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No. 84-128
IN THE SUPREME COURT OF THE STATE OF MONTANA
1984

SHIRLEY CRENSHAW,
Plaintiff and Respondent,

BOZEPllAN DEACONESS HOSPITAL, EDWLN E. DAHLBERG,
Administrator and RUSSELL NIELSEN,

Defendants and Appellants.

APPEAL FROM: District Court of the Eighteenth Judicial District
In and for the County of Gallatin,
The Honorable Thomas Olson, Judge presiding.

COUNSEL OF RECORD:

For Appellant: Berg, Coil, Stokes & Tollefsen; Ben E. Berg, Jr. argued, Bozeman, Montana
For Respondent: Goetz, Madden & Dunn; James Goetz argued, Rozeman, Montana
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Submitted: September 27, 1984
Decided: December 6, 1984

. .
,..84

Filed:

Clerk

Mr. Justice John Conway Harrison delivered the Opinion of the
Court.

Bozeman Deaconess Hospital appeals from a judgment on a.
jury verdict entered by the District Court of the Eighteenth
Judicial District of the State of Montana, in and for the
County of Gallatin, in favor of respondent, Shirley Crenshaw,
on her claims for relief from the termination of her
employment.

On December 1, 1981, Crenshaw commenced employment with
the Hospital as a respiratory therapist. Prior to that time,
she had been employed by an independently operated
respiratory therapy department which contracted services to
the Hospital. The department was purchased by the Hospital
on December 1, 1981. Crenshaw worked for the Hospital until
January 8, 1982, at which time she took a leave of absence
until February 8, 1982. After returning to work, Crenshaw
was employed until March 12, 1982, when she was discharged.

Subsequent to the take-over of the respiratory
department by the Hospital, two orientation meetings were
held with employees of the respiratory therapy department.
The employees were given information regarding salaries,
benefits and formal orientation. The employees were given a
personnel policy manual. A provision in the manual provided:
"You are on probation during the first 500 hours of
employment. Any employee may be discharged without notice
during the probationary period." Both parties concur that
Crenshaw had not completed the 500 hours of probationary
status at the time of her discharge on March 12, 1982.

The immediate dispute began in the late hours of March
11, 1982. Three nurses on duty in the intensive care unit.
complained to their supervisor, Terry Knohle. A meeting was

held between Terry Knoble, the three nurses, Russell Nielsen,
the personnel director, and Bill Kirtley, the acting head of
the respiratory therapy department. Following the meeting, a
discharge memorandum was prepared directing Crenshaw's
discharge. The discharge document charged Crenshaw with:

"Insubordination;

"disrupting the continuity of care;

"continually getting in the way of

patient care;

"disorderly conduct;

"unsatisfactory work performance;

"violation of safety and/or health rules;

and

"breach of confidentiality."

The testimony reveals, on the night of March 11, 1982, Crenshaw was not at home when the Hospital attempted to reach her at 10:30 p.m. That evening Crenshaw had been visiting a former patient. Crenshaw's husband telephoned her to tell h.er that the Hospital had called. Crenshaw telephoned the Hospital and was told that she would be needed at the Hospital later that evening. Crenshaw immediately departed to the Hospital. The former patient's daughter, Berna-Dean Hennessey, drove her to the Hospital. Hennessey remained at the Hospital for a number of hours. Related to Hennessey's presence, the discharge document charged Crenshaw with "breach of confidentiality." The Hospital contends a breach of confidential information resulted when Hennessey accompanied Crenshaw to the Hospital lab. While Crenshaw ran a separate errand, Hennessey waited for a blood-gas report and delivered it to the ICU. Crenshaw contends the report was not readily comprehensible to a lay person. Hennessey testified:
" (a) she did not examine the contents of the slip, (b) that upon arriving at the intensive care unit she put her hand inside the curtain and handed the slip to someone tending to patient care, and (c) that she did not at any time view the patient."
The "insubordination" charge stemmed from the nurses'
allegation that Crenshaw attempted to perform ABG's (arterial
blood gases). This fact is disputed not only by Crenshaw,
but by the nurses and doctors present. There is question as
to whether or not Hospital policy forbid respiratory
therapists from doing ABG's.

The discharge document also accused Crenshaw of not performing "the respiratory therapy task of suction as needed." Again there was a dispute as to whether suctioning was called for. The nurses testified that the suctioning should have been performed for the sake of appearance of the patient. However, one of the physicians testified that suctioning was not required "that it could have been a waste of time . . . with the disconnection of the ventilator necessary to suction the patient."
The three nurses present during the shift, also charged
that Crenshaw was disrupting the continuity of patient care.
As a. result, Crenshaw was accused of "endangering pa.tient
well-being." The nurses testified that Crenshaw repeatedly
answered the telephone, read electrocardiogram monitors and
distracted the nurses by commenting on the irregular cardiac
display on the monitors. The testimony regarding this
allegation is in conflict. Two physicians present during the
controversial shift testified that th.ey found nothing
deficient about Crenshaw's performance. Also, one of the
nurses in attendance during part of the shift, confirmed that
there was no misbehavior on Crenshaw's part. Finally, the
discharge document states that Crenshaw had been subject to

previous verbal counselings. It was established at the
trial, however, that this was false and that Crenshaw had not
been subject to previous disciplinary action by the Hospital.

The following morning, Crenshaw was called into the
Hospital. Crenshaw was given the disciplinary discharge
document and was advised to see the administrator the
following Monday. On Monday, March 15, 1981, Crenshaw met
with the administrator, Edwin Dahlberg. He informed her that
he would review the matter, the administrator conducted
interviews of those present in the intensive care unit during
the morning in question. The administrator affirmed the
discharge in a letter to Shirley Crenshaw, dated March 15,
1981. Crenshaw contends that the administrator failed to
interview all of the staff members, even though he was aware
that they had been present during the controversial shift and
that the charges were strongly contested.

After her discharge, Crenshaw applied for unemployment
compensation benefits. Crenshaw alleges the Hospital
informed the Bozeman Job Service indicating that she had been
discharged for unsatisfactory performance and for endangering
patient well-being. As a result, Crenshaw was unable to
procure employment in the medical community in Rozeman. She
encountered difficulties because of a lack of references from
her previous employer. In January, 1983, she and her husband
were forced to close his construction business and move to
Spokane. After two months of job seeking, she has been
employed part-time and full-time at various jobs.

Crenshaw contends the Hospital acted with malice: (1)
by lodging and sustaining false charges against her; and (2)
by tampering with her personnel file. Crenshaw claims a
certificate authorizing her to perform arterial blood gases
was removed from the file.

Crenshaw filed the present action on December 10, 1982,

alleging that she had been wrongfully discharged from her
employment with Bozeman Deaconess Hospital and sought damages
under several theories. Crenshaw alleged the Hospital
breached the implied covenant of good faith and fair dealing.
She further alleged the actions of appellants were negligent
and were malicious and/or in wanton and/or in willful
disregard of her rights entitling her to exemplary damages.
The complaint was amended to include a fourth count alleging
a separate tort in violating the duty of good faith owed to
her. A jury trial was held on November 28, 1983. The jury
found for Crenshaw and awarded her $125,000 in compensatory
damages and exemplary damages in the amount of $25,000.

The issues raised on appeal are as follows:

(1) Whether an at-will probationary employee is covered
by the implied covenant of good faith and fair dealing.

12) Whether the record sustains a separate action based on negligence.
(3)
Whether the trial court abused its discretion in
permitting an expert witness to testify on the question of
breach of duty on either wrongful discharge or fair dealing.


(4)
Whether the award of punitive damages upon a
finding of negligence and/or breach of implied covenant of
good faith and fair dealing was proper.



The Hospital submits that the covenant of good faith
and fair dealing does not apply to a probationary employee,
a.nd that the trial court erred in giving an instruction as
such.

The court gave the following instruction over the Hospital's objection: "Instruction 14. You are instructed that Bozeman Deaconess Hospital, . . . may classify certain of its employees as
probationary employees and these
employees may be discharged if they do
not measure up to the Hospital standards
during the probationary period. However,
even these employees are owed a duty of
good faith and fair dealing and the
Hospital must comply with its written
policies concerning these employees."

The court refused the Hospital's proposed instructions no. 41

and no. 42 which consecutively stated:

"Instruction 41. You are instructed that
plaintiff Shirley Crenshaw was a
probationary employee of defendant
Bozeman Deaconess Hospital and tha.t the
purpose of a probationary status is to
provide a brief period in which to
measure the employee's ahility to perform
her job before granting her a degree of
job security. If the employer feels that
the employee is not measuring up during
this probationary period, it can dismiss
that employee without procedural due
process.

"Instruction 42. You are instructed that if you find from the evidence that plaintiff Shirley Crenshaw was a probationary employee of defendant Bozeman Deaconess Hospital and that the purpose of a probationary status is to provide a brief period in which to measure the employee's ability to perform her job before granting her a degree of job security, then you are instructed that if the employer feels that the employee has not measured up during the probationary period, it can dismiss that employee without any procedural due process."
The doctrine of implied covenant of good faith and fair

dealing in employment contracts was established in Gates v.

Life of Montana (1982), 196 Mont. 178, 638 P.2d 1063, (Gates

I), brhere this Court stated: "A covenant of good faith and
-
fair dealing was implied in employee contracts." This Court

went a step further in Gates v. Life of Montana (Mont. 1983),

668 P.2d 213, 40 St.Rep. 1287, (Ga.tes -11) holding that the
covenant arises out of the employment relationship and it

exists "apart from, and in addition to, any terms agreed to

by the parties."

The Hospital argues to the Gates rule there should be

an exception, and the probationary employee is the exception.
The Hospital states the doctrine of good faith and fair
dealing has the purpose of enhancing job security for the
employee. But the probationary employee has little prospect
of job security until his trial period has elapsed and
attains the status of a permanent employee. The Hospital
proposes that the final answer to this issue is found in
Storch v. Board of Directors (1976), 169 Mont. 176, 545 P.2d

644. In Storch, the plaintiff was a probationary State
employee. The court held the purpose of the probationary
status is to provide the employer with a trial period in
which unsatisfactory employees may be dismissed without
procedural due process.

In light of the Storch decision, the hospital submits it was clear error to instruct the jury that even probationary employees are owed a duty of good faith and fair dealing. We find the Storch decision cannot withstand the scrutiny of the good faith and fair dealing mandate. It was Gates -I and not the Storch decision which gave rise to the doctrine of implied covenant of good faith and fair dealing. Furthermore, Storch does not even mention the implied covenant of good faith and fair dealing. The plaintiff-employee in Storch protested his discharge on the grounds of constitutional due process and right to privacy, not on lack of good faith and fair dealing as is the case in the present ma.tter. Accordingly, we hold even in probationary employment relationships, the employer still owes his employee a duty of good faith and fair dealing under Gates I.
-
In a recent decision, Dare v. Montana Petroleum

Marketing Co. (Mont. 19841, P.2d , 41 St.Rep. 1735,
Justice Weber defined the parameters of the covenant of good

faith and fair dealing doctrine:

"Whether a covenant of good faith and fair dealing is implied in a particular case, depends upon objective manifestations by the employer giving rise to the employee's reasonable belief that he or she has job security and will be treated fairly. . . the implied covenant protects the investment of the employee who in good faith accepts and maintains employment reasonably believing their job is secure so long as they perform their duties satisfactorily, such an employee is protected from bad faith or unfair treatment by the employer."
We find the following testimony from the record

constitutes objective manifestations by the Hospital giving

rise to Crenshaw's belief that she had job security:

"1. That Crenshaw had worked for the
respiratory therapy department under Dr.
Shaw since approximately April, 1980.

"2. That all of her respiratory therapy
work had been done during that period at
Sozeman Deaconess Hospital, and her
duties, salary, and procedures remained
essentially unchanged when the Hospital
finally took over the Department.

"3. That Crenshaw was led to believe that
she and. other long-term staff would come
on board with permanent full-time status.

"4. That the Hospital provided permanent,
full-time employees with the privilege to
join the Hospital group health insurance
pr0gra.m. Since the Hospital considered
Crenshaw qualified for a health insurance
program which only permanent employees
could join, the Hospital must have
considered her a permanent employee. In
addition, the Hospital had. a policy of
allowing permanent employees a ten
percent discount for medical services at
the Hospital. Crenshaw received surgical
treatment at the Hospital in January,
1982, and she received a ten percent
permanent employee discount.

"5. That the Hospital personnel policy
requires an evaluation meeting between
the probationary employee and his
supervisor at the end of the 500 hour
probationary period. Crenshaw and two
other employees testified that they had
no such evaluation meeting at the end of

500 hours after the merger with Bozeman

Deaconess Hospital.
"6. That there was no reference to her
probationary status in either the
discharge memorandum or in the
Administrator's letter sustaining the
discharge."

Crenshaw had reason to believe her job was secure. As an
employee she was entitled to the protection of good faith and
fair dea1in.g by the Hospi.ta1.

Appellant next claims error by the court's refusa-l of
section 39-2-503, MCA, instruction of the "at will" statute.
That instruction stated:

"You are instructed that section
39-2-503, MCA provides that employment
having no specified term may be
terminated at the will of either party on
notice to the other. You are further
instructed that the foregoing statute
does not require notice prior to
termination."

The Hospital- contends that the Gates -I1 decision of good faith and fair dealing is abrogated by the enactment of the "at will" statute. The Hospital primarily relies on a decision rendered by this Court in 1981, Reiter v. Vellowstone County, Montana (Mont. 1981), 627 P.2d 845, 39 St.Rep. 686, where we held that an implied employment contract cannot circumvent the at-will statute. In Ga.tes I,
7
Reiter was clearly distinguished, ". . . the issue there, [in Reiter], was whether an employee at-will had a property interest in continued employment and was entitled to procedural due process prior to termination. . . We did not reach or decide the good faith and fair dealing issue presented, here. . . " Gates v. Life of Montana Ins. Co., supra, 638 P.2d at 1066. The same holds true in the present case, as Crenshaw is alleging a breach of covenant of good faith and fair dealing.
We hold that the "at-will" sta-tute, section 39-2-503,
MCA, is very much alive. The Gates I decision does not

-
preempt the statute. There is no legitimate precedent for an
exception for probationary employees. Therefore, Crenshaw
even as a probationary employee was owed a duty of good faith
under the mandate of Gates I. This requirement of good faith

-
and fair dealing does not conflict with section 39-2-503,
MCA, but merely supplements it. Employers can still
terminate untenured employees at-will and without notice.
They simply may not do so in bad faith or unfairly without
becoming liable for damages. The Hospital's notification to
the Bozeman Job Service of Crenshaw's unsatisfactory work
performance deprived her of employment in the 1oca.l medical
community. This was an act of bad faith. The charges and
a.llegations in the discharge memorandum were false. The
charges were serious and resulted in Crenshaw losing her
employment as well as jeopardizing her career. This was an
act of bad fa-ith. The record shows that Crenshaw's discharge
was motivated by bad faith and warrants recovery for breach
of implied covenant of good faith and fair dealing under
Gates I.

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We therefore uphold, instruction 14 that stated probationary employees " . . . may be discharged if they do
a duty of good faith and fair dealing. was properly

not  measure  up  to  the  hospital  standards  during  the  
probationary period.  However, even t hese employ ees are  owed  
"

. .

given by the District Court.

The Hospital next claims error by the trial court refusing to give defendant's proposed instruction involving wrongful discharge: "It is only when public policy has been violated in connection with the wrongful discharge that the cause of action arises." The Hospital contends that
violation of public policy is a necessary element of the

doctrine of good faith and fair dealing which the jury should
have been allowed to consider. In support of this
contention, the Hospital cites Nees v. Hocks (Or. 1975), 536
P.2d 512; Peterman v. International Brotherhood of Teamsters

(1959), 174 Cal.App.2d 184, 344 P.2d 25.

The Hospital is correct that this Court adopted the
concept of implied covenant of good faith and fair dealing
from the New Hampshire Supreme Court decision of Monge v.
Beebe Rubber Co. (1974), 114 N.H. 130, 316 A.2d 549. The
decision in Monqe was later limited by the New Hampshire
Supreme Court to situations where the termination violated
public policy. Howard v. Door Woolen Co. (1980), 120 N.H.
295, 414 A.2d 1273. However, the Hospital may not assume
that by adopting the earlier New Hampshire decision, this
Court will accept the imposed limitation as well.

We have repeatedly stated that a showing of public policy violation is required only to sustain an action for wrongful discharge. "It is only when public policy has been violated in connection with the wrongful discharge that the cause of action arises . . . " Keneally v. Orgain (Nont. 1980), 606 P.2d 127, 37 St.Rep. 154; See also Dare v. Montana Petroleum Marketing Co., supra. The present case is not a case which involves an allegation of "wrongful discharge." The central issue here, is whether there was a breach of duty of good faith and fair dealing. By virtue of Gates -I and Gates -11, this Court recognizes that liability is not limited to those cases in which a public policy violation has been alleged.
The Hospital next claims error by the trial court's instruction defining negligence. The Hospital arques that negligence is not an issue in the breach of a covenant of
good faith and fair dealing. That negligence is not
synonymous with bad faith. Thompson v. State Farm Mutual
Automobile Insurance (1972), 161 Mont. 207, 505 P.2d 423;
also Gram v. Liberty Mutual Insurance Co. (Mass. 1981), 429
N.E.2d 21.

Crenshaw responds the Hospital's failure to interview all of the witnesses present on the night in question wads negligent as a theory separate and distinct from the theory of breach of good faith and fair dealing. Crenshaw offered evidence which raised the question of the Hospital's negligence:
(1)
the former acting director testified lze had not
interviewed all of the appropriate witnesses;


(2)
the administrator admitted that he had failed to
interview key witnesses and that he was not sure he had
interviewed a physician before sustaining the discharge; and


(3)
Doctor Vinton, Crenshaw's expert on personnel management, conceded that "when the discharge was made . . . the allegation had not been properly investigated by the Hospital administrator."


In light of the foregoing, we find the Hospital's conduct showed a "want of attention to the nature or probable consequence of the act or omission" and that their conduct fell below the "standard established by 1-aw for the protection of others against unreasonable risk." Flansberg
v.
Montana Power Co. (1969), 154 Mont. 53, 460 P.2d 263; Mang


v.
Eliasson (1969), 153 Mont. 431, 458 P.2d 777. The
allegation of negligence was clearly established in
respondent's complaint. We hold the trial court committed no
error in issuing the instruction to the jury.



The Hospital raises as its next issue $or appeal, the

testimony of Crenshaw's expert on personnel management, Dr.
Karen Vinton. Dr. Vinton testified to the following:

"1. That there were serious weaknesses in
the actions taken by the Hospital in
discharging Shirley Crenshaw;

"2. She testified as to the importance of
giving an accused employee the
opportunity to defend herself in a non
stressful situation; of following
established disciplinary procedures for
investigation and appeal; of carefully
documenting disciplinary matters; and of
maintaining the appearance as well as the
reality of fairness;

"3. That the Hospital failed to properly

investigate the charges against her;
"4. That Ms. Crenshaw would have
difficulty finding subsequent employment;

"5. That in her opinion, the discharge of
Ms. Crenshaw was unjustified."
The qualifications of the expert are well-documented in
the record. Dr. Vinton received her Nasters in Business
Administration and her PH.D in Human Resource Management and
Organizational Behavior. She is Assistant Professor of
Business Administration at Montana State University. She is a
member of the American Associates of Personnel
Administrators. Her experience is extensive. She has acted
as a consultant to business and research firms. She has
taught human resource management to hospital management.
The Hospital moved to exclude her testimony on two
grounds: (1) the issue was not the proper subject to expert
opinion; and (2) her testimony would constitute comment and
argument going to the ultimate issue of this action.
The Hospital contends the testimony of Dr. Vinton has
invaded that field of common knowledge to the severe
prejudice of the defendants. The employer-employee
relationship is within the common knowledge of the average

layman. The Hospital goes on to state all persons have been

exposed to such a relationship.

The Hospital primarily relies on Ployhar v. Board of
Trustees of Missoula (1980), 187 Mont. 363, 603 ~,2d 1226.
There, parents of a son killed in a heavy equipment operation
accident brought a negligence action against school board.
An expert testifying for the defendant was allowed to give
his opinion as to the cause of the industrial accident. We
affirmed the trial court order, stating: "opinion evidence
concerning the cause of an accident is admissible only if the
subject matter is beyond the ordinary understanding of the
jury." We held there was no need for such testimony. In
Ployhar, the accident was simple. The evidence was
sufficient to allow the jury to make an independent judgment
as to the ultimate cause of the accident. The instant case
is not a scenario of simple fa.cts. Fault arising from breach
of implied covenant of good faith a.nd fair dealing is not
easily comprehensible to the average person. Dr. Vinton's
testimony was based on professional expertise and experience
which the individual jury members were unlikely to possess.
Her testimony assisted the trier of fact by providing the
jury with information and a prospective beyond the common
experience of a lay juror. State of Montana v. Howard (Mont.
1980), 623 P.2d 1226, 38 St.Rep. 1980, see also Demarais v.
Johnson (1931), 90 Mont. 366, 3 P.2d 283.

The admissibility of expert testimony is governed by
Rule 702, Montana Rule of Evidence:
"If scientific, technical, or other
specialized knowledge will assist the
trier of fact to understand the evidence
or to determine a fact in issue, a
witness qualified as an expert by
knowledge, skill, experience, training,
or education may testify thereto in the
form of an opinion or otherwise."

Contrary to the Hospital's reading of this rule, Rule 702

does not exclude expert testimony on all matters about which

jury members have any knowledge or experience. This Court

has long passed the days of when only experts in the field of

medicine were allowed to testify. We must continue with the

spirit of the new rules of evidence and recognize individuals

in other fields, especially the complex domain of labor

relations are a new legion of experts. In Barmeyer v.

Montana Power Co. (Mont. 19831, 657 P.2d 594, 40 St.Rep. 23,

this Court stated:

" . . . Rule 705, Mont. R. Evid. , mandates that the opinion of a qualified expert is admissible, and if opposing counsel believe the opinion is not founded on sufficient data, cross-examination is the shield to guard against unwarranted opinions . . . Stewart v. Casey (1979), 182 Mont. 185, 595 P.2d 1176."
The Hospital's counsel vigorously cross examined Dr. Vinton

to determine the extent of her knowledge with respect to

hospital management, j-n particular, personnel policy

governing probationary employees.

"Q. [By Mr. Berg] Well now, 1-et's take it
in general, do you know is there a
distinction, generally speaking, between
the procedure for dismissal of a
probationary as distinguished from a
permanent employee?

"A. It usua.11~ depends on the company's
written procedures, but frequently
probationary employees are not afforded
as much as permanent full-time employees
in the discipline procedures.

"Q. Would it be fair to say that a
probationary employee may be discha.rged
without reason?

"A. There are companies that do that,
yes.

"Q. I see. Do you know what the policy of

the Bozeman Deaconess Hospital is with

regard to that policy?

"A. As I read it, in the personnel
policy, it stated that probationary

employees can be discharged without

notice.
"Q. I see. So, in Rozeman Deaconess
Hospital, that's one of the institutions
that make it clear, distinguishes between
probationary and permanent employees?

"A. I don't think they make it a very clear distinction --"8. They do with notice?
"A. As far as notice, yes.
"Q. Well, they do as far as notice is
concerned.

"A. As far as notice, yes.

"Q. Do you know what an at will employee
is?
"A. Yes.
"Q. What is an at will employee?
"A. Well, at will the term at will was

developed through some legal people
basically it means that an employee or an
employer can terminate an employment
agreement at any time for any reason with.
no notice."

The trier of fact's experience does not extend to Hospital
disciplinary guidelines, much less the ability to evaluate
the propriety of such guidelines. We find Dr. Vinton's
perspective assisted the jury to understand the evidence and
ultimately the breach of implied covenant of good faith and
fair dealing question at issue. Further, the Hospital's
counsel moved in limine to exclude Dr. Vinton's testimony.
The argument was presented to the trial judge. The trial
court in its broad discretion admitted the expert testimony.
The trial court's order will not be disturbed on appeal in
the absence of a clear showing of a manifest abuse of
discretion. Yerkich v. Opsa (1978), 176 Mont. 272, 577 P.2d
857; Tigh v. College Pa.rk Realty Co. (1967), 149 Mont. 358,
427 P.2d 57; Ployhar v. Board of Trustees (1980), 187 Mont.
363, 609 P.2d 1226, We find no abuse of discretion here.

This Court recognized for the first time that the breach of an implied covenant of good faith and fair dealing was a tort for which punitive damages may be awarded. In Gates v. Life of Montana (Mont. 1983), 668 P.2d 213, 40 St.Rep. 1287 we stated: "Breach of the duty owed to deal fairly and in good faith in the employment relationship is a tort for which punitive damages can be recovered if defendant's conduct is sufficiently culpable." The Hospital submits it was clear error to instruct the jury on punitive damages. Crenshaw was discharged on March 12, 1982. The Gates -I1 decision was decided by this Court August 5, 1983. The Hospital advamces it was error to assess punitive damages for tortious conduct that was an unknown cause of action at the time of plaintiff's discharge. We disagree. We established the duty of good faith and fair dealing arising out of an employment agreement in Gates -I. The Hospital was put on notice to deal in good faith at the time the alleged incident took place. Moreover, negligence on the part of the Hospital's investigation was yet another basis of Crenshaw's cause of action. Section 27-1-221, MCA, provides:
"In any action for a breach of an obligation not arising from contract where the defendant has been guilty of oppression, fraud or malice, actual or presumed, the jury, in addition to the actual damages, may give damages for the sake of example and by way of punishing the defendant. "
Under this statute, it is necessary to prove more than
ordinary negligence; such willful disregard of duty amounting
to actual or implied malice must be shown. Spackman v. Ralph

M. Parsons Co. (1966), 147 Mont. 500, 414 P.2d 918; Cashin v.
Northern Pacific Ry. Co. (1934), 96 Mont. 92, 28 P.2d 862.

Crenshaw asserts the maliciousness of the Ilospital's
conduct stemmed from the Hospital removing the "arterial

blood gas" certificate from her personnel file and
fabricating charges against her. The record sustains that
the Hospital failed to properly investigate the charges. In
a medical community such as Bozeman, charges of such a nature
should not have been raised without careful consideration of
the consequences to one's professional livelihood and
reputation. This, we hold, is the degree of culpability the
Gates 11, decision was to prevent.

-
We find the evidence set forth by Crenshaw presented an
issue of punitive damages. The issue was properly submitted
to the jury.

The judgment of the District Court is affirmed.

We concur:

i
3~4 ~~J

4.pd&
Chief Justice

Justices

Mr. Justice L. C. Gulbrandson:
I specially concur in the result.

/I
I
Justice

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