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Court of Appeal, First District, Division 2, California.

Russell J. NOTIDES, Plaintiff and Appellant, v. WESTINGHOUSE CREDIT CORPORATION et al., Defendants and Respondents.

No. A062773.

Decided: December 12, 1994

Kathleen M. Lucas, San Francisco, for plaintiff and appellant Russell J. Notides. Susan H. Roos, Thomas A. Counts, Sheppard, Mullin, Richter & Hampton, San Francisco, for defendant and respondent Westinghouse Credit Corp. et al.

Russell J. Notides (Notides) appeals from a judgment entered by the trial court after granting a summary judgment motion made by his former employer, Westinghouse Credit Corporation (WCC), to the first, second and fifth causes of action, and sustaining WCC's demurrer to the fourth, sixth and seventh causes of action of the first amended complaint.1  He contends there are triable issues of fact concerning the existence of good cause to terminate his employment.   He further contends that his tort claims for intentional and negligent misrepresentation are not barred by Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley ), and Hunter v. Up–Right, Inc. (1993) 6 Cal.4th 1174, 26 Cal.Rptr.2d 8, 864 P.2d 88 (Hunter ).   We affirm the judgment.


WCC is a financial services company that generates income primarily by investing and lending capital, which it borrows in the capital markets, to other corporate borrowers.   The Corporate Capital Group, a division of WCC, was headed by Donald Jenkins during all times relevant to this matter.   Jenkins supervised James Murray who was in charge of the Group's west coast regional office, located in Newport Beach.   During the early part of 1990, Murray and his assistant, Scott Sampson, contacted the appellant about joining WCC in a newly-created position as vice president for new business development in San Francisco.   This position entailed generating business deals which WCC would fund through loans or equity investments.   At the end of January 1990, Notides had been laid-off by Prudential–Bache, when it decided to abandon its work in this field.   Prudential had provided Notides with what he believed would be indefinite out-placement services.   During the conversations with respondent's representatives, Notides expressed his concern about job security.   They informed him that WCC had a long-term commitment to developing its financial service business in California, and, more particularly, in San Francisco.   On May 8, 1990, Notides was formally extended an offer of employment by WCC.

On May 9th, the offer of employment was rescinded.   Jenkins and Murray decided that the offer had been improvident.   In Jenkins's words, “[W]e discussed whether or not we were moving too fast, whether the economy was going to support continued business, and just general uncertainties we had about how much business we would need to do and where it would come from in the corporation.”   The fear was not that Notides would develop too few deals to justify his position, but too many.   WCC had a leverage problem:  the ratio of its debt to its equity was becoming so high that it would adversely affect the interest rate it would have to pay to borrow the capital it used to fund its deals.   As Notides developed new sources of investment, WCC would have to incur additional debt to fund them, aggravating its situation.   The uncertainties related to this leverage problem led to the rescission of the offer of employment.

Soon after the rescission, a further evaluation by the WCC officials led them to conclude that the problem would be short term in nature.   Notides was contacted and a second offer of employment was extended.   Notides questioned Murray and Sampson closely about the reasons for the reconsideration and was informed that the decision to rescind had been an overreaction to what was perceived as a short term leverage problem that should not be permitted to interfere with WCC's goal of establishing a presence in the San Francisco area.   Notides accepted the renewed offer at the beginning of June and began work one month later.   He received a signing bonus of $20,000, a performance bonus of $50,000, and a monthly salary of $10,000.

At the time that the second offer was extended, the WCC representatives discussed with Notides the leverage problem and their short term approach to dealing with it:  new business deals would only be approved on a highly selective basis.   During the first several months of his tenure, Notides estimated that he developed five to ten deals, all of which were rejected by WCC.   In late 1990, Jenkins was informed that WCC had decided to stop doing new business entirely.   As part of its decision to cease new business activities, WCC decided to lay off 34 new business development personnel, including Notides.   At the end of October 1990, Notides was informed by Murray that the company was not going to approve any new deals.   On February 4, 1991, each of the 34 affected employees received formal, written notice of their lay off, to be effective in March 1991.   As of that date, all business development people in the Corporate Capital West Group, including the appellant, were laid off.   WCC eliminated Notides' position entirely and since that time no one has been hired to perform new business development services.   In the layoff notice, WCC explained that its “capacity to generate new business opportunities greatly exceed[ed its] investment needs.”

During his tenure at WCC, Notides received a total compensation of $150,000 for eight months' work, including the two bonuses.   He conceded that after the October meeting with Murray, he had no work to perform.

Notides filed a complaint for damages on March 19, 1992, alleging claims for breach of contract and tort.   On July 9, appellant filed his first amended complaint.   WCC demurred to the tort causes of action on the basis that they were barred by Foley, supra, 47 Cal.3d 654.   On October 19, 1992, the court sustained this demurrer and dismissed plaintiff's causes of action for negligent supervision and negligent and intentional misrepresentation without leave to amend.   Notides moved for reconsideration of the order dismissing the two misrepresentation claims on the basis of the Supreme Court's decision in Hunter, supra, 6 Cal.4th 1174, 26 Cal.Rptr.2d 8, 864 P.2d 88.   The court denied this motion.   The dismissal of the two misrepresentation claims is challenged in this appeal.

WCC filed its answer to the first amended complaint on November 5, 1992.   On February 26, 1993, WCC moved for summary judgment on the three remaining causes of action.   On March 11, appellant moved for leave to file a second amended complaint and to strike portions of the Jenkins declaration filed in support of the summary judgment motion.   All three motions were heard on March 26.   The motion to strike the declaration was sustained in part and overruled in part.   The court then granted summary judgment and denied the motion to amend.   Each of these three decisions is also the subject of this appeal.


A. Summary Judgment on the Contract Claim

 Although we independently review a grant of summary judgment, we analyze the motion according to the same principles relied on by the trial court.  “ ‘․ First, we identify the issues framed by the pleadings since it is these allegations to which the motion must respond by establishing a complete defense or otherwise showing there is no factual basis for relief on any theory reasonably contemplated by the opponent's pleading.  [¶] Second[ly], we determine whether the moving party's showing has established facts which negate the opponent's claim and justify a judgment in movant's favor․  [¶]  When a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue.’ ”  (580 Folsom Associates v. Prometheus Development Co. (1990) 223 Cal.App.3d 1, 13–14, 272 Cal.Rptr. 227, quoting AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064, 225 Cal.Rptr. 203.)

Effective January 1, 1993, Code of Civil Procedure section 437c, subdivision (o)(2) was amended to provide, “A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action.   Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists to that cause of action.”   Applying this burden of proof, our independent review of the record leads us to affirm the trial court's summary judgment ruling.

For purposes of the summary judgment motion, the respondent conceded that the appellant had an employment contract that permitted termination for good cause only.   It then submitted, as undisputed material facts that, in response to valid business judgments, it decided to curtail new business development and eliminated all business development positions, including appellant's.   Further, it submitted that a total of 34 persons lost their jobs across the country as part of this reduction in force and that appellant's job performance was not a factor in his termination.

 Good cause for termination exists where a reduction in force (RIF) is based on lack of work or other legitimate business considerations.   (Gianaculas v. Trans World Airlines, Inc. (9th Cir.1985) 761 F.2d 1391;  Malmstrom v. Kaiser Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 321, 231 Cal.Rptr. 820.)   Appellant does not dispute that reductions in force based on valid business decisions are proper.   He does not contend that the layoffs were a pretext for the discharge.   He objects to the summary judgment ruling on three other grounds.   First, he contends that WCC failed to present admissible evidence to prove its undisputed material facts.   Second, appellant contends that certain misrepresentations made to him to induce his acceptance of the second employment offer estop WCC from raising the RIF defense.   Finally, appellant argues that we should imply the existence of certain agreements by WCC which preclude his termination, even if the general layoff was proper.   We find each of these contentions meritless.

1. Admissible Evidence

In its summary judgment motion, respondent relied primarily on the declaration of Donald Jenkins to describe the circumstances surrounding the termination of appellant.2  In sum, Jenkins stated that:  (1) WCC decided to cut costs and curtail new business development in late 1990 or early 1991;  (2) due to this decision, all new business development positions, including appellant's, were eliminated;  (3) appellant's job performance was not a factor in the decision;  (4) WCC is currently exiting the financial services business;  and (5) appellant's position has not been filled since his discharge.   In his deposition, Jenkins admitted that he did not make the decisions referred to, and was not present when they were made.

 The motion for summary judgment “must be decided upon admissible evidence in the form of affidavits, declarations, [and] admissions․”  (Hayman v. Block (1986) 176 Cal.App.3d 629, 638, 222 Cal.Rptr. 293.)   “Supporting and opposing affidavits or declarations shall be made by any person on personal knowledge, shall set forth admissible evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavits or declarations.”  (Code Civ.Proc., § 437c, subd. (d).)  Evidence Code section 702 requires that a witness have personal knowledge of a fact in order to testify about it.

 In his position as executive vice president of WCC in charge of the Corporate Capital Group, Jenkins was well aware of the leverage problems that had been facing the company.   In late 1990, in one of several meetings and phone conversations he had with his superiors concerning this problem, he was informed of their decision that his group should stop developing new business.   He was directed to accomplish this through a reduction in force that eliminated appellant's job, among others.   He had personal knowledge of this information and, as the trial judge ruled, he properly provided a declaration concerning it.

2. The Misrepresentations

 Appellant also argues that the summary judgment was erroneous because certain misrepresentations allegedly made by respondent at the time of the hiring estop respondent from relying on the RIF to justify the discharge.   Evidence Code section 623 provides:  “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.”   This doctrine “rests on the theory that the party to be estopped may not prove certain facts if he has by his conduct or declarations misled another to his prejudice.”  (Youngman v. Nevada Irrigation District (1969) 70 Cal.2d 240, 249, fn. 7, 74 Cal.Rptr. 398, 449 P.2d 462, emphasis in original.)   To take advantage of this doctrine, Notides must show (1) representations of a material fact were made;  (2) WCC knew they were false or knowingly concealed the true facts;  (3) the true facts were not known to Notides;  (4) WCC intended to induce Notides' reliance on the representations;  and (5) Notides was induced to act upon the representations.  (11 Witkin, Summary of Cal.Law (9th ed. 1990) Equity, § 177, p. 859.)   WCC raises a host of objections to the applicability of this doctrine in this case.   Because we find that no material misrepresentations were made, it is unnecessary for us to consider all of them.

 The appellant contends that WCC made three critical, related misrepresentations that induced Notides to take the job and, therefore, bar it from relying on the RIF to justify his termination.   Sampson and Murray informed Notides on more than one occasion during the hiring process that WCC had a long-term commitment to creating and maintaining a business development position in San Francisco.   To establish that these statements were false when made, appellant points to the deposition testimony of their superior, Jenkins, and claims that it establishes that he had a short-term experimental approach to the San Francisco position.   In fact, when viewed in context, the testimony shows no such perspective.3  He testified he had no expectation as to how long the San Francisco office would have to operate before he could realistically judge its effectiveness.   When asked to speculate as to whether six months would be a sufficient time, he responded that he did not know.   Appellant's effort to rely on this to establish that he did know that six months would be sufficient is disingenuous.

More significantly, we cannot pretend that this is a situation where the San Francisco new business development office closed, and, after the fact, a manager is asked how long he had originally planned to permit it to operate.   In our case, WCC laid off business development employees nationwide, including all of its new business development personnel in the Corporate Capital West Group.   Appellant has presented no evidence from which we could find that there is a triable issue of fact on whether WCC misrepresented its commitment.

 Notides claims that the second and third misrepresentations related to the leverage problem.   We are told that Murray and Sampson concealed the true nature of the problem by calling it “short-term,” and stating that it would be solved by year-end.   Their statement that the problem would be handled by taking a more cautious approach to deal-making in the short term is labeled a further misrepresentation.   To prove that these predictions were false when made, appellant points to nothing more than the fact that they turned out to be inaccurate.   The logical fallacy in this is obvious.   In addition, false predictions cannot form the basis for an estoppel, unless the speaker did not believe them at the time.  (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158, 2 Cal.Rptr.2d 861.)   Notides points to no fact supporting a contention that Murray and Sampson, or anyone else at WCC for that matter, knew in June that the leverage problem would be long term, that it would not be solved by the end of the year or that it could not be handled in the near future by being selective.4

 It is difficult to conjure any possible motive for WCC to have intentionally misled Notides in the manner suggested.   If they knew there was no future in new business development, why expend an enormous sum of money to hire a new business developer?   Notides was paid $150,000 for eight months' work.   This amount included a $50,000 bonus which WCC could have avoided with a slight rescheduling of the layoff.5  An executive placement firm was paid an additional $60,000 for finding Notides, and WCC spent additional funds to lease an office to do business.   It strains credulity to believe that all of this was done by a company that had no long term commitment to the position created.   Appellant's search for a hidden agenda is unavailing.

At the time the second offer was made, the financial situation at WCC was troubled and somewhat unpredictable.   Notides must have known this.   In the space of four weeks he was offered a job, had the offer rescinded and then was offered the position again.   As a professional in this area, he had to have had at least a general sense that the situation at WCC was uncertain, though hopeful.   He had been informed of the leverage problem before accepting the job.   He was told by Murray “that Corporate Capital West had actively brought in new business in the first half of 1990, and that he was confident that it would be doing so again by the beginning of 1991.”  (Emphasis added.)   In short, he was told what Murray believed to be so.   The WCC managers were mistaken about what the economy had in store for their company;  they were not dissembling.   No doubt, Notides had his expectations dashed by the termination, but those expectations should have been limited by the information he gleaned during the hiring process.   Since we find that there were no misrepresentations, the summary judgment order on the contract claim must be affirmed.

B. Summary Judgment of the Other Claims

 Summary judgment was also granted on the claim alleging a breach of the covenant of good faith and fair dealing.   The Supreme Court in Foley, supra, 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373, noted that this covenant is implied in every contract and is “aimed at making effective the agreement's promises.”  (Id. at p. 683, 254 Cal.Rptr. 211, 765 P.2d 373.)  Foley eliminated a tort remedy for breach of this covenant in wrongful termination cases.   Where the covenant claim relies upon the same conduct as the contract claim, they are duplicative.   A second cause of action for breach of the covenant “adds nothing because the same conduct on defendant's part is alleged to constitute breach of both the employment contract and the covenant.   For breach of either [the] plaintiff may recover only contract damages.”   (Aragon–Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 240, 282 Cal.Rptr. 233.)

 Appellant attempts to fashion a distinctive claim for breach of the covenant.   He argues that the covenant is breached when an employer lays off an employee based on financial conditions known at the time of the hiring, where assurances were given of long term commitment to the position.   However, this claim, like the one on the contract, depends upon a finding that WCC misrepresented either its financial condition or its commitment to the appellant.   Therefore, we affirm the summary judgment on the second cause of action for the same reasons we upheld the trial court's ruling on the contract claim.

 Finally, appellant attacks the court's grant of summary judgment on the promissory estoppel claim.   Relying on Sheppard v. Morgan Keegan & Co. (1990) 218 Cal.App.3d 61, 266 Cal.Rptr. 784, Notides claims that we should find, implied in his contract, a right not to be terminated before having “a good-faith opportunity to perform his duties to the satisfaction of (his employer).”  Sheppard is inapposite.   In that case, the court found that an employer's right to fire an “at-will” employee was limited where plaintiff gave up his job in California, relocated to Tennessee, and was terminated before he started work for “inappropriate attire.”   For purposes of this motion, Notides was treated as having a “good cause” condition in his contract;  he was not an “at-will” employee.   Moreover, the RIF was found to be sufficient cause to justify the termination.   Summary judgment as to the third cause of action is affirmed.

C. Demurrer

 In the first amended complaint, Notides alleged three tort claims relating to his hiring and discharge from WCC.   On October 19, 1992, the trial court granted respondent's demurrer as to each without leave to amend.   Notides appeals the dismissal of the claims for intentional and negligent misrepresentation.   When a demurrer is sustained, we review the decision to determine whether the complaint states facts sufficient to constitute a cause of action.  (Hill v. Miller (1966) 64 Cal.2d 757, 759, 51 Cal.Rptr. 689, 415 P.2d 33.)   We must regard the plaintiff's allegations in the complaint as true.  (Foremost Ins. Co. v. Wilks (1988) 206 Cal.App.3d 251, 260, fn. 9, 253 Cal.Rptr. 596.)   When the court has sustained the demurrer without leave to amend, we decide whether a real possibility exists that the defect can be cured by amendment;  if it can be, the trial court has abused its discretion.  (Kilgore v. Younger (1982) 30 Cal.3d 770, 781, 180 Cal.Rptr. 657, 640 P.2d 793.)

In recent years, the California Supreme Court has sharply restricted tort recovery for employment termination.   In Foley, supra, 47 Cal.3d 654, 254 Cal.Rptr. 211, 765 P.2d 373, the court concluded that the nature of the employer-employee relationship is fundamentally contractual.   The court then declined to permit tort remedies for the essentially contractual claim of breach of the implied covenant of good faith and fair dealing.  (Id. at pp. 683–693, 254 Cal.Rptr. 211, 765 P.2d 373.)   This decision rested on the concern that permitting tort remedies in employment termination would unduly deprive employers of discretion to dismiss employees by raising fears that any dismissal might lead to tort recoveries.  (Id. at p. 696, 254 Cal.Rptr. 211, 765 P.2d 373.)   Since virtually any termination could provide the basis for an allegation that the discharge was in bad faith, the court emphasized that the expansion of tort remedies in the employment context threatened enormous consequences for the stability of the business community.  (Id. at p. 699, 254 Cal.Rptr. 211, 765 P.2d 373.)

In Hunter, supra, 6 Cal.4th 1174, 26 Cal.Rptr.2d 8, 864 P.2d 88, the Supreme Court revisited this issue and reaffirmed its commitment to the Foley policy.   In Hunter, the plaintiff alleged his employer had misrepresented that his job was about to be eliminated, in order to induce his resignation.   The employee contended that this fraud was designed to avoid the contractual requirement that he be discharged only for cause.   The court refused to allow a fraud claim so intertwined with an employee's discharge.   It held that “Tort recovery is available only if the plaintiff can establish all of the elements of fraud with respect to a misrepresentation that is separate from the termination of the employment contract, i.e., when the plaintiff's fraud damages cannot be said to result from termination itself.”   (6 Cal.4th at p. 1178, 26 Cal.Rptr.2d 8, 864 P.2d 88.)

 In Hunter, the court denied tort recovery for a misrepresentation made in the course of the termination.   Its holding would apply equally to a misrepresentation made long before termination if the only damages “result from termination itself.”  (6 Cal.4th at p. 1178, 26 Cal.Rptr.2d 8, 864 P.2d 88.)   An example of this would occur whenever a plaintiff alleged that he or she had been induced to enter an employment contract by a false representation of job security.   Since proof of the misrepresentation would seem to require proof of termination, tort recovery would be barred by Hunter.  Hunter, itself, cited with approval, American Guar. & Liability v. Vista Medical Supply (N.D.Cal.1988) 699 F.Supp. 787, 791, for the proposition that “an employee's cause of action for negligent misrepresentation based on the employer's representation that she would have job security was part and parcel of the concurrent wrongful discharge claim because it arose out of the employer's intentional act of discharging her.”  (Hunter, supra, 6 Cal.4th at p. 1182, 26 Cal.Rptr.2d 8, 864 P.2d 88.)   In accord with this is Brooks v. Bell Savings & Loan Assn. (1994) 29 Cal.App.4th 565, 34 Cal.Rptr.2d 785.   In Brooks, plaintiff sued for tort damages on the basis that his employer had failed to abide by its representation, made at the time of hiring, that he would not be discharged without good cause.   The court found that plaintiff was barred by Hunter and Foley from any tort recovery, caused by this alleged misrepresentation, for damages that resulted from the termination.  (29 Cal.App.4th at p. 591, 34 Cal.Rptr.2d 785.)

 Each of the alleged misrepresentations in plaintiff's first amended complaint relates to job security.   Thus, paragraph 47 in the cause of action for intentional misrepresentation and paragraph 58 in the cause of action for negligent misrepresentation state:  “Defendants ․ made numerous assurances to Plaintiff, including:  [¶] (a) Assurances that his employment would be secure so long as he performed satisfactorily;  [¶] (b) Assurances they were committed to a long-term plan to develop a presence in San Francisco;  and [¶] (c) Assurances that Plaintiff would have a position with WESTINGHOUSE so long as he performed satisfactorily.”   As we discussed, the logic of the policy announced in Foley and confirmed in Hunter should bar tort recovery for any damages resulting from the breach of the employer's promise to provide job security since those damages only occur if the employee is terminated.   Whether the promise is couched in terms of a commitment of long-term employment, or in terms of a promise not to discharge without good cause is immaterial.   If its breach creates tort damages, then the limitation on such recovery created by Foley and Hunter becomes illusory.   Any damages resulting from an employment termination can easily be recast as the result of a fraud:  a misrepresentation of the length of employment made at the time of hiring by the employer.   Since all damages flowing from a misrepresentation of job security result from the termination itself, only contractual remedies exist.

To the extent that Brooks holds to the contrary, we respectfully disagree with it.  Brooks accepted the proposition that a misrepresentation of job security made at the time of hiring and designed to induce acceptance of the job offer could not lead to recovery in tort for damages resulting from the termination itself.  (Brooks, supra, 29 Cal.App.4th at p. 591, 34 Cal.Rptr.2d 785.)   However, it went on to find that certain damages from this misrepresentation could be recovered in a tort claim if they were separate from the termination.  “One example of such damages,” the court found, “would be where an employee incurs expenses to uproot his or her family to accept a job that was fraudulently represented by the employer.”   It seems manifest to us that such damages result from the termination itself.   It is unquestionably true that any expenses and emotional distress involved in relocating occurred long before the termination, as did the misrepresentation.   It is the termination, alone, however, which converts these expenses to recoverable damages.   Therefore, Hunter requires that the plaintiff be limited to contractual remedies for them.6

Stewart v. Jackson and Nash (2d Cir.1992) 976 F.2d 86, provides an example of an employment case where the misrepresentation and the damages are independent of any termination.   In Stewart, an attorney left her job in the environmental law department of one New York firm to work for another, based on its representations that it had secured a major environmental client, that she would do the work for that client and head up its environmental law department.   After working at the firm for 18 months on non-environmental, general litigation matters, she learned that the “major environmental client” was fictitious.   When she was terminated some months later, she sued for fraud.   The court concluded New York law prohibited tort claims in connection with an employee discharge.   However, the attorney was permitted to maintain her claim that her career development as an environmental lawyer had been damaged by her reliance on the misrepresentation, because this was a damage element separate from those resulting from the termination.

 For purposes of our decision, we will assume that New York law is the same as California's, despite the strong business protection policy enunciated in Foley and reiterated in Hunter.   Where a misrepresentation has induced an employment contract and where the damages claimed would have occurred in the absence of a termination, neither Foley nor Hunter should bar the claim.   Notides' attempt to rely on Stewart is misplaced however.   In our case the damages are not separate from the termination and the demurrer was properly sustained.

 A careful examination of appellant's tort claims reveals that they simply restate the theory that he was damaged when WCC violated its prior assurances and terminated him.   In his tort claims, appellant argues that, at the time of the second hiring, he was assured by WCC that they had a long-term commitment to the office being opened, he would not be discharged without good cause and he would work in the area of new business development.7  Instead of developing new business, appellant contends that the job quickly proved to involve “deflecting” new business, arguably resulting in a major professional embarrassment to him.   Assuming the accuracy of all of these contentions, as we must, does little to assist appellant.   The injury he describes, first a reduction and then an elimination of his work, is not separate from, but quite precisely the damage caused by the termination process.

Hine v. Dittrich (1991) 228 Cal.App.3d 59, 278 Cal.Rptr. 330, is instructive.   In Hine, a fired employee sued his employer for negligent supervision of a second employee.   In finding this tort claim barred by Foley, the court noted that, “While the discharge of an employee may take little more than the time necessary to say, ‘You're fired,’ the circumstances leading up to a termination decision are rarely instantaneous.   During that often lengthy series of precursor events, it can frequently be alleged that the employer acted unreasonably or ‘should have’ done something different.   Such allegations do not establish a tort of negligence independent of the discharge itself.   As long as the alleged injury would not have occurred but for the employment termination, Foley indicates that the employee is generally limited to a contractual remedy.”  (228 Cal.App.3d at pp. 64–65, 278 Cal.Rptr. 330.)

Like Hine, the termination process caused the injury alleged by Notides;  apart from that process no claim would exist.   As WCC struggled with the business problems that would eventually cause the reduction in force, one strategy it employed was to reduce new business development and become more selective in the deals it funded.   This meant that appellant worked at WCC for several months without promoting the type and number of deals that he had anticipated.   In turn, this may have damaged his professional development, and his reputation in the marketplace may have been adversely affected.   This is very different from the situation in Stewart.   There, the attorney suffered the injury alleged prior to any attempt to terminate her.   In fact, the misrepresentation she relied on would have caused the harm alleged if she had never been discharged.   In our case, however, the damage was caused by “precursor events” to the termination.   As Hine teaches, this damage may only be recompensed in a contract action, even though it is alleged that the employer acted unreasonably or could have done something differently.

A contrary ruling would create a multitude of tort claims rooted in the termination process.   Reductions of workload are not uncommon “precursors” of a layoff.   Sales personnel or production managers, like business developers, might accomplish little during this slowdown.   They, too, might have a difficult time explaining this lack of production to future employers, and so, might be caused the same “professional embarrassment” claimed by Notides.   Making this actionable in tort, however, would violate both the spirit and the letter of Foley and Hunter.   Therefore, we affirm the trial court's decision to sustain the demurrer and dismiss appellant's misrepresentation claims.   Since the defect goes to the heart of appellant's allegations, and there is no realistic possibility that it can be cured by an amendment, we also affirm the trial court's decision to deny leave to amend.


The judgment is affirmed.



1.   The third cause of action related to a different defendant, James Murray.   A demurrer filed by that defendant to the first amended complaint was sustained without leave to amend and Murray was ordered dismissed from the action.   No appeal has been taken from that order.

2.   The trial judge struck certain statements in the declaration and respondent has not appealed that decision.

3.   The testimony is as follows:“Q. Did you have an understanding at the time that you approved creating the position in San Francisco that that position in San Francisco might turn out to be a bust because there wasn't much of a deal flow in northern California?“A. We believed there was adequate deal flow in northern California.   Any time you create a new position or open a new office it's possible that either the person you're hiring or that particular region of the country will not give you the business that you had hoped for.   And if it's not profitable then you may indeed have to close an unprofitable operation.“Q. Did you have an idea about how long you would give the operation in San Francisco to prove whether or not it would be profitable?“A. We had no specific—“․“Q. Well, did you have any expectation whatever as to how long you would allow this position to exist in San Francisco before assessing whether it was profitable or not?“A. No.“Q. At the time that you approved creating this position in San Francisco did you envision that it might be opened and closed within three months because it wasn't profitable within the first three months?“A. No.“Q. Why not?“A. I would have allowed more time than that to determine whether the region would indeed prove out.“Q. How much more time would you have allowed than that?“A. Would have depended on the economy and whether the person we had hired was the right person.   Whether the person we had hired was showing up for work.   Any number of various inputs would have gone into that decision over time.“Q. But you were able to tell me at least that three months would have been too short a time to leave that position in operation;  is that correct?“A. Assuming the person we hired was performing and was coming to work and was out there in the market and doing what they were expected, I believe I would have allowed more than three months.“Q. Okay.   Continuing with those assumptions that you just stated, would you have allowed at least six months?“A. I don't know.

4.   Appellant suggests that Jenkins knew that the problem would be handled by curtailing new deals, not simply being selective.   In his deposition he stated that “the step of curtailing new business is a logical one to take.”   Appellant seems to misunderstand the word “curtail” to mean “eliminate.”   Even if Jenkins made the same error, he said that this decision to curtail was not made until the Fall of 1990, several months after the hiring and shortly before Notides was informed of the decision.

5.   According to the May 30, 1990 letter confirming the second job offer, the performance bonus of $50,000 was payable in “early 1991 contingent upon active employee status through January 31, 1991.”   (Emphasis added.)

6.   Following oral argument, counsel for appellant alerted us to the opinion in Lazar v. Superior Court (1994) 30 Cal.App.4th 496, 35 Cal.Rptr.2d 578.   In Lazar, plaintiff claimed that he had been induced to relocate to California to take a new job by defendant's misrepresentation of job security.   He sued following termination.   The court found that Hunter did not bar his claims because “[i]t merely bars the limited category of fraud claims arising from employer misrepresentations which are made to effect termination.”  (Id. at p. 510, 35 Cal.Rptr.2d 578.)   For the reasons stated above we respectfully disagree.

7.   It is of interest to note that we have already found that these assurances were not, in fact, misrepresentations.   Therefore, even if we had disagreed with the trial court and found that the demurrer was improvidently sustained, the appellant could not have prevailed.

SIMONS, Associate Justice.* FN* Assigned by the Chairperson of the Judicial Council.

SMITH, Acting P.J., and PHELAN, J., concur.

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