Nakamura v Bank of Guam (II) [1994] FMSC 2; 6 FSM Intrm. 345 (App. 1994) (15 March 1994)

FSM SUPREME COURT TRIAL DIVISION
APPEAL CASE NO. C2-1993
Nakamura v. Bank of Guam (II)
[1994] FMSC 2; 6 FSM Intrm. 345 (App. 1994)

JACK NAKAMURA,
Plaintiff-Appellant

vs.

BANK OF GUAM,
Defendant-Appellee.

OPINION

Argued: February 1, 1994
Decided: March 15, 1994

BEFORE:

Hon. Andon L. Amaraich, Associate Justice, FSM Supreme Court
Hon. Martin Yinug, Associate Justice, FSM Supreme Court
Hon. Judah C. Johnny, Temporary Justice, FSM Supreme Court*

*Associate Justice, Pohnpei Supreme Court, Kolonia, Pohnpei

APPEARANCES:

For the Appellant: Charles Greenfield, Esq. (argued)
Micronesian Legal Services Corporation
P.O. Box 38
Lelu, Kosrae FM 96944

Thomas J. Schweiger, Esq. (on the brief)
Micronesian Legal Services Corporation
P.O. Box D
Weno, Chuuk FM 96942

For the Appellee: Joaquin C. Arriola, Jr. (argued)
Anita P. Arriola (on the brief)
Arriola, Cowan & Bordallo
P.O. Box X
Agaña, Guam 96910

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HEADNOTES

Appeal and Certiorari - Standard of Review; Civil Procedure - Discovery
The fashioning of remedies and sanctions for the failure of a party to comply with discovery requirements is a matter within the trial court's discretion and should not be disturbed by an appellate court absent a showing that the trial court's action has unfairly resulted in substantial hardship and prejudice to a party. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 349 (App. 1994).

Appeal and Certiorari - Standard of Review; Evidence
If a judge does not specifically rely on the objected to evidence, the appellate court must presume that he did not rely on that evidence and therefore that any error in admitting the evidence did not result in substantial hardship or prejudice to a party. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 349 (App. 1994).

Appeal and Certiorari - Standard of Review
An appellate court should not set aside a finding of fact of a trial court where there is credible evidence in the record to support that finding. The trial court, unlike the appellate court, had the opportunity to view the witnesses and the manner of their testimony. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 349 (App. 1994).

Appeal and Certiorari - Standard of Review
A claim that a trial court's decision did not address all the issues raised is not a basis for remand as long as the trial judge made a finding of such essential facts as provide a basis for the decision. The test as to the adequacy of the findings is whether they are sufficiently comprehensive and pertinent to the issue to form a basis for the decision. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 349 (App. 1994).

Appeal and Certiorari - Standard of Review; Evidence
It is not an abuse of the trial court's discretion for a trial court to admit testimony that is inconsistent with that witness's answer to an interrogatory. Admissions made in interrogatories are not binding and the answering party may introduce other evidence on the subject of the admissions at trial. Contradictions between a party's answers to interrogatories and court testimony go to the weight and credibility of the testimony, not to its admissibility. Conflicting testimony may be admitted, and it is the responsibility of the finder of fact to weigh all the answers and resolve the conflict. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 350 (App. 1994).

Appeal and Certiorari - Standard of Review; Civil Procedure
Where a party at trial claims surprise, and the judge offers that party a chance to cure any prejudice this might have caused and they make the tactical choice to decline the opportunity, it is a tactical choice the party must live with and is not a basis for reversal. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 351-52 (App. 1994).

Appeal and Certiorari - Standard of Review; Evidence
Where there is no indication that the trial court relied on certain evidence, the presumption is there was no such reliance, and any error in its admission is not prejudicial. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 351 (App. 1994).

Evidence
Inconsistencies between a party's responses to discovery and trial testimony properly go to the weight and credibility of the testimony and not to its admissibility. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 352 (App. 1994).

Appeal and Certiorari - Standard of Review
Where a trial court's decision does not state that it reached any conclusion about a certain disputed fact, the appellate court may presume that it was not a basis for the trial court's decision. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 352 (App. 1994).

Employer - Employee
Where there is sufficient evidence in the record for the trial judge to have found that an employee was terminated for the just cause of insubordination as permitted without notice in the the parties' written employment contract, the trial court ruling that the plaintiff failed to prove he was terminated without just cause is sufficiently comprehensive and pertinent to the issue to form a basis for the decision. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 352-53 (App. 1994).

Employer - Employee
Termination for just cause as described in a written employment contract precludes the former employee from seeking redress for the termination as the breach of an implied contract embodied in the personnel manual. Nakamura v. Bank of Guam (II), [1994] FMSC 2; 6 FSM Intrm. 345, 353 (App. 1994).

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COURT'S OPINION

MARTIN YINUG, Associate Justice:

Jack Nakamura, the plaintiff in this employment/termination case, appeals the judgment by the trial division finding for the Bank of Guam ("the bank"), his former employer. He alleges three bases for reversal: 1) that the trial court erred when it allowed Karita Tenry, the bank manager, to testify at trial that she had warned Nakamura that he would be terminated if he continued to fail to work overtime during the bank's computerization process because that testimony contradicted the bank's answer to an interrogatory and therefore unfairly surprised the plaintiff; 2) that the trial court erred when it allowed Tenry to testify that a section of the bank's personnel manual regarding discipline for absenteeism was not in effect when Nakamura was terminated because that testimony contradicted the answer to a request for production of documents and therefore unfairly surprised the plaintiff; and 3) that the trial court failed to consider the plaintiff's first claim for relief, i.e., that the Bank breached an implied contract with Nakamura by failing to follow its personnel manual and past policy and practice. As discussed below, we hold that the trial court did not err by admitting Tenry's testimony and that the court's decision included the findings necessary to dispose of the plaintiff's first claim for relief.

BACKGROUND FACTS

Nakamura was employed by the bank in its Chuuk branch from 1980 until his termination in June of 1985. At the time of his termination he was working as a Pro-Assistant Cashier and had responsibility for supervising six tellers. In March of 1985 the bank president, Jesus Leon Guerrero, informed Nakamura and other bank officers that in order to "computerize" the Chuuk branch they would have to work on Saturdays and after normal quitting time (5:30 pm) for approximately one month. Transcript ("Tr.") at 101. Once the computerization began the employees were working a full day on Saturday and from 8 a.m. until about 11:00 p.m. on weekdays. Tr. at 102. Nakamura had been trained in the computerization process and was expected to guide the six tellers he supervised during the late nights and weekends when the computerization was being performed. Tr. at 101.

The parties agree that once the computerization began Nakamura did not work all the required overtime. Tr. at 37, 103. There is also no dispute that Nakamura did not inform management in advance on those occasions when he failed to appear for overtime. Tr. at 42, 104. The parties do dispute, however, the degree of Nakamura's failure to comply. Tenry states that most days Nakamura did not work late and that, to her recollection, Nakamura never worked on a weekend. Tr. at 103. However, Nakamura says that he "was there" after hours during the week and that he missed only one or two weekend days during the computerization. Tr. at 36-37, 62-63. When an audit of the computerization was performed the tellers complained that Nakamura had not been helpful during the process. Tr. at 109-10. Tenry stated that the work was delayed because the tellers under Nakamura's supervision did not know what to do in his absence. Tr. at 103.

The procedures that were followed in discharging Nakamura are disputed. The one thing that both parties agree on is that there is nothing in the Nakamura's personnel file about his failure to work the required overtime during the computerization - no written warnings, no record of verbal warnings or counseling sessions, no discipline short of discharge. Nakamura testified that, in fact, it was never brought to his attention that anyone was dissatisfied with the hours he was working during the computerization. Tr. at 43-44, 62-63. However, Tenry states that she and the branch manager repeatedly counseled Nakamura about his failure to be helpful enough during the computerization. Tr. at 130, 155. Nakamura was terminated in June of 1985.

The "Agreement of Employment" that Nakamura signed, stated, inter alia, that the bank would give him "two weeks' notice or one-half month's salary in lieu thereo[f] in case of dismissal unless such dismissal result[ed] from . . .onestsubordinardination oron or other good cause." Ex. No. 1 (Agreement of Employment) para. 7. Evidence was also introduced regarding the bank's 600-page perl manwhich stated, at section 120.1, that an employee oyee with with an attendance problem should be counseled and placed on 6 months probation before being terminated, and that a record should be kept of the absenteeism and probation. Tr. at 85-86. Tenry testified that section 120.1 was not in effect at the time of Nakamura's discharge. Tr. at 127-28. Nakamura admitted that he was not aware that section 120.1 existed, but stated that he believed that the bank's practice was to give verbal and written warnings before discharging an employee for absenteeism. Tr. at 67-69.

On May 31, 1991, approximately six years after his termination, Nakamura filed this lawsuit. The complaint, filed with the Chuuk trial division of the FSM Supreme Court, stated four claims for relief: 1) that the defendant's past practices and personnel polices created an "implied contract" and that the bank violated this contract by firing Nakamura without just cause; 2) that the bank had an implied covenant of fair dealing with its employees and that this was violated when the bank discharged Nakamura without just cause; 3) that the bank had a duty to deal in good faith with Nakamura and that the duty was violated when the bank discharged Nakamura without just cause; and 4) that the bank, by discharging Nakamura, intentionally acted to cause him severe emotional distress, pain and suffering, and humiliation.

TRIAL COURT RULINGS AND DECISION

At trial two witnesses were called for the plaintiff - Tenry and Nakamura himself. Tenry was allowed to testify, over the plaintiff's objection, that she repeatedly counseled Nakamura regarding his failure to be helpful during the computerization, and that section 120.1 of the personnel manual was not in effect when Nakamura was terminated. According to the plaintiff this testimony unfairly surprised him because it contradicted the defendants' answers to an interrogatory and a request to produce documents. The trial judge asked the plaintiff if he wanted to have an opportunity to remedy this surprise with further discovery, Tr. at 142, but the plaintiff instead chose to move that Tenry's testimony be stricken, Tr. at 143. The trial court denied the request to strike Tenry's testimony and afterwards the plaintiff never asked for an opportunity to do further discovery.

After trial, the court found that Nakamura was not entitled to recover damages because of his termination from employment. The decision stated that "the plaintiff failed to prove that the termination in June 1985 was without just cause" Appendix ("App.") at 34, and had also failed to show that "the plaintiff acted intentionally to inflict emotional distress on the plaintiff." Id.

STANDARD OF REVIEW

The "fashion[ing of] remedies and sanctions for failure of a party to comply with discovery requirements" is a matter within the "trial court's discretion" and "should not be disturbed by an appellate court absent a showing that the trial court's action has unfairly resulted in substantial hardship and prejudice to a party." Engichy v. FSM, [1984] FMSC 13; 1 FSM Intrm. 532, 558 (App. 1984). If the judge did not specifically rely on the objected to evidence, then it may be presumed that he did not rely on that evidence, and therefore that any error in admitting the evidence did not result in substantial hardship or prejudice to a party. 5 Am. Jur. 2d Appeal and Error § 799 (1962).

An appellate court should not overrule or set aside a finding of fact of a trial court where there is credible evidence in the record to support that finding. Engichy, 1 FSM Intrm. at 556. The trial court, unlike the appellate court, has the opportunity to view the witnesses and the manner of their testimony. Id.; FSM Civ. R. 52(a) ("due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses").

A claim that a trial court's decision did not address all the issues raised is not a basis for remand as long as the trial judge made a finding of such essential facts as provide a basis for the decision. 5A James W. Moore et al., Moore's Federal Practice 52.06[1] (2d ed. 1990). "The ultimate test as to the adequacy of findings is whether they are sufficiently comprehensive and pertinent to the issue to form a basis for the decision." Id. "[T]he trial judge is not required to assert the negative of each rejected contention . .&# . [h]e need not mnot make findings on a particular issue if other issues are decisive of the case." 9 Charles A. Wright & Arthur R. Miller, Federactic Procedure § 2579, at 712 (1979).

DISCUSSION

I. Admission of Tenry's Testimony Regarding Verbal Warnings

The first basis for reversal urged by the plaintiff is that the trial court erroneously rejected the plaintiff's motion that Tenry's testimony be stricken because her statement that verbal warnings were given to the plaintiff was inconsistent with the bank's response to an interrogatory. The interrogatory at issue - number 5 - asked the bank the following: "Please list and describe in detail any and all disciplinary warnings, whether in writing or given orally, which defendant's employees provided plaintiff during his entire employment history with defendant." App. at 12. The bank objected to the interrogatory as "vague and ambiguous" and "virtually impossible" to answer. In its entirety the bank's response was:

This interrogatory is vague and ambiguous in that it fails to define the term "disciplinary warnings". It is also burdensome in that it requires defendant to account for all warnings, including those given orally, by defendant's employee, during plaintiff's entire history with the bank. This is a virtually impossible task, since the bank would have to question all present and former bank employees to determine whether any oral warnings had been given. Notwithstanding said objection, see contents of plaintiff's personnel file, produced in response to plaintiff's First Request for Production of Documents.

App. at 20. The plaintiff seizes on the last sentence in this response and says that because the bank referred him to the personnel file, and because that file contained no record of counseling or discipline, he justifiably assumed that the bank would not claim that the plaintiff received any disciplinary warnings during his history with the bank, and was unfairly surprised when "suddenly at trial, the bank present[ed] testimony by Karita Tenry that there were counseling sessions or oral warnings to the employee prior to termination." Reply Brief at 7.

Even if we agreed that the interrogatory answer contradicted Tenry's testimony, that would not be a basis for reversing the trial court's decision to admit the testimony unless we also concluded both that doing so was an abuse of discretion and that it "resulted in substantial hardship and prejudice to a party." Engichy, 1 FSM Intrm. at 558. The plaintiff has not shown any basis for concluding that the trial court's decision not to strike Tenry's testimony on the basis of the supposed inconsistency with the bank's answer to interrogatory no. 5 was an abuse of discretion. Indeed, the trial court's decision was consistent with the general common law rule that "admissions made in interrogatories are not binding, and the answering party may introduce other evidence on the subject of the admissions at trial." 23 Am. Jur. 2d Depositions and Discovery § 243, at 553 (1983). Under that rule "[c]onflicting testimony may be admitted, and it is the responsibility of the finder of fact to weigh all the answers and resolve the conflict." Id. This common law rule is sound. As a general matter, contradictions between a party's answers to interrogatories and court testimony go to the weight and credibility of the testimony, not to its admissibility. "The trier of fact is `free to select from conflicting evidence, and inferences that which it considers most reasonable.'" Epiti v. Chuuk, [1991] FMCSC 3; 5 FSM Intrm. 162, 166 (Chk. S. Ct. Tr. 1991) (quoting 30 Am. Jur. 2d Evidence § 1082).

While unfair surprise may, under some circumstances, be sufficiently prejudicial to warrant making an exception to this rule, we find that any prejudice that the plaintiffs suffered in this case was self-inflicted. When the plaintiff raised the issue of unfair surprise, the trial judge asked if the plaintiff wanted to adjourn the trial in order to conduct additional discovery. Such additional discovery, while certainly inconvenient for all concerned, would have remedied any significant advantage that the defendant might have gained from the "surprise" testimony. The plaintiff did not seek additional discovery after the motion to strike Tenry's testimony was denied. That was a tactical decision that the plaintiff must now live with.

The defendant in Engichy faced a similar situation when significant statements were disclosed to him late in the proceedings and the trial judge offered him the opportunity to recall witnesses regarding those statements. The appellate court stated that "in determining whether to re-examine witnesses whose testimony was completed, counsel faced some difficult tactical decisions," but that that did not constitute "a sufficient showing of prejudice to . . . ju reve" 1 F 1 FSM Intr Intrm. at 559. Similarly, in this case the plaintiff made a tactical decision not to seek additional discovery based on Tenry's "surprise" trial testimony. Under Engichy, the fact that this tactical decision may have been a difficult one is not a basis for a reversal.

In addition, it is clear that the bank's answer was not meant to provide all the information sought by the plaintiff - a task that the bank was claiming would be "virtually impossible" to perform. It plainly puts the plaintiff on notice that the answer is not complete and essentially invites the plaintiff to either file a motion to compel an answer, or negotiate about the breadth of the interrogatory. Counsel's decision to address the incompleteness of the answer by simply interpreting it in the way most favorable to his client, rather than through appropriate discovery actions, was also a tactical choice that the plaintiff must now live with.

The plaintiff's argument has another, equally serious, defect. Even if one assumes that Tenry's testimony regarding the counseling sessions should have been excluded, there is no reason to believe that the admission of the evidence affected the outcome here. The trial court's decision makes absolutely no reference to the testimony regarding counseling sessions, and it is not a necessary implication of the decision that the court relied on the testimony. Rather, the trial court simply concluded that the plaintiff had failed to show that his discharge was without just cause. That conclusion could have been reached based solely on Tenry's testimony that the plaintiff failed to work necessary overtime and failed to notify the bank when he was absent, and on the plaintiff's own testimony that he did not work all the overtime that the bank asked him to during the computerization. There is no reason to assume that the trial court's decision relied in anyway on the testimony regarding counseling, and, in fact, given the court's silence it should be presumed that there was no such reliance. 5 Am. Jur. 2d Appeal and Error § 799 (1962). Therefore, even if the admission of Tenry's testimony about the verbal warnings was error, it was not prejudicial, and cannot justify reversal. Engichy, 1 FSM Intrm. at 558.

II. Admission Of Tenry's Testimony That The Personnel Manual Section On Absenteeism Was Not In Effect

The second evidentiary basis that the plaintiff gives for reversal is that Tenry was allowed to testify, over objection, that section 120.1 of the bank's personnel manual, which required counseling and progressive discipline for absenteeism, was not in effect when the plaintiff was terminated. The plaintiff claims that this testimony unfairly surprised and prejudiced him because it was directly contradicted by the bank's prior responses to the plaintiff's requests for production of documents nos. 6 and 7. Those requests stated:

6. Please provide a copy of the entire Bank of Guam personnel manual effective when plaintiff was terminated.

7. To the extent not included in your answer to No.6, above, please provide a copy of any and all letters, memoranda or writings of any kind, which discuss the Bank's policy of terminating employees, the procedures applicable to terminations and what reasons are considered good cause for terminations, effective when plaintiff was terminated.

The bank responded by attaching two pages of section 123.1 (not the absenteeism section) of the Uniform Personnel Manual and stating: that:

6. See attached.

7. See attached. These pages are from the Uniform Personnel Manual (UPM), which comprises approximately 600 pages and is available for inspection and copying at the Bank of Guam bank in Chuuk.

The plaintiff claims that this indicated that the entire manual was in effect at the time of the termination, and that he was unfairly surprised by Tenry's testimony that section 120.1 was not in effect at the time of Nakamura's discharge.

This argument fails for essentially the same reasons as the one based on the interrogatory answer. The trial court's decision to suggest adjourning for further discovery, rather than striking Tenry's trial testimony, is not grounds for reversal unless that decision was an abuse of discretion that prejudiced the plaintiff. Here, the decision was not an abuse of discretion because the inconsistencies, if any, between the defendant's responses to discovery and Tenry's trial testimony properly go to the weight and credibility of that testimony, not to its admissibility. Moreover, any prejudicial "surprise" to which the plaintiff can claim to have been subjected was "self-inflicted" because: 1) the surprise could have been remedied by adjourning for further discovery, but the plaintiff failed to pursue that option; and 2) during discovery the plaintiff failed to seek a clarification of the defendant's ambiguous response to the request for production, and instead chose to simply interpret that ambiguity in the manner most favorable to his client.^[1]

Even if it was an error to admit the testimony, that error did not affect the outcome and therefore is not a basis for reversal. The trial court's decision does not state that it reached any conclusion regarding the effective date of section 120.1. Thus, on appeal this Court may presume that a conclusion about the effective date of section 120.1 - whether that conclusion was favorable or unfavorable to the plaintiff - was not a basis for the trial court's decision. There is nothing in this case to rebut that presumption.

III. Court's Failure To Discuss Claim That Defendant Breached An "Implied Contract" Created By The Personnel Manual

The plaintiff's last contention on appeal is that the trial court failed to consider his first claim for relief, which alleged that the Bank breached an implied contract with Nakamura by failing to follow its personnel manual and past policy and practice. The plaintiff states that the trial court's decision "was silent as to whether or not the bank followed its own procedure for dealing with such conduct." Appellant's Opening Brief at Heading III.

We conclude that the trial court's findings, though spare, were "sufficiently comprehensive and pertinent to the issue to form a basis for the decision." See 5A James W. Moore et al., Moore's Federal Practice 52.06[1]ed. 1990). Nakamurkamura signed an employment contract with the bank, which stated the terms of his employment. That contract d that the bank could terminate Nakamura without even giving him two weeks notice if his teis termination was for "dishonesty, disloyalty, insubordination or other good cause." Pl.'s Ex. No. 1, para. 7. Thus, the trial court's finding that the plaintiff had failed to show that he was discharged without just cause disposes of the first claim for relief because it means that under the employment contract the bank was entitled to discharge Nakamura without even giving him two weeks notice, much less the six-month probation period described in section 120.1. There is no reason to look to extraneous evidence because this contract is complete on its face regarding the employee's rights in the case of termination for just cause. Generally, under United States common law a written contract that is complete on is face is presumed to embody the final and entire agreement of the parties. 17A Am. Jur. 2d Contracts § 398 (1991); see also Semens v. Continental Air Lines, Inc., [1985] FMSC 3; 2 FSM Intrm. 131, 142 (Pon. 1985) ("common law decisions of the United States are an appropriate source of guidance for this Court for contract . . . issues unresolved by statutes, decisions of constitutional courts here, or custom and tradition within the Federated States of Micronesia").

Furthermore, we believe that the plaintiff's admitted actions - including his failure to work hours when he knew his presence was required and to inform his employer that he would be absent - amply support a conclusion that he was insubordinate. This is another reason why the trial court did not have to discuss the procedures of section 120.1, because those apply only to discharge for absenteeism, not insubordination. See 5A James W. Moore et al., Moore's Federal Practice 52.06[1] (2d1990) (the tria trial court's findings should be construed liberally in support of the judgment or order, and whenever, from facts explicitly found, other facts may be inferred which will support the judgment, such inferences will be deemed to have been drawn by the trial court).

Finally, although the plaintiff now characterizes his first claim for relief as alleging that the defendant violated an implied contract by failing to follow procedures, what the complaint actually alleged was that the bank violated the implied contract by terminating the plaintiff "without just cause." App. at 7. The trial court clearly did address that issue, stating that "[t]he plaintiff failed to prove that the termination in June 1985 was without just cause." App. at 34. There is no merit to the plaintiff's contention that the trial court failed to make the findings necessary to dispose of his first claim for relief.^[2]
CONCLUSION

The Court is not without sympathy for Mr. Nakamura who, after five years of superior work, was forced to take on new, and very burdensome, overtime responsibilities, and then was terminated when he found those hours unworkable. However, it is plain that none of the errors alleged by the appellant justify reversing or remanding the trial court's decision. Therefore, the decision of the trial court is affirmed and the appeal is dismissed.

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^[1] The plaintiff attached two pages from section 123.1 in response to the request for production and noted where those pages could be found. A fair reading ─ admittedly not the only reading ─ of that response is that only the attached pages were in effect in 1985, not, as the plaintiff claims, the entire 600-page manual.

^[2] At oral argument the plaintiff also argued that the trial court did not address his second claim, which alleged violation of covenant of good faith and fair dealing. The "Statement of Issues" in appellant's opening brief makes perfectly clear, however, that this was not one of the bases for the appeal. See Appellant's Opening Brief at "Statement of Issues Presented For Review." In any case, this claim, like the implied contract claim, alleged that the violation was plaintiff's termination "without just cause," not the failure to follow procedures. Therefore, that claim was disposed of by the trial court's finding that the plaintiff had failed to show that he was discharged without just cause.