Haggard v. Kimberly Quality Care, Inc. (39 Cal. App. 4th 508, 1995)

Opinion

COTTLE, P. J.

Plaintiff Cynthia Haggard alleged that Kimberly Quality Care, Inc., and Kimberly Home Health Care, Inc. (collectively KQC) breached an implied contract to terminate her employment only for cause, and that KQC and certain employees discriminated against her on the basis of disability. A jury awarded plaintiff damages of $250,000 on her breach of contract claim, but no recovery on her disability discrimination claim. KQC appeals from the portion of the judgment relating to the implied contract claim, contending that the trial court erred in admitting evidence to contradict the terms of a written employment contract. Plaintiff cross-appeals from the portion of the judgment relating to her disability discrimination claim, raising issues relating to the statute of limitations and jury instructions. We reverse the portion of the judgment relating to the implied contract claim, and affirm the portion of the judgment regarding the disability discrimination claim.

Due to the distinct nature of the claims made by each party on appeal, we will summarize the factual background regarding the appeal and cross-appeal separately.

I. KQC’s Appeal

A. Factual Background Regarding Implied-in-fact Contract

Quality Care, Inc., hired plaintiff as a field staff supervisor in its Monterey branch office in January 1986. In 1987 Quality Care, Inc., promoted plaintiff to the position of branch manager. In 1988 Quality Care, Inc., merged with Kimberly, Inc., to form KQC. KQC employed plaintiff after the 1988 merger.

1. The 1989 Agreement

On June 8, 1989, plaintiff signed an “Employment and Confidentiality Agreement” (Agreement or 1989 Agreement) with KQC. The Agreement contained provisions regarding access to trade secrets, confidentiality, customer lists, and termination of employment. For purposes of this appeal, the crucial provisions are paragraphs 9 and 15, which provide as follows: “9. Termination. It is understood that the employment relationship between Employee and the Company is at the mutual consent of both parties. Accordingly, either Employee or the Company can terminate the employment relationship at will, at any time, with or without cause or advance notice. It is further understood that no employee or representative of the Company, other than the president of Company, has any authority to enter into an agreement for any specified period of time, or to make any agreement contrary to the foregoing. Moreover, the parties agree that there are no express or implied agreements contrary to the foregoing, and the president of the Company, can only enter into an agreement contrary to the foregoing if the president does so in a formal written agreement that is fully executed by the president and Employee. [Paragraphs 10-14 omitted.] [U 15. Final Agreement. This Agreement supersedes all previous agreements, whether written or oral, express or implied, relating to the above subject matter, and shall not be changed or subject to change orally.”

Plaintiff testified that she read the Agreement before she signed it. She also testified that she “had some reluctance to sign the document,” but did so understanding that her continued employment with KQC was contingent upon signing it.

2. The 1991 Employee Handbook

On December 5, 1991, plaintiff signed and dated an acknowledgment of her receipt of a KQC associate orientation handbook. The receipt provides: “The policies and guidelines in this handbook have been adopted voluntarily by Kimberly Quality Care and are not intended to give rise to contractual rights or obligations, nor to be construed as a guarantee of employment for any specific period of time or any specific type of work. You are an ‘at-will’ associate, meaning that your employment is for no definite period of time and may be terminated by you or by KQC at any time and for any reason. Furthermore, KQC reserves the right to interpret, amend, modify or cancel and withdraw any or all sections or provisions of this handbook at any time. H] I certify that I have received a copy of the Kimberly Quality Care Associate Orientation Handbook. I acknowledge that I am responsible for knowing and adhering to the Policies and Procedures of Kimberly Quality Care while I am working as an associate of the company.” Plaintiff testified that the handbook was distributed to all administrative employees nationwide in 1991.

3. Termination of Plaintiff s Employment

Slightly over six weeks later, on January 20, 1992, KQC terminated plaintiff’s employment. The parties vigorously dispute the reason for this termination. Briefly, KQC contends that it decided to terminate plaintiff’s employment as branch manager because plaintiff knowingly allowed an unlicensed nurse to work on a case involving a ventilator patient, in violation of KQC’s policies and the state regulations governing KQC. Plaintiff contends that she was blamed for “another employee’s clinical error,” and that KQC discriminated against her on the basis of her disability (multiple sclerosis), which had been diagnosed in 1990.

4. This Litigation

Plaintiff filed her original complaint in this case on March 31, 1992, alleging causes of action for breach of contract, wrongful discharge, employment discrimination, intentional and negligent infliction of emotional distress, and invasion of privacy. After various pretrial proceedings, the breach of implied contract and disability discrimination claims were tried to a jury beginning on September 13, 1993.

In her cause of action for breach of an alleged implied contract, plaintiff claimed that the termination of her employment violated an implied-in-fact contract that her employment could be terminated only for good cause. In support of her implied contract theory, plaintiff offered evidence of factors such as the duration of her employment, commendations, promotions, raises, annual performance ratings, and KQC’s personnel policies and practices.

Despite KQC’s consistent efforts to have evidence of the alleged implied-in-fact contract excluded, the evidence was admitted and the question of the implied contract was submitted to the jury.

During its deliberations, the jury asked the trial court, “Does an ‘at-will’ contract of employment ‘super[s]ede’ an ‘implied’ contract, legally?” The court responded: “Somebody could write a long Law Review article on this. I’m not kidding you, somebody could write a long review, a long Law Review article in response to this, because there are so many possibilities and so many factors that you have to take into account before you can say yes or no. [

Where, as here, the trial court’s interpretation of the agreement did not turn on the credibility of extrinsic evidence and did not require a resolution of a conflict in that evidence, we make an independent determination as to whether the agreement was integrated. (See Gerdlund v. Electronic Dispensers International, supra, 190 Cal.App.3d at p. 270.)

This case must be distinguished from cases in which the document at issue did not contain both an at-will termination provision and an integration clause. (See, e.g., Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514 [273 Cal.Rptr. 296].)

On January 8, 1986, while employed by Quality Care, Inc., plaintiff signed a contract entitled “Restrictive Covenant and Confidentiality Agreement.” This contract stated: “This agreement contains the entire restrictive covenant and confidentiality and understanding and agreement between the parties. This agreement may not be orally changed, but may only be modified by a subsequent agreement in writing signed by the party against whom enforcement of any waiver, change or modification is sought. Nothing herein shall be construed as constituting employment for a stated term; the parties intend employment to be at will.” On January 24, 1986, plaintiff signed another agreement stating that “Nothing herein shall be construed as constituting employment for a stated term because I understand that my employment is at will by the Company.” In February 1987, plaintiff signed another “Restrictive Covenant and Confidentiality Agreement,” containing the same provision.

Because we find that the handbook and receipt did not modify the termination provision of the 1989 Agreement, we need not address the parties’ dispute as to whether these documents could together constitute a “formal written agreement that is fully executed by the president and Employee,” as required by paragraph 9 of the 1989 Agreement for modification of that paragraph’s terms.

See footnote, ante, page 508.