Thomka v. Financial Corp.

• Decision Date: 10 May 1993
• Docket Number: No. B061692,B061692
• Citation: 19 Cal.Rptr.2d 382,15 Cal.App.4th 877
• Court: California Court of Appeals Court of Appeals
• Parties: Albert E. THOMKA, Plaintiff and Appellant, v. FINANCIAL CORPORATION OF AMERICA et al., Defendants and Appellants. Thomas R. JONES, et al., Plaintiffs and Appellants, v. FINANCIAL CORPORATION OF AMERICA et al., Defendants and Respondents.

Page 382

19 Cal.Rptr.2d 382

15 Cal.App.4th 877

Albert E. THOMKA, Plaintiff and Appellant, v. FINANCIAL CORPORATION OF AMERICA et al., Defendants and Appellants.

Thomas R. JONES, et al., Plaintiffs and Appellants, v. FINANCIAL CORPORATION OF AMERICA et al., Defendants and Respondents.

No. B061692.

Court of Appeal, Second District, Division 7, California.

May 10, 1993.

As Modified June 9, 1993.

Review Denied Aug. 26, 1993.

Certified for Partial Publication ^*

Mathews & Evans, Charles T. Mathews and William D. Evans, Los Angeles, for plaintiffs and appellants.

Jeffer, Mangels, Butler & Marmaro, Louise Ann Fernandez and Jay A. James, Los Angeles, for defendants and appellants.

Jonathan W. Biddle, Beverly Hills, Fenigstein & Kaufman, and Harold J. Tomin, Los Angeles, for defendants and respondents.

STANIFORTH, Associate Justice, Assigned. ^**

This is a consolidated appeal in two separate cases joined for trial.

CASE I

Albert E. Thomka filed a multi-count civil action against defendants/appellants New West Federal Savings and Loan Association. ¹ Thomka named eight individual corporate officer employees as defendants. ²

At close of plaintiffs evidentiary case the trial court nonsuited all but one of Thomka's causes of action against New West and nonsuited all of Thomka's claims against the individual defendants. The only cause of action remaining was for breach of employment contract against New West. After defense presentation of their case and appropriate instruction, the jury returned a verdict against New West in Thomka's favor in the sum of $963,000.00.

New West filed post-trial motions, seeking judgment notwithstanding the verdict (JNOV) or a new trial. The trial court denied the motion for JNOV but granted the motion for new trial conditioned upon Thomka's acceptance of the reduction of the verdict to $130,667.00. Thomka consented to the remittitur and judgment was entered for $130,667.00. The corporate defendants appeal this judgment. Thomka filed his cross-appeal to reinstate the original judgment of $963,000. (See Rosenau v. Heimann (1990) 218 Cal.App.3d 74, 77, 267 Cal.Rptr. 20.)

CONTENTIONS

On appeal New West contends Thomka's employment was an "at will" status and that no "cause" was required before discharging him. Further it is asserted Thomka's action is preempted (barred as a matter of law) on these bases; (a) the federal banking (Federal Home Loan Bank Board; FHLBB) regulation (12 CFR 563.39) or (b) the doctrine of D'Oench, Duhme & Co. v. FDIC (1942) 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956, as now partially codified in 12 U.S.C. section 1823.

On his cross-appeal Thomka contends that if the original verdict is not restored, then at least New West is liable for the reduced judgment of $130,667.

I Facts on Thomka's Case ³

Thomka and the Jones plaintiffs were employed by the American Savings as account executives selling Jumbo Certificates of Deposits (CD's) to the public but principally to large investors and institutions such as banks and credit unions. Thomka was first hired by American Savings in his home town of Pittsburgh, Pennsylvania in 1983. His boss, Mr. Lester Hueber, told him if he got a CD portfolio of $5 million in six months and if he worked hard and diligently he could have a good career and make a lot of money. Hueber referred to the six month period as a "probation period." Thomka was not required to sign any FCA Asset Management Sales Regulation (Sales Regulations).

When the Pittsburgh office closed in March 1985, Thomka was transferred to Southern California (Encino). In April 1986 he received the "Good Guy" award. Later, after he was in Southern California, Thomka periodically signed Sales Regulations. However, none contained "at will" language until shortly before he was fired. Thomka met the "quota" production requirements.

Thomka (and the Jones plaintiffs) during the last year and one-half employment, and before this litigation, worked in the same office located at Rancho Park. They were supervised by account executive, Hamilton. Several witnesses testified at the consolidated trial either express or implied promises of continued employment in addition to those described by Thomka. This evidence supports Thomka's factual position. Thomka became a top performer in sales with a book exceeding $5 million dollars at one time. There was much evidence of the custom practice and treatment of all the account executives as permanent "non-probationary" employees. The "at will" status was never discussed.

New West contends these account executives were governed by the "Sales Regulations" which imposed a quota system of employee production. An employee would be placed on probation if he fell below this quota. Thomka (and the Jones plaintiffs) testified compliance with these quotas was made difficult or virtually impossible for a group of the so called "have nots". These "have nots" could be terminated from their employment for noncompliance with the quota.

Thomka (and the Jones plaintiffs) testified to certain sales practices which were required of them to improve the account executive's performance. These management imposed requirements required misrepresentation and fraud. Evidence was that following these practices resulted in misleading of customers and accusation of fraud. Thomka (and the Jones plaintiffs) objected to these tactics required of them.

Thomka (and the Jones plaintiffs) testified they were terminated for pretextual reasons. They were terminated from their jobs because they would not go along with the misleading practices. Moreover, the firing of an account executive would leave the ousted account executives' investment portfolios to be divided among the so called "haves"--a group of account executives who did not protest the improper soliciting devices required of account executives. Moreover, whenever an account executive was terminated it would increase the income of such manager.

At or about the time the Thomka (and the Jones plaintiffs) were terminated in late 1987, for the first time the Sales Regulations which they did sign contained "at will" language. The Sales Regulations declared in effect New West could sever their employment at any time with or without cause.

There is a factual dispute as to when the "at will" language first appeared. Witness Jones testified the "at will" language never appeared in the Sales Regulations until October 1986. Thomka's view of this factual dispute is supported by substantial evidence. The employees were not notified when the language was added to the Sales Regulations.

New West contends the "at will" language was included earlier and that Thomka signed five such documents. No documentary evidence support this assertion. There is no evidence that such language was other than ex parte addition to the Sales Regulations. It was not communicated to Thomka or the Jones plaintiffs.

Several witnesses describe a meeting in September 1986 when American Savings was experiencing a difficult financial period. An official came from San Francisco to conduct the meeting with the account executives. He announced American Savings was going through difficult times, and the account executives who would continue to meet their quota at the end of the quarter would be around for a long time because the company needed them. The account executives "would have a home with American Savings".

New West presented evidence to persuade the jury (without success) Thomka was fired for cause. Thomka was injured on the job when his chair fell over backwards causing him a back injury. New West asserted Thomka had psychiatric difficulties for which he must obtain help or be fired. It was testified he had threatened a person with a gun; that he was paranoid. The jury did not accept this evidence as proof of cause to fire. Substantial evidence supports the jury verdict.

II

We assume there was a 1986 insertion of the "at will" language in the Sales Regulations. Yet in a conceded "at will" employment relationship the employer's right to terminate the employee is not unlimited.

The seminal authority on this issue is Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917. The appellate court held in the context of a termination of an "at will" employment, there are certain limitations on an employer's power of dismissal. "The mere fact that a contract is terminable at will does not give the employer the absolute right to terminate it in all cases." (Italics added.)

The plaintiff in Pugh had been employed by the defendant for 32 years, during which time he worked his way up the corporate ladder from dishwasher to vice president. (116 Cal.App.3d at p. 315, 171 Cal.Rptr. 917.) When hired, he had been assured that " 'if you are loyal ... and do a good job, your future is secure.' " (Id., at p. 317, 171 Cal.Rptr. 917.) During his long employment, the plaintiff received numerous commendations and promotions, and no significant criticism of his work. Throughout this period the company maintained a practice of not terminating administrative personnel without good cause. On this evidence, the Court of Appeal concluded the jury could determine the existence of an implied promise that the employer would not arbitrarily terminate the plaintiff's employment. (Id., at p. 329, 171 Cal.Rptr. 917.)

In Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 676, 254 Cal.Rptr. 211, 765 P.2d 373, the Supreme Court was urged to overrule, modify the Pugh v. See's Candies, Inc., supra, rule. The Supreme Court declared:

"[D]efendant urges that we disapprove precedent permitting a cause of action for wrongful discharge founded on an implied-in-fact contract and require instead an express contract provision requiring good cause for termination, supported by independent consideration. Alternatively, defendant requests that we distinguish Pugh and its progeny from the present case. We conclude, however, that Pugh correctly applied basic contract...