Court Opinion

ID: 9726349
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:45:45.98016+00
Date Added: 2024-06-11T18:25:24.778678
License: Public Domain

WORK, J., Concurring and Dissenting.
Although I agree Spratley’s purported cause of action for breach of the covenant of good faith and fair dealing, as pleaded, is barred by the exclusivity provisions of Labor Code1 section 3602,1 find the majority’s analysis of her claim for fraudulent inducement to contract both factually and legally skewed. I would reverse the judgment of dismissal as to the fraud cause of action and remand for further proceedings.
Contrary to the majority’s assertion, the pivotal issue is not when the injury occurred, but whether the wrongful conduct from which the injury flowed occurred in the workplace and is of the type that is normally expected *1418to occur there. (Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148 [233 Cal.Rptr. 308, 729 P.2d 743].)
In Cole, the Supreme Court distinguishes between those cases in which the employer was charged with intentionally failing to warn of dangers inherent in the employment or to provide a safe workplace, and those where the employer’s intentional conduct was specifically designed to injure or defraud an employee. (Id. at pp. 158-159, quoting Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 474-475 [165 Cal.Rptr. 858, 612 P.2d 948, 9 A.L.R.4th 758].) The case the majority cites as controlling here, Wright v. FMC Corp. (1978) 81 Cal.App.3d 777 [146 Cal.Rptr. 740], was characterized as falling within the first category by the Supreme Court. (See Johns-Manville Products Corp. v. Superior Court, supra, at p. 474.) In Johns-Manville, fraud occurring during the employment relationship was found to be not barred by the exclusivity provisions of the workers’ compensation act even though the judicial action was filed concurrently with a workers’ compensation claim.2 Plaintiffs complaint asked compensatory and punitive damages for the fraudulent acts and concealments by the employer allegedly intended to induce employee to continue to work in a dangerous environment. Although the acts and concealments occurred during the employment relationship and at the workplace, the employer’s conduct was deemed so blameworthy and the societal interest in deterring similar future conduct so great, there was justification for awarding punitive damages in an action of law.
I
There are two causes of action in Spratley’s first amended complaint. The first charges fraudulent conduct by Winchell which preceded the creation of the employment relationship, although Spratley did not discover the falsity of Winchell’s representation until after the employment commenced. The injuries for which she seeks redress are the “mental pain and suffering and emotional distress” flowing from the realization she had been defrauded, the loss of the salary differential which she would have received had she not been gulled into accepting Winchell’s offer and punitive damages to sanction Winchell’s fraudulent conduct. These injuries flow from conduct occurring before the employment was created. They cannot be construed as being based on conduct normally occurring in the workplace and a cause of action would lie even had Spratley never suffered physical injury. Here, both the tort and the injuries for which damages are claimed are independent of acts which occurred after the employment commenced. Further, the exemplary *1419damages, if appropriate, have nothing to do with what occurred during Spratley’s employment. Clearly, she could not state a workers’ compensation claim for any conduct before she became an employee.
In Ramey v. General Petroleum Corp. (1959) 173 Cal.App.2d 386 [343 P.2d 787], the court distinguished injuries relating to fraudulent conduct of an employer from physical injuries for which workers’ compensation remedies were available. There, although the fraudulent conduct itself occurred during the term of the employment contract (a factor not present here), the emotional distress allegedly caused by fraudulent misrepresentation concerning legal rights and remedies for job-related injuries was not proximately caused by employment and did not arise out of and in the course of employment in the sense that the terms are used in Labor Code section 3600. (Id. at p. 401.) As pointed out in Johns-Manville Products Corp. v. Superior Court, supra, 27 Cal.3d at page 476, Ramey held the Legislature never intended an employer’s fraud was a risk of the employment, and therefore the injury from fraudulent concealment of causes of action do not occur while performing services growing out of or incidental to employment. Similarly, Spratley’s first cause of action alleges emotional injuries arising out of conduct preceding the employment relationship and not arising out of the course of employment. Because each of the factors required for workers’ compensation liability under section 3600 have not been established, the exclusivity provisions of section 3602 are not triggered and the applicable statutory rule is stated in section 3602, subdivision (c): “In all cases where the conditions of compensation set forth in Section 3600 do not concur, the liability of the employer shall be the same as if this division had not been enacted.”3
II
Spratley’s second cause of action is for an alleged breach of the implied covenant of good faith and fair dealing. Such a covenant is implied in every contract. (Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 768 [206 Cal.Rptr. 354, 686 P.2d 1158].) In employment contracts it has been used to redress wrongful discharges violating the obligation imposed by law that neither party will do anything which injures the right of the other to receive the benefits of an agreement. (See discussion in Koehrer v. Superior Court (1986) 181 Cal.App.3d 1155, 1168-1170 [226 Cal.Rptr. 820].) Since the covenant of good faith and fair dealing does not exist independent of the agreement of which it is a part, conduct which precedes the creation of a contract, by definition, cannot breach that covenant. Thus, when Spratley pleads the implied covenant was breached when *1420Winchell “fraudulently induced [her] to enter into a contract of employment” she is stating a factual impossibility.
However, Spratley also alleges the covenant was breached when Winchell failed to provide the promised security and to change the locks on all doors, concealed these facts and told Spratley the locks had all been changed. However, these omissions and misrepresentations, as pleaded, all occurred before the contract of employment came into existence. The only misconduct she implies occurred during the term of the contract was that Winchell’s manager falsely stated sheriffs patrols would be reinstated to enhance security. This act, although characterizable as intentional or even deceitful, suggests no more than that the employer may have acted with reckless disregard of probable injury to Spratley. Here, the distinction articulated in Johns-Manville is relevant. There, the court found the workers’ compensation remedies to be exclusive in cases where employers concealed or falsely represented the true dangers in the workplace. (Johns-Manville Products Corp. v. Superior Court, supra, 27 Cal.3d at p. 474.) The statutory system was deemed not to exclude employer acts intended to injure the employee. (Id., at p. 476.) The distinction recognized in Johns-Manville was noted with approval in Cole v. Fair Oaks Fire Protection Dist., supra, 43 Cal.3d 148, which stated “... reckless disregard of the probability of injury should not warrant exemption from the exclusive remedy provisions of the Labor Code.” (Id. at p. 159.) It is significant Spratley does not allege Winchell’s misrepresentations were intended to cause her injury. In the absence of factual allegations in that regard, Spratley cannot escape the exclusivity of her statutory remedy for conduct occurring during the term of the employment contract. Thus, the court properly sustained Winchell’s demurrer to Spratley’s second cause of action.

All statutory references are to the Labor Code unless otherwise specified.

Any double recovery was deemed avoidable by appropriate offsets. (Johns-Manville Products Corp. v. Superior Court, supra, 27 Cal.3d at pp. 478-479.) Here, there would be none.

Section 3602 was amended by Statutes 1982, chapter 922, section 6, page 3367.