Procedural Posture
Plaintiff discharged employee appealed the judgment of the Superior Court of Los Angeles County (California), which affirmed the trial court's judgment sustaining defendant employer's demurrer without leave to amend in plaintiff's suit for compensatory and punitive damages for wrongful discharge.OverviewPlaintiff employee alleged that defendant employer wrongfully discharged him because he informed defendant that his new supervisor was under suspicion for embezzling from another company. Plaintiff asserted a tort cause of action for wrongful discharge in violation of public policy, a contract claim for breach of an implied-in-fact promise to discharge for good cause only, and tortious breach of the implied covenant of good faith and fair dealing. The court affirmed in part and reversed in part the sustaining of defendant's demurrer without leave to amend, holding that plaintiff's tort claim for wrongful discharge failed since no public interest was involved; that tort remedies were not available for breach of the implied covenant of good faith and fair dealing; and that plaintiff's cause of action for breach of an implied-in-fact contract promise to discharge only for good cause survived the statute of frauds, Cal. Civ. Code §1624 (a).OutcomeThe court affirmed that plaintiff's tort cause of action for wrongful discharge failed and that tort remedies were not available for breach of an implied covenant of good faith and fair dealing. The parties were represented by their respective business attorney. The court reversed the dismissal of plaintiff 's claim for breach of an implied-in-fact contract promise to discharge only for cause.Procedural PostureDefendant school district terminated a construction contract with plaintiff contractor. The contractor successfully sued the district for breach of contract. The Court of Appeal of California, Second Appellate District, Division Five, affirmed a jury's award to the contractor of general damages, based on profits the contractor did not earn on future unidentified contracts because its surety had reduced its bonding capacity. The district appealed.OverviewThe district terminated the contract when the contractor, four and a half months after the promised due date, still had not finished the project. The contractor's bonding company then hired another firm to complete the project, but it reduced the amount of bonding for the contractor. The contractor successfully sued the district for breach of contract, recovering in damages some $ 3 million dollars for potentially lost profits, which the contractor claimed it would have earned on prospective construction contracts it never won because of its impaired bonding capacity. The court of appeal concluded that those potential profits were a proper item of general damages. On appeal, the court disagreed, holding that the contractor's lost profits were not general damages. The court could not say that the parties' bargain included the contractor's potential profits on future construction projects it had not bid on and been awarded. Additionally, the contractor's lost profits were not special damages because they were not actually foreseen or foreseeable as reasonably probable to result from the district's breach.OutcomeThe judgment of the court of appeal was modified to reflect that the award for lost profits was reversed. In all other respects, the judgment was affirmed. The matter was remanded to the trial court for an award of prejudgment interest consistent with the opinion of the court of appeal.