Heslop v. Bank of Utah

839 P.2d 828, 194 Utah Adv. Rep. 20, 7 I.E.R. Cas. (BNA) 1279, 1992 Utah LEXIS 66, 1992 WL 214030
CourtUtah Supreme Court
DecidedSeptember 4, 1992
Docket900532
StatusPublished
Cited by62 cases

This text of 839 P.2d 828 (Heslop v. Bank of Utah) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heslop v. Bank of Utah, 839 P.2d 828, 194 Utah Adv. Rep. 20, 7 I.E.R. Cas. (BNA) 1279, 1992 Utah LEXIS 66, 1992 WL 214030 (Utah 1992).

Opinion

HALL, Chief Justice:

Defendant Bank of Utah appeals from a jury verdict awarding Ivan J. Heslop damages for wrongful termination and from the trial court’s refusal to grant a new trial. Plaintiff Heslop cross-appeals the trial court’s refusal to instruct the jury on consequential damages arising from his termination, including attorney fees, and its decision granting defendant’s motion for a directed verdict dismissing plaintiff's public policy claims. We affirm the trial court’s denial of defendant’s motion for a new trial. We reverse for failure to allow the jury to award Heslop consequential damages and the dismissal of Heslop’s public policy claims.

I. FACTS

“Where evidence is in conflict in a jury trial, we assume that the jury believed those facts that support its verdict, and we view the facts and the reasonable inferences that arise from those facts in a light most supportive of the jury’s verdict.” 1 We therefore recite the following facts in a light most favorable to the jury’s verdict. Heslop began employment with the Bank of Utah (the “Bank”) in March 1955. He worked first as a collector and then as a loan officer until the fall of 1959. On January 26, 1955, prior to his employment with the Bank, Heslop completed an application that contained the following clause:

I agree that my employment will depend upon usefulness to the bank, in its sole discretion; the bank reserving the right to release me without notice, its obligation ending with the payment of salary through the last day I work.

In 1962, Heslop again applied for employment with the Bank. Heslop met with Roderick Browning and William Beutler, both officers of the Bank. At that interview, Browning and Beutler informed Hes-lop about the Bank’s personnel policies of seniority, promotion from within the organization, and termination only for good cause. The interviewers explained that the Bank terminated only for good cause because it wanted to provide an incentive for employees to develop experience and remain with the Bank. Heslop did not sign another employment application on reemployment with the Bank in 1962.

At trial, Heslop testified that he understood he would have employment at the Bank until he retired unless the Bank terminated him for good cause. Several other present and former employees of the Bank *831 also testified that they understood the Bank’s personnel policy to allow termination for good cause only. The Bank’s interviewers never told Heslop that the Bank would revive the employment application he signed in 1955 or would construe the application as an employment contract with the Bank.

In 1963, the Bank promoted Heslop to assistant vice president and appointed him an officer of the Bank. In 1966, the Bank promoted Heslop to vice president. He was appointed to the Officers’ Executive Committee (the “OEC”) in 1976. The OEC had general responsibility for the management of the Bank. In 1980, the Bank made Heslop senior vice president and manager of the Bank’s Salt Lake Division.

In 1980, Beutler discovered that a problem in the Bank’s computer system caused an over-accrual of the commercial loan account and an under-accrual of the time certificates of deposit (“TCD”) account. The problem resulted in an overstatement of the Bank’s income. In February 1981, Beutler informed the OEC members of the accrual problem. He tpld the OEC that the error in the accrual account could equal as much as $200,000. Beutler also informed Browning (the current president) of the problem. Heslop asked if Beutler could correct the accrual problem before the Bank’s next required call report to the State Department of Financial Institutions. Beutler said yes.

At the November 1981 OEC meeting, Heslop asked Beutler if he had corrected the accrual problem. Beutler said that he had not and that the deficiency had grown to between one-half million and one million dollars. Heslop complained that the call reports misrepresented the Bank’s income and assets. He insisted that Beutler inform Browning of the problem. Beutler disagreed, but consented to place the matter on the agenda for the next OEC report to Browning. However, Beutler failed to mention the accrual problem at that meeting.

After the meeting, Heslop returned to his office and telephoned Browning to report the accrual deficiency. He told Browning that he believed his call would offend Beutler and offered to find another job if Browning wished to avoid conflict. Browning responded that he would handle the problem without telling Beutler of the call. After receiving the call, Browning asked Beutler to come to his office. Browning informed Beutler of Heslop’s call. Browning was annoyed that Heslop had “opened the lid” on the accrual problem and said that he would have to bring the problem to the attention of the board of directors (the “Board”).

At the following OEC meeting, Beutler told Heslop that he knew about the call to Browning. The two argued, and Beutler threatened Heslop’s job. Heslop argued that the Bank should forego profit sharing and dividends to immediately resolve the accrual deficiency. At that time, the Bank was operating near the lowest acceptable level of the capital requirement instituted by the Federal Reserve. Any charge-off or other action that reduced Bank capital would require a recapitalization of the Bank to bring the capitalization ratio up to Federal Reserve requirements. This would require one to two million dollars of capital investment by stockholders. Browning would have to contribute approximately half that amount to maintain his family share of 50 percent or greater ownership in the Bank.

At the Board’s meeting, Beutler and Browning argued to resolve the accrual problem through monthly installment charges against undivided profits over a period of time. Beutler told the Board that he had consulted with an accountant about this method. Heslop continued to argue for immediate resolution of the accrual problem. He also argued against filing call reports before the Bank corrected the account. The Board voted to implement Beutler’s recommendation to correct the account over time, although four Board members knew about Heslop’s concerns regarding the call reports.

In December 1981, Heslop began preparing personal notes about events relating to the accrual problem. Browning told James Packer, an OEC member, that he disap *832 proved of Heslop for not supporting the Board’s method of resolving the accrual problem. David Kunz, a member of the Board and bank counsel, resented Heslop for exposing the accrual problem. He stated that Heslop should have been a team player like the other OEC members. Kunz instructed Packer to monitor some of Hes-lop’s activities.

In March 1981, Beutler began making “wash entries” in the accrual account when the quarterly call reports came due. The wash entries hid the deficiency in the account from bank regulators. Packer knew of these entries, and other officers and directors may also have known. Heslop did not know of the wash entries.

On July 9, 1982, Beutler sent a letter to federal and state bank regulators, informing them of the accrual problem and of the Bank’s method for solving the problem. The regulators began a regular examination of the Bank and immediately investigated the accrual problem.

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839 P.2d 828, 194 Utah Adv. Rep. 20, 7 I.E.R. Cas. (BNA) 1279, 1992 Utah LEXIS 66, 1992 WL 214030, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heslop-v-bank-of-utah-utah-1992.