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Petrik v. Monarch Printing Corp.





Appeal from the Circuit Court of Cook County; the Hon. Thomas J. O'Brien, Judge, presiding.


Plaintiff, Emil Petrik, filed a three-count complaint against defendant, Monarch Printing Corporation (Monarch), his former employer, alleging inter alia that he had been discharged from his position as vice-president in retaliation for his reporting suspicions of embezzlement of corporate funds to Monarch's president and chief operating officer, Herbert C. Hansen. The trial court dismissed Petrik's retaliatory discharge claim, which was set forth in counts II and III, for failure to state a cause of action. Count I, which sought damages for defendant's alleged breach of an oral contract, is still pending in the trial court and is not involved in this appeal. The sole issue presented for our review is whether Petrik's complaint set forth sufficient facts to state a cause of action for retaliatory discharge. For the reasons which follow, we conclude that it does, reverse the trial court and remand the cause for further proceedings.

Petrik alleged in his complaint that he was hired by Monarch in 1975 and that from 1975 until 1978 he was employed as the controller of the corporation. In 1978 Petrik was promoted to vice-president-finance in which position he earned a salary of $28,188 per year and was responsible for certain accounting and financing duties for Monarch "such as cost accounting, forecasting, pricing, budgeting, inventory control and preparation and review of financial statements."

In September 1978 Petrik, in the course of his duties as vice-president-finance, discovered a $130,000 "discrepancy" in Monarch's financial books and records. Petrik immediately informed Herbert C. Hansen, Monarch's president and chief operating officer, of the discrepancy and Hansen "orally requested" Petrik to investigate the source of the missing funds and hired an assistant to aid Petrik in this assignment. In pursuing his investigation, Petrik, in October 1978, discovered what he characterized as "misconduct" by Hansen and "certain unknown persons" in their purchase of Monarch's capital stock from John Selig, Monarch's chairman of the board. The specific allegations of misconduct set forth in Petrik's complaint are as follows:

"(a) That the present management of defendant had agreed to purchase 51% of the capital stock of defendant from John Selig, Chairman of the Board of defendant, for a purchase price of about $640,000;

(b) That 25% of the purchase price was to be paid by a loan obtained by the present management of defendant from LaSalle National Bank, Chicago, Illinois, with the remaining purchase price to be paid in 20 bi-monthly installments at an interest rate of 6% per year;

(c) That the purchase price was to be totally paid out of personal, not corporate funds;

(d) That some of the loan payments to LaSalle National Bank and some of the payments to John Selig had in fact been made from corporate funds of defendant, in direct violation of the purchase agreement; and

(e) That the findings of plaintiff suggested embezzlement of corporate funds of defendant."

Petrik asserts in his complaint that he immediately notified Hansen of his findings and warned him that "officers and/or employees" of Monarch "might be involved in violation of the criminal laws of Illinois." Hansen replied that the contract for the purchase of Monarch's capital stock had been "changed" in June 1978 and he told Petrik "not to worry about anything." Between November 1978 and April 1979 Petrik repeatedly but unsuccessfully attempted to obtain a copy of the purported revised contract.

According to his complaint, on April 6, 1979, Petrik was discharged by Richard Volpe, Monarch's vice-president and treasurer, in direct retaliation for his efforts to bring to Monarch's attention the evidence he had uncovered of possible embezzlement of corporate funds and to require Monarch to operate in compliance with the criminal laws of Illinois. In count II of his complaint, Petrik sought compensatory damages for his discharge; in count III, he asked for punitive damages, alleging that Monarch's conduct was malicious.

On July 13, 1981, Monarch moved to dismiss Petrik's complaint, which motion was granted with leave to amend on September 30, 1981. The trial court reasoned that there are two elements to a claim for retaliatory discharge: an employment-at-will status and acts that would clearly violate public policy. The trial court ruled that since Petrik did not allege that he had disclosed his suspicions of wrongdoing to the public authorities, his complaint merely alleged an internal corporate dispute which did not involve violations of public policy. The complaint was dismissed and Petrik was given leave to amend so that, if possible, he could add an allegation that he had reported his suspicions to the public authorities. Subsequently, the parties stipulated that Petrik did not report his discovery of alleged wrongdoing to the police or to any other law enforcement officials; that no criminal or quasi-criminal investigation was ever conducted as a result of any of the alleged wrongdoings; and that, to the best of his knowledge, Petrik was never a party to a criminal or quasi-criminal investigation of the matters alleged. Following the stipulation, Petrik's complaint was dismissed with prejudice.

• 1 On appeal, the ultimate issue to be decided is whether Petrik has alleged facts sufficient to set forth a claim for retaliatory discharge. As the trial court correctly noted, there are two elements to a claim for retaliatory discharge: at-will employment status and acts that violate public policy. (Palmateer v. International Harvester Co. (1981), 85 Ill.2d 124, 421 N.E.2d 876.) There is no dispute that Petrik was an at-will employee. Thus the issue to be resolved is whether Petrik alleged facts which set forth acts by Monarch which were in violation of public policy.

Because the judgment below was entered upon allowance of defendant's motion to dismiss, all facts properly pleaded in the complaint must be taken as true. (Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 187, 380 N.E.2d 790.) Further, it is well established that a cause of action should not be dismissed on the pleadings unless it clearly appears that no set of facts can be proved which will entitle plaintiff ...

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