Wells Fargo Bank v. Superior Court, No. S014994

CourtUnited States State Supreme Court (California)
Writing for the CourtLUCAS; MOSK; KENNARD; BROUSSARD
Citation53 Cal.3d 1082,282 Cal.Rptr. 841,811 P.2d 1025
Parties, 811 P.2d 1025, 60 USLW 2049, 6 IER Cases 1004 WELLS FARGO BANK, Petitioner, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent; Barbara WERTZ, Real Party in Interest. WELLS FARGO BANK, Petitioner, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent; Wilma BOTELHO, et al., Real Parties in Interest.
Docket NumberNo. S014994
Decision Date27 June 1991

Page 841

282 Cal.Rptr. 841
53 Cal.3d 1082, 811 P.2d 1025, 60 USLW 2049, 6 IER Cases 1004
WELLS FARGO BANK, Petitioner,
v.
The SUPERIOR COURT of the City and County of San Francisco, Respondent;
Barbara WERTZ, Real Party in Interest.
WELLS FARGO BANK, Petitioner,
v.
The SUPERIOR COURT of the City and County of San Francisco, Respondent;
Wilma BOTELHO, et al., Real Parties in Interest.
No. S014994.
Supreme Court of California,
In Bank.
June 27, 1991.

[53 Cal.3d 1085] [811 P.2d 1026] Brobeck, Phleger & Harrison, Jean C. Gaskill, Thomas M. Peterson, Rebecca D. Eisen and James H. Quirk, San Francisco, for petitioner.

Paul, Hastings, Janofsky & Walker, Paul W. Cane, Jr., and Laura L. Saadeh as amici curiae, Los Angeles, on behalf of petitioner.

No appearance for respondent.

John M. True and Christopher Ho as Amici Curiae, San Francisco, on behalf of respondent and real parties in interest.

McGuinn, Hillsman & Palefsky, John A. McGuinn, Cliff Palefsky, Cynthia Bernet-McGuinn and William L. Veen, San Francisco, for real parties in interest.

John K. Van de Kamp and Daniel E. Lungren, Attys. Gen., Andrea Sheridan Ordin, Chief Asst. Atty. Gen., Marian M. Johnston and John Davidson, Deputy Attys. Gen., Bianco, Brandi & Jones, Stephen M. Murphy, San Francisco, Garrison, Silbert & Arterton and Joseph Garrison as amici curiae, New Haven, Conn., on behalf of real parties in interest.

LUCAS, Chief Justice.

Three former branch office managers of a national bank brought suit seeking damages under California law for the bank's alleged wrongful termination of their employment. The bank contends their state law causes of action are preempted by the National Bank Act of 1864 which provides that a national bank's "officers" serve at the pleasure of its board of directors. (12 U.S.C. § 24, Fifth & Sixth; the National Bank Act [53 Cal.3d 1086] will also be referred to as the Act, and section 24 will be referred to as section 24 or the statute.) We consider two issues: (1) were plaintiffs "officers" within the meaning of the Act; and (2) were plaintiffs [811 P.2d 1027] properly discharged by the bank's board of directors?

As branch managers who held appointments as assistant vice-presidents of the bank and exercised significant authority in transactions between the bank and third parties, plaintiffs were "officers" of a national bank. However, they were discharged by more senior bank officers, not by the bank's board of directors as expressly required by section 24. Therefore, plaintiffs' causes of action are not preempted by the Act. Because the Court of Appeal so held, we will affirm its decision.

FACTS

Wells Fargo Bank, National Association (hereafter referred to as Wells Fargo or the bank) is a national banking association created pursuant to the Act. (12 U.S.C. § 21 et seq.) Wells Fargo operates a statewide network of branch banks, each of which has a branch manager.

Plaintiff Barbara Wertz was an assistant vice-president of the bank and manager of its Crystal Springs branch when the bank terminated her employment in August 1985. She had been employed by the bank since June 1974 and had been a branch manager for approximately 10 months. Wells Fargo contends Wertz was discharged because she improperly allowed a customer to negotiate a $300,000 check drawn on the account of another Wells Fargo customer, causing a significant loss to the bank.

At least 12 other Wells Fargo branch managers were discharged or allegedly induced to quit by the bank during 1984 and 1985. Among them were plaintiffs Wilma Botelho and Thomas Moore. Botelho began working for Wells Fargo in 1959 as a bookkeeper. She became an assistant vice-president in June 1980 and manager of the Grand Avenue branch in Oakland in November 1982. Wells Fargo terminated her employment in March 1985. The bank alleges she had been repeatedly and unsuccessfully warned to improve her relationship with her branch's staff.

Thomas Moore began working for Wells Fargo in 1959 as a teller and became assistant vice-president in 1976. He became manager of the bank's St. Helena branch in 1983. He was discharged in May 1985. The bank alleges that he had been repeatedly warned that "deposit volumes" at his branch were declining, but that he was unable to reverse that trend.

Neither Wertz, Botelho, nor Moore was discharged directly by Wells Fargo's board of directors. Rather, their employment was terminated by [53 Cal.3d 1087] senior vice-presidents under authority delegated to them by an executive vice-president, whose authority, in turn, was delegated by the bank's chief executive officer. His authority was pursuant to delegation by the board of directors in the bank's bylaws.

Wertz filed suit on her own behalf, alleging: (1) breach of an implied agreement that she could be terminated only for cause; (2) breach of the implied covenant of good faith and fair dealing; (3) intentional infliction of emotional distress; and (4) wrongful termination because of her age (she was 51 years old when discharged).

Botelho and Moore joined in a separate action with 10 other former Wells Fargo branch managers, alleging the same causes of action as in the Wertz suit, including age discrimination (Botelho and Moore were each 49 years old when discharged). As a result of settlements or dismissals, only Botelho and Moore remain as plaintiffs in that joint action.

Wells Fargo moved for summary judgment in both actions on the ground that all causes of action were preempted by the Act. Wells Fargo also moved in the alternative for summary adjudication of certain issues. The superior court denied summary judgment but decided that Wells Fargo was entitled to prevail on the claims for infliction of emotional distress. The court also concluded as a matter of law that Wertz had no claim for age discrimination. The court, however, denied summary adjudication on the age discrimination claims of Botelho and Moore. As a result of these rulings, Wertz, Botelho and Moore were left with claims for breach of contract and breach of the implied covenant. Botelho [811 P.2d 1028] and Moore were also left with claims for age discrimination.

Wells Fargo filed petitions for writs of mandate in both cases. After a consolidated hearing, the Court of Appeal issued a written opinion denying the bank's request for peremptory writs. We granted the bank's petition for review.

DISCUSSION

I. The National Bank Act

The National Bank Act grants specified corporate powers to each national bank, including the power "To elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places." (12 U.S.C. § 24, Fifth, italics added.) It has been established [53 Cal.3d 1088] for almost a century that section 24 preempts all state law causes of action by a bank officer for breach of an employment agreement. (Mackey v. Pioneer Nat. Bank (9th Cir.1989) 867 F.2d 520, 524-526 (hereafter Mackey ); Westervelt v. Mohrenstecher (8th Cir.1896) 76 F. 118.) We are aware of no decision to the contrary, and plaintiffs do not dispute the general rule of preemption.

Seeking to avoid application of the general rule of preemption to their claims, plaintiffs contend as follows: (1) section 24 applies only to a bank's "senior officers" and not to branch managers, whose authority is so limited by bank policy that they do not qualify as "other officers" within the meaning of the statute; and, alternatively, (2) because they were neither appointed nor discharged in compliance with the Act, i.e., by the bank's board of directors, they are not "officers" subject to the at-pleasure provision. (12 U.S.C. § 24, Sixth.)

Wells Fargo counters that plaintiffs are "other officers" within the meaning of section 24, having been so designated by the bank, and that plaintiffs' terminations were in accord with the bank's bylaws, adopted pursuant to the statute, and were thus proper under the Act. The premise of the argument is that the bank's board of directors was allowed under the Act to delegate hiring and firing decisions to certain corporate officers and that the bank properly did so.

We examine the contentions of the parties in light of the language, history, and purpose of the relevant provisions of the Act.

II. "Other Officers" Under the Act

Section 24 grants Wells Fargo the power to appoint and dismiss at pleasure a "president, vice president, cashier, and other officers." (12 U.S.C. § 24, Fifth, italics added.) None of the plaintiffs held the positions of president, vice-president, or cashier. Each plaintiff was an assistant vice-president and branch manager. The question is whether he or she was one of the "other officers" referred to in section 24.

A. Statutory language, history and purpose

Wells Fargo seeks an expansive construction of the "other officer" language in section 24; plaintiffs advocate a narrow one. Congress referred to "other officers" without restriction, qualification, or definition. No case cited to us supplies a precise definition of the term. It is our task to assign a meaning to the term that comports with the language, history, and purpose of the statute.

[53 Cal.3d 1089] Congress passed the National Bank Act in 1864. The Act was commonly known as the National Currency Act when first enacted. Its name was changed to "The National Bank Act" in 1874. (12 U.S.C. § 38.) Although legislative history for the Act is sparse, commentators have identified three primary objectives of Congress: (1) to develop a national currency; (2) to provide a financial market for Civil War bonds issued by the Union; and (3) to develop national banks as depositories of government funds. (Symons, The "Business of Banking" in Historical Perspective (1983) 51 Geo.Wash.L.Rev. 676, 699; Miller, The Future of the Dual Banking...

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  • Page v. Miracosta Community College Dist., No. D054212.
    • United States
    • California Court of Appeals
    • November 23, 2009
    ...Clara Unified School Dist. (2002) 102 Cal.App.4th 241, 252 [125 Cal.Rptr.2d 337]; see also Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1099 [282 Cal.Rptr. 841, 811 P.2d 1025].) Given our construction of sections 53260 and 53261, we conclude the trial court erred in granting Di......
  • People v. Zapien, No. S004762
    • United States
    • United States State Supreme Court (California)
    • March 4, 1993
    ...we empowered to insert what a legislative body has omitted from its enactments. [Citation.]" (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1099, 282 Cal.Rptr. 841, 811 P.2d Defendant contends the admission of this multiple hearsay violated his rights under the state and federal......
  • Peatros v. BANK OF AMERICA NT & SA, No. S076454.
    • United States
    • United States State Supreme Court (California)
    • January 10, 2000
    ...create a remedy for its violation. We granted review to decide a question of the kind that, in Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1104, 282 Cal.Rptr. 841, 811 P.2d 1025 (hereafter sometimes Wells Fargo), we acknowledged was "important and difficult": In the face of Ti......
  • Peatros v. Bank of America, No. B116465
    • United States
    • California Court of Appeals
    • December 31, 1998
    ...pleasure, and appoint others to fill their places.' (12 U.S.C. § 24, Fifth, italics added.)" (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1087, 282 Cal.Rptr. 841, 811 P.2d The Act "has been consistently interpreted to mean that the board of directors of a national bank may dis......
  • Request a trial to view additional results
77 cases
  • Page v. Miracosta Community College Dist., No. D054212.
    • United States
    • California Court of Appeals
    • November 23, 2009
    ...Clara Unified School Dist. (2002) 102 Cal.App.4th 241, 252 [125 Cal.Rptr.2d 337]; see also Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1099 [282 Cal.Rptr. 841, 811 P.2d 1025].) Given our construction of sections 53260 and 53261, we conclude the trial court erred in granting Di......
  • People v. Zapien, No. S004762
    • United States
    • United States State Supreme Court (California)
    • March 4, 1993
    ...we empowered to insert what a legislative body has omitted from its enactments. [Citation.]" (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1099, 282 Cal.Rptr. 841, 811 P.2d Defendant contends the admission of this multiple hearsay violated his rights under the state and federal......
  • Peatros v. BANK OF AMERICA NT & SA, No. S076454.
    • United States
    • United States State Supreme Court (California)
    • January 10, 2000
    ...create a remedy for its violation. We granted review to decide a question of the kind that, in Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1104, 282 Cal.Rptr. 841, 811 P.2d 1025 (hereafter sometimes Wells Fargo), we acknowledged was "important and difficult": In the face of Ti......
  • Peatros v. Bank of America, No. B116465
    • United States
    • California Court of Appeals
    • December 31, 1998
    ...pleasure, and appoint others to fill their places.' (12 U.S.C. § 24, Fifth, italics added.)" (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1087, 282 Cal.Rptr. 841, 811 P.2d The Act "has been consistently interpreted to mean that the board of directors of a national bank may dis......
  • Request a trial to view additional results

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