Citations
- 189 Cal. App. 4th 947
Full opinion text
Opinion
RUSHING, P. J.
Plaintiffs Charles Luke, Francis A. McCaskey, and John Mellen brought these actions against California State Automobile Association (CSAA) and California State Automobile Association Inter-Insurance Bureau charging breach of contract and age discrimination. The gist of the claims was that defendant brought about plaintiffs’ discharges by breaching a promise to permit senior sales agents to continue in it’s employ under relaxed sales quotas. The trial court entered summary judgment for defendant primarily on the grounds that it was contractually entitled to rescind the promise, and that plaintiffs failed to raise a triable issue of fact concerning defendant’s claimed nondiscriminatory reasons for eliminating the policy. We find that the record raises a triable issue of fact on the contract claim over the question whether defendant honored the policy for an agreed time or, if no agreement as to time can be inferred from the terms and circumstances of the employment contract, for a reasonable time. The record also presents triable issues of fact concerning the genuineness of defendant’s claimed reasons for eliminating the policy. Accordingly, we will reverse the judgment.
Background
At the outset of the events giving rise to this suit, each of the plaintiffs was employed by CSAA as a sales agent (sales representative) at its San Jose-Oakridge branch office. CSAA hired plaintiff Mellen in 1969 at the age of 25, McCaskey in 1971 at the age of 27, and Luke in 1976 at the age of 31. When hired, each signed an “Appointment Agreement.” Although the version signed by Mellen and McCaskey differed slightly from the one signed by Luke, both versions recited that CSAA would pay commissions on new and renewal business in accordance with a “Compensation Plan,” which CSAA reserved the right to modify. Each provided that either party could terminate the agreement either “forthwith” or “without prior notice.”
The compensation plan set out formulas for calculating the commissions plaintiffs would be paid for the various kinds of insurance they were expected to sell. The plan included sales quotas, called “Minimum Sales Quotas” in 1969, and later known as “minimum production requirements,” “MPR’s,” or sometimes “MSPR’s.” In the early versions of the plan these were expressed as a minimum number of new or reinstated policies or memberships the agent was required to sell each month in four categories. By 2001 they had come to be expressed in the dollar value of “New Gross Written Premium,” apparently meaning premiums on newly sold policies. At least some versions of the plan, including the 1969, 2001, and 2005 versions, expressly provided that failure to meet sales quotas was grounds for discipline or termination.
In 1973 CSAA amended the compensation plan to provide that quotas would be reduced by 15 percent for agents who reached the age of 55 with at least 15 years of service, and by a further 25 percentage points (for a total of 40 percent) for agents who reached 60 with 20 years of service. The effect of this provision was to permit agents to work less hard to produce new business without risking termination of employment for failure to satisfy the MPR’s. It remained in effect through 2000. By that time all of the plaintiffs had qualified for the MPR reductions; each had more than 20 years in service to CSAA, and Mellen and McCaskey were 57 years old, while Luke was 55 years four months old.
In early 2001, CSAA adopted a compensation plan that did not provide any reduction in MPR’s for senior agents. Copies of this plan were transmitted to affected employees in late February. The plan included a signature page for agents to acknowledge that it was “Accepted and Approved.” None of the plaintiffs signed it. Instead they engaged counsel, who wrote to CSAA on their behalf stating that elimination of the MPR reductions as to plaintiffs would violate the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.), as well as the existing employment agreement, and that they would not sign it. This triggered an exchange of correspondence culminating in a statement by CSAA that plaintiffs would not be fired for failing to sign the new plan, but that its terms would govern their compensation, and that the prior plan, including the reduction in MPR’s based on age and seniority, was “no longer in effect.”
Plaintiffs continued to work for CSAA. Mellen and Luke at all times continued to produce new business sufficient to meet quota with no adjustment for seniority. McCaskey, however, failed to do so, and CSAA “counseled” him on several occasions beginning in 2002. Each such occasion resulted in issuance of a “Corrective Action Form” with the recital that “[f]ailure to maintain minimum production will result in corrective action, up to and including termination.” On February 22, 2005, CSAA discharged him for the stated reason that he had not met MPR’s for the preceding month.
Meanwhile, CSAA had prepared a newly revised compensation plan, to take effect April 1, 2005. Copies of the plan were apparently transmitted to all agents in February, 2005. CSAA told agents they would have to choose between signing the agreement by its effective date and terminating their employment as of that date. Because the plan still allowed no reduction in MPR’s for veteran employees, Luke and Mellen refused to sign it. As of April 1, 2005, CSAA viewed them as having “left [its] employ.”
The compensation plans generally entitled agents to commissions not only on sales of new policies (new business), but also on renewals of policies originally sold by them. Policies sold by an agent, and the customers who had bought them, were known as “book of business.” Books of business could grow quite large as an agent’s time in service lengthened.
Plaintiffs all declared that prior to 2001 it was CSAA’s standard practice to transfer a departing sales representative’s book of business to other representatives in the same office. From this it may be inferred that, prior to 2001, CSAA would generally owe a renewal commission to someone, whether or not the original seller of the policy was still in its employ. This approach apparently reflected a business model under which sales representatives bore significant if not primary responsibility for customer service. Defendant attempted below to depict this responsibility as a burden on sales representatives from which it sought to relieve them so that they could devote more time and energy to the development of new business. Plaintiffs attempted to depict it as a minimal burden but as an opportunity to generate new business from existing customers, which opportunity CSAA was intent on diverting to hourly employees so as to avoid any obligation to pay commissions on the resulting sales. Whatever part of the truth each side’s depiction may constitute, it is undisputed that beginning in the 1990’s CSAA began to move many of its customer service functions and at least some of its sales functions into telephonic “call centers” where hourly employees fielded calls from existing and potential customers. At the same time, the 2001 compensation plan provided for a category of accounts, known as “House Accounts,” on which “[commissions are not payable to a Sales Representative.” CSAA’s chief witness, Matthew Newcomer, testified in deposition that when plaintiffs were discharged, none of their accounts were reassigned to anyone: “We don’t reassign books of business any longer.” It may be inferred that their existing books of business all became “house accounts,” terminating any liability CSAA would otherwise have for renewal commissions.
Plaintiffs each filed an action against CSAA on June 6, 2005, asserting claims for breach of contract, age discrimination in violation of FEHA, and “Tortious Wrongful Termination—Retaliation.” CSAA answered with a general denial and 36 affirmative defenses. The court ordered the three cases consolidated for trial. CSAA moved against each plaintiff for summary judgment or, in the alternative, summary adjudication on each cause of action. The trial court granted the motions. It entered judgment, and denied plaintiffs’ motions for reconsideration. Plaintiffs filed timely notices of appeal.
Discussion
I. Breach of Contract
A. Introduction
“We summarized the principles governing an appeal of this type in Reeves v. Safeway Stores (2004) 121 Cal.App.4th 95, 106-107 [16 Cal.Rptr.3d 717] (Reeves): ‘On appeal from an order granting summary judgment “we must independently examine the record to determine whether triable issues of material fact exist. [Citations.]” [Citation.] The question is whether defendant “ ‘ “conclusively negated a necessary element of the plaintiff’s case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial.” [Citation.]’ [Citation.]” ([Citations]; see Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 335, fn. 7 [100 Cal.Rptr.2d 352, 8 P.3d 1089] (Guz) [“the issue ... is simply whether, and to what extent, the evidence submitted for and against the motion . . . discloses issues warranting a trial”].) . . . [Citation.] Moreover, “we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his] evidentiary submission while strictly scrutinizing defendants’ own showing, and resolving any evidentiary doubts or ambiguities in plaintiff’s favor. [Citations.]” [Citations.] And a plaintiff resisting a motion for summary judgment bears no burden to establish any element of his or her case unless and until the defendant presents evidence either affirmatively negating that element (proving its absence in fact), or affirmatively showing that the plaintiff does not possess and cannot acquire evidence to prove its existence. [Citations.]’ ” (Mamou v. Trendwest Resorts, Inc. (2008) 165 Cal.App.4th 686, 710-711 [81 Cal.Rptr.3d 406] (Mamou).) In determining whether a triable issue was raised or dispelled, we must disregard any evidence to which a sound objection was made in the trial court, but must consider any evidence to which no objection, or an unsound objection, was made. (See Reid v. Google, Inc., supra, 50 Cal.4th 512, 534; Code Civ. Proc., § 437c, subds. (b)(5), (c), (d).) Such evidentiary questions, however, are subject to the overarching principle that the proponent’s submissions are scrutinized strictly, while the opponent’s are viewed liberally.
“The first step in analyzing a motion for summary judgment is to identify the issues framed by the pleadings. It is these allegations to which the motion must respond by showing that there is no factual basis for relief or defense on any theory reasonably contemplated by the opponent’s pleading.” (6 Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without Trial, § 212, p. 650.) Here plaintiffs alleged that CSAA breached the parties’ contract by (1) discontinuing the MPR reductions after plaintiffs had qualified for those reductions; (2) interfering with plaintiffs’ performance of the contract by making it unreasonably difficult to meet quota; and (3) discharging them for, in McCaskey’s case, failing to meet quota, and in Mellen’s and Luke’s cases, refusing to agree to be bound by the full, unadjusted quotas.
CSAA contended that none of these theories presented an issue of fact for trial because (1) the statute of limitations expired before plaintiffs filed their complaints; (2) the at-will character of the employment entitled CSAA to fire plaintiffs regardless of its grounds for doing so; (3) CSAA in any case had good cause to do so; and (4) CSAA did not breach the contract by eliminating the MPR reductions, because it had satisfied the preconditions giving it the power to do so under the principles applied in Asmus v. Pacific Bell (2000) 23 Cal.4th 1 [96 Cal.Rptr.2d 179, 999 P.2d 71] (Asmus). We do not find the summary adjudication of the contract claims sustainable on any of these grounds.
B. Statute of Limitations
The trial court sustained CSAA’s limitations defense as to two of plaintiffs’ three contract theories. The court understood CSAA to argue that the claims were governed by the four-year statute of limitations applicable to claims based on a written contract. (Code Civ. Proc., § 337, subd. 1.) Since plaintiffs’ complaints were filed on June 9, 2005, the question presented was whether, as a matter of law, the limitations period began to run before June 9, 2001. Defendant argued, and the court concluded, that the period began to run on April 1, 2001, when defendant first adopted a compensation plan omitting die MPR reductions. Plaintiffs argued that this conduct was at most an anticipatory breach, and that they sustained no compensable harm until defendant took detrimental action in violation of the alleged contract.
These contentions raise pure issues of law, which we will address without deference to the trial court’s ruling.
CSAA relies on the “[g]eneral [r]ule” that a contract cause of action runs from the date of the breach. (3 Witkin, Cal. Procedure, supra, Actions, § 520, p. 664.) They contend that the claimed breach with respect to the elimination of the MPR reductions necessarily occurred on the effective date of the 2001 compensation plan, which omitted the provision allowing those reductions. But a breach of contract ordinarily occurs upon the promisor’s failure to render the promised performance. Therefore, to pinpoint the time of an alleged breach for purposes of the statute of limitations, it is necessary to establish what it was the defendant promised to do, or refrain from doing, and when its conduct diverged from that promise. Here the alleged promise, reduced to essentials, was that CSAA would permit plaintiffs to remain in its employ—and thus to draw whatever other emoluments might accompany such employment—under a relaxed sales quota. Stated another way, it was a promise not to fire them for failing to meet the full quotas, so long as they met the relaxed ones. This was in one sense a promise of forbearance, i.e., to refrain from terminating plaintiffs’ employment based upon underproduction; in another sense it could be viewed as a promise to treat them as if they were meeting quota even though they were only meeting the adjusted quota.
CSAA did not breach this promise merely by announcing that it would no longer honor it. As plaintiffs correctly observe, such a repudiation may constitute an anticipatory breach, giving the aggrieved promisee the option of suing immediately. (3 Witkin, supra, Actions, § 527, pp. 674-675.) But it does not accelerate the accrual of a cause of action for limitations purposes; the promisee remains entitled to wait until performance is due and the promisor has failed to perform, i.e., to do the thing promised. (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 489 [59 Cal.Rptr.2d 20, 926 P.2d 1114] (Romano); see id. at p. 488 [“A cause of action for breach of contract does not accrue before the time of breach.”]; Taylor v. Johnston (1975) 15 Cal.3d 130, 137 [123 Cal.Rptr. 641, 539 P.2d 425] [“There can be no actual breach of a contract until the time specified therein for performance has arrived.”].) Here CSAA could have no occasion to perform unless and until a qualifying agent’s sales fell into the zone between the unadjusted quota and the reduced quota. Only then could CSAA be called upon to perform by honoring the latter, and only then could it breach the promise by failing to do so. Unless and until that occurred, defendant’s renunciation of the promise was, at plaintiffs’ election, an “empty threat” to breach the contract. (Taylor v. Johnston, supra, 15 Cal.3d at p. 137.)
In this light, the earliest arguable breach suggested by this record was some time in 2002 when CSAA first counseled plaintiff McCaskey for failing to meet MPR’s. Since Mellen and Luke apparently never fell below the unadjusted MPR’s, no arguable breach appears as to them before 2005, when they were actually discharged. But even in McCaskey’s case the earliest arguable breach occurred well within the four years preceding the filing of his complaint.
CSAA seeks to avoid this logic by depicting the mere adoption of the 2001 plan as injurious to plaintiffs. Thus it describes that act as having “eliminated the . . . right to the [quota] reduction.” Similarly, it alludes to the “ ‘right’ CSAA took away” and “the remov[al] [of] a benefit [plaintiffs] previously had.” These characterizations are inaccurate to the extent they are relevant, and irrelevant to the extent they are accurate. A promisor does not “eliminate” or “take away” the promisee’s rights merely by announcing that he will not perform his promise. The promisee still has his rights; the promisor’s announcement merely gives him the choice between suing immediately to vindicate his rights, and waiting to see whether the promisor will redeem himself when the time for performance comes. The promisor’s repudiation deprives the promisee of no right and subjects him to no obligation; it merely empowers him to declare the contract breached and to seek recompense in court. Unless he exercises that power, the repudiation does not constitute a breach of contract in the eyes of the law, and cannot commence the running of the statute of limitations.
This rule seems particularly apt here, where the four years preceding plaintiffs’ discharges were marked by an uneasy truce, or stalemate, in which each side insisted on its view of the contract while neither was willing to force the issue to a head, except as McCaskey could be said to have done so when he began to fall below the unadjusted quotas. When CSAA finally discharged him in flat violation of the policy, followed shortly by the discharge of Mellen and Luke for refusing to accede to its abolition, plaintiffs moved with alacrity to seek administrative and then judicial relief. To hold their claims barred would be to reduce the statute of limitations to a legally deadly game of maneuver rather than the protective rule of repose it is intended to be.
Similar reasoning establishes that the adoption of the 2001 plan, with its omission of the MPR reductions, inflicted no compensable harm on plaintiffs. As defendant concedes, the statute of limitations cannot ordinarily begin to run until “the plaintiff possesses a true cause of action,” meaning that “events have developed to a point where the plaintiff is entitled to a legal remedy, not merely a symbolic judgment such as an award of nominal damages.” (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 614 [7 Cal.Rptr.2d 859] (Marketing West).) Defendant offers no persuasive reason to suppose that this condition was satisfied here before plaintiffs were fired. The essential effect of the MPR reductions was to shield plaintiffs from being discharged so long as they met the reduced quotas. Had they sued over the mere repudiation of that shield, it is impossible to see how they could have shown any injury. They would still remain employed, and fully compensated, so long as they met the higher quotas applicable to all employees, as Mellen and Luke did, or still had an opportunity to do so, as McCaskey did under defendant’s progressive counseling system. Therefore, CSAA’s renunciation of the MPR reductions caused, and seemingly could cause, no remediable harm unless and until CSAA actually fired plaintiffs, or docked their pay, or otherwise inflicted an injury of a type that could translate into damages in an action for breach of contract. As it was, plaintiffs were fully compensated for their labors up to the day they were discharged, which was less than two years before they filed suit. Prior to that day there was no way of knowing when, or whether, defendant’s renunciation of the policy would have any effect at all on their actual tenure or compensation. They might have continued to satisfy the unadjusted MPR’s until they chose, or were forced by medical or other extrinsic necessity, to stop working entirely. In either event defendant’s refusal to honor the MPR reductions would have proven harmless. For the same reason, they could not have fixed the proof of damages by voluntarily resigning.
CSAA cites Marketing West, supra, 6 Cal.App.4th 603, 614, for the proposition that the statute began to run when defendant presented plaintiffs with the 2001 plan modifications. To some extent this argument seems to overlap the contention, which we address below, that merely by continuing to work plaintiffs accepted the plan modifications, became bound by them, and thus suffered a legally cognizable injury if, as they insist, defendant had no right to impose them. The cited decision may indeed be understood to lend some weight to such a theory. The precise tenor of the plaintiffs’ claims there is unclear, but they apparently alleged that the defendant employer had breached their employment contracts by discharging them without cause. The court held that their causes of action were barred, having accrued at an earlier time when the employer compelled the plaintiffs, under threat of firing, to sign a written agreement converting their employment relationship to one terminable at will. (Id. at pp. 608-609.) At this moment, said the court, the plaintiffs “were harmed by giving up their right to be terminated only for good cause.” (Id. at p. 614.)
This analysis might be on point if plaintiffs here had signed the 2001 agreement and thereby acceded to the destruction of the promised rights. As it is, they explicitly refused to do so. Unless their rights were destroyed by some other means, they were preserved for another day. Nothing in Marketing West suggests that the attempted imposition of a superseding agreement starts the statute of limitations running on a claim for breach of the previous agreement.
Indeed the court’s treatment of the later agreement points to a discrepancy in its reasoning. If the plaintiffs there had predicated their claims on the employer’s forcing them to sign the intermediate agreement, then it might well be that their claims would have accrued when that agreement was signed. But from the court’s somewhat vague account it appears that their claims sounded in wrongful discharge. By logical necessity, then, the plaintiffs relied on a claimed breach of a promise not to discharge them without good cause. The only suggestion of such a promise is in the earlier agreement, which the employer clearly meant the later agreement to supersede. Thus a claim predicated on the earlier agreement necessarily presupposed that the later agreement was ineffectual to have the intended effect. If that was the case, the later agreement inflicted no harm on the plaintiffs, compensable or otherwise, and could not possibly commence the running of the statute of limitations. If, on the other hand, that agreement injured the plaintiffs, as the court supposed, by destroying their erstwhile right not to be terminated without cause, then they had no claim based on that earlier right; the promise sued upon was no longer in effect, and therefore could not have been breached, when they were fired. From a limitations perspective, a cause of action based on that theory had never accmed, and could never accrue.
In short, the later agreement could not inflict the harm on which the court predicated its holding unless it rendered the original promise substantively unenforceable. But if it did that, a claim based on the original promise failed on the merits. The net result of the court’s analysis, seemingly, was to beg the truly dispositive question, which is whether the later agreement actually did excuse the employer from complying with the earlier one. If it did, the plaintiffs had no claim. If it did not, they had a claim. The statute of limitations had no proper place in either alternative.
Even if we thought Marketing West was soundly reasoned, we would see no basis for extending it to the facts here, where plaintiffs never signed a superseding agreement. It is true that CSAA contends plaintiffs were bound by the terms of the 2001 plan whether they signed it or not, but that contention is most appropriately addressed as a defense on the merits. To the extent it becomes a necessary component of the limitations defense, it renders that defense at best superfluous.
For purposes of the present analysis it must be supposed that defendant wrongfully repudiated its undertaking to permit qualifying employees to continue in its employ under a relaxed performance standard. To hold that this repudiation instantly gave rise to a cause of action, even though plaintiffs remained employed by defendant for most of the next four years and were fully compensated throughout that time in accordance with the contract— while making clear their refusal to accede to the attempted destruction of their rights—would unjustifiably penalize plaintiffs for giving defendant the opportunity to retract the repudiation if and when the issue of compliance actually arose. The statute of limitations is supposed to be a shield by which defendants are protected against stale claims, faded memories, and the nasty surprise of a long-dead grievance brought back to life. (See Davies v. Krasna (1975) 14 Cal.3d 502, 512 [121 Cal.Rptr. 705, 535 P.2d 1161].) It is not supposed to operate as a minefield on which meritorious claims are obliterated by technicalities. Nor is it a force of nature falling blindly on the diligent and indolent alike. It is an act of man and, as such, is supposed to reflect that faculty by which man distinguishes himself, when he does, from the rest of nature: his reason. To accept defendant’s limitations defense here would dishonor that faculty.
C. Breach: Discharge in Violation of Promise to Honor Reduced Quotas
1. Introduction
Plaintiffs’ chief claim of breach is that CSAA failed to perform a promise, which it held out to them continuously for some 28 years, to employ them, once they reached age 55 with 15 years in service, under a relaxed standard of job performance. It is undisputed that all three plaintiffs fulfilled the stated conditions before the promise was renounced, and by the time of their discharge had satisfied the conditions for a further reduction in quotas. None of them, however, was ever permitted to enjoy the reduced quotas, and each was eventually discharged either for falling below the unadjusted quotas, or for insisting upon the right to do so.
Defendant’s motion for summary judgment, as it bore on the merits of this theory of recovery, could be understood to assert that (1) CSAA was entitled under the rule of Asmus, supra, 23 Cal.4th 1, to nullify the promised reductions without incurring contractual liability; (2) recovery is precluded by defendant’s contractually reserved rights to terminate the employment without cause and to modify the compensation plan; and (3) plaintiffs consented to the rescission of the MPR reductions, making it mutual, by continuing to work after CSAA adopted the 2001 compensation plan.
The trial court did not reach these arguments as independent grounds for its ruling, but did adopt at least the third, in substance, as part of its analysis of the statute of limitations defense. We find none of them sufficient to warrant judgment for CSAA as a matter of law.
2. Power to Terminate Obligation
Defendant does not dispute, at least for present purposes, that its adoption of the policy granting reduced quotas to senior agents gave rise to a contractual duty toward plaintiffs. Its chief contention is that it was relieved of that duty under the rule of Asmus, supra, 23 Cal.4th at page 6. The employer there had adopted a “ ‘Management Employment Security Policy’ ” committing it “ ‘to offer all management employees who continue to meet our changing business expectations employment security through reassignment to and retraining for other management positions ....’” (Id. at p. 7.) The policy stated that it would remain in effect “ ‘so long as there is no change that will materially affect [the employer’s] business plan achievement.’ ” (Ibid.) Four years later the employer announced that “industry conditions” might require it to discontinue the policy. (Ibid.) About two years after that, the employer announced that it would terminate the policy in about six months. (Ibid.) The plaintiffs were laid off, apparently, at least two years after the employer declared the policy ended. (Id. at pp. 7, 18.) They brought suit in a federal district court, which granted summary judgment in their favor, holding that under the circumstances, the employer lacked the power to unilaterally end the retention policy. On appeal, the Ninth Circuit certified to the California Supreme Court the question whether, under California law, the employer’s “ ‘unilaterally adopted policy,’ ” having “ ‘become a part of the employment contract,’ ” could “thereafter” be “unilaterally” “rescinded]” by the employer, “even though the specified condition has not occurred.” (Id. at pp. 5-6 & fn. 2.)
A divided Supreme Court held that the employer could unilaterally terminate its duty to honor the policy provided certain circumstances were present: “An employer may unilaterally terminate a policy that contains a specified condition, if the condition is one of indefinite duration, and the employer effects the change after a reasonable time, on reasonable notice, and without interfering with the employees’ vested benefits.” (Asmus, supra, 23 Cal.4th at p. 6.)
CSAA contends that the principles applied in Asmus gave it “the right to unilaterally eliminate the MPR reduction.” Plaintiffs contend that Asmus is inapplicable because the policy here was not subject to a condition of indefinite duration but instead took effect at a definite time, i.e., when plaintiffs reached age 55 with 15 years in service. Alternatively, they contend that their right to the reduced MPR’s was a vested right not vulnerable to interference by CSAA. We find neither side’s treatment of the case sustainable.
The general question before us is the same one presented in Asmus: how long must an employer honor a unilaterally adopted policy conferring an employment benefit? Beyond this, the two cases have little in common. In particular, the feature deemed most critical there was that the only indication of the intended duration of the employer’s undertaking was its statement that it intended to grant the promised benefit as long as there was “ ‘no change . . . materially affect[ing]’ ” its “ ‘business plan achievement.’ ” (Asmus, supra, 23 Cal.4th at p. 7.) This was a “ ‘condition’ ” of “indefinite duration,” the court reasoned, in that it “did not state an ascertainable event that could be measured in any reasonable manner.” (Id. at p. 17.) Therefore the promise was one, in effect, to perform for an undefined period; as such it was terminable after a reasonable time. (Ibid.) By honoring the policy for six years, the court held, the employer had satisfied this condition. (Id. at pp. 17-18.) It was therefore entitled to terminate the policy on reasonable notice, and since it had done so, and its conduct infringed no vested right, it could not be liable to the plaintiffs in contract. (Ibid.)
Here the employer also failed to explicitly set an end date for its performance of the promise. But unlike the policy in Asmus, the employer’s promise here, and the circumstances in which it was made, readily suggest an implied-in-fact durational term by which CSAA’s duty to honor the policy would end, as to a qualifying employee, either (1) at age 65, (2) after 10 years, or (3) upon the employee’s retirement. Such an intent is suggested, first, by the express terms of the promised benefit. A worker earned it only by continuing in CSAA’s employment to age 55. At that point the worker would be entitled to a 15 percent reduction in MPR’s for five years, i.e., to age 60, at which point a further 25 percentage point reduction would be granted, bringing the total reduction to 40 percent. One reasonable interpretation of these provisions is that the second level of reductions was to be enjoyed for a like period as the first, i.e., five years, so that the policy would operate to age 65, when the worker reached what might reasonably be viewed as the usual retirement age.
This view receives further support from the purpose of the policy, both from CSAA’s point of view and that of employees. Although CSAA attempts to offer various other reasons for its adoption of the policy—which we discuss below in addressing the claims for employment discrimination—the most obvious function of the policy was to induce sales representatives to remain in CSAA’s employ for their entire working careers. The record does not indicate the extent to which a representative’s book of business might be “portable,” i.e., might follow him to another insurance carrier were he to leave CSAA; nor does it indicate the rate at which his customers might migrate elsewhere on their own if and when the agent from whom they purchased their policies stopped handling their accounts. Whatever the particulars, the policy to all appearances was intended to, and did, induce persons in plaintiffs’ position to remain loyal CSAA employees to the ends of their working lives. To do this it promised, in plaintiffs’ words, to “ease” them “into retirement” by softening the demands of their jobs for the last stage of their careers. Such a benefit would only achieve this goal if it remained in effect until they might reasonably be expected to retire.
Indeed we see nothing in this record that would foreclose an interpretation under which the policy was intended to permit an agent to continue working under the reduced MPR’s for as long as he or she was willing and able to do so. This would not produce the kind of perpetual, inescapable burden, potentially threatening an employer’s very survival, that the courts feared in Asmus and cases cited there.* ** By its terms the policy could only operate as long as a qualifying agent remained able to meet quota, which was (after age 60) 60 percent of the full quota. The policy thus permitted him only to slow down to that degree; he still had to produce the specified quantum of new business or be subject to discharge for underproduction. At some point the natural course of events would render that impossible, so that even the most loyal (or stubborn) agent would be forced to resign the position.
It is of course inappropriate for us to choose from among these potential interpretations of the contract. It is enough for present purposes that the structure of the benefit, coupled with its purpose, would readily yield a finding that the policy was to be honored at least until the agent qualifying for it reached 65. This possibility, if borne out at trial, will take the case outside the rule of Asmus, which applies only where there is no basis to determine the parties’ actual intent as to duration.* ****** That decision necessarily depends on such a condition, for where the parties’ actual intent can be ascertained, it must govern. (See Civ. Code, § 1636.) The Asmus case implicitly acknowledged this fundamental principle, as applicable in the context of durational terms, by citing Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) 69 Cal.2d 713, 731 [73 Cal.Rptr. 213, 447 P.2d 325] (Consolidated Theatres), for the crucial proposition that a contract of “indefinite duration” is “terminable after a reasonable time on reasonable notice.” (Asmus, supra, 23 Cal.4th at p. 17.) Under Consolidated Theatres, and the principles enumerated there, a court may limit a contractual duty to a judicially determined “reasonable time” only after other tools of construction have failed to establish an intended duration.
The court in Consolidated Theaters described a three-stage inquiry in which the first step is the obvious one: to consult the contract itself. If it specifies the duration of the duty at issue, that will ordinarily end the matter. (Civ. Code, §§ 1638, 1639.) If the agreement does not plainly state when the duty will end, its duration must be “judicially determined in accordance with established rules of construction.” (Consolidated Theatres, supra, 69 Cal.2d at p. 724.) The question then is “whether the intention of the parties as to duration can be implied from the nature of the contract and the circumstances surrounding it.” (Id. at p. 725; original italics.) The first two steps seek, in other words, to ascertain the parties’ actual intent, from circumstantial evidence if necessary. (See Civ. Code, §§ 1636, 1647.) If that succeeds, the intent thus found will govern. (See Consolidated Theatres, supra, 69 Cal.2d at p. 727.) However, “in some cases the nature of the contract and the totality of surrounding circumstances give no suggestion as to any ascertainable term. In such cases the law usually implies that the term of duration shall be at least a reasonable time, and that the obligations under the contract shall be terminable at will by any party upon reasonable notice after such a reasonable time has elapsed.” (Id. at pp. 727-728, fn. omitted, italics added.)
In other words, the court first consults the terms of the contract; then the circumstances and other indicia of intent; and only when those steps fail to establish a durational term does the court impose a judicially determined “reasonable time” limitation on the duty at issue. This last step is a manifestation of the broader principle that when any essential term has been omitted from the contract, and the parties’ intent concerning that term cannot otherwise be ascertained, the law will supply a reasonable term—provided the omission was not so grievous as to prevent the formation of a contract. (See Rest.2d Contracts, § 204; 1 Witkin, Summary of Cal. Law, supra, Contracts, § 751, pp. 841-842; cf. Civ. Code, § 1655.)
It follows that before it could properly rely on the “reasonable time” rule applied in Asmus, CSAA had to establish that no durational term could be derived from the terms and circumstances of the MPR reduction policy. It did not attempt such a demonstration. Given the facts to which we have already alluded, this failure was fatal to its claim that it was entitled as a matter of law to unilaterally nullify the policy as to plaintiffs.
Moreover, even if CSAA had established that the rule of Asmus governed the case, we fail to see how the present record can be read to conclusively establish that CSAA only sought to terminate the duty in question “after a reasonable time.” (Asmus, supra, 23 Cal.4th at pp. 6, 17; see id. at pp. 11, 14.) The closest defendant came to acknowledging this question in the trial court was to observe that the policy “had been in place since 1973,” i.e., for 28 years. But the question is not how long ago the promise was made-, it is how long the promisor is required to perform. In Asmus these two periods were essentially coterminous, or at least commenced simultaneously, because the policy burdened the employer with a duty to the plaintiffs the moment it was announced—or more precisely, the moment it was accepted and made binding by the employees’ continuing to work. (See Asmus, supra, at p. 10, quoting Chinn v. China Nat. Aviation Corp. (1955) 138 Cal.App.2d 98, 99-100 [291 P.2d 91] [noting trend in law to treat “ ‘offer [of] additional advantages to employees as being in effect offers of a unilateral contract which offer is accepted if the employee continues in the employment’ ”].) Because the policy offered in Asmus was of a type that could be performed immediately, it burdened the employer from the moment of its announcement forward until the employer could acquire, and exercise, the power to terminate the resulting duty of performance. Thus, in commenting on how long the policy had been “in place” and “maintained,” the Asmus court was also describing how long the resulting duty had been performed. The employer had performed the promise for six years, and apparently could not be said to have actually breached it—by laying off the plaintiffs—until some two years after that, eight years after performance commenced. In essence, the court held, the employer had carried the burden of its promise long enough.
The facts here differ starkly. So far as this record shows, CSAA assumed no immediate burden by announcing the MPR reductions. It assumed no general immediate obligation to an entire class of workers. It obligated itself to do nothing until a worker fulfilled the policy’s conditions by remaining for at least 15 years and approaching the typical retirement age. CSAA thus received the immediate benefits of a loyal, stable workforce, solely on the promise of a future reward. Then, shortly after plaintiffs qualified for the promised benefit—and before any of them actually sought to take advantage of it—defendant renounced the duty to perform it.
Although it is conceivable that additional facts, not reflected in this record, might sustain a different conclusion, nothing before us would permit a court to conclude that a “reasonable time” had passed, at least as to plaintiffs, so as to permit defendant to repudiate their undertaking without contractual liability. Determining what constituted a reasonable time under the circumstances would seem to require consideration of the facts we have already noted, i.e., that the benefit is readily understood as a way to ease plaintiffs into retirement, that plaintiffs had in fact devoted their careers to CSAA’s service in anticipation of the benefit, and that CSAA had therefore received everything it bargained for while yielding nothing whatever in return.
So understood, it would seem patently unreasonable to refuse the promised benefit when CSAA did. If there is any sense in which CSAA ever actually performed the promised duty as to plaintiffs, it was only in the purely hypothetical sense that there was a period between their 55th birthdays and the cancellation of the policy when plaintiffs could have invoked it if they had chosen to do so. Even that purely theoretical benefit was short lived. Mellen and McCaskey had only reached their 55th birthdays about two years, and Luke only five months, before CSAA renounced the policy. The record contains no evidence concerning the extent to which CSAA may have honored the policy as to other agents, and we therefore need not consider the relevance of such evidence. On this record there is simply no basis to conclude that CSAA had honored the policy for a reasonable time when it renounced its undertaking, denied plaintiffs its benefits, and ultimately discharged them for invoking it.
The order granting summary judgment on the contract claims cannot be sustained on the authority of Asmus.
3. Effect of At-will and Revision Clauses
CSAA contends that because plaintiffs’ employment was terminable at will, no liability could be predicated on discharging them for failing to satisfy, or agree to, the full production quotas. Plaintiffs reply that their employment was not terminable at will, despite express recitals to that effect in the various appointment agreements and employee handbooks promulgated by defendant over the years. CSAA responds that plaintiffs’ argument rests at best on implied terms, which cannot be permitted to vary the express terms of the contract, and that in any event there was good cause to terminate plaintiffs’ employment. CSAA also notes that it expressly reserved the right to modify the terms of the compensation plan, which is all it did when it abolished the MPR reductions.
We do not find satisfactory either side’s framing of the issues. The key terms of the parties’ agreement, as presently relevant, were that plaintiffs would work for CSAA for so long as both parties were satisfied with the arrangement; that CSAA would compensate plaintiffs in accordance with the compensation plan, which it reserved the right to modify at any time; and that if plaintiffs continued to work for CSAA to age 55 they would be entitled to remain employed under a relaxed production quota. As framed by the parties, the question is whether to give effect to their express affirmations that the employment was terminable at will. But this sweeps too broadly. It may indeed be true, and can in any event be assumed for present purposes, that the employment was “at will” in the sense that CSAA was generally entitled to discharge plaintiffs without having to establish good cause to do so. It does not follow, however, that it could discharge them—as it explicitly did—for failing to meet production quotas after they had qualified for the promised reductions, or for refusing to relinquish the right to those reductions. The governing question is not CSAA’s general power to discharge plaintiffs without cause, but its power to discharge them, as it expressly did, for a reason it had promised not to use as a basis for their discharge.
This view depends not on implied terms but on harmonizing express ones. A contract is to be construed as a whole, “so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Civ. Code, § 1641.) And where there are “[s]everal contracts relating to the same matters, . . . and made as parts of substantially one transaction,” they “are to be taken together.” (Civ. Code, § 1642.) Here, the at-will clause and the promise of MPR reductions must be read together as parts of a single contract. If the at-will clause empowered CSAA to discharge employees for failing to meet the full quotas, notwithstanding their having qualified for the reduced ones, it would render the promise of reduced quotas wholly illusory. This would deny effect to that promise, offending the principle that where two provisions conflict, the resulting “[rjepugnancy . . . must be reconciled, if possible, by such an interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole contract.” (Civ. Code, § 1652; see id., § 1643 [contract should “receive such interpretation as will make it. . . operative . . . and capable of being carried into effect, if it can be done without violating the intention of the parties”]; cf. id., § 1653 [terms found to be “wholly inconsistent” with contract’s “nature, or with the main intention of the parties, are to be rejected”].) Here the conflict can be resolved by reading the MPR reductions as an exception to the general rule of at-will employment. In that view, the contract may permit CSAA to discharge plaintiffs for no reason, or even for a bad reason, but it does not permit their discharge for the reason that they had invoked, or insisted on the right to invoke, the MPR reductions.
Similarly, the reserved power to modify the compensation plan does not pose an insuperable barrier to plaintiffs’ recovery because it can easily be understood as qualified by the obligation to honor the promise of reduced MPR’s as to those representatives who had qualified for it—i.e., earned it—while it was still in effect. We do not understand plaintiffs to contend that they were entitled to the actual MPR’s in effect before the 2001 plan was adopted. Defendant remained free to revise the plan as a whole. For that matter, so far as plaintiffs were concerned, defendant was free to drop the MPR reductions as they might otherwise apply in the future to employees who had not yet qualified for them. But defendant was not free to eliminate them as to plaintiffs without satisfying the conditions set forth in Asmus, including that plaintiffs be permitted to enjoy the benefits thus earned for the time contemplated by the parties, or if none can be established, for a reasonable time.
4. Consent by Continuing to Work
Defendant contends that whatever effect might otherwise have flowed from its renunciation of the promise of reduced MPR’s, plaintiffs consented to the rescission of that promise by continuing to work after CSAA renounced that promise and told plaintiffs, through counsel, that it considered them bound by the full quotas. Defendant relies on DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629, 636 [69 Cal.Rptr.2d 300] (DiGiacinto), which applied the general rule that when an employer announces new terms of employment, the announcement constitutes a unilateral offer of employment on the new terms, which the employee accepts by continuing to work. The same rule played an integral role in Asmus, because it was the mechanism by which the retention policy there became contractually binding on the employer. (Asmus, supra, 23 Cal.4th at pp. 9-11.) As explained in DiGiacinto, however, the rule depends on the at-will character of the employment: “[A]s a matter of law, an at-will employee who continues in the employ of the employer after the employer has given notice of changed terms or conditions of employment has accepted the changed terms and conditions.” (DiGiacinto, supra, 59 Cal.App.4th at p. 637.) The rationale is that the announcement of new terms “constitutes, in legal effect, both the termination of the old contract and the offer of a new contract.” (Ibid., italics added.) It follows that if the employer was not free to terminate the old contract, the worker cannot bind himself to its abrogation merely by continuing to work, at least where he makes explicit his lack of assent to the new terms.
Here, as discussed above, when CSAA announced the contested terms it was already—so far as this appeal is concerned—under an obligation not to discharge plaintiffs for failing to meet production requirements, unless they fell below requirements as reduced in accordance with the pre-2001 policy. The rationale adopted in DiGiacinto therefore has no application. The court there noted that some courts had reached a result similar to its own by equitable rules such as estoppel. (DiGiacinto, supra, 59 Cal.App.4th at p. 636, citing Facelli v. Southeast Marketing Co. (1985) 284 S.C. 449 [327 S.E.2d 338, 339] and Nichols v. Waterfield Financial Corp. (1989) 62 Ohio App.3d 717 [577 N.E.2d 422, 423].) But those rationales would fare even worse here, since there is no basis to find either that plaintiffs’ conduct was inequitable or that CSAA’s was equitable. In contrast to DiGiacinto and some of the cases there cited, plaintiffs’ conduct was entirely unequivocal. They positively asserted the continuing right—which CSAA’s argument on this point assumes—to the reduced quotas. CSAA could not have been misled. Plaintiffs’ continuation in employment was no stronger a basis to bind them to CSAA’s interpretation of the contract than CSAA’s continuing to employ them was the reverse.
Moreover, unlike the employer in Asmus, CSAA sought plaintiffs’ express consent to the modifications it sought to impose. Plaintiffs—through their attorney—explicitly refused to give that consent. The plaintiff in DiGiacinto also apparently refused to sign a document acknowledging the new terms, but since his employment was entirely at will he was powerless to refuse the employer’s terms; his only choices were to come to work on the stated terms, or stop coming to work. His situation with respect to the modified wage was no different than that of a brand new employee who first appears on the job declaring that he expects to be paid twice what the employer had offered him. There is no mechanism by which such an announcement can ripen into a contract unless the offeror somehow assents to it. If the employee nonetheless commences work he has either accepted the employer’s terms or, perhaps, taken himself entirely outside the contract, so as to be entitled only to relief in equity, or to no relief, for the services he performs. But all this assumes that the employer was free to dictate the terms on which the work would be done, if done at all. Here, the employer was not free—or at least has not been shown to have been free—to discharge the workers for refusing to accede to the new terms. Therefore the rationale underlying the result in DiGiacinto does not apply.
This case may be further distinguished from DiGiacinto and other cases cited by defendant on the ground that the rights at issue here, when promised, would by their nature only accrue in the future, whereas the right the plaintiff claimed in DiGiacinto—to be paid at the rate specified in his original employment agreement—accrued only as he worked. Nothing in the facts suggests that the plaintiff had been promised, or had earned, a right to any particular salary for future work; his right to any particular salary was fixed only as to work he had already performed. Here plaintiffs contend that CSAA was under a duty which it must perform for either a time derived from the contract, or for a reasonable time. It was only free to stop performing the posited duty after that time had elapsed. It could not shed that obligation by the simple expedient of compelling employees who earned the benefit to quit and sue. DiGiacinto would have more nearly resembled this case if the employer had promised to pay a stated wage for a specified time, and had attempted to alter the pay rate before that time had elapsed. In that case, it is far from clear that the employee, merely by reporting to work, would accede to a rescission of the employer’s original undertaking—particularly if he did what plaintiffs did here and explicitly asserted the right to be paid at the originally promised rate. In those circumstances the worker would have been quite right to contend, as he did, that he was entitled to mitigate damages by continuing to work under protest, and to sue later for the shortfall in compensation. As it was, he had no entitlement to any particular salary going forward and his mere failure to expressly accede to the employer’s modification was ineffectual to prevent it from taking effect.
D. Breach: Termination Without Cause
Plaintiffs’ second contract theory is that their employment was terminable only for cause and that defendant lacked the requisite cause, such that the termination of plaintiffs’ employment was a breach of contract. The trial court ruled that there was no triable issue of fact on either of these points—that as a matter of law, plaintiffs’ employment was terminable at will, and defendant had good cause to terminate it. As we have already held, the most plausible interpretation of the contract on the present record is that although CSAA had the general right to terminate the employment without cause, that right did not extend to terminating plaintiffs for underproduction so long as they conformed to the relaxed quotas CSAA had promised them. There is no dispute that CSAA discharged plaintiff McCaskey for failing to satisfy the unadjusted quotas, and discharged plaintiffs Luke and Mellen for refusing to agree to comply with those quotas. The contract can be understood as prohibiting CSAA from discharging them for that conduct. Thus, while the case really does not fit within the framework of a typical discharge-without-good-cause claim, plaintiffs have presented a colorable claim that defendant violated a promise not to discharge them for the reasons which actually led to their discharges.
E. Interference with Performance
Plaintiffs’ third breach-of-contract theory is that defendant breached the employment contract by “unreasonably interfering with [plaintiffs’] job responsibilities.” The gist of this claim, as we understand it, is that defendant made it unreasonably difficult for plaintiffs to perform their contracts, i.e., to meet the quotas they were required to meet, by diverting sales opportunities away from them by means such as establishing an in-house staff of order takers, giving them priority on incoming calls, redirecting plaintiffs’ callers to the order takers, permitting the order takers to solicit plaintiffs’ existing clients, and making direct sales via the Internet.
The legal principle underlying the claim is that “[prevention or hindrance of performance operates not only as an excuse for the [promisor’s] performance [citations], but is also a breach, giving that party the affirmative remedies for breach. [Citations.]” (1 Witkin, Summary of Cal. Law, supra, Contracts, § 851, pp. 937-938.) We question the applicability of this principle to the facts alleged by plaintiffs, but we have no occasion to examine the question further because CSAA offered no challenge to this theory in the trial court other than to lump it together with plaintiffs’ other contract claims and assert that all were barred by the statute of limitations. The trial court agreed, but without acknowledging the quite different facts on which this claim is based. Defendant seeks to defend this approach on appeal by asserting that all of the claimed acts of interference “were merely aspects of the 2001 [Compensation] Plan,” which CSAA was entitled to adopt, and to which plaintiffs acceded by continuing to work. Defendant asserts more specifically that the “terms” plaintiffs accepted by continuing to work after 2001 “included fixed ‘sales quotas’ . . . , redirection of renewal calls to ‘call centers’ . . . , and increased internet sales.”
We have already rejected the limitations defense on grounds that seem equally applicable here. Likewise we have rejected the contention that plaintiffs bound themselves to the 2001 plan merely by continuing to work. Moreover, we detect no substance in CSAA’s attempt to depict the challenged measures as contractual “term[s]” to which plaintiffs did or could assent. CSAA attempts to justify this characterization by stating parenthetically that an “aspect of the 2001 Plan” was “to relieve representatives of renewal work and encourage the development of new business.” But this statement, and CSAA’s entire argument on this point, conflates its business strategy with the parties’ contract by using the term “plan” to refer to both. This is made possible only because CSAA has traditionally entitled its commission schedule, and associated terms, the “Compensation Plan.” In the earlier parts of its brief CSAA uses the phrase “2001 Plan” repeatedly—more than two dozen times, in fact—to mean the 2001 compensation plan. It is only in discussing the interference claim that CSAA uses “2001 Plan” to mean what its witness, Newcomer, referred to in deposition as a “business model,” “sales model,” or “distribution model,” which was apparently intended to place increasing reliance on call centers and direct marketing through media including the Internet. There is no suggestion that anything arguably part of plaintiffs’ employment agreement with CSAA so much as alluded to this “model” or otherwise called upon signatories to accede to the conduct that forms the basis for plaintiffs’ interference claim. That CSAA managers may have seen some connection between their “distribution model” and their agreements with plaintiffs could hardly make the former part of the latter. So far as this record shows, CSAA’s business strategy has nothing whatever to do with any contract issue.
Defendant also seeks to justify the lumping together of plaintiffs’ contract theories on the ground that “plaintiffs’ ‘interference’ and ‘vested rights’ theories . . . both centered around a single occurrence: implementation of the 2001 Plan with its elimination of the MPR reduction.” In other words, the interference claim stands or falls with the discontinuation-of-benefits claim because both arose from the “implementation” of the 2001 plan. Again, this assertion conflates the contract with some larger business strategy. Nor do we see any inherent relationship between the two contract theories. The gist of the interference claim is that CSAA drew potential customers away from plaintiffs and thereby made it unreasonably difficult for plaintiffs to meet their quotas. Such a claim does not logically require, and can be eas