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Braun v. AK Commercial Fishing & Ag. Bank (8/2/91), 816 P 2d 140
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Notice: This is subject to formal
correction before publication in the Pacific
Reporter. Readers are requested to bring
typographical or other formal errors to the
attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
DONALD J. BRAUN, )
) Supreme Court No. S-3812
Appellant, )
) Superior Court No.
v. ) 3AN-88-3702 Civil
)
ALASKA COMMERCIAL FISHING AND ) O P I N I O N
AGRICULTURE BANK, )
)
Appellee. ) [No. 3727 - August 2, 1991]
)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Victor D. Carlson, Judge.
Appearances: C. R. Kennelly, Stepovich,
Kennelly & Stepovich, P.C., Anchorage, for
Appellant. Robert K. Stewart, Jr., Barbara
Simpson Kraft, Davis Wright Tremaine,
Anchorage, for Appellee.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
RABINOWITZ, Chief Justice.
I. FACTS AND PROCEEDINGS
On May 5, 1980, the Alaska Commercial Fishing and
Agriculture Bank ("Bank"), through its then Chief Executive
Officer, Gary Anderson, hired Donald Braun for the position of
loan officer in Anchorage.1 Anderson and Braun were old personal
friends, and Braun was on a social trip visiting Anderson when
the offer was made. In accepting Anderson's offer Braun resigned
from a firefighter's position in California which he had held for
eight years.
On June 1, 1982, then President and Chief Executive
Officer of the Bank, Forest Paulson, terminated Braun. No reason
was given to Braun for his termination at the time of his
dismissal. Braun claims the firing was done without cause in
violation of his contractual rights. The Bank claims that Braun
was an at-will employee. The Bank also claims that it fired
Braun as part of its reduction in force to make the Bank more
efficient and productive.
Braun thereafter filed a complaint alleging wrongful
termination of his contract for employment. Apart from actual
damages, Braun also sought punitive damages. In response, the
Bank moved for partial summary judgment on all the tort claims,
contending they were barred by the two-year statute of
limitations. Braun replied that he was not suing on a tort
theory, but rather he sought punitive damages on the contract
action, and he sought to have the contract statute of limitations
apply. The superior court granted the Bank's motion.
Braun then filed a motion for summary judgment on the
breach of contract claim. The court denied Braun's motion
holding that a genuine issue of material fact relating to
credibility existed. At the same time, the court granted the
Bank's cross-motion for summary judgment, finding that no genuine
issue of material fact existed regarding the cause of Braun's
termination: an economically motivated reduction in force had
occurred. The superior court held that economic necessity
constituted good cause to terminate Bank employees, including
Braun. The superior court also denied Braun's motion for a
continuance to conduct additional discovery relevant to the
Bank's excuse pursuant to Civil Rule 56(f). Braun now appeals.
II. DISCUSSION: Did the superior court err in
granting the Bank summary judgment on its
defense of excuse?2
Braun claims that insufficient evidence existed by
which the superior court could determine that economic factors
necessitated a reduction in the Bank's work force. Even if we
found the superior court erred in denying Braun's summary
judgment motion on the question of whether he was a "for cause"
employee,3 we conclude, upon review of the existing record, that
no genuine issue of material fact existed as to the Bank's
motivation for terminating Braun.
A. Braun was terminated for economic reasons.
"[A] discharge for 'just cause' is one which is not for
any arbitrary, capricious, or illegal reason and which is one
based on facts (1) supported by substantial evidence and (2)
reasonably believed by the employer to be true." Baldwin v.
Sisters of Providence in Washington, Inc., 769 P.2d 298, 304
(Wash. 1989). See also G & M Employment Serv., Inc. v.
Commonwealth, 265 N.E.2d 476, 480 (Mass. 1970), appeal dismissed,
402 U.S. 968 (1971); Simpson v. Western Graphics Corp., 643 P.2d
1276, 1277-79 (Or. 1982) (en banc). The record shows that no
genuine issue of material fact existed as to the Bank's economic
motivation for Braun's termination, or its belief that such
economic need existed.
Braun's termination was one action, among many,
indicating the Bank's concern for its financial stability. For
example, the Bank's chief lender had placed pressure on it to
become more frugal. Edward Crane, President of the Bank, swore
that the Spokane Bank for Cooperatives ("SBC") had been a
principal source of loan funds for the Bank and had reviewed the
Bank's operations. After a meeting between SBC officers and the
Bank's Board in August 1981, the Board stated that it perceived
that the Bank needed to become more frugal in growth and in
expenditures. SBC exercised close supervision over the Bank's
fiscal and credit operations throughout the balance of 1981 and
1982.
State government also applied pressure on the Bank to
become more frugal. In April 1981, the Board became aware that
the Division of Legislative Audit intended to focus on the Bank's
expenditures. The report produced after the audit focused the
Board's attention on issues of extravagance.
Evidence existed that Forest Paulson, president of the
Bank from February 1, 1982, until February 1985, was hired to
increase the Bank's efficiency. When being interviewed for the
position by the Board, Paulson was asked whether he could
"eliminate positions and let people go if necessary to effect a
reduction of staff." Frank Homan, a member of the Board from
1979 until 1985, expressed the Board's concern about Anderson's
expenditures during his tenure as Chief Executive Officer of the
Bank.
Upon arriving at the Bank, Paulson adopted an approach
to reduce expenses and increase productivity. This approach
included increasing the loan volume handled by each credit
officer and adopting recommendations made by a committee of
employees directed to assess employee benefit programs. Paulson
also sent a memorandum to all employees soliciting suggestions
concerning nonpersonnel cost savings. He instituted cost saving
initiatives in consultant and other contract costs. Starting in
June 1982, Paulson eliminated five positions that would not hurt
operational productivity. Paulson also refrained from hiring new
employees to fill vacancies. Paulson swore that Braun was
discharged as a consequence of the reorganization.
The Board of Directors also demonstrated its concern
for reducing expenditures. For example, in August 1981, it
passed various resolutions to gain control over spending. At the
September 1981 Board meeting, it articulated a new policy on
contracts and capital acquisitions to lower expenses. Also,
during the recruitment process and afterwards, the Board made it
clear to Paulson that it wanted him to cut payroll. Roseleen
Moore, a Board member from 1980 until 1986, specifically
questioned in April 1981 the necessity for hiring an additional
loan officer. We find that no genuine issue of material fact
existed on the issue of excuse. The evidence submitted by Braun,
viewed in the light most favorable to him, was insufficient to
controvert the Bank's evidence of its economic motivation for
discharging Braun based on facts it reasonably believed to be
true.
Braun cites his own affidavit in challenging the Bank's
alleged economic necessity. However, the superior court struck
many of these statements as hearsay or as otherwise inadmissible
under Civil Rule 56. The Bank successfully argues that this
information is improperly in Braun's brief given his failure to
appeal the trial court's order granting the Bank's motion to
strike. Braun's points on appeal do not mention this point, nor
does he argue it in his brief.
Braun's admissible evidence challenging the Bank's
defense included his own affidavit stating that the Bank's assets
increased in 1980 from $35,000,000 to $80,000,000 in 1981. To
the best of his recollection, the number of Bank employees also
increased from 1980 to 1981. "There was no economic reduction in
the business of the back [sic] for any reason while I worked
there." Yet, Braun also acknowledged that he did "not know the
day-to-day finances of the bank." Nor did he have evidence to
question the validity of the Bank's reorganization policy.
In addition, Braun tries to infer bad faith from the
Bank's modification of its personnel policies in May 1982. Yet,
employers can modify personnel policies. See Jones v. Central
Peninsula Gen. Hosp., 779 P.2d 783, 787 (Alaska 1989). Merely
changing the policy, given the surrounding facts regarding
concern for the Bank's economic future, does not imply bad faith.
The creation of two loan officer trainee positions in
May 1982 was also not inconsistent with the Bank's economic
motivation for elimination of Braun's position. Braun earned
$44,280 annually at the time of his termination. Only one of the
loan officer trainee positions was filled, and that person earned
only $18,000 per year. This loan officer trainee replaced
another trainee who resigned in February 1982. Braun's position
was later eliminated. The new trainee performed none of the
duties previously performed by Braun; those duties were
reassigned to other loan officers.
Braun emphasizes that the form submitted to the State
Department of Labor Employment Security Division stated that
Braun was "discharged"and not laid off for "lack of work."
Paulson signed an employer statement specifying the reason for
Braun's termination which stated: "[t]his employee was
discharged in the best interest of the Bank, and does not imply
misconduct or poor performance by the employee." This alone does
not give rise to a genuine issue of material fact. This choice
was explained by Paulson in an affidavit. He said,
Because Braun was discharged as a consequence
of a reorganization, I informed the State of
Alaska, Department of Labor that the
termination of his employment did not imply
misconduct or poor performance. I further
indicated CFAB did not anticipate rehiring
Braun. For that reason, I selected the
"Discharge"box in the Reasons for Separation
section as most appropriate among the options
provided on the form. The options of "Quit"
and "Labor Dispute"obviously did not apply.
I understood the "Lack of Work" selection
implied a temporary layoff in which an
employee might be rehired. Because Braun's
position had been eliminated, I perceived
that selection was inappropriate and that the
"Discharge" selection most aptly described
the circumstances.
The Bank claims that Braun does not tell the court what
impermissible motive the Bank had for firing him. The record,
however, indicates that Braun believes the motive was personal
dislike by Paulson, or his role in supporting a co-employee's
equal pay grievance. No evidence supports Braun's allegations
for why he was fired. Paulson never told Braun that he did not
like him. Braun referred to one snide comment Paulson made to
him, although he could not remember what Paulson said. Braun
"figured that's the pressures of the job, whatever." Evidence
existed that Braun was not terminated due to his support of a co-
worker. On June 1, 1982, when Braun was fired, Paulson was not
even informed that Braun supported the female loan officer's
equal pay complaint.4 Consequently, there is insufficient
evidence upon which to find the court erred in granting summary
judgment. The party opposing summary judgment must set forth
specific facts showing genuine issues and cannot rest on mere
allegations. See Fomby v. Whisenhunt, 680 P.2d 787, 792 (Alaska
1984); KOS v. Alyeska Pipeline Serv. Co., 676 P.2d 1069, 1073
(Alaska 1983). Braun rests on just such allegations. Therefore,
we affirm the superior court's grant of summary judgment to the
Bank on the issue of excuse.
B. Braun's Civil Rule 56(f) motion.
Braun alleges, albeit very briefly in his opening
brief, that the superior court erroneously denied his Civil Rule
56(f)5 motion to engage in more discovery on the Bank's defense
of excuse. This issue is omitted from Braun's points on appeal.
After the Bank argued that this issue was abandoned, Braun tried
to resuscitate the appeal of the denial in his reply brief. He
cites In re B.L.J., 717 P.2d 376, 381 n.5 (Alaska 1986), and Winn
v. Mannhalter, 708 P.2d 444, 449 (Alaska 1985), for the
proposition that "[i]f the issue has been briefed and the
appellee and the Court are sufficiently informed of the matters
in issue, the Court may consider the point raised in the brief,"
even if absent from the points on appeal. Here the issue was not
under a separate heading in Braun's opening brief, and he
allocates only a couple of sentences to it and no argument.
Because the issue was absent from his points on appeal, and
because the issue was insufficiently briefed in his opening
brief, Braun has abandoned it. See Alaska R. App. R. 210(e);
State v. O'Neill Investigations, Inc., 609 P.2d 520, 528 (Alaska
1980). Attention to the issue in a reply brief does not
resuscitate it. Hitt v. J.B. Coghill, Inc., 641 P.2d 211, 213
n.4 (Alaska 1982).
Even if we choose to reach the merits of the denial of
additional discovery, the trial court did not abuse its
discretion. Munn v. Bristol Bay Housing Authority, 777 P.2d 188,
193 (Alaska 1989). Plenty of evidence exists that Braun was on
notice that the Bank would argue his termination stemmed from a
reduction in force. Braun knew of the Bank's reduction in force
defense as early as October 1982 when Paulson responded to
Braun's discrimination complaint filed before the Anchorage Equal
Rights Commission. The Bank's position was maintained
consistently throughout those proceedings, as well as in
proceedings before the Alaska State Human Rights Commission.
Braun's deposition clearly indicates that his counsel knew of
this defense by July 13, 1988, approximately thirteen months
before the Bank filed its cross-motion for summary judgment.
Given that Braun conducted no discovery on this issue at all,
Braun was dilatory and it was not an abuse of discretion to deny
him the benefit of Rule 56(f). See Jennings v. State, 566 P.2d
1304, 1313-14 (Alaska 1977) (Alaska R. Civ. P. 56(f) will not be
liberally applied to aid parties who have been dilatory); Munn,
777 P.2d at 193.6 As the superior court had before it Braun's
reasons to grant the Rule 56(f) motion, and the Bank's various
reasons to deny it, including Braun's inexcusable neglect, we do
not find an abuse of discretion occurred.
III. CONCLUSION
We affirm the superior court's grant of summary
judgment to the Bank on its defense of excuse.
AFFIRMED.
_______________________________
1. Some dispute exists as to whether Braun was hired as an
officer or as a trainee.
2. In reviewing the grant or denial of summary judgment, we
determine whether "there are any genuine issues of material fact,
and whether the moving party is entitled to judgment as a matter
of law." Drake v. Hosley, 713 P.2d 1203, 1205 (Alaska 1986).
See also Alaska R. Civ. P. 56(c). We examine the record and
employ de novo review. Grand v. Municipality of Anchorage, 753
P.2d 141, 143 n.3 (Alaska 1988). As to whether there are any
genuine issues of material fact, we view the facts in the light
most favorable to the non-moving party. Loyal Order of Moose,
Lodge 1392 v. International Fidelity Ins. Co., 797 P.2d 622, 628
(Alaska 1990) (citing Drake v. Hosley, 713 P.2d at 1205).
We note that Braun admits in his reply brief that "[a]
decision, based on economic considerations, can be cause for
discharge of an employee." Therefore, we need not decide whether
economic necessity constitutes good cause.
3. Given our agreement with the granting of summary
judgment on the Bank's defense, we need not address Braun's other
claims of error. However, our review of the record does indicate
that a genuine issue of material fact existed as to whether Braun
was a "for cause"employee.
4. Braun filed a complaint with the Anchorage Equal Rights
Commission on September 1, 1982, alleging retaliatory
termination. The Commission closed his complaint for failure to
cooperate in its investigation and declined to reconsider for the
same reason. He also filed a complaint with the Alaska State
Commission for Human Rights on December 2, 1982. Its
investigation found that,
Evidence supports respondent's assertion
that when Paulson took over as president, he
implemented a reorganization plan which
resulted in the elimination of several
positions, including complainant's.
Employment records provided by respondent
supported it's [sic] contention that
complainant had the least amount of loan
experience of the five loan officers employed
with respondent at the time of
reorganization.
It also found that the trainee hired to fill a loan officer
trainee position after Braun was fired earned only $18,000 per
year. Consequently, the Equal Employment Opportunity Commission
found that "[n]o reasonable cause was found to believe that the
allegations made in your charge are true . . . ."
5. Civil Rule 56(f) states:
(f) When Affidavits Are
Unavailable. Should it appear from the
affidavits of a party opposing the motion
that he cannot for reasons stated present by
affidavit facts essential to justify his
opposition, the court may refuse the
application for judgment or may order a
continuance to permit affidavits to be
obtained or depositions to be taken or
discovery to be had or may make such other
order as is just.
6. Braun argues that the burden of proof under Eales v.
Tanana Valley Medical-Surgical Group, Inc., 663 P.2d 958, (Alaska
1983), was on the Bank to prove the excuse of economic necessity.
Eales did not discuss the burden of proof issue. In Arco Alaska,
Inc. v. Akers, 753 P.2d 1150, 1155 (Alaska 1988), we expressly
reserved judgment on allocation of the burden of pleading and
proving good cause in an action for termination of an employment
contract for an indefinite term. In Skagway City School Bd. v.
Davis, 543 P.2d 218, 222-24 (Alaska 1975) overruled on other
grounds, Diedrich v. City of Ketchikan, 805 P.2d 362 (Alaska
1991), we held that the employer had the burden of proof and
pleading regarding good cause in an employment contract for a
definite term. While we realize the nature of Braun's employment
contract is a disputed question of material fact, we find his
actions to be dilatory under either scenario.
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