## Facts

- John A. Russell Corporation hired James Bohlig in 1989 under a three-year executive employment contract.
- After 24 months, the contract allowed termination with either 12 months’ written notice or 12 months’ severance pay in lieu of notice.
- The contract excluded the severance arrangement if Bohlig was terminated for dishonesty in performing job duties.
- During employment, Bohlig obtained permission to use Russell’s labor and equipment to renovate his personal residence, but the work far exceeded what he represented and he failed to pay Russell for more than $200,000 of the work.
- Russell terminated Bohlig before the contract term ended, asserting dishonesty connected to the house-renovation project.
- At trial, the court admitted evidence that Bohlig had previously been terminated from another employer for dishonest use of expense accounts.
- The jury awarded Bohlig about $2,800 on his severance counterclaim, far less than the 12 months of pay and benefits he sought.

## Issues

1. Whether the trial court abused its discretion under V.R.E. 404(b) and V.R.E. 403 by admitting evidence of Bohlig’s prior termination for dishonest expense-account practices to prove contractual “dishonesty” and to provide context for the employment relationship.

## Decision

- The Vermont Supreme Court affirmed the judgment.
- The Court held the trial court did not abuse its discretion in admitting the prior-acts evidence.
- The Court concluded the evidence was relevant to a material issue other than character and that its probative value was not substantially outweighed by unfair prejudice.

## Legal Principles

- Under V.R.E. 404(b), other-acts evidence is inadmissible to show character or propensity, but may be admitted for a non-propensity purpose if it is relevant to a material issue.
- Similarity and a logical connection between the prior act and the disputed conduct increase probative value when the evidence bears on whether conduct meets a contractual standard such as “dishonesty.”
- Under V.R.E. 403, the trial court has broad discretion to balance probative value against the danger of unfair prejudice; appellate review is for abuse of discretion.
- In contract cases where “dishonesty” is a dispositive contractual term, evidence bearing on whether conduct was dishonest, and on the credibility of the asserted justification for termination, may be admissible if offered for a permissible purpose and survives Rule 403 balancing.

## Conclusion

The court upheld admission of evidence that an executive had previously been fired for dishonest expense-account practices, concluding it was properly used for relevant, non-propensity purposes in determining whether he was terminated for contractual “dishonesty” and that the trial court’s Rule 403 balancing was within its discretion.


John A. Russell Corp. v. Bohlig, 739 A.2d 1212 (Vt. 1999)