Opinion
H044159
05-11-2021
JEREMY FORTH, Plaintiff and Appellant, v. CARNEGIE MELLON UNIVERSITY et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 114CV262628)
I. INTRODUCTION
Plaintiff Jeremy Forth was employed by defendant Carnegie Mellon University (Carnegie Mellon) for less than three months before he was terminated, purportedly for cause after his supervisor, defendant Patrick Langley, became dissatisfied with plaintiff's job performance. Plaintiff subsequently filed a civil action alleging tort and contract claims against Carnegie Mellon, a single claim against Langley for defamation, and punitive damages against both defendants.
Carnegie Mellon and Langley each moved for summary judgment or, in the alternative, summary adjudication of plaintiff's causes of action and claim for punitive damages. The trial court granted summary judgment in favor of Langley. Regarding Carnegie Mellon, the court granted summary adjudication as to the tort claims (wrongful termination in violation of public policy, defamation, and misrepresentation) and the claim for punitive damages, but the court denied summary adjudication as to the contract claims. Plaintiff filed a motion for reconsideration, which the court denied. After plaintiff dismissed the remaining contract claims against Carnegie Mellon with prejudice, the court entered judgment in favor of Carnegie Mellon and Langley.
On appeal, plaintiff contends that the trial court erred in granting summary judgment or summary adjudication of the tort claims and the associated claims for punitive damages against defendants. Plaintiff alternatively argues that the court abused its discretion in denying him leave to amend the complaint upon his oral request at the summary judgment hearing and again in connection with his written motion for reconsideration.
For reasons that we will explain, we conclude that the trial court properly granted summary adjudication of the defamation claim (second cause of action) in favor of Carnegie Mellon and Langley. Because this was the sole cause of action against Langley, judgment was properly entered in his favor.
Regarding the remaining tort claims against Carnegie Mellon for wrongful termination in violation of public policy (first cause of action) and misrepresentation (third cause of action), we determine that the trial court properly found that the allegations in plaintiff's complaint were inadequate. However, because the court essentially treated Carnegie Mellon's motion regarding these claims as a motion for judgment on the pleadings, and because the law requires liberality by the court in allowing amendments and that the plaintiff be given leave to amend where, as here, there is a reasonable possibility that the plaintiff can state a claim, we determine that plaintiff should have been granted leave to amend. We will direct the trial court to vacate its order granting summary adjudication as to these two causes of action and the associated claim for punitive damages, and to enter a new order granting judgment on the pleadings with leave to amend.
II. BACKGROUND
Our factual summary is drawn from the parties' separate statements of fact and the evidence they submitted in connection with the motions for summary judgment.
A. Plaintiff's Employment by Carnegie Mellon
In 2012, Langley recruited plaintiff to work at Carnegie Mellon on a project funded by a "MURI subaward," which was part of a larger project funded by the Office of Naval Research. According to Carnegie Mellon's offer letter, plaintiff would be employed as a project scientist at Carnegie Mellon's "Silicon Valley campus" from May 1, 2012, through August 14, 2014. He would conduct research on " 'A Unified Computational Theory of Language and Cognition' and related software and engineering topics." Plaintiff's salary at Carnegie Mellon would be completely funded by the MURI subaward. Plaintiff accepted the written offer and began working on June 6, 2012.
Carnegie Mellon terminated plaintiff's employment less than three months later on August 29, 2012. Plaintiff's termination letter, authored by Langley, stated that plaintiff was being terminated for cause. Langley stated in the letter that plaintiff had "refused to accept [Langley's] direction on the project," that plaintiff had "failed to follow technical directives about how to perform [his] work," that he had "repeatedly refused to share the products of [his] of work," and that he had been "grossly insubordinate and disrespectful," among other criticisms.
B. The Complaint
On March 24, 2014, plaintiff filed a civil complaint against Carnegie Mellon and Langley. Plaintiff alleged causes of action against Carnegie Mellon for (1) wrongful termination in violation of public policy, (2) defamation, (3) misrepresentation, (4) breach of contract, and (5) breach of the implied covenant of good faith and fair dealing. Plaintiff alleged a single cause of action for defamation against Langley. Plaintiff sought punitive damages against both defendants for the tort claims.
C. Defendants' Motions for Summary Judgment or Summary Adjudication
Carnegie Mellon filed a motion for summary judgment or, in the alternative, summary adjudication as to each cause of action and the claim for punitive damages. Langley likewise filed a motion for summary judgment or, in the alternative, summary adjudication regarding the sole cause of action against him for defamation and the claim for punitive damages. Plaintiff opposed both motions, contending there were triable issues.
D. The Hearing on the Motions for Summary Judgment or Adjudication
Prior to the hearing on the motions, the trial court apparently issued a tentative ruling (1) granting summary adjudication as to the wrongful termination, defamation, and misrepresentation claims (first through third causes of action) and the associated claims for punitive damages, and (2) denying summary adjudication as to the breach of contract and breach of implied covenant claims (fourth and fifth causes of action).
At the hearing on the motions on December 10, 2015, plaintiff requested, to the extent the trial court's grant of summary adjudication was actually a judgment on the pleadings, that he be given leave to amend the complaint. Defendants contended that it would be unfair to allow the complaint to be amended, in view of the time already spent in discovery, the fact that discovery had already closed, and the fact that the matter was set for trial within 30 days. Defendants argued that it would be prejudicial "at this late stage" to allow plaintiff to amend and "start all over."
E. The Trial Court's Order Regarding the Motions for Summary Judgment or Adjudication
On December 11, 2015, the trial court filed its written order (1) granting the motion for summary adjudication by Carnegie Mellon regarding the first through third causes of action for wrongful termination, defamation, and misrepresentation and regarding the claim for punitive damages and (2) granting summary judgment as to Langley. The court denied Carnegie Mellon's motion for summary adjudication regarding the fourth and fifth causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing.
F. Plaintiff's Motion for Reconsideration
Plaintiff filed a motion for reconsideration on December 21, 2015, requesting that the trial court grant leave to amend the complaint regarding the causes of action for wrongful termination, defamation, and misrepresentation, as well as the claim for punitive damages. Plaintiff contended that a new case, Prue v. Brady Co./San Diego, Inc. (2015) 242 Cal.App.4th 1367 (Prue), which was published the day after the hearing on defendants' motions, required the court to give plaintiff an opportunity to amend the complaint before entry of judgment. Plaintiff also submitted a proposed amended complaint.
Carnegie Mellon and Langley opposed the motion. First, they contended that Prue did not establish new law which, along with diligence, were prerequisites for bringing a motion for reconsideration. Second, defendants contended that the trial court treated their motions as ones for summary adjudication, not judgment on the pleadings, and therefore Prue was not applicable. Third, Prue was distinguishable from the instant case. Fourth, plaintiff's request for leave to amend was procedurally defective because he failed to explain the proposed changes, among other requirements. Fifth, allowing the complaint to be amended at that stage in the litigation would unduly prejudice defendants. Sixth, the proposed amendments to the complaint did not cure all the deficiencies in the pleading.
In reply, plaintiff contended that Prue established that leave to amend may be requested at the hearing on the summary judgment motion and that the failure to grant leave to amend is an abuse of discretion. Plaintiff also argued that the trial court's ruling on the wrongful termination and misrepresentation claims were in substance an order for judgment on the pleadings. As such, plaintiff contended that he properly sought leave to amend in the motion for reconsideration.
A hearing was held on plaintiff's motion for reconsideration on January 29, 2016. The trial court denied the motion for reconsideration by written order filed on February 4, 2016.
G. The Judgment
Plaintiff voluntarily dismissed with prejudice the remaining two causes of action that had survived Carnegie Mellon's summary adjudication motion (fourth cause of action for breach of contract and fifth cause of action for breach of the implied covenant of good faith and fair dealing). On September 27, 2016, judgment was entered in favor of Carnegie Mellon and Langley.
III. DISCUSSION
Plaintiff contends that the trial court erred in granting defendants' motions for summary judgment or summary adjudication regarding the causes of action for wrongful termination in violation of public policy, defamation, and misrepresentation and the claim for punitive damages, and that the court erred in denying him leave to amend the complaint. Before analyzing whether summary judgment or adjudication was properly granted without leave to amend, we set forth the general rules regarding a motion for summary judgment or adjudication.
A. General Rules Regarding Summary Judgment or Adjudication
A party may move for summary judgment of an entire action or, in the alternative, summary adjudication of a cause of action or a claim for punitive damages. (Code Civ. Proc., § 437c, subds. (a)(1) & (f)(1), (2).) Both motions are "subject to the same rules and procedures." (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819; see § 437c, subd. (f)(2).)
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
" 'The purpose of a summary judgment proceeding is to permit a party to show that material factual claims arising from the pleadings need not be tried because they are not in dispute.' [Citation.] 'The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues: the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.' [Citations.]" (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381 (FPI Development).)
A defendant moving for summary judgment has the initial burden of showing that a cause of action lacks merit because an element of the cause of action cannot be established or there is a complete defense to that cause of action, or that there is no merit to a claim for punitive damages. (§ 437c, subds. (f)(1), (o) & (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) If the moving papers make a prima facie showing that justifies a judgment in the defendant's favor, the burden shifts to the plaintiff to make a prima facie showing of the existence of a triable issue of material fact. (§ 437c, subd. (p)(2); Aguilar, supra, at pp. 849, 850.)
In determining whether the parties have met their respective burdens, "the court must 'consider all of the evidence' and 'all' of the 'inferences' reasonably drawn therefrom [citation], and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party." (Aguilar, supra, 25 Cal.4th at p. 843.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Id. at p. 850, fn. omitted.) Thus, "[a] party cannot avoid summary judgment by asserting facts based on mere speculation and conjecture, but instead must produce admissible evidence raising a triable issue of fact. [Citation.]" (LaChapelle v. Toyota Motor Credit Corp. (2002) 102 Cal.App.4th 977, 981.)
"In reviewing a trial court's grant of summary judgment, . . . ' "[w]e take the facts from the record that was before the trial court when it ruled on that motion" ' and ' " ' "review the trial court's decision de novo . . . ." ' " ' " (Hughes v. Pair (2009) 46 Cal.4th 1035, 1039.) The trial court's stated reasons are not binding on the reviewing court, "which reviews the trial court's ruling, not its rationale. [Citation.]" (Ramalingam v. Thompson (2007) 151 Cal.App.4th 491, 498.)
B. First Cause of Action for Wrongful Termination in Violation of Public Policy Against Carnegie Mellon
On appeal, we understand plaintiff to contend that the trial court erred in summarily adjudicating the claim for wrongful termination in violation of public policy, and that, to the extent there was a defect in the pleading, the court should have granted leave to amend either at the summary adjudication hearing or in connection with plaintiff's motion for reconsideration.
1. Background
In the first cause of action for wrongful termination, plaintiff alleged that Carnegie Mellon terminated him, at least in part, because he complained about "fraud and misrepresentation being committed against [the Office of Naval Research]" and which he "reasonably believed violated State and Federal laws." Specifically, plaintiff allegedly complained to Carnegie Mellon that Langley was misrepresenting the project's status or success to the Office of Naval Research in order to continue to receive funding from the Office of Naval Research. Langley was thus allegedly accepting money from the United States government without performing the work as agreed. Plaintiff alleged that Langley retaliated against him by terminating his employment, which violated public policies "rooted in statute (Government Code); the California Constitution or United States Constitution."
In its summary adjudication motion, Carnegie Mellon contended that plaintiff "[could not] establish a valid public policy underlying his claim" for wrongful termination. Carnegie Mellon argued that, even assuming the truth of plaintiff's allegations that he complained to Carnegie Mellon about Langley making misrepresentations and about fraud being committed against the Office of Naval Research, plaintiff's cause of action was at most a personal dispute between plaintiff and Langley about plaintiff's job performance, which could not support a wrongful termination claim.
In opposition, plaintiff contended that he complained to Carnegie Mellon about Langley misrepresenting the status of the project to the Office of Naval Research, and that "[t]he public policy at issue is the US Grant use and fraudulent use of grant funds."
In reply, Carnegie Mellon reiterated that plaintiff's contention that Langley blamed him for the project's shortcomings to the Office of Naval Research, and that Langley thereby misrepresented the project's status, constituted a personal dispute between the pair regarding job performance and did not implicate a valid public policy.
The day before the hearing on the motions, the trial court apparently issued a tentative ruling granting summary adjudication as to the wrongful termination, defamation, and misrepresentation claims, and denying summary adjudication as to the breach of contract and breach of implied covenant claims. At the hearing on the motions on December 10, 2015, plaintiff requested, to the extent the trial court's grant of summary adjudication was actually a judgment on the pleading, that plaintiff be given leave to amend the complaint. Regarding the wrongful termination claim, plaintiff indicated that the complaint could be amended to allege that he complained about Carnegie Mellon committing fraud, which plaintiff contended would support a cause of action for wrongful termination in violation of public policy. Plaintiff indicated that the public policies at issue would be based on "the Civil Code," "Penal Code violations," and "United States Code sections." He also referred to the "Federal Funding Accountability and Transparency Act of 2006" and the "Federal Grant and Cooperative Agreement Act of 1977" that were on a government website that he had "alluded to in" his written opposition to the summary judgment motion.
In the written order granting summary adjudication of the wrongful termination claim, the trial court determined that plaintiff "fail[ed] to identify any specific constitutional or statutory provision that sets forth the alleged public policy of encouraging persons to report fraudulent misrepresentations made to [the Office of Naval Research]" or "that is violated by making fraudulent misrepresentations to [the Office of Naval Research]." The court stated that plaintiff's opposition brief, which referred to a government website, was inadequate. The court stated that, although its "independent research revealed Labor Code statutes that provide 'whistleblower' protection to employees who report violations of state or federal regulation to a governmental or law enforcement agency ( . . . Labor Code section 1102.5[]), it did not turn up any statute or provision of the Government Code, the California Constitution, or the United States Constitution," which were generally alleged in plaintiff's complaint, "that could arguably form the basis for Plaintiff's public policy claim." The court also determined that "the various fraud statutes set forth in the Civil Code[] do not sufficiently concern society at large as required to constitute a public policy upon which a claim for wrongful termination can be based."
2. General legal principles regarding wrongful termination
in violation of public policy
A claim for wrongful termination in violation of public policy requires proof that (1) the plaintiff was employed by the defendant, (2) the defendant discharged the plaintiff, (3) "a violation of public policy substantially motivated the discharge," and (4) the discharge caused harm to the plaintiff. (Diego v. Pilgrim United Church of Christ (2014) 231 Cal.App.4th 913, 920.) "To support such a cause of action, the policy in question must satisfy four requirements: 'First, the policy must be supported by either constitutional or statutory provisions. Second, the policy must be "public" in the sense that it "inures to the benefit of the public" rather than serving merely the interests of the individual. Third, the policy must have been articulated at the time of the discharge. Fourth, the policy must be "fundamental" and "substantial." ' [Citation.]" (Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, 932, italics added; see also Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 74, 72 (Green) [holding that "regulations promulgated to address important public safety concerns may serve as a source of fundamental public policy" where the regulations "are 'tethered to' statutory provisions"].)
To prevail on a claim for wrongful termination in violation of public policy, the plaintiff must identify the particular statute or constitutional provision upon which the claim is based. (Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1257 (Turner); see Green, supra, 19 Cal.4th at p. 83 & fn. 7.) For example, the California Supreme Court found "plainly insufficient" a plaintiff's "vague charge of 'Alcohol, Tobacco and Firearms laws' violations, largely unaccompanied by citations to specific statutory or constitutional provisions," which "put[] [the employer] and the court in the position of having to guess at the nature of the public policies involved, if any." (Turner, supra, at p. 1257.)
Generally, four categories of employee conduct are protected by way of a wrongful termination claim: " '(1) refusing to violate a statute [citations]; (2) performing a statutory obligation [citation]; (3) exercising a statutory right or privilege [citation]; and (4) reporting an alleged violation of a statute of public importance [citations].' [Citation.]" (Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889.) Regarding the fourth category—reporting an alleged statutory violation of public importance—"an employee need not prove an actual violation of law; it suffices if the employer fired him for reporting his 'reasonably based suspicions' of illegal activity. [Citation.]" (Green, supra, 19 Cal.4th at p. 87.)
3. General legal principles regarding treating a motion for summary judgment
as a motion for judgment on the pleadings
" '[A] defendant's motion for summary judgment "necessarily includes a test of the sufficiency of the complaint . . . ." Motions for summary judgment in such situations have otherwise been allowed as being in legal effect motions for judgment on the pleadings. [Citations.]' [Citations.]" (Hansra v. Superior Court (1992) 7 Cal.App.4th 630, 639, italics omitted (Hansra).)
One appellate court has stated that "[t]he trial court ha[s] two options in such circumstances. First, it could . . . grant[] the summary judgment motion outright because there were no triable issues of fact and [the] defendants were accordingly entitled to judgment. Second, the court could . . . treat[] the motion as being in practical effect a motion for judgment on the pleadings. . . . . The practical difference between these two courses of action is that in the latter instance the court must consider whether leave to amend should be granted to plead a cognizable claim, in recognition of the policy that cases and controversies should be decided on their merits wherever possible." (Hansra, supra, 7 Cal.App.4th at p. 647.)
"When a motion for summary judgment is in effect a motion for judgment on the pleadings, it is better practice to grant the motion with leave to amend . . . ." (Wood v. Riverside General Hospital (1994) 25 Cal.App.4th 1113, 1120 (Wood); see Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663 (Bostrom).)
4. Analysis
In this case, plaintiff alleged in the complaint that Langley retaliated against him by terminating his employment, which violated public policies "rooted in statute (Government Code); the California Constitution or United States Constitution." This "vague" allegation, "unaccompanied by citations to specific statutory or constitutional provisions," was "plainly insufficient." (Turner, supra, 7 Cal.4th at p. 1257.) Likewise, in his written opposition to the summary adjudication motion and at the hearing on the motion, plaintiff failed to identify a specific statute or constitutional provision that would support his claim for wrongful termination in violation of public policy. (See Green, supra, 19 Cal.4th at pp. 83-84 & fn. 7 [determining that the plaintiff met his burden by identifying several federal regulations in his opposition to the summary judgment motion].) We further observe that, to the extent plaintiff broadly referred to two federal acts at the hearing on the summary adjudication motion, on appeal he no longer contends that those federal acts support his public policy claim.
Plaintiff makes several arguments as to why the trial court erred in failing to find a supporting public policy, but we do not find any of plaintiff's arguments persuasive.
First, plaintiff contends that the trial court "ignored" the California Supreme Court's "statements" in Green, supra, 19 Cal.4th 66, that federal or state regulations may be the basis for a public policy claim. Plaintiff fails to show error in this regard. Plaintiff never contended that his public policy claim was based on a federal or state regulation.
Second, plaintiff contends that the trial court "failed to analyze" pages 83 to 84 and footnote 7 of Green, supra, 19 Cal.4th 66. In that portion of Green, the California Supreme Court determined that the Court of Appeal "properly held that [the] plaintiff had met his burden to provide the specific statutes and regulations on which he based his claim," where the "plaintiff had adequately identified several relevant FAA regulations as part of his opposition to summary judgment." (Id. at p. 84; see also id. at p. 83, fn. 7 ["As noted, the Court of Appeal did find that plaintiff adequately identified the statutes and regulations supporting his public policy claim in his opposition to defendant's summary judgment motion."].) This portion of Green is not helpful to plaintiff. As we have explained, plaintiff never adequately identified any statute, constitutional provision, or regulation to support his public policy claim in opposition to Carnegie Mellon's summary adjudication motion.
Third, we understand plaintiff to contend that the trial court erred in failing to recognize that Labor Code section 1102.5, which the court cited in its summary adjudication order, could support plaintiff's public policy claim. We find no error in this regard. Plaintiff fails to provide a record citation establishing that he relied on Labor Code section 1102.5 as a basis for his public policy claim in the trial court. On appeal, plaintiff contends that Labor Code section 1102.5 "was clearly implicated" by his allegations in the complaint regarding violations of "State and Federal laws" and public policies rooted in the "Government Code." We are not persuaded by plaintiff's argument that references to unspecified state and federal laws and to the Government Code as a whole "clearly implicated" Labor Code section 1102.5. (See Turner, supra, 7 Cal.4th at p. 1257 ["vague" allegations "unaccompanied by citations to specific statutory or constitutional provisions" are "insufficient"].) Indeed, plaintiff subsequently submitted a proposed amended complaint to the trial court, and in that proposed pleading, plaintiff did not allege Labor Code section 1102.5 as a basis for his public policy claim.
Moreover, as reflected in the trial court's written order, during the time of plaintiff's employment and termination in 2012, Labor Code section 1102.5, former subdivision (b) protected employees who complained "to a government or law enforcement agency." (Stats. 2003, ch. 484, § 2.) This version of the statute did not apply to an employee who complained only to his or her employer. (Green, supra, 19 Cal.4th at p. 77; Hejmadi v. AMFAC, Inc. (1988) 202 Cal.App.3d 525, 539.) We understand plaintiff to contend on appeal that he complained to a government agency by reporting Langley's misrepresentations and the misuse of government funds to the Office of Naval Research. Plaintiff does not, however, provide a record citation showing that he made such an allegation in his civil complaint, or a record citation to evidence showing that he made such a report to the Office of Naval Research before he was terminated. (See Cal. Rules of Court, rule 8.204(a)(1)(C) [appellate brief must "[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears"]; Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246 [party's argument on appeal deemed waived if party fails to support argument with necessary citations to the record]; Turner, supra, 7 Cal.4th at p. 1258 [a "nexus" is required between the plaintiff's alleged report of statutory violations and the allegedly adverse treatment by the employer].) Further, contrary to plaintiff's assertion on appeal, the trial court in its written order granting summary adjudication did not determine that there was evidence, or otherwise make a finding, that plaintiff had made such a report to the Office of Naval Research before his termination.
Therefore, we agree with the trial court that plaintiff did not sufficiently identify in his complaint or in opposition to the summary adjudication motion a statute or constitutional provision that would support his public policy claim. However, "[w]hen a motion for summary judgment is in effect a motion for judgment on the pleadings, it is better practice to grant the motion with leave to amend . . . ." (Wood, supra, 25 Cal.App.4th at p. 1120; Bostrom, supra, 35 Cal.App.4th at p. 1663.) In this case, the trial court in its written order stated that its "ruling is summary adjudication because there are no triable issues of fact," not judgment on the pleadings, and that it therefore "need not consider whether to grant leave to amend."
Notwithstanding this statement by the trial court that it was treating Carnegie Mellon's motion as one for summary adjudication, not judgment on the pleadings, the court's analysis of plaintiff's wrongful termination claim focused on the legal sufficiency of plaintiff's complaint, rather than on the evidence presented by the parties. In describing the issue presented by Carnegie Mellon's motion, the court stated, "[Carnegie Mellon] argues that even assuming . . . the allegations of the complaint are true, the allegations are insufficient to establish that Plaintiff's termination was in violation of a well-established policy that inures benefit to the public. [¶] It is clear that the issue framed by [Carnegie Mellon's] argument is whether the allegations of Plaintiff's complaint are sufficient to state a cognizable claim for wrongful termination in violation of public policy." The court further stated: "Consequently, the question before the Court is whether the allegations of the complaint identify a violation of a public policy . . . ." The court went on to conclude that neither the complaint nor plaintiff's opposition to the summary adjudication motion identified a statute or constitutional provision that would support his public policy claim. Given this analysis by the trial court, which focused on the sufficiency of plaintiff's pleading, Carnegie Mellon's motion was, in essence, a motion for judgment on the pleadings. We therefore turn to the rules that govern a motion for judgment on the pleadings.
The rules regarding a motion for judgment on the pleadings are similar to the rules for a demurrer. (See Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 259-260 (Dudley).) The question on appeal is whether the plaintiff " 'has stated a cause of action under any possible legal theory.' [Citation.] Furthermore, it is an abuse of discretion to grant a motion for judgment on the pleadings without leave to amend ' "if there is any reasonable possibility that the plaintiff can state a good cause of action." ' [Citations.] In the context of a general demurrer, 'to meet the plaintiff's burden of showing abuse of discretion, the plaintiff must show how the complaint can be amended to state a cause of action. [Citation.] However, such a showing need not be made in the trial court so long as it is made to the reviewing court.' [Citations.] 'This rationale applies equally to the granting of a motion for judgment on the pleadings since it is treated as a demurrer for purposes of appeal.' [Citation.]" (Id. at p. 260.)
In this case, we determine " ' "there is [a] reasonable possibility that . . . plaintiff can state a good cause of action" ' " (Dudley, supra, 90 Cal.App.4th at p. 260) for wrongful termination in violation of public policy based on 18 United States Code section 1001, which addresses false statements to the federal government. Plaintiff identified this section in his briefing on appeal, and he also alleged this section below in his proposed amended complaint in connection with his motion for reconsideration. "[C]ourts have recognized tortious wrongful discharge claims where an employee establishes he [or she] was 'terminated in retaliation for reporting to his or her employer reasonably suspected illegal conduct . . . that harms the public as well as the employer.' [Citations.]" (Holmes v. General Dynamics Corp. (1993) 17 Cal.App.4th 1418, 1426, fn. omitted (Holmes).) For example, in Holmes, the plaintiff employee, who worked for a defense contractor, contended he was terminated in retaliation for disclosing to his supervisor that their employer was overbilling the federal government, amounting to violations of 18 United States Code former section 1001, which prohibited a person from making false statements to a federal department or agency. (Holmes, supra, at p. 1424-1425, 1426.) The appellate court rejected the defendant employer's contention that its violations of this federal code section did not implicate a substantial public policy and could not form a basis for a wrongful termination cause of action. (Id. at p. 1432.) The appellate court agreed with the trial court's observation that, " '[t]o the extent that there's overcharging or false statements which result in damage to the government, they result in damage to the taxpayers. They are the ultimate in a direct attack on public policy, namely that we don't lose money from the public pocket.' " (Ibid.)
At the time Holmes was decided in 1993, 18 United States Code former section 1001 provided: " 'Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.' " (Holmes, supra, 17 Cal.App.4th at p. 1423, fn. 1.)
This section currently states in part: "(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—[¶] (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; [¶] (2) makes any materially false, fictitious, or fraudulent statement or representation; or [¶] (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; [¶] shall be fined under this title, imprisoned not more than 5 years . . . , or both. . . ." (18 U.S.C.S. § 1001(a).)
In this case, plaintiff alleged that Carnegie Mellon terminated him, at least in part, because he complained about "fraud and misrepresentation being committed against [the Office of Naval Research]." Specifically, plaintiff alleged that he complained to Carnegie Mellon that Langley was misrepresenting the project's status or success to the Office of Naval Research in order to continue to receive funding from the Office of Naval Research. Plaintiff further alleged that Langley was thus accepting money from the United States government without performing the work as agreed. These allegations suggest that Carnegie Mellon made false statements in connection with receiving money from the federal government, which might implicate a violation of 18 United States Code section 1001. As stated in Holmes, " '[t]o the extent that there's overcharging or false statements which result in damage to the government, they result in damage to the taxpayers. They are the ultimate in a direct attack on public policy, namely that we don't lose money from the public pocket.' " (Holmes, supra, 17 Cal.App.4th at p. 1432.)
We recognize that Carnegie Mellon objected below to plaintiff's request for leave to amend on the ground that it would be prejudiced because, for example, discovery had already closed and the trial date was, or soon would be, set. We do not believe that amending the complaint to include the statutory basis for the public policy claim would significantly change the tenor or complexity of the case.
In sum, we agree with the trial court that plaintiff did not sufficiently identify a statute or constitutional provision that would support his public policy claim. However, because the law allows a plaintiff the opportunity to amend if " ' "there is [a] reasonable possibility that the plaintiff can state a good cause of action" ' " (Dudley, supra, 90 Cal.App.4th at p. 260), we determine that plaintiff should have been granted leave to amend his cause of action for wrongful termination in violation of public policy because there is a reasonable possibility he may state a claim based on 18 United States Code section 1001. Having reached this conclusion, we do not address whether the other statutory sections cited in plaintiff's proposed amended complaint and argued by plaintiff on appeal may also support a public policy claim, nor do we address whether the trial court erred in denying plaintiff's motion for reconsideration, which included a copy of plaintiff's proposed amended complaint.
C. Second Cause of Action for Defamation Against Carnegie Mellon and Langley
On appeal, plaintiff contends that the trial court erred in summarily adjudicating the defamation claim in favor of Carnegie Mellon and Langley and in denying plaintiff's request for leave to amend.
1. Background
In his March 24, 2014 civil complaint, plaintiff alleged in the second cause of action for defamation that Carnegie Mellon and Langley falsely told other people that plaintiff was incompetent, dishonest, and lacked integrity in relation to his employment at Carnegie Mellon.
In their summary adjudication motions, Carnegie Mellon and Langley contended that the defamation claim was barred by the one-year statute of limitations because plaintiff testified at his deposition that no defamatory statements were made beyond the fall of 2012. Carnegie Mellon and Langley also contended that the alleged defamatory statements about plaintiff's job performance were opinions that were not actionable, were true, and were privileged. Langley further contended that the defamation claim was barred by the doctrine of managerial immunity.
In opposition, plaintiff stated the following in a declaration: "After my termination, I inquired from other scientists if Langley had been telling them false statements about my employment or my work. I discovered he has been doing just that. In particular, on October 6, 2015, I spoke with Dr. Shanahan for 54 minutes when he informed me of ongoing representations from Langley about me that have taken place over the past many months. Langley told Dr. Shanahan that I had done poor quality work at CMU."
In reply, Carnegie Mellon and Langley contended that plaintiff's declaration was inadequate because plaintiff's statement about another scientist reportedly hearing comments by Langley was inadmissible hearsay, vague, and did not involve a defamatory statement. Langley additionally argued that plaintiff's declaration contradicted his prior deposition testimony that no defamatory statements were made after 2012.
At the hearing on the motion, regarding the purported contradiction between his deposition testimony that no defamatory statement was made after 2012, and his subsequent declaration opposing summary judgment in which he stated that Shanahan told him about another defamatory statement by Langley, plaintiff indicated that his conversation with Shanahan took place three or four months after plaintiff's deposition, and therefore plaintiff did not know at his deposition about Langley's comments to Shanahan. To the extent the court intended to grant judgment on the pleadings, plaintiff requested leave to amend the complaint.
In its written order, the trial court determined that defendants had met their initial burden of demonstrating that plaintiff's claim, which was contained in his civil complaint filed on March 24, 2014, was barred by the one-year statute of limitations (§ 340, subd. (c)), in view of his deposition testimony that there were no defamatory statements after 2012. Regarding plaintiff's evidence in opposition, the court first "exercise[d] its discretion to disregard" plaintiff's statement in his declaration regarding the October 6, 2015 conversation he had had with Shanahan "because it contradict[ed] [plaintiff's] sworn deposition testimony that all of the alleged defamatory statements took place in 2012." Second, the court further determined that "this statement of Shanahan is inadmissible hearsay." The court found that plaintiff "had sufficient notice of the issue and the opportunity to submit an appropriate declaration of [the scientist] to oppose this motion. Plaintiff ma[d]e no showing of good cause why the declaration could not have been timely provided." Third, the court found that even if it considered the statements in plaintiff's declaration, the statements were insufficient to establish a triable issue of material fact. The court determined that the statement that Langley had made ongoing representations about plaintiff "over the past many months" was too vague to determine when the alleged defamatory statements occurred.
2. General legal principles regarding defamation
" 'Defamation is an invasion of the interest in reputation. The tort involves the intentional publication of a statement of fact which is false, unprivileged, and has a natural tendency to injure or which causes special damage.' [Citation.]" (Cornell v. Berkeley Tennis Club (2017) 18 Cal.App.5th 908, 946 (Cornell).)
3. Analysis
Plaintiff contends that the trial court erroneously determined that his declaration, in which he stated that Shanahan told him in 2015 that Langley had made a defamatory statement, contradicted plaintiff's earlier deposition testimony that the last defamatory statement occurred in 2012. Second, plaintiff argues that the court erroneously rejected his declaration as inadmissible hearsay. We consider plaintiff's latter contention first, because we find the issue dispositive. We further observe that plaintiff on appeal fails to challenge the court's third, independent reason for granting summary adjudication of the defamation cause of action, that is, the statement that Langley had made ongoing representations about plaintiff "over the past many months" was too vague to determine when the alleged defamation occurred and thus was insufficient to create a triable issue of material fact.
According to plaintiff's declaration opposing summary adjudication, (1) Langley told Shanahan that plaintiff did poor quality work, and (2) Shanahan in turn told plaintiff about Langley's statement. Plaintiff's declaration thus involved two statements: (1) Langley's purportedly defamatory statement to Shanahan, and (2) Shanahan's repeat of the statement to plaintiff. Carnegie Mellon and Langley objected to plaintiff's statement on the ground that it involved "[t]wo levels of [h]earsay." The trial court ruled that Shanahan's statement was inadmissible hearsay.
Hearsay is "evidence of a statement that was made other than by a witness while testifying at the hearing and that is offered to prove the truth of the matter stated." (Evid. Code, § 1200, subd. (a).) Hearsay evidence is generally inadmissible. (Id., § 1200, subd. (b).) Further, "multiple hearsay is admissible for its truth only if each hearsay layer separately meets the requirements of a hearsay exception. [Citations.]" (People v. Arias (1996) 13 Cal.4th 92, 149.)
Plaintiff relies on the " ' "well-established exception or departure from the hearsay rule applying to cases in which the very fact in controversy is whether certain things were said or done and not as to whether these things were true or false, and in these cases the words or acts are admissible not as hearsay but as original evidence." (People v. Henry (1948) 86 Cal.App.2d 785, 789 . . . .) [¶] In these situations the words themselves, written or oral, are "operative facts," and an issue in the case is whether they were uttered or written. [Citations.]' [Citation.]" (Russell v. Geis (1967) 251 Cal.App.2d 560, 571-572, italics omitted (Russell).) Although this principle would allow Shanahan to testify that Langley told him that plaintiff did poor quality work (the first statement), plaintiff fails to provide legal authority establishing that his own testimony about what Shanahan told plaintiff (the second statement) is admissible.
The facts in this case are similar to Cornell, supra, 18 Cal.App.5th 908. In Cornell, the plaintiff and her father, in opposition to the defendant employer's motion for summary adjudication of a defamation claim, provided statements that "they had heard from numerous other non-Club members that someone else had told them [plaintiff] was 'terminated because she secretly planted a recording device in the Board meeting room . . . .' " (Id. at p. 949; see id. at p. 918.) The trial court "excluded as inadmissible hearsay [plaintiff's] and [plaintiff's] father's statements that nonmembers heard about [plaintiff's] termination from others." (Id. at p. 950.)
On appeal, the plaintiff contended that the trial court erred "by excluding as hearsay the 'evidence that defamatory publications were made to several non-Club members . . . .' " (Cornell, supra, 18 Cal.App.5th at p. 950.) As in the present case, the plaintiff in Cornell "relie[d] on the ' " 'well-established exception or departure from the hearsay rule applying to cases in which the very fact in controversy is whether certain things were said or done and not . . . whether these things were true or false.' " ' [Citation.]" (Id. at p. 950.) The appellate court explained: "While this principle might justify admission of testimony by non-Club members that they were told [plaintiff] was terminated for secretly planting the recorder, [plaintiff] does not explain how her and her father's statements about what the non-Club members said they were told also fall into a hearsay exception. [Citation.] Therefore, she fails to convince us that the trial court's exclusion of this evidence was improper . . . ." (Id. at pp. 950-951.)
Similarly, in the instant case, the " ' " 'well-established exception' " ' " to the hearsay rule regarding whether a defamatory statement was made would apply to Langley's statement to Shanahan (the first statement). (Cornell, supra, 18 Cal.App.5th at p. 950.) However, Shanahan's statement to plaintiff (the second statement) was an out-of-court statement by Shanahan offered for its truth, that is, to show that Shanahan had, in fact, heard an allegedly defamatory statement by Langley. This is hearsay, and plaintiff fails to demonstrate that an exception applies to this statement. (See id. at pp. 950-951; Innovative Business Partnerships, Inc. v. Inland Counties Regional Center, Inc. (2011) 194 Cal.App.4th 623, 633 [declarations were hearsay, inadmissible, and thus did not create a triable issue of fact regarding defamation, where declarations were based on what the defendant told a person, who then told the declarant.)
Plaintiff contends that in Russell, supra, 251 Cal.App.2d 560, the appellate court admitted hearsay evidence to show that the original defamatory statement was republished later. We are not persuaded by plaintiff's reliance on Russell. In that case, the plaintiff was permitted "to relate the hearsay statements in her testimony concerning her humiliation and mental suffering." (Id. at p. 572.) In other words, the purpose for which the hearsay statements were admitted "concern[ed] the effect of defendant's defamatory statements" on the plaintiff. (Id. at p. 571.) In contrast, plaintiff in this case did not seek to admit Shanahan's hearsay statement to show the emotional impact of Langley's original statement on plaintiff.
Plaintiff also quotes the "general rule . . . that every repetition of a defamation is a separate publication and gives rise to a new cause of action. [Citation.]" (Neal v. Gatlin (1973) 35 Cal.App.3d 871, 877, fn. 4.) However, the legal authorities that plaintiff cites in this regard do not address the hearsay issue. Further, plaintiff is seeking liability against Langley for his original statement, not liability against Shanahan for repeating the statement to plaintiff. Indeed, plaintiff could not seek liability against Shanahan for Shanahan's repeat of the statement to plaintiff because in order " 'for defamatory matter to be actionable, it must be communicated, or "published," . . . to "one other than the person defamed." [Citation.]' [Citations.]" (Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 278.) We therefore determine that the trial court properly excluded Shanahan's statement as hearsay. (Evid. Code, § 1200, subds. (a) & (b).)
We also observe that plaintiff fails to show error in the trial court's third, independent reason for concluding that there was no triable issue of material fact regarding the defamation claim. The court stated in its written order that "[e]ven if the Court were to consider the statements asserted in Plaintiff's declaration, they are insufficient to establish a triable issue of material fact." In reference to plaintiff declaring that Shanahan told him that Langley had made ongoing representations about plaintiff " 'over the past many months,' " the court explained that it was "wholly unclear from this vague description when the purported publication of the alleged defamatory statements actually occurred and whether that date was after March 24, 2013. Consequently, Plaintiff fails to raise a triable issue of material fact." On appeal, plaintiff fails to address this ruling by the trial court. "[A] trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment. [Citations.]" (Jameson v. Desta (2018) 5 Cal.5th 594, 609.) In this case, plaintiff fails to address this ruling or otherwise demonstrate error in the court's finding that there was no triable issue of material fact regarding the defamation claim.
Lastly, we understand plaintiff to contend that the trial court should have given him leave to amend the defamation claim. However, the trial court's ruling granting summary adjudication of this cause of action, which we have determined was correct, was based on the evidence presented by defendants and the lack of admissible evidence by plaintiff showing a triable issue of material fact. The court's ruling regarding this cause of action was not based on a pleading defect. Under these circumstances, plaintiff fails to persuasively articulate why he is entitled to leave to amend the defamation claim.
D. Third Cause of Action for Misrepresentation Against Carnegie Mellon
On appeal, plaintiff contends that the trial court erred in summarily adjudicating the cause of action for misrepresentation and in denying leave to amend.
1. Background
In the third cause of action for misrepresentation, plaintiff alleged that Carnegie Mellon induced him to stop working on his own project, and to begin working on Carnegie Mellon's project, by misrepresentations regarding "the kind, character and existence of such work, and the compensation." Plaintiff alleged that Carnegie Mellon "should have known" how Langley "would treat [plaintiff's] research and authority in the project." Elsewhere in the complaint, plaintiff alleged that Langley falsely represented that plaintiff (1) would take on the role of principal investigator, which was a higher position, in current and new projects, and (2) that he would have lots of freedom and autonomy, including in initiating new projects. Langley allegedly falsely represented the nature of plaintiff's position at Carnegie Mellon, including the range of professional and research opportunities, his level of leadership and authority, and his pay structure. Plaintiff alleged that Langley "destructively micro-managed" most of plaintiff's efforts instead of giving him an expanded leadership role.
In its motion for summary adjudication, Carnegie Mellon contended that the statements were too vague and indefinite to be actionable, that the statements were truthful and not intentionally false, that there was no detrimental reliance, that any reliance was unreasonable, and that plaintiff did not suffer any damages.
In opposition, plaintiff contended that (1) Langley intentionally or negligently misrepresented material facts regarding whether funding was in place for two more years and whether plaintiff could be a principal investigator on the project, (2) Langley knew that funding might not continue past September 2012, and that plaintiff could never be a principal investigator, (3) alternatively, Langley had no reasonable ground to represent that funding would continue for two more years, (4) Langley intended that plaintiff rely, and plaintiff reasonably did rely, on the representations, and (5) plaintiff was harmed because he was not able to become a principal investigator, he eventually lost his employment, and he did not receive his salary through August 2014.
In reply, Carnegie Mellon contended that plaintiff's opposition improperly alleged new misrepresentations, and that the newly alleged misrepresentations did not meet the elements required for a misrepresentation claim.
At the hearing on the motion, plaintiff requested leave to amend the complaint to allege that Langley knew he could not make plaintiff a principal investigator, but that Langley had indicated in e-mails that he was going to make plaintiff a principal investigator. Carnegie Mellon contended that it was too late and would be unfair to allow the complaint to be amended.
In its written order, the trial court determined that the representations by Langley that were alleged in the complaint were predictions as to future events and/or were opinions, and thus the representations were not actionable fraud. The court further determined that there was no allegation in the complaint that Langley had no intention of performing the promises at the time the promises were made. Regarding plaintiff's contention in opposition that Langley misrepresented that funding would be in place for two more years, the court determined that the purported misrepresentation was not alleged in the complaint and therefore could not be a basis for denying summary adjudication.
2. General legal principles regarding misrepresentation
"The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage." [Citations.]" (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196.)
The elements of intentional misrepresentation or " 'fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.' [Citations.]" (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar).) Regarding knowledge of falsity, the defendant must know that the representation was false at the time it was made. (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498 (Manderville).)
A false promise to perform in the future can support an intentional misrepresentation claim, but not a negligent misrepresentation claim. (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 458 (Stockton Mortgage).) As explained by the California Supreme Court, " '[p]romissory fraud' is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]" (Lazar, supra, 12 Cal.4th at p. 638.) For example, "[a]n action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract. (Chelini v. Nieri (1948) 32 Cal. 2d 480, 487 ['tort of deceit' adequately pled where plaintiff alleges 'defendant intended to and did induce plaintiff to employ him by making promises . . . he did not intend to (since he knew he could not) perform' (fn. omitted)] . . . .)" (Ibid.)
3. Analysis
Plaintiff's cause of action for "misrepresentation" is difficult to decipher. (Capitalization omitted.) He did not clearly allege the misrepresentation(s) upon which the cause of action was based. Instead, he "incorporate[d] . . . by reference" all the "prior paragraphs" of the complaint. It also appears that he attempted to plead both a claim for intentional misrepresentation and a claim for negligent misrepresentation within the single cause of action for "misrepresentation," without clearly alleging the elements of the claim.
In opposition to Carnegie Mellon's summary adjudication motion, plaintiff clarified that two misrepresentations were made: (1) Langley represented that he would be able to make plaintiff the principal investigator on the project, but Langley knew that that could not occur if plaintiff was hired as a project scientist; and (2) Langley represented that funding would be in place for two more years, but there was actually a question whether funding would continue in August and September 2012.
To the extent plaintiff's claim was based on a false promise to perform in the future, he cannot maintain a claim for negligent misrepresentation. (Stockton Mortgage, supra, 233 Cal.App.4th at p. 458.) On appeal, plaintiff contends that he can maintain a claim for intentional misrepresentation, based on promissory fraud, pursuant to Lazar, supra, 12 Cal.4th 631.
In Lazar, which was decided on demurrer, the plaintiff alleged that the defendant corporation intensively recruited him to work for the corporation. (Lazar, supra, 12 Cal.4th at p. 635.) The plaintiff alleged that the defendant's representations "regarding the terms on which he would be retained, [the defendant's] financial health and [plaintiff's] potential compensation were false and, when making them, [the defendant's] agents knew they were false." (Id. at p. 636.) The plaintiff agreed to work for the defendant, but approximately two years later, the plaintiff's employment was terminated. (Id. at p. 636.) The trial court sustained the defendant's demurrer to various causes of action, including fraud. (Id. at p. 637.)
The California Supreme Court concluded that the plaintiff had sufficiently alleged a cause of action for promissory fraud, which "is a subspecies of the action for fraud and deceit." (Lazar, supra, 12 Cal.4th at p. 638.) The court explained that "[a]n action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract. [Citations.]" (Ibid.) The court stated: "[The plaintiff's] allegations, if true, would establish all the elements of promissory fraud. . . . [The plaintiff] alleges that, in order to induce him to come to work in California, [the defendant] intentionally represented to him he would be employed by the company so long as he performed his job, he would receive significant increases in salary, and the company was strong financially. [The plaintiff] further alleges that [the defendant's] representations were false, and he justifiably relied on them in leaving secure New York employment, severing his connections with the New York employment market, uprooting his family, purchasing a California home and moving here. [¶] [The plaintiff] alleges that [the defendant] knew its representations regarding the terms upon which he would be retained in [the defendant's] employ, potential salary increases and the financial strength of the company were false at the time they were made. He also alleges that, at the time [the defendant] represented to him his job would be permanent and secure, [the defendant] was planning an operational merger likely to eliminate [the plaintiff's] job, and [the defendant] had no intention of retaining him so long as he performed adequately. Instead, [the plaintiff] alleges, [the defendant] secretly intended to treat him as if he were subject to termination without cause. [The plaintiff] further alleges [the defendant] knew the purported potential salary increases would not materialize, because company policy was to limit annual increases to 2 or 3 percent. These allegations adequately state a cause of action for promissory fraud as traditionally understood." (Id. at p. 639, italics added.)
In this case, as we have explained, plaintiff in his opposition to the summary adjudication motion relied on two purported misrepresentations: (1) Langley represented that he would be able to make plaintiff the principal investigator on the project, but Langley knew that that could not occur if plaintiff was hired as a project scientist; and (2) Langley represented that funding would be in place for two more years, but there was actually a question whether funding would continue in August and September 2012.
As the trial court observed, plaintiff failed to allege that Carnegie Mellon had no intention of performing any alleged promise. For example, regarding the first purported misrepresentation, there was no allegation in the complaint that, at the time Langley promised plaintiff that he would become the principal investigator, Langley did not intend to perform. (See Lazar, supra, 12 Cal.4th at p. 639 [a promise made without an intention to perform may constitute fraud]; see Manderville, supra, 146 Cal.App.4th at p. 1498 [the defendant must know that the representation was false at the time it was made].)
More fundamentally, regarding the second purported misrepresentation concerning funding being in place for two more years, as the trial court observed, there was no allegation in the complaint regarding any such misrepresentation by Langley. (See FPI Development, supra, 231 Cal.App.3d at p. 381 [on summary judgment, material factual claims must arise from the pleadings]; accord, Nieto v. Blue Shield of California Life & Health Ins. Co. (2010) 181 Cal.App.4th 60, 74 ["the pleadings determine the scope of relevant issues on a summary judgment motion"]; Saatzer v. Smith (1981) 122 Cal.App.3d 512, 520 [opposition papers "filed in response to a defendant's motion for summary judgment may not create issues outside the pleadings"].) To the contrary, plaintiff alleged in the complaint that Carnegie Mellon's offer letter to him stated that his position "was subject to the availability of continued funding from the grant," and that "[i]f, for any reason, there was insufficient funding, the University reserved the right to terminate the position without further liability."
Therefore, we determine that the trial court properly determined that plaintiff failed to state a claim for misrepresentation.
We understand plaintiff to contend on appeal that the trial court erred in denying his oral request for leave to amend the complaint at the December 10, 2015 hearing on the summary adjudication motion and again in connection with his motion for reconsideration.
As we have explained, "[w]hen a motion for summary judgment is in effect a motion for judgment on the pleadings, it is better practice to grant the motion with leave to amend . . . ." (Wood, supra, 25 Cal.App.4th at p. 1120; see Bostrom, supra, 35 Cal.App.4th at p. 1663; see College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 719, fn. 5 [trial court "should allow an opportunity to amend the complaint to include the missing allegations"].) This procedure—allowing the opportunity to amend—is preferable to granting summary judgment or adjudication outright because it "recogni[zes] . . . the policy that cases and controversies should be decided on their merits wherever possible." (Hansra, supra, 7 Cal.App.4th at p. 647.)
"[O]n a motion for summary judgment, considerable liberality should be used by the trial court in allowing amendments which do not completely and entirely depart from the general area of the cause set up in the pleadings. [Citations.]" (Residents of Beverly Glen, Inc. v. Los Angeles (1973) 34 Cal.App.3d 117, 128.) For example, when a complaint is legally insufficient because it is missing allegations that could be added by amendment, "the trial court . . . should allow an opportunity to amend the complaint to include the missing allegations." (College Hospital, supra, 8 Cal.4th at p. 719, fn. 5.) A trial court's refusal to treat a summary adjudication motion as a motion for judgment on the pleadings is similar to a trial court's refusal to grant leave to amend upon the sustaining of a demurrer because, in both cases, the sufficiency of the pleadings is at issue and the plaintiff may seek leave to amend to remedy the insufficiency. It therefore follows that a trial court abuses its discretion in refusing to treat a summary adjudication motion as a motion for judgment on the pleadings if the plaintiff shows that "there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.]" (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; accord, Bostrom, supra, 35 Cal.App.4th at p. 1663.)
In this case, at the hearing on the summary adjudication motion, plaintiff requested that leave to amend be granted to the extent the trial court treated the motion as one for judgment on the pleadings. Plaintiff proposed to allege that Langley knew that he could not make plaintiff a principal investigator on the project, but that Langley had indicated in e-mails he was going to make plaintiff a principal investigator. Plaintiff thus indicated that he could cure the pleading defect by alleging that Langley was " 'making promises . . . he did not intend to (since he knew he could not) perform.' " (Lazar, supra, 12 Cal.4th at p. 638.)
We observe that Carnegie Mellon objected below to plaintiff's request for leave to amend on the ground that it would be prejudiced because, for example, discovery had already closed and the trial date was, or soon would be, set. Amending the misrepresentation claim to include an allegation regarding Langley's intent would not significantly change the tenor or complexity of the case.
Accordingly, because plaintiff met his burden of demonstrating that there was a " ' "reasonable possibility" ' " (Dudley, supra, 90 Cal.App.4th at p. 260) that the complaint could be amended to state a cause of action for promissory fraud, we determine that the trial court erred in failing to grant leave to amend regarding the third cause of action.
E. Punitive Damages
Plaintiff requests that his claim for punitive damages be "revive[d]" because the trial court erred in granting summary adjudication of the tort claims to which the punitive damages claim was attached.
In its summary adjudication motion regarding the claim for punitive damages, Carnegie Mellon contended that plaintiff could not establish that an officer, director, or managing agent had acted with oppression, fraud, or malice. Langley in his own summary adjudication motion contended that plaintiff could not show that Langley acted with oppression, fraud, or malice.
In opposition to Carnegie Mellon's motion, plaintiff contended that he "ha[d] alleged the malice required for an award of punitive damages." He argued that Langley misled him into coming to Carnegie Mellon, that Langley placed all the failures of the project for prior years on plaintiff and did not give plaintiff the opportunity to succeed, and that Carnegie Mellon knew Langley and the history of the project but allowed Langley to terminate plaintiff based on pretext. In opposition to Langley's motion, plaintiff argued that he "ha[d] alleged the malice required for an award of punitive damages."
In reply, Carnegie Mellon observed that plaintiff did not dispute that Langley and the human resources manager were not officers, directors, or managing agents. Langley in his own reply contended that plaintiff failed to establish a triable issue regarding punitive damages.
In its written order, the trial court granted summary adjudication of plaintiff's punitive damages claim because summary adjudication was being granted on the underlying tort claims for wrongful termination, defamation, and misrepresentation. (See Civ. Code, § 3294, subd. (a) [punitive damages are only available "[i]n an action for the breach of an obligation not arising from contract"].)
As we have explained, the trial court correctly granted summary adjudication of the defamation claim, but plaintiff must be granted leave to amend regarding the wrongful termination and misrepresentation causes of action. Because these latter two tort claims (wrongful termination and misrepresentation) may be amended, and because the viability of the punitive damages claim depends on the scope of those underlying tort claims, we will reverse the summary adjudication order as to the punitive damages claim associated with those two tort claims.
In reaching these conclusions, we express no opinion on the question of plaintiff's ability to prove his causes of action or claim for punitive damages.
IV. DISPOSITION
The judgment entered in favor of defendant Carnegie Mellon is reversed. The trial court is directed to (1) vacate its order granting summary adjudication as to the first cause of action for wrongful termination in violation of public policy, the third cause of action for misrepresentation, and the claim for punitive damages associated with those two causes of action, and (2) enter a new order granting judgment on the pleadings with leave to amend regarding the first cause of action for wrongful termination in violation of public policy and third cause of action for misrepresentation. We do not disturb the trial court's order summarily adjudicating the defamation claim in Carnegie Mellon's favor.
The judgment entered in favor of defendant Patrick Langley is affirmed.
The parties shall bear their own costs on appeal.
/s/_________
BAMATTRE-MANOUKIAN, J. WE CONCUR: /s/_________
ELIA, ACTING P.J. /s/_________
DANNER, J.