Tatge v. Chambers & Owen, Inc.
| Decision Date | 19 June 1998 |
| Docket Number | No. 95-2928,95-2928 |
| Citation | 219 Wis.2d 99,579 N.W.2d 217 |
| Parties | , 14 IER Cases 129 Wayne G. TATGE, Plaintiff-Appellant-Cross-Respondent-Petitioner, v. CHAMBERS & OWEN, INC., Defendant-Respondent-Cross-Appellant. |
| Court | Wisconsin Supreme Court |
For the plaintiff-appellant-cross respondent petitioner there were briefs by Richard R. Grant and Consigny, Andrews, Hemming & Grant, S.C., Janesville and oral argument by Richard R. Grant.
For the defendant-respondent-cross appellant there was a brief by Fred Gants, Lauri D. Morris and Quarles & Brady, Madison and oral argument by Fred Gants.
This is a review of a published decision of the court of appeals, Tatge v. Chambers & Owen, Inc., 210 Wis.2d 51, 565 N.W.2d 150 (Ct.App.1997), which affirmed a judgment and an order of the Circuit Court for Rock County, James P. Daley, Judge. The circuit court granted summary judgment in favor of the defendant Chambers & Owen, Inc. (Chambers & Owen) and thereby dismissed the plaintiff Wayne Tatge's (Tatge) claim for wrongful discharge. The circuit court also entered a judgment granting Chambers & Owen's post-verdict motion to dismiss Tatge's claim for negligent misrepresentation.
¶2 There are two issues before us on review: (1) whether a cause of action for breach of an employment contract is actionable in tort for misrepresentation under Wisconsin law; and (2) whether the narrow cause of action for wrongful discharge established in Brockmeyer v. Dun & Bradstreet, 113 Wis.2d 561, 335 N.W.2d 834 (1983), encompasses the discharge of an at-will employee for failing to sign a non-disclosure and non-compete agreement. We hold that a breach of an employment contract is not actionable in tort. We also hold that a contract cause of action for wrongful discharge may not be maintained under Brockmeyer where an at-will employee is terminated for failing to sign a non-disclosure/non-compete agreement. Accordingly, we affirm the decision of the court of appeals.
¶3 The relevant facts are not in dispute. In 1981, Tatge became an employee of Chambers & Owen. In late 1990, Chambers & Owen issued an Employee Handbook to its employees. Tatge signed the Handbook receipt on December 18, 1990, whereby he acknowledged that his employment with Chambers & Owen was "at-will, terminable at any time by the company at its sole discretion with or without cause and with or without notice." The receipt further explained that "such employment is not contractual, and remains as such unless and until a written contract expressly authorized by the Board of Directors is entered into and executed in writing by me and Chambers & Owen, Inc...."
¶4 In early 1993, after several changes to Tatge's job duties and compensation arrangement, Chambers & Owen asked Tatge to sign a "Management Agreement" (the agreement). Paragraph 1 of the agreement contains a non-disclosure provision that states:
Employee recognizes and acknowledges that the customer data, programs, and business practices used or employed by Employer embody and involve the use of information of a confidential nature which represents an asset of substantial value. Employee will not, without prior authorization, during or after the term of employment with Employer, disclose such information to any person, firm, corporation, association, or other entity for any reason or purpose whatever.
¶5 Paragraph 2 of the agreement contains a covenant not to compete that provides:
Covenant Not to Compete. Employee shall not, for a period of six (6) months after termination of his/her employment with Employer for any reason whatsoever, with or without cause on behalf of him/herself or any other person, firm, corporation, association, or other entity, directly or indirectly, engage in, assist in, or be connected in any manner with the sale, distribution, procurement of products or knowledge of those functions competitive with those sold by Employer under this Agreement to any person, firm, corporation, association, or other entity located within the Employers [sic] geographic service area during the six (6) months prior to said termination.
¶6 Beginning in April 1993, Tatge expressed his objection to the agreement and discussed it with the company's president, John Owen (Owen). At trial, Tatge testified that he had asked Owen what would happen if Tatge refused to sign the agreement and that Owen replied, "Nothing." Tatge also discussed job security with Owen and testified that Owen told him his employment would be ongoing and terminable only for what amounted to good cause.
¶7 At a final meeting on April 5, 1993, after Tatge was given the weekend to "think it over," Tatge again stated that he would not sign the agreement. Tatge told Owen that he had more market value than his current compensation package provided for. Because Tatge would not sign the agreement, Chambers & Owen told Tatge that he would be terminated. That same day, Owen sent a letter to Tatge confirming his dismissal because he would not sign the agreement. The letter stated in pertinent part:
This letter is intended to confirm our conversation today.
As you know, we have requested our key employees to sign non-competitive agreements....
We have had different conversations on this issue. Today you informed me of your final decision not to sign the agreement. As a result, we are left with no alternative but to terminate your employment....
¶8 On April 27, 1994, Tatge commenced suit against Chambers & Owen claiming wrongful discharge, breach of contract and three forms of fraudulent misrepresentation, including negligent, strict liability and intentional misrepresentation.
¶9 Both parties moved for summary judgment. On February 17, 1995, the circuit court denied Tatge's motion for partial summary judgment, and dismissed his claim for wrongful discharge. The circuit court reasoned that the agreement did not violate Wisconsin's restrictive covenant statute, Wis. Stat. § 103.465 (1991-92). 1 The circuit court also denied Chambers & Owen's motion to dismiss Tatge's breach of contract and misrepresentation claims, concluding that the latter should be tried only as to the alleged statements that Tatge's employment would be ongoing and that he could only be fired for cause.
¶10 The subsequent trial was bifurcated. At the end of the first phase, the jury found insufficient evidence of a contract other than at-will employment, but determined that Chambers & Owen made a representation of fact that Tatge was entitled to ongoing employment and termination only for cause. During the second phase, the circuit court granted Chambers & Owen's motion to dismiss both the intentional and strict liability misrepresentation claims. The circuit court allowed the negligent misrepresentation claim to proceed to trial.
¶11 The jury found for Tatge on the negligent misrepresentation claim, assessed his damages at $250,000 and found him 40% contributorily negligent. Upon Chambers & Owen's post-verdict motions for judgment notwithstanding the verdict, to change answers and for directed verdict, the circuit court dismissed Tatge's negligent misrepresentation claim. Tatge appealed.
¶12 The court of appeals affirmed the circuit court's order and judgment by concluding: (1) that an employer's discharge of an employee for failing to sign a non-disclosure/non-compete agreement does not give rise to a wrongful discharge claim; and (2) that a breach of an employment contract is not actionable in tort for misrepresentation. On September 18, 1997, we granted Tatge's petition for review.
¶13 The first issue we consider is whether a cause of action for breach of an employment contract is actionable in tort for misrepresentation under Wisconsin law. This presents a question of law which we review de novo, without deference to the conclusions of the circuit court or the court of appeals. See Kara B. v. Dane County, 205 Wis.2d 140, 145-46, 555 N.W.2d 630 (1996).
¶14 Before considering the viability of a misrepresentation claim in a breach of contract action, we first shed light on the jury's determination that Tatge's employment contract was a contract for at-will employment only. As we have stated, the jury found insufficient evidence that Chambers & Owen had entered into a contract with Tatge to provide him with ongoing employment, terminable only for good cause. 2
¶15 Despite the jury's finding, the circuit court allowed the misrepresentation claim to proceed to trial. Then, at the hearing for the post-verdict motions, the circuit court, relying on Brockmeyer, stated:
The jury found that there was no contract. That was the first verdict found that there was no contract for ongoing employment. There was no contract for termination. And based upon that, I believe that ends it as it relates to the termination. As a result, I have, as indicated, dismissed the cause of action.
Record on Appeal at 94:6 (Hearing Transcript August 29, 1995).
¶16 Rather than challenge the jury's verdict that he was an employee-at-will, Tatge contests the circuit court's post-verdict grant of judgment notwithstanding the verdict. Accordingly, Tatge argues that misrepresentation by an employer is a valid tort in Wisconsin as presented to and determined by the jury. More specifically, Tatge argues that Chambers & Owen misrepresented that his employment would be ongoing and terminable only for cause, and that Chambers & Owen thereafter terminated him without cause. Tatge then asks this court to address his misrepresentation claim under tort law--not as a wrongful discharge or breach of contract claim under contract law. He advocates this approach by arguing that employers have an independent duty to their employees to refrain from misrepresentation.
¶17 We decline to give our blessing to such an irreverent marriage of tort and contract law. As we explain below, the circuit court was correct to grant Chambers & Owen's motion for judgment...
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