208 Cal.App.3d 1476, H002936, McLain v. Great American Ins. Companies

Docket Nº:H002936
Citation:208 Cal.App.3d 1476, 256 Cal.Rptr. 863
Opinion Judge:[10] Elia
Party Name:McLain v. Great American Ins. Companies
Attorney:[7] Kalvin M. Grove, Paul R. Garry, Michael A. Paull, Fox & Grove, J. Victor Waye and McCutchen, Doyle, Brown & Enersen for Defendants and Appellants. [8] Susan R. Reischl, Robert L. Mezzetti and Robert M. Tobin for Plaintiff and Respondent.
Case Date:March 28, 1989
Court:California Court of Appeals

Page 1476

208 Cal.App.3d 1476

256 Cal.Rptr. 863

E. Robert McLAIN, Plaintiff and Respondent,


GREAT AMERICAN INSURANCE COMPANIES, et al., Defendants and Appellants.

No. H002936.

California Court of Appeal, Sixth District

March 28, 1989.

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Susan R. Reischl, Law Offices of Robert L. Mezzetti, Robert M. Tobin, San Jose, for plaintiff and respondent, E. Robert McLain.

Kalvin M. Grove, Paul R. Garry, Michael A. Paull, Fox and Grove, Chartered, Chicago, Ill., K. Victor Waye, McCutchen, Doyle, Brown & Enersen, San Jose, for defendants and appellants, Great American Ins.

ELIA, Associate Justice.

This is an action for wrongful termination of employment brought by respondent E. Robert McLain against appellants Great American Insurance Companies, Great American West, Inc., American Financial Corporation, Rose Ann Herman and Kemper Eakle. The jury returned a general verdict for McLain and awarded him $62,000 in compensatory damages. We affirm.


In 1984, McLain was employed with an independent adjusting firm in San Jose. In February 1984, McLain was assigned to temporarily work in

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the Great American offices in Walnut Creek. While working in Walnut Creek, McLain became friendly with Don Kustaborder, a Division Manager of Great American. Kustaborder told McLain he needed two specialists and apprised McLain of employment opportunities available with Great American. Kustaborder emphasized that Great American was one of the highest paying companies in the industry and had a lucrative bonus package for its managers.

McLain was content with his $40,000 salary at the independent adjusting firm but was attracted by Kustaborder's description of the opportunities available with Great American and because Great American was a large, national company. Kustaborder said several Great American offices would soon be consolidated and McLain would have a good chance of becoming the Casualty Claims Manager in the consolidated office. Kustaborder also said that if McLain was employed by Great American he would be on probation for ninety days and then become a "permanent" employee.

Within a few days, McLain and Kustaborder agreed that McLain would join Great American. McLain agreed to reduce his salary to $30,000 based upon Kustaborder's representations of long-term advancement possibilities.

Before McLain starting working for Great American, he was given an application form to complete and was told that it was needed for his personnel file. The form required McLain to provide information regarding his employment and educational background. The form did not specify McLain's position or salary at Great American. At the bottom of the form was an area marked "For Company Use Only." This portion of the application was never signed or filled in by Great American.

On the back page of the application form was the following provision: "In consideration of my employment, I agree to conform to the rules and regulations of the GREAT AMERICAN INSURANCE COMPANY, and I agree that my employment and compensation can be terminated with or without cause, and with or without notice, at any time, at the option of either the GREAT AMERICAN INSURANCE COMPANY or myself. I also understand and agree that the terms and conditions of my employment may be changed, with or without cause, and with or without notice, at any time by the GREAT AMERICAN INSURANCE COMPANY. I understand that no representative of the GREAT AMERICAN INSURANCE COMPANY, has any authority to enter into an agreement for any specified period of time, or to make any agreement contrary to the foregoing." McLain signed the form a few lines below this clause and returned the form to Great American. McLain testified that he never read the clause and that no one from Great American ever pointed it out or discussed it with him.

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On April 2, 1984, McLain started working as a litigation specialist for Great American in its Walnut Creek office. That same day his employment was confirmed in a letter which stated his salary, his position and various benefits. A "New Employee Checklist" was also distributed and signed by McLain as acknowledgment that McLain had been advised of certain Great American benefits and policies.

A June 1984 probationary review commended McLain's job knowledge and capabilities and recommended managerial advancement. In October 1984, the Walnut Creek, San Jose and Sacramento offices of Great American were consolidated in San Jose. McLain was made Casualty Claims Manager of the newly consolidated San Jose office. McLain's salary was raised to $34,000 and then to $36,000 in January 1985. By July 1985, McLain was earning $38,000 and had favorable reviews about the quality of his work performance.

In October 1985, McLain was terminated by Great American. At trial, appellants contended that McLain was terminated for "insubordination" because he distributed a confidential memo. McLain, however, claimed his discharge was without good cause and in retaliation for his complaints about the management style of appellant Rose Ann Herman. The evidence surrounding McLain's termination reveals the following circumstances.

Appellant Rose Ann Herman was Claims Manager and McLain's immediate...

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