No. 02-766
IN THE SUPREME COURT OF THE STATE OF MONTANA
2003 MT 272N
INDIVIDUAL NURSING STAFF, INC., a Montana Profit Corporation; CAMILLE BUKSCH, individually; and VIOLA STEIER, individually,
Plaintiffs and Appellants,
v.
LUTHERAN RETIREMENT HOME, INC., a Montana Non-Profit Corporation, doing business as ST. JOHN’S RETIREMENT HOME, as a division of ST. JOHN’S LUTHERAN MINISTRIES, INC.; JOHN’S LUTHERAN MINISTRIES, INC.,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 2001-0746, Honorable G. Todd Baugh, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Gerald J. Neely, Attorney at Law, Billings, Montana
For Respondents:
W. Anderson Forsythe and Vicki L. McDonald, Moulton, Bellingham, Longo & Mather, P.C., Billings, Montana
Submitted on Briefs: July 30, 2003
Decided: October 2, 2003
Filed:
__________________________________________ Clerk Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), the following decision shall not be cited as
precedent but shall be filed as a public document with the Clerk of the Supreme Court and
shall be reported by case title, Supreme Court cause number and result to the State Reporter
Publishing Company and to West Group in the quarterly table of noncitable cases issued by
this Court.
¶2 The present case revolves around the termination of what was admittedly a
“sweetheart deal” between Camille Buksch (Buksch) and St. John’s Lutheran Ministries, Inc.
(St. John’s). Buksch, her corporation Individual Nursing Staff, Inc. (INS), and employee
Steier sued St. John’s for intentional interference with prospective or future business or
economic advantage, breach of the covenant of good faith and fair dealing, defamation,
breach of the lease, libel and slander. St. John’s moved for summary judgment on all claims
except the defamation count. INS, Buksch and Steier countered for summary judgment in
their favor. The District Court entered an order of summary judgment in favor of St. John’s.
From this order, INS, Buksch and Steier now appeal. We affirm.
ISSUES
¶3 On appeal, the issues are:
(1) Was there a master oral contract containing a covenant not to compete?
(2) Did St. John’s breach the lease?
(3) Did St. John’s breach the covenant of good faith and fair dealing?
(4) Did St. John’s intentionally interfere with prospective business advantage?
2 FACTS
¶4 St. John’s operates a nursing home business, which includes a retirement wing. Self-
sufficient elderly people who do not yet need the full services of a nursing home rent studio
apartments in the retirement wing and are provided meals by St. John’s. St. Johns’s supplied
these residents with minimal nursing assistance. In 1989, because of its own interpretation
of a regulation, St. John’s decided it would no longer directly provide nursing services to
residents of its retirement wing. A St. John’s administrator approached Buksch, who was
employed as a licensed nurse practitioner, and advised her of the situation. That administra-
tor urged Buksch to quit her job with St. John’s and start independently contracting with the
residents for nursing services. Buksch did not want to lose the security of wages and
benefits. She came to an agreement with St. John’s that she would attempt to individually
contract with the residents, but if that did not work out within sixty or ninety days, St.
John’s would re-employ Buksch.
¶5 Buksch never asked for her job back because the arrangement turned out to be very
profitable for her. Buksch formed a corporation, INS, of which she is an employee and the
sole shareholder. INS contracts with the residents to provide nursing services. The other
named plaintiff and appellant, Viola Steier, was also a nurse employed by INS. INS entered
into a lease agreement with St. John’s in 1997, whereby INS agreed to rent a nursing station
for fifty dollars a month from St. John’s. The nursing station included a closet so that INS
could lock up its medication cart, and use of a desk, a phone and a refrigerator, which was
shared with St. John’s personnel. Because they were mostly self-sufficient, the retirement
3 wing residents used INS’s services for such minimal tasks as reminding them to take their
medications, occasional prompting with dress, and contracting-out for services to assist with
bathing. INS personnel were only present during the day. If an emergency were to occur,
a nurse from St. John’s nursing wing would respond.
¶6 This business arrangement was profitable for Buksch. In 2000, the last year of full
operations, Buksch received about $36,000 in wages as an employee of INS. As the owner
of INS, Buksch had profits of $47,000. In addition, INS provided a car for Buksch’s
personal use and insurance for her, her husband and her children.
¶7 In 2000, St. John’s applied for a HUD grant to remodel the retirement wing. St.
John’s knew that if the grant was awarded, the retirement wing would have to meet the state
standards for an assisted living facility. Those standards at the time required supervision and
care of the residents twenty-four hours a day. In mid 2000, Buksch met with St. John’s
administrators and was informed that St. John’s was considering three different options to
supply the twenty-four-hour care: provide it themselves, contract with INS, or contract with
a third party. In December 2000, Buksch learned that St. John’s had been awarded the grant,
and it would have to proceed with a plan to supply twenty-four-hour care. Buksch declined
to avail herself of this business opportunity, since she could not afford the extra staff and
would not pass extra costs on to the residents. The recollections of all the parties clearly
indicate that in January 2001, St. John’s informed Buksch that it was going to provide the
twenty-four hour care to the residents itself, rather than contracting with a third party such
as INS. As of January 2001, it was clear to everyone that St. John’s would begin providing
4 nursing services on May 1, and INS would stop at that time. St. John’s and Buksch
discussed the transition, including options for training and orienting St. John’s new staff.
¶8 The training and orienting was to begin on April 16. Buksch made certain she would
have thirty days to give her clients notice as required by her contracts with them. Buksch
told St. John’s administrators that she would not force the residents to choose between INS
and St. John’s. Buksch repeatedly indicated that her business would soon end, and that she
did not want to work for St. John’s. Further, she prepared a letter for her clients indicating
INS would soon terminate services. This letter was prepared prior to the date in March on
which Buksch claims to have been given actual notice of St. John’s intent to not renew her
lease.
¶9 During this transition, relations between St. John’s and INS soured. St. John’s
informed INS, Buksch, and Steier that they could either apply for jobs with St. John’s or
continue to try to contract with the residents, but that the lease for the nursing station would
not be renewed. Appellants claim that St. John’s acted dishonestly when it met with
residents, telling them Buksch and her employees had been offered jobs when in fact they
had not.
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No. 02-766
IN THE SUPREME COURT OF THE STATE OF MONTANA
2003 MT 272N
INDIVIDUAL NURSING STAFF, INC., a Montana Profit Corporation; CAMILLE BUKSCH, individually; and VIOLA STEIER, individually,
Plaintiffs and Appellants,
v.
LUTHERAN RETIREMENT HOME, INC., a Montana Non-Profit Corporation, doing business as ST. JOHN’S RETIREMENT HOME, as a division of ST. JOHN’S LUTHERAN MINISTRIES, INC.; JOHN’S LUTHERAN MINISTRIES, INC.,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 2001-0746, Honorable G. Todd Baugh, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Gerald J. Neely, Attorney at Law, Billings, Montana
For Respondents:
W. Anderson Forsythe and Vicki L. McDonald, Moulton, Bellingham, Longo & Mather, P.C., Billings, Montana
Submitted on Briefs: July 30, 2003
Decided: October 2, 2003
Filed:
__________________________________________ Clerk Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), the following decision shall not be cited as
precedent but shall be filed as a public document with the Clerk of the Supreme Court and
shall be reported by case title, Supreme Court cause number and result to the State Reporter
Publishing Company and to West Group in the quarterly table of noncitable cases issued by
this Court.
¶2 The present case revolves around the termination of what was admittedly a
“sweetheart deal” between Camille Buksch (Buksch) and St. John’s Lutheran Ministries, Inc.
(St. John’s). Buksch, her corporation Individual Nursing Staff, Inc. (INS), and employee
Steier sued St. John’s for intentional interference with prospective or future business or
economic advantage, breach of the covenant of good faith and fair dealing, defamation,
breach of the lease, libel and slander. St. John’s moved for summary judgment on all claims
except the defamation count. INS, Buksch and Steier countered for summary judgment in
their favor. The District Court entered an order of summary judgment in favor of St. John’s.
From this order, INS, Buksch and Steier now appeal. We affirm.
ISSUES
¶3 On appeal, the issues are:
(1) Was there a master oral contract containing a covenant not to compete?
(2) Did St. John’s breach the lease?
(3) Did St. John’s breach the covenant of good faith and fair dealing?
(4) Did St. John’s intentionally interfere with prospective business advantage?
2 FACTS
¶4 St. John’s operates a nursing home business, which includes a retirement wing. Self-
sufficient elderly people who do not yet need the full services of a nursing home rent studio
apartments in the retirement wing and are provided meals by St. John’s. St. Johns’s supplied
these residents with minimal nursing assistance. In 1989, because of its own interpretation
of a regulation, St. John’s decided it would no longer directly provide nursing services to
residents of its retirement wing. A St. John’s administrator approached Buksch, who was
employed as a licensed nurse practitioner, and advised her of the situation. That administra-
tor urged Buksch to quit her job with St. John’s and start independently contracting with the
residents for nursing services. Buksch did not want to lose the security of wages and
benefits. She came to an agreement with St. John’s that she would attempt to individually
contract with the residents, but if that did not work out within sixty or ninety days, St.
John’s would re-employ Buksch.
¶5 Buksch never asked for her job back because the arrangement turned out to be very
profitable for her. Buksch formed a corporation, INS, of which she is an employee and the
sole shareholder. INS contracts with the residents to provide nursing services. The other
named plaintiff and appellant, Viola Steier, was also a nurse employed by INS. INS entered
into a lease agreement with St. John’s in 1997, whereby INS agreed to rent a nursing station
for fifty dollars a month from St. John’s. The nursing station included a closet so that INS
could lock up its medication cart, and use of a desk, a phone and a refrigerator, which was
shared with St. John’s personnel. Because they were mostly self-sufficient, the retirement
3 wing residents used INS’s services for such minimal tasks as reminding them to take their
medications, occasional prompting with dress, and contracting-out for services to assist with
bathing. INS personnel were only present during the day. If an emergency were to occur,
a nurse from St. John’s nursing wing would respond.
¶6 This business arrangement was profitable for Buksch. In 2000, the last year of full
operations, Buksch received about $36,000 in wages as an employee of INS. As the owner
of INS, Buksch had profits of $47,000. In addition, INS provided a car for Buksch’s
personal use and insurance for her, her husband and her children.
¶7 In 2000, St. John’s applied for a HUD grant to remodel the retirement wing. St.
John’s knew that if the grant was awarded, the retirement wing would have to meet the state
standards for an assisted living facility. Those standards at the time required supervision and
care of the residents twenty-four hours a day. In mid 2000, Buksch met with St. John’s
administrators and was informed that St. John’s was considering three different options to
supply the twenty-four-hour care: provide it themselves, contract with INS, or contract with
a third party. In December 2000, Buksch learned that St. John’s had been awarded the grant,
and it would have to proceed with a plan to supply twenty-four-hour care. Buksch declined
to avail herself of this business opportunity, since she could not afford the extra staff and
would not pass extra costs on to the residents. The recollections of all the parties clearly
indicate that in January 2001, St. John’s informed Buksch that it was going to provide the
twenty-four hour care to the residents itself, rather than contracting with a third party such
as INS. As of January 2001, it was clear to everyone that St. John’s would begin providing
4 nursing services on May 1, and INS would stop at that time. St. John’s and Buksch
discussed the transition, including options for training and orienting St. John’s new staff.
¶8 The training and orienting was to begin on April 16. Buksch made certain she would
have thirty days to give her clients notice as required by her contracts with them. Buksch
told St. John’s administrators that she would not force the residents to choose between INS
and St. John’s. Buksch repeatedly indicated that her business would soon end, and that she
did not want to work for St. John’s. Further, she prepared a letter for her clients indicating
INS would soon terminate services. This letter was prepared prior to the date in March on
which Buksch claims to have been given actual notice of St. John’s intent to not renew her
lease.
¶9 During this transition, relations between St. John’s and INS soured. St. John’s
informed INS, Buksch, and Steier that they could either apply for jobs with St. John’s or
continue to try to contract with the residents, but that the lease for the nursing station would
not be renewed. Appellants claim that St. John’s acted dishonestly when it met with
residents, telling them Buksch and her employees had been offered jobs when in fact they
had not. Buksch claims, inter alia, that St. John’s did not tell her until March 15, fourteen
days after its automatic renewal, that it was not going to renew her lease of the nursing
station.
¶10 The lease in question is typewritten, signed by both parties and dated March 1, 1997.
By its terms, it is a twelve-month lease and is automatically renewed unless one of the
parties, “requests reopening lease for negotiations thirty (30) days prior to any twelve (12)
5 month period.” There is also a Default clause, but it only refers to a default on the part of
the lessee, INS. Other than these provisions, there are no terms for termination of the lease.
STANDARD of REVIEW
¶11 The review of an appeal from a grant of summary judgment is de novo. Kullick v.
Skyline Homeowners Assoc., Inc., 2003 MT 137, ¶ 13, 316 Mont. 146, ¶ 13, 69 P.3d 225,
¶ 13. This Court will apply the same standards as the trial court under Rule 56, M.R.Civ.P.
The moving party must establish both the absence of a genuine issue of material fact and
entitlement to judgment as a matter of law. Kullick, ¶ 13. Once the moving party has met
its burden, the opposing party must, in order to raise a genuine issue of material fact, present
substantial evidence essential to one or more elements of its case rather than mere conclusive
or speculative statements. Kullick, ¶ 13. Our standard of review of a question of law is
whether the trial court’s legal conclusions are correct. Gonzalez v. Walchuck, 2002 MT 262,
¶ 9, 312 Mont. 240, ¶ 9, 59 P.3d 377, ¶ 9.
DISCUSSION
¶12 The underlying premise of Appellants’ numerous claims is the existence of a covenant
not to compete. The Appellants claim that the meeting between Buksch and St. John’s
administrators in 1989 created a valid “master” oral contract including an implied covenant
not to compete. The lease is understandable only as part of this “master” contract, so it
necessarily incorporates the same implied terms. Appellants contend that the oral contract
and lease give rise to a claim for breach of the covenant of good faith. Lastly, Appellants
claim interference with prospective or future business or economic advantage.
6 ¶13 The undisputed facts are insufficient to establish the existence of an enforceable oral
contract with all of the terms Buksch advances. All contracts may be oral except those that
are specifically required by statute to be in writing. Section 28-2-901, MCA. All contracts
must contain four essential elements: (1) identifiable parties capable of contracting, (2) their
consent, (3) a lawful object, and (4) consideration. Section 28-2-102, MCA. Furthermore,
the terms must be certain. Restatement (Second) of Contracts § 33 (1981). Although
contracts in restraint of trade are generally void by statute, § 28-2-703, MCA, covenants not
to compete extending beyond one year are enforceable when they are in writing, § 28-2-
903(1), MCA, and the terms are explicit and reasonable in time and place. See, e.g.,
Dobbins, DeGuire & Tucker v. Rutherford, etc. (1985), 218 Mont. 392, 708 P.2d 577
(agreement of employee accountants not to take firm’s clients within twelve months of
termination of employment was enforceable); and O’Neill v. Ferraro (1979), 182 Mont. 214,
596 P.2d 197 (lessor’s covenant with restaurant lessee not to rent space in building to another
restaurant was enforceable).
¶14 Here, the alleged master contract fails for lack of consent. Further, the alleged
covenant not to compete extended beyond one year, was not in writing, and had neither
explicit terms nor a reasonable limitation in time. The undisputed facts indicate St. John’s
promised that if Buksch’s independent contracting with the residents did not work out within
sixty to ninety days, she could have her old job back. Other than that oral promise, no other
terms are certain. It is axiomatic that it is not possible to consent to terms which are
uncertain.
7 ¶15 The record supports the District Court’s conclusion that, beyond the 90-day safety net
agreement, there was no oral master contract between the parties. The District Court
correctly concluded that in the absence of an enforceable and on-going master agreement to
provide nursing services, there was no basis for a claim for breach of the covenant of good
faith and fair dealing and any alleged breaches of the lease of the nursing station were
rendered moot.
¶16 Appellants also assert the District Court erred in denying their claim for intentional
interference with prospective economic advantage. That claim requires acts that:
(1) are intentional and willful; (2) are calculated to cause damage to the plaintiff’s business; (3) are done with the unlawful purpose of causing damage or loss, without right or justifiable cause on the part of the actor; and (4) result in actual damages or loss.
Maloney v. Home Inv. Center, Inc., 2000 MT 34, ¶ 41, 298 Mont. 213, ¶ 41, 994 P.2d
1124, ¶ 41. The District Court dismissed the claim because of a lack of a showing on the
third element. The burden is on the plaintiff to demonstrate that the actions were done
“without right or justifiable cause.” Bolz v. Myers (1982), 200 Mont. 286, 295, 651 P.2d
606, 611. Here, St. John’s gave early notice about the HUD grant process, provided
plaintiff-appellants with several accommodating options, and ultimately decided to provide
all of the nursing services required. When St. John’s stopped providing nursing services to
its retirees in 1989, it did so of its own volition, and it was free to do so. St. John’s was
similarly free to reenter the nursing services market. It took reasonable steps necessary to
achieve that end. St. John’s gave sufficient and timely notice to the Appellants. Further, St.
8 John’s gave Appellants several business options, all of which they soundly rejected.
Appellants have failed to meet the third element of this claim. The District Court was correct
in concluding that St. John’s purpose was to improve the quality of service, not cause
damage to INS.
¶17 Because of the foregoing, the decision of the District Court is affirmed.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ KARLA M. GRAY /S/ JIM REGNIER /S/ PATRICIA COTTER /S/ JIM RICE