Kittelson v. Archie Cochrane Motors, Inc., 90-614

Docket NºNo. 90-614
Citation813 P.2d 424, 248 Mont. 512
Case DateJune 06, 1991
CourtUnited States State Supreme Court of Montana

Page 424

813 P.2d 424
248 Mont. 512, 122 Lab.Cas. P 56,964
Gary O. KITTELSON, Plaintiff and Appellant,
ARCHIE COCHRANE MOTORS, INC., Defendants and Respondents.
No. 90-614.
Supreme Court of Montana.
Submitted on Briefs April 18, 1991.
Decided June 6, 1991.

Page 425

[248 Mont. 513] Gregory P. Johnson and Jock B. West, West Law Firm, Billings, for plaintiff and appellant.

Don M. Hayes, Herndon, Hartman, Sweeney & Halvorson, Billings, for defendants and respondents.

HARRISON, Justice.

Gary O. Kittelson appeals from summary judgment granted on September 28, 1990, by the District Court of the Thirteenth Judicial District, Yellowstone County, Montana, in favor of Archie Cochrane Motors, Inc. Kittelson claimed that by refusing to disburse severance [248 Mont. 514] pay, Archie Cochrane Motors was negligent and had breached the employment contract and the implied covenant of good faith and fair dealing. We affirm.

The issue is whether the District Court erred in determining that no genuine issues of material fact exist and improperly granted summary judgment.

Summary of Facts

Gary O. Kittelson was fired on August 11, 1986, after having been employed by Archie Cochrane Motors (ACM) for seventeen years, working his way up from salesperson in 1968 or 1969 to General Sales Manager in 1979. When he was promoted to General Sales Manager on July 1, 1979, Kittelson signed an employment contract which provided that he receive a salary of $1,700 per month plus two per cent of the company's operating profits, as well as a year-end bonus of two per cent of the company's operating profits. The contract did not refer to a definite time period of employment. Kittelson's base salary increased over the years, and although his profit percentage remained the same, he was making over $50,000 a year as General Sales Manager during the last few years of employment.

When Kittelson began working for ACM, the company was owned by Archie Cochrane, who sold ACM in January 1974 to James and Dave McNally. After McNallys bought the car dealership, an employee handbook was distributed to all ACM employees. The handbook did not state procedures or policies for discharging employees except for a section providing that severance pay would be decided on a case by case basis, but would not be given if the employee had engaged in "improper conduct."

According to James McNally, the President of ACM, Kittelson's performance began to decline in late 1984. On January 27, 1986, McNally wrote Kittelson a letter, constituting "a formal and final warning on the problems you and I have been discussing over the past ninety days." The letter listed Kittelson's shortcomings in "inventory management" and "people management."

Kittelson told McNally in June 1986 that he felt his performance had improved. McNally disagreed and demoted Kittelson to truck manager, temporarily taking over as General Sales Manager himself. McNally said that because he and Kittelson were friends, he switched Kittelson's position rather than terminating his employment, to "jar" him back to "functioning like he used to." According to McNally, Kittelson's performance continued to decline, leading to his termination in August 1986.

[248 Mont. 515] Following his termination, Kittelson approached Jim McNally about the possibility of obtaining severance pay. McNally instructed Kittelson to write down the reasons that he felt entitled to severance pay, and assured Kittelson that he would present the matter to the Board of Directors. According to Kittelson, McNally also commented that if anyone deserved severance pay, Kittelson did. The Board rejected Kittelson's request for severance pay.

McNally stated that approximately a year later, Kittelson told him that he needed

Page 426

a letter of recommendation because of difficulty in finding employment. Against his attorney's advice, McNally wrote the letter and backdated it to the time Kittelson's employment was terminated. McNally said that he did this because "I was trying to help him out."

Before Kittelson's termination, ACM had never given an employee severance pay. Subsequent to Kittelson's discharge, two ACM employees received severance pay after termination of their employment.

Kittelson filed this action against ACM alleging negligent discharge, negligent infliction of emotional distress, breach of the implied covenant of good faith and fair dealing, and breach of contract for failing to provide severance pay.


Before discussing the issues concerning Kittelson's termination, we must address the preliminary question of whether the Montana Wrongful Discharge From Employment Act, Secs. 39-2-901 to -914, MCA, applies to this case. Since Kittelson was discharged in August 1986, this action is not controlled by the Montana Wrongful Discharge From Employment Act, which took effect July 1, 1987.

We now turn to Kittelson's claim that the District Court erred in granting summary judgment to ACM because genuine issues of material fact existed. Summary judgment is proper when no genuine issues of material fact exist, and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P.; First Security Bank of Bozeman v. Jones (1990), 243 Mont. 301, 303, 794 P.2d 679, 681. Initially, the moving party must allege the absence of genuine factual issues. To prevail, the nonmoving party must set forth facts demonstrating that a genuine issue exists. O'Bagy v. First Interstate Bank of Missoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191.

Kittelson argues that the following material facts were at issue: (1) whether Kittelson was entitled to severance according to provisions of the employee handbook; (2) whether ACM terminated [248 Mont. 516] Kittelson's employment "for an act of improper conduct;" (3) whether McNally's statements to Kittelson in regard to his request for severance pay imposed obligations on ACM; and (4) whether the question of Kittelson's severance pay was presented to the Board by Jim McNally. Examination of the record reveals that no genuine issues of material fact existed.

In Montana, employment "having no specified term may be terminated at the will of either party on notice to the other...." Section 39-2-503, MCA. In asserting claims of wrongful discharge, Kittelson relied on the exceptions to "at will" termination of employment listed in Prout v. Sears, Roebuck and Co. (1989), 236 Mont. 152, 157, 772 P.2d 288, 291. Aside from statutory exceptions, Prout lists four exceptions to "at will" termination of employment: (1) violation of public policy; (2) breach of express or implied promise of job security; (3) breach of the implied covenant of good faith and fair dealing; and (4) negligent discharge. As noted in Prout and as our discussion will demonstrate, these exceptions frequently overlap. Prout, 236 Mont. at 157, 772 P.2d at 291.


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