Title: GATES v LIFE OF MONTANA INS CO
Citation: N/A
Docket Number: 82-468
State: Montana
Issuer: Montana Supreme Court
Date: August 5, 1983

No. 82-468 I N THE SUPREME C O U R T O F T H E STATE O F M O N T A N A 1983 M A R L E N E S. GATES, P l a i n t i f f and Appellant, -vs- LIFE O F MONTANA INSURANCE COMPANY, Defendant and Respondent. Appeal from: District Court of t h e Eighteenth J u d i c i a l District, I n and f o r t h e County of G a l l a t i n , The Honorable Jack D. Shanstrom, Judge p r e s i d i n g . Counsel of Record: For Appellant: Wellcome & F r o s t ; Page Wellcome argued, Rozeman, Montana For Respondent: Landoe, Brown, Planalp, Komrners & Lineberger; Gene I. Brown argued, Bozeman, Montana Submitted: June 6 , 1983 Decided: August 5, 1983 Abr"G F i l e d : 5 1983 - Clerk Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. Plaintiff brought this action to recover damages for breach of the covenant of good faith and fair dealing implicit in an at-will, employment contract. Summary judgment for defendant was reversed in Gates v. Life of Montana (1982), Mont . , 638 P.2d 1063, 39 St.Rep. 16. The case was remanded for trial and resulted in a jury verdict in favor of plaintiff for $1,891 in compensatory damages and $50,000 in punitive damages. The trial court entered judgment for plaintiff on compensatory damages but entered judgment notwithstanding the verdict in favor of defendant on punitive damages. Plaintiff appeals from the granting of the judgment n.0.v. Appellant commenced employment as a cashier with respondent on July 29, 1976, under an oral contract of indefinite duration. On October 19, 1979, she was called to meet with her supervisor, Roger Syverson, and without prior warning she was given the option of resigning or being fired. She testified that while in a distraught condition and under duress she signed a letter of resignation which was handed to her by Syverson. Appellant stated that she signed the letter of resignation because she thought it would be better for her record and because Syverson told her he would give her a letter of recommendation so that she could be reemployed. Appellant went home and discussed the situation with her husband who advised her to retrieve the letter of resignation and inform her supervisor that she was not resigning. Appellant stated that she immediately called Syverson and demanded the letter be returned and that he promised to do so. Syverson testified that she only requested a photocopy of the letter. Respondent's witnesses testified appellant was discharged for carelessness, incompetency and insubordination. In the first appeal we held there was a submissible jury issue on breach of the implied covenant of fair dealing in that appellant was discharged without warning and an opportunity for hearing. The jury here found that this covenant was indeed breached and awarded damages. On appeal, we are concerned with two issues. First, can punitive damages be awarded for breach of the covenant to deal fairly? Secondly, does the evidence here create a jury issue on punitive damages? In ~ipinski v. Title Insurance Co. (19821, Mont . , 655 P.2d 970, 39 St.Rep. 2283, this Court held that punitive damages could be assessed for bad faith insurance practices in absence of a statutory violation. We said in Lipinski: "Should there be any doubt, we now expressly hold that insurance companies have a duty to act in good faith with their insureds, and that this duty exists independent of the insurance contract and independent of statute. Any statements in our cases, to the extent they may be or appear to be in conflict with this holding, are expressly overruled." Likewise, punitive damages may be assessed for breach of the obligation owed to deal fairly with an employee, if the provisions of section 27-1-221, MCA, are satisfied. That section provides: "In anv action for a breach of an obliaation not - arisini from contract where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, the jury, in addition to the actual damages, may give damages for the sake of example and by way of punishing the defendant." (emphasis added) An action for breach of an implied covenant of fair dealing, at first blush, may sound both in contract and tort. The duty arises out of the employment relationship yet the duty exists apart from, and in addition to, any terms agreed to by the parties. In this respect, the duty is much like the duty to act in good faith in discharging insurance contractual obligations. See Lipinski v. Title Ins. Co., supra. The duty is imposed by operation of law and therefore its breach should find a remedy in tort. Flint and Walling Mfg. C0.v. Beckette (1906), 167 Ind. 491, 498, 79 N.E. 503, 505. Also see W. Prosser, Law of Torts (4th ed. 1971), 592 at 617-618. We hold that section 27-1-221, MCA, only exempts breach of contract actions from its provisions. Breach of the duty owed to deal fairly and in good faith in the employment relationship is a tort for which punitive damages can be recovered if defendant's conduct is sufficiently culpable. We must examine the record in this case to determine whether there is evidence which would permit a jury to find malice, oppression or fraud attributable to the defendant. Motions for judgment notwithstanding the verdict are only to be granted when there is a complete absence of any credible evidence to support the verdict. All evidence and all inferences drawn therefrom must be considered in the light most favorable to this appellant. Barmeyer v. Montana Power Company (1983), Mont . , 657 P.2d 594, 40 St-Rep. 23. "The courts will exercise the greatest self-restraint in interfering with the constitutionally mandated processes of jury decision." Barmeyer at 40 St.Rep. 25; Jacques vs. Montana National Guard (1982), Mont . , 649 P.2d 1319, 1325-26, 39 St.Rep. 1565, 1573-74. With these rules in mind we review the testimony upon which appellant must necessarily rely in her contention that a jury issue was created on the matter of punitive damages. We have divided the testimony which was offered to show that a letter of resignation was coerced by misrepresentation. Secondly, we refer to that testimony bearing upon the issue of whether appellant's supervisor agreed to return the resignation letter and then subsequently failed to do so. With resepect to the conversation surrounding appellant's tendering a resignation letter, appellant testified as follows: "Q. And did he point out to you that he would give you this letter of recommendation? "A. Yes, he did, and he even stated that I was a good worker, he had nothing against me and that he would give me a letter of recommendation. "Q. And did you understand by that that he would give you a positive letter of recommendation? "A. Yes. "Q. Not merely as he has said a statement that you had worked for two or three years? "A. That's right." Syverson, appellant's supervisor, testified that he offered to give appellant a letter of recommendation if she resigned. However, he testified that he only planned to give her a letter which would state that appellant was employed by Life of Montana Insurance Company; he never intended to provide appellant with a favorable letter of recommendation. There was evidence from which the jury might infer that appellant understood she was to receive a favorable letter of recommendation and that Syverson allowed her to resign on this basis. By way of deposition, Syverson testified: "Q. And then I asked you finally, "Question: Don't you think she understood when you said, 'We will give you a letter of recommendation,' that you would give her a favorable letter or recommendation to a subsequent employer? And your answer to that was what? "A. At line 15, Answer: I believe so." From the foregoing the jury could have found that (1) Syverson acting for defendant told appellant if she resigned she would receive a favorable letter of recommendation in order to obtain subsequent employment; (2) appellant reasonably expected to receive a favorable letter of recommendation to assist her in gaining reemployment; (3) appellant relied upon this representation and tendered her resignation; (4) Syverson never intended to give a favorable letter of recommendation to appellant. This evidence was sufficient for the jury to find fraud, oppression or malice. Additional evidence supports appellant's position. After appellant returned home her husband advised her to demand return of the resignation letter. Appellant testified she immediately called Syverson and discussed the resignation letter. Her testimony follows: "Q. And what did you say? "A. I told him that I had discussed this with my husband and that it was my prerogative that I could ask for my letter of resignation back because I had no intentions of resigning. "Q. And what did Mr. Syverson say to you? "A. He indicated to me that he wanted to keep the letter over the weekend and that on Monday he would mail it to me. "Q. He would mail you the letter of resignation? "A. He would mail me the original copy of the letter of resignation. "Q. Now, when we are talking here, are the original and copy two different things? "A. On the original letter? "Q. The original letter that you had signed? "A. Yes. "Q. Did you make clear to%him that that's what you wanted back? "A. Yes, I did. "Q. Because you said you didn't intend to resign? That's right." Appellant testified that Syverson promised to send her the letter of resignation. Appellant's testimony was corroborated by her husband who testified that he heard appellant, in a telephone conversation with Syverson, demand return of the resignation letter. The letter was never returned. Syverson's position at trial was that he only agreed to give appellant a copy of the letter. From this evidence the jury could infer that (1) appellant demanded return of the resignation letter; (2) Syverson acting on behalf of respondent said that the letter would be returned; (3) Syverson never intended to return the resignation letter to appellant. This evidence, when considered with the testimony surrounding the giving of the resignation letter, supports an award of punitive damages. Respondent argues that it should not be liable for punitive damages for terminating appellant without warning because at the time of appellant's termination there was an absolute right to fire without any type of process. Respondent asserts that new legal rights were given to appellant in the first appeal of this case and that respondent could not have known of the duty it owed appellant at the time of her termination. Respondent is not being assessed punitive damages for failing to provide a warning prior to the firing. Rather respondent's conduct in obtaining the letter of resignation and refusing appellant's demand for return forms the basis for a jury finding of fraud, oppression or malice. An employer stands to gain by an employee's resignation and such gain may be at the employee's expense. Resignation, rather than discharge, may protect an employer from immediately becoming liable for unemployment compensation benefits. Furthermore, the employer may, by obtaining a letter of resignation, be insulating itself from a claim of wrongful discharge. The courts must vigilantly assure that employers, as well as employees, are treated fairly. The sting of punitive damages will only be sanctioned where there is evidence that the tort feasor's conduct rose to a level of oppression, fraud or malice. Here we have a close case. However, when the evidence is viewed in a light most favorable to the employee, there is sufficient evidence for a jury to find that employer's conduct rose to the requisite level of culpability. We reverse the granting of judgment notwithstanding the verdict and remand to the trial court with directions to reinstate the award of punitive damages. ! We concur: 2*&$#(&/q,&gq Chief Jus ice Justices Mr. J u s t i c e L . C. Gulbrandson d i s s e n t i n g : I r e s p e c t f u l l y d i s s e n t . I would a f f i r m t h e D i s t r i c t Court s e t t i n g a s i d e t h e award of p u n i t i v e damages. I n t h e f i r s t appeal of t h i s c a s e , G a t e s v. L i f e of Montana, ( 1 9 8 2 ) , 638 P.2d 1063, 39 St.Rep. 1 6 , t h i s Court s t a t e d : "The c i r c u m s t a n c e s of t h i s c a s e a r e t h a t t h e employee e n t e r e d i n t o an employment c o n t r a c t t e r m i n a b l e a t t h e w i l l of e i t h e r p a r t y a t any time. The employer l a t e r promulgated a hand- book of p e r s o n n e l p o l i c i e s e s t a b l i s h i n g cer- t a i n p r o c e d u r e s w i t h regard t o t e r m i n a t i o n s . The employer need n o t have done s o , b u t pre- sumably sought t o s e c u r e an o r d e r l y , coopera- t i v e and l o y a l work f o r c e by e s t a b l i s h i n g uniform p o l i c i e s . The employee having f a i t h t h a t she would be t r e a t e d f a i r l y , t h e n deve- loped t h e peace of mind a s s o c i a t e d w i t h job s e c u r i t y . I f t h e employer h a s f a i l e d t o f o l l o w its own p o l i c i e s , t h e peace of mind of i t s employees is s h a t t e r e d and an i n j u s t i c e is done. "We hold t h a t a covenant of good f a i t h and f a i r d e a l i n g was implied i n t h e employment c o n t r a c t of t h e a p p e l l a n t . There remains a genuine i s s u e of m a t e r i a l f a c t which p r e c l u d e s a summary judgment, i . e . whether t h e respon- d e n t f a i l e d t o a f f o r d a p p e l l a n t t h e p r o c e s s r e q u i r e d and i f s o , whether t h e respondent t h e r e b y breached t h e covenant of good f a i t h and f a i r d e a l i n g . "As t o a l l o t h e r c l a i m s a g a i n s t t h e respon- d e n t , however, summary judgment was p r o p e r l y e n t e r e d . The D i s t r i c t Court c o r r e c t l y concluded t h a t a p p e l l a n t ' s c l a i m i n t o r t f o r wrongful d i s c h a r g e is unsupported by any showing of a v i o l a t i o n of p u b l i c p o l i c y a s r e q u i r e d under K e n e a l l y v. Orgain, s u p r a . "Gates' c l a i m f o r i n t e n t i o n a l in£ l i c t i o n of emotional d i s t r e s s must a l s o f a i l . The u n c o n t r a d i c t e d f a c t s show t h a t she was ' r a t h e r d i s t u r b e d ' and 'kind of i n shock.' Under any known s t a n d a r d t h e s e a l l e g a t i o n s a r e i n s u f - f i c i e n t t o e n t i t l e h e r t o r e c o v e r . K e l l y v. Lowney & W i l l i a m s , I n c . ( 1 9 4 2 ) , 1 1 3 Mont. 385, 126 P.2d 486; Helton v. Reserve L i f e I n s u r a n c e Co. (D.Mont., 1 9 7 5 ) , 399 F.Supp. 1322." 638 P.2d a t 1067, 39 St.Rep. a t 20-21. The m a j o r i t y , i n its v a l i a n t and s u c c e s s f u l e f f o r t t o c l a s s i f y t h e conduct of t h e d e f e n d a n t a s t o r t u o u s , s t a t e s : "Respondent is not being a s s e s s e d p u n i t i v e damages f o r f a i l i n g t o provide a warning p r i o r t o t h e f i r i n g . R a t h e r , r e s p o n d e n t ' s conduct i n o b t a i n i n g t h e l e t t e r of r e s i g n a t i o n and r e f u s i n g a p p e l l a n t ' s demand f o r r e t u r n , forms t h e b a s i s f o r a j u r y f i n d i n g of f r a u d , o p p r e s s i o n , o r malice." I n o t e t h a t j u r y i n s t r u c t i o n twenty-three reads: "You a r e i n s t r u c t e d t h a t t h e l e t t e r of r e s i g n a t i o n dated October 1 9 , 1979, became t h e p r o p e r t y of defendant L i f e of Montana, and d e f e n d a n t L i f e of Montana was under no l e g a l o b l i g a t i o n t o r e t u r n t h e l e t t e r of r e s i g n a t i o n t o t h e p l a i n t i f f . " T h a t was t h e o n l y i n s t r u c t i o n given t h e j u r y where t h e l e t t e r of r e s i g n a t i o n was mentioned. The c a s e was o b v i o u s l y submitted and argued by p l a i n t i f f t o t h e j u r y on t h e b a s i s t h a t l i a b i l i t y a l s o r e s u l t e d from t e r - m i n a t i o n without n o t i c e . (See i n s t r u c t i o n s no. 17, 1 9 , and 21, which g e n e r a l l y s t a t e t h a t l i a b i l i t y can a r i s e from f a i l u r e t o f o l l o w e s t a b l i s h e d company p o l i c y . ) I f t h e j u r y followed i n s t r u c t i o n no. 23 ( n o duty of d e f e n d a n t t o r e t u r n t h e l e t t e r of r e s i g n a t i o n ) and i f , a s t h e m a j o r i t y s t a - t e s , t h e respondent is not being a s s e s s e d p u n i t i v e damages f o r f a i l i n g t o provide a warning p r i o r t o t h e f i r i n g , t h e n t h e award must be based on t h e d e f e n d a n t ' s conduct i n o b t a i n i n g t h e l e t t e r of r e s i g n a t i o n . I n t h a t regard t h e p l a i n t i f f Marlene Gates t e s t i f i e d a s f o l l o w s : "Q. Have you ever considered why you would be g i v e n t h a t o p t i o n , t h e r e s i g n i n g o r being f i r e d ? A. No. "Q. Well, i f he wanted t o g e t r i d of you, it would have been simple enough t o say, 'You're f i r e d , ' wouldn't i t ? A . Y e s . "Q. But he allowed you t o r e s i g n . A . Y e s . "Q. And d i d you think t h a t over? Did you t h i n k over t h a t d e c i s i o n of whether you should r e s i g n or be f i r e d ? A. Yes. "Q. How long d i d you think it o v e r ? A . Well, I s a t t h e r e I suppose it was minu- tes, you know. I t was a f t e r f i v e o ' c l o c k . I was wanting t o g e t home and I ' m s u r e he was wanting t o g e t o u t of t h e o f f i c e , and s e v e r a l t h i n g s went through m y mind, and I had t o make a d e c i s i o n one way or t h e o t h e r . "n. You decided t o r e s i g n . A . T h a t ' s r i g h t . "Q. Why was t h a t ? A. Because I t h o u g h t it would look b e t t e r f o r my r e c o r d , and I ' m s u r e it wouldn't be very good f o r t h e i r record t o be known t o be f i r i n g p e o p l e . "Q. You were concerned about how it would look f o r you? A . Yes. "Q. I f you signed t h e l e t t e r of r e s i g n a t i o n , you could t e l l p e o p l e , ' I r e s i g n e d ,' and you wouldn't have t o say, ' I was f i r e d , ' r i g h t ? A. Right. "Q. And a l s o , when you went o u t t o seek a n o t h e r job, you wouldn't have t o say you were f i r e d from your l a s t one. You could say you r e s i g n e d . A. T h a t ' s r i g h t . "Q. So t h a t was done a s a b e n e f i t t o you, is t h a t r i g h t ? A . Right. "Q. Now, when you went i n t o t h i s meeting w i t h Roger Syverson when you were t e r m i n a t e d , was t h e r e any loud t a l k or loud language? A . No, t h e r e was n o t . "Q. Was t h e c o n v e r s a t i o n calm a nd b u s i n e s s l i k e ? A . Yes. "Q. Were you nervous? A. Y e s . "Q. Was Roger nervous? A . H e appeared t o be very nervous, yes. "Q. Would you t e l l u s which of you were t h e most nervous? A . I d i d n ' t weigh it o u t , no. "Q. A t l e a s t you could t e l l o b v i o u s l y t h a t Mr. Syverson was nervous about t h i s whole s i t u a t i o n ? A . Yes. "Q. Did he i n t i m i d a t e you? A . No. "Q. Did you i n t i m i d a t e him? A . I d o n ' t b e l i e v e I d i d . "Q. Now, when you were asked t o make a deci- s i o n whether you wanted t o r e s i g n o r be f i r e d , you thought t h a t over p r e t t y c l o s e l y ? A . Yes, I d i d . "Q. And your d e c i s i o n was t h a t you p r e f e r r e d t o r e s i g n ? A . Yes. "Q. And you have, a t t h a t t i m e you f e l t t h a t was a good d e c i s i o n ? A . Well, it was t h e b e t t e r d e c i s i o n , yes. "Q. And it was based on your d e t e r m i n a t i o n t h a t w i t h t h e l e t t e r of r e s i g n a t i o n , you would be b e t t e r a b l e t o g e t a job, p l u s it would be e a s i e r t o handle q u e s t i o n s of f e l l o w employees and f r i e n d s ? A. Yes. "Q. Those were your reasons f o r s i g n i n g t h e l e t t e r of r e s i g n a t i o n ? A . Yes. "Q. And when you l e f t t h e o f f i c e t h a t a f t e r - noon, October 1 9 , 1979, you had concluded t h a t t h a t was t h e b e s t t h i n g t o do. A . Y e s . " The m a j o r i t y o p i n i o n s t a t e s : " t h e s t i n g of p u n i t i v e damages w i l l o n l y be s a n c t i o n e d where t h e r e is evidence t h a t t h e t o r t - f e a s o r ' s conduct r o s e t o a l e v e l of o p p r e s s i o n , f r a u d , o r m a l i c e . " I do n o t f i n d t h a t o p p r e s s i v e l e v e l of conduct and n e i t h e r d i d t h e t r i a l judge when s e t t i n g a s i d e t h e award f o r p u n i t i v e damage. H i s memorandum of September 28, 1982, s t a t e d : " i n t h i s c a s e , I f i n d no evidence t h a t t h e d e f e n d a n t knowingly v i o l a t e d any d u t y t o t h e p l a i n t i f f . There is no evidence t h a t t h e defen- d a n t a c t e d m a l i c i o u s l y , i n t e n t i o n a l l y , o r w i l l f u l l y , and there- f o r e t h e c l a i m f o r p u n i t i v e damages must f a i l . " T h i s Court, i n t h e f i r s t G a t e s o p i n i o n , c o r r e c t l y i d e n t i f i e d t h e t h r e s h o l d q u e s t i o n of whether t h e employee's r e s i g n a t i o n was v o l u n t a r y . U n f o r t u n a t e l y , t h e j u r y was not i n s t r u c t e d on t h i s p o i n t and no s p e c i a l v e r d i c t was r e q u e s t e d . I n t h e f i r s t G a t e s d e c i s i o n , t h e Court c i t e d Molinar v. Western E l e c t r i c Company (1st C i r . 1 9 7 5 ) , 525 F.2d 521, cert. d e n . , ( 1 9 7 6 ) , 424 U.S. 978, 96 S.Ct. 1485, 47 L.Ed.2d 748, where t h e c o u r t decided t h e a p p l i c a b l e r u l e t h a t "an employee who v o l u n t a r i l y r e s i g n s cannot m a i n t a i n a cause of a c t i o n f o r wrong- f u l d i s c h a r g e . " The c o u r t t h e r e s t a t e d : "A more d i f f i c u l t i s s u e is whether M o l i n a r ' s l e t t e r of r e s i g n a t i o n r a i s e d a j u r y i s s u e of v o l u n t a r i n e s s . Molinar a r g u e s t h a t he was induced t o r e s i g n by t h e f r a u d u l e n t promise t h a t i f he d i d s o he would r e c e i v e good recommendations. " [where] . . . [a] v o l u n t a r y r e s i g n a t i o n bars a s u i t f o r wrongful d i s c h a r g e , t h e following s t a n d a r d h a s been l a i d down: "'Even where t h e employee is t o l d t h a t he must choose between r e s i g n a t i o n and s e p a r a t i o n , t h e subsequent c h o i c e of r e s i g n a t i o n is n o t coerced u n l e s s t h e employee can show t h a t h i s s u p e r i o r knew or believed t h a t t h e reasons f o r t h e proposed s e p a r a t i o n could n o t be s u b s t a n t i a t e d . . . . 1 11 "Cosby v. United S t a t e s , [ ( I 9 6 9 C t . C l . ) , 417 F.2d 13451 a t 1355. T h i s s t a n d a r d , which w e t h i n k New York would adopt, l i m i t s a c l a i m of d u r e s s t o r e s i g n a t i o n s e x t o r t e d a s a cover f o r wrongdoing, and r e c o g n i z e s t h a t r e s i g n a t i o n s i n l i e u of d i s c h a r g e may i n many o t h e r instan- c e s r e f l e c t a mutually b e n e f i c i a l , good f a i t h composition between an employer and employee having d i f f e r e n t views a s t o what each owes t o t h e o t h e r . Thus, h e r e , f o r M o l i n a r ' s resigna- t i o n t o be t r e a t e d a s coerced and l e g a l l y i n e f f e c t i v e , it must be shown n o t o n l y t h a t t h e p r o j e c t e d d i s c h a r g e would amount t o a l e g a l breach of c o n t r a c t b u t t h a t t h e r e was bad f a i t h , i n t h a t Western E l e c t r i c knew o r b e l i e v e d t h a t t h e d i s c h a r g e could not be s u b s t a n t i a t e d . " I n m y view, t h e m a j o r i t y , by extending t h e o r i g i n a l G a t e s d e c i s i o n , has s e t t h e s t a g e f o r a " j u s t cause s t a n d a r d f o r at- w i l l employees," which I b e l i e v e is a l e g i s l a t i v e r a t h e r t h a n a j u d i c i a l f u n c t i o n . S e c t i o n 39-2-503, MCA, p r o v i d e s t h a t employment, having no s p e c i f i e d term, may be terminated a t t h e w i l l of e i t h e r p a r t y on n o t i c e t o each o t h e r . T h i s s e c t i o n c o d i f i e s t h e long- e s t a b l i s h e d , b u t r e c e n t l y q u e s t i o n e d , " a t - w i l l " r u l e . Although t h i s Court h a s recognized t h a t t h i s r u l e may be o u t d a t e d , we have a l s o recognized t h a t " i t is uniquely a p r o v i n c e of t h e l e g i s l a - t u r e t o change i t . " Reiter v. Yellowstone County ( 1 9 8 1 ) , Mont. , 627 P.2d 845, 849, 38 St.Rep. 686, 690. I n Reiter, w e noted t h a t because of t h e o p e r a t i o n of s e c t i o n 39-2-503, MCA, t h e a t - w i l l employee was not employed on a " d i s c h a r g e f o r cause only" b a s i s . W e s t a t e d , "assuming arguendo t h a t a p p e l l a n t had an implied c o n t r a c t w i t h an implied covenant of good f a i t h , t h e employer d i d not a c t i n bad f a i t h because its conduct was s t a t u t o r i l y p e r m i s s i b l e . " 627 P.2d a t 849-850, 38 St.Rep. a t 690. I n o t h e r words, under s e c t i o n 39-2-503, MCA, an employer o r employee could t e r m i n a t e employment f o r any o r a l l r e a s o n s , pro- v i d e d t h e reasons o r manner of t e r m i n a t i o n d i d not v i o l a t e p u b l i c p o l i c y . See K e n e a l l y v. Orgain ( 1 9 8 0 ) , Mont. , 606 P.2d 127, 37 St.Rep. 154. I n t h e p r i o r d i s c u s s i o n of t h i s c a s e , t h i s Court determined t h a t a covenant of good f a i t h and f a i r d e a l i n g was implied i n t h e p a r t i e s ' o r a l , a t - w i l l , employment c o n t r a c t . The b a s i s f o r t h i s h o l d i n g was t h e employer 's promulgation of an employees' hand- book, two y e a r s a f t e r G a t e s began employment. The handbook pro- v i d e d c e r t a i n g u i d e l i n e s f o r t e r m i n a t i o n of employees. W e s t a t e d t h a t G a t e s had a cause of a c t i o n because " i f t h e employer f a i l e d t o f o l l o w its own p o l i c i e s , t h e peace of mind of its employees is s h a t t e r e d and an i n j u s t i c e is done." 638 P.2d a t 1067, 39 St.Rep. a t 20. W e t h e n found two genuine i s s u e s of m a t e r i a l f a c t : (1) whether respondent f a i l e d t o a f f o r d a p p e l l a n t G a t e s t h e p r o c e s s r e q u i r e d ; and ( 2 ) whether t h e respondent t h e r e b y breached t h e covenant of good f a i t h and f a i r d e a l i n g . The Court had a l s o decided i n t h e p r i o r d e c i s i o n t h a t t h e g u i d e l i n e s i n t h e employer handbook r e g a r d i n g n o t i c e p r i o r t o t e r m i n a t i o n , were not e n f o r c e a b l e a s c o n t r a c t r i g h t s . W e f u r t h e r determined t h a t a p p e l l a n t ' s claim i n t o r t f o r wrongful d i s c h a r g e was p r o p e r l y dismissed because it was not supported by any show- i n g of a v i o l a t i o n of p u b l i c p o l i c y . The m a j o r i t y c i t e s L i p i n s k i v. T i t l e I n s u r a n c e Co. ( 1 9 8 2 ) , ---- Monte ---- , 655 P.2d 970, 39 St.Rep. 2283, f o r t h e a s s e s s m e n t of p u n i t i v e damages i n bad f a i t h c a s e s . I n s u r a n c e c a s e s upholding a breach of t h e implied covenant of good f a i t h and f a i r d e a l i n g d i d not evolve under t h e same con- s i d e r a t i o n s a s c a s e s d i s c u s s i n g a breach of t h e implied covenant i n employment c o n t r a c t s . I n t h e i n s u r a n c e c a s e s , t h e c o u r t s look t o whether t h e i n s u r a n c e company, w i t h m a l i c e , f r a u d o r o p p r e s s i o n , abused its duty t o a c t i n good f a i t h . The "bad f a i t h " employment c a s e s m a i n t a i n a h i g h e r s t a n d a r d i n t h a t t h e c o u r t s g e n e r a l l y look f o r a v i o l a t i o n of p u b l i c p o l i c y on t h e p a r t of t h e employer. See d i s c u s s i o n i n P i e r c e v. O r t h P h a r m a c e u t i c a l Corp. ( 1 9 8 0 ) , 84 N . J . 58, 417 A.2d 505, 1 2 ALR4th 520, and Annot. 1 2 ALR4th 544, ( 1 9 8 2 ) . Most c o u r t s r e c o g n i z i n g a cause of a c t i o n based on a d i s c h a r g e t h a t o f f e n d s p u b l i c p o l i c y have grounded t h a t a c t i o n i n t o r t , while o n l y a few have r e l i e d on an implied c o n t r a c t t h e o r y of recovery. Compare Tameny v. A t l a n t i c R i c h f i e l d Co. ( 1 9 8 0 ) , 27 Cal.3d 167, 610 P.2d 1330, 164 Cal.Rptr. 839, ( r e c o g n i z i n g a t o r t a c t i o n f o r wrongful d i s c h a r g e when employee was terminated because he r e f u s e d t o commit a c r i m i n a l a c t ) ; Nees v. Hooks ( 1 9 7 5 ) , 272 Or. 210, 536 P.2d 512 ( r e c o g n i z i n g a t o r t a c t i o n because an employee was dismissed f o r s e r v i n g j u r y d u t y ) ; and Kelsay v. Motorola ( 1 9 7 8 ) , 74 111.2d 172, 364 N.E.2d 353 ( r e c o g n i z i n g a t o r t a c t i o n when employee was dismissed f o r f i l i n g a workers' compensation c l a i m ) ; w i t h Fortune v. N a t i o n a l Cash R e g i s t e r Co. ( 1 9 7 7 ) , 373 Mass. 96, 364 N.E.2d 1251 ( r e c o g n i z i n g a c o n t r a c t a c t i o n when employee t e r m i n a t e d i n o r d e r not t o r e c e i v e earned bonuses o r commissions ) ; and Monge v. Beebe Rubber Co. ( 1 9 7 4 ) , 1 1 4 N.H. 130, 316 A.2d 549 ( r e c o g n i z i n g c o n t r a c t a c t i o n and l i m i t i n g damages t o those f o r breach of c o n t r a c t when employee t e r m i n a t e d f o r r e f u s a l t o d a t e foreman). For a more complete list, see Smith v. A t l a s Off-Shore Boat S e r v i c e ( 5 t h C i r . 1 9 8 1 ) , 653 F.2d 1057, 1061 N.9. I n t h e p r i o r d e c i s i o n , t h i s Court r e l i e d on Fortune and Monge i n r e c o g n i z i n g t h a t a p p e l l a n t h a s a cause of a c t i o n under an i m p l i e d covenant of good f a i t h and f a i r d e a l i n g . Both Fortune and Monqe grounded t h e i r d e c i s i o n s i n c o n t r a c t , n o t t o r t law. Damages were l i m i t e d t o t h o s e allowed o n l y f o r breach of c o n t r a c t . Moreover, t h e d e c i s i o n i n Monqe - was l a t e r l i m i t e d by t h e N e w Hampshire Supreme Court t o s i t u a t i o n s where t h e t e r - m i n a t i o n v i o l a t e d p u b l i c p o l i c y . See Howard v. Dorr Woolen Co. ( 1 9 8 0 ) , 120 N.H. 295, 414 A.2d 1273. By allowing p u n i t i v e damages i n t h i s c a s e , t h e m a j o r i t y h a s i d e n t i f i e d , and approved, an independent t o r t of bad f a i t h i n a t - w i l l employment c o n t r a c t s . A l l o t h e r j u r i s d i c t i o n s do so o n l y when t h e t e r m i n a t i o n v i o l a t e s p u b l i c p o l i c y . I n o t e f u r t h e r t h a t t h e t e r m i n a t i o n i n q u e s t i o n occurred October 1 9 , 1979. The Reiter d e c i s i o n , s u p r a , acknowledging t h a t " t h e employer d i d n o t a c t i n bad f a i t h because its conduct was s t a t u t o r i l y p e r m i s s i b l e , " was dated May 4 , 1981. The K e n e a l l y d e c i s i o n , s u p r a , was d a t e d J a n u a r y 30, 1980, and t h i s Court, c i t i n g P e r c i v a l v. General Motors Corp. (E.D. Mo. 1 9 7 5 ) , 400 F.Supp. 1322, s t a t e d : "Thus, t h a t c o u r t noted, c o r r e c t l y , t h a t a d i s c h a r g e by an employer i n a c o n t r a c t ter- minable a t w i l l does not g i v e rise t o a c l a i m f o r wrongful d i s c h a r g e i n t h e o r d i n a r y s e n s e , though t h e f i r i n g o r t h e t e r m i n a t i o n may have been u n j u s t i f i e d . I t is o n l y when a p u b l i c p o l i c y has been v i o l a t e d i n c o n n e c t i o n w i t h t h e wrongful d i s c h a r g e t h a t t h e cause of a c t i o n a r i s e s . " 606 P.2d a t 1 2 9 , 37 St.Rep. a t 157. I n view of t h e f a c t t h a t t h e t e r m i n a t i o n i n q u e s t i o n occurred l o n g b e f o r e t h e above two d e c i s i o n s of t h i s Court, I would expect t h i s Court t o a p p l y t h e law a s s t a t e d i n t h o s e d e c i s i o n s t o t h i s c a s e . The G a t e s d e c i s i o n , s u p r a , wherein t h e d o c t r i n e of implied c o v e n a n t of good f a i t h was f i r s t approved, was dated J a n u a r y 5 , 1982. I do not o b j e c t t o t h e a p p l i c a t i o n of t h i s d o c t r i n e r e t r o a c t i v e l y f o r t h e d e t e r m i n a t i o n of compensatory damages, b u t I do n o t a g r e e t h a t it should be t h e b a s i s of p u n i t i v e damages. I n o t e , w i t h a p p r o v a l , t h e c i t a t i o n by t h e t r i a l judge i n h i s memorandum of September 28, 1982, of Nees v. Hooks, s u p r a . I n t h a t c a s e an employee was d i s c h a r g e d f o r missing work t o a t t e n d j u r y d u t y , a c l e a r v i o l a t i o n of p u b l i c p o l i c y . The Oregon c o u r t allowed compensatory damages, b u t would n o t a l l o w t h e awarding of p u n i t i v e damages. The Oregon c o u r t s t a t e d a s follows: "There is one f a c t o r , however, which is p r e s e n t i n t h i s c a s e which h a s n o t been p r e s e n t i n p a s t c a s e s approving t h e submission o f t h e p u n i t i v e damage i s s u e t o t h e jury. I n o u r p a s t c a s e s , t h e d e f e n d a n t knew h i s conduct was regarded a s c u l p a b l e and would g i v e r i s e t o a cause of a c t i o n because of p a s t j u d i c i a l d e c i s i o n s o r l e g i s l a t i o n . For example: An automobile d e a l e r t u r n i n g back t h e odometer t o d e c e i v e t h e p u r c h a s e r , Lewis v. Worldwide Imports, 238 O r . 580, 395 P.2d 922 ( 1 9 6 4 ) ; a f i n a n c e company c o n v e r t i n g an automobile by wrongful r e p o s s e s s i o n , P e l t o n v. Gen. Motors Accept. Corp., 139 O r . 198, 7 P.2d 263, 9 P.2d 128 ( 1 9 3 2 ) ; and a drunken d r i v e r c o l l i d i n g w i t h another c a r , H a r r e l l v. A m e s , 265 O r . 1 8 3 , 508 P.2d 211 ( 1 9 7 3 ) . " U n t i l t h e t r i a l c o u r t ' s r u l i n g i n t h i s c a s e and our a f f i r m a n c e t h e r e was no j u d i c i a l deci- s i o n t h a t an employer was l i a b l e i f he d i s c h a r g e d an employee because she served j u r y d u t y . A s we e a r l i e r s t a t e d , t h e g e n e r a l r u l e known t o employers and lawyers a l i k e is t h a t a b s e n t c o n t r a c t o r s t a t u t e , an employer can d i s c h a r g e an employee f o r any r e a s o n w i t h o u t i n c u r r i n g l i a b i l i t y . " I f w e h e l d t h a t p u n i t i v e damages could be awarded i n t h e p r e s e n t c a s e , w e would be per- m i t t i n g t h e j u r y t o punish d e f e n d a n t s f o r con- d u c t which t h e y could not have determined be£ orehand was even a c t i o n a b l e . The assessment of p u n i t i v e damages h a s some of t h e same f u n c t i o n s a s t h e s a n c t i o n s of c r i m i n a l law. . . . The s a n c t i o n s of t h e c r i m i n a l law cannot c o n s t i t u t i o n a l l y be imposed when t h e c r i m i n a l i t y of t h e conduct is not capable of being known beforehand." 272 O r . 210, 536 P.2d a t 516-17. I would hold t h a t p u n i t i v e damages a r e not a l l o w a b l e where t h e r e h a s been no showing t h a t t h e t e r m i n a t i o n of an a t - w i l l employee v i o l a t e d p u b l i c p o l i c y , u n t i l such t i m e a s t h e l e g i s l a - t u r e r e p e a l s o r amends s e c t i o n 39-2-503, MCA. I concur i n the f o r e g o i n g d i s s e n t of M r . J u s t i c e Gulbrandson: Mr. Justice Fred J. Weber dissents as follows: I join in the dissent of Justice Gulbrandson. In addition I dissent as follows: With regard to the covenant of good faith, the majority opinion holds in part: "Breach of the covenant to deal fairly is, simply stated, breach of a legal duty to deal fairly. Breach of the duty owed to deal fairly in the employment relationship is a tort for which punitive damages can be recovered if defendant's conduct is sufficiently culpable." I am unable to understand how the majority has arrived at that conclusion. The majority refers to section 27-1-221, MCA, which in pertinent part states: "In any action for a breach of an obligation - not arising from contract . . . the jury . . . may give damages for the sake of example and by way of punishing the defendant." (Emphasis added.) The basic question here is whether there is a breach of an obligation not arising from contract. In our original opinion, Gates v. Life of Montana Ins. Co. (1982), Mont . , 638 P.2d 1063 at 1067, we stated the key holding: "We hold that a covenant of good faith and fair dealing was implied in the employment contract of the appellant." In reaching that conclusion, we pointed out that a general principle of good faith and fair dealing has been recognized under the Uniform Commercial Code and also has been recognized in insurance contracts. We also pointed out that recent decisions in other jurisdictions support the proposition that a covenant of good faith and fair dealing is implied in employment contracts. Since we then concluded that in the Gates case a covenant of good faith and fair dealing was implied in the employment contract, it seems clear that such a covenant becomes a part of the employment contract as if it were set forth in writing. An implied covenant can be breached just as a covenant expressly stated in the contract can be breached. The present case is an action for breach of the covenant of good faith and fair dealing, arising from the contract from which -- that covenant is implied. Comparing the contractual covenant of good faith and fair dealing with the punitive damages section, it seems clear that breach of such a contractual obligation does not justify an award of punitive damages under the express terms of the statute. The majority holds that the code section exempts only breach of contract actions from its provisions. Essentially, that is the nature of the present claim for relief. The present holding has little relationship to our original holding in Gates. There we held that a covenant of good faith and fair dealing was implied in the employment contract. We remanded the cause to determine if the employee had been given due process and, if so, whether a breach of the covenant of good faith and fair dealing resulted. If I understand the majority, we now disregard the contractual relationship and its implied covenant, and hold that there is a duty to deal fairly, which apparently -- does not arise from the contract itself, and the breach of such duty is a tort for which punitive damages can be recovered. While I agree that it may be reasonable to amend section 27-1-221, MCA, to allow punitive damages for breach of an obligation arising from contract, we have traveled a long way to arrive at a conclusion which should have been left to the legislature.