No. 94-528

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

DEAN HOWARD,

Plaintiff and Appellant,

v.

CONLIN FURNITURE NO. 2, INC.,

a Montana corporation,

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and for the County of Yellowstone,

The Honorable G. Todd Baugh, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Michael G. Eiselein Lynaugh,

Eiselein & Eakin, Billings,

Fitzgerald,

Montana

For Respondent:

T. Thomas Singer, Moulton, Bellingham

& Mather, Billings, Montana

Filed:

Submitted on Briefs: March 30, 1995

Decided: August 21, 1995
Justice Terry N. Trieweiler delivered the opinion of the Court.

The plaintiff, Dean Howard, filed a complaint and an amended

complaint in the District Court for the Thirteenth Judicial

District in Yellowstone County in which he alleged that he had been

wrongfully discharged from his employment by the defendant, Conlin

Furniture No. 2, Inc. (Conlin). In response to Conlin's motion for

summary judgment, the District Court concluded that Howard failed

to raise genuine issues of material fact, and that Conlin was

entitled to judgment dismissing Howard's complaint as a matter of

law. Howard appeals from the District Court's order and judgment.

We reverse the judgment of the District Court.

The issue on appeal is whether the District Court erred when

it granted Conlin's motion for summary judgment.

FACTUAL BACKGROUND

Paul Gunville is the president of 16 Conlin furniture stores,

including stores in Montana, each of which is individually

incorporated. In 1990, Gunville recruited Dean Howard from Baers

Furniture to work for Conlin's store in Billings. Howard began to

work as Conlin's manager on September 4, 1990, and was paid a

salary in the amount of $50,000 annually, plus a commission. On

May 4, 1992, Gunville evaluated Howard's performance as manager to

that date by concluding that: "Dean has brought strength in

leadership and great management tools with an underlying desire to

be and teach success. Dean will only get better as his experience

in mdse. and general furniture business increases." He concluded

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by stating that Howard's potential for advancement in the company

is "outstanding."

In late 1992, Gunville hired Robert Anderson from Rhodes

Furniture Store in Atlanta, Georgia, to work as a district

supervisor for four of his stores in Montana. Anderson began work

in Billings in January 1993.

Anderson took over Gunville's role as Howard's supervisor.

Before Anderson left Atlanta, Doug Sahr, who also worked for

Rhodes, asked Anderson to keep Sahr in mind for positions that

might become available.

After Anderson began work for Conlin, he telephoned Sahr to

determine whether he was interested in a position as a manager.

Anderson testified that he may have telephoned Sahr in March 1993.

Howard produced telephone records that indicated several telephone

calls were made from the Conlin No. 2 store in Billings to Sahr's

home telephone number, as well as to Rhodes Furniture Stores in

Atlanta, in February and March 1993. During that same month,

Anderson began to record written complaints regarding Howard's

performance.

On May 20, 1993, Howard was terminated from his position as a

store manager and then offered a sales position at a salary of

$1000 per month, plus a commission opportunity. He was not first

advised of the areas in which he was deficient and given an

opportunity to improve his performance. Sahr replaced Howard

shortly after Howard was terminated as manager.

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on June 28, 1994, Conlin moved the District Court to dismiss

Howard's complaint by summary judgment for the reasons that he was

neither actually nor constructively discharged and that there were

legitimate business reasons for his demotion. The District Court

agreed. It held that Howard's rejection of the sales job was, at

best, a constructive discharge, but that Howard failed to offer

evidence that working conditions would have been intolerable. It

also held that Conlin offered evidence of reasonable job related

grounds for demotion, and that Howard's alleged reasons were

conclusory and speculative.

DISCUSSION

Did the District Court err when it dismissed Howard's

complaint by summary judgment?

This Court reviews an order granting summary judgment based on

the same criteria applied by the district court pursuant to

Rule 56, M.R.Civ.P. Hagen v. Dow ChemicalCo. (1993), 261 Mont. 487,

491, 863 P.2d 413, 416 (citing Mnniev. CityofRoundup (1993), 257 Mont.

429, 431, 849 P.2d 212, 214). Summary judgment is an extreme

remedy and should not be granted if there is any genuine issue of

material fact; a summary judgment procedure should never be

substituted for a trial if a material factual controversy exists.

Hagen, 863 P.2d at 416 (citing Rule 56(c), M.R.Civ.P.; Cereckv.

Albertson‘s, Inc. (1981), 195 Mont. 409, 637 P.2d 509; Reaves v. Reinbold

(1980), 189 Mont. 284, 615 P.2d 896).

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A party seeking summary judgment has the burden of

establishing a complete absence of any genuine factual issues.

Hagen, 863 P.Zd at 416 (citing D'Agostinov. ~wunson (1990), 240 Mont.

435, 442, 784 P.2d 919, 924). In light of the pleadings and the

evidence before the court, there must be no material issue of fact

remaining which would entitle a nonmoving party to recover. Hagen,

863 P.2d at 416 (citing MarriageofHoyt (1985), 215 Mont. 449, 454,

698 P.2d 418, 421). Once the movant has presented evidence to

support his or her motion, the party opposing summary judgment must

present material and substantial evidence, rather than mere

conclusory or speculative statements, to raise a genuine issue of

material fact. Hagen, 863 P.2d at 416 (citing B.M by Berger v. State

(1985) I 215 Mont. 175, 179, 698 P.2d 399, 401). Finally, all

reasonable inferences that might be drawn from the offered evidence

should be drawn in favor of the party who opposed summary judgment.

Hagen, 863 P.2d at 416 (citing Cereck, 637 P.2d at 511).

In its order, the District Court recognized that Howard

alleged that he was discharged, or constructively discharged, from

his employment. However, in its discussion, the court stated that

the issue was whether Conlin created an intolerable employment

situation within the meaning of 5 39-2-903 (1), MCA, when Conlin

demoted Howard. The District Court concluded that Howard did not

raise genuine issues of fact which would preclude summary judgment

because Howard's support for the notion that his demotion was a

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pretext to hire Sahr consisted only of conclusory and speculative

statements. Because Conlin supported its reasons for demoting

Howard with several job-related incidents, the court concluded that

the demotion could be based on reasonable job-related grounds and

a logical relationship to the needs of the business. The court

also stated that it considered Howard's claim for actual discharge

to be marginal, at best, and focused its analysis on Howard's claim

for constructive discharge.

Howard argues that the District Court erred because it focused

on constructive discharge. Howard claims that Anderson admitted he

was discharged from his position as store manager, which is not the

equivalent of a voluntary termination because of an intolerable

working condition.

Conlin contends that Howard was demoted, not discharged

Conlin also claims that we should affirm the District Court's

decision because this Court has upheld a discharge motivated by

legitimate business reasons when the plaintiff presents only

conclusory allegations. Finstad v. Montana Power Co. ( 19 9 0 ) , 2 4 1 Mont

10, 29, 785 P.2d 1372, 1383.

Section 39-2-904(2), WA, states that a discharge is wrongful

only if: "the discharge was not for good cause and the employee had

completed the employer's probationary period of employment . . .I(

The term "discharge" includes

constructive discharge . . . and any other termination of

employment, including resignation, elimination of the

job, layoff for lack of work, failure to recall or

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rehire, and any other cutback in the number of employees

for a legitimate business reason.

Section 39-2-903(2), MCA. "Good cause" is defined as "reasonable

job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer's operation,

or other legitimate business reason." Section 39-2-903(5), MCA.

The first sub-issue we must decide is whether Howard was

discharged, or merely demoted, following which he resigned. In

that regard, the statement made by Anderson to the Billings Job

Service in response to Howard's application for benefits, speaks

for itself. He stated:

(1) Dean Howard was discharged from the position of

store manager on the date noted.

(2) At that time he was offered a sales position at

Conlin's. That offer was declined by Mr. Howard on

5/25/93.

This case does not involve a lateral transfer, nor a minor

change in job description. This case involves absolute and final

termination from a managerial position, followed by an offer of

employment in a functionally different, and substantially inferior,

position with the same employer. To hold, as Conlin suggests, that

termination of employment in a position that pays over $50,000 per

year, and subsequently offering a position which pays less than

25 percent of that amount, is not "a termination of employment"

would ignore the plain language of the Act and allow circumvention

of the Act's damage provisions which are based on wages at the time

of termination. Section 39-2-905, MCA.
Howard was informed that he was being terminated as Conlin's

manager. He was then offered a subordinate position among the

sales staff he previously managed. His refusal to accept an offer

of a lesser position, at best, affects his duty to mitigate his

damages. We conclude that when Howard was terminated from his

managerial position, he was discharged from employment within the

meaning of 5 39-Z-903(2), MCA, of Montana's Wrongful Discharge From

Employment Act.

The second sub-issue is whether Howard's termination was for

good cause as a matter of law, or whether there was a factual issue

to be decided.

The only formal evaluation of Howard's work as manager of the

Conlin's Furniture Store was the evaluation done by the company's

president on May 4, 1992. In that evaluation, Howard was given the

highest possible rating for interest in his work, self-confidence,

personal characteristics, personal relations, leadership, and

customer service. With regard to customer service, his employer

wrote "Dean writes the book here!". He was given above average

ratings in practically every other area considered. As recently as

March 4, 1993, two and one-half months before his termination, his

direct supervisor, Anderson, testified that no thought had been

given to his termination.

However, Anderson testified that from January 1993 until

Howard's termination as manager, the following events occurred

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which demonstrated Howard's unsatisfactory performance of his job

duties:

1 . The warehouse he was responsible for was found to be in

poor condition and disorderly;

2 . He credited his account at the store with the value of a

rug he had brought to the store from his own home;

3 . He was absent an excessive amount of time;

4 . He made a personnel decision regarding Connie Smith which

caused dissatisfaction from other employees and ultimate payment to

Smith of two weeks severance pay;

5 . He gave inaccurate information to a customer who then,

based on that information, traveled a long distance to the store

without being able to accomplish the purpose of her trip;

6 . He loaned out a company vehicle which was damaged while

being used by a third party;

7 . A letter from a disgruntled employee complained of

management performance; and

8 . A claim for unpaid commissions was made by a salesperson

after her termination from employment at Conlin.

In response to those allegations, Howard testified by

deposition that:

1 . He had trouble controlling the warehouse because its

employees were underpaid and dissatisfied;

2 . His Karastan rug was placed on the floor of the store by

consignment openly and apparently consistent with past practices;

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3 . His absences from the store were related to store

business;

4 . His personnel decision which led to discontent among

other employees was a good faith effort to retain an employee who

threatened to go to work for a competitor;

5 . The misinformation he gave to a long-distance customer

was based on information obtained from an inventory sheet which was

supposed to be current;

6 . When he loaned the company vehicle for use by a third

party, he acted consistent with the company's policy of assisting

others for the purpose of public relations;

7. The critical letter from a former employee related to

management in general and not him in particular; and

8 . The commission payments which were the subject of a claim

by a former employee were withheld with the approval of Anderson.

We conclude that these claims, denials, and counterclaims

raise a factual issue as to whether Howard was terminated for good

cause within the meaning of § 39-2-903(5), MCA, of the Wrongful

Discharge From Employment Act.

We held in Guevtinv. Moody’sMarket (19941, 265 Mont. 61, 874 P.2d

710, that where an employee testified that she had been hard

working and loyal and had not received previous complaints from her

employer about her management capability; and where she denied that

the reasons given by her employer for her termination were correct;

there was an issue of fact regarding whether she was terminated for

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good cause. Likewise, here we conclude that reasonable persons

could differ regarding inferences to be drawn from the deposition

testimony and exhibits.

Therefore, the judgment of the District Court which dismissed

plaintiff's amended complaint is reversed and this case is remanded

for further proceedings consistent with this opinion.

We concur:

Chief Justice

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Justice Karla M. Gray, dissenting.

I respectfully dissent from the Court's opinion. The Court

resolves.the issue before it on the basis of its conclusion that a

demotion can be a "discharge," as opposed to a "constructive

discharge," under 5 39-Z-903(2), MCA. I cannot agree.

Section 39-2-903(2), MCA, provides in pertinent part:

"Discharge" includes . . . any other termination of

employment, including resignation, elimination of the

job, layoff for lack of work, failure to recall or

rehire, and any other cutback in the number of employees

for a legitimate business reason.

The plain meaning of the term "termination," as the word is used in

the statute, is "ending;" thus, a "termination of employment" is an

ending of employment. The other terms used in 5 39-2-903(2), MCA,

also connote an ending of employment. In each situation

referenced--resignation, elimination of the job, layoff, and the

like--the person's employment has ended. Therefore, I conclude

that the statute means what it so clearly says: that a discharge

means an ending of employment, nothing more and nothing less.

The Court equates a demotion, or a termination from a

particular position with an offer of a different position, to a

"termination of employment." The plain language of the statute

does not support such a conclusion. Nor does the Court offer any

authority or legal analysis which might support its conclusion.

The reason is clear--analysis would be the undoing of the result

the Court desires to reach in this regard.

Howard contends that two cases from the Michigan Court of

Appeals support his position that the term "termination of

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employment" includes the term "demotion.'1 The Court wisely does

not rely on these cases, as neither supports its conclusion.

In the wrongful discharge case of Richards v. Detroit Free

Press (Mich. App. 1988), 433 N.W.2d 320, the Michigan appellate

court states flatly: "A demotion from one job to a lesser job is

a discharge from the first job, and a demotion will support a

wrongful dischaxge claim." Richards, 433 N.W.2d at 322. There are

several insurmountable problems with attempting to use Richards as

authority in the case presently before us. First, the Michigan

court does not quote any controlling wrongful discharge statute

such as the one at issue here; thus, no basis is provided on which

we properly could reach the same conclusion. Second, the case to

which the Michigan court cites in support of its statement,

Sepanske v. Bendix Corporation (Mich. App. 1985), 384 N.W.2d 54,

was inapposite to the Richards case. Seoanske was a breach of

employment contract case, not a wrongful discharge case. Senanske,

384 N.W.2d at 58-59. Moreover, the statement drawn from Senanske

in Richards simply does not appear, either directly or indirectly,

in Seuanske. Finally, and most importantly, the Michigan Supreme

Court remanded Richards to the Michigan Court of Appeals for

reconsideration. Richards v. Detroit Free Press (Mich. 1989), 448

N.W.2d 351. Thus, the Richards decision is of no force and effect.

The Court suggests that Anderson's statement to the Billings

Job Service "speaks for itself" with regard to the issue of whether

Howard was discharged, or merely was demoted and then resigned.

Anderson's statements that Howard was discharged from the position

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of store manager and offered a sales position on the same date do,

indeed, speak for themselves; they do not, however, speak to the

legal issue of whether a demotion is a "termination of employment"

under 5 39-Z-903(2), MCA.

I would affirm the District Court's determination that a

demotion is not a termination of employment and address the issue

of constructive discharge on which, in large part, the District

Court's summary judgment ruling was based. The Court having

avoided that issue altogether by its unsupported conclusion, there

is no point in my addressing it.

Chief Justice J.A. Turnage joins in the foregoing dissent of

Justice Karla M. Gray.

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Justice Fred J. Weber dissents as follows:

I dissent from the Court's opinion. In doing so, I join in

the dissent of Justice Gray.

In addition to the points made by Justice Gray, I point out

that the Wrongful Discharge From Employment Act, §§ 39-2-901 to

915, MCA, has additional pertinent provisions. Section 39-2-904,

MCA, sets forth the key elements of wrongful discharge as follows:

39-Z-904. Elements of wrongful discharge. A

discharge is wrongful only if:

i2j the discharge was not for good cause . .

As a result of the foregoing statute, we must first determine if a

discharge was not for good cause. Good cause is defined as follows

in § 39-2-903, MCA:

(5) "Good cause" means reasonable job-related

grounds for dismissal based on a failure to

satisfactorily perform job duties, disruption of the

employer's operation, or other legitimate business

reason.

I emphasize here that good cause relates only tom dismissal based on

a failure to perform job duties, etc. Justice Gray points out that

"termination" is an ending of employment. In the same way, the

word "dismissal" is an ending of employment. I conclude this is an

additional reason to join in the conclusion of Justice Gray that a

discharge means an ending of employment, nothing more and nothing

less. I would affirm the District Court's determination.

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