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Thursday, May 13th, 2021
Procedural Posture

Procedural Posture

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by April 23, 2021 Business

Appellant, a creditor of several corporations, sought review of a summary judgment from the Superior Court of Santa Clara County (California), which ruled in favor of respondent director in an action for breach of contract, misrepresentation, and related causes of action alleging an alter ego theory.

Overview

The creditor sold component parts to the director’s companies on credit. The director gave the creditor a written guarantee as to one debt that was paid. He also orally indicated that he would see to it that other debts were paid, but some of them were not. The creditor’s complaint alleged that the director had diverted money that would have been used by one company to pay the creditor and that the director controlled and dominated the companies to such an extent that recognizing separate corporate identities would be inequitable. The court stated that because the oral conversations referred to past debts rather than contemporaneous sales, the lack of a written surety obligation meant that the director could not be personally liable under Civ. Code, § 2794, subd. (4), on a breach of guaranty claim. The court concluded that the creditor’s evidence, if proven, could show that the director had domination and control over the company that diverted payment from the creditor. The record did not establish as a matter of law either that there was a unity of interest between the director and the companies or that the creditor would be unable to make the requisite alter ego showing at trial. The parties were represented by California business and employment attorney.

Outcome

The court reversed the judgment of the trial court.

Procedural Posture

Defendant employer sought review of the judgment of the Superior Court of Santa Clara County (California) which denied a motion in limine filed by defendant to exclude evidence of oral representations made by defendant, to plaintiff sales representatives, that they would not be terminated as long as they performed well; and which, following a jury verdict for plaintiffs, entered judgment thereon.

Overview

Plaintiff sales representatives brought action against defendant employer alleging defendant breached a written agreement by terminating them as sales representatives without good cause. Prior to trial defendant brought a motion in limine seeking to exclude evidence of oral representations made by defendant to plaintiffs, that plaintiffs would not be terminated as long as they performed well. The trial court denied defendant’s motion and the matter proceeded to trial. A jury rendered a verdict in favor of plaintiffs and defendant appealed. Plaintiffs filed a separate appeal from an order determining costs, contending that the trial court abused its discretion in setting the date from which to calculate prejudgment interest. The two appeals were consolidated for review. The court reversed the judgment in favor of plaintiffs, holding that the alleged oral agreement to terminate only for good cause was a complete and final expression of the parties’ agreement, precluding any evidence of collateral agreements. Thus the proffered parol understanding as to grounds for termination was inadmissible to vary the contractual terms. The court held plaintiff’s cost issue on appeal was moot.

Outcome

The court reversed the trial court judgment in favor of plaintiff sales representatives, on grounds the parol evidence should not have been submitted to the jury. The court found that the employment contract represented the complete and final agreement between plaintiffs and defendant employer, and the language of the termination clause contained therein did not reasonably lend itself to the meaning advanced by plaintiffs.

 

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