Baker v. Tremco Inc.

• Decision Date: 01 December 2009
• Docket Number: No. 29S02-0902-CV-00065.,29S02-0902-CV-00065.
• Citation: 917 N.E.2d 650
• Parties: Brennen BAKER, Appellant (Plaintiff/Counterclaim Defendant below), and Moisture Management, Appellant (Third-Party Defendant below), v. TREMCO INCORPORATED, Appellee (Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Below), and Rick Gibson, Appellee (Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Below).
• Court: Indiana Supreme Court

917 N.E.2d 650

Brennen BAKER, Appellant (Plaintiff/Counterclaim Defendant below), and Moisture Management, Appellant (Third-Party Defendant below), v. TREMCO INCORPORATED, Appellee (Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Below), and Rick Gibson, Appellee (Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Below).

No. 29S02-0902-CV-00065.

Supreme Court of Indiana.

December 1, 2009.

Andrew W. Hull, Daniel K. Burke, Indianapolis, IN, Attorneys for Appellants.

Mark J.R. Merkle, Anthony W. Mommer, Indianapolis, IN, Attorneys for Appellees.

On Petition to Transfer from the Indiana Court of Appeals, No. 29A02-0711-CV-1001

SHEPARD, Chief Justice.

Appellant Brennan Baker contends that constructive discharge falls within the public policy exception to Indiana's doctrine of employment at will. We conclude that a claim may rest on involuntary resignation, but only where the cause fits within the grounds recognized by our decisions on retaliatory discharge. Baker's claim does not.

Facts and Procedural History

Tremco, Inc. manufactures and sells various products for construction and maintenance of roofing systems. On July 19, 1991, Brennan Baker and Tremco entered into an agreement in which Tremco employed Baker to sell and promote the sale of Tremco's products in such areas or to such accounts as Tremco might assign him. The agreement included provisions under which Baker agreed not to compete with Tremco or solicit any of Tremco's customers while Baker was employed by Tremco and for a period of eighteen months following termination.

During the course of Baker's employment, Tremco trained him in the promotion of goods and services through the Association of Educational Purchasing Agencies (an association of school systems that combine their purchasing power to buy goods), in roof asset management programs, and in thermal imaging that would reveal problems in roofing systems. Baker also sold field inspection services, roof asset management services, and patch and repair services as well as roofing supplies and products. Baker received commissions on the sales of Tremco's products and services provided by Waterproofing Technologies, Inc., Tremco's subsidiary.

Baker resigned from his employment on January 5, 2004, after a dispute arose between Baker and Tremco regarding Tremco's sales and bidding practices. Baker alleges that he concluded that the AEPA schools were being overcharged for products and services, and after informing his immediate supervisor Rick Gibson, he refused to continue using WTI policies and the AEPA contract as a means of selling Tremco's products.

Baker subsequently formed and operated Moisture Management, a company that provides its clients with consultation and troubleshooting services relating to roofing and waterproofing as well as mold consultation.

Baker filed a complaint for damages against Tremco, seeking a declaration that the covenant not to compete is unenforceable and asserting claims for wrongful termination, defamation, and violation of Indiana's blacklisting statute. Tremco filed a counterclaim, seeking an injunction to enforce the covenant not to compete and asserting claims against Baker for breach of contract and against Moisture Management for tortious interference. The parties filed competing summary judgment motions with respect to the non-compete claim. Tremco also argued that no genuine issue of material fact exists with respect to Baker's remaining claims. The trial court granted summary judgment in favor of Tremco and Gibson with respect to all claims and issued an injunctive relief against Baker and Moisture Management.

Baker appealed, and the Court of Appeals affirmed in part, reversed in part, and remanded. Baker v. Tremco Inc., 890 N.E.2d 73 (Ind.Ct.App.2008). We granted transfer. 915 N.E.2d 981 (Ind.2009) (table).

Although the parties raise numerous issues for review, we will only address three.¹ First, we consider whether a claim for constructive retaliatory discharge falls within Indiana's public policy exception to the employment at will doctrine. Second, we consider whether the non competition agreement is unenforceable because Baker is actually competing with a subsidiary of Tremco. Third, we judge whether a statement from the former supervisor was slanderous per se so as to create an actionable defamation claim.

I. Retaliatory Discharge

Baker contends that he is entitled to judgment with respect to his breach of contract/wrongful termination claim against Tremco. (Appellants' Br. at 26.) He argues that he was wrongfully discharged for refusing to participate in illegal activity—refusing to participate in Tremco's scheme to sell its roofing products and WTI's services by violating public bidding laws and defrauding Indiana public schools. Tremco argues that Baker's employment was not involuntarily terminated, noting that Baker tendered his own resignation. (Appellees' Br. at 20.)

"Indiana follows the doctrine of employment at will, under which employment may be terminated by either party at will, with or without reason." Wior v. Anchor Indus., Inc., 669 N.E.2d 172, 175 (Ind.1996). The presumption of at-will employment is strong, and we are disinclined to adopt broad and ill-defined exceptions to the employment at will doctrine. Orr. v. Westminster Village N., Inc., 689 N.E.2d 712, 717 (Ind.1997).

This Court has recognized only three exceptions to the doctrine. First, if an employee establishes that "adequate independent consideration" supports the employment contract, the Court generally will conclude that the parties intended to establish a relationship in which the employer may terminate the employee only for good cause. Id. at 718. Adequate independent consideration is provided when the employer is aware that the employee had a position with assured permanency and the employee accepted the new position only after receiving assurances guaranteeing similar permanency, or when the employee entered into a settlement agreement releasing the employer from liability on an employment related claim against the employer. Id.

Second, we have recognized a public policy exception to the doctrine if a clear statutory expression of a right or a duty is contravened. Wior, 669 N.E.2d at 177, n. 5.

Third, this Court has recognized that an employee may invoke the doctrine of promissory estoppel by pleading the doctrine with particularity, demonstrating that the employer made a promise to the employee, that the employee relied on the promise to his detriment, and that the promise otherwise fits within the Restatement test for promissory estoppel. Orr, 689 N.E.2d at 718.

In this case, Baker argues the second of these, saying that when he refused to participate in Tremco and WTI's unlawful activities in using the AEPA/Wilson line-item contract to violate public bidding laws and defraud public schools in Indiana, he was advised that he would be terminated. Baker cites McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 392-93 (Ind.1988) for support.

In McClanahan, we extended the public policy exception to include a "separate but tightly defined exception to the employment at will doctrine" when an employer discharges an employee for refusing to commit an illegal act for which the employee would be personally liable. 517 N.E.2d at 393. In that case, an at-will employee working as an interstate truck driver refused to drive his overweight truck through Illinois, fearing he would be personally liable for violating Illinois law and subjected to fines. Id. at 391. The employer ordered the employee to return to the company headquarters, and it terminated him when he arrived. According to the company's employee manual, the employee's actions constituted a "voluntary quit." Id. The employee filed a claim for wrongful discharge. Id.

The decision in McClanahan flowed from Frampton v. Cent. Ind. Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973), where this Court first recognized the public policy exception to the employment at will doctrine. Frampton had filed a claim under workers compensation, and Central Indiana Gas fired him for doing so. We declared that "when an employee is discharged solely for exercising a statutorily conferred right[,] an exception to the general rule must be recognized." Id. at 253, 297 N.E.2d at 428.

Despite the fact that the employee in McClanahan was fulfilling a statutory duty (declining to drive an overweight truck in abrogation of a statute) rather than exercising a statutorily conferred right, we held that "firing an employee for refusing to commit an illegal act for which he would be personally liable is as much a violation of public policy declared by the legislature as firing an employee for filing a workmen's compensation claim." 517 N.E.2d at 392-93.

Tremco contends that McClanahan offers no support because our holding was carefully limited to an employee who was terminated, and Tremco further explains that Baker resigned and was not fired. (Appellees' Br. at 18.) Baker, by contrast, argues that Tremco fails to refute that Baker was constructively discharged from his employment for refusing to participate in illegal activity. (Appellants' Br. at 27.) He cites Tony v. Elkhart County, 851 N.E.2d 1032 (Ind.Ct.App.2006) to suggest that the public policy exception includes situations where the employee was constructively discharged.

In Tony, an employee serving as a highway maintenance worker was involved in two work-related accidents in which he sustained injuries that required surgery, physical therapy, and placement on work restrictions by his physicians. Id. at 1034. The employee was subjected to a hostile working environment in which he was ridiculed by the employer's management for his injuries and compensation claims, and the management ignored the employee's restrictions and directed him to perform task that exceeded the employee's limitations and placed him in further risk of injury. Id. The employment...