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Court of Appeal, First District, Division 3, California.

Milad I. HANNA, Plaintiff and Appellant, v. SECURITY PACIFIC BUSINESS CREDIT INC., et al., Defendants and Respondents.

No. A049182.

Decided: May 31, 1991

Mark I. Schickman, Heather Bussing, Elisabeth Brandon, Fox and Grove, Chartered, San Francisco, for plaintiff and appellant. John C. Cook, David A. Pursley, Sarah E. Robertson, Sheppard, Mullin, Richter & Hampton, San Francisco, for defendants and respondents.

Security Pacific Business Credit Inc., (Security) terminated Milad Hanna when it closed its branch office in San Francisco where Hanna worked as a regional credit manager.   Hanna, however, believed he had been terminated in retaliation for complaining about Security's allegedly discriminatory lending practices.   Consequently, he sued Security for wrongful termination in violation of public policy, breach of contract, breach of the implied covenant of good faith and fair dealing, and national origin discrimination in violation of California's Fair Employment and Housing Act (FEHA).   The trial court granted Security's motion for summary judgment 1 on all causes of action.   After the trial court denied his motion for reconsideration, Hanna appealed.

We reverse the summary judgment in favor of Security on the causes of action for breach of contract and breach of the covenant of good faith and fair dealing.   In all other respects, we affirm.



Hanna was born in Egypt in 1942.   He moved to the United States in 1970 and became a citizen of this country in 1975.   In 1980, while Hanna was working for the Bank of California, one of his former colleagues actively recruited him to join Security as an account executive.   This former colleague and Security's then regional manager both told Hanna he would never have to worry about losing his job in a corporate reorganization at Security, because Security was much more stable than the Bank of California.   In reliance on that promise, Hanna accepted Security's offer to work as an account executive and senior auditor.

During his first six years at Security, Hanna consistently received good to excellent annual reviews and regular promotions.   By 1986, he had been promoted to vice president and regional credit manager in the San Francisco office.   That same year he received an exceptional 18.9 percent salary increase and a discretionary bonus based on 1985 performance.   In recommending the raise and bonus, Hanna's supervisors described his performance as “exemplary” and suggested that a salary increase was necessary to prevent a competitor from luring him away.

According to Hanna, his fall from grace began in June of 1986 when he had a run-in with upper management concerning a loan to a naturalized citizen.   The borrower—Red Apple Companies, Inc. of New York—applied for a $10 million loan to help finance its buy out of Gristedes Supermarkets.   John Catsimatidis, Red Apple's president and sole shareholder, had agreed to provide a $1 million personal guarantee on the loan.

The loan originated in Security's San Francisco office and was handled by Hanna and his then supervisor, Mr. Haddad.   The loan was approved at the San Francisco regional and western divisional levels and Haddad informed Catsimatidis the loan had been approved for $10 million.   Shortly before funding, however, Haddad learned that senior management in Security's New York headquarters had reservations about the loan and would not approve it.

In an effort to save the Red Apple transaction, Haddad and Hanna went to New York to discuss the loan with senior management.   There they met with Security president Martin Kelly, senior credit officer Fred Faraone, and two other senior executives.   At that meeting Haddad asked Faraone why he would not approve the loan.   Faraone responded, “I don't trust a naturalized citizen with $10 million.”   Hanna, who is particularly sensitive to national origin discrimination, strongly objected to this comment.   He said he was insulted by Faraone's comment and that it was not proper or legal to decline the loan because Catsimatidis was a naturalized citizen.   Mr. Faraone became upset at this charge, but eventually he and Hanna calmed down and the group returned to discussing the loan.   The loan was ultimately approved for $6 million.

At a post-meeting lunch, Linda Margolin, who was present when Faraone made his comment, told Hanna they were concerned because Catsimatidis held two passports, not because he was a naturalized citizen.   Faraone also explained that it was Catsimatidis' two passports—not his status as a naturalized citizen—which concerned him.

Later that day, Hanna and Haddad stopped by the office of Dick Madresh—who was then the eastern division manager—and told Madresh about Faraone's “naturalized citizen” comment.   Madresh, who disapproved of the comment, suggested Faraone would not be in power much longer.

Toward the end of 1986, Madresh stopped by Hanna's office and asked if his relationship with Faraone had improved.   Hanna said Faraone had recently screamed and swore at him during a meeting.   Madresh responded that Faraone was bigoted and acted with malice.

In May of 1987, Hanna's immediate supervisor—Haddad—left Security.   Before he left, Hanna expressed concern about his job.   Haddad responded that Hanna need not worry because “they” needed him since Haddad was leaving;  he added that “they” would not “do anything” to Hanna until Haddad's replacement started.

From April 1987 until October 1987 Hanna served as acting manager of the San Francisco office.   In October Adrian Padilla replaced Haddad as manager.   At that time the harassment against Hanna resumed.   Hanna repeatedly complained to Padilla that Faraone and another executive, Bob MacDonald 2 , abused him and were “after him” because he had objected to Faraone's “naturalized citizen” comment.   Unlike Haddad, who had tried to protect Hanna from Faraone, Padilla was unsympathetic.   He told Hanna it was a figment of his imagination that everyone was after him.   He suggested Hanna leave if he was unhappy.   Padilla told Hanna:  “If they hate you, they hate you․  If that's what you believe, fine, but just get off my back and stop complaining, go do your job.   If you don't like it, leave.”   On another occasion Padilla told Hanna he was tired of him fighting with everyone.   He told Hanna:  “They [upper management] don't like me.   So what if they don't like you.   They are jerks, assholes.   I said, yes, so we work for a bunch of jerks and assholes.   The world is full of them.”

Eventually, Hanna told Padilla if the company didn't like his performance they should fire him.   Padilla responded that “they” would not fire him because “they” were afraid of liability.   Padilla offered Hanna six-months salary if he would resign.   Hanna refused to accept the deal, and Padilla responded that he would give Hanna a bad performance review.   Padilla added that “ ‘as long as you are here, they will not approve any deal.   And, quite frankly, if you don't resign, they will close the credit department just to get rid of you.’ ”

 In May of 1988, Hanna wrote to Madresh—who was by then president and chief executive officer of Security—to complain about the pattern of harassment against him.   In that letter, Hanna alleged that Faraone and MacDonald were out to “destroy [his] future with the company” in retaliation for his objection to Faraone's “naturalized citizen” comment.   Hanna also related the ultimatum he had received from Padilla and the threat to close the office if he did not resign.3

In response, Madresh wrote to Hanna and said he could not find support for Hanna's allegations.   He added that Hanna's performance had not been satisfactory for some time, and that continued poor performance would lead to termination.   In his deposition, Madresh said that after he received the letter he believed for the first time the negative comments he had been hearing about Hanna.   However, the only investigation he conducted was to speak with Faraone and MacDonald, and to accept their denials of Hanna's charges at face value.

The stress caused by his problems at work began to tell on Hanna.   In the second week of May 1988, Hanna broke into tears at his desk and went home sick when Padilla confronted him about a mistake in some figures he had provided.   The next morning, Hanna was hospitalized after suffering stress-induced chest pains.   Hanna's psychiatrist testified that Hanna was suffering from neurotic depression which may have been triggered by his confrontation with Faraone over the “naturalized citizen” incident.   Hanna returned to work after a week's leave of absence.

In July of 1988, Security “converted” the San Francisco office to a marketing office, thereby eliminating its operations and credit function.   Seven employees, including Hanna, were terminated and not offered transfers or new positions with the company.   Also, seven employees lost their old positions but were offered new positions in the newly constituted San Francisco “loan production” office.

Under Security's written personnel procedures, management is required to give “consideration” to retaining a laid off employee for placement in a new job, and to “attempt” to make one reasonable offer to a laid off employee for a roughly equivalent position.   However, management did not consider Hanna for any other positions, because of his complaints and performance problems.

In its moving papers, Security contended the decision to close the San Francisco office was part of a nationwide restructuring scheme designed to cut costs and improve efficiency.   In 1987, Security closed three similar “satellite” offices located in Atlanta, Cleveland, and Baltimore.   At that time, the decision whether to close the San Francisco office was “up in the air.”   However, in June of 1988 CEO Madresh decided to close the San Francisco office as well, because business there had declined to the point where it no longer made economic sense to keep it open.   Consequently, Security claimed the decision to close the San Francisco office was purely economic and had nothing to do with Hanna.

Hanna, however, points out that the extensive written analysis regarding the decision to close the Atlanta, Cleveland, and Baltimore offices makes no mention of the San Francisco office.   In fact, Security has not cited or produced any written analysis of the decision to close the San Francisco office.   Moreover, when Padilla took over the San Francisco office at the end of 1987, he was not told Security was contemplating closing that office;  in fact, Madresh told him the San Francisco office would remain open because of the presence of Security Pacific Bank in Northern California.

Based on this evidence, the trial court granted Security's motion for summary judgment, stating:  “Discrimination on alienation is permitted.   I think that the bank was completely within its right to decide on a business basis whether they wanted to loan a certain amount to a party because he had dual citizenship or not.   That is not discrimination.”4  No other reason was given for granting summary judgment.

After his motion for reconsideration was denied,5 Hanna filed the instant appeal.


DISCUSSIONA. Standard of Review.

“Summary judgment is proper only if there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law.  (Code Civ.Proc., § 437c.)   In reviewing a summary judgment, we determine only whether the facts shown by the parties give rise to a triable issue of material fact.   In making this determination the moving party's papers are strictly construed, while those of the opposing party are liberally construed.   (Howell v. State Farm Fire & Casualty Co. (1990) 218 Cal.App.3d 1446, 1448 [267 Cal.Rptr. 708];  Safeco Ins. Co. v. Gibson (1989) 211 Cal.App.3d 176, 179–180 [259 Cal.Rptr. 206].)   The trial court's ruling on a motion for summary judgment is one of law based upon the papers submitted;  consequently, the reviewing court must make its own independent determination whether the conflicting affidavits raise a triable issue of material fact.  (Wilkerson v. Wells Fargo Bank (1989) 212 Cal.App.3d 1217, 1224–1225 [261 Cal.Rptr. 185].)”  (Desuasido v. Sanwa Bank California (1991) 228 Cal.App.3d 362, 374, 278 Cal.Rptr. 868.)

B. Termination in Breach of Employment Contract.

 The general evidentiary burdens on a cause of action for breach of employment contract are well settled.   The employee must first establish a prima facie case of breach of the implied (or express) employment contract by showing that he had an implied or express contract that he would not be terminated except for good cause.   Once the plaintiff makes that showing, the burden of going forward with the evidence shifts to the employer to show the reason for the discharge.   The employee may then attack the employer's proffered explanation either on the ground that it is pretextual and the real reason is one prohibited by the contract or public policy, or on the ground it is insufficient to constitute good cause.   The employee, however, has the ultimate burden of proving he was wrongfully terminated.   (Desuasido v. Sanwa Bank California, supra, 228 Cal.App.3d at pp. 374–375, 278 Cal.Rptr. 868;  Pugh v. See's Candies, Inc. (1988) 203 Cal.App.3d 743, 752, 250 Cal.Rptr. 195 [hereafter “Pugh II”];  Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 329–330, 171 Cal.Rptr. 917 [hereafter “Pugh I”].)

1) Evidence of Implied Contract.

Security first contends there is no evidence it agreed to terminate Hanna only for good cause.   We conclude Hanna has raised a triable issue of fact on this issue.

 The statutory presumption that employment is “at will” may be overcome by evidence of an implied agreement not to terminate an employee except for good cause.  (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 677–682, 254 Cal.Rptr. 211, 765 P.2d 373.)   Such an agreement may be shown by “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.”  (Pugh I, supra, 116 Cal.App.3d at p. 327, 171 Cal.Rptr. 917, fns. omitted, quoted in Foley, supra, 47 Cal.3d at p. 680, 254 Cal.Rptr. 211, 765 P.2d 373.)

In Foley, the plaintiff had worked for his employer for nearly seven years.   He alleged he had received repeated oral assurances of job security and had also received consistent promotions, salary increases and bonuses during the term of his employment.  (47 Cal.3d at pp. 663, 681, 254 Cal.Rptr. 211, 765 P.2d 373.)   In addition, the plaintiff alleged breach of written “ ‘Termination Guidelines,’ ” which implied self-imposed limitations on the employer's power to discharge at will.  (Id., at p. 681, 254 Cal.Rptr. 211, 765 P.2d 373.)   The Supreme Court concluded these allegations provided a basis for an implied-in-fact contract limiting the employer's right to discharge the plaintiff without cause.  (Id., at p. 682, 254 Cal.Rptr. 211, 765 P.2d 373;  see also Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514, 1520, 273 Cal.Rptr. 296.)

 Similarly, in the present case there is evidence Hanna received oral assurances of job security, and that he garnered consistent promotions, salary increases and bonuses during his eight-year term of employment.   In addition, there is evidence Security did not follow its own written guidelines for dealing with employees who are terminated due to a reduction in force.   Taken together, this evidence is clearly sufficient to raise a triable issue of fact that Security had implicitly agreed not to fire Hanna except for good cause.

 Nevertheless, Security contends Hanna may not reasonably rely on the written guidelines in its policy manual to create an implied contract because the manual contains an express disclaimer that it is not intended to create such rights.6  This contention misses the mark.   Even if the argument is sound as far as it goes, it ignores the fact Hanna is relying on other evidence—unrelated to the policy manual—to establish an implied promise not to terminate without cause.7  Moreover, even though the written manual may not itself create an implied or express contract, it is nevertheless evidence of the employer's “personnel practices and policies” which are relevant to Hanna's reasonable expectation that he would not be discharged except for good cause.   In sum, given the “totality of the circumstances” (Foley v. Interactive Data Corp., supra, 47 Cal.3d at p. 681, 254 Cal.Rptr. 211, 765 P.2d 373) there is a triable issue of fact that Security implicitly agreed to terminate Hanna only for good cause.

2) Evidence of Pretext.

 Security next argues that even if good cause were required to terminate Hanna, it had such cause as a matter of law.   We agree Security has established a facially valid reason for terminating Hanna.   However, Hanna has presented evidence which indicates this reason is pretextual.   Consequently, the jury should be allowed to resolve this factual dispute.

 Generally, a reduction in force necessitated by a business reorganization constitutes good cause for termination as a matter of law.   (Clutterham v. Coachmen Industries, Inc. (1985) 169 Cal.App.3d 1223, 1227, 215 Cal.Rptr. 795;  Malmstrom v. Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 321, 231 Cal.Rptr. 820.)   Here, there is no question Security established a prima facie case that it terminated Hanna as part of a nationwide reorganization.   However, this does not end our inquiry.  “[E]ven when an employer produces evidence of a facially sufficient reason for discharging an employee, the employee may nevertheless prevail by showing that the facially valid reason is a mere pretext, and the true reason for termination is improper.”  (Desuasido v. Sanwa Bank California, supra, 228 Cal.App.3d at p. 375, 278 Cal.Rptr. 868, and cases there cited;  see also Harlan v. Sohio Petroleum Co. (N.D.Cal.1988) 677 F.Supp. 1021, 1030–1031 [prima facie case of good cause based on reduction in force may be overcome by evidence that reduction is pretextual].)

Hanna claims the business reorganization was not the “true” reason for his termination.   Instead, he believes Faraone engineered his termination in retaliation for his objections to Security's allegedly discriminatory lending practices.   If we view the record in the light most favorable to Hanna—as we must in this case—there is evidence to support this belief.

First, there is no real dispute Hanna and Faraone quarreled when Faraone told Hanna he would not fund the Red Apple loan because he did not trust “a naturalized citizen with $10 million.”   Indeed, this incident was common knowledge throughout the company.   This conflict marked a turning point in Hanna's career.   During the six years before this incident, Hanna was a top performer, who consistently received good to excellent reviews (from three different supervisors), along with regular promotions and bonuses.   In fact, only two months before the incident, Hanna received a perfect 5.0 rating.8  Nevertheless, two years after the incident he was roundly criticized in the first evaluation prepared by his new supervisor, Padilla.

There is also evidence Faraone was “out to get” Hanna.   When Hanna complained to Madresh that Faraone had screamed and swore at him during a meeting, Madresh responded that Faraone is “bigoted” and acts with “malice.”   This opinion was later substantiated when Padilla told Hanna that neither Faraone nor MacDonald would approve a particular deal if Hanna were involved in it.   Still later, when Padilla tried to convince Hanna to resign, he told Hanna that “as long as you are here, they will not approve any deal.   And, quite frankly, if you don't resign, they will close the credit department just to get rid of you.”   He also told Hanna that “they” would not fire him outright because “they” were afraid of liability.

In addition to the direct evidence that Security caused (or at least took advantage of) the closure of the San Francisco credit office to get rid of Hanna, there is circumstantial evidence which suggests there was something fishy about the San Francisco “reorganization.”   The decision to close the other “satellite” offices in Atlanta, Cleveland and Baltimore was preceded by extensive written analysis.   That analysis examined the money saved and new costs incurred in closing each office and recommended a specific plan for transferring or terminating affected employees.   No similar written analysis was performed for the San Francisco reorganization.   Moreover, when Padilla became the manager of the San Francisco office in October of 1987, Security did not tell him it planned to close the office.   On the contrary, Madresh told Padilla the San Francisco office would remain open because of Security Pacific Bank's presence in northern California.

Finally, when Hanna's position was “eliminated,” management did not consider him for any new positions, apparently because of his frequent complaints and recent performance problems.   This was contrary to the spirit—if not the letter—of Security's own personnel manual which requires that it consider employees whose jobs have been eliminated for new positions, and that it “attempt” to make one reasonable offer to the employee for a roughly equivalent job.

In short, although the evidence is not overwhelming, a reasonable jury could conclude, based on all of the circumstances, that the reorganization was not the true reason Security terminated Hanna.   A jury could alternatively find that (1) Security closed the San Francisco credit office at least in part to get rid of Hanna and to avoid liability;  or (2) even if the San Francisco office were closed solely for legitimate business reasons, Hanna would have been offered other employment with Security if he had not tangled with Faraone over the “naturalized citizen” comment.   Thus, Hanna has presented sufficient evidence that he may have been terminated in retaliation for his objections to Security's allegedly discriminatory lending practices.9

 In our view, this evidence is also sufficient to establish a breach of the covenant of good faith and fair dealing which is implied in every contract.  (Foley v. Interactive Data Corp., supra, 47 Cal.3d at p. 683, 254 Cal.Rptr. 211, 765 P.2d 373.)   The evidence clearly puts Security's “good faith” in issue.  (Wilkerson v. Wells Fargo Bank, supra, 212 Cal.App.3d 1217, 1230, 261 Cal.Rptr. 185.)

C. Termination in Violation of Public Policy.

We next consider whether Hanna's evidence supports a tort cause of action for wrongful termination in violation of public policy.   We conclude that it does not.

In Foley v. Interactive Data Corp., supra, the Supreme Court reaffirmed a plaintiff's right to sue for tort damages when he or she has been terminated in violation of a fundamental public policy.  (47 Cal.3d at pp. 665–669, 254 Cal.Rptr. 211, 765 P.2d 373.)   The court reasoned that an employer's traditional right to discharge an at-will employee is “subject to limits imposed by public policy, since otherwise the threat of discharge could be used to coerce employees into committing crimes, concealing wrongdoing, or taking other action harmful to the public weal.”  (Id., at p. 665, 254 Cal.Rptr. 211, 765 P.2d 373, fn. omitted.)   The court stressed that the implicated policy must be “fundamental” and “public” in nature.  (Id., at p. 669, 254 Cal.Rptr. 211, 765 P.2d 373;  see also Rojo v. Kliger (1990) 52 Cal.3d 65, 89, 276 Cal.Rptr. 130, 801 P.2d 373.)

 We have already concluded there is evidence to support Hanna's belief he was terminated (at least indirectly) because he objected when Faraone refused to fund the Gristedes loan because he did not trust a “naturalized citizen” with $10 million.   Hanna frames this issue as one involving “national origin discrimination” in lending, which is clearly prohibited by California, New York, and federal statutes.  (Civ.Code, §§ 51, 52 [California]; 10 N.Y. Executive Law § 296–a, subd. 1.b. (Consol.1990) [New York]; 11  15 U.S.C. § 1691(a)(1) [federal Equal Credit Opportunity Act].12 )  Security, on the other hand, frames the issue as one involving permissible discrimination on the basis of a borrower's or guarantor's dual citizenship.   According to Security, “[s]uch dual citizenship obviously raises bona fide issues concerning whether [the guarantor or borrower] intends to remain within reach of [United States] laws.”

The manner in which we frame this issue is critical to its resolution.   Had Faraone said he would not approve the loan because he did not trust an Italian, Greek, Romanian, etc. with $10 million dollars, there is no question California's fundamental public policy would be implicated.   However, that is not what Faraone said.   Instead, Faraone said he did not trust a “naturalized citizen” with $10 million, and later explained it was the fact Catsimatidis carried two passports—not his status as a naturalized citizen—which concerned him.

Nevertheless, Hanna contends the nature of naturalized citizenship makes it clear Faraone was in fact discriminating against Catsimatidis on the basis of his national origin.   There is some logic to this argument.   All persons who are born in the United States are automatically citizens of this country.   (8 U.S.C. § 1401(a) & (b).)   Consequently, by definition, “naturalized citizens” are those citizens who are born outside of the United States and become citizens through the naturalization process.  (8 U.S.C. § 1421 et seq.)   Thus, Hanna contends, Faraone's comment that he would not trust a “naturalized citizen” with $10 million is in effect a declaration he would not trust a foreign born citizen with that sum of money.   This, according to Hanna, is “national origin” discrimination against all persons with origins from countries other than the United States.

Unfortunately for Hanna, very similar arguments have been rejected by the United States Supreme Court and the Fifth Circuit.   In Espinoza v. Farah Mfg. Co. (1973) 414 U.S. 86, 94 S.Ct. 334, 38 L.Ed.2d 287, the high court (by Marshall, J.) concluded discrimination on the basis of alienage did not violate the prohibition against “ ‘national origin’ ” discrimination found in title VII of the Civil Rights Act.   There, the petitioner was a legal United States resident and citizen of Mexico who was denied employment because of a company policy prohibiting the hiring of aliens.  (Id., at pp. 87–88, 94 S.Ct. at pp. 336.)   The Supreme Court concluded the company policy did not violate title VII's prohibition against “national origin” discrimination, and held that “nothing in the Act makes it illegal to discriminate on the basis of citizenship or alienage.”  (Id., at p. 95, 94 S.Ct. at p. 340.)   The eight-member majority rejected Justice Douglas' dissenting argument that discrimination against aliens is de facto discrimination based on national origin because aliens are necessarily born outside of the United States.   (Id., at pp. 96–98, 94 S.Ct. at pp. 340–341 (dis. opn. of Douglas, J.).)

Similarly, in Bhandari v. First Nat. Bank of Commerce (5th Cir.1987) 808 F.2d 1082 (modified en banc in Bhandari v. First Nat. Bank of Commerce (5th Cir.1987) 829 F.2d 1343), a bank denied the plaintiff's application for a credit card in part because of its policy not to provide cards to aliens absent special approval.  (Id., at pp. 1084–1085.)   The plaintiff argued the policy violated the Equal Credit Opportunity Act's prohibition against “national origin” discrimination because aliens by definition have origins outside the United States.   The Fifth Circuit refused to embrace this “reductio ad absurdum,” and concluded the argument “contradicts the holding of Espinoza that national origin discrimination is distinct from alienage discrimination.”  (Id., at p. 1101, emphasis in original.)

In light of the foregoing authority, we reject Hanna's claim that discrimination based on naturalized citizenship is in fact discrimination based on national origin.   There was no triable issue of fact on this issue.

 Hanna next argues that even if Faraone did not discriminate on the basis of national origin, it nevertheless violates California's fundamental public policy to discriminate against a person on the basis of his status as a “naturalized citizen.”   We disagree.

In order to support a tort wrongful termination action, the “public policy” involved must be fundamental and “ ‘firmly established’ ” at the time of discharge.  (Foley v. Interactive Data Corp., supra, 47 Cal.3d at pp. 668–669, 254 Cal.Rptr. 211, 765 P.2d 373.)   In other words, the public policy must be one “about which reasonable persons can have little disagreement.”  (Id., at p. 668, 254 Cal.Rptr. 211, 765 P.2d 373;  Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 28, 267 Cal.Rptr. 618.)   That is not the case here.

As we have already explained, the courts have not condemned discrimination based on alien status.  (Espinoza v. Farah Mfg. Co., supra, 414 U.S. at p. 95, 94 S.Ct. at p. 340;  Bhandari v. First Nat. Bank of Commerce, supra, 829 F.2d at pp. 1349–1351, vacated and remanded for further consideration (1989) 492 U.S. 901, 109 S.Ct. 3207, 106 L.Ed.2d 558, aff'd (5th Cir. en banc 1989) 887 F.2d 609, cert. den. (1990) 494 U.S. 1061, 110 S.Ct. 1539, 108 L.Ed.2d 778;  Bhandari v. First Nat. Bank of Commerce, supra, 808 F.2d at p. 1101;  Mahdavi v. Fair Employment Practice Com. (1977) 67 Cal.App.3d 326, 337, 136 Cal.Rptr. 421.)

We recognize, of course, that the present case does not involve discrimination against an alien, but against a naturalized citizen.13  Nevertheless, Hanna has not cited a single case or statute which specifically condemns discrimination on the basis of a person's status as a naturalized citizen.   Nor has Hanna explained why discrimination against aliens should be distinguished from discrimination against naturalized citizens who hold two passports.   Instead, he rests his claim on the Unruh Act, which, he contends, prohibits all arbitrary discrimination based on “personal characteristics.”   (See Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1148, 1161, 278 Cal.Rptr. 614, 805 P.2d 873.)   The problem with this argument is that the courts have not resolved whether status as a naturalized citizen is a “personal characteristic,” and, if it is, whether the reasons advanced by Security to justify discrimination on that basis are arbitrary, or are instead “reasonable regulations that are rationally related to the services performed․”  (In re Cox (1970) 3 Cal.3d 205, 212, 90 Cal.Rptr. 24, 474 P.2d 992;  Harris, supra, 52 Cal.3d at p. 1152, 278 Cal.Rptr. 614, 805 P.2d 873.)   In short, although it may violate the Unruh Act to discriminate against a borrower on the basis of his or her status as a naturalized citizen, a prohibition against such discrimination was not a “ ‘firmly established’ ” public policy at the time of the discharge.  (Foley v. Interactive Data Corp., supra, 47 Cal.3d at p. 668, 254 Cal.Rptr. 211, 765 P.2d 373;  Luck v. Southern Pacific Transportation Co., supra, 218 Cal.App.3d at pp. 28–29, 267 Cal.Rptr. 618.)   Consequently, Hanna has not established a cause of action for wrongful discharge in violation of public policy.14

D. The FEHA Claim.

Finally, Hanna contends he has established a prima facie case of national origin discrimination in employment under the FEHA, which bars national origin discrimination in the terms, conditions or privileges of employment.  (Gov.Code, § 12940, subd. (a).) 15  Because he failed to exhaust his administrative remedies, we disagree.

To obtain redress under the FEHA, an aggrieved person must first file a complaint with the Department of Fair Employment and Housing (Department), whose function is to investigate and seek redress of claimed discrimination.   If the Department deems the complaint valid, it will seek to resolve the matter by conference, conciliation and persuasion.   If that fails or is inappropriate, the Department may issue an accusation which is heard by the Fair Employment and Housing Commission.   If no accusation is issued within 150 days after a complaint is filed or the Department decides earlier not to prosecute the case, the Department must give the complainant a “ ‘right to sue’ ” letter.   Only then may the complainant bring a civil suit under the FEHA.  (Rojo v. Kliger, supra, 52 Cal.3d at p. 72, 276 Cal.Rptr. 130, 801 P.2d 373.)

In the present case, Hanna filed a complaint with the Department which alleged discrimination based on “national origin.”   However, the facts alleged in the complaint indicated only that he had been terminated because of his opposition to Security's discrimination against others.   Specifically, Hanna alleged he had been terminated in retaliation for protesting discrimination against borrowers who are naturalized citizens or carry two passports.16  The complaint did not allege that Security had discriminated against Hanna because of his national origin.   In fact, Hanna's Egyptian national origin was not even mentioned in the administrative complaint.

 Hanna's complaint to the Department does not make out a cause of action under the FEHA.   Like its federal counterpart, title VII, the FEHA does not bar discrimination based on alienage or citizenship.  (See Mahdavi v. Fair Employment Practice Com., supra, 67 Cal.App.3d at pp. 336–337, 136 Cal.Rptr. 421;  Espinoza v. Farah Mfg. Co., supra, 414 U.S. at p. 95, 94 S.Ct. at p. 340.)   Thus, Hanna's complaint that he was terminated because of his objection to discrimination against “naturalized citizens” does not fall within the jurisdiction of the FEHA.  (See discussion, ante, pp. 867–868.)

 However, on appeal, Hanna has changed his theory to allege that he was discriminated against because of his own national origin.   The only additional evidence Hanna cites to support his personal national origin claim is the fact one of his superiors at Security expressed concern about his ability to communicate clearly with clients because of his accent.17  According to Hanna, this is evidence he was not considered for “higher level jobs” due to his accent.18

Even if we assume this evidence is properly before us,19 the doctrine of exhaustion of administrative remedies bars Hanna from raising his personal national origin discrimination claim in a judicial forum, because he failed to raise it in the administrative forum.

 A party must exhaust his administrative remedies before he brings a statutory civil action under the FEHA.  (Rojo v. Kliger, supra, 52 Cal.3d at p. 83, 276 Cal.Rptr. 130, 801 P.2d 373.)   Not only must a prospective plaintiff obtain a right to sue letter, he must also have alleged the same general claim in the administrative forum that he seeks to litigate in the judicial forum.  (Yurick v. Superior Court (1989) 209 Cal.App.3d 1116, 1121–1123, 257 Cal.Rptr. 665;  Ong v. Cleland (9th Cir.1981) 642 F.2d 316, 318.)   When an employee seeks judicial relief for incidents not listed in the original charge to the administrative agency, he must show that the additional incidents are “ ‘like or reasonably related to’ ” the allegations contained in the administrative charge.  (Yurick, supra, 209 Cal.App.3d at p. 1121, 257 Cal.Rptr. 665;  Ong, supra, at p. 318.)   There need not be a perfect “fit” between the administrative charges and the judicial complaint, provided the dual policies of promoting resolution of disputes by conciliation and requiring initial administrative review of claims 20 has been served.   (Yurick, supra, 209 Cal.App.3d at pp. 1121–1122, 257 Cal.Rptr. 665;  Ong, supra, at p. 319;  see Rojo, supra, 52 Cal.3d at p. 83, 276 Cal.Rptr. 130, 801 P.2d 373.)

Based on the above guidelines, we cannot say Hanna's claim he was barred from “higher level” positions because of his accent is “like or reasonably related to” his claim he was terminated because he objected to discrimination against naturalized citizens.   Both the operative facts and alleged harm are different in each case.   In short, the dual policies of promoting resolution of disputes by conciliation and requiring initial administrative review of claims would be harmed if we were to entertain Hanna's new discrimination theory on appeal.   (See Yurick v. Superior Court, supra, 209 Cal.App.3d at pp. 1121–1123, 257 Cal.Rptr. 665 [age discrimination claim not like or reasonably related to sex discrimination claim];  Ong v. Cleland, supra, 642 F.2d at pp. 319–320 [discrimination in promotion claim not like or reasonably related to constructive discharge claim];  Brown v. Puget Sound Elec. App. & Train. Trust (9th Cir.1984) 732 F.2d 726, 730 [claim of intentional sex discrimination not like or reasonably related to claim of disparate impact on women];  Zalewski v. M.A.R.S. Enterprises, Ltd. (D.Del.1982) 561 F.Supp. 601, 605.)

E. Disposition.

The summary judgment in favor of Security on Hanna's second cause of action for breach of contract and on his third cause of action for breach of the covenant of good faith and fair dealing is reversed.   In all other respects, the judgment is affirmed.21

Costs are awarded to appellant.


1.   Hanna's complaint also named two of Security's officers as defendants—Fred Faraone and Robert MacDonald.   Their motions for summary judgment were also granted.

2.   A few months after the Gristedes loan was funded, MacDonald told Hanna that a second loan guaranteed by Catsimatidis had been refused “because [he] carries two passports.”   A Security vice president who was involved in this second loan wrote a memo to Padilla complaining that the loan had not been reviewed fairly.   In particular, this vice president wrote that he was “told by certain members of the credit committee that they did not trust John Catsimatidis even though there was no derogatory information about John in the Bishop's report ․ but rather ․ this mistrust was derived from the fact that John was a ‘naturalized citizen.’ ”   Padilla advised the vice president to take this allegation out of his memo since it was based on hearsay.

3.   Hanna has not sworn by declaration or otherwise that the matters asserted in the letter are true.   Thus, Security correctly points out that the letter is a self-serving unsworn statement which is rife with inadmissible hearsay.   However, we consider the letter not for the truth of the matter asserted therein (namely, that Faraone and MacDonald had in fact engaged in certain retaliatory behavior) but as proof Hanna communicated those complaints to the chief executive officer.   (Evid.Code, § 1200.)Security's other hearsay objections are based on Hanna's alleged failure to establish the foundational facts necessary to bring statements made by Security's officers and employees within the authorized admission exception.  (Evid.Code, § 1222.)   We believe the necessary foundational facts were established and, in any event, the trial court did not sustain Security's objections.   In determining if there is a triable issue of fact, we must consider “all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court․”  (Code Civ.Proc., § 437c, subd. (c), emphasis added.)   Since the objections were not sustained, we must assume the court considered the evidence.

4.   The court then added:  “I just don't see anything there, that's all, Mr. Schickman, and I ․ expect it will be appealed.   I hope it will be appealed.   If I'm wrong, it will come back.   That is the way it is.”

5.   Security contends we may not rely on any of the declarations or other evidence submitted in support of Hanna's motion for reconsideration because the trial court specifically denied that motion on the ground Hanna failed to state new or different facts.   We need not resolve this issue, since the statement of facts and our decision is based solely on the materials submitted in support of and in opposition to the motion for summary judgment.

6.   The relevant provision states:  “Nothing in this manual or in any other communication, either written or oral, by any representative of the Corporation, made at the time of hire or during the course of employment shall create or is intended in any way to create a contract of employment, express or implied, or in any way alter the mutual and voluntary employment ‘at will’ relationship between the Corporation and each of its employees.”

7.   We note that Security has not argued that this provision prevented company representatives from making assurances which could create implied rights, even though its express terms would seem to warrant that argument.   This argument would be inconsistent with Security's primary contention that the policy manual is not a contract, and therefore not binding on either party.   Moreover, Security has not provided any evidence this provision was in effect at the time Hanna was hired and the assurances regarding his employment were made.   To the contrary, the page where the disclaimer appears bears the notation “3–86,” suggesting it was adopted some six years after Hanna started working for Security.

8.   This rating was lowered after the western divisional manager wrote a memo to Hanna's immediate supervisor (Haddad) to ask him to reconsider the evaluation.   The memo stated:  “While we all agree that Milad is motivated and professional, and that he is a most valued officer and an asset to the firm, neither he nor we are perfect.”

9.   Security contends Hanna's neurotic depression caused him to believe he was being hounded from the company by Faraone and others.   That may be.   However, the cause and effect may also be reversed.   That is, Hanna's depression may have been caused by Faraone's continual harassment.   On the record before us, either scenario is possible.

10.   Civil Code section 51 provides in pertinent part:  “All persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry [or] national origin ․ are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”  (Emphasis added.)Civil Code section 52, subdivision (a) provides in pertinent part:  “Whoever denies, or who aids, or incites such denial, or whoever makes any discrimination, distinction or restriction on account of sex, color, race, religion, ancestry [or] national origin ․” is liable for treble damages.  (Emphasis added.)

11.   Section 296–a of New York's Executive Law provides in part:  “1. It shall be an unlawful discriminatory practice for any creditor or any officer, agent or employee thereof:  [¶] b. To discriminate in the granting, withholding, extending or renewing, or in the fixing of the rates, terms or conditions of, any form of credit, on the basis of race, creed, color [or] national origin․”  (Emphasis added.)

12.   The Equal Credit Opportunity Act provides:  “It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction ․ [¶] (1) on the basis of race, color, religion [or] national origin․”  (15 U.S.C. § 1691(a)(1), emphasis added.)This section protects both individual and corporate borrowers.  (15 U.S.C. § 1691a (a), (b) & (f).)

13.   The alleged justification for this discrimination is that a naturalized citizen may have two passports and thus be more able to avoid United States jurisdiction than would a native born citizen.   As Haddad stated in his declaration:“[I]t is a normal business practice to assess the creditworthiness of an individual who is to personally guarantee a loan.   As part of this assessment, the guarantor's citizenship status is considered.   Since a guarantor is by definition one whom the lender may be required to sue should the borrower default, a prudent lender has an interest in being relatively sure of the guarantor's amenability to service of process.   One part of this assessment is the implication that the guarantor might be a ‘flight risk,’ raising a legitimate question about his or her intentions concerning continued U.S. residency and amenability to legal process.”

14.   We note that this conclusion is not inconsistent with our preceding finding that Hanna has established a prima facie case of wrongful termination in violation of an implied contract.   It is of course possible for a plaintiff to establish a cause of action for wrongful termination in breach of contract without also proving his termination violated public policy.  (See, e.g., Foley v. Interactive Data Corp., supra, 47 Cal.3d at pp. 665–671, 682, 254 Cal.Rptr. 211, 765 P.2d 373.)   In the breach of contract case, the issue is not whether the reason for termination violated public policy but whether it is “ ‘the kind of thing that justifies terminating the employment relationship[.]’ ”  (Desuasido v. Sanwa Bank California, supra, 228 Cal.App.3d at p. 376, 278 Cal.Rptr. 868.)

15.   Government Code section 12940 provides in pertinent part:  “It shall be an unlawful employment practice, unless based upon a bona fide occupational qualification, or, except where based upon applicable security regulations established by the United States or the State of California:  [¶] (a) For an employer, because of the race, religious creed, color, national origin, ancestry ․ of any person, ․ to bar or to discharge such person from employment ․ or to discriminate against such person in compensation or in terms, conditions, or privileges of employment.”

16.   The complaint stated in pertinent part:“I believe that I am threatened with termination because of my opposition to discrimination based upon national origin for the following reasons:  [¶] 1. In October 1987 and May 1988, Adrian Padilla, Vice–President and Manager stated that Fred Farone [sic], Senior Vice–President and Robert McDonald [sic], Executive Vice–President did not like me because I opposed discrimination in lending.  [¶] 2. In June 1986, in response to Fred Faroane's [sic] statement, ‘I cannot trust ten million to a naturalized citizen’ ․ I protested such conduct as being illegal and immoral.   In the last quarter of 1986, I again protested, when Robert McDonald['s] basis for a loan rejection was ‘because he carries two passports.’ ”Although the complaint states Hanna was “threatened with termination,” he had, in fact, been terminated long before he filed the complaint on October 11, 1988.

17.   Hanna also alleges that four other San Francisco office employees who were not offered transfers were also foreign born.   However, there is no evidence to support this assertion.   Hanna's record citations merely identify the persons who were not offered transfers;  Hanna has not cited any evidence which indicates they are foreign born.

18.   In particular, Guy Rear, Security's western division director of credit services, testified that he was “concerned about [Hanna's] ability to communicate with senior officers of our larger clients and I was concerned with his supervisory skills.”   He added that because of his accent “[w]hen [Hanna is] excited, he can be very hard to understand unless you work at it, and I was concerned that people might not work at it and that we could have an expensive misunderstanding.”We note that Hanna has not cited this evidence in support of his claim he was terminated in violation of public policy.   We presume this is because there is absolutely no evidence to link Mr. Rear's concern about Hanna's accent and the decision to terminate him.   Indeed, Mr. Rear stated he played “no role whatsoever” in the decision to eliminate Hanna's position or not to transfer him.   At best, the testimony is evidence Hanna was not considered for “higher level jobs” because of his accent.   Although this may be prohibited by the FEHA (see Carino v. University of Oklahoma Bd. of Regents (10th Cir.1984) 750 F.2d 815, 819) it has no bearing on Hanna's wrongful termination claim.

19.   Security contends it is not because it was introduced as part of Hanna's unsuccessful motion for reconsideration.

20.   As the Rojo court observed, the administrative exhaustion requirement serves the important goal of “easing the burden on the court system, maximizing the use of administrative agency expertise ․ and providing a more economical and less formal means of resolving the dispute․”  (Rojo v. Kliger, supra, 52 Cal.3d at p. 83, 276 Cal.Rptr. 130, 801 P.2d 373.)

21.   We affirm the summary judgment in favor of the individual defendants in full because there is no evidence they had a contractual relationship with Hanna.

WHITE, Presiding Judge.