Shapiro v. Wells Fargo Realty Advisors

• Decision Date: 28 February 1984
• Citation: 152 Cal.App.3d 467,199 Cal.Rptr. 613
• Parties: , 119 L.R.R.M. (BNA) 2520, 100 Lab.Cas. P 55,454, 1 IER Cases 1803 Steven SHAPIRO, Plaintiff and Appellant, v. WELLS FARGO REALTY ADVISORS, Defendant and Respondent. Civ. 70061.
• Court: California Court of Appeals Court of Appeals

Page 613

199 Cal.Rptr. 613

152 Cal.App.3d 467, 119 L.R.R.M. (BNA) 2520,

100 Lab.Cas. P 55,454, 1 IER Cases 1803

Steven SHAPIRO, Plaintiff and Appellant, v. WELLS FARGO REALTY ADVISORS, Defendant and Respondent.

Civ. 70061.

Court of Appeal, Second District, Division 3, California.

Feb. 28, 1984.

Hearing Denied May 17, 1984.

[152 Cal.App.3d 472] Herbert L. Michel, Jr., Los Angeles, for plaintiff and appellant.

Brobeck, Phleger & Harrison, John J. Wasilczyk, San Francisco, for defendant and respondent.

ARABIAN, Associate Justice.

Plaintiff and appellant, Steven Shapiro ("Shapiro"), appeals from an order dismissing his first amended complaint against defendant and respondent, Wells Fargo Realty Advisors ("Wells Fargo"), after Wells Fargo's demurrer was sustained as to all causes of action and, at Shapiro's request, was sustained without leave to amend. We affirm the dismissal.

FACTS

Shapiro was employed by Wells Fargo as its treasurer and vice-president from March 1, 1978, until his discharge, approximately three and one-half years later, on September 25, 1981. Based on this termination, he filed a complaint against his former employer. When Wells Fargo filed its first demurrer, motion to strike, and request for judicial notice, Shapiro voluntarily amended his complaint. The first amended complaint, filed on December 29, 1982, contains three causes of action.

In his first cause of action Shapiro alleges that Wells Fargo breached an implied-in-fact contract by refusing to allow him to continue his employment, even though he was performing satisfactorily. Shapiro alleges that he was advised, orally by supervisors and in writing through benefit brochures, that he would have an opportunity to achieve the maximum level of base pay and that he would not be terminated without good cause.

In the second cause of action, which requests punitive damages, Shapiro alleges that his termination was wrongful and malicious because Wells Fargo knew that an at-will employee could not be terminated except for good cause.

In his third cause of action for breach of the implied covenant of good faith and fair dealing, Shapiro alleges that Wells Fargo denied him the opportunity to obtain optimum employment benefits. He claims that Wells Fargo made false representations that he would not be terminated without good cause. Thus, Wells Fargo did not act in good faith and did not deal fairly with him when it entered into written benefit contracts and when he was terminated while performing satisfactorily. Shapiro requested punitive damages for willful concealment of fraudulent representations and intentional denial of the opportunity to obtain maximum benefits.

Wells Fargo filed another demurrer and motion to strike in response to Shapiro's amended complaint, and a request for judicial notice of a Wells Fargo Stock Option Agreement. The Stock Option Agreement On March 18, 1983, the trial court sustained Wells Fargo's demurrer as to all causes of action. At Shapiro's request, the demurrer was sustained without leave to amend to enable him to file this appeal.

signed by Shapiro on April 22, 1979, one year after he was hired, expressly defines the relationship between Shapiro and Wells Fargo as employment-at-will. ¹

ISSUE

The questions presented by this appeal are whether an at-will employee, who is discharged without cause by his employer, can maintain actions for (a) wrongful termination in violation of public policy, (b) breach of an implied covenant of good faith and fair dealing, or (c) breach of an implied-in-fact contract, without alleging facts which state a recognized exception to Labor Code section 2922. ²

DISCUSSION

Based on Shapiro's decision not to amend his complaint and his request to the trial court that the demurrer be sustained without leave to amend, we presume that Shapiro has stated his case "as strongly as it can be stated, and all ambiguities and uncertainties will be resolved against [him]." (Archibald v. Cinerama Hawaiian Hotels, Inc. (1977) 73 Cal.App.3d 152, 156, 140 Cal.Rptr. 599; Sierra Investment Corp. v. County of Sacramento (1967) 252 Cal.App.2d 339, 341, 60 Cal.Rptr. 519.) Where the lower court sustains the defendant's demurrer and plaintiff declines to amend, electing to stand on his complaint, the judgment of dismissal must be affirmed if the complaint is objectionable on any ground raised by the demurrer. (Gonzalez v. State of California (1977) 68 Cal.App.3d 621, 635, 137 Cal.Rptr. 681; see Cal Francisco Inv. Corp. v. Vrionis (1971) 14 Cal.App.3d 318, 321, 92 Cal.Rptr. 201.)

I.

Shapiro is an at-will employee.

Shapiro's complaint does not allege the existence of an employment contract, but defines his position as an at-will employee. A provision within the Stock Option Agreement expressly reserves Wells Fargo's right "to discharge [Shapiro] at any time for any reason whatsoever, with or without good cause." By signing this contract, Shapiro agreed to continue to perform services for one year, in exchange for an option to purchase stock. The agreement expressly stated that it did not grant Shapiro "any right to continue" in his employment. ³

"Under traditional common law rule, codified in Labor Code section 2922, an employment contract of indefinite duration is in general terminable at 'the will' of either party. Over the past several decades, however, judicial authorities in California and throughout the United States have established "The absolute power conferred by Labor Code section 2922 on an employer to discharge the at-will employee without cause is founded on the contractual concept of mutuality of obligation. The reasoning is that, since the employee may terminate the employment relationship when he wishes to do so, the employer also is entitled to terminate the relationship at his pleasure. However, when viewed in the context of present-day economic reality and the joint, reasonable expectations of employers and employees, the 'freedom' bestowed by the rule of law on the employee may indeed be fictional." (Cleary v. American Airlines, Inc. (1980) 111 Cal.App.3d 443, 448-449, 168 Cal.Rptr. 722.)

the rule that under both common-law and this statute an employer does not enjoy an absolute or totally unfettered right to discharge even an at-will employee. In a series of cases arising out of a variety of factual settings in which a discharge clearly violated an expressed statutory objective or undermined a firmly established principle of public policy, courts have recognized that an employer's traditionally broad authority to discharge an at-will employee 'may be limited by statute .... or by considerations of public policy.' [Citations.]" (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 172, 164 Cal.Rptr. 839, 610 P.2d 1330.)

II.

The complaint does not state a cause of action for wrongful discharge.

A series of recent California cases have limited the application of Labor Code section 2922. ⁴ Three distinct theories have been developed: (1) a tort cause of action for wrongful discharge in violation of public policy (Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330); (2) a cause of action for employer's breach of the implied covenant of good faith and fair dealing, which sounds both in tort and contract (Cleary v. American Airlines, Inc., supra, 111 Cal.App.3d 443, 168 Cal.Rptr. 722); and (3) a cause of action for employer's breach of an implied-in-fact covenant to terminate only for good cause (Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917). Shapiro's complaint attempts to state a cause of action under each of these theories.

A. Public policy.

The Supreme Court in Tameny, held that an employee discharged for refusing to engage in illegal conduct at his employer's request may bring a tort action for wrongful discharge. (27 Cal.3d at p. 178, 164 Cal.Rptr. 839, 610 P.2d 1330.) In Tameny, the plaintiff alleged that his former employer had discharged him after fifteen years of service because he refused to participate in an illegal scheme to fix retail gasoline prices. (Id., at p. 169, 164 Cal.Rptr. 839, 610 P.2d 1330.) The Supreme Court found that the trial court erred in sustaining defendant's demurrer to the tort cause of action for wrongful discharge. (Id., at p. 179, 164 Cal.Rptr. 839, 610 P.2d 1330.)

The Tameny court held that an employer's obligation to refrain from discharging an employee who refuses to commit a criminal act does not depend on any express or implied promises set forth in the employment contract, but rather reflects a duty imposed by law on all employers in order to implement the fundamental public policy embodied in the penal statutes. (Id., at p. 176, 164 Cal.Rptr. 839, 610 P.2d 1330.) The Tameny court found it unnecessary to determine whether a tort recovery would also be available on the theory that the discharge constituted a breach of the implied-in-law covenant of good faith and fair dealing inherent in every contract. (Id., at p. 179, fn. 12, 164 Cal.Rptr. 839, 610 P.2d 1330.) Thus, " 'where the employer's motivation for [a] discharge contravenes some substantial public policy principle, then the In Hentzel v. Singer Co. (1982) 138 Cal.App.3d 290, 293, 188 Cal.Rptr. 159, plaintiff alleged in his complaint that his termination from employment was a result of his efforts to obtain a reasonably smoke-free work environment. The court held that his complaint was sufficient to state a cause of action for the tort of wrongful discharge based on retaliatory dismissal. (Id., at p. 304, 188 Cal.Rptr. 159.) The Hentzel court found "that an employee is protected against discharge or discrimination for complaining in good faith about working conditions or practices which he reasonably believes to be unsafe, whether or not there exists at the time of the complaint an [Occupational Safety and Health Act] standard or order which is being violated." (Id., at pp. 299-300, 188 Cal.Rptr. 159.)...