Lamke v. Sunstate Equipment Co., LLC

• Decision Date: 22 September 2004
• Docket Number: No. C-03-4956 EMC.,C-03-4956 EMC.
• Citation: 387 F.Supp.2d 1044
• Court: U.S. District Court — Northern District of California
• Parties: Joseph LAMKE, Plaintiff, v. SUNSTATE EQUIPMENT CO., LLC, Defendant.

387 F.Supp.2d 1044

Joseph LAMKE, Plaintiff, v. SUNSTATE EQUIPMENT CO., LLC, Defendant.

No. C-03-4956 EMC.

United States District Court, N.D. California.

September 22, 2004.

COPYRIGHT MATERIAL OMITTED

Lisa R. Roberts, McNamara Dodge Ney Beatty Slattery, Walnut Creek, CA, for Plaintiff.

D. Gregory Valenza, Shane K. Anderies, Jackson Lewis LLP, San Francisco, CA, Jay A. Zweig, Gallagher & Kennedy, P.A., Phoenix, AZ, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND STRIKE

(Docket No. 33)

CHEN, United States Magistrate Judge.

Having considered the parties' briefs and accompanying submissions, and good cause appearing therefor, the Court hereby GRANTS Defendant Sunstate Equipment Co., LLC's motion to dismiss and strike.

I. FACTUAL & PROCEDURAL BACKGROUND

In his first amended complaint ("FAC"), Plaintiff Joseph Lamke has asserted claims for (1) breach of implied contract; (2) breach of the covenant of good faith and fair dealing; (3) fraud and deceit; and (4) wrongful termination in violation of public policy. Sunstate has moved to dismiss and strike the FAC. All of the causes of action are challenged in the motion to dismiss and strike except for that of breach of implied contract.

The following facts are alleged in Mr. Lamke's FAC: Mr. Lamke was employed by Sunstate as a sales manager for almost five years. See FAC ¶ 1. He had a history of positive reviews and promotions with Sunstate. See id. ¶ 5. In spite of such, on or about August 22, 2002, Mr. Lamke was terminated based upon allegations of drug use about which Sunstate did not properly inform him (e.g., failing to identify the individual who made the allegations), which were not substantiated, which Sunstate failed to investigate properly, and which he was not allowed to contest. See id. ¶ 4. Sunstate's actions were contrary to its policies and procedures as expressed in its employee handbook as well as its oral representations. See id. ¶¶ 3, 6.

The Court notes that, in his opposition to Sunstate's motion to dismiss and strike, Mr. Lamke makes allegations beyond those stated in his FAC. In ruling on this motion, the Court shall consider only those allegations as stated in the FAC. However, allegations in the opposition inform the Court's decision as to whether dismissal should be granted with leave to amend.

II. DISCUSSION

A. Legal Standard

1. Motion to Dismiss

Pursuant to Rule 12(b)(6), a defendant may move to dismiss for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). For such a motion, the court must accept the plaintiff's allegations as true and construe them in the light most favorable to the plaintiff. See Janas v. McCracken (In re Silicon Graphics Sec. Litig.), 183 F.3d 970, 983 (9th Cir.1999). Dismissal is improper "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

2. Motion to Strike

Under Rule 12(f), a court may strike "from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). "[C]ourts will strike a claim as `redundant' when it essentially repeats another claim in the same complaint." 2-12 Moore's Fed. Practice § 12.37[3]; see also Munie v. Stag Brewery, 131 F.R.D. 559, 560 (N.D.Ill.1989) (because two counts alleged premises liability and personal injury damages against defendant, ordering the second count stricken on grounds of redundancy); Davidson v. John Deere & Co., 644 F.Supp. 707, 712-13 (N.D.Ind.1986) (consistent with recent state court decision, striking claim for breach of implied warranty under UCC as duplicative of strict liability/products liability claim).

B. Breach of Covenant of Good Faith and Fair Dealing

Sunstate argues that Mr. Lamke's claim for breach of the covenant of good faith and fair dealing should be dismissed and/or stricken because it is duplicative of his claim for breach of implied contract. In support of this argument, Sunstate cites Guz v. Bechtel Nat'l, Inc., 24 Cal.4th 317, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (2000).

In Guz, plaintiff asserted claims for, inter alia, breach of implied contract to be terminated only for good cause and breach of the covenant of good faith and fair dealing. See id. at 326, 100 Cal.Rptr.2d 352, 8 P.3d 1089. Plaintiff argued that, "even if his employment included no ... implied-in-fact agreement limiting [defendant's] right to discharge him, and was thus `at will,' the covenant of good faith and fair dealing, implied by law in every contract, precluded Bechtel from terminating him arbitrarily, as by failing to follow its own policies, or in bad faith." Id. at 326-27, 100 Cal.Rptr.2d 352, 8 P.3d 1089. The court disagreed. It emphasized that the covenant of good faith and fair dealing "cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." Id. at 349-50, 100 Cal.Rptr.2d 352, 8 P.3d 1089. To the extent an implied covenant cause of action seeks to impose limits beyond those to which the parties actually agreed, the claim is invalid. To the extent the claim seeks simply to invoke terms to which the parties did not agree, it is superfluous. Id. at 352, 100 Cal.Rptr.2d 352, 8 P.3d 1089. The central teaching of Guz is that in most cases, a claim for breach of the implied covenant can add nothing to a claim for breach of contract.

In the instant case, there are allegations about, e.g., failure on the part of Sunstate to investigate the grievance or give Mr. Lamke an opportunity to respond to the grievance, but Mr. Lamke's claim for breach of the covenant of good faith and fair dealing is essentially based on his termination "without good or sufficient cause." FAC ¶ 19; see also id. ¶ 20 (claiming breach of covenant by defendant by "terminating plaintiff's employment without cause and for reasons having nothing to do with legitimate business justifications"). As Guz noted, an implied covenant claim adds nothing to a breach of contract claim for wrongful termination. If there is an implied-in-fact right against no-cause termination, the implied covenant claim is superfluous. If the contract-in-fact is at will, the implied covenant claim is invalid. See id. at 350, 100 Cal.Rptr.2d 352, 8 P.3d 1089 ("`[B]reach of the implied covenant cannot logically be based on a claim that [the] discharge [of an at-will employee] was made without good cause.'") (emphasis added). The same applies to any claim that defendant breached plaintiff's contract rights by failing to investigate the grievance or give Mr. Lamke a chance to respond to the grievance. Those claims turn on the terms of the implied-in-fact contract as may ultimately be adjudicated in this case. The implied covenant claim adds nothing to any breach of contract claim Plaintiff may have.

Mr. Lamke points out, however, that the Guz court intimated there is an exception to the immateriality of the implied covenant:

We do not suggest the covenant of good faith and fair dealing has no function whatever in the interpretation and enforcement of employment contracts. As indicated above, the covenant prevents a party from acting in bad faith to frustrate the contract's actual benefits. Thus, for example, the covenant might be violated if termination of an at-will employee was a mere pretext to cheat the worker out of another contract benefit to which the employee was clearly entitled, such as compensation already earned. We confront no such claim here.

Id. at 353 n. 18, 100 Cal.Rptr.2d 352, 8 P.3d 1089.

While this statement in Guz leaves open the possibility of a claim for breach of the covenant of good faith and fair dealing under narrow circumstances, there are no allegations in the FAC as it currently stands that meet this narrow exception. Cf. McCollum v. XCare.net, Inc., 212 F.Supp.2d 1142, 1153 (N.D.Cal.2002) (denying defendant's motion for summary judgment on claim for breach of the covenant of good faith and fair dealing because fact finder could conclude that defendant intended to frustrate plaintiff's legitimate expectations under a compensation plan — i.e., entitlement to a commission — by reassigning an account on which plaintiff had worked and/or terminating her employment less than two weeks before the contract related to the account was signed). Plaintiff does not claim his termination was intended to deprive him of some contractual right other than that directly connected with his termination. See Agosta v. Astor, 120 Cal.App.4th 596, 15 Cal.Rptr.3d at 573 (2004) (denying implied covenant claim where plaintiff sought only losses "associated with the termination of his contract benefits").

The Court therefore dismisses Mr. Lamke's claim for breach of the covenant of good faith and fair dealing but shall give him leave to amend the claim if he can allege a claim viable under Guz, McCollum and Agosta as provided herein. The dismissal here does not affect Mr. Lamke's breach of contract claim, whether the breach is related to his termination without good cause, Sunstate's failure to investigate the grievance, Sunstate's failure to give Mr. Lamke an opportunity to respond to the grievance, or any other contractual right to which Plaintiff contends he is entitled.

C. Fraud and Deceit

Mr. Lamke's claim for fraud is based on the allegation that he was induced into employment because Sunstate misrepresented to Mr. Lamke (1) that he would not be terminated as an employee as long as his work performance was satisfactory and (2) that he would be given a fair opportunity to respond to grievances. See FAC ¶ 23. According to Mr. Lamke, these misrepresentations "were made for the purpose of inducing [him] to enter into an employment contract with [Sunstate] and thereafter for the purpose of inducing [him] to continue performing said employment...." Id. ¶ 25.

Sunstate...