Chiodo v. General Waterworks Corp.

Vincent Chiodo (plaintiff) owned the Bear River Telephone Company (company) and sold it to General Waterworks Corporation (defendant) in exchange for shares of General Waterworks. As part of the transaction, General Waterworks also agreed to employ Chiodo as the manager of the company for 10 years at a salary of $12,000 per year. Chiodo’s employment agreement was silent as to any standards of conduct or conditions under which General Waterworks would have the right to discharge Chiodo. During the negotiations, General Waterworks’ vice president told Chiodo that Chiodo would be allowed to run the company as he saw fit. Three years into the employment contract, General Waterworks terminated Chiodo’s employment. Chiodo sued General Waterworks for breach of the employment contract. General Waterworks argued it was justified in discharging Chiodo because he had improperly allowed his relatives to work for the company and had been insubordinate and disloyal. Chiodo offered evidence that the employment of his relatives had been proper and evidence that tended to rebut General Waterworks’ allegations of insubordination and disloyalty. For instance, General Waterworks argued that Chiodo had disobeyed orders to cancel an insurance policy. Chiodo acknowledged that he had refused to cancel the policy; however, Chiodo had purchased the policy when he owned the company and felt he had a moral obligation to continue it. Chiodo also thought the insurance was necessary to protect the company’s property and that it was his prerogative as the manager to maintain it. Chiodo told General Waterworks at the time that he would not cancel the policy, and General Waterworks said nothing further about the matter until after Chiodo filed his lawsuit more than 20 months later. The trial court entered judgment in favor of Chiodo, and General Waterworks appealed.