Opinion ID: 1159643
Heading Depth: 3
Heading Rank: 4

Heading: Condition as Definite Duration Clause

Text: Plaintiffs alternatively contend that a contract specifying termination on the occurrence (or nonoccurrence) of a future happening, in lieu of a specific date, is one of definite duration that cannot be terminated or modified until the event occurs. (See Wittmann v. Whittingham (1927) 85 Cal.App. 140, 145, 259 P. 63 [contract to deliver shares of stock when stock dividends or profits had paid note is contract of definite duration]; La Jolla Casa deManana v. Hopkins (1950) 98 Cal. App.2d 339, 348, 219 P.2d 871 [contracts specified to last until `termination of the present war' and until plaintiff `can reasonably build a home for herself' are contracts for definite duration].) Because Pacific Bell declared that it would maintain its MESP so long as its business conditions did not substantially change, plaintiffs, like the dissent, assert that the specified condition is automatically one for a definite duration that Pacific Bell is obliged to honor until the condition occurs. Contrary to plaintiffs and the dissent, a specified condition may be one for either definite or indefinite duration. Indeed, both plaintiffs and the dissent fail to recognize that courts have interpreted a contract that conditions termination on the happening of a future event as one for a definite duration or time period only when there is an ascertainable event which necessarily implies termination. ( Lura v. Multaplex, Inc. (1982) 129 Cal.App.3d 410, 414-415, 179 Cal.Rptr. 847; see also Bradner v. Vasquez (1951) 102 Cal.App.2d 338, 344, 227 P.2d 559.) As Pacific Bell observes, even though its MESP contained language specifying that the company would continue the policy so long as it did not undergo changes materially affecting its business plan achievement, the condition did not state an ascertainable event that could be measured in any reasonable manner. As Pacific Bell explains, when it created its MESP, the document referred to changes that would have a significant negative effect on the company's rate of return, earnings and, ultimately the viability of [its] business. The company noted that if the change were to occur, it would result from forces beyond Pacific Bell's control, and would include major changes in the economy or the public policy arena. These changes would have nothing to do with a fixed or ascertainable event that would govern plaintiffs' or Pacific Bell's obligations to each other under the policy. Therefore, the condition in the MESP did not restrict Pacific Bell's ability to terminate or modify it, as long as the company made the change after a reasonable time, on reasonable notice, and in a manner that did not interfere with employees' vested benefits. (See, e.g., Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) 69 Cal.2d 713, 731, 73 Cal.Rptr. 213, 447 P.2d 325 [contract for indefinite duration terminable after a reasonable time on reasonable notice].) The facts show that those conditions were met here. Pacific Bell implemented the MESP in 1986, and it remained in effect until 1992, when the company determined that maintaining the policy was incompatible with its need for flexibility in the marketplace. The company then implemented a new Management Force Adjustment Program in which employees whose positions were eliminated would be given 60 days to either find another job within the company, leave the company with severance benefits after signing a release of any claims, or leave the company without severance benefits. The employees were provided with a booklet entitled Voluntary Force Management Programs detailing the new benefits the company provided following the MESP cancellation. Thus, the MESP was in place for a reasonable time and was effectively terminated after Pacific Bell determined that it was no longer a sound policy for the company. Contrary to the dissent, Pacific Bell did not engage in behavior that one could characterize as manipulative or oppressive. (Dis. opn., post, 96 Cal.Rptr.2d at p. 191, 999 P.2d at p. 82.) Employees were provided ample advance notice of the termination, and the present plaintiffs even enjoyed at least two more years of employment and corresponding benefits under a modified policy before they were eventually laid off. In sum, Pacific Bell maintained the MESP for a reasonable time, it provided more than reasonable notice to the affected employees that it was terminating the policy, and it did not interfere with employees' vested benefits. The law requires nothing more.