Prevost v. First Western Bank

Opinion

Plaintiff Robert Prevost appeals from summary judgment entered in favor of defendant First Western Bank in an action arising from Prevost’s termination from employment and the bank’s accusation that he accepted a gratuity in connection with processing of loan. We conclude the court erred in granting First Western’s motion for summary judgment and therefore reverse.

Factual and Procedural Background

First Western hired Prevost as a loan officer on December 12, 1983, at a salary of $20,000 a year. Prevost’s duties included gathering data on loan applicants, evaluating that data and preparing loan packages for presentation to his superiors for approval. The terms of the oral employment agreement provided for a 90-day probationary period. First Western provided Prevost with a copy of its personnel policy manual which included the following paragraph regarding probationary status: “All new employees are hired on a trial basis for the first 3 months. This period gives the new

In February 1984 Paul J. Crock applied to First Western for a $200,000 loan on behalf of his corporation, Paul J. Crock, Inc. Marco Toorop, the bank’s executive vice president, asked Prevost to prepare the loan package. The Crock loan was approved by the loan committee and funded in March 1984.

While First Western was processing the loan, Crock approached several bank employees, including Prevost, about purchasing a condominium unit he had for sale. Prevost expressed an interest and on March 30, 1984, Prevost purchased the condominium from Crock for $65,000 and no money down. Prevost agreed to rent the condominium to Crock’s daughter for one year at a reduced rent. He also agreed to pay fees for escrow, title insurance, termite inspection and other incidental expenses. Prevost stated he negotiated the purchase only after informing Robert McNeil, the bank president.

Meanwhile, Toorop and McNeil were engaged in a power struggle over presidency of the bank. Toorop had informed Prevost on March 11, 1984, that Prevost was “his boy” and could look forward to a long and successful career at First Western. The next day Toorop told Prevost he would be taking McNeil’s place as president and suggested Prevost align himself with Toorop. Prevost told McNeil about Toorop’s comments.

On March 13, immediately after completion of the 90-day probationary period, Toorop dismissed Prevost from his job as a loan officer. Prevost had not been informed that his work was in any way deficient or that dismissal was being contemplated. McNeil was not consulted about Prevost’s termination and did not approve Toorop’s actions. McNeil resigned later the same day. First Western later informed a potential employer that Prevost had been terminated because he was not following standard operating pro

The defense of privilege in defamation actions “presents a conflict . . . between two principles equally regarded by the law — the right of the individual, on one hand, to enjoy his reputation unimpaired by defamatory attacks, and, on the other hand, the necessity, in the public interest, of a free and full disclosure of facts in the conduct of the legislative, executive and judicial departments of the government.” (Veeder, Absolute Immunity in Defamation: Judicial Proceedings (1909) 9 Colum.L.Rev. 463 .)

Civil Code section 47 defines various classifications of privileged communications. Subdivision 2 states in part: “A privileged publication or broadcast is one made—

“2. In any (1) legislative or (2) judicial proceeding, or (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable [by writ of mandate]. . . .” The focus of Civil Code section 47, subdivision 2 is the proceeding in which the publication occurs, not the fact, as argued by First Western, that the defendant is required by law to make the publication. “When the occasion arises, the right arises; when the occasion is past— when the facts or relation cease to exist — the right disappears.” (Veeder, supra, 9 Colum. L. Rev. at p. 468.)

First Western’s defense of absolute privilege emphasizes the phrase “in any other official proceeding authorized by law.” Our courts interpret this language to encompass “those proceedings which resemble judicial and legislative proceedings, such as transactions of administrative boards and quasi-judicial and quasi-legislative proceedings.” (Ascherman v. Natanson (1972) 23 Cal.App.3d 861 , 865 [ 100 Cal.Rptr. 656 ].) Three primary factors determine the nature of these proceedings: (1) whether the administrative body is vested with discretion based upon investigation and consideration of evidentiary facts, (2) whether it is entitled to hold hearings and decide the issue by the application of rules of law to the ascertained facts and (3) whether its power affects the personal or property rights of private persons. (Id. at p. 866.) It is not enough that state law requires the creation of, for example, a review committee. Civil Code section 47, subdivision 2 applies exclusively to government agencies. (Hackethal v. Weissbein (1979) 24 Cal.3d 55 , 61 [ 154 Cal.Rptr. 423 , 592 P.2d 1175 , 9 A.L.R.4th 791 ].)

First Western failed to plead the defense of qualified privilege under Civil Code section 47, subdivision 3 or argue qualified privilege in its motion for summary judgment. Thus there was no reason for Prevost to counter the defense by introducing evidence of malice. The issue of qualified privilege is not properly before us in this appeal.

B.

Having concluded the proof of loss statement was not subject to absolute privilege under Civil Code section 47, subdivision 2, we next consider whether there is a triable issue as to the truth or falsity of that communication, that is, whether Prevost accepted preferential treatment in the purchase of Crock’s condominium in violation of 18 United States Code section 215.

During the relevant period 18 United States Code section 215 provided; “(a) Whoever, being an officer, director, employee, agent, or attorney of any financial institution . . . except as provided by law, directly or indirectly, asks, demands, exacts, solicits, seeks, accepts, receives or agrees to receive anything of value, for himself or for any other person or entity, other than such financial institution, from any person or entity for or in connection with

There is also a question as to whether Prevost accepted or received “anything of value.” Although Prevost testified that at the time he purchased his unit he knew the condominiums were worth at least $70,000, six months later another buyer paid the same as Prevost for a similar unit and traded Crock carpet in lieu of the $5,000 down payment. The record also establishes that Prevost paid the escrow and title insurance fees, the cost of termite inspection, and other incidental closing costs, which he claimed were not negotiated in lieu of the down payment. In addition, he paid, albeit indirectly, the additional sum of approximately $1,200 by agreeing to reduce the rent charged to Crock’s daughter. We therefore conclude there are triable issues of material fact as to the truth of the bank’s proof of loss statement.

A.

Prevost’s second cause of action for breach of the oral employment agreement alleges he was discharged without just cause and without the authority of First Western’s board of directors after he had completed the 90-day probationary period. In its motion for summary judgment First Western argued the contract cause of action was barred by the statute of frauds. The bank acknowledges it incorrectly relied on two cases pending before the California Supreme Court, Foley v. Interactive Data Corp. (1985) 193 Cal.App.3d 28 [ 219 Cal.Rptr. 866 ], review granted January 30, 1986 (2-B009001), and Santa Monica Hospital v. Superior Court (1985) 192 Cal.App.3d 138 [ 218 Cal.Rptr. 543 ], review granted January 16, 1986 (2-B012103), in support of its position. The trial court found that First Western was entitled to judgment as a matter of law on the contract theory of recovery.

Given the present uncertainty with regard to the statute of frauds issue, we adopt the approach taken in Gray v. Superior Court (1986) 181

Ill

In the third cause of action Prevost asserts the bank breached the implied covenant of good faith and fair dealing by failing to give notice of its intention to discharge him or grounds for the discharge as required by the personnel policy manual. He further alleges that First Western dismissed him without cause.

First Western argues it was not required to give Prevost notice of its intent to fire him. It says the personnel policy manual did not require First Western to provide Prevost with the reasons for termination at the time of termination. The bank also claims Prevost lacked the longevity of service necessary to state a cause of action for breach of implied covenant, citing Cleary v. American Airlines, Inc. (1980) 111 Cal.App.3d 443 [ 168 Cal.Rptr. 722 ].

Although longevity of satisfactory service is helpful to a plaintiff in establishing breach of duty of fairness toward him, that factor is not essential to the cause of action. (Gray v. Superior Court, supra, 181 Cal.App.3d at p. 821.) “. . . [A] breach of the implied covenant of good faith and fair dealing in employment contracts is established whenever the employer engages in ‘bad faith action extraneous to the contract, combined with the obligor’s intent to frustrate the [employee’s] enjoyment of contract rights.’ ” (Ibid., citing Shapiro v. Wells Fargo Realty Advisors (1984) 152 Cal.App.3d 467 , 479 [ 199 Cal.Rptr. 613 ].) Thus an action will lie where the existence of good cause for discharge is asserted by the employer without a good faith belief that good cause in fact exists. (Koehrer v. Superior Court (1986) 181 Cal.App.3d 1155 , 1171 [ 226 Cal.Rptr. 820 ], citing Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752 , 769-770 [ 206 Cal.Rptr. 354 , 686 P.2d 1158 ].) “The true reasons for an employee’s dismissal, and whether they show bad faith rather than dissatisfaction with services and reflect intention to deprive the discharged employee of the benefits of the contract, are evidentiary questions most properly resolved by

Prevost’s last two causes of action seek damages for intentional and negligent infliction of emotional distress. The elements of a prima facie case for intentional infliction of emotional distress include: “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.” (Cervantez v. J. C. Penney Co. (1979) 24 Cal.3d 579 , 593 [ 156 Cal.Rptr. 198 , 595 P.2d 975 ].) Conduct may be considered outrageous when a defendant abuses a position that gives it the power to damage plaintiff’s interest. (Agarwal v. Johnson (1979) 25 Cal.3d 932 , 946 [ 160 Cal.Rptr. 141 , 603 P.2d 58 ].) “ ‘Whether treated as an element of the prima facie case or as a matter of defense, it must also appear that the defendants’ conduct was unprivileged.’” (Cervantez v. J. C. Penney Co., supra, 24 Cal.3d at p. 593; quoting Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376 , 394 [ 89 Cal.Rptr. 78 , 47 A.L.R.3d 286 ].)

At summary judgment First Western argued the emotional distress claims failed because there were no triable issues in the first three causes of action. The bank also argued its filing of the proof of loss statement could not constitute outrageous conduct because the filing was required by OCC. On appeal the bank shifts the focus of its argument and asserts Prevost has submitted no evidence of emotional distress. It also argues the bank’s filing of the proof of loss statement was privileged.

To be granted summary judgment, the moving party’s supporting papers must be sufficient to sustain a judgment in his favor. When the defendant is the moving party, he must negate completely an essential element of plaintiff’s case or establish a complete defense. (Fireman ’s Fund Ins. Co. v. City of Turlock (1985) 170 Cal.App.3d 988 , 994.) We have already decided First Western’s defense of absolute privilege fails and that there are triable issues as to the truth of the proof of loss statement and the basis for Prevost’s dismissal. The bank offered no evidence to negate allegations of severe

Disposition

Judgment reversed. First Western to bear all costs.

Kremer, P. J., and Butler, J., concurred.