Wisehart v. Meganck
2002 Colo. App. LEXIS 1426, 19 I.E.R. Cas. (BNA) 56, 66 P.3d 124 (2002)
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Rule of Law:
The at-will employment doctrine bars a terminated employee's claim for fraudulent misrepresentation or concealment when the alleged fraud was the means used to justify a termination that the employer had the right to carry out for any reason or no reason at all.
Facts:
- Larry N. Wisehart was an at-will loan officer for Vectra Bank Colorado, NA.
- Bank policy required approvals from other bank officers for certain loans, although in practice these approvals were sometimes obtained after a loan closing.
- For a specific loan, Wisehart sought approval from a senior loan officer, who requested more information before departing for the day.
- After their meeting, the senior officer told another employee he would not approve the loan but did not communicate this decision to Wisehart.
- Despite knowing the loan was scheduled to close the next day and that Wisehart intended to proceed, no one at the bank informed him that approval had been withheld.
- While Wisehart was attending the out-of-town closing, the bank prepared his final paycheck.
- Upon his return, Wisehart's supervisor, Michael Meganek, terminated his employment, stating the reason was his failure to obtain the required written approvals before the closing.
Procedural Posture:
- Larry N. Wisehart filed a lawsuit against Vectra Bank Colorado, NA and Michael Meganek in a Colorado trial court.
- Wisehart's complaint asserted claims for fraudulent misrepresentation and concealment related to his termination.
- The defendants filed a motion for summary judgment, arguing that a fraud claim is not recognized in the context of an at-will employment termination.
- The trial court granted the summary judgment motion in favor of the defendants, dismissing Wisehart's claims.
- Wisehart, as the appellant, appealed the trial court's judgment to the Colorado Court of Appeals.
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Issue:
Can an at-will employee maintain a claim for fraudulent misrepresentation and concealment against an employer who allegedly manufactured a fraudulent reason to justify the employee's termination?
Opinions:
Majority - Judge Casebolt
No, an at-will employee cannot maintain such a claim. The at-will employment doctrine allows an employer to terminate an employee at any time, with or without cause. Allowing a fraud claim under these circumstances would improperly undermine this doctrine, as the law will not punish a party for doing by misdirection that which it has a right to do forthrightly. The court reasoned that since Vectra Bank was free to terminate Wisehart without any reason, using a fraudulent pretext to create a reason does not give rise to a separate tort claim. The alleged fraud is not independent of the termination itself; it is the means of termination. This situation is distinct from fraudulent inducement to employment, where the tort occurs before the employment relationship begins.
Dissenting - Judge Webb
Yes, an at-will employee should be able to maintain such a claim. The claim is not a challenge to the termination itself but rather an action based on the employer's fraudulent conduct. The dissent argues that the bank did not merely exercise its right to terminate but resorted to fraud by nondisclosure to contrive a cause. This separate tortious act put the employee in a worse position. The dissent reasons that but for the fraudulently orchestrated cause, the bank might not have terminated Wisehart when it did, possibly due to concerns about potential litigation (e.g., an age discrimination claim). Therefore, the fraudulent conduct should be actionable, even if damages might be limited by the at-will nature of the employment.
Analysis:
This decision strongly reinforces the at-will employment doctrine in Colorado by refusing to create a new common law exception for fraud used to effect a termination. It clarifies the distinction between actionable fraud that induces employment (as in 'Berger v. Security Pacific') and non-actionable fraud that serves as a pretext for firing an at-will employee. The ruling limits the ability of terminated at-will employees to challenge the reasons for their dismissal through tort law, thereby protecting employer discretion. Future litigation will need to carefully distinguish between torts that are truly independent of the termination and those, like this one, that are inextricably intertwined with it.
