Harris v. Atlantic Richfield Co.

• Decision Date: 11 March 1993
• Docket Number: No. F015046,F015046
• Citation: Harris v. Atlantic Richfield Co., 14 Cal.App.4th 70, 17 Cal.Rptr.2d 649 (Cal. App. 1993)
• Court: California Court of Appeals
• Parties: David B. HARRIS, Plaintiff and Appellant, v. ATLANTIC RICHFIELD COMPANY, Defendant and Respondent.

Page 649

17 Cal.Rptr.2d 649

14 Cal.App.4th 70

David B. HARRIS, Plaintiff and Appellant, v.ATLANTIC RICHFIELD COMPANY, Defendant and Respondent.

No. F015046.

Court of Appeal, Fifth District, California.

March 11, 1993.

Certified For Partial Publication ^*

As Modified on Denial of Rehearing April 8, 1993.

Review Denied May 27, 1993.

[14 Cal.App.4th 72] George J. Berger and Wilson A. Schooley, Jennings, Engstrand & Henrikson, San Diego, Robert G. Carter, Gary Huss, Wild, Carter, Tipton & Oliver, Fresno, for plaintiff and appellant.

Arnold & Porter, Ronald C. Redcay, Matthew T. Heartney and James F. Speyer, Richard E. Woo, ARCO Products Co., Los Angeles, Crowe, Williams, Jordan, Richey & Brodersen, Daniel W. Crowe, Visalia, for defendant and respondent.

OPINION

BEST, Presiding Justice.

The novel issue presented by this appeal is whether a Tameny ¹ cause of action for breach of a contract in violation of public policy exists outside the employment situation.We conclude it does not.

STATEMENT OF THE CASE

AppellantDavid B. Harris appeals from the judgment entered on his lawsuit against Atlantic Richfield Company(ARCO) and ARCO's cross-complaint against him.Appellant claimed ARCO mistreated him during his operation of an ARCO "am/pm mini-market" under a written franchise agreement by failing to repair and refurbish his unit as promised in retaliation for his failure to comply with ARCO's pricing dictates and his report of an underground gasoline leak to the authorities.He sought compensatory and punitive damages on five causes of action: (1) breach of written contract, (2) tortious breach of written contract in violation of public policy, (3) breach of oral contract, (4) bad-faith denial of the existence of the oral contract, and (5) fraud.

ARCO cross-complained for compensatory and punitive damages for appellant's failure to report food sales which deprived ARCO of royalties to which it was contractually entitled.

After a four-week trial, the jury awarded damages to appellant on the first, second and fourth causes of action as follows: (1) breach of written contract ($3,550), (2) tortious breach of written contract ($2,534 compensatory, $250,000 punitive damages); and (4) bad-faith denial of the existence of the oral contract ($250,000 punitive damages).The jury awarded ARCO $1,988 compensatory damages and $30,000 punitive damages on its cross-complaint.

After the verdict was read, the parties noted that although the jury found there was no consideration for the oral contract, they awarded $250,000 in punitive damages for ARCO's bad-faith denial of that contract.The trial court struck the punitive damage award for the bad-faith denial claim.Thereafter ARCO moved for judgment notwithstanding the verdict on the cause of action for tortious breach of the written contract.The trial court granted the motion which reduced appellant's recovery against ARCO to the $3,550 awarded on his breach of written contract claim.

Appellant contends the judgment must be reversed because of trial court error.In the unpublished portion of the opinion we agree with one of his contentions and will reverse the judgment on the fraud cause of action.In the published portion of the opinion, we conclude the court properly granted judgment notwithstanding the verdict on the tortious breach of contract claim.

STATEMENT OF FACTS ^**

DISCUSSION

I.The trial court did not err by excusing the jury and resolving the inconsistent verdict findings itself.^***

II.The court correctly held appellant had no cause of action for tortious breach of the written contract.

The trial court granted ARCO's motion for judgment notwithstanding the verdict on the tortious breach of written contract cause of action.The court concluded, while the weight of authority seems to militate toward extension of the cause of action for tortious breach of contract to circumstances other than employer-employee, the necessary factual predicates were not present in this case.Specifically, the contract did not require appellant to act in a manner contrary to fundamental public policy, and the parties did not have the requisite "special relationship," one "characterized by elements of public interest, adhesion and fiduciary responsibility."

Appellant contends that ruling was wrong because a Tameny claim does not require the contract itself to impose the public policy violation nor does it require a "special relationship" between the parties.ARCO submits the court made the correct ruling but for the wrong reason.ARCO urges this court to hold that a breach of contract in violation of public policy claim does not exist outside of the employment situation.

(a) Current case law does not recognize a Tameny cause of action outside the employment situation.

Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d at page 178, 164 Cal.Rptr. 839, 610 P.2d 1330 held that a tort action for wrongful discharge may lie if the employer conditions employment upon required participation in unlawful conduct by the employee.The Tameny plaintiff alleged he was fired for refusing to engage in price fixing in violation of the Cartwright Act and the Sherman Antitrust Act.(Id. at p. 170, 164 Cal.Rptr. 839, 610 P.2d 1330.)

In rejecting Atlantic Richfield's argument that an action for wrongful discharge sounds only in contract, the court stated, " ' "if the cause of action arises from a breach of a promise set forth in the contract, the action is ex contractu, but if it arises from a breach of duty growing out of the contract, it is ex delicto." ' "(Tameny, supra, 27 Cal.3d at p. 175, 164 Cal.Rptr. 839, 610 P.2d 1330, emphasis in original.)The court reasoned that an employer's obligation not to fire an employee who refuses to commit a criminal act arises from a public policy interest in deterring criminal behavior and not from a promise, either express or implied, in the employment contract.Because the cause of action for wrongful discharge arises from a duty grounded in public policy and imposed by law, the remedy is in tort.(Id. at pp. 175-176, 178, 164 Cal.Rptr. 839, 610 P.2d 1330.)

While contract actions are created to protect the interest in having promises performed, tort actions are created to protect the interest in freedom from various kinds of harm.The duties of conduct which give rise to tort relief are imposed by law, and are based primarily upon social policy, not necessarily on the will or intention of the parties.(Tameny, supra, 27 Cal.3d at p. 176, 164 Cal.Rptr. 839, 610 P.2d 1330, citingProsser, Law of Torts (4th ed. 1971) p. 613.)

Later courts summarizing this authority have agreed, " 'the theoretical reason for labeling the discharge wrongful in such cases is not based on the terms and conditions of the contract, but rather arises out of a duty implied in law on the part of the employer to conduct its affairs in compliance with public policy....The tort is independent of the term of employment.' "(Foley v. Interactive Data Corp.(1988)47 Cal.3d 654, 667, 254 Cal.Rptr. 211, 765 P.2d 373;accord, Abreu v. Svenhard's Swedish Bakery(1989)208 Cal.App.3d 1446, 1453, 257 Cal.Rptr. 26.)

A Tameny claim is not limited to situations where the employment contract or the employer coerces an employee to commit an act which violates public policy.An action for wrongful discharge will lie when the basis of the discharge contravenes a fundamental public policy.(Rojo v. Kliger(1990)52 Cal.3d 65, 91, 276 Cal.Rptr. 130, 801 P.2d 373;Blom v. N.G.K. Spark Plugs (U.S.A.), Inc.(1992)3 Cal.App. 4th 382, 388, 389, 4 Cal.Rptr.2d 139.)However, the public policy must be grounded in constitutional or statutory provisions.(Gantt v. Sentry Insurance(1992)1 Cal.4th 1083, 1095, 4 Cal.Rptr.2d 874, 824 P.2d 680.)

The parties have not cited nor has our research disclosed case law recognizing a Tameny cause of action outside the employment relationship.Several cases suggest such cause of action does not exist.In Abrahamson v. NME Hospitals, Inc.(1987)195 Cal.App.3d 1325, 241 Cal.Rptr. 396, a hospital pathologist claimed his contract was terminated in violation of public policy because he refused to condone allegedly improper practices at the hospital.The contract was terminable by either party without cause on 90 days' notice.(Id. at pp. 1326-1328, 241 Cal.Rptr. 396.)The appellate court affirmed a grant of summary judgment for the hospital finding Tameny inapplicable for two reasons.First, plaintiff was an independent contractor rather than an at-will employee.Second, if the agreed termination without cause term could only be accomplished with cause--for reasons violative of public policy--the phrase "without cause" was effectively deleted from the agreement.Such an interpretation would rewrite the contract.(Id. at pp. 1329-1330, 241 Cal.Rptr. 396.)

In Premier Wine & Spirits v. E. & J. Gallo Winery(9th Cir.1988)846 F.2d 537, plaintiff alleged defendant wrongfully terminated a distributorship contract because plaintiff refused to do an illegal act.In granting summary judgment on plaintiff's claim for tortious termination of the contract, the court noted the tort of wrongful discharge for refusal to break the law has been recognized only in the employee-employer relation.(Id. at p. 540.)

"Although the principle of Tameny is logically capable of extension beyond the employment relation, there is a consideration that makes it peculiarly apt in that setting and not in a broader context: it is normal for an employee to take directions from his employer.In the ordinary commercial world, the control of one party's actions by another is not so usual or so close."(Ibid.)

Appellant contends Johns-Manville Sales Corp. v. United States(D.C.Cal.1985)622 F.Supp. 443 supports the principle that Tameny is logically capable of extension beyond the employment situation.In Johns-Manville, an asbestos manufacturer brought an action for indemnity from the United...