Zilmer v. Carnation Co.

Decision Date31 October 1989
Docket NumberNo. B038441,B038441
Parties, 118 Lab.Cas. P 56,623, 4 IER Cases 1750 Dean David ZILMER, Plaintiff and Appellant, v. CARNATION COMPANY, et al., Defendants and Respondents.
CourtCalifornia Court of Appeals Court of Appeals
Epstein, Reed & Snyder, Howard A. Snyder and S.K. Khalsa, Los Angeles, for plaintiff and appellant

Paul, Hastings, Janofsky & Walker, Santa Monica, William S. Waldo, Los Angeles, Paul W. Cane, Jr., and Nancy A. Weeks, Santa Monica, for defendants and respondents.

DANIELSON, Associate Justice.

Plaintiff and appellant Dean Zilmer sued defendants and respondents Carnation Company ("Carnation"), and supervisory employees Mortimer Adams and Arthur Pate, 1 and various Does for wrongful termination of employment, breach of an implied-in-fact contract, breach of the implied covenant of good faith and fair dealing, and fraud. He thereafter substituted the

                Nestle Corporation ("Nestle") in place and stead of one of the Does.  The trial court sustained the demurrer of Carnation and Adams to the complaint with leave to amend;  the parties stipulated that the [215 Cal.App.3d 34] order was also effective as to Nestle. 2  Plaintiff elected not to amend, and dismissed the action.  He appeals from the order of dismissal. 3  We affirm the order as to the first and fourth causes of action, reverse the order as to the second and third causes of action, and remand the matter with directions
                
FACTS

Plaintiff alleged he was constructively discharged by Carnation and Nestle on December 31, 1986, after thirty-one years of loyal and devoted service during which he rose from the position of office management trainee to division controller of the largest division of the company. In December of 1985, Pate and Adams, who were engaged in a reorganization of the accounting department, informed plaintiff that Carnation accounting directors or controllers without CMA certificates would have to take a course and obtain such certificates as a condition of their further employment by the company. 4 Plaintiff told Pate and Adams that because of his "immense job responsibilities, which included recently imposed added responsibilities and work requirements" due to Carnation's acquisition by the Nestle Corporation, he did not believe he could obtain the CMA certificate.

Plaintiff alleged defendants' representations were false and intended to create intolerable working conditions for plaintiff and thus force his resignation as part of a plan to replace high level managerial personnel of Carnation with associates and friends of Adams from Price Waterhouse, where he was formerly employed. After plaintiff's termination, defendants hired controllers and accounting directors who neither had, nor were required to obtain, CMA certificates; other employees of Carnation were also relieved of this obligation.

In his first cause of action, against Carnation and Nestle for breach of an oral contract of employment, plaintiff alleged the terms and conditions of his employment included both oral and written representations, and a company practice of "fair and equitable treatment." He alleged Carnation promised it would not act arbitrarily in dealing with him, and would not terminate his employment except for good cause. These promises were both expressed to plaintiff upon commencement of his employment, and implied by the conduct and activities of Carnation, its personnel policies and practices, the longevity of plaintiff's employment by the company, and Carnation's repeated positive evaluations of his work.

Plaintiff's second cause of action was for Carnation's and Nestle's breach of an implied-in-fact contract of employment, and essentially reiterated the allegations of the first cause of action.

In his third cause of action, plaintiff alleged the above described conduct of Carnation and Nestle constituted a breach of the covenant of good faith and fair dealing inherent in the employment contract, caused him emotional distress, and were "oppressive, fraudulent, malicious, intentional, and deliberate, and carried out despite the protests of Plaintiff against such conduct."

In his fourth cause of action, for fraud against all defendants, plaintiff again alleged defendants' representations regarding the necessity for CMA certificates, upon which he relied, "were in fact pretextual, false, and known by the Defendants to be false at the time said promises and representations were made." In addition, the representations were made for the purpose of forcing plaintiff to resign or be Plaintiff sought compensatory damages in the sum of $1,000,000, and punitive damages in the sum of $25,000,000 in connection with his third and fourth causes of action.

terminated, in order to replace him with associates or friends of Adams from Price Waterhouse.

THE TRIAL COURT'S RULING

The trial court sustained the demurrer in the belief that an allegation of violation of public policy is requisite to maintenance of an action for constructive wrongful discharge, whether the action be in tort or contract.

DISCUSSION

On this appeal from an order of dismissal entered after the trial court sustained defendants' demurrer, " 'we must, under established principles, assume the truth of all properly pleaded material allegations of the complaint in evaluating the validity' of the decision below. [Citations.]" (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 663, 254 Cal.Rptr. 211, 765 P.2d 373.) In addition, because plaintiff refused to amend his complaint after the demurrer was sustained, we must presume that he has stated his case as strongly as it can be stated in his favor (Hesse v. Vinatieri (1956) 145 Cal.App.2d 448, 454-455, 302 P.2d 699), and the judgment of dismissal must be affirmed if the unamended complaint is objectionable on any ground raised by the demurrer. (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 457, 212 Cal.Rptr. 743.)

Plaintiff Alleged An Implied Contract

Although plaintiff describes his first cause of action as one for breach of an express oral contract, he does not allege explicit words by which the parties agreed that he would not be terminated without good cause. Instead he alleges that a course of conduct, including various oral and written representations, created a reasonable expectation to that effect. Thus, his action is more properly described as one for breach of an implied-in-fact contract (Foley v. Interactive Data Corp., supra, 47 Cal.3d 654, 675, 254 Cal.Rptr. 211), and the demurrer was properly sustained as to the first cause of action.

In Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917, the court stated that a variety of factors may support the formation of an implied-in-fact contract to discharge only for good cause: "the personnel policies or practices of the employer, the employee's longevity of service, actions or communications by the employer reflecting assurances of continued employment, and the practices of the industry in which the employee is engaged." (Id. at p. 327, 329, 171 Cal.Rptr. 917; fns. omitted.) We hold the allegations of plaintiff's second cause of action are sufficient to plead an implied-in-fact contract to terminate only for good cause.

Plaintiff Was Not Required To Allege That His Employer Violated Public Policy In This Contract Action

Although there is no authority directly in point, the trial court's conclusion that plaintiff's complaint failed to state a cause of action was based essentially on the decision in Brady v. Elixir Industries (1987) 196 Cal.App.3d 1299, 242 Cal.Rptr. 324.

The plaintiff in Brady sued her employer for sexual discrimination and tortious constructive discharge. Her complaint as to the latter was essentially that she was an at-will employee, having no contract of employment, express or implied; that she was constructively discharged, i.e., forced to resign, by her employer; and that the employer's conduct in forcing her resignation was wrongful, i.e., actionable. The Brady court held that "to establish a tortious constructive discharge, an employee must show:

"(1) the actions and conditions that caused the employee to resign were violative of public policy;

"(2) these actions and conditions were so intolerable or aggravated at the time of the employee's resignation that a reasonable person in the employee's position would have resigned; and

"(3) facts and circumstances showing that the employer had actual or constructive knowledge of the intolerable actions In a footnote to its discussion, the Brady court stated: "In this case we deal with a tortious constructive discharge as opposed to a constructive discharge in a breach of employment contract or bad faith context. (See Koehrer v. Superior Court (1986) 181 Cal.App.3d 1155, 1163-1172 ... [distinguishing between tortious, contractual, and bad faith wrongful discharge].) While the principles enunciated in this case may be applicable to the other two areas, we decide in this case only what facts and circumstances will constitute a constructive discharge in a tortious discharge context." (Brady v. Elixir Industries, supra, 196 Cal.App.3d at p. 1305, fn. 4, 242 Cal.Rptr. 324.) Defendants cite this language in support of their contention that an employee seeking recovery for constructive discharge must in any case show that "the actions and conditions that caused the employee to resign were violative of public policy." We disagree.

and conditions and of their impact on the employee and could have remedied the situation" (Id. at p. 1306, 242 Cal.Rptr. 324.)

Brady is consistent with the more recent decision of our Supreme Court in Foley v. Interactive Data Corp., supra, 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373, recognizing that a terminated employee who lacks the protection of an express or implied contract of employment may state a cause of...

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