Trail v. Boys & Girls Clubs of N.W. in, 45S03-0504-CV-00132.

• Citation: 845 N.E.2d 130
• Case Date: April 12, 2006
• Court: Supreme Court of Indiana

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845 N.E.2d 130 Eddie TRAIL and Katrinka Trail, Appellants (Plaintiffs below),
v.
BOYS AND GIRLS CLUBS OF NORTHWEST INDIANA, Donald Weiss, Bonnie Coleman, John Diederich, Paul Bailey, Edward Williams, Fran Taylor, James Greiner, Raymond Morris, and Bonnie Fine, Appellees (Defendants below). No. 45S03-0504-CV-00132. Supreme Court of Indiana. April 12, 2006.

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Nathaniel Ruff, Merrillville, for Appellants.

Paul J. Peralta, D. Lucetta Pope, South Bend, for Appellee.

SHEPARD, Chief Justice.

Subsequent to a parting of ways with the Boys and Girls Clubs of Northwest Indiana, former executive director Eddie Trail sued the organization and a number of its board members. He alleged breach of contract, defamation, and tortious interference with an employment at will relationship. Because Trail failed to plead sufficient operative facts, and because certain of his claims have no basis in law, we conclude that the trial court was correct to dismiss.

Facts and Procedural History

This case arises from a motion to dismiss, so the only facts available are those alleged in the complaint. The Boys and Girls Club of Northwest Indiana is an Indiana not-for-profit corporation. Eddie Trail worked with the Club in various capacities for twenty-three years, with the last six as Executive Director. Trail alleges that during his service with the Club, he became a respected and valued member of the organization, earning performance raises and receiving recognition for his work as an Executive Director.

Trail's employment contract with the Club expired on December 31, 2001, and early signs seemed favorable for an extension. Board member John Diederich told Trail in February 2001 that the Executive Committee had voted unanimously to retain him as Executive Director. After the contract expired, board president Donald Weiss informed him that members of the Executive Committee had voted to increase his salary.

Trail alleges that Weiss, Paul Bailey, Bonnie Coleman, and Fran Taylor, who were members of the Executive Committee, were "unhappy for personal reasons with the retention of Trail ... [and] were upset with [him] because he refused to defer to them on those initiatives and actions that properly were [his] duties as Executive Director." (Compl.¶¶ 4, 12.) He says these director-defendants "contrived a study of the Club" the purpose of which, Trail alleges, was "to discredit Trail and justify his termination." (Compl.¶ 13.) To achieve that end, Trail alleged that the defendants created a biased report that

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cast him in a negative light. (Compl.¶¶ 14, 16.) Trail says he is uncertain exactly how, or even if, the defendants used the report to remove him from his position, but he alleges that defendant Paul Bailey told Trail the Board of Directors had voted unanimously to terminate him, and then told both the Board of Directors, and the media, that Trail had resigned. (Compl. ¶¶ 18, 20, 21.)¹

Trail says that although the defendants have "released to a few individuals the alleged contents of parts of the report highly negative about Trail," they have neither released the report in its entirety to anyone, nor discussed the contents of the report openly. (Compl. ¶¶ 22-23.) Trail claims that this silence has had a negative impact on his employment since the defendants know that this silence "would be taken erroneously to mean that Trail had been found to have committed grave personal improprieties with the children [the Boys and Girls Club] serve[s] or financial misdeeds such as embezzlement." (Compl.¶ 23.) As proof of this negative impact, Trail alleges that he has applied for several openings, but that in response he has been treated as a "pariah" and received negative responses from prospective employers, which he states "would have been inconceivable" before his termination. (Compl.¶¶ 24, 25.)

Based on these allegations, Trail sought relief under several theories, including: breach of implied terms of contract, tortious interference with Trail's contract with the Club, and a claim for defamation based on the contents of the report. Trail's wife Katrinka Trail sought relief for loss of consortium.

The defendants responded by moving to dismiss under Rule 12(B)(6), failure to state a claim. After the parties filed several affidavits, exhibits, and briefs, the trial court dismissed the Trails' claims.

The Court of Appeals concluded that the trial court had properly dismissed Trail's breach of contract claim, but had wrongly dismissed the claims of tortious interference against the Executive Committee members in their unofficial capacity, defamation, and loss of consortium. Trail v. Boys and Girls Club of N.W. Indiana, 811 N.E.2d 830, 842 (Ind.Ct.App.2004) vacated. We grant transfer and affirm the trial court.

Standard of Review

A motion to dismiss under Rule 12(B)(6) tests the legal sufficiency of a complaint: that is, whether the allegations in the complaint establish any set of circumstances under which a plaintiff would be entitled to relief. See Kitco, Inc. v. Corp. for Gen. Trade, 706 N.E.2d 581 (Ind. Ct.App.1999). Thus, while we do not test the sufficiency of the facts alleged with regards to their adequacy to provide recovery, we do test their sufficiency with regards to whether or not they have stated some factual scenario in which a legally actionable injury has occurred.

A court should "accept[] as true the facts alleged in the complaint," Minks v. Pina, 709 N.E.2d 379, 381 (Ind.Ct.App. 1999), and should not only "consider the pleadings in the light most favorable to the plaintiff," but also "draw every reasonable inference in favor of [the non-moving] party." Newman v. Deiter, 702 N.E.2d 1093, 1097 (Ind.Ct.App.1998). However, a court need not accept as true "allegations that are contradicted by other allegations or exhibits attached to or incorporated in the pleading." Morgan Asset Holding Corp.

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v. CoBank, ACB, 736 N.E.2d 1268, 1271 (Ind.Ct.App.2000) (citations omitted).

Indiana Trial Rule 8(A), this state's notice pleading provision, requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Although the plaintiff need not set out in precise detail the facts upon which the claim is based, she must still plead the operative facts necessary to set forth an actionable claim. Miller v. Mem. Hosp. of South Bend, Inc., 679 N.E.2d 1329 (Ind.1997). Under notice pleading, we review the granting of a motion to dismiss for failure to state a claim under a stringent standard, and affirm the trial court's grant of the motion only when it is "apparent that the facts alleged in the challenged pleading are incapable of supporting relief under any set of circumstances." McQueen v. Fayette County Sch. Corp., 711 N.E.2d 62, 65 (Ind.Ct.App. 1999).

I. Claims for Breach of Contract

Trail contends that the trial court erred in dismissing his claim for breach of the contract that expired by its own terms on December 31, 2001. The Court of Appeals rejected his argument, concluding that Trail's complaint did not provide any facts or legal authority "capable of supporting a breach of contract action against the Club." Trail, 811 N.E.2d at 839, vacated. It observed that after the expiration of Trail's contract, he became "an at-will employee subject to termination at any time with or without cause." Id. at 837. The Court of Appeals concluded that Trail had not alleged any facts that would demonstrate any oral arrangement promising job security. Id. at 837-39. We summarily affirm the Court of Appeals' holding on this point. Ind.App. Rule 58(A). Consequently, like the Court of Appeals, we will assess Trail's other claims in light of his position as an employee at will.

Employment at will is an American doctrine, one that freed both employer and employee from the strictures of the English common law. English law presumed that employment contracts of unspecified duration were to last for a year. This presumption imposed reciprocal legal duties: the duty to provide employment for a year, and the duty to perform service for a year. It thus ensured, as William Story explained, that "both master and servant may have the benefit of all the seasons."² With few exceptions, the modern American doctrine permits both employers and employees to terminate an employment relationship for any reason and on a timetable of their choosing, without being responsible financially to the other. See, e.g., Jarboe v. Landmark Cmty. Newspapers of Indiana, Inc., 644 N.E.2d 118, 121 (Ind.1994); Bochnowski v. Peoples Fed. Sav. & Loan Ass'n, 571 N.E.2d 282, 284 (Ind.1991). But see, McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 392-94

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(Ind.1988)(employee at will may recover for wrongful discharge if fired for refusing to perform illegal act).

II. Defamation Claim

The trial court dismissed the defamation claim after concluding that the complaint "provides no evidence of a communication with defamatory imputation, malice, or special damages resulting from the defamation." (Order, Appellants' App. at 15.)

To establish a claim of defamation, a plaintiff must prove the existence of "a communication with defamatory imputation, malice, publication, and damages." Davidson v. Perron, 716 N.E.2d 29, 37 (Ind.Ct.App.1999). Any statement actionable for defamation must not only be defamatory in nature, but false. Doe v. Methodist Hospital, 690 N.E.2d 681, 687 (Ind.1997) (citing Restatement (Second) of Torts § 558 (1977)).

The first communication Trail appears to treat as defamatory is the apparent transmission of the report by the individual defendants to other directors or officers of the Boys and Girls Club of Northwest Indiana. (Br. Appellants at 19).

The appellees argue that Trail failed to establish any of the elements of a claim for defamation. Not so. Trail has sufficiently pled the publication...