Solle v. Western States Ins. Agency, Inc.
| Citation | 2000 MT 96,999 P.2d 328,299 Mont. 237 |
| Decision Date | 13 April 2000 |
| Docket Number | No. 99-209.,99-209. |
| Parties | Diana J. SOLLE, Plaintiff and Appellant, v. WESTERN STATES INSURANCE AGENCY, INC., a Montana corporation, Defendant and Respondent. |
| Court | United States State Supreme Court of Montana |
Cynthia K. Smith, Cederberg, Shott & Smith, Missoula, Montana, For Appellant.
Candace C. Fetscher, Lucy T. France, Garlington, Lohn & Robinson, Missoula, Montana, For Respondent.
¶ 1 Diana J. Solle (Solle) appeals from an order of the District Court for the Third Judicial District, Powell County, granting the motion of Western States Insurance Agency, Inc., (WSIA) to compel arbitration. We affirm.
¶ 2 We address the following issues on appeal:
¶ 3 1. Whether Solle can maintain a claim for wrongful termination apart from either the Wrongful Discharge from Employment Act or the employment contract. ¶ 4 2. Whether Solle's claim for wrongful termination is subject to arbitration as provided in the employment contract.
¶ 5 Solle owned a private insurance agency in Deer Lodge. In December 1988, she sold that agency to WSIA and, the following month, she began working for them as a contract employee. Her contract was renewed each year until 1998.
¶ 6 Until 1997, Solle held the position of manager of the Deer Lodge and Dillon branches of WSIA. In 1997, along with her management of those two branches, she assumed the position of Branch Manager of the Missoula office. This new position was the subject of the employment contract at issue in this appeal. The contract was for the term beginning January 1, 1997, through December 31, 1997. It addressed the terms and conditions of Solle's employment with WSIA including her duties, WSIA's expectations of her, and the conditions for termination. In addition, the contract contained the following clause:
10. Arbitration. Any unresolved dispute that may arise under the provisions of this Agreement shall be submitted to arbitration in accordance with the rules of the American Arbitration Association and the Uniform Arbitration Act, Sections 27-5-111, et. seq., MCA. The written determination of the arbitration shall be final, binding, and conclusive on the parties.
After her contract expired on December 31, 1997, WSIA did not enter into another contract with Solle for 1998.
¶ 7 On October 8, 1998, Solle filed suit in the District Court alleging that WSIA violated its common law duty of good faith and fair dealing by failing to renew her employment contract when she had a reasonable expectation that such renewal would be offered to her. WSIA moved to dismiss for lack of subject matter jurisdiction or, in the alternative, for an order compelling Solle to submit her claim to binding arbitration. Solle opposed the motion arguing that her claim did not "arise under" the employment contract and, therefore, was not subject to arbitration. The District Court granted WSIA's motion to compel arbitration and ordered the action stayed until completion of the arbitration. From this order Solle appeals.
¶ 8 A district court's order compelling arbitration is subject to de novo review. Iwen v. U.S. West Direct, 1999 MT 63, ¶ 17, 293 Mont. 512, ¶ 17, 977 P.2d 989, ¶ 17 (citing Zolezzi v. Dean Witter Reynolds, Inc. (9th Cir.1986), 789 F.2d 1447). We review a district court's conclusions of law regarding arbitrability to determine whether they are correct. Iwen, ¶ 17 (citing Ratchye v. Lucas, 1998 MT 87, ¶ 14, 288 Mont. 345, ¶ 14, 957 P.2d 1128, ¶ 14).
¶ 9 Whether Solle can maintain a claim for wrongful termination apart from either the Wrongful Discharge from Employment Act or the employment contract.
¶ 10 Solle, citing Dare v. Montana Petroleum Mktg. Co. (1984), 212 Mont. 274, 282, 687 P.2d 1015, 1020, argues that under Montana's common law of wrongful termination, an employer violates its duty of good faith and fair dealing by discharging an employee who had a reasonable expectation of continued employment. However, Solle fails to recognize that claims for wrongful termination from tort or express or implied contract are no longer viable under Montana law. See Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 776 P.2d 488
.
¶ 11 In 1987, three years after Dare was decided, the Montana Legislature enacted the Wrongful Discharge from Employment Act (WDEA) (Title 39, Chapter 2, Part 9 of the Montana Code Annotated) setting forth certain rights and remedies with respect to wrongful termination and providing "the exclusive remedy for a wrongful discharge from employment." Section 39-2-902, MCA. The WDEA explicitly preempts all common law remedies, providing that "no claim for discharge may arise from tort or express or implied contract." Section 39-2-913, MCA; Kulm v. Montana State University—Bozeman (1997), 285 Mont. 328, 331, 948 P.2d 243, 245. ¶ 12 In construing the WDEA, this Court has held that § 39-2-913, MCA, bars all claims arising from an asserted wrongful discharge based upon common law tort or implied or express contract. Kneeland v. Luzenac America, Inc., 1998 MT 136, ¶ 27, 289 Mont. 201, ¶ 27, 961 P.2d 725, ¶ 27 (citing Beasley v. Semitool, Inc. (1993), 258 Mont. 258, 261-62, 853 P.2d 84, 86). Not all tort or contract claims arising from employment are barred by § 39-2-913, MCA, however. Section 39-2-913, MCA, bars only those tort and contract claims which are "for discharge." Kneeland, ¶ 27. Further, under the WDEA, there is no right under any legal theory to damages for wrongful termination for pain and suffering, emotional distress, compensatory damages, punitive damages, or any other form of damages, except as provided for in the Act. Section 39-2-905, MCA; Kulm, 285 Mont. at 331,948 P.2d at 245.
¶ 13 A threshold determination in cases alleging wrongful termination is whether the parties' relationship is governed by a written contract for a specific term or whether it falls under the provisions of the WDEA. The WDEA specifically states that it does not apply to the discharge "of an employee covered by ... a written contract of employment for a specific term." Section 39-2-912(2), MCA.
¶ 14 Solle does not dispute that her employment with WSIA was covered by a written contract of employment for a specific term. In fact, she argues that, because there was an employment contract in effect, her claim is not governed by the WDEA. Even so, Solle argues that the arbitration clause within her employment contract does not apply in her case. Solle cannot have it both ways. Either her employment was covered by an employment contract for a specific term—a contract containing an arbitration clause—or it was not, in which case the WDEA would apply.
¶ 15 This Court has determined that claims for breach of the implied covenant of good faith and fair dealing are "inextricably intertwined with and based upon [an individual's] termination from employment." Kulm, 285 Mont. at 333, 948 P.2d at 246. So too in the case before us on appeal, Solle's claims are inextricably intertwined with and based upon her termination from employment.
¶ 16 Although breach of a contract is not a prerequisite to breach of the implied covenant of good faith and fair dealing, the covenant of good faith and fair dealing arises out of a contractual relationship between the parties. See Schaal v. Flathead Valley Community Coll. (1995), 272 Mont. 443, 447, 901 P.2d 541, 543
(); Farris v. Hutchinson (1992), 254 Mont. 334, 339, 838 P.2d 374, 377 (); Story v. City of Bozeman (1990), 242 Mont. 436, 450, 791 P.2d 767, 775 ( ) This Court has expressly held that a contractual relationship is a prerequisite to an action for breach of the implied covenant of good faith and fair dealing. Davey v. Nessan (1992), 252 Mont. 397, 404, 830 P.2d 92, 96.
¶ 17 The gravamen of Solle's complaint is that she was terminated from her employment with WSIA in violation of WSIA's written policies and procedures. The employment contract contained the specific conditions under which WSIA was authorized to terminate Solle. The contract addressed the relationship between Solle and WSIA after termination of the contract. The contract set forth the term and expiration date of Solle's employment. The contract addressed the duties, services, professional standards and the extent of Solle's authority. As WSIA pointed out, much of the evidence and argument regarding wrongful termination will center on whether Solle satisfactorily achieved the terms of that contract.
¶ 19 Accordingly, we hold that Solle cannot maintain a claim for wrongful termination apart from either the WDEA or the employment contract.
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