Cole v. Valley Ice Garden

• Decision Date: 09 February 2005
• Docket Number: No. 03-729,03-729
• Citation: 2005 MT 21,106 P.3d 556,325 Mont. 388
• Parties: DAVID G. COLE, Plaintiff, Respondent and Cross-Appellant, v. VALLEY ICE GARDEN, L.L.C., VALLEY ICE GARDEN MANAGEMENT, L.L.C., and WILLIAM MARTEL, Defendants and Appellants.
• Court: Montana Supreme Court

2005 MT 21

325 Mont. 388

106 P.3d 556

DAVID G. COLE, Plaintiff, Respondent and Cross-Appellant, v. VALLEY ICE GARDEN, L.L.C., VALLEY ICE GARDEN MANAGEMENT, L.L.C., and WILLIAM MARTEL, Defendants and Appellants.

No. 03-729

Supreme Court of Montana.

Submitted on Briefs: February 1, 2005

Decided: February 9, 2005

For Appellants: Richard J. Andriolo, Esq., Andriolo & Refling PLLC, Bozeman, Montana; Donald C. Robinson, Esq. and Ronald A. Thuesen, Esq., Poore, Roth & Robinson, P.C., Butte, Montana.

For Respondent: Monte D. Beck, Esq., Beck, Richardson & Amsden, PLLC, Bozeman, Montana.

Justice Patricia O. Cotter delivered the Opinion of the Court.

¶ 1 Valley Ice Garden, L.L.C. and Valley Ice Garden Management, L.L.C. (hereinafter collectively referred to as VIG) and William Martel (Martel) appeal the judgment of the Eighteenth Judicial District Court, Gallatin County, that the termination of Plaintiff David G. Cole (Cole) as the hockey coach for the Bozeman Ice Dogs (the Ice Dogs) was without cause. We affirm in part and reverse and remand in part.

ISSUES

¶ 2 VIG presents the following issues on appeal:

¶ 3 1. Did the District Court err in concluding that Cole was terminated without cause?

¶ 4 2. Did the District Court err in concluding that a clause in the employment agreement which provided that Cole would receive one year's salary and a bonus if he was terminated without cause was a liquidated damages clause and was therefore void?

¶ 5 3. Did the District Court err in allowing Cole to assert a list of liquidated damages?

¶ 6 4. Did the District Court err in finding that the term of the employment agreement was for five years?

¶ 7 5. Did the District Court err in excluding evidence concerning the Immigration and Naturalization Services (INS) Visa status of Cole?

¶ 8 Cole raises the following issues on cross-appeal:

¶ 9 1. Did the District Court err in concluding that VIG did not breach the covenant of good faith and fair dealing?

¶ 10 2. Did the District Court err in failing to include social security and vehicle use benefits in its assessment of Cole's damages?

¶ 11 We affirm the District Court's determination that Cole was terminated without cause. However, we reverse the District Court's conclusion that a clause in the employment agreement which provided Cole with one year's salary and a bonus if he was terminated without cause was void as a liquidated damages provision. We therefore remand for further proceedings consistent with this Opinion. We do not reach VIG's remaining issues, nor do we reach Cole's cross-appeal issues.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 12 In June of 1997, Martel purchased the Ice Dogs, a Junior A, American West Hockey League team. Because of the time in the season that Martel purchased the Ice Dogs, he needed to find a coach immediately. Hence, Martel met with and ultimately hired Cole as the Head Coach and General Manager of the Ice Dogs.

¶ 13 Martel asked Cole to draw up an employment agreement, which Cole did after consulting an attorney. The applicable portion of this employment agreement stated:

TERM: That the term of this Agreement shall be five (5) years, commencing on the 1st day of June 1997, and continuing thereafter, uninterrupted, unless employee is terminated for cause. In the event of the termination of employee for other than cause, employee shall receive one (1) full calendar year salary and a bonus equal to that paid to him for the preceding year.

¶ 14 The above-quoted provision of the agreement was subsequently amended in March 1998 to add the following:

Further, the term of this Agreement shall automatically renew, so as to have five (5) years remaining, each year on the 1st day of June, unless employer notifies employee in writing prior to the 1st day of May of that Year of the non-renewal.

Cole's annual base salary was fixed at $50,000.00.

¶ 15 The 1997-1998 hockey season was fairly successful, but the following 1998-1999 season was not. The Ice Dogs ended that season with a record of 18 wins, 35 losses, and 7 ties. The Ice Dogs did not qualify for the playoffs, Cole did not receive any performance bonuses, and the game attendance declined to approximately 1,000 fans per game.

¶ 16 Thereafter, during the off-season and at Cole's suggestion, Martel expended substantial sums of money in an effort to improve the team. In particular, Martel increased his recruitment efforts; entered the Ice Dogs in pre-season tournaments and in games in Canada; and hired a goalie coach and a new trainer. Despite these efforts, the 1999-2000 season again started out poorly, with the Ice Dogs winning one game and losing six.

¶ 17 On October 3, 1999, Martel terminated Cole due to the Ice Dogs' poor performance. Martel then told Cole that because he had cause to fire him, he felt he was not obligated to provide him severance pay. However, Martel did offer Cole $15,000 in severance pay, which Cole accepted. When Cole arrived to pick up his check, Martel asked him to sign a release from liability form, which Cole declined to sign. Cole then sought the advice of an attorney, and thereafter requested that Martel provide him with a written statement regarding his reasons for terminating him. Martel complied with Cole's request.

¶ 18 After receiving Martel's explanation, Cole brought an action for breach of the employment contract and for breach of the implied covenant of good faith and fair dealing. Cole filed a motion for partial summary judgment. VIG also filed a motion for summary judgment. The District Court denied VIG's motion, and it granted Cole's motion as to liability, holding, in part, that Cole was terminated without cause. Subsequently, a bench trial was held as to damages and Cole's bad faith claim.

¶ 19 Ultimately, the District Court determined that VIG did not violate the covenant of good faith and fair dealing; that the liquidated damages clause in the employment agreement was void because Cole's damages were both certain and ascertainable; that Cole's damages included lost wages and fringe benefits based on a five-year term of employment; and that the evidence concerning Cole's INS Visa status was inadmissable in that it was irrelevant, speculative, and not pled in VIG's Answer to Cole's Complaint. The District Court then calculated Cole's damages, accepting the viability of certain damage claims while rejecting others, and awarded damages to Cole in the sum of $199,193.00.

¶ 20 VIG now appeals the District Court's judgment, and Cole cross-appeals.

STANDARD OF REVIEW

¶ 21 We review a district court's findings of fact to determine whether the findings are clearly erroneous. Riverview Homes, II, Ltd. v. Canton, 2001 MT 309, ¶ 12, 307 Mont. 517, ¶ 12, 38 P.3d 848, ¶ 12. We review a district court's conclusions of law to determine whether the conclusions are correct. Riverview Homes, II, ¶ 12.

DISCUSSION

¶ 22 Did the District Court err in concluding that Cole was terminated without cause?

¶ 23 VIG contends it had good cause to terminate Cole, and that the District Court erred in concluding that Cole was discharged without cause. In this connection, it presents several arguments. First, VIG argues that under Montana law, if any uncertainty in a contract exists, that uncertainty must be construed against the drafter. As such, VIG contends that any uncertainty as to the meaning of "cause," as contained in the contract, must be construed against Cole, as he drafted the employment agreement. In addition, VIG maintains that the ordinary meaning of "cause" should apply, and that VIG had several "good or adequate" reasons for terminating Cole's employment.

¶ 24 VIG likens the present case to one brought under Montana's Wrongful Discharge from Employment Act (the WDEA). While acknowledging that the WDEA does not apply here, VIG argues that since "good cause" is defined in the WDEA, that definition provides this Court with a guideline for "cause" in the present case. Namely, the WDEA defines "good cause" 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[s]." Section 39-2-903(5), MCA. VIG maintains that based on this definition, we have before upheld termination for "good cause" on the basis of poor job performance and we should do so here as well.

¶ 25 As VIG notes, Cole admits he was not terminated for a capricious or false reason; in fact, he concedes his termination was the result of his losing record. Thus, there is no allegation of a pre-textual or otherwise improper motive for the discharge. VIG further maintains that firing a coach for a poor win/loss record is hardly unusual in the sports industry. Indeed, VIG contends that the expectation for Cole to win was evident by the built-in bonuses for winning listed in the employment agreement. VIG argues that it is hypercritical for Cole—who drafted the employment agreement—to claim he should be financially rewarded for winning, yet not penalized for a poor win/loss record.

¶ 26 Cole contends that because the plain language of the employment agreement does not list as one of Cole's duties the need to maintain a specific win/loss ratio, this Court need not analyze the contract any further, as it cannot insert terms into the contract that are not there. Hence, because the win/loss ratio was not delineated in the employment agreement, the fact that Cole was terminated because of it proves that he was not terminated "for cause." He then maintains that "[t]he fundamental issue in this case is not whether VIG had a right to discharge Coach Cole." Rather, he argues that because coaches are commonly terminated for failing to maintain a winning record, it follows that VIG is obligated to pay off the remainder of a coach's contract, as is the case here. Cole further maintains that the WDEA's definitions do not apply to the present case. Finally, he asserts that the employment agreement...