Kestell v. Heritage Health Care Corp.

• Decision Date: 10 August 1993
• Docket Number: No. 93-147,93-147
• Citation: 259 Mont. 518,858 P.2d 3
• Parties: , 8 IER Cases 1233 John KESTELL, Plaintiff and Respondent, v. HERITAGE HEALTH CARE CORPORATION, d/b/a Glacier View Hospital, a Washington corporation, Sterling Corporation, d/b/a Glacier View Hospital, Defendants and Appellants.
• Court: Montana Supreme Court

Page 3

858 P.2d 3

259 Mont. 518, 8 IER Cases 1233

John KESTELL, Plaintiff and Respondent, v. HERITAGE HEALTH CARE CORPORATION, d/b/a Glacier View Hospital, a Washington corporation, Sterling Corporation, d/b/a Glacier View Hospital, Defendants and Appellants.

No. 93-147.

Supreme Court of Montana.

Submitted on Briefs June 1, 1993.

Decided Aug. 10, 1993.

Daniel W. Hileman, Murray & Kaufman, Kalispell, for defendants and appellants.

Elizabeth A. Best, Great Falls, for plaintiff and respondent.

GRAY, Justice.

Heritage Health Care Corporation and its owner, Sterling Corporation, doing business as Glacier View Hospital in Kalispell, Montana, appeal from judgment on a jury verdict in the Eleventh Judicial District Court, Flathead County. The jury found that the appellants (collectively, the hospital) wrongfully discharged the respondent John Kestell (Kestell). We affirm.

The following issues are raised on appeal:

1. Did the District Court err in denying the hospital's motions for directed verdict and judgment notwithstanding the verdict on Kestell's wrongful discharge claim?

2. Did the District Court err in allowing a proposed release into evidence?

3. Did the District Court err in instructing the jury?

4. Were the damages awarded by the jury excessive as a matter of law?

In September 1989, Jerry Wetherbee, a Sterling Corporation officer, and Brent Porges, administrator of Glacier View Hospital, offered Kestell a position as director of the hospital's chemical dependency unit. He had been working as an inpatient supervisor at Rimrock Foundation in Billings, Montana, but had accepted a new position with a similar facility in Roseburg, Oregon. Porges and Wetherbee persuaded Kestell to change his plans and come to Kalispell by increasing their salary offer and promising ninety days notice of any termination during Kestell's first year of employment.

Kestell testified that he was hired to increase the number of patients in the chemical dependency unit, in part by expanding its services to include addictive disorders other than chemical dependency. He began work at Glacier View Hospital on September 25, 1989, under an employment agreement that established his base pay at $3,583.34 per month and provided for quarterly bonuses based on the number of paying patients in the chemical dependency unit. The agreement also included a reciprocal ninety-day notice provision.

Porges evaluated Kestell's performance in March 1990, at the end of his six-month probationary period. In his report Porges praised Kestell's marketing efforts and his commitment to his patients and to quality treatment, and he noted approvingly that Kestell had "opened up the patient environment" by allowing chemical dependency patients the freedom to mix with psychiatric patients. Although he indicated that Kestell "needed improvement" in several areas, Porges did not rate his performance as unsatisfactory in any of the twelve areas listed.

Two months later, on June 12, 1990, Wetherbee and Porges told Kestell that his position had been eliminated and that another job would be found for him. At a staff meeting the same day, Kestell learned that the hospital had entered into an agreement with Health Management Corporation (HMC), which provided that HMC would assume full management responsibility for the chemical dependency unit. Kestell was told that he would be replaced as director by HMC's employee and, in fact, HMC's employee, Mike DuHoux, began work as director of the chemical dependency unit on or about July 1, 1990.

Soon after June 12, 1990, Kestell was moved to a "group room" in the psychiatric wing of the hospital so that his former office in the administrative wing could be remodeled for DuHoux. Kestell testified that he was given a desk but no work assignments or responsibilities, and that he was expected to leave the room when group therapy sessions were scheduled.

Wetherbee suggested that Kestell apply for one of the counseling jobs vacated when HMC took over the chemical dependency unit, but Kestell refused. He testified that his salary as director of the unit had been approximately $48,000 per year, including bonuses, while the counselor position would have paid approximately $25,000; that he had had no recent experience in daily counseling; and that the offer was a "humiliation."

Wetherbee also offered Kestell an opportunity to apply for a marketing job with Sterling Corporation, but Kestell testified that he could not afford to consider this because it would have meant relocating to Idaho. He already owned houses in Billings and Kalispell and was unwilling to move his children a second time in the same year.

On June 29, 1990, Porges sent Kestell a formal termination letter, referring to their employment agreement and stating that:

[Y]ou will be relieved of your duties as [chemical dependency] program director as of July 1, 1990. As we agreed, your base salary will remain the same for 90 days.... Though you should consider this letter as your 90 day notice per agreement, we will continue to honor our agreement to work with you, the new Director and the Management Consultant Team, to negotiate an acceptable position with the [chemical dependency] program.

In response, Kestell wrote to Porges, reminding him that his performance as director had been an asset to the hospital and stating that he had been offered a lower position with less responsibility and respect. He warned the hospital that if it did not reinstate him, he would pursue legal remedies under the Montana Wrongful Discharge from Employment Act.

Kestell continued to spend eight hours at his desk in the psychiatric unit every day, five days a week, until July 18, 1990. On that day Porges showed him a letter from the hospital's lawyer, dated July 13, 1990, which expressed the opinion that Kestell had not been wrongfully discharged because his position had been eliminated. Kestell testified that he read this letter as an expression of bad faith on the part of the hospital administration and immediately left the premises. The hospital continued to pay his base salary through September 1990.

Kestell soon found a marketing position with the Rocky Mountain Treatment Center in Great Falls, but he could not afford to move and was forced to commute from Kalispell on a daily or weekly basis. He was laid off eight months later and subsequently opened a private practice in Kalispell. At the time of the trial in December 1992, he was making approximately $1,200 a month in his private practice and $600 a month as executive director of a low-income counseling facility in Kalispell.

Kestell filed a wrongful discharge complaint in November 1990, seeking award of wages and fringe benefits for four years from the date of discharge. The hospital admitted in its answer that Kestell had been relieved of his duties as director of the chemical dependency unit but denied that he had been discharged, alleging instead that Kestell's position had been eliminated pursuant to the hospital's contract with HMC.

Kestell amended his complaint in July 1991 to join HMC and its two shareholder-directors individually, alleging that HMC or its directors had tortiously interfered with his employment contract; intentionally or negligently inflicted severe emotional distress; and acted with actual fraud or actual malice. HMC and its directors immediately moved to dismiss Kestell's claims against them.

The hospital moved for summary judgment in August 1991. It argued that its employment agreement with Kestell ended when it contracted with HMC for management of the chemical dependency unit, and that no discharge had occurred because Kestell resigned before the ninety-day notice period had expired.

The District Court denied both motions. It determined that genuine issues of material fact existed as to whether Kestell quit; whether his position was eliminated; whether DuHoux served in the same capacity; and whether the hospital had a legitimate business purpose in contracting with HMC. It also determined that the individual liability of HMC's directors was a genuine issue of material fact because HMC had not filed its articles of incorporation when its directors signed the contract with the hospital.

The jury trial began on November 30, 1992. After three days of testimony, the jury returned a special verdict, finding that the hospital had wrongfully discharged Kestell and awarding damages in the amount of $123,600. The jury also found that HMC and its directors did not tortiously interfere with Kestell's employment contract or intentionally inflict emotional distress. The hospital appealed. Because Kestell did not cross-appeal, HMC and its directors are not involved in this appeal.

I

Did the District Court err in denying the hospital's motions for directed verdict and judgment notwithstanding the verdict on Kestell's wrongful discharge claim?

The hospital moved for a directed verdict during the trial and, later, for judgment notwithstanding the verdict. The District Court denied both motions on the ground that the evidence was sufficient for the jury to find that Kestell was wrongfully discharged.

In considering a motion for a directed verdict or for judgment notwithstanding the verdict, the district court must view the evidence in a light most favorable to the non-moving party. A motion for directed verdict must be denied if there is any evidence that warrants submission to the jury. Wilkerson v. School District No. 15, Glacier County (1985), 216 Mont. 203, 211, 700 P.2d 617, 622. A motion for judgment notwithstanding the verdict must be denied if it appears that the non-moving party can recover upon any view of the evidence, including legitimate inferences to be drawn from it. Larson v. K-Mart Corp. (1990), 241 Mont. 428, 433, 787 P.2d 361, 364.

The hospital contends, on appeal, that the evidence did not warrant submitting the wrongful discharge issue to the jury. It supports this contention...