NO. 89-563 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

DOUG MAJERUS, 

Plaintiff and Appellant, 

SKAGGS ALPHA BETA, INC., a Delaware 

corporation; WAYNE JACOBSON; JUDY 

FUGLESTAD and DWIGHT KROHMER, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable Jack L. Green, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

H. L. McChesney, McChesney, Grenfell & Ogg, 

Missoula, Montana 

Michael G. Majerus, ~illings, Montana 

For Respondent: 

J. David Slovak, Ugrin, Alexander, Zadick & Slovak, 

P.C., Great Falls, Montana 

Filed: 

Submitted on Briefs: July 13, 1990 

a Decided: September 11, 1990 

'Clerk 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

Doug Majerus appeals the summary judgment of the Fourth 

Judicial District Court, Missoula County, which dismissed his 

action against Skaggs Alpha Beta, Inc. (Skaggs), Wayne Jacobson, 

Judy Fuglestad, and Dwight Krohmer, for wrongful discharge, breach 

of the implied covenant of good faith and fair dealing, negligent 

infliction of emotional distress, and negligence. The court 

granted summary judgment: 1) based on the doctrine of res 

judicata, 2) because Majerus failed to establish, as a matter of 

law, a breach of the implied covenant of good faith and fair 

dealing, and 3) because no genuine issue of material fact existed. 

We affirm. 

Majerus raises the following issues: 

1. Did the District Court err in granting summary judgment 

based on the doctrine of res judicata? 

2. Did the District Court err in granting summary judgment 

on the basis that Majerus failed to establish, as a matter of law, 

a breach of the implied covenant of good faith and fair dealing? 

3. Did the District Court err in granting summary judgment 

on the basis that no genuine issue of material fact existed? 

On August 15, 1986, Doug Majerus was discharged from his 

position as manager of the Buttrey Food Store located in Tremper 

Shopping Center in Missoula, Montana, following fifteen years of 

employment by Buttrey Food, Inc. (Buttrey) and its 1984 successor, 

Skaggs Alpha Beta, Inc. (Skaggs) . Skaggs discharged Majerus 

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because he violated company policy when he took $350.00 from a 

checkstand till on June 21, 1986, and on the following day, used 

these company funds for his personal use on a gambling vacation in 

Jackpot, Nevada. Majerus returned these funds some sixteen days 

later. 

Following his discharge, Majerus applied for unemployment 

benefits through the Montana Department of Labor & Industry. On 

October 1, 1986, by a deputy's determination, Majerus was found to 

be eligible for unemployment benefits. Skaggs, however, appealed 

the deputy's determination asserting that Majerus was not entitled 

to unemployment benefits because he was properly discharged from 

his employment for misuse of company funds. 

A hearing was held before the Montana Department of Labor & 

Industry on October 29, 1986--both parties attended and were 

represented by counsel. On October 31, 1986, the appeals referee 

held that Majerus was properly discharged from his employment for 

work-related misconduct, and thereby not entitled to unemployment 

benefits under 1 39-51-2303, MCA. 

Majerus appealed this decision to the Montana Department of 

Labor & Industry Board of Labor Appeals (BLA) . The BLA affirmed 

the decision, after determining that no substantial evidence 

existed to modify or reverse the prior findings and decision of the 

appeals referee. The BLA's decision stated that Majerus had the 

right to further appeal to district court. 
Maj erus, however, did not pursue a further appeal regarding 

his ineligible status to unemployment benefits. Instead, on 

December 9, 1989, Majerus filed a district court action against 

Skaggs, and three Skaggs' employees, Wayne Jacobson, Judy Fuglestad, and Dwight Krohmer, for wrongful discharge, breach of the 

implied covenant of good faith and fair dealing, negligent 

infliction of emotional distress, and negligence. 

Prior to the filing of the district court action, Majerus, in 

a November 2, 1987, deposition, conceded that he acted improperly 

when he took the company funds. He also conceded that no company 

policy allowed or authorized the removal of company funds for 

personal use. Additionally, affidavits of Skaggsf employees Ben 

Flaig and Dwight Krohmer dated June 13, 1989, established that it 

was the company policy of Skaggs, as well as Buttrey, that 

employees could not, under any circumstances, take, borrow, or use 

company funds, regardless of any intent to repay the funds. The 

affidavits further stated that this policy was well known by 

Skaggsf employees, including Majerus, and that it was common 

knowledge to the employees that a violator of this policy would be 

subject to discharge from employment. Majerus never refuted these 

affidavits. 

On June 16, 1989, the defendants moved the District Court for 

summary judgment. The District Court granted summary judgment on 

August 30, 1989: 1) based on the doctrine of res judicata, 2) 

because Majerus failed to establish, as a matter of law, a breach 

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of the implied covenant of good faith and fair dealing, and 3) 

because no material issue of fact existed. From this decision, 

Maj erus appeals. 

1. Did the District Court err in granting summary judgment 

based on the doctrine of res judicata? 

The District Court granted summary judgment on three independent grounds, one of them being the doctrine of res judicata: 

The basic proposition embraced by the doctrine 

of res judicata has always remained the same: 

a party should not be able to relitigate a 

matter he or she has already had an opportunity to litigate. This policy reflects the 

notion that a lawsuit should not only bring 

justice to the aggrieved parties but provide 

a final resolution of the controversy. 

Brault v. Smith (1984), 209 Mont. 21, 25, 679 P.2d 236, 238. In 

determining whether res judicata applied, the District Court relied 

upon Nasi v. State Dep't of Highways (1988), 231 Mont. 395, 753 

P.2d 327, for the proposition that an employee, who unsuccessfully 

pursues a grievance at an administrative proceeding, is then 

precluded from pursuing a wrongful discharge action when: (1) the 

parties are the same; (2) the subject matter is the same; (3) the 

issues are the same; and (4) the relationship between the parties, 

the subject matter, and the issues is the same. Nasi, 753 P.2d at 

329 (citations omitted). The District Court found that the 

present facts satisfied the Nasi criteria and thereby held that 

res judicata applied. 
This Court, however, recently distinguished Nasi in Niles v. 

Weissman & Sons, Inc., (Mont. 1990), 786 P. 2d 662, 47 St.Rep. 240: 

we determine that a final decision from an 

administrative agency that an employee is not 

entitled to unemployment compensation is not 

res judicata as to the employee's separate 

action in District Court for wrongful discharge and breach of the covenant of good 

faith and fair dealing. 

Niles, 786 P.2d at 663. Because the present facts are on point 

with Niles, we hold that Niles, and not Nasi, is controlling to 

this case. Therefore, the District Court erred when it granted 

summary judgment based on the doctrine of res judicata. However, 

this does not necessarily mean that summary judgment was improper 

in this case--the District Court granted summary judgment based on 

two other grounds as well. A discussion of these two grounds 

follows. 

2. Did the District Court err in granting summary judgment on 

the basis that Majerus failed to establish, as a matter of law, a 

breach of the implied covenant of good faith and fair dealing? 

This Court established the implied covenant of good faith and 

fair dealing in employment relationships in Gates v. Life of 

Montana Insurance Co. (1982), 196 Mont. 178, 638 P.2d 1063. See 

Schramm, Montana Employment Law and the 1987 Wrongful Discharge 

From Employment Act: A New Order Begins, 51 Mont. L. Rev. 94 

(1990). However, even when the implied covenant of good faith and 

fair dealing applies to an employment relationship, an employer may 
still terminate an employee without breaching the covenant if the 

employer has a Itfair and honest reasonu for the termination. 

Flanigan v. prudential Federal Savings & Loan (1986), 221 Mont. 

419, 428, 720 P.2d 257, 262. 

Here, the defendants did not breach the implied covenant of 

good faith and fair dealing because they had a fair and honest 

reason to terminate Majerus--Majerus violated company policy when 

he admittedly took company funds and used them for his personal 

use of financing a gambling trip to Jackpot, Nevada. Moreover, 

the affidavits of Ben Flaig and Dwight Krohmer established that 

Skaggsl employees, including Majerus, knew that it was against 

company policy to take company funds and use them for personal use, 

and a violator of this policy would be subject to discharge from 

employment. Therefore, Majerus had no basis for a claim of breach 

of the covenant of good faith and fair dealing and we uphold the 

District Court's summary judgment based on the finding that Majerus 

failed to establish a breach of the implied covenant of good faith 

and fair dealing. 

Majerus, however, argues that even though it was wrong to take 

the company funds and use them for his personal use, his infraction 

did not justify the harsh result of discharge from employment in 

light of his fifteen years of service to Buttrey and its successor, 

Skaggs, and his reasonable expectation of employment security. 

Majerusl argument is without merit. We agree with the District 

Court when it found that Majerusl infraction was I1more than a 

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simple transgre~sion.~~ The seriousness of his infraction coupled 

with the unrefuted affidavits of Ben Flaig and Dwight Krohmer 

establish that discharge from employment is justified when an 

employee takes company funds and converts them for personal use. 

Majerus further argues that the issue of whether the implied 

covenant of good faith and fair dealing has been breached is a jury 

determination, thereby summary judgment is inappropriate. This 

argument lacks merit because, as previously discussed, the record 

reflects that Majerus had no basis for a claim based on a breach 

of the implied covenant of good faith and fair dealing. 

3. Did the ~istrict Court err in granting summary judgment 

on the basis that no genuine issue of material fact existed, and 

therefore, the defendants were entitled to judgment as a matter of 

law? 

Rule 56(c) of the Montana Rules of Civil Procedure provides, 

in part: 

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to 

interrogatories, and admissions on file, 

together with the affidavits, if any, show 

that there is no genuine issue as to any 

material fact and that the moving party is 

entitled to a judgment as a matter of law. 

Here, no genuine issue of material fact exists, because the record 

reflects an admitted and serious breach of store policy arising 

from the misuse of employer's funds. Majerus admittedly took 

$350.00 from a Skaggsl checkstand till and used these funds on a 

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gambling vacation to Jackpot, Nevada. The affidavits of Ben Flaig 

and Dwight Krohmer establish that it was against store policy to 

take company funds and use them for personal use. Additionally, 

the affidavits establish that this policy was well-known to Skaggs' 

employees, including Majerus, and the employees further knew that 

a violator of the policy would be subject to discharge from 

employment. Majerus never refuted these affidavits, and furthermore, admitted that there was no company policy that allowed for 

his misconduct. Based on these uncontroverted facts, we affirm 

the District Court's summary judgment on the basis that no genuine 

issue of material fact existed, and the defendants were entitled 

to judgment as a matter of law. 

Affirmed. 

We concur: 

Justices