Haggard v. Kimberly Quality Care, Inc.

• Decision Date: 27 September 1995
• Docket Number: No. H012194,H012194
• Court: California Court of Appeals Court of Appeals
• Parties: , 7 NDLR P 171, 95 Cal. Daily Op. Serv. 8281, 95 Daily Journal D.A.R. 14,248 Cynthia HAGGARD, Plaintiff and Appellant, v. KIMBERLY QUALITY CARE, INC., et al., Defendants and Appellants.

Page 16

46 Cal.Rptr.2d 16

39 Cal.App.4th 508, 7 NDLR P 171, 95 Cal. Daily Op. Serv. 8281,

95 Daily Journal D.A.R. 14,248

Cynthia HAGGARD, Plaintiff and Appellant, v. KIMBERLY QUALITY CARE, INC., et al., Defendants and Appellants.

No. H012194.

Court of Appeal, Sixth District, California.

Sept. 27, 1995.

Certified for Partial Publication ^*

Review Denied Dec. 14, 1995.

Michelle A. Welsh, Katherine E. Stoner, Stoner, Walsh & Schmidt, Pacific Grove, for Plaintiff.

Nancy E. Egan, Robert M. Pattison, Jackson, Lewis, Schnitzler & Krupman, San Francisco, for Defendants.

COTTLE, Presiding Justice.

Plaintiff Cynthia Haggard alleged that Kimberly Quality Care, Inc. and Kimberly Home Health Care, Inc. (collectively KQC) breached an implied contract to terminate her employment only for cause, and that KQC and certain employees discriminated against her on the basis of disability. A jury awarded plaintiff damages of $250,000 on her breach of contract claim, but no recovery on her disability discrimination claim. KQC appeals from the portion of the judgment relating to the implied contract claim, contending that the trial court erred in admitting evidence to contradict the terms of a written employment contract. Plaintiff cross-appeals from the portion of the judgment relating to her disability discrimination claim, raising issues relating to the statute of limitations and jury instructions. We reverse the portion of the judgment relating to the implied contract claim, and affirm the portion of the judgment regarding the disability discrimination claim.

Due to the distinct nature of the claims made by each party on appeal, we will summarize the factual background regarding the appeal and cross-appeal separately.

I. KQC'S APPEAL

A. Factual Background Regarding Implied-in-Fact Contract

Quality Care, Inc. hired plaintiff as a field staff supervisor in its Monterey branch office in January 1986. In 1987 Quality Care, Inc. promoted plaintiff to the position of branch manager. In 1988 Quality Care, Inc. merged with Kimberly, Inc., to form KQC. KQC employed plaintiff after the 1988 merger.

1. The 1989 Agreement

On June 8, 1989, plaintiff signed an "Employment and Confidentiality Agreement" (Agreement or 1989 Agreement) with KQC. The Agreement contained provisions regarding access to trade secrets, confidentiality, customer lists, and termination of employment. For purposes of this appeal, the crucial provisions are paragraphs 9 and 15, which provide as follows: "9. Termination. It is understood that the employment relationship between Employee and the Company is at the mutual consent of both parties. Accordingly, either Employee or the Company can terminate the employment relationship at will, at any time, with or without cause or advance notice. It is further understood that no employee or representative of the Company, other than the president of Company, has any authority to enter into an agreement for any specified period of time, or to make any agreement contrary to the foregoing. Moreover, the parties agree that there are no express or implied agreements contrary to the foregoing, and the president of the Company, can only enter into an agreement contrary to the foregoing if the president does so in a formal written agreement that is fully executed by the president and Employee. [Paragraphs 10-14 omitted.] [p] 15. Final Agreement. This Agreement supersedes all previous agreements, whether written or oral, express or implied, relating to the above subject matter, and shall not be changed or subject to change orally."

Plaintiff testified that she read the Agreement before she signed it. She also testified that she "had some reluctance to sign the document," but did so understanding that her continued employment with KQC was contingent upon signing it.

2. The 1991 Employee Handbook

On December 5, 1991, plaintiff signed and dated an acknowledgment of her receipt of a KQC Associate Orientation Handbook. The receipt provides: "The policies and guidelines in this handbook have been adopted voluntarily by Kimberly Quality Care and are not intended to give rise to contractual rights or obligations, nor to be construed as a guarantee of employment for any specific period of time or any specific type of work. You are an 'at-will' associate, meaning that your employment is for no definite period of time and may be terminated by you or by KQC at any time and for any reason. Furthermore, KQC reserves the right to interpret, amend, modify or cancel and withdraw any or all sections or provisions of this handbook at any time. [p] I certify that I have received a copy of the Kimberly Quality Care Associate Orientation Handbook. I acknowledge that I am responsible for knowing and adhering to the Policies and Procedures of Kimberly Quality Care while I am working as an associate of the company." Plaintiff testified that the handbook was distributed to all administrative employees nationwide in 1991.

3. Termination of Plaintiff's Employment

Slightly over six weeks later, on January 20, 1992, KQC terminated plaintiff's employment. The parties vigorously dispute the reason for this termination. Briefly, KQC contends that it decided to terminate plaintiff's employment as branch manager because plaintiff knowingly allowed an unlicensed nurse to work on a case involving a ventilator patient, in violation of KQC's policies and the state regulations governing KQC. Plaintiff contends that she was blamed for "another employee's clinical error," and that KQC discriminated against her on the basis of her disability (multiple sclerosis), which had been diagnosed in 1990.

4. This Litigation

Plaintiff filed her original complaint in this case on March 31, 1992, alleging causes of action for breach of contract, wrongful discharge, employment discrimination, intentional and negligent infliction of emotional distress, and invasion of privacy. After various pretrial proceedings, the breach of implied contract and disability discrimination claims were tried to a jury beginning on September 13, 1993.

In her cause of action for breach of an alleged implied contract, plaintiff claimed that the termination of her employment violated an implied-in-fact contract that her employment could be terminated only for good cause. In support of her implied contract theory, plaintiff offered evidence of factors such as the duration of her employment, commendations, promotions, raises, annual performance ratings, and KQC's personnel policies and practices.

Despite KQC's consistent efforts to have evidence of the alleged implied-in-fact contract excluded, ¹ the evidence was admitted and the question of the implied contract was submitted to the jury.

During its deliberations, the jury asked the trial court, "Does an 'at-will' contract of employment 'super[s]ede' an 'implied' contract, legally?" The court responded: "Somebody could write a long Law Review article on this. I'm not kidding you, somebody could write a long review, a long Law Review article in response to this, because there are so many possibilities and so many factors that you have to take into account before you can say yes or no. [p] All I can say is, depends. [p] The Foreperson: Thanks. [p] The Court: Depends on the circumstances surrounding the parties' relationship, along with all the exhibits that you have in your jury deliberation room." The jury returned to its deliberations. The court later recalled the jury and provided an additional instruction on the integration issue. ²

After further deliberations, the jury returned its verdict. On a special verdict form, the jury indicated its findings that KQC had entered an implied contract to terminate plaintiff's employment only for good cause, and that the termination had been without good cause. The jury found that plaintiff was entitled to damages of $250,000 on this claim.

B. Discussion

On appeal, KQC argues that the trial court "erred when it did not rule that, as a matter of law, an integrated express at-will agreement barred [plaintiff's] cause of action for breach of an implied contract."

1. The 1989 Agreement's At-Will Termination Provision

Paragraph 9 of the 1989 Agreement, which specifically provides that "either Employee or the Company can terminate the employment relationship at will, at any time, with or without cause or advance notice," is clearly an agreement for at-will employment. ³ Plaintiff claims that despite this provision in the 1989 Agreement, she had an implied-in-fact contract with defendants that her employment was not at-will, but could be terminated only for cause. Defendants contend that plaintiff should not have been allowed to introduce evidence of this alleged implied contract at trial.

2. Evidence of Prior and Contemporaneous Agreements: The Parol Evidence Rule

California's parol evidence rule is codified in section 1856 of the Code of Civil Procedure. Subdivision (a) of section 1856 provides: "Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement." (Slivinsky v. Watkins-Johnson Co. (1990) 221 Cal.App.3d 799, 804-805, 270 Cal.Rptr. 585; Gerdlund v. Electronic Dispensers International (1987) 190 Cal.App.3d 263, 270, 235 Cal.Rptr. 279.)

"The court shall determine whether the writing is intended by the parties as a final expression of their agreement with respect to such terms as are included therein...." (Code Civ.Proc., § 1856, subd. (d).) Whether the agreement is an integration is thus a question of law for the court. ⁴ (Slivinsky, supra, 221 Cal.App.3d at 805, 270 Cal.Rptr. 585.)

"An integration may be partial, as well as complete; that is, the parties may intend that a writing finally and completely express certain terms of their agreement rather than the agreement in its entirety." (Wagner v. Glendale...