Filed 3/28/13 Zarate v. Bruker Nano CA2/6 

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS 

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA 

SECOND APPELLATE DISTRICT 

DIVISION SIX 

JOHN ZARATE, 

 Plaintiff and Respondent, 

v. 

BRUKER NANO, INC., 

 Defendant and Appellant. 

2d Civil No. B241217 

(Super. Ct. No. 1384661) 

(Santa Barbara County) 

 Appellant Bruker Nano, Inc. (Bruker) purchased all of the stock of Veeco 

Metrology (Veeco) and retained all of Veeco's employees, including respondent John 

Zarate. When hired by Veeco, Zarate signed an employee confidentiality agreement 

containing an arbitration provision. Zarate later signed a similar confidentiality 

agreement with Bruker, but it did not provide for arbitration. A dispute arose between 

Zarate and Bruker, resulting in Zarate's termination. Zarate sued, inter alia, for wrongful 

termination and Bruker moved to compel arbitration. The trial court determined the 

second agreement superseded the first and, consequently, there was no agreement to 

arbitrate. We affirm. 

FACTS AND PROCEDURAL BACKGROUND 

 In 2008, Zarate was hired by Veeco, a California based manufacturer of 

high resolution microscopes. Zarate executed a three-page employee confidentiality and 

inventions agreement (Veeco Agreement) that contains an arbitration provision requiring 
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him to submit "any claim or controversy arising out of [his] employment or the cessation 

thereof . . . [to] binding arbitration." The document states that the terms of the agreement 

apply as a condition of his employment or continued employment with Veeco, "its 

subsidiaries, affiliates, successors or assigns." 

 Two years later, Bruker, a Massachusetts based microscope manufacturer, 

purchased 100% of Veeco's stock, and all of Veeco's existing employees, including 

Zarate, began working for Bruker. During an orientation meeting, a Bruker 

representative informed Zarate and the other Veeco employees that they would have to 

sign several employment-related documents, including an employee patent and 

confidentiality agreement (Bruker Agreement). The three-page Bruker Agreement 

addresses virtually the same subject matter as the Veeco Agreement, but does not contain 

an arbitration provision. 

 After Bruker terminated Zarate's employment, Zarate brought this action 

for wrongful termination in violation of public policy and waiting time penalties. Zarate 

contends Bruker terminated him because he refused to engage in "illegal" marketing 

activities. When Zarate refused to submit his claims to arbitration, Bruker petitioned to 

compel arbitration based on the arbitration provision in the Veeco Agreement. Bruker 

asserted that the Bruker Agreement did not supersede the Veeco Agreement and that both 

agreements, including the Veeco arbitration provision, are fully enforceable. 

 The trial court denied the petition, concluding Zarate never consented to 

have his claims against Bruker submitted to arbitration. The court acknowledged that the 

Bruker Agreement does not contain an integration clause or state that it supersedes all 

prior agreements, but determined "it is apparent on reading the [Bruker] agreement that it 

was intended to replace the Veeco document." The court noted that both agreements 

concern the same subject matter, i.e., confidentiality and inventions, were presented to 

Zarate as a condition of employment and include "a number of inconsistent provisions 

that would be very difficult to enforce if both agreements were in effect." The two 

agreements have dissimilar disclosure and assignment provisions and define confidential 

information very differently, causing the court to remark: "It makes no sense for 
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[Bruker] to have presented [Zarate] with its own inventions and confidentiality agreement 

if it did not intend to replace the prior agreement, which, while containing similar 

provisions, was also very different in its terms." Having decided that the Veeco 

Agreement was superseded by the later agreement, the court did not reach Zarate's 

contention that the Veeco arbitration provision is unconscionable and unenforceable. 

Bruker appeals. 

DISCUSSION 

Standard of Review 

 This appeal turns on whether the Bruker Agreement was a novation or 

modification of the Veeco Agreement. Although the trial court referred to the Bruker 

Agreement as a substituted agreement, rather than a novation, Zarate concedes the 

concept of novation is the appropriate "legal framework for review." As discussed 

below, a novation is a "substituted contract" that completely extinguishes the original 

obligation. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 961, p. 1052; 

see Wells Fargo Bank v. Bank of America (1995) 32 Cal.App.4th 424, 431 (Wells 

Fargo).) Where there is conflicting evidence, the question of whether the parties entered 

into a novation or modification is a question of fact. (Wade v. Diamond A Cattle Co. 

(1975) 44 Cal.App.3d 453, 457.) Where, as here, the issue turns upon the meaning of a 

written instrument and no conflicting extrinsic evidence exists, then the question is one of 

law subject to de novo review. (Howard v. County of Amador (1990) 220 Cal.App.3d 

962, 980 (Howard).) 

The Bruker Agreement Superseded the Veeco 

 Agreement through Novation 

 A novation is the "substitution of a new obligation for an existing one" with 

the intent to extinguish the latter. (Civ. Code, § 1530;1 Meadows v. Lee (1985) 175 

Cal.App.3d 475, 482, fn. 1.) Under principles of novation, a new contract may be 

substituted for an old contract by creating a new obligation between the same parties or 

 

1 All statutory references are to the Civil Code.
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with a new party. (§§ 1531, 1532.) Thus, a novation is a "new contract which supplants 

the original agreement and 'completely extinguishes the original obligation . . . .'" (Wells 

Fargo, supra, 32 Cal.App.4th at p. 431.) In contrast, a modification does not terminate 

the preexisting contract. (Davies Machinery Co. v. Pine Mountain Club, Inc. (1974) 39 

Cal.App.3d 18, 25.) A subsequent agreement that expressly recognizes and affirms the 

continuing existence and validity of the original agreement is a modification rather than a 

novation. (Howard, supra, 220 Cal.App.3d at pp. 977-978.) 

 The question of whether a novation has occurred is always one of intent. 

(Howard, supra, 220 Cal.App.3d at pp. 977-978; Wells Fargo, supra, 32 Cal.App.4th at 

p. 432.) It must "'clearly appear' that the parties intended to extinguish rather than merely 

modify the original agreement." (Howard, at p. 977.) Intent need not be express, 

however, it may be inferred from the circumstances and the conduct of the parties. (14A 

Cal.Jur.3d (2008) Contracts, § 293, p. 175; see Alexander v. Angel (1951) 37 Cal.2d 856, 

860.) The parties do not have to state that the original contract was rescinded, so long as 

the intent to abandon can be ascertained from the acts and conduct of the parties. (Hunt 

v. Smyth (1972) 25 Cal.App.3d 807, 818.) 

 Bruker contends the uncontroverted evidence fails to clearly establish the 

parties intended to substitute the Veeco Agreement for the Bruker Agreement. We 

disagree. Bruker could have held Zarate to the terms of the Veeco Agreement. Instead, it 

required Zarate to sign a new agreement addressing the same confidentiality and 

inventions issues, but containing very different terms. A court may infer novation when a 

new agreement is so inconsistent with the earlier agreement that the two cannot subsist 

together. (Producers Fruit Co. v. Goddard (1925) 75 Cal.App. 737, 754-755; see 14A 

Cal.Jur.3d, supra, at § 293, pp. 175-176, fns. omitted ["Whether the new contract was 

intended as a substitute for the old may be inferred where the terms of the new contract 

differ widely from those of the old, especially where the two are entirely inconsistent and 

cannot be operative at the same time"].) Such is the case here. 

 It is undisputed that after the stock purchase, all Veeco employees, 

including Zarate, became full-fledged Bruker employees. As a condition of employment, 
5 

Bruker required Zarate to sign numerous employment documents which, in large part, 

duplicated the Veeco employment documents. The Bruker and Veeco Agreements have 

similar titles and address virtually all the same issues, but are inconsistent in many 

respects. The Veeco Agreement is governed by California law; the Bruker Agreement is 

subject to Massachusetts law. The Veeco Agreement prohibits employees from 

disclosing confidential or proprietary information during the period of employment and 

for five years after, while the Bruker Agreement prohibits the disclosure of such 

information at any time "during, or subsequent to, the Employee's employment." The 

Veeco Agreement requires the employee to assign to the company each invention, 

discovery, or idea made or conceived during the period of employment, that relates 

directly or indirectly to Veeco's business. In contrast, the Bruker Agreement requires the 

assignment of inventions during the period of employment or within three months after 

termination of employment. The two agreements also define "confidential information" 

very differently. As a result, an employee could fully comply with one agreement while 

breaching the other. 

 Notably, the Bruker Agreement required Zarate to "represent[] that he/she 

has no agreements with, or obligations to, others in conflict with the foregoing [terms]." 

Given the conflicting terms in the two confidentiality agreements, Zarate could not make 

this representation if the parties had intended for the earlier agreement to remain in effect. 

That Bruker compelled its employees to represent that they had no conflicting obligations 

is clear evidence that Bruker intended to supersede the Veeco Agreement through 

novation. As the trial court observed, "[i]t makes no sense for [Bruker] to have 

presented [Zarate] with its own inventions and confidentiality agreement if it did not 

intend to replace the prior agreement . . . ." 

CONCLUSION 

 As a novation, the Bruker Agreement completely extinguished the Veeco 

Agreement, including the arbitration provision. (See Wells Fargo, supra, 32 Cal.App.4th 

at p. 431.) Had Bruker wished an arbitration provision, it should have included one in the 

successor agreement. 
6 

 Without an agreement to arbitrate, Zarate cannot be compelled to submit 

the parties' dispute to arbitration. (Cione v. Foresters Equity Services, Inc. (1997) 58 

Cal.App.4th 625, 634 ["'The right to arbitration depends upon contract; a petition to 

compel arbitration is simply a suit in equity seeking specific performance of that contract. 

[Citations.] There is no public policy favoring arbitration of disputes which the parties 

have not agreed to arbitrate. [Citation.]' [Citation.]"].) Thus, the trial court properly 

denied Bruker's petition to compel arbitration. 

 Because we concur with the trial court's decision, we need not reach 

Zarate's contention that the Veeco arbitration provision is procedurally and substantively 

unconscionable. 

 The order of the trial court is affirmed. Zarate shall recover his costs on 

appeal. 

 NOT TO BE PUBLISHED.

 PERREN, J. 

We concur: 

 GILBERT, P. J. 

 YEGAN, J. 

 
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Colleen K. Sterne, Judge 

Superior Court County of Santa Barbara 

______________________________ 

 

 Nixon Peabody, Bonnie Glatzer, Ellen M. Papadakis and Tzaddi S. 

Thompson for Defendant and Appellant. 

 Law Offices of Lauren John Udden, Lauren John Udden; Law Office of 

Herb Fox and Herb Fox for Plaintiff and Respondent.