NO. 94-133

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

GORDON SULLIVAN,

Plaintiff, Respondent, and

Cross-Appellant, yfg

1 i<,d

".

SISTERS OF CHARITY OF PROVIDENCE

OF MONTANA, a nonprofit corporation,

d/b/a COLUMBUS HOSPITAL,

Defendant, Appellant, and

Cross-Respondent.

APPEAL FROM: District Court of the Eighth Judicial District,

In and for the County of Cascade,

The Honorable John Warner, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

James R. Walsh and Dennis P. Clarke,

Smith, Walsh, Clarke & Gregoire,

Great Falls, Montana

For Respondent:

Antonia P. Marra and Barbara E. Bell,

Bell & Marra, Great Falls, Montana

Filed:

Submitted on Briefs: August 11, 1994

Decided: November 22, 1994
Justice Terry N. Trieweiler delivered the opinion of the Court.

Plaintiff Gordon Sullivan commenced this action in the

District Court for the Eighth Judicial District in Cascade County

to recover damages from his employer, the Sisters of Charity, based

on his discharge from employment at the Columbus Hospital.

Sullivan's wrongful discharge claim was tried before a jury, which

returned a verdict in his favor in the amount of $70,000. After

Columbus filed its notice of appeal, Sullivan received an anonymous

file containing information related to his termination. Sullivan

moved to reopen discovery and for sanctions. The District Court

found that Columbus should have disclosed the information during

discovery, granted Sullivan's motion for sanctions, and ordered a

new trial on damages. Both parties appeal from the order of the

District Court. We affirm the District Court.

The issues raised by Columbus are:

1 . Did the District Court err when it granted Sullivan's

motion for a new trial limited to the issue of damages?

2 . Did the District Court err when it imposed sanctions

against Columbus in the amount of $5500?

3 . Was Sullivan's notice of cross-appeal timely?

The issues raised by Sullivan's cross-appeal are:

4 . Did the District Court err when it bifurcated Sullivan's

discrimination claim from his wrongful discharge claim, and

disallowed Sullivan's demand for a jury trial of the discrimination

claim?
5 . Did the District Court err when it held that Sullivan's

remedies are limited to those provided in the Wrongful Discharge

From Employment Act?

6 . Were the sanctions imposed by the District Court

adequate?

FACTUAL BACKGROUND

In November 1982, Sullivan began working as director of the

public relations department at Columbus. In 1983, Sullivan hired

Laura James (now Laura James Goldhahn, but referred to in this

opinion as James) as an assistant. James and Sullivan apparently

did not get along well. Eventually, Sullivan's job duties were

divided between Sullivan and James. Sullivan became director of

marketing and James became director of public relations. Sullivan

was not given a job description which explained his new duties and

he was removed from his committee positions: however, his salary

remained the same.

In 1985, and again in 1986, Sullivan injured his back at work.

After the second accident, Sullivan was hospitalized and informed

that he needed back surgery. While implementing some new programs

he had started, Sullivan informed his supervisor, Joel Lankford,

that he required surgery and had scheduled it for April 1987.

Lankford told Sullivan that he must return to work or his job would

be in jeopardy. A few days later Sullivan returned to work without

a physician's permission. Shortly thereafter, Sullivan received a

negative job performance evaluation from Lankford. columbus's

rules provided that if an employee received a negative evaluation,

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he has four months to improve negative ratings if he is to retain

employment. Therefore, Sullivan postponed the surgery because he

felt he had to respond to the negative job evaluation or lose his

job. Four months later, on July 21, 1987, Sullivan received a

superior rating. Thereafter, Sullivan's back worsened, so he

rescheduled surgery and commenced his leave of absence on

November 15, 1987.

Before surgery, in January 1988, Sullivan met with his new

supervisor, Sister Eileen Croghan, who informed him that several

people at Columbus questioned the legitimacy of his workers'

compensation claim. Sullivan testified that at the January meeting

Croghan told him that when he returned from surgery she would

request that he resign, and that if he did not resign., he would be

fired. Croghan recalled this meeting, but denied this

conversation. Sullivan took leave, based on his disability, and

had back surgery in Minneapolis on February 1, 1988.

At this time, Sullivan was earning $42,182 per year, not

including benefits. After surgery on April 6, 1988, Sullivan

arranged to meet Croghan to inform her that he had a release from

his physician and would be able to work part-time. At this

meeting, Croghan advised Sullivan that his position was eliminated

because of financial demands. Sullivan was offered a job in the

public relations department as an assistant to James at less than

half of his previous salary. He did not accept the offer.

As of December 1993, Sullivan had not obtained new employment.

At trial, Sullivan's expert testified that during four years of

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unemployment as marketing director, Sullivan lost compensation

worth $237,000.

Sullivan based his claim against Columbus for wrongful

discharge on the common law, and the 1987 Wrongful Discharge From

Employment Act that became effective on July 1, 1987, and

superseded common law remedies. He also moved to amend his

complaint to include a claim based on discrimination.

In several written interrogatories submitted prior to trial,

Sullivan asked for all information in Columbus's possession which

was related to the contemplated elimination of his position.

Columbus did not produce those documents now known as the anonymous

file, nor the Laura James file, which included many of the same

documents.

On March 23-26, 1992, the wrongful discharge claim was tried

before a jury. The jury found that Columbus wrongfully discharged

Sullivan and awarded him $70,000 as compensatory damages. Sullivan

moved for a new trial based on insufficient damages. The District

Court granted the motion and ordered a new trial on damages because

it concluded that the jury misunderstood the court's instructions.

The District Court denied columbus's motion for judgment

notwithstanding the verdict on the issue of liability.

Columbus appealed. While the appeal was pending, on or about

August 20, 1992, Sullivan received the anonymous file. The file

indicates that unbeknownst to Sullivan, and for some time before he

was terminated, James prepared documents or proposals, pursuant to

Lankford's request, to consolidate Sullivan's department with

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James's department, and allegedly to terminate Sullivan. Sullivan

was not aware of these documents and the alleged plan until after

the trial.

In September 1992, Sullivan moved the District Court to reopen

discovery and requested sanctions. Since the matter was on appeal,

the District Court decided it did not have jurisdiction.

Therefore, Sullivan filed a similar motion with this Court.

Columbus produced further materials, including the Laura James

file, and provided affidavits from its employees denying knowledge

of the anonymous file and its contents. This Court then dismissed

the first appeal without prejudice, and remanded the case to the

District Court to determine whether discovery should be reopened

and whether or not sanctions were appropriate.

The District Court held a hearing on July 7, 1993, and found

that Columbus willfully withheld documents relating to damages and

should be sanctioned. Sullivan and the Court agreed that reopening

discovery would be useless. District Court Judge John McCarvel

then recused himself from the case.

On September 7, 1993, District Court Judge John Warner

accepted jurisdiction. After hearing evidence on December 21

and 22, 1993, regarding the anonymous file, and hearing testimony

from several witnesses, including Sullivan's counsel, the court

issued its findings of fact, conclusions of law, and order on

December 30, 1993.

The Court found, among other things, that:

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1 . The documents produced after trial relate to arguments

made at trial and may have weakened Columbus's case relating to

liability and affected the case regarding damages.

2 . The documents were relevant, would have changed the trial

strategy, and indicate a plan, at least to some extent, concerning

Sullivan's employment.

The court ordered a new trial on damages and imposed sanctions

against Columbus in the amount of $5500 to cover attorney fees

related to summary judgment and post-trial motions. The court

apparently awarded nothing for the costs of trial.

In summary, two District Court Judges, at different times,

ordered a new trial on damages alone. Columbus appeals from the

District Court's order, and Sullivan cross-appeals.

ISSUE 1

Did the District Court err when it granted Sullivan's motion

for a new trial limited to the issue of damages?

Columbus argues that the District Court erred when it granted

a new trial limited to the issue of damages. When we consider

whether a district court imposed proper sanctions for a discovery

abuse, we determine whether the district court abused its

discretion. Eisenmengerv.E~lzicort,Inc. (1994), 264 Mont. 393, 402, 871

P.2d 1313, 1319. In this case, Sullivan moved for sanctions

pursuant to Rules 11 and 37(d), M.R.Civ.P. Sanctions were imposed

pursuant to Rule 37(d). However, we will affirm their imposition,

if appropriate, under either of the above rules. Jerome v. Pardk

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(1989), 240 Mont. 187, 783 P.2d 919. This Court defers to the

trial court because it is in the best position to know whether the

party in question has disregarded the other's rights, and is in the

best position to determine which sanction is most appropriate.

Ekenmenger , 871 P.2d at 1319 (citing Dassori v. Roy Stanky Chevrolet Co.

(1986), 244 Mont. 178, 179-80, 728 P.2d 430, 431). In Eisenmenger ,

871 P.2d at 1320-21, we concluded that if one party does not

properly respond to discovery and the other party suffers

prejudice, a district court's decision to impose a default judgment

as a sanction was proper.

Columbus argues that ordering a new trial on the damages issue

alone, and not ordering a retrial on liability, is the equivalent

of a default judgment. While, according to our decision in

Eisenmenger , the entry of default may be appropriate as a sanction

for failure to candidly respond to discovery, we disagree that a

default was entered in this case.

Here, the jury rendered a verdict for Sullivan on the issue of

liability. The District Court concluded that there was substantial

evidence to support that verdict when it denied Columbus's motion

for judgment notwithstanding the verdict. Columbus does not

contest that conclusion on appeal.

The sanction actually imposed was a new trial on the issue of

damages which, for the reasons discussed in Eisenmenger, we conclude

did not result from an abuse of discretion.

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Further, the District Court's order regarding a new trial was

justified without regard to the issue of sanctions. Montana has

long recognized that district courts are empowered to order a new

trial on damages alone. Bohrerv. Clark (1978), 180 Mont. 233, 590

P.2d 117. In Bohrer, the district court found the jury's damage

award insufficient and after plaintiffs moved to alter or amend the

judgment or for a new trial, the court increased the jury's damage

award. Both parties appealed and we held that Rule 59(a),

M.R.Civ.P., provides for instances when a new trial on damages is

appropriate. Bohrer , 590 P.2d at 122-23. We recognized that

although infrequently necessary, "the power of both trial and

appellate courts to order such a limited trial is well recognized."

Bohrer , 590 P.2d at 123. We relied partly on 58 Am. Jur. 2d New

Trial 5 27, stating that when there is an error in the determination

of damages, and the court is satisfied that the jury properly

settled the liability issues based on sufficient evidence, and an

error in damages requires setting aside the verdict, a new trial on

damages may be proper. Bohrer, 590 P.2d at 123. We also recognized

that it is generally within the district court's discretion to

allow or refuse to allow a new trial on the grounds of inadequate

damages. Bohrer, 590 P.2d at 122.

In Bohrer, the district court concluded that the jury's award

was inadequate. We stated, "[u]nder these circumstances, an order

granting a new trial limited to the issue of damages would have

9
been within the court's discretion." Bohrer, 590 P.2d at 123. We

indicated a preference for a new trial on the issue of damages,

rather than an assessment of damages by the district court.

After the newly discovered evidence appeared, Judge McCarvel

and Judge Warner both found that the undisclosed information would

have affected the damage award. We conclude that ordering a new

trial limited to the issue of damages based on these findings was

not an abuse of discretion. The District Court did not substitute

its judgment for the jurors' decision regarding damages. Rather,

the court properly ordered a new trial on damages so the jury could

hear all evidence relevant to damages. There was substantial

evidence to support the jury's verdict on the issue of liability.

Therefore, the District Court did not err when it declined to order

a new trial on that issue. The order of the District Court

granting a new trial limited to the issue of damages is affirmed.

ISSUE 2

Did the District Court err when it ordered sanctions against

Columbus in the amount of $5500?

As mentioned above, in determining whether a district court

imposes proper sanctions for discovery abuse, we examine whether

the district court abused its discretion. Eisenmenger , 871 P.2d at

1319. Judge Warner ordered Columbus to pay Sullivan $5500 for

attorney fees as a sanction for discovery abuse. The District

Court heard testimony regarding Sullivan's attorney fees. After a

hearing, Judge Warner found that $2500 for amounts expended for

10
work on summary judgment and $3000 for work required after the

verdict was a sufficient sanction. Judge Warner did not award

attorney fees for amounts expended trying the case.

The District Court Judge is better situated to decide the

appropriate sanctions in this case. He heard evidence regarding

the missing files and attorney fees, and concluded that $5500 was

a reasonable amount. We conclude that the District Court did not

abuse its discretion when it imposed monetary sanctions in the

amount of $5500. This analysis is also dispositive of the issue

raised by Sullivan's cross-appeal challenging the sufficiency of

sanctions.

ISSUE 3

Was Sullivan's notice of cross-appeal timely?

Columbus claims that Sullivan did not file a notice of appeal

after the District Court's March 19, 1992, order, and that pursuant

to Rule 5(a)(3), M.R.App.P., notice of cross-appeal must be filed

within 14 days from the notice of appeal. Since Columbus's first

notice of appeal was filed on June 1, 1992, and no notice of

cross-appeal was filed within 14 days, Columbus argues that

Sullivan's cross-appeal is untimely, and therefore, barred.

However, Columbus's original appeal was dismissed without prejudice

on February 18, 1993, and this case was remanded for further

proceedings in the District Court.

Those proceedings were concluded by the findings, conclusions,

and order filed on December 30, 1993. Notice of entry of judgment

was served on January 7, 1994, and Columbus filed a new notice of

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appeal on February 1, 1994. Sullivan filed his notice of

cross-appeal on February 3, 1994, well within the time provided for

by Rule 5(a)(3). We conclude that Sullivan's cross-appeal was

timely.

ISSUE 4

Did the District Court err when it bifurcated Sullivan's

discrimination claim from his wrongful discharge claim, and

disallowed Sullivan's demand for a jury trial of the discrimination

claim?

We will uphold a district court's decision to bifurcate issues

absent a clear abuse of discretion. See In re Marriage of Geertz ( 1988) ,

232 Mont. 141, 144, 755 P.2d 34, 36. We have recognized that a

party who pleads legal and equitable claims is entitled to have

legal claims heard by a jury. Gray v. City of Billings ( 198 4 ) , 2 13

Mont. 6, 689 P.2d 268. In Gray, we stated that liberal rules of

civil procedure permit joinder of claims and recognized that the

same rules permit severance of claims and issues. Gray, 689 P.2d

at 272.

Sullivan argues that the claims should not have been

bifurcated and that he is entitled to a jury trial of the

discrimination claim. At the time the initial bifurcation order

was entered, and when Judge Warner reaffirmed it on December 30,

1993, Montana case law held that there is no right to a jury trial

of discrimination claims based on the Montana Human Rights Act. See

vaini v.Brookshire (1993), 258 Mont. 273, 277, 852 P.2d 596, 599;

12
Romerov.J&JTire (1989), 238 Mont. 146, 151-52, 777 P.2d 292, 295-96.

Since Montanan law allows district courts broad discretion to

segregate claims, and Montana law does not guarantee the right to

a jury trial in discrimination claims, we conclude that the

District Court did not abuse its discretion by severing the claims

in this case.

ISSUE 5

Did the District Court err when it held that Sullivan's

remedies are limited to those provided in the Wrongful Discharge

From Employment Act?

Sullivan argues that the undisclosed documents indicate a plan

to terminate him in 1987 before the new law was enacted on July 1.

He claims that the file constitutes evidence of constructive

discharge. Sullivan incorrectly interprets Montana's law of

constructive discharge. Prior to the Act's adoption, Montana case

law defined constructive discharge similar to the current

definition in 5 39-2-903(l) MCA:

[T]he voluntary termination of employment by an employee

because of a situation created by an act or omission of

the employer which an objective, reasonable person would

find so intolerable that voluntary termination is the

only reasonable alternative.

SeeKestellv. HeritageHealth Care Cop. (1993), 259 Mont. 518, 524, 858 P.2d

3, 6. In Kestell, we recognized that prior case law defined

constructive discharge essentially the same as the current statute,

relying on Snellv.Montana-Dakota Utilities Co. (1982), 198 Mont. 56, 643

P.2d 841, and Nilesv.BigSkyEyewear (1989), 236 Mont. 455, 771 P.2d

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114. Under those cases, and under the Act, to find constructive

discharge "the fact finder must decide whether the employer has

rendered working conditions so intolerable that resignation is the

only reasonable alternative." Kestell, a58 P.2d at 7 (citing Niles,

771 P.2d at 118). The intolerable situation about which Sullivan

complains occurred after the Act became effective. Sullivan was

not informed that his position was eliminated until April 1988, and

he was not forced to quit before the new law was enacted. We hold,

based on the facts in this case, that a constructive discharge did

not occur prior to the effective date of the Wrongful Discharge

From Employment Act.

For similar reasons, we must reject Sullivan's claim that the

implied covenant of good faith and fair dealing, as it existed

before the Act, applies in this case. Pursuant to § 27-2-

10.2 (1) (a), MCA, a cause of action accrues when all elements of the

cause exist. In Martin v. Special Resource Management, Inc. ( 199 0) , 2 4 6 Mont.

181, 185, SO3 P.2d 1086, 1089, we held that all of the elements to

establish a breach of the implied covenant, if present at all, were

present when the employee received notice of termination. Sullivan

received notice after the Act's effective date, and was terminated

after that date. Therefore, the Act applies to his claim.

We hold that the District Court did not err when it concluded

that the Wrongful Discharge From Employment Act is Sullivan's

exclusive remedy.

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We affirm in all respects the orders and judgment of the

District Court.

J tice

We concur:

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