Hillsman v. Sutter Community Hospitals

• Decision Date: 27 March 1984
• Citation: 200 Cal.Rptr. 605,153 Cal.App.3d 743
• Parties: , 119 L.R.R.M. (BNA) 2645 Deane HILLSMAN, M.D., Plaintiff and Appellant, v. SUTTER COMMUNITY HOSPITALS OF SACRAMENTO, Defendant and Respondent. Civ. 22590.
• Court: California Court of Appeals Court of Appeals

Page 605

200 Cal.Rptr. 605

153 Cal.App.3d 743, 119 L.R.R.M. (BNA) 2645

Deane HILLSMAN, M.D., Plaintiff and Appellant, v. SUTTER COMMUNITY HOSPITALS OF SACRAMENTO, Defendant and Respondent.

Civ. 22590.

Court of Appeal, Third District, California.

March 27, 1984.

Certified for Partial Publication

Jerome Berg, Carolyn Morris and Linda L. Mallette, San Francisco, for plaintiff and appellant.

Wendy S. Ball, San Francisco, as amicus curiae, on behalf of plaintiff and appellant.

Thomas A. Tweedy, William M. Briggs, McDonough, Holland & Allen, Gary F. Loveridge and Betsy S. Kimball, Sacramento, for defendant and respondent.

SIMS, Associate Justice.

Plaintiff Deane Hillsman, M.D. appeals from an order and judgment dismissing his complaint entered after the trial court sustained defendant Sutter Community Hospitals' demurrers to plaintiff's first, second and third causes of action without leave to amend, and granted summary judgment for defendant on plaintiff's fourth cause of action. On appeal plaintiff challenges only the sustaining of demurrers to the first and second causes of action. ¹

FACTUAL AND PROCEDURAL BACKGROUND

"Because this appeal arises from a judgment entered after the sustaining of a general demurrer, we must, under established principles, assume the truth of all properly pleaded material allegations of the complaint in evaluating the validity of the trial court's action." (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330.) The third amended complaint alleges in part:

On or about May 28, 1970, plaintiff and defendant entered into a written agreement under which plaintiff was to be employed as a full-time, hospital-based physician. ²

Plaintiff was to coordinate a comprehensive respiratory [153 Cal.App.3d 748] program, including a pulmonary laboratory, inhalation therapy, and chest physical therapy at Sutter General and Sutter Memorial Hospitals. The agreement allowed plaintiff to maintain a limited private medical practice in addition to his duties for defendant.

The agreement provided in part that "It is further understood that renegotiation or termination of this letter of understanding by either party may be accomplished upon thirty days notice. [p] We look forward to a long, pleasant, and mutually satisfactory relationship with you and the Sutter Community Hospitals."

On or about August 31, 1973, defendant breached the employment agreement by terminating plaintiff's employment. It is alleged that plaintiff's termination was contrary to an implied promise that defendant would be terminated only as provided in defendant's bylaws. It is alleged further that "defendant promised plaintiff a long, pleasant, and mutually satisfactory relationship with" defendant, and that plaintiff, "In reliance upon the representations [made] by defendant ... and as a bargained for element of such agreement" agreed to leave the clinic where he was formerly employed and where he expected substantial benefits, including tenure, salary increases, and senior staff status. Plaintiff pleads entitlement to damages in excess of $350,000.

Plaintiff's second cause of action pleaded a common count for the value of services rendered by plaintiff at the request of defendant.

Plaintiff posits various legal theories in support of his pleading, including contentions his termination was barred by (1) an express covenant in the letter of understanding; (2) his furnishing of "independent consideration" for the agreement in the form of his detrimental reliance in leaving his prior position of employment and its associated benefits; and (3) an implied contractual provision that plaintiff would not be terminated except in accordance with bylaws of the hospital providing for grounds of discipline, notice and hearing. We conclude plaintiff's third contention has merit so that we reverse the judgment of dismissal.

DISCUSSION

I

A

We note at the outset the general rule governing the duration of employment contracts, codified as Labor Code section 2922: "An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means employment for a period greater than one month." (See Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d at p. 172, 164 Cal.Rptr. 839, 610 P.2d 1330; Hentzel v. Singer Co. (1982) 138 Cal.App.3d 290, 295, 188 Cal.Rptr. 159.) This statute creates a presumption that an employment contract is terminable at will. (Pugh v. Sees's Candies, Inc. (1981) 116 Cal.App.3d 311, 324, 171 Cal.Rptr. 917.) ³ This presumption "is subject, like any presumption, to contrary evidence. This may take the form of an agreement, express or implied, that the relationship will continue for some fixed period of time. Or ... it may take the form of an agreement that the employment relationship will continue indefinitely, pending the occurrence of some event such as the employer's dissatisfaction with the employee's services or the existence of some 'cause' for termination." (Id., at pp. 324-325, 171 Cal.Rptr. 917, fns. omitted.)

B

Although appellant's brief is not entirely clear, it appears he first contends the presumption of at-will employment is sufficiently rebutted by his pleading of an explicit contractual promise that his employment would be terminated only for cause. He argues the letter of understanding contains the express promise on which he relies.

Here the letter agreement was pleaded in its entirety by attachment to the complaint. (See fn. 1, ante.) "Ordinarily a written contract is sufficiently pleaded if it is set out in full or its terms alleged according to their legal effect.... But if the instrument is ambiguous, the pleader must allege the meaning he ascribes to it. [Citations.]" (3 Witkin, op. cit. supra, Pleading, § 402, p. 2059.) Where a written contract is pleaded by attachment to and incorporation in a complaint, and where the complaint fails to allege that the terms of the contract have any special meaning, a court will construe the language of the contract on its face to determine whether, as a matter of law, the contract is reasonably subject to a construction sufficient to sustain a cause of action for breach. ⁴ (See Sweet v. Vista Irrigation Dist. (1933) 134 Cal.App. 518, 520-521, 25 P.2d 512; 3 Witkin, op. cit. supra, Pleading, § 320, p. 1988, § 402, pp. 2059-2060; compare Coast Bank v. Minderhout (1964) 61 Cal.2d 311, 314-315, 38 Cal.Rptr. 505, 392 P.2d 265.) Since plaintiff has not pled that the language of the letter-agreement is subject to any special meaning, we construe the language itself.

Plaintiff locates an express promise of employment terminable only for cause in the penultimate paragraph of defendant's letter of understanding, which recites that "We look forward to a long, pleasant, and mutually satisfactory relationship with you and the Sutter Community Hospitals." Plaintiff apparently contends the foregoing language contained a promise of "permanent" employment for a term of more than one month, so that the contract is not one falling within Labor Code section 2922. Plaintiff implicitly argues that since defendant allegedly promised employment for a term more than one month, plaintiff could be terminated only if he failed to perform his agreed duties satisfactorily. However, it is immediately apparent that the language relied on by plaintiff expresses a mere hope or expectation rather than a promise. For example, defendant could not promise a "mutually satisfactory" relationship because it had no control over plaintiff's conduct and could not guarantee that plaintiff's performance would be satisfactory; only plaintiff could do that. Plaintiff's interpretation twists defendant's polite closing salutation far beyond its obvious purpose, which was simply to add a touch of personal warmth to an otherwise businesslike letter. The foregoing language did not promise plaintiff employment for a specified term of more than one month. ⁵

The letter agreement also provides, "It is further understood that renegotiation or termination of this letter of understanding by either party may be accomplished upon thirty days notice." Plaintiff suggests the thirty-day clause merely imposes a thirty-day notice requirement before terminating the agreement for cause. However, this language is silent with respect to whether

the agreement shall be terminable with or without cause. Accordingly, we find nothing in the language of the agreement to rebut the presumption of Labor Code section 2922 that plaintiff's employment was terminable at will by either party. The agreement contains no express promise of employment terminable only for cause.

II

Relying principally on Rabago-Alvarez v. Dart Industries, Inc. (1976) 55 Cal.App.3d 91, 127 Cal.Rptr. 222, plaintiff next contends he furnished consideration independent of the services to be performed by the employee for his prospective employer and the furnishing of this independent consideration bars his termination except for cause. The independent consideration alleged by plaintiff is that he left his medical practice at a clinic and gave up expected tenure, salary increases, senior staff status, security, and other employment prospects.

In Rabago-Alvarez, plaintiff left employment selling copper gift ware and went to work for a division of Dart Industries, Inc. (Dart). Representatives of Dart assured plaintiff her position would be permanent as long as her work efforts were satisfactory and that she would never be terminated arbitrarily but only for cause if she failed to perform her work and assignments. (Id., at pp. 94-95, 127 Cal.Rptr. 222.) Her employment with Dart was terminated after she was taken by her boss to view some topless and bottomless entertainment and insisted on leaving. (Id., at p. 95, 127 Cal.Rptr. 222.) A jury awarded damages for wrongful termination of employment and the Court of Appeal affirmed. (Ibid.) The court's...