Hunter v. Up-Right, Inc. - 6 Cal. 4th 1174, 26 Cal. Rptr. 2d 8, 864 P.2d 88 (1993)

Rule:

In essence, misrepresentations are merely the means to the end desired by the employer, i.e., termination of employment. They cannot serve as a predicate for tort damages otherwise unavailable under Foley. If the termination itself is wrongful, either because it breaches the employment contract or because it violates some well-established public policy articulated in a statute or constitutional provision, then the employee is entitled to recover damages sounding in contract or tort, respectively. But no independent fraud claim arises from a misrepresentation aimed at termination of employment. 

Facts:

Charles Hunter, a former employee, who claimed that his employer, Up-Right, Inc., had made misrepresentations that induced him to resign, brought a wrongful discharge action against Up-Right, based on breach of contract and fraud. Following a verdict in favor of Hunter on both the breach of contract and fraud theories and an award of damages that included damages for the contractual theories and for misrepresentation, the trial court entered judgment accordingly. The Court of Appeal affirmed ruling that Up-Right’s misrepresentation in the course of wrongfully terminating Hunter amounted to fraud. The court of appeals concluded that Hunter had proved a knowing misrepresentation, that was intended to defraud him into resigning, his detrimental reliance, and his resulting damage.

Issue:

Did the Court of Appeal err in ruling that Up-Right’s misrepresentation in the course of wrongfully terminating Hunter amounted to fraud?

Answer:

Yes.

Conclusion:

The court, reversing the judgment, approved damages for economic loss but refused damages for misrepresentation. The court held that Up-Right’s misrepresentation inducing Hunter to resign was wrongful termination but no independent fraud claim arose from the misrepresentation because Up-Right employed falsehood to do what it would have otherwise accomplished directly.