Procedural Posture
Defendant former employer challenged a decision of the Superior Court of Fresno County (California), which concluded that because defendant misrepresented a fact in course of wrongfully terminating plaintiff former employee, it defrauded plaintiff into resigning from his job and where plaintiff relied on the misrepresentation to his detriment, he was awarded damages for injury attributable for the fraud.
Overview
Plaintiff former employee, who worked for defendant former employer, filed suit for breach of contract, breach of implied covenant of good faith and fair dealing, and fraud. The evidence regarding the circumstances of plaintiff's termination was conflicting. Defendant testified that plaintiff voluntary resigned, and plaintiff testified that defendant told him that if he did not resign, he would be terminated. The trial ended with the jurors receiving CACI civil jury instructions. The jury awarded plaintiff damages for economic loss and misrepresentation, and the court of appeals affirmed, ruling that defendant's misrepresentation in the course of wrongfully terminating plaintiff amounted to fraud. The court of appeals concluded that plaintiff had proved a knowing misrepresentation, that was intended to defraud him into resigning, his detrimental reliance, and his resulting damage. The court, reversing the judgment, approved damages for economic loss but refused damages for misrepresentation. The court held that defendant's misrepresentation inducing plaintiff to resign was wrongful termination but no independent fraud claim arose from the misrepresentation because defendant employed falsehood to do what it would have otherwise accomplished directly.
Outcome
The court reversed the judgment of the lower court, approving damages for economic loss but refusing them for misrepresentation. The court ruled that defendant former employer's misrepresentation inducing plaintiff former employee to resign was wrongful termination but no independent fraud claim arose from the misrepresentation because defendant employed falsehood to do what it would have otherwise accomplished directly.
Procedural Posture
Defendant accounting firm challenged a decision of the Court of Appeal (California), which affirmed the trial court's judgment of professional negligence against defendant in action brought by plaintiffs, an individual investor, a corporate investor, and associated individuals.
Overview
Plaintiffs, an individual investor, a corporate investor, and associated individuals, invested in a computer company that went bankrupt. Plaintiffs brought an action against defendant accounting firm, alleging intentional fraud and negligent misrepresentation. Plaintiffs contended that their investments were made in reliance on defendant's unqualified audit opinion on the company's financial statements. A jury found for plaintiffs on the professional negligence ground only. Defendants appealed, and the corporate investor cross-appealed on its misrepresentation claim, alleging that the trial court improperly instructed the jury. The appellate court, however, affirmed the trial court's judgment in favor of plaintiffs. The court reversed the appellate court's judgment, holding that because plaintiffs were not clients of defendants, they were not entitled to recover on a general negligence theory. The court remanded the case to the appellate court with instructions to enter judgment in favor of defendant against plaintiff individual investor, and to decide the corporate investor's cross-appeal and enter judgment or to conduct further proceedings consistent with the court's opinion.
Outcome
The court reversed and remanded the judgment in favor of plaintiffs, an individual investor, a corporate investor, and associated individuals. Because plaintiffs were not defendant accounting firm's clients, they were not entitled to recover on a general negligence theory. The appellate court was instructed to enter judgment in favor of defendant against plaintiff individual investor, and to decide plaintiff corporate investor's cross-appeal.
