2018-00229220-CU-BC

Gabriel Santos vs. Ca Dept. of Forestry and Fire Protection

Nature of Proceeding: Hearing on Demurrer to Plaintiff’s First Amended Complaint and Motion

Filed By: Koenigsberg, Marc B.

Defendant State of California, Department of Forestry and Fire Protection’s (Cal Fire) demurrer is OVERRULED.

Cal Fire’s Motion to Strike portions of the first amended complaint (FAC) is GRANTED in part and DENIED in part.

Overview

Cal Fire’s request for judicial notice of the State Personnel Board’s (SPB) Decision Approving Stipulation for Settlement dated 9/13/16 is GRANTED. In taking judicial notice, the court accepts the existence of the document and the existence of its contents.

Plaintiff Gabriel Santos (Santos) alleges that after graduating from a California

Commission on Peace Officer Standards and Training (POST) academy in 2011, he became a peace officer. Santos served Cal Fire between 2011 and 2016. In 2015, Cal Fire suspended Santos’ peace officer status pending an administrative investigation. Cal Fire served Santos with a Notice of Adverse Action (NOAA) in April 2016 and dismissed him soon after. At some point, Cal Fire notified POST of Santos’ dismissal, and POST changed Santos’ peace officer status to “terminated.”

Santos appealed his dismissal in an SPB proceeding. Santos and Cal Fire settled the appeal in a written agreement (Agreement) that the SPB adopted as its decision in the appeal, i.e., the Decision Approving Stipulation for Settlement (SPB Decision). (See RJN.) Among other things, the Agreement provides:

1. CAL FIRE agrees to, and hereby does, withdraw the NOAA, effective close of business on April 18, 2016. CAL FIRE agrees to remove the NOAA and supporting documents from the Appellant’s Official Personnel File (OPF) and supervisory file within 30 days after SPB’s approval of this Agreement.

2. Appellant agrees to, and hereby does, resign from his position as

Assistant Chief with CAL FIRE, effective close of business on April 18, 2016. […] CAL FIRE agrees to, and hereby does, accept [Santos’] resignation. […]

(See RJN.)

The SPB Decision adopting the Agreement is dated 9/13/16. According to Santos, however, Cal Fire did not change his OPF to reflect his “resigned” status until approximately 1/12/17. He alleges he lost an employment opportunity as a result.

The Agreement does not expressly require Cal Fire to insert into Santos’ OPF the fact of his resignation. Nor does it expressly require Cal Fire to contact POST or otherwise facilitate POST’s alteration of its own files to reflect Santos’ resignation. Similarly, the Agreement does not expressly require Cal Fire to inform inquiring employers that Santos resigned, rather than was terminated. Nonetheless, Santos alleges that the Agreement contains Cal Fire’s implied promises to take such actions. Cal Fire disagrees.

Santos alleges that Cal Fire’s failure to perform its implied promises has prevented him from obtaining employment as a peace officer. The FAC contains causes of action against Cal Fire for “Breach of Implied Terms of Written Contract,” breach of the implied covenant of good faith and fair dealing, and writ of mandamus. Cal Fire demurs to the first two causes of action on jurisdictional grounds. In addition, it demurs to all three causes of action on grounds the allegations fail to state a valid cause of action. Santos opposes.

Discussion

Jurisdiction

The demurrer is overruled.

Cal Fire argues the court lacks jurisdiction because Santos failed to exhaust

administrative remedies. Cal Fire relies on Government Code § 18710 to support this argument. Cal Fire highlights the portion of § 18710 authorizing the SPB to enforce its own orders:

If any appointing power or other party refuses or neglects to comply with any such order or decision, the board may, in its sole discretion, after investigation with or without a hearing, do any of the following:

(a) Issue further findings interpreting or clarifying the order or decision.

(b) Issue further findings as to whether an appointing power or other party has or has not complied with the order or decision.

(c) Issue an order to show cause, directed to the appointing power, why the board should not file a petition for a writ of mandate to compel the appointing power to comply with the order or decision.

Elsewhere, however, the same section provides:

This procedure for the enforcement of the orders and decisions of the board is in addition to any other means or procedure which may be provided by law. Nothing in this section shall preclude a party to a proceeding before the board from seeking judicial enforcement of an order or decision of the board. (Emphasis added.)

This language led the court in Lomeli v. Department of Corrections (App. 3 Dist. 2003) 108 Cal.App.4th 788, 795 to conclude that a mandate petitioner was entitled to seek judicial enforcement of an SPB order once the order became final. Cal Fire does not argue that the SBP Decision in this case was not final when Santos filed the complaint. Nor has it explained why Santos must exhaust administrative remedies before filing a civil action for breach of contract when, under Lomeli, he is not required to exhaust such remedies before seeking writ relief.

The fact that Santos was a public employee, and that public employment in California is generally statutory in nature rather than contractual, does not alter the outcome. (See, e.g., Guarino v. County of Siskiyou (App. 3 Dist. 2018) 21 Cal.App.5th 1170, 1184 [“’The public employee, thus, can have no vested contractual right in the terms of his or her employment, such terms being subject to change by the proper statutory authority’”].) Santos does not allege the breach of terms of his employment. He contends he and Cal Fire executed a separate contract that governs the characterization of his separation. Absent a case holding that a public employee may not sue in contract in such circumstances, the court rejects Cal Fire’s contrary argument.

Finally, the court is not persuaded that, as matter of law, the SPB’s adoption of the Agreement as its decision on appeal destroyed any right the parties otherwise had to sue on the Agreement. Public employees and their employers may, but are not required, to submit their settlements to the SPB for adoption as the latter’s decision. (See Larson v. SPB (1994) 28 Cal.App.4th 265, 280-281.) Moreover, Santos seeks contract damages, and Cal Fire does not explain how he could obtain such relief in an administrative or writ proceeding. Given this, and given that SPB action on a decision

incorporating a settlement does not preclude other enforcement mechanisms, (Gov’t Code § 18710), this court may entertain the current contract dispute.

Failure to State a Cause of Action

The First Cause of Action for Breach of Implied Terms of Written

Contract

The demurrer is overruled.

Cal Fire argues the terms Santos alleges are implied in the Agreement would impermissibly rewrite the Agreement. Cal Fire also argues the implied terms contradict the express terms. And Cal Fire argues Santos cannot meet the test for implied contractual terms set forth in Lonely Maiden Productions, LLC v. GoldenTree Asset Mgmt., LP [Lonely Maiden] (2011) 201 Cal.App.4th 368, 377:

“Implied terms are not favored in the law, and should be read into contracts only upon grounds of obvious necessity. “A court may find an implied contract provision only if (1) the implication either arises from the contract’s express language or is indispensable to effectuating the parties’ intentions; (2) it appears that the implied term was so clearly within the parties’ contemplation when they drafted the contract that they did not feel the need to express it; (3) legal necessity justifies the implication; (4) the implication would have been expressed if the need to do so had been called to the parties’ attention; and (5) the contract does not already address completely the subject of the implication. [Citations.]” (Emphasis added.)

With respect to Lonely Maiden, Cal Fire argues that Santos cannot establish any “legal necessity” requiring the imposition of implied contractual terms. Santos counters that, without the implied terms, he receives nothing in exchange for withdrawing his SPB appeal. In other words, Santos equates “legal necessity” with contractual consideration. There is support in the case law for this notion of legal necessity. (See Avidity Partners, LLC v. State of California (App. 3 Dist. 2013) 221 Cal.App.4th 1180, 1208.) As result, the court will not sustain the demurrer on grounds Santos cannot establish a legal necessity for the implied terms.

Cal Fire also argues that the allegations and incorporated Agreement cannot establish that the implied terms either arise from the Agreement’s express terms or are “indispensable” within the meaning of Lonely Maiden. Santos responds that an implied duty to inform inquiring employers that he had resigned arises from Cal Fire’s promise to “accept” the resignation. At this point, the court accepts Santos’ position. Perhaps extrinsic evidence will ultimately demonstrate that the parties intended for Cal Fire to allow Santos to resign while still treating him as a terminated employee when other employers made inquiries. But the word “accept” is susceptible of another interpretation, and the court cannot rule out that a duty to inform employers that Santos resigned arises from the promise to accept the resignation.

In overruling the demurrer, the court is aware of Cal Fire’s position that parol evidence “would not be permitted in this instance to explain any unexpressed

intentions.” (Moving Memo. at 18, fn. 6.) A court, however, must provisionally receive extrinsic evidence and then decide whether it reveals an ambiguity. (See ASP

Properties Grp., L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1267.) Because the court may not receive evidence on demurrer, it cannot rule out the existence of extrinsic evidence revealing ambiguities in the Agreement.

Finally, the court rejects Cal Fire’s argument that the allegedly implied terms contradict the Agreement’s express terms. An implied duty to inform inquiring employers that Santos resigned does not contradict an express duty to accept Santos’ resignation.

The Second Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing

The demurrer is overruled.

Cal Fire argues the second cause of action is defective because it contemplates substantive duties beyond those expressed in the Agreement:

The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made. [Citation.] The covenant thus cannot “ ‘be endowed with an existence independent of its contractual underpinnings.’ ” [Citations.] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.

(Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350, italics in original.) As stated above, the Agreement can be read as conferring upon Santos the right to submit a resignation that Cal Fire would “accept.” Hence, it is at least conceivable that Cal Fire’s alleged statements to potential employers, that it had terminated Santos, violated the implied covenant by frustrating Santos’ right to an accepted resignation.

The court also rejects Cal Fire’s argument that the second cause of action merely duplicates the first. In the first cause of action, Santos contends specific terms should be implied into the Agreement based on the factors set forth in cases such as Lonely Maiden, supra. In the second cause of action, he relies on the more general covenant implied in every contract. Because the two causes of action advance different legal theories, the court will not sustain a demurrer on grounds they are duplicative.

The Third Cause of Action Writ of Mandamus

The demurrer is overruled.

Cal Fire asserts it has failed to locate any decision in which mandamus was used to compel an agency’s compliance with implied terms in an agreement. It concedes, however, that mandamus might be used properly to compel compliance with the express terms of the Agreement. (See Moving Memo. at 21:18-25.) Hence, Cal Fire’s demurrer to the writ cause of action is essentially the same as its demurrers to the other causes of action, i.e., Cal Fire is not required to perform any implied duties under the Agreement. The court continues to reject this argument for reasons stated above. Accordingly, the demurrer to the writ cause of action is overruled.

The court disregards Cal Fire’s argument, raised for the first time in the reply, that writ relief is not available to enforce any contract. Santos has not had a fair opportunity to

respond.

The Motion Strike

The motion is granted in part and denied in part.

Most of the motion to strike is directed at portions of the FAC positing implied terms of the Agreement. For reasons discussed above, the court is not persuaded that such terms are untenable as a matter of law. Accordingly, the court will not strike references to implied terms.

The balance of the motion to strike is directed at allegations that Cal Fire enjoyed superior bargaining power when the Agreement was negotiated. These allegations appear under the second cause of action for breach of the implied covenant of good faith and fair dealing. Cal Fire cites McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 799, for the proposition that the implied covenant does not require parties to negotiate a contract in good faith. Santos does not cite any contrary authority or explain how the parties’ pre-Agreement bargaining positions are relevant to any claim or defense. Consequently, the court concludes the subject allegations are irrelevant and should be stricken. Because Santos has not demonstrated a reasonable likelihood he can render the allegations relevant through amendment, leave to amend the allegations about unequal bargaining power is denied.

Disposition

The demurrer is overruled.

The motion strike from the second cause of action allegations about unequal bargaining power is granted without leave to amend. The balance of the motion to strike is denied.

Cal Fire shall file and serve its answer to the FAC no later than 9/12/18.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.