Jefferson v. Cal. Dept. of Youth Authority

• Citation: 28 Cal.4th 299,121 Cal.Rptr.2d 391,48 P.3d 423
• Decision Date: 01 July 2002
• Docket Number: No. S097104.,S097104.
• Court: United States State Supreme Court (California)
• Parties: Mary J. JEFFERSON, Plaintiff and Appellant, v. CALIFORNIA DEPARTMENT OF YOUTH AUTHORITY et al., Defendants and Respondents.

121 Cal.Rptr.2d 391

28 Cal.4th 299

48 P.3d 423

Mary J. JEFFERSON, Plaintiff and Appellant, v. CALIFORNIA DEPARTMENT OF YOUTH AUTHORITY et al., Defendants and Respondents.

No. S097104.

Supreme Court of California.

July 1, 2002.

Law Offices of Leo James Terrell, Leo James Terrell and Rebecca J. Riley, Los Angeles, for Plaintiff and Appellant.

Knapp, Petersen & Clarke, Andre E. Jardine and Anastasia M. Baumeister, Glendale, as Amici Curiae on behalf of Plaintiff and Appellant.

Bill Lockyer, Attorney General, David S. Chaney, Assistant Attorney General, Angela Sierra and Silvia M. Diaz, Deputy Attorneys General, for Defendants and Respondents.

Hill, Farrer & Burrill, Suzanne J. Holland and Warren J. Higgins, Los Angeles, as Amici Curiae on behalf of Defendants and Respondents.

BROWN, J.

In this case, we consider whether a compromise and release executed in a workers' compensation proceeding, that expressly releases "all claims and causes of action" relating to an injury and that includes an attachment establishing the parties' intent to include civil claims within the scope of the release, bars a civil action under the California Fair Employment and Housing Act (FEHA) (Gov.Code, § 12900 et seq.) for damages relating to the same events that resulted in the injury. We conclude the express terms of the release evidence the parties' intent to settle the FEHA action. Accordingly, we affirm the judgment of the Court of Appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

The California Department of Youth Authority (the Youth Authority) employed Mary J. Jefferson from September 1992 to February 1994 to work part time as a teacher's assistant in the high school classroom of Larry Berg. Jefferson claims that, while working in Berg's classroom, Berg and his students regularly used derogatory language when referring to women. The language offended Jefferson, who complained to Berg and his supervisors. Nevertheless, the sexually offensive conduct continued.

Eventually, the Youth Authority reassigned Jefferson to a different classroom, but at about the same time, her doctor recommended she stop working due to work-related stress. Jefferson stopped working on February 24, 1994, and on March 10, 1994, she filed a workers' compensation claim describing her injury as "adjustment disorder with anxious mood, psychological factors affecting physical condition of hypertension and allergies." She indicated in her report of injury that her injuries were caused by "(sexual harassment) sexually degrading words used to describe females, by Mr. Larry Berg and wards [students]. (Hostile work environment) No class room policies to control the behavior of the wards in the classroom. The environment was unsafe without policies, offensive, hostile and intimidating."

In October 1994, Jefferson also filed a sex discrimination claim with the California Department of Fair Employment and Housing (DFEH). Her allegations were essentially the same as those underlying her workers' compensation claim. Specifically, she alleged she was "subjected to work-environment sex harassment.... The harassment was verbal in nature which created an offensive and hostile working atmosphere." The DFEH issued a right-to-sue letter on October 10, 1995. On July 9, 1996, Jefferson settled her workers' compensation claim against the Youth Authority using the mandatory form adopted by the Workers' Compensation Appeals Board (WCAB) for compromise and release of claims. (See Cal.Code Regs., tit. 8, § 10874 [requiring every compromise and release agreement to be in a form prescribed by the WCAB].) As consideration for the settlement, she received a net payment of $41,639 in addition to the significant compensation she had already received, which included temporary disability indemnity for one year, $8,360 in permanent disability indemnity, and $27,360.07 in medical expenses. She testified at her deposition that she read the release before signing it and was represented by counsel at the time.

In the preprinted section of the release form, Jefferson stated clearly that, upon approval by the WCAB and payment, she "releases and forever discharges [the Youth Authority] from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of [the claimed] injury." In a typed attachment to the release, she added: "The Applicant [Jefferson] desires to avoid the hazards of litigation and the defendants wish to buy their peace.... The settlement is to compensate for all aspects of all injuries included herein. [¶] ... [A]pplicant agrees that this release will apply to all unknown and unanticipated injuries and damages resulting from such accident, and all rights under Sections [sic ] 1542 of the Civil Code of California are hereby expressly waived. [¶] ... [¶] ... [A]pplicant agrees that this release extends to and covers the ... employees of the defendants...." The same attachment also quoted the text of Civil Code section 1542 (hereafter section 1542), which protects parties from inadvertently settling unknown claims.

On August 2, 1996, the WCAB approved the compromise and release, "having considered the entire record," including the medical record. Jefferson filed this civil action on August 23, 1996, against the Youth Authority and Larry Berg. After dismissal of several causes of action, the only remaining cause of action alleged sex discrimination in violation of the FEHA based on the same events that gave rise to her workers' compensation injury and alleging essentially the same injury (emotional and mental anguish, emotional distress, and humiliation). Respondents filed a motion for summary judgment as to this cause of action, citing the broad language of the workers' compensation compromise and release, and during the hearing on this motion, the parties conceded that there was no extrinsic evidence to aid the court in interpreting the language of the release. The trial court granted summary judgment, concluding "the release executed by Jefferson bars her complaint as a matter of law. The release referred to matters that were clearly outside the scope of worker's compensation. Having accepted the benefit of the payment of $49,500.00 [sic], the Plaintiff cannot avoid the express terms of the release." The court entered judgment in respondents' favor, and Jefferson timely filed a notice of appeal.

The Court of Appeal affirmed the judgment, holding that the preprinted language releasing "all claims and causes of action" settled the FEHA action. The Court of Appeal applied "[s]tandard contract principles," which require strict enforcement of agreements, in the absence of fraud, duress, or other unfair practices. The court also noted that the text of the typed attachment to the preprinted release form necessarily contemplated the settlement of civil claims as well as workers' compensation claims. We granted Jefferson's petition for review, and we now affirm.

II. DISCUSSION

"`The general rule is that when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped from saying that its provisions are contrary to his intentions or understanding.'" (Palmquist v. Mercer (1954) 43 Cal.2d 92, 98, 272 P.2d 26, quoting Smith v. Occidental & Oriental Steamship Co. (1893) 99 Cal. 462, 470-471, 34 P. 84.) We have been particularly rigorous about strictly enforcing broad release language in workers' compensation settlements, because, in that context, WCAB oversight helps to ensure fairness. (Johnson v. Workmen's Comp.App. Bd. (1970) 2 Cal.3d 964, 973, 88 Cal.Rptr. 202, 471 P.2d 1002 (Johnson).

) At the same time, however, we have sought to protect the interests of workers who execute workers' compensation settlement documents without a full appreciation of what claims or rights might later arise. (Sumner v. Workers' Comp. Appeals Bd. (1983) 33 Cal.3d 965, 972-973, 191 Cal.Rptr. 811, 663 P.2d 534 (Sumner).) We conclude that the broad settlement language at issue here is enforceable as written. Two points in particular support our conclusion: (1) the parties included an attachment in their settlement agreement that made clear their intent to settle matters outside the scope of workers' compensation; and (2) Jefferson offered no extrinsic evidence establishing the parties' intent to exclude her FEHA claim from the settlement.

In Johnson, supra, 2 Cal.3d 964, 88 Cal. Rptr. 202, 471 P.2d 1002, we considered a widow's claim for workers' compensation death benefits after her husband suffered a work-related injury to his lungs, settled his workers' compensation claim by compromise and release, and then died (allegedly as a result of the work-related injury). (Id. at pp. 968-969, 88 Cal.Rptr. 202, 471 P.2d 1002.) At issue was whether the husband's release of "all claims," which was based on the same preprinted language that is at issue here, encompassed death benefits, though the compromise and release did not make any express reference to death benefits. (Id, at p. 969, 88 Cal.Rptr. 202, 471 P.2d 1002.) We concluded that the release language did include death benefits, noting that workers' compensation differed from tort proceedings in that the settlement had to be approved by the WCAB, thereby protecting the rights of employees. (Id, at p. 973, 88 Cal.Rptr. 202, 471 P.2d 1002.) We also reaffirmed that a party may settle unknown claims if the surrounding facts establish the parties' intent to do so. (Id. at p. 973, fn. 6, 88 Cal.Rptr. 202, 471 P.2d 1002.)

Our holding in Johnson was in the context of a proceeding in which significant evidence had come before the workers' compensation judge, thereby permitting the judge to assess the fairness of the release. (Johnson, supra, 2 Cal.3d at p. 968, 88 Cal.Rptr. 202, 471 P.2d 1002.) We noted that the WCAB's preprinted form did not inform injured workers of the possibility of obtaining...