Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-01575/USCOURTS-caed-2_02-cv-01575-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOHN HEALY,

NO. CIV. S-02-1575 LKK/DAD

Plaintiff,

v. O R D E R

MCI WORLDCOM NETWORK

SERVICE, INC., a Delaware,

corporation; ELECTRONIC

DATA SYSTEMS CORPORATION,

a foreign corporation; and 

EDS/SHL CORPORATION, a Delaware

corporation,

Defendants.

 /

 Plaintiff, John Healey, filed suit against defendants, MCI

Worldcom Network Services, Inc., Electronic Data Systems

Corporation, and EDS/SHL Corporation, alleging various causes of

action. Plaintiff’s claims arise from defendants’ purported

failure to adhere to a separation agreement entered into on

September 10, 1998. Plaintiff seeks damages in the amount of

$906,084.25 in addition to prejudgment interest, attorney’s fees

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 1 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1 In his opposition, plaintiff withdrew three other causes

of action.

2 All facts are undisputed unless otherwise noted. 

2

and punitive damages.

Pending before the court are the parties’ cross-motions for

summary judgment and/or partial summary adjudication. The

causes of action at issue in these motions are the breach of

contract, fraud, and intentional infliction of emotional

distress claims.1

I.

FACTS2

SHL Systemhouse Inc. ("Systemhouse"), a systems integration

company, hired plaintiff, John Healy, on June 4, 1993, as its

Vice President of National Systems. Plaintiff's job duties

included managing, developing, and growing state government

business. Def.'s SUF 1. Approximately a year later,

Systemhouse decided to get out of the state government business. 

On July 18, 1994, plaintiff and Systemhouse entered into a

"Settlement Agreement" where Systemhouse agreed to terminate

plaintiff on or before December 31, 1994, if the company did not

sell its state government line of business or if it did not

agree to make it a part of its "core strategy." Under the

agreement, Systemhouse promised to pay plaintiff $262,500 upon

his separation. Def.'s SUF 2. 

Systemhouse did not separate plaintiff on December 31, 1994

despite the agreement. Instead, Systemhouse retained plaintiff

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 2 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

3

and entered into another settlement agreement on February 28,

1995. As part of that agreement, Systemhouse agreed to pay

plaintiff $262,500 if it terminated his employment in the future

without cause. Def.'s SUF 3. 

Shortly thereafter, MCI Communications Corporation

purchased Systemhouse. Following the purchase, the company was

known as "MCI Systemhouse.” Plaintiff remained employed in the

same capacity after the acquisition. Def.'s SUF 4. As an MCI

Systemhouse executive, plaintiff received options to purchase

MCI stock. In his deposition, plaintiff explained that he was

awarded a "certain number of options on an annualized basis as

part of [his] overall compensation." He believed they vested,

“one-third, one-third, one-third," and were exercisable after

"one year, two years, three years." Plaintiff testified that he

believed the stock options had a total life of ten years, and

that they were not exercisable thereafter. Def.'s SUF 5, citing

Healy Dep. at 57.

 In early 1998, MCI Systemhouse informed plaintiff of its

decision to discontinue the state government services. Barbara

Iman, Vice President of Human Resources, explained to plaintiff

that MCI Systemhouse would terminate him without cause due to

that decision. Def.'s SUF 7. On May 19, 1998, the parties

entered into a "Separation Agreement and General Release," that

set forth the term of Plaintiff's separation. The agreement

provided the plaintiff would be retained "through August 1, 1998

at which time [he] will be terminated." The agreement further

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 3 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

provided that MCI Systemhouse would pay plaintiff $262,500 in

severance within ten days of his termination. It also stated

that plaintiff "will be permitted to exercise his stock option

grants in accordance with MCI's Stock Option Plan. The terms

and conditions of the deferred incentive program for a

termination without cause will apply." Def.'s SUF 8. Although

plaintiff agreed to an August 1, 1998 separation date, he told

his manager that he hoped to stay employed longer because he

expected MCI to merge with Worldcom in the near future. Def.'s

SUF 9. 

On July 22, 1998, plaintiff learned that MCI Systemhouse

agreed to continue his employment through December 31, 1998. 

Although plaintiff wished to work through the end of the year,

he wanted to ensure that he had the right to file for disability

benefits during that time. Over the course of several weeks,

plaintiff worked with Barbara Iman to reach an agreement that

would permit him to work through the end of the year and still

be able to file for disability benefits, if necessary. Def.'s

SUF 10.

 On July 30, 1998, Iman told plaintiff that if an employee

who is to be terminated files for disability, that individual's

separation is placed on hold until he or she returns from

disability leave. According to Iman, under MCI’s disability

policy, an employee who was on disability could not be

terminated. Iman also told plaintiff that he needed to file for

disability benefits by the end of the next day because his

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 4 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

5

employment was to terminate on August 1, 1998 per the separation

agreement. Def.'s SUF 11. 

 Iman proposed that plaintiff be separated as agreed on

August 1, 1998 on the following day, but be retained thereafter

as an independent contractor. Under that scenario, however,

plaintiff would not be entitled to long-term disability benefits

as an independent contractor. Plaintiff did not agree to Iman's

proposal. Per the May 1998 separation agreement, plaintiff was

to be separated the next day, but MCI did not separate him on

August 1, 1998. Rather, on August 3, 1998, Iman told plaintiff

that MCI would draft a new agreement with a December 31, 1998

separation date. Plaintiff continued to work as the parties

prepared the new agreement. 

On August 19, 1998, Iman told plaintiff that if he went on

disability leave prior to December 31, 1998, he would not be

terminated. She explained that he would not be separated until

he returned from the disability leave, at which time he would

receive severance pay, because his severance payment was "100%

tied to date of separation." Iman explained that Systemhouse

could not legally terminate plaintiff if he were on disability. 

See Healy Dep. at 129-135; Iman Dep. at 101-102 (2002); Pl.’s

Ex. U (Iman e-mail stating that “legally Systemhouse could not

terminate [plaintiff] until he returned from disability”). 

Plaintiff questioned the appropriateness or accuracy of these

statements, but did not investigate their accuracy until after

December 31, 1998. Def.'s SUF 15. 

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 5 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6

Plaintiff and MCI Systemhouse Corp. eventually entered into

a revised "Separation Agreement and General Release" on

September 10, 1998 ("Revised Separation Agreement"). Although

the initial separation agreement stated that plaintiff would be

separated on August 1, 1998, he remained employed -

notwithstanding the absence of a new agreement - for more than

five weeks before accepting the revised agreement. Def.'s SUF

15; Pl.'s SUF 1, 2. The Revised Separation Agreement provided

that: "Subject to Employee's compliance with Paragraph 1.4

below, MCI agrees to retain employee at his current annual base

rate of salary, through December 31, 1998, at which time

Employee will be terminated. Employee's termination will be

designated as a termination without cause. MCI further agrees

to continue to pay Employee his bi-weekly guaranteed through

December 31, 1998, or his actual date of termination if

earlier." Def.'s SUF 16. 

The Separation Agreement executed by Healy in September

1998 provided that "MCI will pay Employee a lump sum payment in

the amount of $262,500 within 10 days of his termination." 

Pl.'s SUF 4. Paragraph 1.3 of the Separation Agreement

specified that:

Upon the full completion and execution of the

Agreement and Release, Employee will remain eligible

to receive his Retention Bonus in accordance with

Program Guidelines and will be considered an

involuntary termination without cause. Employee will

be permitted to exercise stock option grants in

accordance with MCI's Stock Option Plan. The terms

and conditions of the 1997 deferred incentive program

for a termination without clause will apply . . . . 

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 6 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7

Pl.'s SUF 5. 

 Paragraph 3.5 of the "Non-Qualified Stock Option Agreement

for Key Employees (1998 Options)" (“Stock Option Plan”)

stipulated:

Disability: Notwithstanding Section 3.3, if you become 

disabled, the Option will be exercisable for one 

year from the date you commence receiving benefits 

under a Company sponsored Short-Term Disability Plan . . .

(Exhibit I)

Plaintiff also received stock options under the terms of an

Incentive Stock Unit ("ISU") plan in 1997 and 1998. Under the

terms of the ISU plan, plaintiff could defer any portion of his

incentive pay each year. MCI Systemhouse matched 25 percent of

the amount deferred by plaintiff. The deferred incentive pay

and the employer match were used to purchase MCI stock. The

parties dispute whether the options vested over the course of

three years, like the stock options, or would have accelerated

under the agreement and would have vested by December 31, 1998. 

Def.'s SUF 6. MCI's Incentive Stock Unit Agreement, dated

February 5, 1997 states:

3.4 Disability If you become disabled as that term is

defined in the Company's short or long term disability

plan, as the case may be, but remain employed, your

Units will continue to vest according to the schedule

set forth in Section 3.2 for the duration of your

disability. 

Section 3.2 reads:

3.2 Requirement of Active Employment on Each Vesting

Date. The incentive Stock Award Units and the Matching

Award Units will become vested and nonforfeitable only

to the extent of 33% on each of the first and second

anniversaries and 34% on the third anniversary of the

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 7 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

8

Grant Date (each, a "Vesting Date") so long as you are

employed by the Company on each Vesting Date. If you

are not employed with the Company or any affiliate of

the Company on a Vesting Date, all non-vested Units

will be forfeited . . . . 

Pl.'s Ex. E.

The agreement also indicated that "MCI and Employee

acknowledge that this Agreement does not modify any term,

condition, or provision of the MCI Communications Corporation

Stock Option Plan or any stock option agreement previously

entered into by the Parties."

Despite the prior conversation between plaintiff and Iman

concerning his potential disability status, the agreement was

silent concerning what would happen if plaintiff were on

disability leave as of December 31, 1998. Def.'s SUF 18. 

 On December 8, 1998, plaintiff filed for disability

benefits under MCI's ERISA disability plans. Hartford Life

Insurance Company ("Hartford"), the administrator of MCI's

disability plans, approved plaintiff's application for short

term and subsequently long-term disability benefits. Plaintiff

relied on the head of Human Resources and believed what she told

him, so he never asked if he could continue to receive

disability benefits if his employment were terminated. Def.'s

SUF 19. 

In January 1999, plaintiff contacted Iman and inquired

about his severance payment. She informed him that, consistent

with their prior discussions, he would not be terminated until

he returned from disability, so he was not entitled to his

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 8 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

9

severance payment at that time. Even though plaintiff believed

the separation agreement contained a termination date, he

accepted the explanation that he would not be terminated until

after he came back to employment from disability. Def.'s SUF

20, citing Healy Dep. at 147:4-20.

On or about April 22, 1999, defendant Electronic Data

Systems Corporation purchased MCI Systemhouse, and that entity

became known as EDS. Following the merger, on May 1, 1999,

plaintiff moved to the MCI corporate payroll because he was

receiving disability benefits, and those benefits could not

transfer to EDS. EDS never carried plaintiff as an employee on

its records. Def.'s SUF 21.

In August 1999, plaintiff inquired of EDS as to who would

pay his severance when he returned from disability leave.

In-house counsel for EDS, responded to plaintiff's inquiry that

"[i]t appears from the MCI LTD [long term disability] website

that an employee can perhaps continue to receive MCI LTD

benefits even though he/she is no longer an active MCI employee,

so long as he/she was an active employee when he/she commenced

benefits." Plaintiff spent the following two years trying to

determine who would pay his severance when he either returned

from disability leave, died or turned age 65. On March 14,

2002, in response to plaintiff's inquiry as to whether EDS or

MCI would pay his severance when he returned from disability

leave, counsel for MCI told plaintiff that he could have been

terminated in December 1998 even if he were receiving disability

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 9 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

10

benefits. In 2002, plaintiff demanded that MCI terminate his

employment retroactive to December 31, 1998, and make him whole

for his alleged damages. Def.'s SUF 23. 

It is now undisputed that MCI's long-term disability plan

would allow plaintiff to continue receiving long-term disability

benefits if he were terminated. Nevertheless, MCI's practice in

its administration of the long-term disability plan was not to

terminate employees who were receiving disability benefits

pursuant to the plan. Pl.'s SUF 3. MCI claims that it never

terminated plaintiff because its actions are consistent with the

terms of the separation agreement and the understanding that

plaintiff would not be separated until he returned from

disability leave. Plaintiff is, according to MCI, a current MCI

employee on a leave of absence.

As an MCI employee on disability leave, plaintiff is

eligible to receive MCI health benefits. As of February 17,

2005, plaintiff received health care benefits. He received

health benefits from MCI in prior years as well. Def.'s SUF 24.

Plaintiff believed that the actual distribution of the

stock options was controlled by MCI. Plaintiff asserts that MCI

failed to provide him access to the stock options he believed

vested as of December 31, 1998. On March 20, 2000, MCI's stock

option plan administrator told plaintiff that the stock options

plaintiff believed should have vested no later than February 5,

2000 would not vest because he was on disability leave. Def.'s

SUF 25. 

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 10 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

11

On June 13, 2002, plaintiff brought this action against

EDS, as well as MCI WorldCom Network Services, Inc., the parent

of MCI Systemhouse. On July 21, 2002 and November 8, 2002, MCI

WorldCom filed for Chapter 11 Bankruptcy. On July 28, 2004,

plaintiff and EDS agreed to dismiss MCI WorldCom from this

action, without prejudice. On August 8, 2004, the court

dismissed MCI WorldCom from the suit. Def.'s SUF 26. 

II.

SUMMARY JUDGMENT STANDARDS UNDER FED. R. CIV. P. 56

Summary judgment is appropriate when it is demonstrated

that there exists no genuine issue as to any material fact, and

that the moving party is entitled to judgment as a matter of

law. Fed. R. Civ. P. 56(c); See also Adickes v. S.H. Kress &

Co., 398 U.S. 144, 157 (1970); Secor Limited v. Cetus Corp., 51

F.3d 848, 853 (9th Cir. 1995).

Under summary judgment practice, the moving party

[A]lways bears the initial responsibility of

informing the district court of the basis

for its motion, and identifying those

portions of "the pleadings, depositions,

answers to interrogatories, and admissions

on file, together with the affidavits, if

any," which it believes demonstrate the

absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[W]here

the nonmoving party will bear the burden of proof at trial on a

dispositive issue, a summary judgment motion may properly be

made in reliance solely on the 'pleadings, depositions, answers

to interrogatories, and admissions on file.'" Id. Indeed,

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 11 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

12

summary judgment should be entered, after adequate time for

discovery and upon motion, against a party who fails to make a

showing sufficient to establish the existence of an element

essential to that party's case, and on which that party will

bear the burden of proof at trial. See id. at 322. "[A]

complete failure of proof concerning an essential element of the

nonmoving party's case necessarily renders all other facts

immaterial." Id. In such a circumstance, summary judgment

should be granted, "so long as whatever is before the district

court demonstrates that the standard for entry of summary

judgment, as set forth in Rule 56(c), is satisfied." Id. at

323.

If the moving party meets its initial responsibility, the

burden then shifts to the opposing party to establish that a

genuine issue as to any material fact actually does exist. 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

586 (1986); See also First Nat'l Bank of Ariz. v. Cities Serv.

Co., 391 U.S. 253, 288-89 (1968); Secor Limited, 51 F.3d at 853. 

In attempting to establish the existence of this factual

dispute, the opposing party may not rely upon the denials of its

pleadings, but is required to tender evidence of specific facts

in the form of affidavits, and/or admissible discovery material,

in support of its contention that the dispute exists. Fed. R.

Civ. P. 56(e); Matsushita, 475 U.S. at 586 n.11; See also First

Nat'l Bank, 391 U.S. at 289; Rand v. Rowland, 154 F.3d 952, 954

(9th Cir. 1998). The opposing party must demonstrate that the

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 12 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

13

fact in contention is material, i.e., a fact that might affect

the outcome of the suit under the governing law, Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Owens v. Local

No. 169, Assoc. of Western Pulp and Paper Workers, 971 F.2d 347,

355 (9th Cir. 1992) (quoting T.W. Elec. Serv., Inc. v. Pacific

Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987), and

that the dispute is genuine, i.e., the evidence is such that a

reasonable jury could return a verdict for the nonmoving party,

Anderson, 477 U.S. 248-49; see also Cline v. Industrial

Maintenance Engineering & Contracting Co., 200 F.3d 1223, 1228

(9th Cir. 1999).

In the endeavor to establish the existence of a factual

dispute, the opposing party need not establish a material issue

of fact conclusively in its favor. It is sufficient that "the

claimed factual dispute be shown to require a jury or judge to

resolve the parties' differing versions of the truth at trial." 

First Nat'l Bank, 391 U.S. at 290; See also T.W. Elec. Serv.,

809 F.2d at 631. Thus, the "purpose of summary judgment is to

'pierce the pleadings and to assess the proof in order to see

whether there is a genuine need for trial.'" Matsushita, 475

U.S. at 587 (quoting Fed. R. Civ. P. 56(e) advisory committee's

note on 1963 amendments); see also International Union of

Bricklayers & Allied Craftsman Local Union No. 20 v. Martin

Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

In resolving the summary judgment motion, the court

examines the pleadings, depositions, answers to interrogatories,

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 13 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

14

and admissions on file, together with the affidavits, if any. 

Rule 56(c); See also In re Citric Acid Litigation, 191 F.3d

1090, 1093 (9th Cir. 1999). The evidence of the opposing party

is to be believed, see Anderson, 477 U.S. at 255, and all

reasonable inferences that may be drawn from the facts placed

before the court must be drawn in favor of the opposing party,

see Matsushita, 475 U.S. at 587 (citing United States v.

Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam)); See also

Headwaters Forest Defense v. County of Humboldt, 211 F.3d 1121,

1132 (9th Cir. 2000). Nevertheless, inferences are not drawn

out of the air, and it is the opposing party's obligation to

produce a factual predicate from which the inference may be

drawn. See Richards v. Nielsen Freight Lines, 602 F. Supp.

1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th

Cir. 1987).

Finally, to demonstrate a genuine issue, the opposing party

"must do more than simply show that there is some metaphysical

doubt as to the material facts. . . . Where the record taken as

a whole could not lead a rational trier of fact to find for the

nonmoving party, there is no 'genuine issue for trial.'" 

Matsushita, 475 U.S. at 587 (citation omitted).

III. 

 ANALYSIS

Plaintiff argues that SHL Systemhouse’s failure to pay him

$262,500 severance payment and provide him access to his stock

options and incentive stock units (“ISUs”) was “in complete

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 14 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

15

derogation of the written contract.” Pl.’s Mot. at 19. 

Plaintiff requests that “the court order immediate payment of

the severance payment of $262,500, the ISUs in the amount of

$398,174.25, and the value of the stock options of $245,410.00,

for a total of $906.084.25.” Pl.’s Mot. at 20. Defendants, on

the other hand, argue that plaintiff’s claims are preempted by

the Employee Retirement Income Security Act (“ERISA”), that MCI

did not breach the separation agreement, and that his other

claims fail as a matter of law. 

A. THRESHOLD ISSUES

Before turning to the parties’ contentions regarding the

causes of action, the court must consider several threshold

issues.

1. EDS’s Liability

 It is undisputed that in April 1999 defendant Electronic

Data Systems Corp. purchased MCI Systemhouse, and that entity

became known as “EDS.” Following the merger, plaintiff was

moved to the MCI corporate payroll. Def.’s SUF 21. As

plaintiff points out, the question remains “as to which company

owns [sic] his severance obligations.” Pl.’s Ex. DD. EDS

concedes that “it is liable as a successor corporation to MCI

Systemhouse (the subsidiary of MCI Worldcom) if MCI breached

Plaintiff’s Separation Agreement.” Def.’s Opp’n at 10. EDS,

however, also argues that it is not liable for damages flowing

from the stock options because it “lacked control over the stock

options [plaintiff] was to receive from MCI WorldCom.” Def.’s

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 15 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

3 It is not self-evident, as EDS apparently assumes, that

lack of control equates to lack of liability. Thus, without at all

ruling, it might well be that given EDS’ position as a successor

corporation, it is liable to plaintiff with a right of indemnity

from its predecessor. In any event, given the lack of any

authority cited by EDS, the court will proceed based on EDS’ 

general acknowledgment that as a successor entity it is liable for

its predecessor’s contracts. 

16

Opp’n at 11. EDS fails to further explain its position and

cites to no authority supporting the proposition.3 The court,

therefore, accepts EDS’s general admission of liability as a

successor corporation for MCI Systemhouse’s actions.

2. Applicable Law

Plaintiff at one point suggests that New York law may be

applicable to the interpretation of the stock purchase

agreement. Pl.’s Mot. at 9. In their brief, defendants cite

exclusively to California law and nowhere does plaintiff dispute

this application of law. Rather, plaintiff responds by citing

California law as applicable to the interpretation of the

contractual dispute. See Pl.’s Mot. at 8-9. Where, in a

diversity suit, the parties have assumed that California law

applies, the court may indulge the same assumption. See

American Sheet Metal, Inc. v. Em-Kay Engineering Co., 478

F.Supp. 809, 811, n.1 (1979)(citing Brobeck, Phledger & Harrison

v. Telex Corp., 602 F.2d 866, 871, n.2 (9th Cir. 1979)).

3. ERISA Preemption

Defendants contend that plaintiff’s breach of contract,

fraud, and IIED claims are preempted by ERISA because they all

relate to his eligibility for, and receipt of, disability

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 16 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

17

benefits under MCI’s disability plans. Def.’s Mot. at 2. The

argument is unavailing. 

 ERISA provides that it “shall supersede any and all state

laws insofar as they may now or hereafter relate to any employee

benefit plan.” 29 U.S.C. § 1144(a). The Supreme Court has

noted that “[t]his language is “conspicuous for its breadth.” 

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138 (1990)

(citation omitted). The Ninth Circuit, however, has held that

ERISA preemption “has reasonable limits.” Bogue v. Ampex Corp.,

976 F.2d 1319, 1322 (9th Cir. 1992), cert. denied, 507 U.S. 1031

(1993). “[A] plaintiff’s state law claim ‘relates to’ an

employee benefit plan, in the normal sense of the phrase, if it

has a connection with or relation to such a plan.” Shaw v.

Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). Four types of

state laws “relate to” ERISA plans and are therefore preempted:

1. Laws that regulate the type of benefits or terms of ERISA

plans; 2. Laws that create reporting, disclosure, funding, or

vesting requirements; 3. Laws that provide rules for

calculation of the amount of benefits to be paid under ERISA

plans; and 4. Laws that provide remedies for misconduct growing

out of the administration of ERISA plans. Martori Bros.

Distributors v. James-Massengale, 781 F.2d 1349, 1356-57 (9th

Cir.), as amended, 791 F.2d 799 (9th Cir.), cert denied, 479

U.S. 949, 1018 (1986). The case at bar involves none of these

types of state laws. 

////

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 17 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

18

Plaintiff’s claim does not challenge any benefits

determination made by an ERISA plan, the reporting, disclosure,

funding, or vesting requirements of the disability plan, the

amount of benefits paid to him under the plan, or any misconduct

arising out of MCI’s administration of the disability plan. 

Instead, plaintiff challenges defendants’ actions as they relate

to the execution and performance of the terms and conditions of

the revised separation agreement, an issue wholly distinct from

the ERISA plan. In sum, the instant case presents a set of

facts and state law claims with “too tenuous, remote, or

peripheral” a relationship to an ERISA-governed plan for

preemption. Shaw, 463 U.S. at 100 n. 21. Cf. Farr v. US West

Inc., 58 F.3d 1361, 1366 (9th Cir. 1995)(participants’ fraud

state law claim was not preempted by ERISA where plaintiffs

challenged defendants’ misrepresentations regarding tax

liability independent of the plan); Ellenberg v. Brockway, Inc.,

763 F.2d 1091, 1096 (9th Cir. 1985)(state law claims such as

fraud and deceit and breach of contract were preempted by ERISA

only where they related to the improper handling of claims under

benefit plans directly connected with the employee benefit

plan). 

B. BREACH OF CONTRACT CLAIM

1. The Terms of the Agreement

Plaintiff maintains that, under the September 1998

separation agreement and general release, he was entitled to the

$262,500 plus all of his deferred income by way of ISUs and

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 18 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

19

stock options on or about December 31, 1998. Pl.’s Repl. at 8. 

Defendants argue that Systemhouse did not breach the separation

agreement, relying on the parties’ course of conduct before and

after entering the separation agreement. Def.’s Mot. at 7. 

Defendants’ argument is not persuasive. 

It is undisputed that the separation agreement was silent

as to the potential implications of plaintiff's disability

status. Def.'s SUF 18. Defendants assert this silence equates

to ambiguity as to what would occur if plaintiff went on

disability status, so that extrinsic evidence may be received if

it “explains the ambiguity and fills in the gap in the

agreement.” Id. at 8. I cannot agree.

 It is established California law that if a reviewing court

determines that the language of a contract is “fairly

susceptible of either one of the two interpretations contended

for” by the parties, extrinsic evidence may be admitted. 

Pacific Gas and Elec. Co. v. G.W. Thomas Drayage & Rigging, 69

Cal.2d 33, 40 (1968). Nonetheless, it is equally well

established that the terms of an agreement must first be

examined before turning to extrinsic evidence and that

“extrinsic evidence is not admissible to add to, detract from,

or vary the terms of a written contract.” Id. at 39; See also

Cal. Civ. Proc. Code § 1856, subd. (a)(The court may not

consider extrinsic evidence of any prior agreement or

contemporaneous oral agreement to vary or contradict the clear

and unambiguous terms of a written, integrated contract.);

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 19 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4 Although defendants do not claim that an oral agreement

between the parties modified plaintiff’s termination date, the

court notes that the contract itself precludes modification of the

written contract by any oral agreement. The separation agreement

makes explicit that “[t]his agreement may be modified only in

writing, signed by both Parties.”

20

Principal Mutual Life Ins. Co. v. Vars, Pave McCord & Freedman,

65 Cal.App.4th 1469, 1478 (parol evidence may not be used “to

create a contract the parties did not intend to make” or “to

insert language one or both parties now wish had been

included.”). 

I turn to the language of the agreement to determine

whether it is ambiguous. The revised separation agreement

provides:

1.1. “ . . . MCI agrees to retain Employee at his

current annual base rate of salary, through December

31, 1998 at which time Employee will be terminated. 

Employee’s termination will be designated as a

termination without cause.” 

Pl.’s Ex. P.

Put directly, Systemhouse and plaintiff agreed that

plaintiff was to be terminated without cause on December 31,

1998. There simply is nothing ambiguous or uncertain about the

terms. Thus, the court may not consider extrinsic evidence

because there are no terms contained within this contractual

clause which would be susceptible to more than one

interpretation. Accordingly, the court holds that defendants

breached the September 1998 contract when they failed to

terminate plaintiff on December 31, 1998.4

////

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 20 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

5 On December 4, 2001, MCI WorldCom filed a complaint in

state court in San Francisco seeking a declaration that the

obligation to make the severance payment to Healy lies wholly with

SHL, and that MCI WorldCom is not obligated to make the severance

payment to Healy now or at any time hereafter. Pl.’s Ex. HH. 

Plaintiff mentions this briefly in his papers, Pl.’s Mot. at 4, but

the parties do not disclose what relief, if any, the court granted

in this declaratory action. It may be that whatever relief the

court granted is irrelevant because on July 28, 2004 plaintiff and

EDS agreed to dismiss MCI WorldCom from this case, without

prejudice, and the court subsequently dismissed MCI WorldCom on

August 8, 2004. Def.'s SUF 26. 

21

2. Defendants’ Obligations to Plaintiff under the

SeparationAgreement

a. $262,5000 Severance

Plaintiff contends that he is entitled to $262,500.00, the

value of the ISUs in the amount of $398,174.25, and the value of

the stock options of $245,410, for a total of $906,084.25. 

Under the revised separation agreement, the language is

unambiguous with regard to the lump sum amount, the agreement

provides that “MCI will pay Employee a lump sum payment in the

amount of $262,500 within ten days of his termination.” Pl.’s

Ex. P. Because the court has concluded that defendants were

required to terminate plaintiff on December 31, 1998, it follows

that plaintiff was owed the amount of $262,500 within ten days

of his termination.5 

Plaintiff also contends that he is entitled to prejudgment

interest. His position finds support in California law. 

"Section 3287 of the California Civil Code provides for an award

of prejudgment interest whenever a plaintiff prevails in a

breach of contract claim for an amount of damages that is

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 21 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6 Under the disability provision (3.4), plaintiff’s ISUs

continue to vest based on a three-year schedule.

22

certain or is capable of being made certain by calculation." 

Unocal Corp. v. Unites States, 222 F.3d 528, 541 (9th Cir.

2000). Where, as here, when the prejudgment interest rate is

not stipulated to in the contract, the legal rate of interest is

ten percent. Cal. Civ. Code § 3289(b); see id. Accordingly,

plaintiff is entitled to prejudgment interest at the rate of ten

percent annually, accruing at the time his $262,500 was due. 

b. Incentive Stock Units (ISUs)

Plaintiff contends that upon his termination on December

31, 1998, he should have been allowed to immediately vest and

sell his own deferred compensation, or ISUs, which would have an

additional value of $398,194.25. Plaintiff relies on language

contained in the separation agreement which specifies that

“[t]he terms and conditions of the 1997 deferred incentive

program for a termination without cause will apply.” Paragraph

1.3, Pl.’s Ex. P. Turning to the referenced document which

discusses the deferred incentive program, the “Incentive Stock

Unit Agreement,” (Pl.’s Ex. E) the section regarding

“termination of employment not for cause” declares that “all

Your non-vested Units will fully vest on the date of your

termination of employment.” Sec. 3.7.

Defendants argue that the ISU agreement sets forth how an

employee’s shares would vest while on disability,6 and that this

disability provision should apply because “these are the terms

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 22 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7 Plaintiff explains that he had 8521 split adjusted stock

units that matured as of February 5, 2000, and 1276 split adjusted

stock units that matured as of February 14, 2001. According to the

ISU argument, he maintains, they were due and payable as of April

5, 2000 and April 16, 2001, respectively. Plaintiff asserts that

the 8521 split adjusted shares on April 5, 2000 had a value per

unit of

$43.81 for a total of $373,305.01, and that the value of the 1276

split adjusted units on April 16, 2001, based on split adjusted per

unit value of $19.49 was $24,869.00. 

23

that the parties understood would apply while plaintiff was on

disability leave.” Opp’n at 12. This argument is unavailing

for several reasons. 

 If defendants wanted the disability provision rather than

the “termination for cause” provision to apply as they relate to

the deferred incentive program, they had every opportunity to

make that clear in the separation agreement. Defendants failed

to do so. Instead, defendants understood that plaintiff was

intending to file for disability and nonetheless included

language in the separation agreement providing that the

termination without cause provision would apply. Because under

the plain terms of the agreement the termination without cause

provision applied, plaintiff’s ISUs “fully vest[ed] on the date

of his termination or employment.” Pl.’s Ex. E. 

Although the court has determined that the “termination

without cause” provision applies to plaintiff’s ISUs, it is less

clear what amount he is owed under the ISU agreement. Plaintiff

contends that he is owed $398,174.25 because under §4 of the ISU

Agreement, “payment was due within 60 days following the

maturity date of each portion of the units” (emphasis supplied)7

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 23 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

24

Pl.’s Mot. at 6. Plaintiff misstates the language of section 4. 

Rather, the language is that within sixty days following the

maturity date of each portion of the units (the maturity date

being his date of termination), the company “will deliver to You

shares of MCI stock . . . .” (emphasis added). Thus, the ISU

agreement contemplates that the stock would vest and mature on

the termination date and that such shares would be within

plaintiff’s possession, but it does not follow that plaintiff

would have necessarily sold his stocks on its maturity date. As

explained further below, defendants contend that genuine issues

of material fact remain concerning how much plaintiff is owed

with regard to his stock. Opp’n at 13. Defendants’ point is

well-taken. It appears to the court that the exact amount owed

to plaintiff under the ISU agreement is a factual question

appropriate for the jury as such determination rests on when

plaintiff would have sold his stock.

c. Stock Options

Plaintiff contends that because he should have been

terminated without cause on December 31, 1998, he could have,

and would have, exercised a number of stock options. Pl.’s Mot.

at 2, 5-7. Plaintiff contends that he would have sold those

shares exactly 90 days after his termination, and that if he had

done so, the fair market value of those shares would be equal to

$245,410, or $92.12 (value of stock on March 30, 1999) minus the

strike price of $47.50 (Plaintiff’s SUF 7). 

////

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 24 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

8 Similar to the ISU document, the Stock Option Plan

Agreement (Ex. I) contains a termination without cause provision

which states that “the unvested portion of the Option will become

25

 Defendants argue that the provision regarding “disability”

contained in the Stock Option Agreement applied to plaintiff’s

stock options as of December 1999, so that plaintiff’s stock

options would not vest upon his termination. Opp’n at 11. 

Defendants also maintain that plaintiff did not make a fair

estimate of the value of his alleged stock options. They

contend that plaintiff cannot establish that he would have sold

his shares on any particular day, and that he relies on various

exhibits which do not conclusively establish the damages to

which he claims he is entitled. See Exs. F, G, and AA.

As previously noted, the language contained in paragraph

1.3 of the September 1998 separation agreement provides:

Upon the full completion and execution of the

Agreement and Release, Employee will remain eligible

to receive his retention bonus in accordance with program

guidelines and will be considered an involuntary

termination without cause. Employee will be permitted

to exercise stock option grants in accordance with

MCI’s Stock Option Plan. The terms and conditions of

the 1997 deferred incentive program for a termination

without cause will apply. Employee waives any right

to receive future stock-option/ISU grants or postmerger retention bonuses (emphasis supplied).

 

Pl.’s Ex. P. The “MCI Stock Option Plan,” contains a provision

specifying how stock would vest if plaintiff were on disability

(Section 3.5) and another specifying how the stock would vest if

plaintiff were to be terminated by the company “other than for

cause” (section 3.3).8 See Pl.’s Ex. I. Unlike the ISUs, where

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 25 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

fully vested” on the date of termination, December 31, 1998. 

It also contains a disability provision, which states that the

options will be exercisable:

“. . . for one year from the date [plaintiff]

commence[s] receiving benefits under a Company sponsored

Short-Term Disability plan, for a number of shares

equally to the number, if any, as to which the Option is

exercisable on the date [plaintiff] commence[s]

receiving short-term disability benefits plus a prorated

portion of the shares.” 

Pl.’s Ex. I. 

26

the separation agreement explicitly specifies that the

termination without cause provision applies, it is unclear which

provision applies in this instance – the termination without

cause provision or the disability provision. 

Plaintiff argues that because the “termination without

cause” terms apply to the ISUs, it would also apply to the stock

options. Pl.’s Mot. at 5. Defendants contend that the Stock

Option Agreement sets out how an employee’s shares would vest

while on disability leave, and these are the terms the parties

understood applied while plaintiff was on disability leave.

It appears to the court that there is a latent ambiguity in

the contractual language of the revised separation agreement,

and accordingly, it would be appropriate to admit extrinsic

evidence. Under California law, even where an agreement

“appears to be clear and unambiguous on its face, it may contain

a latent ambiguity.” Pacific Gas & Electric, supra 39-40. To

determine whether a latent ambiguity exists, the trial court

first receives any extrinsic evidence to determine whether the

contract is reasonably susceptible to the interpretation urged

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 26 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

by the party asserting the existence of an ambiguity. Pacific

Gas & Electric, supra at 40. If the language is reasonably

susceptible to the interpretation proposed, the extrinsic

evidence is admitted to aid the court in interpreting the

parties’ objective intent. Id. at 40. Here, the language

contained in the 1998 Separation agreement is susceptible to

defendants’ interpretation because the agreement merely states

that plaintiff would be permitted to exercise stock option

grants consistent with the plan, but does not specify which

provision of the stock plan agreement would apply. Opp’n at 12. 

If, in light of the extrinsic evidence, only one

interpretation of the contract is reasonable, the issue may be

resolved as a matter of law. If, however, the extrinsic

evidence is in conflict, thus raising a question of fact as to

which of the two reasonable interpretations of the contract was

intended by the parties, summary judgment is improper. See Wolf

v. Superior Court, 114 Cal.App.4th 1343, 1351 (2004). Here,

more than one interpretation exists as to how the stock options

should vest upon plaintiff’s termination. Thus, a question of

fact exists as to whether plaintiff’s or defendants’

interpretation was intended by the parties. Accordingly, the

court must reject both plaintiff’s and defendants’ motions for

summary judgment as to when the stock options would vest. 

Similarly, the court cannot determine the value of the stock

options which plaintiff claims he is entitled to. Plaintiff

contends that he would have sold those shares exactly 90 days

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 27 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

28

after his termination, and that if he had done so, the fair

market value of those shares would be equal to $245,410, or

$92.12 (value of stock on March 30, 1999) minus the strike price

of $47.50 (Plaintiff’s SUF 7). Defendants, however, state that

plaintiff cannot establish that he would have sold his shares on

any particular day. This is a quintessential factual dispute

that must be reserved for the jury. 

C. FRAUD CLAIM

Under California law, in order to establish fraud, a

plaintiff must prove that: (1) the defendant made a false

representation; (2) the defendant had knowledge of the falsity

or "scienter"; (3) the defendant had the intent to defraud, i.e.

to induce reliance; (4) the plaintiff justifiably relied on the

defendants misrepresentation; (5) damages resulted. City

Solutions, Inc. V. Clear Channels Communications, Inc., 365 F.3d

835, 839 (9th Cir. 2004).

Plaintiff bases his fraud claim on Barbara Iman's

representation that he could not be terminated and retain his

disability benefits at the same time. Barbara Iman avers that

she believed her statements were true at the time she made them,

and there is nothing in the evidence which directly demonstrates

that she had knowledge that her representation was false at the

time they were made. Nonetheless, given her position in the

company, a jury might infer that she knew the representation was

false. Equally, a reasonable jury might conclude that her

testimony was credible. Plaintiff also offers no direct

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 28 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

29

evidence in support of his position that Barbara Iman lied with

the intent to defraud. Once again, arguably a jury might find

that the misrepresentations benefitted the company thus

supplying a motive from which intent might be inferred. On the

other hand, a jury might conclude there was no benefit to be

gained under the circumstances, thus negating an inference of

fraud. As I pointed out long ago, “motive or intent [are] not

readily susceptible to resolution on a motion for summary

judgment.” Richards v. Nielsen Freight Lines, 602 F.Supp. 1223,

1231 (E.D. Cal. 1985). In sum, the question of fraud and intent

are disputed issues of fact which a jury must resolve.

Defendants also argue that plaintiff’s fraud claim is timebarred under California’s statute of limitations. See Cal Civ.

Proc. Code § 338(d) (Statue of limitations for fraud is three

years). As defendants note, the cause of action accrues when

the facts constituting the fraud are, or should reasonably have

been, discovered. Solomon v. North Am. Life & Cas. Inc. Co.,

151 F.3d 1132 (9th Cir. 1998) (citation omitted). Defendants

contend that plaintiff discovered the fraud when Iman first told

plaintiff he would be terminated if on disability leave, in

approximately 1998. Arguably, however, plaintiff did not have

notice of the alleged fraud until August 1999, when an EDS

attorney informed plaintiff that Iman's 1998 representations

might have been false. If, in fact, plaintiff did not discover

the fraud until 1999, the complaint would not be time-barred as

it was filed less than three years after August of 1999. In

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 29 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

9 Defendant mistakenly argues that claims for intentional

infliction of emotional distress are subject to a one-year statute

of limitations. In 2002, however, California amended the

pertinent statute to provide for a two-year statue of limitations.

The statute was designated effective on January 1, 2003, see Cal.

Gov’t Code § 9600, and has retroactivity effect only as to the

victims of the September 11, 2001 attacks. See Cal. Civ. Proc.

Code § 940.10.

30

sum, there is an issue of disputed fact as to when plaintiff’s

fraud claim might have accrued. Thus, the court finds that when

plaintiff’s fraud claim began to accrue is also a question

reserved for the jury.

D. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

1. Statute of Limitations

The Ninth Circuit has explained that an IIED claim is

classified as a personal injury claim. See Molski v. Gleich, 318

F.3d 937, 958 (9th Cir. 2003). Under California law, personal

injury claims are subject to a two-year limitations period. 

See Cal. Civ. Proc. Code 335.1.9 A cause of action for

intentional infliction of emotional distress (“IIED”) accrues

and the statute of limitations begins to run once plaintiff

suffers severe emotional distress as a result of outrageous

conduct on part of defendant. See West’s Ann. Cal. Civ. Proc.

Code § 340(3); Cantu v. Resolution Trust Corp., 4 Cal.App.4th

857, 889 (1992). Where, as here, the IIED claim arises out of

defendants’ alleged false representations that he could not be

terminated without putting his disability benefits in jeopardy

and failing to terminate him as promised by the separation

agreement, courts have held that the statute of limitation

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 30 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

31

begins to accrue when the plaintiff is put on inquiry notice

that the defendant will not perform that contract. See, e.g.,

Averbach v. Vnescheconombank, 280 F.Supp.2d 945, 958 (N.D. Cal.

2003). 

It is undisputed that plaintiff was placed on notice that

defendants would not abide by the terms of the Separation

Agreement in December 1998. It may be argued, however, that the

statute of limitations did not accrue until plaintiff was on

inquiry notice in 1999 when EDS’ attorney suggested he could

have been terminated while on disability, and that Systemhouse

breached the separation agreement. Whatever the case, plaintiff

filed his IIED claim at least one year too late. It is

undisputed that plaintiff did not bring this action until 2002. 

Thus, plaintiff’s IIED claim is time barred under California’s

two-year statute of limitations. Defendants’ motion for summary

judgment as to the IIED claim must be GRANTED.

IV.

CONCLUSIONS AND ORDERS

For the foregoing reasons, the court hereby ORDERS as

follows:

1. Plaintiff’s motion for summary adjudication as to the

breach of contract claim is GRANTED in part, and DENIED in part,

as consistent with this order;

2. Defendants’ motion for summary adjudication as to the

fraud claim is DENIED; 

////

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 31 of 32
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

32

3. Defendants’ motion for summary adjudication as to the

IIED claim is GRANTED; and

4. All other motions are DENIED.

IT IS SO ORDERED.

DATED: August 2, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

Case 2:02-cv-01575-LKK -DAD Document 67 Filed 08/03/05 Page 32 of 32