Sullivan v. Cont'l Constr. of Mont., LLC

• Citation: 299 P.3d 832,370 Mont. 8
• Decision Date: 23 April 2013
• Docket Number: No. DA 12–0489.,DA 12–0489.
• Parties: Michael SULLIVAN, Plaintiff and Appellant, v. CONTINENTAL CONSTRUCTION OF MONTANA, LLC, Defendant and Appellee.
• Court: United States State Supreme Court of Montana

370 Mont. 8

299 P.3d 832

Michael SULLIVAN, Plaintiff and Appellant,

v.CONTINENTAL CONSTRUCTION OF MONTANA, LLC, Defendant and Appellee.

No. DA 12–0489.

Supreme Court of Montana.

Submitted on Briefs Feb. 27, 2013.

Decided April 23, 2013.

For Appellant: Todd Shea, Shea Law Firm, P.L.L.C.; Bozeman, Montana.

For Appellee: Edmond E. Koester; Coleman, Yovanovich & Koester, P.A.; Naples, Florida, Dennis P. Clarke; Smith, Walsh, Clarke & Gregoire, PLLP; Great Falls, Montana.

Justice BRIAN MORRIS delivered the Opinion of the Court.

[370 Mont. 9]¶ 1 Michael Sullivan (Sullivan) filed a wrongful discharge action in the Eighteenth Judicial District, Gallatin County. The District Court granted summary judgment in favor of Continental Construction of Montana, LLC (Continental Construction). Sullivan appeals. We affirm.

¶ 2 Sullivan presents the following issues on appeal:

¶ 3 Whether the District Court properly concluded that Continental Construction had good cause to terminate Sullivan's employment?

¶ 4 Whether Continental Construction improperly considered hearsay evidence in deciding to terminate Sullivan's employment?

¶ 5 Whether the District Court improperly considered hearsay evidence in concluding that Continental Construction had good cause to terminate Sullivan's employment?

¶ 6 Whether the District Court properly concluded that Continental Construction did not violate the provisions of its employee handbook when it terminated Sullivan's employment?

PROCEDURAL AND FACTUAL BACKGROUND

¶ 7 Continental Construction operates a construction company from its headquarters in Florida. Continental Construction hired Sullivan as a construction site supervisor in April 2008. Sullivan directly supervised many of Continental Construction's employees in Montana. Sullivan also worked directly with many of Continental Construction's subcontractors and clients.

¶ 8 Sullivan left Montana on a scheduled vacation on October 21, 2010. John Cecil (Cecil), the Vice President of Construction for Continental Construction, travelled to Montana from Florida to replace Sullivan while Sullivan was on vacation. A group of Continental Construction employees approached Cecil that same day. The employees informed Cecil that they were unhappy with Sullivan as a supervisor. Cecil understood that these employees were threatening to quit unless Continental Construction immediately terminated Sullivan's position as their supervisor.

¶ 9 Cecil called Peg Wilson (Wilson), Continental Construction's office manager in Florida, to inform her of the employees' dissatisfaction with Sullivan. Wilson instructed Cecil to interview each of the employees individually about their experiences with Sullivan. John Wallace (Wallace), the administrator for Continental Construction in Montana, helped Cecil conduct these interviews the following day, on October 22, 2010.

¶ 10 These interviews revealed that many employees felt that Sullivan routinely made demeaning and derogatory comments about Continental Construction's management to both employees and non-employees. Sullivan also made derogatory and demeaning comments to employees and subcontractors about their work. Several employees reported that Sullivan often showed up late to work and would disappear for extended periods of time during the working shift. Many employees believed that Sullivan negatively affected employee morale.

¶ 11 Wallace e-mailed to Wilson copies of his notes from the employee interviews that same day. Wilson shared the notes with James Murphy (Murphy), the sole owner and president of Continental Construction, and Michael Kluck (Kluck), a Continental Construction supervisor in Florida. Wilson, Murphy, and Kluck determined that Sullivan's conduct did not meet the standards for Continental Construction supervisors. Wilson, Murphy, and Kluck decided to terminate Sullivan's employment immediately.

¶ 12 Continental Construction contacted Sullivan by telephone on October 26, 2010, to notify him that his employment had been terminated. Continental Construction provided Sullivan with a letter that set forth the reasons for his discharge. The letter stated that Sullivan had been discharged for treating employees and subcontractors in a demeaning manner; for having frequent unexplained absences from work; for speaking to others in a derogatory manner about customers and employees; and for behaving in a manner that did not meet the standards of Continental Construction.

¶ 13 Sullivan filed an action that alleged that Continental Construction had violated the Montana Wrongful Discharge from Employment Act (WDEA), §§ 39–2–901 to 39–2–915, MCA. Continental Construction defended on the basis that it had terminated Sullivan's employment for a valid business reason. Sullivan and Continental Construction filed cross-motions for summary judgment. The District Court granted Continental Construction's motion for summary judgment. Sullivan appeals.

STANDARD OF REVIEW

¶ 14 We review de novo a district court's grant of summary judgment. McConkey v. Flathead Elec. Coop., 2005 MT 334, ¶ 19, 330 Mont. 48, 125 P.3d 1121. We apply the same method of evaluation applied by the district court. McConkey, ¶ 19. Summary judgment is proper if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. McConkey, ¶ 19. The party seeking summary judgment possesses the burden of establishing a complete absence of any genuine issues of material fact. McConkey, ¶ 19. Once the moving party has met its burden, the opposing party must present material and substantial evidence, rather than mere conclusory or speculative statements, to raise a genuine issue of material fact. McConkey, ¶ 19.

DISCUSSION

¶ 15 Sullivan argues that he raised genuine issues of material fact to suggest that Continental Construction violated WDEA when it terminated Sullivan. Sullivan first argues that he raised genuine issues of material fact to demonstrate that Continental Construction had discharged him without good cause, in violation of § 39–2–904(1)(b), MCA. Sullivan claims that the District Court improperly relied upon hearsay evidence in finding that Continental Construction possessed good cause. Sullivan further argues that he raised genuine issues of material fact to demonstrate that Continental Construction had not followed the provisions of its employee handbook when it terminated his employment, in violation of § 39–2–904(1)(c), MCA.

¶ 16 Whether the District Court properly concluded that Continental Construction had good cause to terminate Sullivan's employment?

¶ 17 A discharge is wrongful if no good cause exists for the termination. Section 39–2–904(1)(b), MCA. Good cause includes a legitimate business reason. A legitimate business reason involves “a reason that is neither false, whimsical, arbitrary or capricious and it must have some logical relationship to the needs of the business.” McConkey, ¶ 26 (quoting Buck v. Billings Mont. Chevrolet, Inc., 248 Mont. 276, 281–82, 811 P.2d 537, 540).

¶ 18 This Court has stressed the importance of the “right of an employer to exercise discretion” over whom “it will employ and keep in employment.” McConkey, ¶ 26 (quoting Buck, 248 Mont. at 282, 811 P.2d at 540). We afford employers the greatest discretion where an employee occupies a “sensitive” managerial position and exercises “broad discretion” in his job duties. McConkey, ¶ 26. We have emphasized that a court should not become involved in the day-to-day employment decisions of a business regarding its management. McConkey, ¶ 26 (quoting Buck, 248 Mont. at 282, 811 P.2d at 541).

¶ 19 This Court considered an employer's desire to hire a trusted manager in Buck. Jim Buck (Buck) served as general manager at a Chevrolet dealership. Buck, 248 Mont. at 279, 811 P.2d at 539. F.S. Enterprises purchased the dealership and promptly terminated Buck's employment. Buck, 248 Mont. at 280, 811 P.2d at 539. F.S. Enterprises did not allege that Buck had engaged in any wrongful conduct that merited termination. In fact, Buck had been an exemplary employee. Buck, 248 Mont. at 279, 811 P.2d at 539. F.S. Enterprises nevertheless replaced Buck as general manager with a longtime employee of F.S. Enterprises.

¶ 20 The controlling stockholder of F.S. Enterprises lived in Louisiana. He wanted a long-term employee whom he trusted to manage his new investment in Montana. Buck, 248 Mont. at 282, 811 P.2d at 541. This Court recognized that it would be “against common sense and rationality” to force F.S. Enterprises to “retain someone who it did not know or perhaps even trust to manage a large dollar investment.” Buck, 248 Mont. at 282–83, 811 P.2d at 541. This Court agreed that F.S. Enterprises possessed a legitimate business reason to terminate Buck. Buck, 248 Mont. at 283, 811 P.2d at 541.

¶ 21 The Court cautioned, however, that its determination applied only to employees who “occupy sensitive managerial or confidential positions” that “require the exercise of broad discretion.” Buck, 248 Mont. at 283, 811 P.2d at 541. A company's interest in “running its business as it sees fit” would not apply to a decision to terminate a lower echelon employee. Buck, 248 Mont. at 283, 811 P.2d at 541.

¶ 22 This Court considered again in McConkey a firm's interest in employing a manager whom it could trust. Warren McConkey (McConkey) served as the general manager of Flathead Electric Cooperative (FEC). McConkey, ¶ 8. McConkey convinced FEC to acquire another utility. McConkey, ¶ 9. FEC's debt to equity ratio fell to the low single digits after FEC's acquisition of the other utility. McConkey, ¶ 27. FEC also substantially increased its electricity rates, including 6.9% in 2000, 29% in April 2001, and 12.5% in October 2001. McConkey, ¶ 11. The FEC Board of Trustees voted unanimously in February 2002 to terminate McConkey's employment as the general manager. McConkey, ¶ 14.

¶ 23 This Court determined that FEC possessed a legitimate business...