Court Opinion

ID: 9797479
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:21:50.987337+00
Date Added: 2024-06-11T08:56:22.838823
License: Public Domain

Judge WEBB
dissenting.
With respect, I dissent from the holding that plaintiffs nondisclosure claim depends on a "fraud exception" to the at-will employment rule. This is not a case of an employer that passively waited until it had cause to terminate an at-will employee, whether needed or not, but instead the bank allegedly resorted to fraud by nondisclosure. I find adequate support in Colorado tort law for applying basic fraud principles to plaintiff's employment relationship, despite his at-will status.
In Berger v. Security Pacific Information Systems, Inc., 795 P.2d 1380 (Colo.App.1990), a division of this court upheld the fraud claim of an employee who relied on the employer's concealment of a fact that cast doubt on the longevity of their at-will relationship, without purporting to create an exception to the at-will employment rule. Both the claim in Berger and plaintiff's claim here share the fact that the employees suffered injury from the fraud when the employers terminated them for tainted reasons, rather than merely exercising their right to terminate without reason.
I disagree with the majority's limitation of Berger to fraud "not employed to effect termination." The fraud claim there arose because the employer terminated the employee for the reason that it had allegedly concealed. Berger v. Security Pacific Information Systems, Inc., supra, 795 P.2d at 1885 ("[The employee] did not know, when she accepted the job with SPIS, that there was a substantial risk that SPIS would discontinue [her project] in the near future.").
In my view, Colorado's recognition of a claim for tortious interference with an at-will employment contract, see e.g., Cronk v. Intermountain Rural Electric Ass'n, 765 P.2d 619 (Colo.App.1988), also supports plaintiffs claim here. Tortious interference involves third party misconduct. Nevertheless, I discern no reason to recognize a claim against the supervisor in Cronk, who induced the employer to exercise its at-will termination *131power by presenting a corrupt reason concerning subordinates whom he had targeted, but here reject plaintiff's claim against the bank, which allegedly targeted plaintiff by contriving a reason for terminating him.
While the majority points to the general public policy underpinnings of the at-will rule, I do not see plaintiff as "inquiring into the basis for termination," which the majority correctly notes is prohibited by the at-will employment rule. Rather, plaintiff's allegations focus on the alleged cause and effect relationship between the timing of the bank's termination decision and its purported fraud. Thus, here as in many employment disputes, "timing is everything." NLRB v. Joy Recovery Technology Corp., 184 F.3d 1307, 1314 (7th Cir.1998).
Moreover, I am persuaded by the specific public policy of protecting employees against fraud by employers. See § 8-2-104, C.R.S. 2001 (remedy for employees fraudulently induced to come to Colorado for work). Hence, I would allow plaintiff an opportunity to prove that, as in any fraud case, he was put in a worse position for having relied on the bank's alleged fraudulent concealment. See generally 37 C.J.S. Fraud § 41 (1948).
The background facts are undisputed: the bank acquired plaintiff's prior employer in 1998, retained him as its at-will employee, and acknowledged that he was an exemplary employee until it terminated him in 1999 for having violated credit policy. The termination memorandum read, in relevant part:
The loan has not been approved internally according to Vectra Bank Colorado credit policy, yet you have willfully disregarded this fundamental rule and completed the transaction. You leave me no alternative but to terminate your employment at Vee-tra Bank for cause effective this date .... (emphasis supplied)
The unrefuted complaint allegations and differing reasonable inferences from undisputed facts show a viable fraudulent nondisclosure claim because: (1) the bank wanted to replace officers of the predecessor with its own people; (2) the bank took no action against plaintiff for approximately one year following the acquisition; (8) as a matter of past practice, the three signatures required by the credit policy were sometimes obtained after a loan closed; (4) the afternoon before the scheduled loan closing, the senior officer told another employee that he did not intend to sign the approval form on the loan at issue, but neither communicated this information to plaintiff nor directed anyone else to do so; (5) the senior officer's statement to plaintiff at about the same time that he wanted more information on the loan created a false impression that he had not yet decided against signing the loan approval form; (6) the senior officer intended plaintiff to close the loan the following morning in ignorance of the officer's decision not to sign; (7) given the past practice, plaintiff closed the loan in reasonable reliance on this false impression; (8) ultimately, the bank did not object to the loan; and (9) but for plaintiff's having thereby violated credit policy, the bank would not have terminated his employment at that time.
The only element of plaintiff's fraud claim disputed by the majority is detrimental reliance. However, the bank's alleged plan to replace at-will employees inherited from the predecessor with its own people could have been implemented at any time since the acquisition. Yet the bank acted only after- and then immediately after-according to plaintiff it had fraudulently orchestrated cause.
The inference that but for this contrived cause the bank would not have acted against plaintiff when it did, even though it did not need cause at all, finds support in factors beyond the bank's alleged machinations.
First, termination without cause would have left the bank at risk of litigation because of the many and somewhat unpredietable exceptions to the at-will employment rule.
Defense attorneys should not cause or allow their clients to believe in the vitality of the employment at-will doctrine. The doctrine is so riddled with exceptions that it will rarely be the case that the termination of a particular employee does not fall within one of the exceptions. In short, if an employer terminates an employee, prudence dictates that the employer have a *132good reason for the termination, which should be documented.
Practitioner's Guide to Colorado Employment Law 2-2 (Supp.2001)(emphasis supplied).
Second, absent clear cause for termination the bank could have been exposed to a claim by plaintiff under state and federal statutes protecting even at-will employees against age discrimination, because of the implication of age bias arising from plaintiff's status as a long-term and otherwise exemplary employee who was within the protected age group.
The narrow ground on which I would sustain plaintiff's claim-that the bank obtained through fraudulent nondisclosure a basis for termination without which it would not have terminated his employment when it did-does not contravene "the value of a free market in employment," as the majority fears. Fraud has long been recognized as an exception to caveat emptor. See, e.g., Mastin v. Bartholomew, 41 Colo. 328, 92 P. 682 (1907).
Even if employment at will is treated as a defense under basic tort principles, a jury question exists whether the bank's alleged contrivance of a reason for termination through fraudulent nondisclosure precludes a defense based on the at-will employment rule. Cf. First Interstate Bank v. Piper Aircraft Corp., 744 P.2d 1197 (Colo.1987)(fraudulent concealment of 2 wrongful act tolls the limitations period). See generally F. Harper et al., The Law of Torts 495 (2d ed. 1986)("Misrepresentation may also avoid a defense.").
That the bank could have terminated plaintiff's at-will employment the very next day or any time thereafter, for some other reason or even for no reason, raises a dilemma equally inherent in many Colorado cases that recognize public policy wrongful termination claims by at-will employees. This factor may limit plaintiff's damages, but should not extinguish his claim. See Berger v. Security Pacific Info. Sys., Inc., supra, 795 P.2d at 1385 (rejecting the argument that fraud damages should be limited because the employee had "no guarantee of continued employment," because the jury "could reasonably infer from the evidence that [the employee's] employment would have continued for a reasonable time").
Lazar v. Superior Court, 12 Cal.4th 681, 49 Cal.Rptr.2d 377, 909 P.2d 981 (1996), cited by the majority, also illustrates the importance of looking at whether the bank would have terminated plaintiff without the allegedly tainted reason. There, explaining why it had earlier rejected an employee's fraud claim in Hunter v. Up-Right, Inc., 6 Cal.4th 1174, 26 Cal.Rptr.2d 8, 864 P.2d 88 (1993), the court said, "[Blecause [the employer] had both the power and intention of discharging him in any event, [the employee] was no worse off for being induced by [the employer's] misrepresentation to resign." Lazar v. Superior Court, supra, 12 Cal.4th at 642, 49 Cal.Rptr.2d 377, 909 P.2d at 987 (emphasis supplied).
The majority correctly concludes that most courts hold the at-will doctrine precludes a claim when "fraud is the means used to effect the termination." However, the other cases on which the majority relies do not discuss the three factors whose convergence I see as precluding summary judgment here: (1) an ulterior motive for terminating the at-will employee; (2) followed by a significant delay until the employer fraudulently fabricated a reason for termination; and (8) termination soon thereafter on the basis of that tainted reason. See Salter v. Alfa Insurance Co., 561 So.2d 1050 (Ala.1990); Mackenzie v. Miller Brewing Co., 241 Wis.2d 700, 623 N.W.2d 789 (2001); Tatge v. Chambers & Owen, Inc., 219 Wis.2d 99, 579 N.W.2d 217 (1998).
Finally, I do not share the majority's concern that accepting plaintiff's fraud theory here would unduly conflate contract claims and tort claims. See Town of Alma v. Azco Construction, Inc., 10 - P.3d 1256 (Colo.2000)(Iimiting negligence claims where the parties have a contractual relationship, but citing with approval Brody v. Bock, 897 P.2d 769, 776 (Colo.1995), which held, "The fact that such alleged representations constitute the substance of Bock's breach of contract claim does not require dismissal of his [fraud] claim.").
Accordingly, I would reverse the summary judgment order and allow the jury to consid*133er plaintiffs fraud claim based on why the bank terminated him when it did, rather than foreclosing that inquiry because of what the bank legally could have done much earlier, but did not do.