Tacket v. General Motors Corp. Delco Remy Div., IP 89 162-C.

• Decision Date: 26 February 1993
• Docket Number: No. IP 89 162-C.,IP 89 162-C.
• Citation: 818 F. Supp. 1243
• Parties: Thomas J. TACKET, Plaintiff, v. GENERAL MOTORS CORPORATION DELCO REMY DIVISION, Defendant.
• Court: U.S. District Court — Southern District of Indiana

818 F. Supp. 1243

Thomas J. TACKET, Plaintiff, v. GENERAL MOTORS CORPORATION DELCO REMY DIVISION, Defendant.

No. IP 89 162-C.

United States District Court, S.D. Indiana, Indianapolis Division.

February 26, 1993.

Frank B. Harshey, Merriman & Harshey, Indianapolis, IN, for plaintiff.

Herbert C. Snyder, Jr., Barnes & Thornburg, Fort Wayne, IN, for defendant.

ENTRY

BARKER, District Judge.

This matter is before the Court to address the defendant's motion for partial summary judgment. That motion is fully briefed, and based on a review of the parties' filings and the record, the motion for partial summary judgment is DENIED, in part.

I. Background

Thomas J. Tacket sues his former employer, the Delco Remy division of General Motors, for wrongful discharge in breach of an employment contract. The facts of his case, as reported in Tacket v. Delco Remy, Div. of General Motors Corp., 959 F.2d 650 (7th Cir.1992), are as follows:

Mr. Tacket was hired by General Motors on January 6, 1971, and was employed by Delco Remy (a division of General Motors) for approximately sixteen years. During his time at General Motors, Mr. Tacket rose to the level of senior project engineer. Mr. Tacket was employed pursuant to a written employment contract. Under the terms of the contract, Mr. Tacket's employment was extended "from month to month only on a calendar month basis." R.7 Ex. A. While still employed by General Motors, Mr. Tacket filed a defamation suit against his employers. On February 20, 1987, the district court granted General Motors' motion for a directed verdict in the defamation suit;¹ and on March 6, 1987, General Motors fired Mr. Tacket. In a letter dated March 9, 1987, General Motors stated to Mr. Tacket that he had been discharged because Mr. Tacket's conduct had "caused him to lose the trust, confidence and respect of his superiors and peers. He had made claims against his management which they believe are groundless. In support of his claims, he made statements about his superiors and peers that management believes were untrue. These circumstances make continuation of his employment not in the best interest of him or the Corporation." R.7 Ex. B. At the time of his discharge, Mr. Tacket was paid for five days of work in March and for twelve and one-half vacations days. Mr. Tacket's monthly salary at the time of his dismissal was $3,887.88.

Id. at 651.

II. Discussion

A. Punitive Damages

The defendant moves for partial summary judgment on Tacket's claim for punitive damages on the basis that "no public interest is involved in this case which would be served by the deterrent effect of punitive damages."² The defendant claims that "it will be difficult, if not impossible, for Tacket to show the existence of any public interest in whether employees are discharged from their employment in retaliation for suing their employers," citing Morgan Drive Away, Inc. v. Brant, 489 N.E.2d 933 (Ind.1986). In response, Tacket claims that awarding punitive damages would serve a strong public interest, that Indiana has a strong public policy interest in discouraging employers from terminating a worker in retaliation for that worker's exercise of a "state" right. Tacket explains that everyone in Indiana has a "remedy by due course of law" under the Indiana Constitution, and claims that although Indiana case law provides that only "statutorily conferred rights" may define public policy, he fails to see a reason to protect a state statutory right more than a state constitutional right.

When it comes to employment terminations, Indiana distinguishes between those who are employed "at will" and those who are employed pursuant to a contract for a definite period of time. Tacket, 959 F.2d at 652-53. An at will employee may be discharged for virtually any reason at any time,³see McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 392 (Ind.1988); Streckfus v. Gardenside Terrace Coop., Inc., 504 N.E.2d 273, 275 (Ind.1987), but a contract employee "may not be discharged before the expiration of such term except for cause or by mutual agreement unless the right to do so is reserved in the contract." Rochester Capital Leasing Corp. v. McCracken, 156 Ind.App. 128, 295 N.E.2d 375, 378 (Ct.App.1973).

Punitive damages are generally not recoverable when an employer breaches an employment contract. Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244 (Ind.1992). Until two weeks ago, punitive damages could be awarded in contract actions:

"whenever the elements of fraud, malice, gross negligence or oppression mingle in the controversy, and it can be shown that the public interest will be served by the deterrent effect of the punitive damages."

Bud Wolf Chevrolet, Inc. v. Robertson, 519 N.E.2d 135, 136-37 (Ind.1988) (citing Art Hill Ford, Inc. v. Callender, 423 N.E.2d 601, 602 (Ind.1981)). In other words, under Bud Wolf, to award punitive damages, this Court would have to conclude that under the known circumstances, the defendant "subjected other persons to probable injury, with an awareness of such impending danger and with heedless indifference of the consequences," that a serious wrong, "tortious in nature," has been committed, and that the public interest would be served by the deterrent effect of punitive damages. Bud Wolf Chevrolet, Inc. v. Robertson, 519 N.E.2d 135, 136-37 (Ind.1988).

Under Indiana law, broad statements establishing and defining public policy, or determinations regarding which of competing public policies should be given precedence, are left to the legislature. Rice v. Grant County Board of Comrs., 472 N.E.2d 213, 215 (Ind.Ct.App.1984). Indiana courts have found that there is a public interest in protecting at will employees who have filed suit based on the exercise of a statutory right or who have refused to breach a statutorily imposed duty. Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973); see note three. On the other hand, the Indiana Supreme Court has held that when an employee⁴ is fired in retaliation for filing a common law action, even if the right to bring that action was statutorily created, no public policy is implicated. Morgan Drive Away, 489 N.E.2d at 934, Call v. Scott Brass, Inc., 553 N.E.2d 1225, fn. 5 (Ind.Ct.App.1990) (interpreting Morgan Drive Away). Indiana has struck this balance in light of the competing public interests between preserving the "employment at will doctrine," Morgan Drive Away, Inc. v. Brant, 489 N.E.2d at 934, and protecting an employee who exercises a protected right, id., or complies with a statutory duty. McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390 (Ind.1988).⁵

A protracted public policy inquiry under Lawyers Title Ins. Corp. v. Pokraka and Bud Wolf Chevrolet, Inc. v. Robertson is no longer necessary, however. On February 11, 1993, the Indiana Supreme Court retreated from its previous position by holding that, in order to recover punitive damages for a breach of contract, evidence of tortious conduct, an independent tort, not merely "tort-like" conduct, is the prerequisite to an award of punitive damages. Miller Brewing Co. v. Best Beers of Bloomington, Inc., 608 N.E.2d 975 (Ind.1993). Whether a plaintiff seeking punitive damages for a breach of contract demonstrates "tort-like" conduct and whether public policy interests would be served by an award of punitive damages are now irrelevant inquiries; to recover punitive damages, "the plaintiff must plead and prove the existence of an independent tort of the kind for which Indiana law recognizes that punitive damages may be awarded." Id. at 984.

Opinions of this Court have consistently stated the general rule that punitive damages are not allowed in a breach of contract action. Lawyers Title Ins. Corp. v. Pokraka (1992), Ind., 595 N.E.2d 244, 250; Bud Wolf Chevrolet, Inc. v. Robertson (1988), Ind., 519 N.E.2d 135, 136; Travelers Indem. Co. v. Armstrong (1982), Ind., 442 N.E.2d 349, 362; Art Hill Ford, Inc. v. Callender (1981), Ind., 423 N.E.2d 601, 602; F.D. Borkholder Co., Inc. v. Sandock (1980), 274 Ind. 612, 616, 413 N.E.2d 567, 57- sic; Hibschman Pontiac, Inc. v. Batchelor (1977), 266 Ind. 310, 314, 362 N.E.2d 845, 847; Vernon Fire & Casualty Ins. Co. v. Sharp (1976), 264 Ind. 599, 607, 349 N.E.2d 173, 183. Such statements suggest that there are exceptions to this rule, but upon close examination of the opinions of this Court, we find that no exceptions have ever been applied. Today we hold that, in fact, no exception exists.

* * * * * *

A rule that requires establishment of an independent tort furthers the public interest in recognizing the existence of bona fide business disputes and separating them from breaches of contract achieved in a tortious manner.

* * * * * *

We hold that in order to recover punitive damages in a lawsuit founded upon a breach of contract, the plaintiff must plead and prove the existence of an independent tort of the kind for which Indiana law recognizes that punitive damages may be awarded.

Miller Brewing Co. v. Best Beers of Bloomington, Inc., 608 N.E.2d at 981-84 (Ind.1993).

Accordingly, to recover punitive damages in a breach of contract case, the plaintiff must plead and prove the existence of an independent tort of the kind for which Indiana law recognizes that punitive damages may be awarded. In other words, Indiana no longer recognizes (if it ever did) an exception to the general rule that punitive damages are not allowed for a breach of contract.

Tacket has failed to plead an independent tort of the kind for which Indiana law recognizes that punitive damages may be awarded. Although it is not clear that Tacket can so frame his action, since, as mentioned in footnote six, Indiana does not recognize the tort of intentional infliction of emotional distress in the contract setting, the Court will allow Tacket twenty (20) days to amend his complaint to plead an independent tort of the kind for which Indiana law allows for the recovery of...