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Foley v. Interactive Data Corp.

Supreme Court of California

December 29, 1988

L.A. No. 32148

Opinion

 [*662]  [**374]  [***212]    After Interactive Data Corporation (defendant) fired plaintiff Daniel D. Foley, an executive employee, he filed this action seeking compensatory and punitive damages for wrongful discharge. In his second amended complaint, plaintiff asserted three distinct theories: (1) a tort cause of action alleging a discharge in violation of public policy ( Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167 [164 Cal.Rptr. 839, 610 P.2d 1330, 9 A.L.R.4th 314]), [****3]  (2) a contract cause of action for breach of an implied-in-fact promise to discharge for good cause only (e.g., Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311 [171 Cal.Rptr. 917] [all references are to this case rather than the 1988 posttrial decision appearing at 203 Cal.App.3d 743]), and (3) a cause of action alleging a tortious breach of the implied covenant of good faith and fair dealing (e.g., Cleary v. American Airlines, Inc. (1980) 111 Cal.App.3d 443 [168 Cal.Rptr. 722]). The trial court sustained a demurrer without leave to amend, and entered judgment for defendant.

The Court of Appeal affirmed on the grounds (1) plaintiff alleged no statutorily based breach of public policy sufficient to state a cause of action pursuant to Tameny; (2) plaintiff's claim for breach of the covenant to discharge only for good cause was barred by the statute of frauds; and (3) plaintiff's cause of action based on breach of the covenant of good faith and fair dealing failed because it did not allege necessary longevity of employment or express formal procedures for termination of employees. We granted review to consider each [****4]  of the Court of Appeal's conclusions.

 [*663]  We will hold that the Court of Appeal properly found that plaintiff's particular Tameny cause of action could not proceed; plaintiff failed to allege facts showing a violation of a fundamental public policy. We will also conclude, however, that plaintiff has sufficiently alleged a breach of an "oral" or "implied-in-fact" contract, and that the statute of frauds does not bar his claim so that he may pursue his action in this regard. Finally, we will hold that the covenant of good faith and fair dealing applies to employment contracts and that breach of the covenant may give rise to contract but not tort damages.

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47 Cal. 3d 654 *; 765 P.2d 373 **; 254 Cal. Rptr. 211 ***; 1988 Cal. LEXIS 269 ****; 3 I.E.R. Cas. (BNA) 1729; 110 Lab. Cas. (CCH) P55,978

DANIEL D. FOLEY, Plaintiff and Appellant, v. INTERACTIVE DATA CORPORATION, Defendant and Respondent

Prior History:  [****1]   Superior Court of Los Angeles County, No. C488289, Ricardo A. Torres, Judge.

Disposition:  Accordingly, that portion of the judgment of the Court of Appeal affirming the dismissal of plaintiff's causes of action alleging a discharge in breach of public policy and a tortious breach of the implied covenant of good faith and fair dealing is affirmed. That portion of the judgment of the Court of Appeal affirming the dismissal of the cause of action alleging an implied-in-fact contract not to discharge except for good cause is reversed, and the case is remanded for action consistent with the views expressed herein. 1

CORE TERMS

insured, bad faith, cases, termination, fair dealing, tort remedy, cause of action, good faith, parties, courts, contracts, employees, damages, good cause, decisions, promise, public policy, employment contract, breach of the implied covenant, employment relationship, wrongful discharge, tort damages, contract damages, breach of contract, give rise, discharged, remedies, tort action, tort cause of action, statute of frauds

Labor & Employment Law, Wrongful Termination, Breach of Contract, Express Contracts, Employment Relationships, At Will Employment, General Overview, Employment Contracts, Conditions & Terms, Discharges, Exceptions, Tort Exceptions, Public Policy Violations, Implied Contracts, Duration of Employment, Public Policy, Business & Corporate Law, Duties & Liabilities, Knowledge & Notice, Duty of Agent to Disclose, Torts, Vicarious Liability, Agency Relationships, Civil Procedure, Responses, Defenses, Demurrers & Objections, Defects of Form, Appeals, Standards of Review, Employee Privacy, Disclosure of Employee Information, Business & Corporate Compliance, Contracts Law, Contract Formation, Execution & Delivery, Contracts Law, Statute of Frauds, Duration of Employment, Permanent Employment, Enforcement, Duties & Liabilities of Parties, Requirements, Signatures, Performance, Statute of Frauds, Breaches, Governments, Legislation, Interpretation, Effect & Operation, Retrospective Operation, Types of Contracts, Quasi Contracts, For Cause Standard, Employer Handbooks, Covenants, Contract Interpretation, Good Faith & Fair Dealing, Commercial Law (UCC), Remedies, Limitations & Modifications, Application & Construction, Contract Provisions, Implied Covenant of Good Faith, General Provisions (Article 1), Courts, Judicial Precedent, Breach, Defenses, Procedural Matters, Commencement & Prosecution