Court: Idaho Court of Appeals; October 13, 1988; Idaho; State Appellate Court
In the case Keith B. Nilsson v. MAPCO, Inc., the Idaho Court of Appeals reviewed an employment termination dispute where the jury found that MAPCO wrongfully terminated Nilsson's employment. MAPCO-Nevada, the defendant, raised several arguments on appeal: it contended it was not Nilsson's employer; if it was, Nilsson was an at-will employee who could be terminated for any reason; the trial court erred by not providing jury instructions regarding at-will employment; and it sought costs and attorney fees related to its defense.
The court determined that MAPCO-Nevada was indeed the proper party in the case but noted that the trial court's jury instructions and special verdict form were ambiguous and inconsistent with Idaho law, leading to the vacation of the judgment and a remand for a new trial. Nilsson had been employed as maintenance superintendent at the DeLamar Silver Mine since May 1979, initially hired by Earth Resources Company (ERC). After ERC was acquired by Mapco Minerals Corporation (MMC), Nilsson received a new employee handbook emphasizing fair treatment but lacking specific disciplinary procedures.
Despite receiving positive evaluations and assurances regarding job security from his supervisor, Lyle Talbott, Nilsson was terminated in July 1983, following claims of lost confidence from fellow employees and allegations of misappropriation of mine property. Following his dismissal, Nilsson filed suit alleging age discrimination, breach of contract, and bad faith, ultimately naming MAPCO-Nevada as the sole defendant. During pre-trial proceedings, both parties stipulated to Nilsson’s employment duration at the mine.
MAPCO-Nevada did not timely object to the trial court's order as allowed by I.R.C.P. 16(g) and continued with litigation, leading to a trial six weeks later. After jury selection, MAPCO-Nevada sought dismissal, claiming it was not involved with the mine's operation and that it was wrongly named as the defendant. The trial judge rejected this argument, enforcing the pre-trial stipulation that named MAPCO-Nevada as the defendant. The jury subsequently found MAPCO-Nevada liable for wrongfully terminating Nilsson's employment, awarding him $20,000 in damages.
On appeal, MAPCO-Nevada contends the trial court erred by not dismissing it as the defendant, asserting it had no involvement with the mine and that Nilsson was aware of this. In contrast, Nilsson argues that MAPCO-Nevada's defense and procedural failures, including not moving for dismissal under I.R.C.P. 12 or joining MAPCO-Delaware as an indispensable party, should estop it from denying liability. The trial court's decision is upheld, emphasizing that the pre-trial conference aims to expedite cases through stipulations that parties generally must adhere to. The court determined it would be inequitable to dismiss MAPCO-Nevada at such a late stage, as Nilsson had taken necessary steps to identify the correct defendant, and MAPCO-Nevada had not denied its role until the trial began. The court also noted that had MAPCO-Nevada timely raised a personal jurisdiction defense, it would have been required to assess jurisdiction over the proper defendant. However, its failure to do so indicates a waiver of that defense by participating in the case on the merits.
A 'voluntary appearance' in legal proceedings is established by actions demonstrating a party's intent to defend against the action. In this case, MAPCO-Nevada exhibited such intent, leading to the conclusion that the trial judge appropriately declined to relieve it from a pre-trial stipulation designating it as the defendant. Consequently, the denial of MAPCO-Nevada's request to dismiss itself from the case was not erroneous.
MAPCO-Nevada contends that the trial court's special verdict contradicts Idaho law, arguing that Nilsson was an at-will employee due to the absence of a written contract and that the employee manuals did not create contractual terms. It asserts that at-will employment does not include an implied covenant of good faith and fair dealing. In contrast, Nilsson argues that his employment was not at-will, citing assurances from Talbott and Cole, along with provisions from the employee manuals, which he claims formed a contractual relationship guaranteeing fair treatment and protection against disciplinary actions. Nilsson states that he was terminated without just cause as outlined in the employee manual and that an implied covenant of good faith and fair dealing existed in his relationship with ERC and MMC.
During the trial, the jury's special verdict indicated that an express or implied contract or duty existed that limited the reasons for Nilsson's termination. However, the jury's response did not clarify whether it found an express or implied contract or a breach of good faith. Under established law, at-will employment permits termination without liability unless restricted by a specific contract or public policy exception. Although employment contracts can exist through express or implied agreements, an implied covenant of good faith and fair dealing does not create an independent ground for wrongful discharge liability in all cases. Such a covenant may apply where termination is based on bad faith towards a specific employee. The trial judge lacked guidance from previous rulings when formulating jury instructions, resulting in uncertainty regarding the jury's basis for their verdict concerning the existence of a contract or a breach of the implied covenant.
The trial judge allowed the jury to decide on Nilsson's claim regarding an implied covenant of good faith and fair dealing, instead of directing a verdict in favor of MAPCO-Nevada. Jury instructions required the plaintiff to prove several propositions, including the existence of an employment contract and that the termination breached the duty of good faith and fair dealing. However, the instructions did not clarify that a claim for breach of this covenant necessitated evidence of bad faith directed personally at Nilsson. This ambiguity meant the jury could not accurately determine MAPCO-Nevada's liability under the covenant theory, as they were not properly informed of the requirement for a specific showing of bad faith. Consequently, the appellate court could not ascertain the basis of the jury's decision and remanded the case for a new trial, instructing the trial court to separate inquiries regarding breach of contract from those related to bad faith in its special verdict form. The appellate court found other issues raised by MAPCO-Nevada unnecessary to address and vacated the judgment, ordering a new trial without awarding attorney fees on appeal. Costs were assigned to MAPCO-Nevada.
BURNETT and SWANSTROM, JJ. concur. MAPCO-Nevada admitted that Nilsson was employed as maintenance superintendent at the DeLamar Mine but denied all other allegations in Nilsson's complaint and amended complaint. The pre-trial stipulation regarding Nilsson's employment reflected MAPCO-Nevada's answer. An employment contract can be established by the trial court as a matter of law or as a factual question when evidence is conflicting or terms are unclear. Various sources can indicate the existence of an employment contract, including express agreements, oral agreements, and provisions in employee handbooks. In jury cases, findings will not be overturned if supported by substantial and competent evidence, even if conflicting. Discharged employees must prove that an employee manual or handbook constitutes an employment contract by demonstrating the employer's policies were communicated and that the employee reasonably relied on those policies to remain employed.
