No. 86-095 

IN THF SUPREME COURT OF THE STATE OF MONTANA 

1986 

MARY PAT MILLER, 

Plaintiff and Appellant, 

CATHOLIC DIOCESE OF GREAT FALLS, 

BILLINGS AND ROMAN CATHOLIC BISHOP 

OF GREAT FALLS, jointly and severally, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Charles Luedke, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Nye & Meyer; Victoria Francis argued, Billings, 

Montana 

For Respondent: 

Cure, Borer & Davis; Maxon R. Davis argued,~~~~t Falls, 

Montana 

Crowley Law Firm; Peter F. Habein, Billings, Montana 

Submitted: October 21, 1986 

Decided: November 20, 1986 

Filed: 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

Mary Pat Miller (now Mrs. Mullner) appeals the summary 

judgment dismissing her wrongful discharge complaint against 

defendants. The District Court for Yellowstone County concluded that applying the tort of bad faith in this case would 

infringe upon the free exercise of religion. We affirm. 

The issue is whether the free exercise of religion 

clauses of the United States and Montana Constitutions bar 

consideration of the tort of breach of the covenants of good 

faith and fair dealing in the discharge of Mrs. Mullner for 

her failure to maintain discipline in the classroom. 

The defendants also raise the issue of whether summary 

jud~ent can be upheld because no breach of the implied 

covenant of good faith and fair dealing is established in the 

record. 

Little Flower School in Billings is part of the Catholic 

school system administered by the Catholic Diocese of Great 

Falls-Billings. Mrs. Mullner taught fifth and sixth grade 

students there during the school year 1983-84. Her immediate 

supervisor evaluated her as "outstanding" in every category. 

Her contract was renewed and she received a $1,000 raise for 

the 1984-85 school year. 

During the 1984-85 school year, Mrs. Mullner had a new 

supervisor (the head teacher). The new head teacher did not 

approve of Mrs. Mullnerls teaching methods. The district 

court file contains a copy of the head teacher's dated notes 

documenting her concerns and the concerns of parents, other 

teachers, and the school administrator about a lack of discipline in Mrs. Mullnerls classroom. Mrs. Mullner admits that 

the head teacher spoke with her "on more than one occasion" 
about problems in her classroom. In November 1984 Father 

Wagner, the school administrator, told Mrs. Mullner that the 

next day would be her last day of teaching at the school, 

because she was not properly disciplining the children in her 

class. She was paid for the following fifteen days, pursuant 

to the termination clause in her teaching contract. 

Mrs. Mullner filed this suit alleging breach of the 

covenant of good faith and fair dealing in employment. 

Discovery was conducted, including depositions of Mrs. 

Mullner, the head teacher, and Father Wagner. Defendants 

produced various documents, including copies of Mrs. 

Mullner's employment contract, her evaluation, and the 

1984-85 Little Flower School handbook and code of conduct 

booklet. The defense moved for summary judgment that application of the tort of bad faith would impermissibly interfere 

with freedom of religion. The District Court granted that 

motion. 

Since an affirmative answer to the issue raised by 

defendants would eliminate the necessity of reaching the 

constitutional issue, we will discuss defendants' issue 

first. 

Can summary judgment be upheld because no breach of the 

implied covenant of good faith and fair dealing is established in the record? 

The defendants argue that nothing in the record establishes any breach of an implied covenant of good faith and 

fair dealing. They maintain that there were no objective 

manifestations of job security to Mrs. Mullner, and that 

there were indications to her that she was not performing 
satisfactorily. They also maintain that there has been no 

evidence of lack of good faith on the part of Father Wagner. 

The defendants' brief to the District Court in support 

of their motion for summary judgment did not raise this 

argument. It discussed only the constitutional issue. 

Issues not raised before the district court are generally not 

considered on appeal. Mont. Ass'n of Underwriters v. State, 

etc. (1977), 172 Mont. 211, 218, 563 P.2d 577, 581. However, 

this Court has the power to grant summary judgment even when 

no motion has been made. Treasure State Industries Inc. v. 

Welch (1977) , 173 Mont. 403, 410, 567 P. 2d 947, 951. Even 

so, the complaint's allegation of defendants' bad faith is 

supported by Mrs. Mullner's deposition. She further contends 

that she would have submitted additional evidence on this 

point, had it been raised in the lower court. Her position 

is that she reasonably believed her employment would continue. We conclude the record does not support summary judgment 

on this basis. 

Do the free exercise of religion clauses of the United. 

States and Montana Constitutions bar consideration of the 

tort of breach of the covenants of good faith and fair dealing in the discharge of Mrs. Mullner for her failure to 

maintain discipline in the classroom? 

The relevant constitutional provisions are U. S. Const. 

Amend. I: 

Congress shall make no law respecting an establishment of religion, or prohibiting the free 

exercise thereof; . . . 

and Art. 11, § 5, Mont. Const.: 
Freedom of religion. The state shall make no law 

respecting an establishment of religion or prohibiting the free exercise thereof. 

Former Chief Justice Burger has acknowledged for the United 

States Supreme Court, in regard to the federal provision, 

that "[clandor compels acknowledgement . . . that we can only 

dimly perceive the lines of demarcation in this extraordinarily sensitive area of constitutional law." Lemon v. Kurtzman 

(1971), 403 U.S. 602, 612, 91 S.Ct. 2105, 2111, 29 L.Ed.2d 

745, 755. The Court provided more guidance on application of 

the free exercise clause in Wisconsin v. Yoder (1972), 406 

U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15. In that case, the 

Court held that a Wisconsin requirement that all children 

attend school until the age of 16 was unconstitutional when 

applied to the Amish respondents, because compelling public 

school attendance beyond the eighth grade unconstitutionally 

interfered with their religious beliefs. The Court stated: 

The essence of all that has been said and written 

on the subject is that only those interests of the 

highest order and those not otherwise served can 

overbalance legitimate claims to the free exercise 

of religion. 

Yoder, 406 U.S. at 215. We use that standard as our guide. 

The parties do not dispute that Little Flower School 

played an important role in the religious mission of the 

Roman Catholic Church--that is, teaching the students the 

elements of the Catholic faith. Defendants point out that 

all aspects of parochial school education, including discipline, are permeated with the religious mission of the 

school. We agree with the conclusion of the District Court 

in Lemon that parochial schools constitute an integral part 

of the religious mission of the Catholic Church, and with the 

statement that " [i] n short, parochial schools involve 
substantial religious activity and purpose." Lemon, 403 U.S. 

at 616. 

This case must be distinguished from the cases cited by 

Mrs. Mullner involving such issues as wage rates in parochial 

schools or the application of neutral principles of law to 

division of property claimed by various members of a church 

group. - See, e.g., Donovan v. Shenandoah Baptist Church 

(D.C.Va. 1983), 573 F.Supp. 320; Jones v. Wolf (1979), 443 

U.S. 595, 99 S.Ct. 3020, 61 L.Ed.2d 775. In order to consider Mrs. Mullner's contentions, this case requires an analysis 

of the discipline methods used in teaching various school 

subjects, including religion itself. The suggestion is made 

that consideration can be given to the methods of discipline 

without becoming involved with claims which are rooted in a 

religious belief. Father Wagner's deposition testimony 

demonstrates why this division of discipline from religious 

instruction cannot easily be made. He testified that he was 

not able to successfully teach religion to the students in 

Mrs. Mullner's classroom because of the absence of proper 

discipline. This example demonstrates how the failure to 

discipline in an acceptable manner directly interfered with 

the teaching of religion, which is one of the aspects of the 

free exercise of religion. Further, defendants point out 

that discipline itself is an essential element of the religious faith taught at Little Flower School. 

A judicial determination of the presence or absence of 

good faith on the part of Father Wagner would require the 

court to examine the school's discipline policy as applied to 

classroom instruction covering both religious and nonreligious subjects, and to evaluate Father Wagner's interpretation 

and application of that discipline policy. Such an 
examination of necessity would impinge upon elements of the 

teaching of religion, or the free exercise of religion. We 

conclude that discipline in the classroom is so intertwined 

with teaching which in turn is intertwined with religious 

principles that a court cannot properly make the determination requested here without interfering with a legitimate 

claim to the free exercise of religion. 

The breach of the covenant of good faith and fair dealing in employment is a common-law tort which has been recently recognized in Montana but is not universally recognized. 

Gates v. Life of Montana Ins. Co. (Mont. 1982), 638 P.2d 

1063, 39 St.Rep. 16. We apply the Yoder standard as our 

guide and conclude that Mrs. Mullner's tort claim is not a 

right "of the highest order and not otherwise served" so as 

to overbalance defendants' claim to the free exercise of 

religion. We hold that this suit is barred by the free 

exercise of religion clauses of the United States and Montana 

Constitutions. 

Mrs. Mullner argues that resolution of this issue in 

defendants' favor will result in excessive government entanglement ~rith religion, in violation of the Establishment 

Clause of the United States Constitution. A three-factor 

balancing test has been developed for evaluating Establishment Clause claims. The factors are: (1) the character and 

purpose of the institution involved; (2) the nature of the 

law's intrusion into church affairs; and (3) the resulting 

relationship between the government and the religious authority. Lemon, 403 U.S. at 615. The religious character and 

purpose of Little Flower School is not disputed. Denying 

application of the tort of bad faith in this case does not 

result in an intrusion into church affairs. The resulting 
relationship between government and the religious authority 

is negligible, at best, because our holding applies only to 

this particular situation, and not to all applications of the 

tort of bad faith to religious organizations. We conclude 

after examining the three factors set forth in Lemon that 

prohibiting Mrs. Mullner's lawsuit does not violate the 

Establishment Clause. 

Because allowing Mrs. Mullner's lawsuit to go forward 

would impermissibly interfere with the free exercise of 

religion, we affirm the summary judgment of the District 

Court. 

We Concur: 

Justices 
Mr. Justice Frank B. Morrison, Jr. dissents as follows: 

The issue in this case is - not whether the Catholic 

school officials have a right to set conditions of employment 

for teachers respecting the discipline of students. Of 

course they do. To deny the churches the right to afford a 

complete religious instruction, and the means to assure that 

the student receives the instruction, would be an 

unconstitutional infringement upon free exercise of religion. 

Plaintiff's case here does not involve the teaching of 

religion. Plaintiff's case is premised upon the fact that 

she was denied due process in connection with her 

termination. She was not afforded an opportunity to change. 

She was not given a hearing in which she could explain her 

position. Although the church is entitled to set whatever 

standards it wants respecting and imparting religious 

education to its students, the law does require that certain 

fair procedures are necessary in order to accord due process. 

The dismissed teacher here takes the position that she 

was an excellent teacher, disciplined the students, and the 

complaints lodged against her are false. She only asks for a 

hearing to explain her position. The denial of this 

opportunity does not promote free exercise of religion; 

rather it denies due process rights and the legal protection 

of the covenant of good faith and fair deal-inq to the 

plaintiff. 

This case represents another example of this Court 

engaging in "bottom line" decision making without careful 

legal analysis of the issues. I sense an attitude on the 

part of the majority that says, "The courts have no business 

interfering in the churches' business". Although that may be 

true when dealing with religious instruction the principle 
has no application to a claim that a teacher was denied 

procedural due process and therefore the covenant to deal 

fairly and in good faith was breached. 

I would reverse and remand for trial. 
Mr. Justice William E. Hunt, Sr., dissenting: 

I agree with the majority opinion that summary judgment 

cannot be upheld because of any absence of breach of the 

implied covenant of good faith and fair dealing. 

I dissent on the second issue and would hold that the 

application of the implied covenant of good faith and fair 

dealing to the facts of this case would not 

unconstitutionally inhibit the free exercise of religion nor 

violate the free exercise of religion clauses of the United 

States and Montana Constitutions. Summary judgment was not 

proper on these grounds and I would reverse and remand this 

case for trial on the merits. 

Defendant contends Little Flower School played an 

important role in the religious mission of the Roman Catholic 

Church and that all aspects of their education are permeated 

with religious mission. The majority has stated that this 

case involves the process of discipline and instruction 

itself within a religious school setting. 

I have no quarrel with these statements as far as they 

go but they do not fully address the facts and issue before 

this Court. Plaintiff herself acknowledges that she was told 

she was dismissed because of problems with discipline in her 

classroom. She does not question that improper discipline 

can be used as a reason to terminate an employee under the 

terms of the school's contract. 

Rather her claim addresses whether she had notice of the 

shortcomings that displeased her employer so she could 

correct them and whether the discipl-ine used by her met the 

disciplinary standards set out by her employer, Little Flower 
School. Nowhere does plaintiff challenge the validity of 

that disciplinary standard. 

The First Amendment protects against government 

establishment of religion and prohibition of the free 

exercise thereof. Art. 11, § 5 of the Montana Constitutj.on 

provides these same protections. 

I find Cantwell v. State of Connecticut (1940), 310 U.S. 

296, 60 S.Ct. 900, 84 L.Ed. 1213 instructive for direction on 

the issue of free exercise of religion. In its discussion on 

the First Amendment, the U.S. Supreme Court found that: 

. . . the Amendment embraces two concepts,--freedom 

to believe and freedom to act. The first is 

absolute but, in the nature of things the second 

cannot be. Conduct remains subject to regulation 

for the protection of society.. . . 

- Id. at 303-304, 60 S.Ct. at 903, 84 L.Ed. at 1218. 

. . . Nothing we have said is intended even 

remotely to imply that, under the cloak of 

religion, persons may, with impunity, commit frauds 

upon the public . . . 

Even the exercise of religion may be at some slight 

inconvenience in order that the State may protect 

its citizens from injury. 

- Id. at 306, 60 S.Ct. 60 S.Ct. at 904, 84 L.Ed. at 1219. 

The case before us involves a private citizen seeking to 

enforce a common law tort through the courts of this state 

against her employer, a church-operated school. The cases 

relied on by the majority regarding excessive entanglement 

between church and state are not fully applicable here. 

Rather, a wealth of case law indicates that although federal 

and state courts have no jurisdiction over solely internal 

ecclesiastical affairs or the validity of religious beliefs, 

they may exercise jurisdiction over torts incurred by 

religious institutions and in church controversy which 

impinges on property or civil rights. Lund v. Caple (Wash. 
1984), 675 P.2d 226; Turner v. Unification Church (D. R.I. 

1978), 473 F.Supp. 367 aff'd (1979) 602 F.2d 458; Saul v. 

Roman Catholic Church of Arch. of Sante Fe (N.M. 1965), 402 

P.2d 48. Federal courts have directly addressed the issue of 

whether the free exercise clause immunizes defendant churches 

from tort claims. 

In Turner, the court stated that: 

.. . . the "operational activities" of a religion, 

those activities that are not solely in the 

ideological or intellectual realm, are subject to 

judicial review and may be regulated to achieve a 

sufficiently important state objective. 

- Id. at 371-372. 

In a similar case Van Schaick v. Church of Scientology 

of Cal., Inc. (D. Mass. 1982), 535 F.Supp. 1125, the court 

observed that: 

Whether or not such i~munity exists depends, in 

 art. on whether the adjudication of the claim 

hould require a judiciai determination - of - the 

validity -- of a. religious belief. . . 

Causes of action based upon some proscribed conduct 

may, thus, withstand a motion to dismiss even if 

the alleged wrongdoer acts upon a reliqious belief 

or is organized. for a reli.gicus purpose. (Emphasis 

added. ) 

- Id. at 1135. 

In the present case the application of the tort of good 

faith and fair dealing to the church-operated school does not 

require a determination of the validity of a religious 

belief. A clergy administra.torl s religious role, in itself, 

does not bar application of the tort of good faith or any 

other common law tort. Religious leaders and organizations 

are responsible for breach of duty under common law. This 

Court has jurisdiction to apply the common law to this 

situation because such a review of a dismissal for the 

failure to use proper discipline jn a classroom, whether a. 
public or religious classroom, does not involve a judicial 

determination of the validity of a religious belief. 

Further, a series of case law decisions have indicated 

that neutral application of common law has been 

constitutionally applied to some circumscribed situations 

involving internal church disputes. For example, in Konkel 

v. Metropolitan Baptist Church, Inc. (~riz. App. 1977) , 572 

P.2d 99, the court found that where the issue is whether the 

expelling organization had acted in accordance with its own 

regulations the court had jurisd.iction to determine whether 

the expulsion was proper. Id. at 100. Other jurisdictions 

follow a similar view. Ogden Street Church, Etc. v. Gospel 

Temple Church, Etc. (Colo. App. 19741, 522 P.2d 757; Gospel 

Tab Body of Christ Church v. Peace Pub. & Co. a an. 1973) , 

506 P.2d 1135; Mount Zion Baptist Church v. Second Baptist 

Church (Nev. 1967) , 432 P. 2d 328; Wolozyn v. Regarek (0kla. 

The Supreme Court in Jones v. Wolf (1979), 443 U.S. 595, 

99 S.Ct. 3020, 61 L.Ed.2d 775 stated: 

The neutral-principles approach cannot be said to 

"inhibit" the free exercise of religion, any more 

than do other neutral provisions of state law 

governing the manner in which churches own 

property, hire employees, or purchase goods. 

- Id. at 606, 99 S.Ct. at 3027, 61 L.Ed.2d at 786. 

Thus since courts have been found to have jurisdiction 

to settle certain internal church disputes, I believe there 

is abundant authority for this Court to allow application of 

neutral tort law to respondent's external dispute. 

The majority opinion also relies on Wisconsin v. Yoder 

(1972), 406 U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15 for the 

authority that only values of the "highest nature" can be 

grounds for inhibiting First Amendment rights. 
They do not appear to consider the fact that the Yoder 

court found that only certain claims would invoke the 

protection of the First Amendment. The Supreme Court hel-d 

that : 

. . . to have the protection of the Religion 

Clauses, the claims must -- be rooted in religious 

belief. Although a determination ofwhat is a 

"religious" belief or practice - entitled to 

constitutional protection may present a most 

delicate question, the very concept of ordered 

liberty precludes allowing every person to make his 

own standards on matters of conduct in which 

society as a whole has important interests. 

(Emphasis added.) 

- Id. at 215-216, 92 S.Ct. at 1533, 32 L.Ed.2d at 25. 

While maintenance of discipline is important to any 

school, whether public or private, I would argue that it is 

not the correct factor in the equation to apply to the above 

standard. 

More accurately this Court should ask whether 

plaintiff's claim that she was terminated unfairly or in bad 

faith is a claim that impinges on the defendant's religious 

belief. I would argue that application of the tort of bad 

faith in these circumstances does not do so. 

Employers owe a duty to deal fairly and in good faith in 

employment relationships. This Court has found that a breach 

of this duty is a tort. Gates v. Life of Montana Ins. Co. 

(Mont. 1983), 668 P.2d 213, 40 St.Rep. 1287. 

Employees have an investment in their employment which 

is protected. Their very livelihood is dependent on their 

employment. Loss of employment often jeopardizes the family 

home and structure. The State of Montana has a compelling 

interest in maintaining that structure and stability for the 

citizens of this state. The duty of an employer to treat an 

employee fairly and terminate employment in good faith was 
recognized because it struck an important balance between the 

inherent unequality of bargaining power present in many 

employment relationships. Dare v. Montana Petroleum 

Marketing Co. (Mont. 1984), 687 P.2d 1015, 41 St.Rep. 1735. 

The State of Montana has an important state objective in 

applying the obligation of good faith to employment 

relationships including lay teachers at church-operated 

schools. This common law tort as applied to Little Flower 

School is not a violation of the First Amendment and I would 

reverse the grant of summary judgment and allow plaintiff to 

bring her action to a jury for trial on the merits of her 

case. 

Mr. Justice John Conway Harrison, dissentinq. 

I dissent. I would have this case go to trial and not be 

decided by summary judgment. 

/