Buck v. Billings Montana Chevrolet, Inc.

• Decision Date: 16 May 1991
• Docket Number: No. 90-250,90-250
• Parties: , 122 Lab.Cas. P 57,014, 6 Indiv.Empl.Rts.Cas. 938 James S. BUCK, Plaintiff and Appellant, v. BILLINGS MONTANA CHEVROLET, INC., a Delaware corp.; Frontier Chevrolet Co., a Montana corp.; FS Enterprises, Inc., a South Dakota Corp.; Frank Stinson; and Dennis Menholt, Defendants and Respondents.
• Court: Montana Supreme Court

Page 537

811 P.2d 537

248 Mont. 276, 122 Lab.Cas. P 57,014,

6 Indiv.Empl.Rts.Cas. 938

James S. BUCK, Plaintiff and Appellant, v. BILLINGS MONTANA CHEVROLET, INC., a Delaware corp. Frontier Chevrolet Co., a Montana corp.; FS Enterprises Inc., a South Dakota Corp.; Frank Stinson; and Dennis Menholt, Defendants and Respondents.

No. 90-250.

Supreme Court of Montana.

Submitted March 21, 1991.

Decided May 16, 1991.

Kenneth D. Tolliver, argued, Wright, Tolliver & Guthals, Billings, for plaintiff and appellant.

Sidney R. Thomas, Martha Sheehy, argued, Moulton, Bellingham, Longo & Mather, Peter T. Stanley, Bill McNamer, argued, McNamer & Thompson, Rockwood Brown, argued, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for defendants and respondents.

McDONOUGH, Justice.

Plaintiff, James S. Buck, appeals from an order granting summary judgment in favor of defendants Billings Montana Chevrolet, Frontier Chevrolet, F.S. Enterprises, Inc., Frank Stinson and Dennis Menholt. The District Court of the Thirteenth Judicial District, Yellowstone County, held that the reasons asserted by defendants for Buck's discharge constituted a legitimate business reason under the Wrongful Discharge from Employment Act, Sections 39-2-901 et seq., MCA. It therefore granted summary judgment and dismissed Buck's lawsuit. We affirm in part and reverse in part.

The issues presented for our review are:

1. Whether a new owner (controlling shareholder and new officers) of a business may properly terminate a long term employee who was general manager of the busines before the control of the new business was sold to the new owner;

2. Whether the District Court properly granted summary judgment on the issue of fraud;

3. Whether an issue of fact exists as to the employee's discharge violating written personnel policies of Billings Montana Chevrolet;

4. Whether the District Court properly dismissed Frontier Chevrolet, F.S. Enterprises, Frank Stinson and Dennis Menholt from the lawsuit.

James Buck (Buck) was an employee, since 1973, of a corporation which was named Frontier Chevrolet Company (Frontier Chevrolet) and is now named Billings Montana Chevrolet, Inc., in Billings, Montana. The controlling shareholder of Frontier Chevrolet was Andy Anderson, who was Buck's father-in-law and president of the company. By all accounts, Buck was a competent, faithful employee who had risen through the ranks to become general manager of the business. His expertise was recognized throughout the automobile industry. Mr. Buck was elected President of the Billings Automobile Dealers Association, the only non-dealer to ever hold the position and was preapproved by General Motors to be a dealer. Apparently, Mr. Buck had dreams of purchasing the dealership, but he did not have sufficient resources.

Frank Stinson is a controlling shareholder of FS Enterprises, Inc., which owns and controls a number of automobile dealerships. In 1986 he began looking for another automobile dealership on behalf of F.S. Enterprises, and, as a result became interested in purchasing the Frontier Chevrolet Company. Apparently, Mr. Stinson through F.S. Enterprises had a tradition of buying dealerships and having his long term loyal employees placed in a position of management at the newly purchased business. These employees would eventually purchase the dealership from F.S. Enterprises. This arrangement was a method utilized by Stinson, through his companies, to reward his faithful employees.

After several months of negotiations, a contract for the purchase of the stock of Frontier Chevrolet was agreed to. During these negotiations Andy Anderson died. However, Mr. Buck and his wife continued to negotiate the purchase. The final contract required the officers and directors of Frontier Chevrolet to resign. The contract did not, however, require any employee to resign. Although Mr. Buck was the general manager of the dealership, he was not an officer or director.

Sale of the stock of Frontier Chevrolet was completed on August 7, 1987. Consistent with Frank Stinson's and F.S. Enterprises' policy of management, Frontier Chevrolet, acting through its new officers, filled the position of executive manager of the dealership with one of Stinson's long-term employees, Dennis Menholt. The next day, Mr. Buck showed up for work and was told that he was no longer general manager because Menholt would be running the business, and it would not work out with both of them there. After some negotiations, he was offered the position of Fleet and Lease Manager, which he refused.

Mr. Buck's employment with his father-in-law's company was without a contract or specified term.

I

Following F.S. Enterprises' purchase of the stock of Frontier Chevrolet, and the change of officers, Jim Buck was terminated. The defendants maintain that Buck was terminated in compliance with a long standing policy of F.S. Enterprises and Frank Stinson, which placed long term employees in charge of the new dealership. The defendants also maintain that this arrangement would save money, because the two positions formerly held by Buck and his father-in-law, were consolidated into one position held by Dennis Menholt. Buck has not brought forth any facts to contest these reasons. He does, however, maintain that the first reason, which was the primary justification for his discharge, is not adequate under Montana's Wrongful Discharge from Employment Act. See Secs. 39-2-901 et seq., MCA. According to pertinent parts of the Wrongful Discharge Act, a discharge is only wrongful if the discharge was not for good cause and the employee had completed the employer's probationary period of employment. See Sec. 39-2-904(2), MCA.

Buck was not a probationary employee. Therefore, in order to establish a claim for wrongful discharge under Sec. 39-2-904(2), MCA, he must prove that his termination was not for good cause. Good cause is defined as:

... reasonable job related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer's operation or other legitimate business reason. Section 39-2-903(5).

All parties agree that there was no failure on Buck's part to satisfactorily perform his job duties. Nor is there any allegation that he disrupted the employer's operation. Instead the defendants maintain that his dismissal was justified by "reasonable job related grounds ... based upon [a] legitimate business reason." We must therefore determine whether under these uncontested facts F.S. Enterprises' policy (which became Frontier Chevrolet's policy) to replace Buck with its own man constituted a legitimate business reason under the Act.

A review of the legislative history of the Wrongful Discharge from Employment Act is of little assistance. Initially good cause was defined as a legitimate business reason. However, further changes eliminated this term and defined good cause as:

reasonable job related grounds for dismissal based upon a failure to satisfactorily perform job duties or disruption of employment operations.

This wording appears to have been set forth to include some specificity to misconduct charges for the protection of the employee. However, this limited language had a major omission because there was no allowance for discharge based upon legitimate economic reasons such as lack of work or elimination of the job. To remedy this situation, the term legitimate business reason was added to the definition. It was thought that this term was broad enough to cover all of the various kinds of termination of employment. The term would advance the employee's interest in job security by requiring the employer in fact have a legitimate reason for discharge. At the same time, the employer's interest in management discretion would be protected by allowing businesses to make employment decisions for business reasons.

Perhaps because this term was added in an effort to broaden the definition of good cause, the legislature has not provided any concrete guidance to aid the judiciary in interpreting its meaning. We have, therefore, thoroughly reviewed prior case law from this jurisdiction, our sister jurisdictions, arbitration cases from the National Labor Relations Board, and law from foreign jurisdictions in an effort to arrive at a precise meaning of the term "legitimate business reason." This review has been of little assistance. All attempts to more specifically define this term or like terms have resulted in definitions that are as general as the term itself. We are therefore forced to fill in the gap left by the legislature and to define and apply the term in an equitable fashion that most nearly effectuates the intent of the legislature.

A legitimate business reason is a reason that is neither false, whimsical, arbitrary or capricious, and it must have some logical relationship to the needs of the business. In applying this definition, one must take into account the right of an employer to exercise discretion over who it will employ and keep in employment. Of equal importance to this right, however, is the legitimate interests of the employee to secure employment.

We apply this definition to the issue presented by this case. As stated earlier, Jim Buck was an exemplary employee who worked in his father-in-law's business for almost fifteen years. During that period of time he rose through the ranks to become general manager of the dealership. While holding this position, Buck was responsible for managing the business in his father-in-law's absence.

In 1987, the business was sold to F.S. Enterprises. Frank Stinson, controlling shareholder, had a long term policy which was executed by F.S. Enterprises, of buying dealerships and placing long term faithful employees in the position of manager. The employee would then be given the chance to buy the business. According to deposition testimony, Stinson preferred this arrangement because he found the dealerships were run...