SAVIK PIIPO v ENTECH INC
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96-072 NO. IN THE SUPREMECOURT OF THE STATE OF MONTANA 1996 MARLEN G. SAVIK, an individual and JACK W. PIIPO, an individual, Plaintiffs and Appellants, v. ENTECH, INC., a Montana Corporation; MICHAEL J. MELDAHL, an individual; and DOES l-100, inclusive, Defendants APPEAL FROM: and Respondents District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable Ed P. McLean, Judge presiding. COUNSEL OF RECORD: For Appellants: Donald V. Snavely; Montana Snavely Law Firm, Cynthia K. Smith; Cederberg, Missoula, Montana Shott Missoula & Smith, For Respondents: Terry J. MacDonald; Missoula, Montana Garlington, Patrick Attorney T. Fleming, Submitted Filed: Lohn & Robinson, at Law, Butte, on Briefs: Decided: August Montana 8, 1996 September 12, 1996 Justice W. William Marlen the jury delivered the Opinion G. Savik and Jack Piippo verdict County, Leaphart of their denying the Fourth request (Savik and Piippo) Judicial for reverse in part For purposes of this decision, the following dispositive District damages for in part, We affirm of the Court. appeal Court, breach from Missoula of contract. and remand. this Court will discuss only issues: in dismissing District Court err breach of contract claim? 1) Did the Piippo's 2) Did the District Court err parol evidence when Savik under a theory of fraudulent Savik and in instructing the jury on and Piippo sought recovery inducement? BACKGROUND In long 1983, distance officers of operated Piippo various entered of the is Following into assets a Montana negotiations, stockholders in contract of period, was Entech's the Entech chief purchased sale 2 and principal of that all of Entech During businesses for Vice President, all agreement. and the sale of negotiations negotiator its has owned and including with a In May On May 15, 1990, Savik America. Touch to a written control businesses technology. Inc., in Montana. corporation a written (Meldahl) pursuant and were non-utility the negotiation Meldahl assets America Touch America, services were the sole in communications following J. Touch organized company with and Piippo Entech operations. involved and Piippo telephone Savik of 1990, all Savik for and Michael Entech. of Touch America's The Sale Agreement consisting Savik of a $1.15 million and Piippo business of generated net profits also required The Agreement that three stated those employment that five that years plus the Savik for Entech after to of the the sale. The of $783,545. be permitted the sale of Touch America. to other for profits Savik and Piippo and Piippo In accordance sale price a distribution net years after are afforded policies." worked of a variable had a maximum payment Entech for benefits percent the first distribution to work for set forth down payment, twenty during The Agreement Piippo (Agreement) would "be entitled employees with under to Entech's the Agreement, years three Savik to prior and their termination. In 1993, Savik and Piippo claiming that employment they Piippo's rule breached three Court claims set forth barred granted breach and Piippo At trial, into of Savik various contract was whether that claimed Savik the and the parol communication Entech their the Agreement. dismissing finding the only and Piippo and Piippo entering were clear Therefore, entering into Savik Court by terminating Savik summary judgment of the oral and Piippo. Court Agreement induced in District First, Second, in the contract consideration the District with of the years. were fraudulently and Savik along Entech after The District terms an action damages based on two theories. claimed that brought express evidence between Meldahl remaining fraudulently and issue before induced Savik the Agreement. and Piippo argued that representations 3 by the employment Meldahl, clause, created the impression that Meldahl's they alleged claims verdict favor made by among other dismiss breach regarding parol Entech employees. are the basis Savik things, of the fraudulent and Piippo. Savik of Entech, challenging, their become permanent representations inducement in would Following and Piippo brought this Court's decision as jury instructions the District of contract claim a jury as well appeal to evidence. DISCUSSION 1) Did the District Court err in dismissing and Piippo's breach of contract claim? Our standard rulings of is de novo. review Mead v. 470, 872 P.2d 782, 785. summary judgment, court 272 Mont. Savik their Agreement. M.S.B., the 261, 264, Inc. 900 P.2d 901, of the intent That paragraph summary (1994), a district Bruner claims of from provided v. judgment 264 Mont. 465, court's grant as the district same evaluations 56, M.R.Civ.P. and Piippo's interpretation appeals When we review we apply based on Rule (1995), in Savik Yellowstone of County 903. breach of of contract paragraph in relevant stem 4.13 of from the part: Subject to satisfying Entech's hiring policies, Entech shall retain Messrs. Savik and Piippo for terms of salaries of three (3) years each at annual initial $60,000 each. Messrs. Savik and Piippo will be entitled to those benefits that are afforded to other employees under Entech's employment policies[.l Savik and Piippo maintain that Entech employees included not only vacation, pension, but also permanent the "benefits" employment 4 available health terminable to them as insurance, only for and good Savik and Piippo cause. on oral based their representations that Meldahl. They also contract, "[tlhe intended evidence rule and 28-2-905, 28-2-904, execution concerning parol its when an agreement parties, there imperfection agreement is contract, Savik ambiguous and thus to that the statements fact all of that (1988), 231 Mont. claim term the have allowed which evidence of Lines 522, 528-29, explained: 5 agreement led of the for breach "benefits" parol or of was evidence as them to believe employment. where the terms 95, 100, 902 P.2d 9, 12. the when a mistake that should has held 273 Mont. except of by the or when the validity them by Meldahl Freight terms or MCA, further to writing In their contend the court Molerway the is claimed This Co. of permanent admissible. ยงยง or accompanied 28-2-905, has been reduced the writing and Piippo and uncertain, under negotiations preceded Section included ambiguous term. the oral which "benefits" Court to the law requires in dispute. made to that was needed whether can be no evidence of the writing evidence MCA, explains, matter that contents as used in the 28-2-904, supersedes provides the by Section of the instrument." than them in writing, the execution other "benefits," in using MCA. or not, made to in Montana has been codified of a contract to be written stipulations the term of the contract were claim and thus what the parties The parol it claim they that was ambiguous explain interpretation of the contract are circumstances is attending v. Rite-Line In Monte Vista 755 P.2d 1358, Transp. (1995), Co. v. Anaconda 1362, this Court An ambiguity exists when a contract is subject to two interpretations and parol testimony can be used to determine what the parties intended. [Citations omitted.] However, intent of the parties is only looked to when the agreement in issue is not clear on its face. [Citation omitted.] In the present rationale for case, granting the District Court gave the following summary judgment: The express language of that provision c4.131 clearly establishes a three year term of employment. Plaintiffs contend that the intent of the provision was to bind the individual Plaintiffs to a minimum of three years, and that the language in the provision entitling Plaintiffs to "those benefits that are afforded to other employees under Entech's employment policies" include the "benefit" of permanent employment absent good cause for firing Plaintiffs. This Court does not find that the provision language is ambiguous and therefore, there is no need to look to the parties' intent, and in any event, such interpretation would require adding language to the agreement which would contradict the express three year term in violation of the parol evidence rule. After reviewing District years Court that of employment permanent that record (1991), Sherrodd case, was clear all of $97,500. work, the 249 Mont. because it 815 P.2d claimed that it had been pressured had been told that would more than be paid a deal not include in Sherrodd, to perform Inc. v. Morrison- is on point. certain earth contract 1136. completion After In work provided for a lump sum of of the was owed more money than the $97,500 to execute would the and did be performed at the and three of the written would with "benefits" 282, 815 P.2d 1135, The terms earthwork we agree and unambiguous had contracted Sherrodd, Sherrodd regarding Our decision Morrison-Knudsen. that and the Agreement, the provision employment. Knudsen Co. for the the contract be worked sum provided 6 and that out wherein for in the it Sherrodd contract. Sherrodd, judgment 815 P.2d at The district to Morrison-Knudsen, precluded Sherrodd were incorporated not affirmed not 1136. cover and held the agreement. evidence from relying into that entire that the 815 P.2d evidence contract. contention at summary representations written contradicted granted the parol upon oral Sherrodd's job Sherrodd, rule, holding court 1137. which This that the rule Court the $97,500 terms of the In applying did written the parol we concluded: the compensation of Sherrodd is governed exclusively by the written contract and that Sherrodd's claims are barred under the parol evidence rule. We hold that the District Court did not err in granting summary judgment for defendants. Sherrodd, 815 P.2d at 1137. amount of compensation oral representations employment District dismissing 2) specified, that was barred Court As with Sherrodd's Savik would vary by the parol the breach the granting in of contract law is whether on term Accordingly, summary judgment of the and claim. of review the court's of a district court's interpretation of the Carbon County v. Union Reserve Coal Co. (19951, 686. A district instructing the jury and we will of instructional alleged reliance expressed rule. the Did the District Court err in instructing the jury on parol evidence when Savik and Piippo sought recovery under a theory of fraudulent inducement? The standard 898 P.2d to vary and Piippo's evidence correct was attempt 680, court has not reverse errors absent 7 conclusions law is 271Mont. broad an abuse correct. 459, 469, discretion the court of of in on the basis discretion. Werre v. David Further, 193. properly in (Mont. given or refused, entirety, the by the court. 273 Mont. 104, 373, court to admit claim consider evidence jury the trial 187, instructions and other were instructions instructions & Associates, in the inducement, parol Inc. 114, 120, 1024. of fraudulent outside it evidence Company of Western goes to the heart In 258 Mont. 593 P.2d 1022, a party's jury 53 St.Rep. the challenged v. Hardin fraud Products 377, at 635, (1995), 902 P.2d 520, 527. Dew v. Dower (1993), Gibson evidence alleges upon the district 625, whether we consider Cechovic 116, When a party v. 913 P.2d when we examine given their 1996), on the question. 852 P.2d 549, Montana For a jury inducement, of the written is incumbent (1979), 552; Dodds 181 Mont. to adequately it is consider critical agreement that it as such evidence of the claim. instant case, instructions over the District Savik Court and Piippo's gave the following objection: [No. 81 The execution of a contract in writing, whether the law requires it to be ornot, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument. the If the if [No. 101 A contract is to be construed according to intention of the parties at the time of contracting. the contract is reduced to writing, the intention of parties is to be ascertained from the writing alone, possible. These instructions Savik and thereafter, inducement. were given Piippo's to contract they were effect, these claim advancing In the only jury had been a claim instructions 8 despite the fact that dismissed of kept fraud the jury and, in the from considering support the of their When fraud jury. 190 Mont. to a written demonstrated fraud held in the See also Limiting that, a jury's creates to the creation 754 P.2d of the 465 P.2d 326, In regarding parol considering and This parol evidence by parol reviewed hold that jury from considering the written parties District effectively evidence. the Savik rule, 852 181 Mont. (1970), Court's between and Piippo's between 154 Mont. Savik claim instructions the Meldahl of Piippo from and Savik fraud representations and jury in the by Meldahl, and Meldahl were consideration. the challenged jury instructions instructions communications agreement. was crucial has Dew -I Co. (19791, precluded conversations to the jury's Having the was based on pre-contract communications crucial case, evidence Since Court 330. pre-contract Piippo. inducement the instant the be v. Home Electronics 373, 377, 593 P.2d 1022, 1024; Goggans v. Winkley 459, contract the is provable of requirement 494. P.2d at 552; Dodds, Mersy v. Gibson Products 451, (1980), 491, notwithstanding inducement by the consideration an illogical Webcor Electronics 382, in inducement. Flemmer v. Ming leading 377, forward MCA. by a writing. previously brought may be considered agreement fraud 231 Mont. (1988), Piippo par01 evidence 621 P.2d 1038. an alleged and of fraudulent 28-2-905(2) 403, evidence claim Savik is alleged, Section that evidence to Evidence Savik in effectively entirety, precluded between the parties of communication and Piippo's 9 their claims the outside between of we of the fraudulent inducement. We hold by instructing of the fraudulent jury the not District to Court consider parol abused its evidence discretion in a claim inducement. Accordingly, a new trial that on the we affirm issue in part, of fraudulent We concur: Justices 10 reverse in part inducement. and remand for
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