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Hillesland v. Federal Land Bank Association of Grand Forks

    Brief Fact Summary. Elmer Hillesland (Plaintiff) filed suit against Federal Land Bank Association of Grand Forks and Federal Land Bank of St. Paul (Defendants) challenging his discharge. Plaintiff appealed the decision of the district court granting a Motion for Summary Judgment dismissing the action.

    Synopsis of Rule of Law. There is no action for breach of implied covenant of good faith and fair dealing in an at-will employment contract.

    Facts. Plaintiff began working for the Association in 1956, and became chief executive officer in 1972. Then in June of 1983 he was discharged. During his employment, Plaintiff learned that the Westbys were having financial difficulties and that they had received an offer to purchase their farm from another customer of the Defendant. Plaintiff contacted the Westbys to offer financial counseling and they said they wanted to sell the farm. This led to an offer to purchase by Plaintiff’s sons. Plaintiff submitted the details of the transaction to the board of directors for their approval. The board approved the transaction, the Plaintiff then went to the other Bank for approval and they stated that it was not in position to disapprove the transaction but expressed concern over the conflict of interest. The sale was then consummated. Bank then began to investigate the sale and informed the Plaintiff at a board meeting that he was being discharged because Plaintiff had violated written st
    andards of conduct, damaged the image and reputation of the Defendants and exercised poor business judgment. Plaintiff commenced this action against the Defendants alleging violation of the Farm Credit Act, breach of contract, age discrimination, and tortious interference by the Bank with Plaintiff’s employment contract with Defendant Association. Plaintiff appeals from the judgment of the district court dismissing the action.

    Issue. Whether under the Farm Credit Act there is an implied right of action for wrongful discharge?
    Whether the trial court erred in dismissing Plaintiff’s breach of contract claim?
    Whether there is an implied covenant of good faith and fair dealing in employment contracts?
    Whether the trial court erred in dismissing Plaintiff’s age discrimination claim?
    Whether the trial court erred in dismissing Plaintiff’s tortious interference with contract claim?

    Held. No, on all issues. Judgment affirmed.
    In determining whether there is an implied private right of action, the following factors must be examined: is the plaintiff a member of the class for who the benefits were designed; if there is any indication of legislative intent to create the remedy; is it consistent with the underlying purposes of the legislative scheme to imply the remedy; and is the cause of action one relegated to state law so it would be inappropriate to infer breach of contract based on federal law. Here, Plaintiff failed to identify any legislative history, which indicated that Congress intended to create a private right of action for wrongful discharge on behalf of Farm Credit System employees. Therefore, there is no implied private right of action under the Farm Credit Act.
    Plaintiff alleges that the trial court erred in dismissing his breach of contract claim because there are material issues of fact remaining preventing summary judgment. Summary judgment is available for the disposition of controversies without trial after viewing the evidence in light most favorable to opposing party, there is no genuine dispute as to the material facts drawn from undisputed facts. The party seeking summary judgment has the burden, but the opposing party must also present competent evidence by means, which raises an issue of material fact. In order to prove his claim for breach of contract, Plaintiff must produce evidence that there existed a contract for employment for a specified term or he would only have been terminated for cause. Plaintiff here could not present sufficient evidence that his contract was permanent, and thus failed to take his contractual agreement outside at will employment. Therefore, the trial court did not err in its judgment.
    There is no cause of action for breach of an implied covenant of good faith and fair dealing where the claimant relies upon the employment contract, which contains no express term specifying the duration of employment. The majority of the courts have failed to adopt such principle despite the efforts of state of California, which recognizes an implied covenant of good faith and fair dealing. Therefore, the district court did not err in its decision.
    Plaintiff contended that his termination violated Age Discrimination in the Employment Act. The court agrees with the decisions of the district court and thus the court did not err in granting summary judgment on the age discrimination claims.
    Plaintiff also contended that the Bank unlawfully interfered with his employment contract with the Association by coercing them into terminating his employment. However, this argument ignores the credit system of the company. Thus, the trial court did not err in granting summary judgment dismissing this claim.

    Dissent. The dissent disagrees with the portion of the opinion that states that there is not a duty of good faith. The dissent believes that there is an obligation to not act in bad faith.

    Discussion. The at-will rule discussed in the case is that an employer may discharge an employee for good cause, for no cause or even for cause morally wrong, without being thereby guilty of legal wrong.


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