Aalgaard v. Merchants Nat. Bank, Inc.

• Decision Date: 10 October 1990
• Docket Number: No. C005605,C005605
• Citation: 224 Cal.App.3d 674,274 Cal.Rptr. 81
• Court: California Court of Appeals
• Parties: , 54 Fair Empl.Prac.Cas. (BNA) 125, 59 Empl. Prac. Dec. P 41,575, 5 IER Cases 1443 Robert G. AALGAARD, Plaintiff and Appellant, v. MERCHANTS NATIONAL BANK, INC., et al., Defendants and Respondents.

Page 81

274 Cal.Rptr. 81

224 Cal.App.3d 674, 54 Fair Empl.Prac.Cas. (BNA) 125,

59 Empl. Prac. Dec. P 41,575, 5 IER Cases 1443

Robert G. AALGAARD, Plaintiff and Appellant, v. MERCHANTS NATIONAL BANK, INC., et al., Defendants and Respondents.

No. C005605.

Court of Appeal, Third District, California.

Oct. 10, 1990.

Certified for Publication ^*.

Review Denied Jan. 4, 1991.

Mastagni, Holstedt & Chiurazzi and Richard J. Chiurazzi, Sacramento, for plaintiff and appellant.

Hubbert, Shanley & Lee and N. Paul Shanley, Sacramento, for defendants and respondents.

SPARKS, Acting Presiding Justice.

The central question in this appeal is whether an action against a national banking association with less than 20 employees, and its officers, for age discrimination under the California statute (Gov.Code, § 12941) and for violation of employment covenants under California law is preempted by section 24, fifth, of the National Bank Act. (12 U.S.C. § 24, Fifth [§ 24, Fifth].) We hold that it is.

Under the act, "a national banking association ... shall have power ... [p] To elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, ... dismiss such officers or any of them at pleasure, and appoint others to fill their places." (§ 24 (Fifth.) Under the California statute, however, an employer may not "discharge [or] dismiss ... any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action." (Gov.Code, § 12941, subd. (a).) In addition, under California decisional law, an employer's breach of the implied covenant of good faith and fair dealing gives rise to a cause of action for breach of contract. (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 258 Cal.Rptr. 592, 772 P.2d 1059; Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373.) Similarly, an employer's breach of an implied contract not to discharge except for good cause also gives rise to a cause of action for breach of contract. (Koehrer v. Superior Court (1986) 181 Cal.App.3d 1155, 226 Cal.Rptr. 820; Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917.) The issue is whether these state-based causes of action are preempted by the federal statute.

Following his separation from employment as the cashier of defendant Merchants National Bank, Inc. (Bank), plaintiff Robert G. Aalgaard brought this action against the Bank and two of its officers. By the time of his second amended complaint the action had evolved into one for a violation of the state age discrimination statute (Gov.Code, § 12941), a tortious breach of the covenant of good faith and fair dealing implied in his employment contract with the Bank, ¹ a breach of an implied covenant to discharge him only for good cause, and a conspiracy to interfere with his contractual relationship with defendant Bank. The corporate and individual defendants ² repeatedly and unsuccessfully asserted below that all four causes of action were preempted by § 24 (Fifth). They further contended that there was no triable controversy concerning the fact that they did not breach any covenant of good faith or fair dealing, that there was no implied covenant not to discharge except for good cause, that the individual defendants did not participate in any conspiracy and in any event were protected by the manager's privilege, that there was no outrageous conduct warranting the award of punitive damages, and that plaintiff could not recover any mental suffering because of the exclusionary provisions of the Workers' Compensation Act. Following a third summary judgment motion incorporating these arguments yet one more time, the trial court granted the motion without specifying the basis in its order. From the transcript of the hearing on the motion, however, it is clear the court based its ruling solely on the preemption issue. The trial judge stated, "I do think the Federal Statute is specific. And I think it fits right here. And I think the Board can terminate at it[s] pleasure. And that's what they did.... So for that reason, I'm going to go ahead and grant the summary judgments."

The plaintiff's appeal challenges all the bases of the defendants' motion. We first conclude that the cause of action for conspiracy to interfere with plaintiff's contractual relationship with the Bank is barred by the manager's privilege. The remaining three causes of action, we next conclude, are preempted by § 24 (Fifth). Accordingly, we reject plaintiff's challenges and affirm the judgment.

I PROCEDURAL HISTORY OF PLAINTIFF'S ACTION

Plaintiff's initial complaint, which contained causes of action only for age discrimination and breach of the Foley covenant, was filed in September 1986. The defendants demurred to it in November 1986 on the basis of federal preemption. Judge Warren overruled the demurrer in December 1986. The defendants then moved for summary judgment on this basis in August 1987. Judge Warren denied the motion as to the age discrimination claim, and--with respect to the Foley claim--treated the motion as one for judgment on the pleadings, granting it without leave to amend as to the individual defendants and with leave to amend as to the Bank. The plaintiff next filed an amended complaint for age discrimination and (solely against the Bank) breach of the Foley and Pugh covenants. The Bank (and, unaccountably, the individual defendants who were not part of the claims) demurred in October 1987 to the two latter causes of action on the basis of preemption. Judge Warren again overruled. Undaunted, the defendants moved for summary judgment in January 1988 on all claims; among the grounds was the hydra of preemption. Judge Anthony DeCristoforo denied the motion on procedural grounds. The plaintiff filed a second amended complaint in March 1988 to add the count for conspiracy to interfere with contractual rights. The defendants brought the successful summary judgment motion (styling it as a renewed motion) before Judge DeCristoforo in November 1988. This appeal followed.

II THE SCOPE OF REVIEW ON APPEAL FROM THIS MOTION

"Since a summary judgment motion raises only questions of law regarding the construction and effect of the supporting and opposing papers, we independently review them on appeal, applying the same three-step analysis required of the trial court.... First, we identify the issues framed by the pleadings since it is these allegations to which the motion must respond by establishing a complete defense or otherwise showing there is no factual basis for relief on any theory reasonably contemplated by the opponent's pleading.... [p] [Second], we determine whether the moving party's showing has established facts which negate the opponent's claim and justify a judgment in [the] movant's favor.... [p] When a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue." (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064-1065, 225 Cal.Rptr. 203 [citations omitted].)

As we shall ultimately demonstrate, there are few material factual issues relevant to the questions of law raised in this appeal. But to be orderly, we shall follow the AARTS paradigm.

III

THE COMPLAINT AND THE SUMMARY JUDGMENT PAPERS

A.

For purposes of his age discrimination cause of action, plaintiff alleged that he was first hired by the Bank in January 1956. By 1978, he had become a full cashier and began attending meetings of the Bank's board of directors as an officer of the Bank (acting at the meetings in the capacity of secretary). Plaintiff alleged his competence at his job (as evidenced by his steadily increasing responsibilities over the course of three decades) and his belief that beginning in 1984 "most of [his] duties and responsibilities were gradually taken away from him and given to other younger individuals." By November 22, 1985, plaintiff had attained the age of 57 and intended to work with the Bank for a minimum of eight additional years. But on that date, defendants Bolton and Favre told the plaintiff the board had decided he should take an early retirement; defendant Bolton demanded the plaintiff draft a letter making such a request. The plaintiff cleared out his desk and left without drawing up the letter. He returned on December 4th with the requested letter, ³ and was given written confirmation, dated November 22, of "the Board of Directors['] action in connection with your request for early retirement." The wrongful acts of defendants "were oppressive and were done maliciously with an intention and design of discriminating against Plaintiff based upon his age." Plaintiff further alleged that he had filed a complaint with the California Department of Fair Employment and Housing in June 1985 and received a right-to-sue letter in July 1986. On this cause of action, plaintiff sought the imposition of liability upon both the corporate and individual defendants.

For purposes of his Foley cause of action against the Bank, he alleged he was the third most highly paid employee of the Bank. Had he continued working until normal retirement, it would have been at a substantial cost to the Bank. Therefore, without good cause, the Bank began to reassign his duties in order to humiliate him into resigning. At a board meeting on November 21 of which the plaintiff was not informed, the individual defendants falsely represented to the other board members that the plaintiff's performance for the prior three years had been inadequate; the other board members had no way of knowing these representations were false. This course of conduct was alleged to be a breach of the covenant of good faith and fair dealing.

For the purposes of the Pugh claim against the Bank, he alleged that a covenant was in fact implied...