Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC282677, Victor H. Person, Judge.
Mahoney & Soll, Paul M. Mahoney and Richard A. Soll for Plaintiff and Appellant.
Clark & Trevithick, Philip W. Bartenetti; Greines, Martin, Stein & Richland, Robert A. Olson and Cynthia E. Tobisman for Defendants and Appellants.
ALDRICH, J.
INTRODUCTION
Kathleen Dent worked for Farmers Insurance Group of Companies as an agent. Farmers fired Dent. Dent sued Farmers, related entities, and individual defendants (Tony Nunes, Paul Crosetti, Laura Day, and Ron Coble) for, among other things, promissory fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing. A jury found in Dent’s favor on the fraud claims, but against her on the contractual claims. The jury also awarded Dent punitive damages. Farmers, Day, and Crosetti now appeal, contending that the evidence is insufficient to support liability and damages on the fraud claims, including punitive damages. Dent cross-appeals, requesting that the judgment on the contract claims be reversed if the judgment on the fraud claims is reversed.
At trial, plaintiff and appellant was referred to as Kathleen Craig and Kathleen Dent. Because the complaint was filed in the name of Kathleen Dent, we use Dent.
Dent sued the following corporate entities: Farmers Insurance Group of Companies, Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, and Farmers New World Life Insurance Company. We refer to the corporate entities collectively as “Farmers.”
We hold that there is insufficient evidence of fraud, namely, there is insufficient evidence that any of the alleged misrepresentations were fraudulent. We therefore reverse the judgment in Dent’s favor on the claims for intentional and negligent misrepresentation causes of action. But because the special verdict form with respect to the breach of contract claim was defective, we reverse the judgment in Farmers’s favor on that claim and remand for further proceedings. We otherwise affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual background.
A. Dent’s mortgage brokerage business.
Dent began working in the mortgage industry in high school. Over the ensuing years, she worked her way up in that industry, eventually having her own staff and clientele of builders. In 1998 or 1999, she began to think about ways to grow her existing business. The mortgage business had “peaks and valleys, ” and she wanted to build something consistent and ongoing. Around that time, she saw an advertisement for Farmers. Dent set up a meeting with Laura Day, a Farmers’s district manager in Pleasanton.
B. Dent meets with Laura Day to discuss becoming a Farmers agent, and she becomes a reserve agent.
Dent met with Day in early 1999. At that meeting, Day told Dent about opportunities Farmers offered and gave her brochures and a folder about being an agent. A brochure stated, “You’ll be in business for yourself making your own day-to-day business decisions” and “You will have the latitude to set your own professional goals and make the day-to-day decisions that will help you achieve those goals.” The brochure also represented that “we provide our agents with training that uses state-of-the-art Agent-Focused Marketing techniques, which are designed to develop long-term relationships between you and your customers.” Day also told Dent that Farmers would provide the training she needed to be successful. Day would primarily train Dent, but classes would also be available.
Day showed Dent a couple of agents’ folios who made between $400,000-500, 000 per year. Day told her, “ ‘[W]ith hard work and dedication, you too could do this.’ ” They did not discuss, however, how much time Dent would need to spend on Farmers’s business or what amount of time she could work on her mortgage business.
After meeting with Day, Dent entered Farmers’s reserve program in August 1999. The reserve program is a one-year or less long program designed to allow reserve agents to get their insurance licenses and to learn about Farmers’s products. If an agent successfully completes the reserve program, then he or she can become a career agent.
While in the reserve agent program, Dent maintained her mortgage business, although she planned to get out of the mortgage business eventually. Dent took classes, and she became licensed to sell life, auto, and fire insurance. Although the classes were sufficient to get her through the licensing process, she did not feel comfortable selling life insurance and in her knowledge of Farmers’s products. When Dent raised her concerns with Day, Day gave her more training, although it was done “on a per-needed basis.” For example, if Dent had a client, she gave Day the client’s information, and Day would give her a quote. Dent didn’t know the computer systems and the proper way to quote, although Day was training her on that. Day was very supportive if Dent brought her a client.
C. Dent becomes a career agent.
Around April 2000, Day and Dent talked about Dent becoming a career agent. Dent told Day she didn’t feel confident about her sales skills to become a full-time agent, but Day reassured her that training would continue. Day also told Dent that if she converted by July 15, 2000 Paul Crosetti, Day’s division marketing manager, would receive a large bonus.
Dent met with Day and Crosetti on June 2, 2000, at which time they gave her the agent agreement. Before Dent signed it, Crosetti said that Dent’s training would continue, that Farmers offered different classes, and that Day would work with Dent one-on-one. Crosetti also gave Dent the name of an agent with whom she could talk for help. They discussed sales goals she would need to reach, and Crosetti told her the standards were the same for all agents.
Dent read the agent agreement and discussed it with Day and Crosetti. They specifically discussed paragraph C. It states, “This Agreement terminates upon the death of the Agent and may be terminated by either the Agent or the Companies on three (3) months written notice. [¶] If the provisions of this Agreement are breached by either the Agent or the Companies, the Agreement may be terminated by the other party on thirty (30) days written notice. This Agreement may be terminated immediately by mutual consent or by the Companies for the following reasons: 1. Embezzlement of monies belonging to the Companies. [¶] 2. Switching insurance from the Companies to another carrier. [¶] 3. Abandonment of the Agency. [¶] 4. Conviction of a felony. [¶] 5. Willfull [sic] misrepresentation that is material to the operation of the agency.”
They also reviewed paragraph D. It provides that in the event Farmers terminates the agent agreement, the agent may request a review by a termination review board (TRB). The TRB members are composed of a company agent who is a member of the president’s council and who is selected by the terminated agent, the regional manager or the manager’s representative, and a third party mutually selected by the other two board members. The TRB hearing is held “at the Regional Office or such other convenient place selected by the Regional Manager.” After the hearing, the “Board will submit a summary of the hearing and its recommendations to the Executive Home Office. The chief executive officer and staff will review the summary and recommendations, reach a decision, and promptly advise the Agent of that decision.”
Based on Dent’s concern that she “never had an employment contract where somebody had the right to let me go, ” Day assured her that nobody was fired unless they failed to service clients or committed fraud or embezzlement. Crosetti told Dent that all incoming agents had to sign the same contract without modifications. Dent signed the agreement. She would not have signed it had she known she could be fired for a reason other than embezzlement, fraud or failing to service clients.
Shortly after signing the agent agreement, Day told Dent that by the end of her two-year career program, July 15, 2002, she needed to get her series 6 and 63 licenses to sell securities. Dent signed an addendum to that effect, and she took classes in mid-2001 to get the licenses. The addendum also set forth the minimum acceptable performance standards for career agents.
She was scheduled to take her licensing test when she received a termination letter in March 2002. Because she needed a sponsor, she postponed taking it.
Dent then went to career school, a five-day course about different aspects of an agency. Even after attending career school, life insurance remained a “challenge” for her, although she was very comfortable selling fire and auto insurance. Dent talked to Day, who gave her additional training, but it was in “bits and pieces” and was never an intense training. She was not thoroughly trained on whole and universal insurance. Crosetti told her he would try and get a class and a trainer together, but that never happened. Day also trained her in commercial insurance, auto/fire insurance, how to use the auto/fire processing system, and life insurance.
Crosetti testified that nearly one day of career school was devoted to life insurance.
Although Dent was in the top tier of new agents in terms of production during the first six months of her career agency, she did not meet all of her sales goals from October 2001 through February 2002. Farmers therefore cut a subsidy Dent had been receiving. To help, Day said she would give Dent additional training on life insurance.
D. Farmers fires Dent, who requests a TRB hearing.
Around February 2002, Day returned from a management meeting and told Dent there was a new state executive, Ron Coble, who was suddenly enforcing the agent agreement where it had never before been enforced. Day told her 75 termination letters had gone out and that Dent might be getting one. Both Dent and Day were upset.
On March 15, 2002, Crosetti gave her the letter, dated March 4, exercising Farmers’s right to terminate Dent’s agent agreement on three months’ written notice, termination effective June 15, 2002. He told her she was being fired for not meeting her sales goals. Dent requested a TRB hearing.
Coble, a vice president and state executive director, informed Dent the hearing would be in Simi Valley, at California’s state office. Dent asked Coble to move the hearing to the Pleasanton office. Tony Nunes, a marketing manager for the Bay Area operations, told her that all TRB hearings are held at the state office in Simi Valley. Although Farmers used to have regional offices, they moved to a state office structure.
Coble had four market managers under him, including Tony Nunes. Crosetti, a division marketing manager, reported to Nunes.
The TRB hearing was scheduled for July 2, 2002. Dan Youngs, the TRB member whom Dent had selected per Day’s recommendation, did not appear. When Dent called Youngs, he said Farmers never told him the hearing date. Although Dent had also sent him emails and a message, when he tried to call Dent, her telephone number was wrong. Dent asked Coble to reschedule the hearing and to reimburse her for the expense of having Youngs and herself fly out again. Coble told her no, although he admitted Farmers should have also called Youngs. She was also told that Judge Philip Saeta would be the third member of the TRB. She was not told how Judge Saeta had been selected and that Farmers was paying him $500 to be there. Farmers did not consult with Youngs before selecting Judge Saeta.
The hearing proceeded. Tony Nunes told Dent she was being fired because she didn’t meet her sales goals and had not received her series 6 and 63 license. Although Nunes referred to Dent’s failure to get her license, Coble later said this was not a reason for her termination. Rather, unbeknownst to Dent, the deadline for getting her series 6 and 63 license had been extended for all agents to April 2003. After the hearing was over, Coble told her that she would have an answer within 30 to 60 days, and that she could continue to do business until then.
A week later, Nunes told Dent, contrary to what Coble had told her after the TRB hearing, that she needed to immediately turn over all of her policies and that her agency was being terminated. Dent said that they had not yet received the TRB’s decision, but Nunes told her he did not think the result would be favorable. He offered to let her become an agency producer under another agent for a year and then come back through the career agent program. She told him she would think about it. Day told Dent she should sue.
Then, by letter dated August 2, 2002, Martin Feinstein, Farmers’s CEO, informed Dent that she was fired, effective July 15. The letter, however, contained two mistakes: First, her agency producer number was wrong, and, second, the TRB hearing date was wrong. Feinstein also never reviewed documents concerning the TRB hearing, although his staff did.
After Dent was fired, Farmers paid her $3,404.52, the value of her agent contract.
As a result of being fired from Farmers, Dent suffered sleepless nights, gained weight due to depression, and her psoriasis flared up.
II. Procedural background.
A. Dent files a complaint.
In February 2002, Dent filed an amended complaint for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional and negligent infliction of emotional distress, sex discrimination, intentional and negligent misrepresentation, and violation of public policy.
With respect to the intentional and negligent misrepresentation causes of action, Dent alleged that Day and Crosetti, with their codefendants’ knowledge, represented at a meeting in April 1999 that she could earn the same or more than what she made at her mortgage company. At the June 2, 2000 meeting, they represented that her performance goals would be the same as all other agents under the same career contract, that she would be treated fairly and all terms of her contract would be honored, and that she would have the same opportunities and same training as other career program agents.
B. The special verdict.
The jury found in Dent’s favor on the fraud claims, but against her on the remaining claims. As to the intentional misrepresentation cause of action, the jury found that Farmers, Crosetti, and Day made a false representation of an important fact to Dent, and that they knew the representation was false or they made it recklessly and without regard for its truth. They each intended Dent to rely on the representation, Dent did rely on it, and her reliance was a substantial factor in causing Dent harm. The jury awarded Dent $131,000 for past economic losses, including lost earnings/lost profits/medical expenses; $101,000 for future economic loss, including lost profits; and $126,000 for past noneconomic loss, including physical pain/mental suffering.
As to the negligent misrepresentation cause of action, the jury similarly found that Farmers, Crosetti, and Day negligently made false representations. The jury, however, found that Dent’s reliance on only Farmers’s representation was a substantial factor in causing Dent harm. The jury therefore awarded Dent $79,000 for past economic losses, including lost earnings/lost profits/medical expenses; and $63,000 for future economic loss, including lost earnings/lost profits/lost earning capacity/medical expenses.
The jury found in Farmers’s favor on the causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and wrongful discharge/demotion in violation of public policy. As to the breach of the implied covenant of good faith and fair dealing claim, the jury answered “No” to the question, “Did Farmers breach the employment agreement by failing to properly train Plaintiff so she could adequately perform her duties as an agent?” As to the wrongful termination in violation of public policy cause of action, the jury found that Dent’s gender was not a motivating reason for Farmers’s decision to fire Dent.
In her cross-appeal, Dent does not contest the verdict on that claim.
The jury also found that Farmers, Crosetti, and Coble acted with malice, fraud or oppression, but that Nunes and Day did not. Because Coble was not a party to the intentional misrepresentation cause of action, the parties agreed that the jury could not assess punitive damages against him. The jury awarded Dent $500,000 in punitive damages against Farmers, and $11.00 against Crosetti.
Farmers filed motions for judgment notwithstanding the verdict and for a new trial, raising, among other things, the sufficiency of the evidence of fraud damages. The trial court denied the motions.
Farmers timely appealed; Dent cross-appealed.
DISCUSSION
Farmers, Day, and Crosetti attack the jury’s fraud verdict on both liability and damages grounds. As to liability, they contend that the evidence is insufficient to support fraud. They similarly contend that the evidence is insufficient to support the jury’s economic damages award, and that there is no basis for the punitive damages awards. In her cross-appeal, Dent argues that if we reverse the judgment on the fraud claim, then we should also reverse the judgment on the breach of contract and breach of the implied covenant of good faith and fair dealing claims. As we discuss, both the appeal and cross-appeal have merit.
I. Sufficiency of the evidence of fraud.
Farmers, Day, and Crosetti contend that there is insufficient evidence to support the jury’s finding of liability for fraud. We agree.
A. General principles.
Under the substantial evidence standard of review, “ ‘ “[w]hen a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.” ’ [Citations.] ‘ “[W]e have no power to judge the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.” ’ [Citations.]” (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 766.)
“ ‘ “Substantial” evidence, however, is not synonymous with “any” evidence. To constitute sufficient substantiality to support the verdict, the evidence must be “reasonable in nature, credible, and of solid value; it must actually be ‘substantial’ proof of the essentials which the law requires in a particular case.” [Citations.]’ [Citation.] . . . Improbable conclusions drawn in favor of a party litigant through the sanction of a jury’s verdict will not be sustained where testimony is at variance with physical facts and repugnance is material and self evident.” (Banco Do Brasil, S.A. v. Latian, Inc. (1991) 234 Cal.App.3d 973, 1012 (Banco Do Brasil).)
The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar).) Negligent misrepresentation has the same elements, except it does not require scienter or intent to defraud. (Agosta v. Astor (2004) 120 Cal.App.4th 596, 603.)
“ ‘Promissory 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.” (Lazar, supra, 12 Cal.4th at p. 638.) Where a defendant fraudulently induces the plaintiff to enter into a contract, an action for promissory fraud may lie. (Ibid.) To prove that the defendant did not intend to perform its promise, something more than mere nonperformance is required. (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.) Fraudulent intent may, however, be proved by circumstantial evidence. (Ibid.)
An action for fraud must be based on a statement of fact, not opinion. (Nibbi Brothers, Inc. v. Home Federal Sav. & Loan Assn. (1988) 205 Cal.App.3d 1415, 1423.) “ ‘[P]redictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud.’ [Citation.]” (Ibid.)
B. There is insufficient evidence of fraud.
Here, Farmers, Day, and Crosetti contend that there is insufficient evidence that the following representations constitute fraud: 1. Dent could make $400,000-$500,000; 2. Farmers would train Dent; 3. Dent would not be fired unless she failed to service her clients or embezzled money or committed fraud; 4. Dent could set her own performance goals and make day-to-day business decisions; and 5. Farmers would honor all contract terms, in particular the TRB hearing provision.
1. Dent could make $400,000-$500,000.
Before Dent became a reserve agent, Day told her she could make $400,000-$500,000. The precise statement, in Dent’s own words, was that “ ‘with hard work and dedication’ ” she “could”make $400,000-$500,000. (Italics added.) This statement could not be the basis for fraud; it is a statement of opinion, not of fact. (See, e.g., Pacesetter Homes, Inc. v. Brodkin (1970) 5 Cal.App.3d 206, 211 [statement made to prospective purchaser of real property—“if you receive the rents as we contemplate, ” the properties would be an excellent investment—were nonactionable statements of opinion “concerning future estimated rentals and not . . . an unqualified representation of what those rentals would be”]; Gentry v. eBay, Inc. (2002) 99 Cal.App.4th 816, 835 [eBay’s statement on its Web site that a positive eBay rating is “ ‘worth its weight in gold’ ” is not an actionable representation of fact].)
Not only was the statement merely one of opinion, there was also no evidence it was false. Day showed Dent folios of agents who made the amounts represented. Therefore, it was true that there were Farmers agents who made that much money.
Dent, however, argues that Day had a superior knowledge regarding the subject matter, and Dent therefore should have disclosed that the average commission income for a full-time agent in California is $100,000 or less. But Dent never testified or offered any evidence that had she known that the average agent makes $100,000 she would not have entered into the agreements. Given that Dent was neither assured she would make a certain amount of money nor did she testify that she wouldn’t have entered into the agreements had she known what the average agent makes, these representations and omissions cannot be the basis of the jury’s fraud verdict.
2. Training.
The record also does not show that Farmers, Day, and Crosetti made misrepresentations about the training Dent would receive.
The record instead shows that before Dent became a reserve agent, Farmers gave her a brochure. It stated that Farmers provides “agents with training that uses state-of-the-art Agent-Focused Marketing techniques, which are designed to develop long-term relationships between you and your customers.” Day also told Dent that Farmers would train her, primarily through Day. While Dent was a reserve agent, she received training, from classes and from Day. That training enabled her to pass the licensing tests. When Dent told Day she needed additional training on Farmers’s products, Day gave it to her, albeit on a “per-needed basis.” Then, when Dent was considering whether to become a career agent, Day assured Dent her training would continue. Crosetti similarly assured Dent that different classes were offered in the region and that Day would work with her one-on-one. Dent thereafter took classes. She attended five days of career agent school. When she asked for additional training, Day gave it to her, although it was never an intense training and although she still did not feel “thoroughly” trained to sell whole life insurance. When Dent talked to Crosetti about whole life policies, he told her he would see if he could get a class together, but that never happened.
This evidence shows that Farmers did train Dent, but she was dissatisfied with the training. Dent’s dissatisfaction with the training she received, however, is not sufficient to prove that what Farmers, Day, and Crosetti told her about training was false or that they intended at the outset to give her insufficient training. Rather, what they said about training at the time Dent was contemplating entering into the reserve and agent agreements occurred. Namely, Day said she would primarily train Dent one-on-one; Day did train her. Day said classes would be offered to Dent; they were offered. Before Dent signed the agent agreement, Day assured Dent her training would continue; it did continue. Crosetti told Dent classes were offered in the region; they were offered. Crosetti told Dent that Day would work with her one-on-one; Day did work with her. Also, neither Day nor Crosetti behaved in a manner suggesting they never intended to train Dent. Rather, Day personally trained Dent. And, according to Dent herself, Day was supportive.
Therefore, in the absence of a more specific representation of what type of training Dent would get, we cannot find any evidence to support a claim of fraud based on the training Dent was promised and what she received.
We note that the jury found, in connection with Dent’s cause of action for breach of the implied covenant of good faith and fair dealing, that Farmers did not “breach the employment agreement by failing to properly train Plaintiff so she could adequately perform her duties as an agent.” ~(AA 122)~ This finding does not necessarily preclude fraud. But it does indicate a belief on the jury’s part that Dent received the training to which she was contractually entitled and sufficient to allow her to perform her job.
3. Grounds for termination.
Day and Crosetti told Dent she could be fired only if she committed embezzlement or fraud or failed to service her clients. Farmers, Day, and Crosetti contend that any such representations are contrary to the written agent agreement, and, under the parol evidence rule, cannot be evidence of fraud. We agree.
(a) The parol evidence rule.
The parol evidence rule is in Code of Civil Procedure section 1856, which provides: “Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.” (Code Civ. Proc., § 1856, subd. (a).) The parol evidence rule is not an evidentiary rule, but one of substantive law. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343.) Because it is a rule of substantive law, the parol evidence rule may be raised where, as here, the appellant failed to raise it in the trial court. “To be sure, a party who has not objected to the introduction of extrinsic evidence cannot complain if that evidence is considered by the trier of fact. But in determining whether substantial evidence supports a judgment, extrinsic evidence inconsistent with any interpretation to which the instrument is reasonably susceptible becomes irrelevant; as a matter of substantive law such evidence cannot serve to create or alter obligations under the instrument. Irrelevant evidence cannot support a judgment. [Citation.]” (Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 23, fn. omitted.)
To determine in a promissory fraud case whether the parol evidence rule applies, we apply a two-part analysis: (1) Is the writing intended to be an integration, i.e., a complete and final expression of the parties’ agreement, precluding any evidence of collateral agreements; and (2) is the agreement susceptible of the meaning contended for by the party offering the evidence? (Banco Do Brasil, supra, 234 Cal.App.3d at p. 1001.) “ ‘In determining the [integration] issue, the court must consider not only whether the written instrument contains an integration clause, but also examine the collateral agreement itself to determine whether it was intended to be a part of the bargain. [Citations.] However, in determining the issue of integration, the collateral agreement will be examined only insofar as it does not directly contradict an express term of the written agreement; “it cannot reasonably be presumed that the parties intended to integrate two directly contradictory terms in the same agreement.” [Citation.]’ ” (Id. at p. 1002.) “ ‘The test of whether parol evidence is admissible to construe an ambiguity is not whether the language appears to the court to be unambiguous, but whether the evidence presented is relevant to prove a meaning to which the language is “reasonably susceptible.” [Citation.]’ [Citations.]” (Pacific State Bank v. Greene (2003) 110 Cal.App.4th 375, 385.)
The parol evidence rule applies to cases involving promissory fraud: Although “it is true that a recognized exception to the parol evidence rule permits evidence of fraud in order to nullify the main agreement . . ., that rule has no application where ‘ “ promissory fraud” is alleged, unless the false promise is independent of or consistent with the written instrument. [Citations.] It does not apply where, as here, parol evidence is offered to show a fraudulent promise directly at variance with the terms of the written agreement. [Citations.]’ ” (Banco Do Brasil, supra, 234 Cal.App.3d at p. 1009, fn. and citation omitted; see also Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263.)
Applying this two-part test here, we conclude that the termination provision in the agent agreement was integrated and that the provision is not reasonably susceptible to the interpretation Dent advocates.
(b) The termination provision was integrated.
The first question is was the agent agreement integrated? The agent agreement does not contain an integration clause. The absence of an integration clause, however, is not necessarily dispositive on this issue. Rather, an agreement can be partially integrated. (Wallis v. Farmers Group, Inc. (1990) 220 Cal.App.3d 718, 730 (Wallis), disapproved on another ground by Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 394, fn. 2 (Dore); Masterson v. Sine (1968) 68 Cal.2d 222, 225.) The court in Wallis analyzed the same form agent agreement at issue here. Wallis found that the agent agreement “exhaustively covers the subject of termination and even provides for a termination review procedure. Both parties concede that no other written material discusses the subject. . . . We conclude that while the agreement as a whole was not integrated, it was integrated with respect to the subject of termination.” (Wallis, supra, at p. 730.)
We agree with Wallis, at least insofar as it concluded that the agent agreement is integrated with respect to the subject of termination. Here, as in Wallis, the parties testified that they discussed the agent agreement before Dent signed it. Dent testified she reviewed the termination clause in detail. No other agreement covers the issue of termination. Moreover, as we discuss in greater detail below, the collateral agreement—that Dent would be fired only for embezzlement, fraud or failure to service her clients—directly contradicts express terms of the termination clause. Contradictory terms cannot be integrated into the same agreement. (Banco Do Brasil, supra, 234 Cal.App.3d at p. 1002.)
(c) The agent agreement is not reasonably susceptible to the interpretation Dent offers.
Next, is the agent agreement reasonably susceptible to the meaning Dent offers? It is not.
The agent agreement describes at least fourways in which it can be terminated. First, it terminates on the agent’s death. Second, it may be terminated by either the agent or by Farmers on three months’ written notice. Third, if either party breaches the agent agreement, then either party can terminate it on 30 days’ written notice. Fourth, the agent agreement can be terminated immediately by mutual consent or by Farmers for embezzlement, switching insurance from Farmers to another carrier, abandonment of the agency, a felony conviction or a willful misrepresentation material to the agent’s operation of the agency.
Although the agent agreement sets forth at least these four ways in which it can be terminated, Dent contends there was only one way in which she could be fired: if she embezzled monies, committed fraud or failed to service clients. To reconcile this collateral agreement with the agent agreement, we would have to ignore or to excise most of the termination provision. For example, the agent agreement would not be subject to termination on 30 days’ written notice upon a breach by either party. It would also not be subject to termination if Dent switched insurance from Farmers to another carrier or if she was convicted of a felony. In addition, interpreting the agent agreement to provide that Dent could be fired on three months’ written notice only if she committed fraud, embezzlement or failed to service clients creates a conflict with the later provision setting forth multiple grounds for immediate termination. In other words, the agreement already provides that embezzlement, for example, is a ground for immediate termination. Embezzlement cannot be a ground for immediate termination and also require three months’ written notice before termination.
We therefore conclude that there is no way to incorporate the collateral agreement into the written agreement. The agent agreement is not reasonably susceptible to an interpretation that Dent would be fired only under specified limited circumstances.
(d) Wallis and Dore.
In response, Dent cites Wallis, supra, 220 Cal.App.3d at page 730, to support her contention that the phrase “on three (3) months written notice” is ambiguous and can be interpreted to mean she could be fired only if she committed embezzlement or fraud or failed to service her clients. Wallis does not help her.
Wallis held that parol evidence was admissible to establish that Farmers needed good cause to fire the plaintiff under the three months’ written notice provision. But unlike the plaintiff in Wallis, Dent did not contend at trial that the three months’ written notice provision can be interpreted to mean she could only be fired for good cause. She contended she could be fired on three months’ notice only if she committed embezzlement or fraud or failed to service her clients. As we previously explained, this interpretation of the notice provision directly contradicts that portion of the agent agreement stating she could be fired immediately for committing those transgressions, as well as others.
Dent testified on direct examination that she was told she could only be fired for embezzlement or fraud or not servicing clients: “A. . . . Laura had told me that nobody was ever terminated unless they were not servicing their clients, fraud, and embezzlement. [¶] Q. Did you have any discussion about whether they needed cause to terminate you? [¶] A. That was the cause.” On cross-examination, after testifying that Crosetti and Day told her she could be fired only for good cause, she was impeached with her deposition testimony, in which she denied that Crosetti and Day told her she could be fired only for good cause. Dent then explained that she was “told unless there was fraud or not servicing your contracts” she would not be fired. Dent’s trial counsel similarly argued in his closing argument that Dent was told she wouldn’t be fired except for those reasons.
Moreover, Wallis rejected the contention Dent makes. The plaintiff in Wallis, like Dent, testified that she and Farmers had an express oral agreement that she could be terminated only for embezzlement, switching insurance carriers, agency abandonment, a felony conviction or willfull misrepresentation. Wallis said that this oral agreement “must be disregarded” because it contradicted express provisions of the agent agreement giving Farmers the right to fire the plaintiff for other breaches of the agreement and on three months’ notice. (Wallis, supra, 220 Cal.App.3d at p. 731, fn. 9.)
The court in Wallis, however, admitted parol evidence on the issue of whether the agreement could be terminated on three months’ notice for good cause. As we discuss post, this holding is suspect in light of Dore.
Wallis additionally does not help Dent, because our California Supreme Court has disapproved it on the point for which Dent cites it. In Dore, supra, 39 Cal.4th at page 388, a writing informed the plaintiff his employment was at will, meaning that the defendant could “ ‘terminate your employment at any time just as you have the right to terminate your employment . . . at any time.’ ” (Italics added.) The plaintiff contended that there was an oral agreement he could be fired only for cause and that the parol evidence rule did not bar such an agreement because the phrase “at any time” was susceptible to the interpretation that termination would occur only for cause. Dore disagreed. The court held that “the verbal formulation ‘at any time’ in the termination clause of an employment contract” is not per se ambiguous; rather “such a formulation ordinarily entails the notion of ‘with or without cause.’ ” (Id. at p. 391.) The court went on to examine extrinsic evidence that the plaintiff offered to establish an ambiguity, and the court nonetheless concluded that the phrase “at any time” meant that the plaintiff could be fired with or without cause.
Because Wallis has been disapproved, we reject Dent’s argument that Wallis, under the doctrines of res judicata and collateral estoppel, bars Farmers from relitigating the issue whether the three months’ written notice provision requires termination only for good cause. We reject that argument for the additional reason that whether Farmers could fire Dent only for good cause was not her argument at trial.
In reaching its conclusion, Dore cited cases, including Wallis, concerning agreements that could be terminated on a certain number of days of written notice. (Dore, supra, 39 Cal.4th at pp. 389-390.) Dore disapproved those cases to the extent they were inconsistent with the opinion. Although Justice Moreno separately concurred to emphasize his understanding that the majority opinion did not express any view as to whether a termination “upon notice” connotes an intent to create an at-will employment, it nonetheless appears that Dore supports such a view. Notably, the majority in Dore, in addition to disapproving cases such as Wallis, did not disapprove Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358. Bionghi held that the plain language of an agreement stating it may be terminated on 30 days’ notice in writing was not reasonably susceptible to an interpretation requiring the employer to have good cause for termination. (Id. at p. 1369; see also Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th471, 478 [Farmers’s agent agreement stating that it could be terminated by either party on 30 days’ written notice “would suggest that it could be terminated with or without cause”].)
In any event, whether Dore has any bearing on whether we can imply a good cause requirement into the three months’ written notice provision before us is beside the point. As we stated, Dent’s argument at trial was not that the three months’ written notice provision required Farmers to fire her only for good cause. Dent’s argument was the provision allowed Farmers to fire her only if she committed embezzlement or fraud or failed to service her clients. The termination provision is simply not reasonably susceptible to that interpretation.
Even Dent understood that she could be fired for no reason. She testified, “I had asked if I could have the contract modified, because I’ve never had an employment contract where somebody had the right to let me go. . . . Mr. Crosetti informed me that everybody that was coming in as an agent at the same time I was, we all had to sign the same contract. There was no modifications to it.”
(e) The right to a hearing before the TRB does not establish that Dent could be fired only for good cause.
Although Dent did not argue in the trial court she could be fired only for good cause, Dent now says that the TRB hearing provision is evidence she could be terminated only for good cause. The TRB hearing provision provides that if Farmers terminates the agent agreement, the agent may request a review of the termination before the TRB. Dent argues that the TRB hearing provision is irrelevant if agents can be fired without cause. In other words, why have a process if Farmers can fire agents for any or no reason?
We do not agree that a fired employee’s contractual right to a TRB hearing engrafts a “good cause” limitation on the circumstances under which an employee may be fired. Even if a worker can be fired for no cause, the termination review process is meaningful. For example, one of the agents who received a termination letter at the same time as Dent was ultimately not fired. He asked for a TRB hearing, but it never went forward because his district manager informed Farmers that he had incorrectly told the agent he did not have to meet certain goals. The agent’s district manager thus took the blame for the agent’s poor performance. Perhaps if a similar explanation for Dent’s performance had been offered at her hearing the outcome might have been different. This demonstrates why holding that the termination review process somehow engrafts a good cause limitation on the termination provisions would work to both the employee’s and employer’s detriment. It would discourage employers who want at-will relationships with their workers from offering such a process.
Nor does our opinion in Saeta v. Superior Court (2004) 117 Cal.App.4th 261 compel a contrary interpretation. Judge Saeta—the third party Farmers selected to be on the TRB—filed a petition, which argued that his statements at Dent’s TRB hearing were privileged and not discoverable. We held that the TRB proceeding is not an arbitration or a mediation, with the result that privileges in the Evidence Code are inapplicable. (Id. at p. 267.) In reaching that conclusion we said that “the review board is merely a contractual condition precedent to discharging Dent.” (Id. at p. 270.) Using that language, Dent now argues that we have therefore held that Dent could not be fired on three months’ notice except on good cause. We disagree. First, Saeta does not address the circumstances under which Dent or another agent can be fired. Second, Saeta does not concern or interpret the termination provision. Finally, as we stated, the TRB hearing is consistent with a contractual provision permitting an employer to fire its employee for no cause.
Saeta was an earlier writ proceeding brought during litigation in the trial court.
Thus, evidence that Day or Crosetti told Dent she would be fired only for certain limited reasons cannot support the fraud judgment.
4. Performance goals.
Nor is there sufficient evidence that Farmers, Day or Crosetti made misrepresentations about Dent’s ability to control her “day-to-day business” and to set her performance standards and goals.
As an initial matter, Dent does not cite to any portion of the record in which Day or Crosetti made such a statement. Rather, the only such specific statements are found in the agent agreement and in a Farmers’s brochure. The agent agreement states that the agent “shall, as an independent contractor, exercise [the] sole right to determine the time, place and manner in which the objectives of this Agreement are carried out, provided only that the Agent conform to normal good business practice, and to all State and Federal laws governing the conduct of the Companies and their Agents.” Farmers’s brochure states that “[y]ou’ll be in business for yourself making your own day-to-day business decisions, but with the backing, guidance and support of your district manager, . . .” and that “[a]s a Farmers agent you are an independent contractor in business for yourself, but not by yourself. You will have the latitude to set your own professional goals and make the day-to-day decisions that will help you achieve those goals.” The brochure continues, “You will have the freedom to develop and implement the marketing plans that will dictate your agency’s direction and continued success.”
To show the falsity of these statements, Dent points out that Farmers controlled what type of insurance policies she sold and that she had to turn over all premiums to Farmers. But Dent was a Farmers agent; of course she had to turn over premiums she collected to Farmers. And although Dent complains that Farmers controlled what type of insurance policies Dent sold, that too is hardly surprising. The agent agreement provides, “All business acceptable to the Companies and written by the Agent will be placed with the Companies.” Moreover, Dent testified that if a client asked her for a policy that Farmers would not or could not write, she could place it with another carrier, although “it was highly discouraged.” Notwithstanding that “discouragement, ” Dent conceded she could place policies with other carriers if Farmers would not write the policy.
Dent also complains that she was not allowed to control her advertising and marketing activities. Instead, all such activities were subject to Farmers’s approval. But Dent was not prohibited from developing her own advertising activities; she was merely required to obtain Farmers’s approval before doing so. This is not fraud.
Finally, that Day told Dent she couldn’t work out of her home and that she needed to be at the office from 9:00 a.m.-5:00 p.m. does not show that the representations in the agent agreement and brochure were fraudulent. The agent agreement does state that the agent can determine the time, place, and manner in which the agreement can be carried out. But that is qualified by the condition that the agent must conform to normal business practices. Therefore, asking Dent to keep an office outside the home and to be in the office during normal business hours is not at variance with the agreement.
Moreover, although the brochure refers to the ability of a Farmers’s agent to make her own “day-to-day business decisions” that statement is a general one about the nature of an agency. It is not a specific statement about, for example, the hours an agent must work or where an agent must locate their office. Dent testified that before she entered the reserve agent program “there wasn’t much discussion” about how much time she needed to spend on Farmers’s business. Dent also did not testify that Day or Crosetti ever told her, before she entered into the reserve and career agent agreements, that she could set her own hours. In the absence of a more specific representation on that subject, we cannot find any evidence of fraud based on any requirement that Dent work from 9:00 a.m.-5:00 p.m.
Indeed, Dent testified that with respect to the concept she would be in business for herself, it was merely “implied that we would be on our own but that we would have the assistance of our [district manager].”
To support her claim of fraud, Dent also says she was required to keep her office in Day’s office. But the testimony she cites in support merely states that she was “encouraged” to set up office next to Day.
Nor does Dent cite to evidence in the record that Crosetti and Day told her that if she signed the agent agreement its terms would not be changed and no additional requirements would be imposed on her. Rather, Dent instead testified that at the time she signed the agent agreement Day and Crosetti did not mention that there would be other documents, such as one requiring her to get her series 6 and 63 license, that she would have to sign. In other words, what other agreements she might have to sign was simply not discussed. There was no affirmative representation or implication made that no other requirements would be imposed on her.
Dent also briefly states that Crosetti and Day told her she would be treated fairly like all other Farmers agents. She refers to male agents who were not fired although they failed to meet their goals. She does not, however, develop this argument in her brief. In any event, the jury found that Dent’s gender was not a motivating reason for her termination.
It is additionally unclear how Farmers, Day, and Crosetti lied to her about her “performance” standards. Dent does not clearly state to what standards she is referring. In any event, Dent testified that no one at Farmers ever told her she could set her own sales goals. Moreover, the subsidy agreement Dent signed set forth minimum performance standards. Dent acknowledged that if she failed “to meet monthly or accumulated production count or Life Policy-in-Force requirements for the Minimum Acceptable Performance Standards, after the subsidy is stopped, my training will cease, my appointment agreement will be terminated, and I am responsible for the subsidy repayment according to the terms of the subsidy agreement.” Therefore, Dent’s testimony that Day and Crosetti told her she could set her own performance goals is directly contrary to the subsidy agreement. For the reasons detailed above, parol evidence cannot support a finding of fraud.
5. The TRB hearing procedure.
Dent’s TRB hearing deviated from the procedure described in the agent agreement in four ways. Notwithstanding these deviations, the record still contains insufficient evidence of fraud.
First, the agent agreement states the TRB hearing will be at the regional office or such other convenient place selected by the regional manager. Dent’s hearing, however, was not held at the regional office in Pleasanton. It was held in Simi Valley. Indeed, at the time Dent entered into the agent agreement, Farmers no longer had regional offices or regional managers. It had shifted to a state system, which used only state offices, with California’s state office in Simi Valley.
Nevertheless, Dent did not testify, for example, that had she known the TRB hearing would be held at a place other than the regional office she would not have entered into the agreement. Nor would any reliance on such a representation have been justifiable. Where the hearing is held not a material term, especially given that the hearing was held in Simi Valley in Southern California rather than in Pleasanton in Northern California. (See generally, Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331 [the false representation must be as to a material fact].) Moreover, the agent agreement does not provide that the TRB hearing will be held only at the regional office. Rather, the agent agreement provides that the TRB hearing will be held either at the regional office or at such other convenient place selected by the regional manager. Therefore, the agent agreement contemplates that the hearing might be held at a place other than the regional office.
Second, the agent agreement states that the TRB will be composed of three members, one of whom the fired agent would select. Dent selected Dan Youngs. Dent’s attempts to inform Youngs of the hearing date and location went astray. Farmers also failed to give Youngs notice of the hearing. Youngs therefore failed to appear at the hearing. Coble offered to reschedule the hearing, but Dent declined the offer when Coble refused to cover her costs of having to fly to Simi Valley again.
Although Farmers admitted it failed to give notice of the hearing to Youngs, that does not evidence a knowing and fraudulent attempt to preclude Dent from choosing a representative to be on the TRB. To the contrary, Coble informed Dent, before the TRB hearing, that it was her responsibility to select her TRB representative and to “secure their agreement to be a member of the TRB.” Also, Dent could have continued the hearing, albeit at her own expense. Moreover, at the time Dent entered into the agent agreement, Farmers, Day, and Crosetti could not have known that Dent would be fired, that she would request a TRB hearing, and that all attempts, including Dent’s, to inform Youngs of the hearing date would go astray.
Third, the agent agreement provides that the fired agent’s representative and Farmers’s representative would mutually select the third TRB member. But Farmers, without consulting Youngs, unilaterally selected Judge Saeta and paid him $500 to appear. Notwithstanding this deviation, there was no evidence that the TRB hearing provision is a sham, which is essentially Dent’s argument. There was no evidence that other hearings were held in a similar manner, e.g., that Farmers routinely used Judge Saeta or someone else, that Farmers unilaterally selects the third member of the TRB, and that the hearing would have gone forward even if Dent had objected to Judge Saeta.
Coble testified that he had never met or talked to Judge Saeta before Dent’s TRB hearing.
Finally, the agent agreement provides that the TRB would submit a hearing summary and its recommendations to the executive home office. The CEO and staff “will review the summary and recommendations, reach a decision and promptly advise the Agent of that decision.” Farmers’s CEO, Marty Feinstein, did not personally review the TRB’s summary and recommendations. Instead, members of his staff reviewed it, and Feinstein’s electronic signature was affixed to a letter notifying Dent that the decision to fire her would be upheld. We do not believe that there is a material difference between Farmers’s CEO personally reviewing the TRB’s summary and recommendations and the CEO’s personal staff reviewing those matters and recommending to the CEO that he sign off on Dent’s termination.
In conclusion, there is insufficient evidence that Farmers, Day or Crosetti made an intentional or negligent misrepresentation. Because we hold that the judgment on Dent’s fraud causes of action must be reversed, we need not decide whether there was sufficient evidence of her damages. Instead, we turn to Dent’s cross-appeal, which concerns the jury’s verdict against Dent on the breach of contract and breach of the implied covenant of good faith and fair dealing causes of action.
II. Dent’s cross-appeal on the contractual claims.
Dent filed a protective cross-appeal with respect to the breach of contract and breach of the implied covenant of good faith and fair dealing claims. She specifically contends that the special verdict forms contained two “misleading” questions, and therefore reversal is required. We agree that the judgment on only the breach of contract claim must be reversed.
A. The breach of contract claim.
1. Additional facts.
Dent requested a general verdict. Farmers requested special verdicts. The trial court gave the jury special verdict forms. The breach of contract special verdict form, in part, provided:
“1. Did Kathleen Dent do all, or substantially all, of the significant things that her contract with Farmers required her to do?
“[Answer]: _____ Yes _____ No
“If your answer to question 1 is yes, then skip question 2 and answer question 3. If you answered no, answer question 2.
“2. Was Kathleen Dent excused from having to do all, or substantially all, of the significant things that the contract required her to do?
“[Answer]: _____ Yes _____ No
“If your answer to question 2 is yes, then answer question 3. If you answered no, stop here, answer no further questions, and have the presiding juror sign and date this form.
“3. Did all of the conditions occur that were required for Farmer’s performance?
“[Answer]: ______Yes ______No.”
The special verdict form was based on CACI 303, with which the jury was instructed as follows: “To recover damages from Farmers for breach of contract, Kathleen Dent must prove all of the following: [¶] 1. That Kathleen Dent and Farmers entered into a contract; [¶] 2. That Kathleen Dent did all, or substantially all of the significant things that the contract required her to do; [¶] 3. That all conditions required for Farmers[’s] performance had occurred; [¶] 4. That Farmers breached the contract; and [¶] 5. That Kathleen Dent was harmed by that breach. [¶] If you decide that Kathleen Dent has proved each of the above, your verdict on this claim must be for Kathleen Dent. If you do not find that all of the above have been proved, your verdict must be for Farmers.”
During deliberations, the jurors sent a note to the trial court about question no. 3. What the jury precisely asked is not a part of the record, but they were apparently confused about whether question No. 3 concerned plaintiff or defendant. Dent’s trial counsel argued that if the jury had answered “yes” to question no. 1, then the answer to question No. 3 also had to be “yes.”
In response to the jury’s question, the trial court instructed the jury that it “must determine from the evidence whether the contract between [Dent] and Farmers contained any other conditions that need to be satisfied prior to Farmers performing their part of the bargain.” When a juror asked whether there was anything more, the trial court responded, “That’s it. Now, you’re all looking very quizzical. ‘Conditions’ is a broad term. Were there any other things, conditions, events, that needed to take place and occur before Farmers was required to perform its end of the bargain?”
The jury thereafter returned its verdict in favor of Farmers on the breach of contract claim. It answered “yes” to question No. 1, thereby finding that Dent did all, or substantially all, of the significant things that her contract with Farmers required her to do. It answered “no” to question No. 3, thereby finding that all of the conditions required for Farmers’s performance did not occur.
2. The breach of contract special verdict form was defective.
In pertinent part, Code of Civil Procedure section 624 provides: “The verdict of a jury is either general or special. . . . [A] special verdict is that by which the jury find[s] the facts only, leaving the judgment to the court. The special verdict must present the conclusions of fact as established by the evidence, and not the evidence to prove them; and those conclusions of fact must be so presented as that nothing shall remain to the court but to draw from them conclusions of law.” Generally, “[a] special verdict presents to the jury each ultimate fact in the case, so that ‘nothing shall remain to the Court but to draw from them conclusions of law.’ [Citation.] This procedure presents certain problems: ‘ “The requirement that the jury must resolve every controverted issue is one of the recognized pitfalls of special verdicts. ‘[T]he possibility of a defective or incomplete special verdict, or possibly no verdict at all, is much greater than with a general verdict that is tested by special findings . . . .’ [Citation.]” [Citation.]’ ” (Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 285.) A special verdict form that conflicts with the law or a plaintiff’s theory of liability is erroneous and subjects the judgment to reversal. (Byrum v. Brand (1990) 219 Cal.App.3d 926, 938-939.)
In a breach of contract case, the plaintiff must prove it has performed all conditions on its part or that it was excused from performance. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.) Similarly, where defendant’s duty to perform under the contract is conditioned on the happening of some event, the plaintiff must prove the event transpired. (Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380 (Consolidated).) Agreements to buy real property typically contain a condition precedent. For example, in Consolidated, the plaintiff and the defendant entered into an agreement to buy a condominium. Defendant’s duty to complete the transaction was conditioned on plaintiff opening escrow within 60 days from the date of the agreement. The “opening of escrow was a condition precedent to Lido’s performance of its duty to complete the sale. Lido could not perform its promise until after CWI performed its part. . . . [¶] . . . [¶] Thus, the uncontradicted evidence established the failure of the conditions precedent to Lido’s duty to sell.” (Id. at pp. 380-381.)
Unlike in Consolidated, there were no conditions precedent to Farmers’s performance, and therefore the special verdict form was defective. Dent’s trial counsel pointed out that if the jury believed that Dent did all or substantially all of the significant things she was required to do under the agent agreement, then it was not necessary for the jury to answer question No. 3 regarding conditions precedent to Farmers’s performance, because there were none. ~(RT 3008, 3009)~ Alternatively, they should answer “yes” to question No. 3.
Indeed, when the trial court asked Farmers’s trial counsel what were the conditions precedent, he could not provide a clear answer. He said: “As I stand here, now, I’m sure there are. Because we talked about, you know, what she had to do in terms of meeting the standards. She was – she was paid. It’s a question – you know, does it surround the termination in March? Does it surround what occurred after? Because, you know, our position is that there is no relief period in the last three months. And they may be thinking of that as some condition, if there’s some condition attached to that. [¶] I just think there are a number of issues in the relationship that we raised and put before them that they can decide. And I think the suggestion of the neutral answer is the way to go. Because when I look at it and I tell counsel I think it’s talking about conditions of the plaintiff. He says it’s conditions of Farmers.”
On appeal, Farmers provides an equally unclear response to the question what was the condition precedent. Farmers suggests that the condition precedent was that, although Dent met the minimum necessary to discharge her obligations, the jury “might also have concluded that the most fundamental condition precedent to Farmers’ continued performance—Farmers’ continued desire to do business with Dent—did not occur. In other words, Farmers’ performance was excused because one of the conditions for its performance—here, sufficiently excellent performance to justify wanting to keep Dent as an agent—had not occurred.”
This makes little sense. Farmers cannot concede on the one hand that Dent did everything she was required to do under the contract but that there was something more she had to do—“sufficiently excellent performance”—before Farmers had to perform. Nothing in the agent agreement references such a condition precedent. What Farmers is basically saying is it simply didn’t want to continue its agreement with Dent. That may or may not be, but that goes to Farmers’s reasons for terminating the agent agreement. It is not particularly helpful on the issue whether Farmers’ breached the contract.
Moreover, the jury’s response to question No. 3 is vague and ambiguous when considered in context with the trial court’s response to its question about the special verdict form. The jury indicated it was confused about the meaning of question No. 3. The trial court clarified that the jury had to decide whether there were any other conditions or events that needed to take place before Farmers was required to perform its end of the bargain. The jury thereafter answered “no” to question No. 3, which could mean that they believed all conditions had occurred, and Farmers was required to perform. In that event, the jury should have then gone on and decided whether Farmers breached the contract. Instead, the jury was instructed that if it answered “no” to question No. 3 then it should stop and answer no further questions. This was error, and a reversal is required. (Woodcock v. Fontana Scaffolding & Equip. Co. (1968) 69 Cal.2d 452, 457 [if a special verdict is hopelessly ambiguous, a reversal is required] (Woodcock).)
Nor is Farmers’s argument that Dent forfeited any right to raise this issue on appeal because she failed to object below unpersuasive. To be sure, Dent did not object to the special verdict forms before they went to the jury. (See generally, Woodcock, supra, 69 Cal.2d at pp. 456-457 [a failure to object to the form of a special verdict before the jury is discharged can be a waiver of any defect].) But, when the jury asked about question No. 3, Dent’s counsel recognized the problem and then raised objections. He argued that if the jury answered “yes” to question No. 1 (that Dent did all or substantially all of the things required for her performance), then there was nothing more for the jury to do once they answered that question and that question No. 3 was duplicative of and possibly contradictory to question No. 1. Thus, Dent did object to question No. 3 before the jury was discharged, and the issue is not waived or forfeited.
B. Breach of the implied covenant of good faith and fair dealing.
Unlike the breach of contract special verdict form, the breach of implied covenant of good faith and fair dealing special verdict form, which was limited to the issue of training, was not similarly vague, ambiguous or defective. The special verdict form provided:
“1. Did Kathleen Dent and Farmers enter into an employment relationship? “[Answer]: Yes.
“If your answer to question 1 is yes, then answer question 2. If you answered no, stop here, answer no further questions, and have the presiding juror sign and date this form.
“2. Did Kathleen Dent substantially perform her job duties?
“[Answer]: Yes.
“If your answer to question 2 is yes, skip question 3 and answer question 4. If you answered no, answer question 3.
“3. Was Kathleen Dent’s performance excused or prevented?
“_____ Yes _____ No
“If your answer to question 3 is yes, then answer question 4. If you answered no, stop here, answer no further questions, and have the presiding juror sign and date this form.
“4. Did Farmers breach the employment agreement by failing to properly train Plaintiff so she could adequately perform her duties and an agent?
“[Answer]: No.”
The implied covenant of good faith and fair dealing is a supplement to express contractual covenants; it prevents a contracting party from engaging in conduct which may not technically violate express covenants, but nevertheless frustrates the other party’s rights to the benefits of the contract. (Cf. Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d 1136, 1147-1148.) Here, the type and amount of training Dent would receive was not expressly covered by the agent agreement, and therefore, it was a proper subject of the implied covenant. Had Dent wanted the jury to consider other implied covenants, then she should have objected to the special verdict form, but she didn’t. Although Dent objected to using special verdict forms rather than a general verdict, the record does not show that she objected to the specific verdict forms used. Unlike the objections she later voiced to the breach of contract special verdict form, she did not later raise any objections to the breach of the implied covenant special verdict form. (Woodcock, supra, 69 Cal.2d at pp. 456-457.) Therefore, Dent has waived the issue on appeal.
DISPOSITION
The judgment is reversed and remanded to the trial court for further proceedings in connection with the breach of contract cause of action only. The judgment in favor of Dent on the fraud causes of action is reversed, and the trial court is directed to enter judgment in Farmers’s favor on those causes of action. The judgment on the breach of the implied covenant of good faith and fair dealing cause of action is affirmed. All parties are to bear their own costs on appeal.
We concur: CROSKEY, Acting P. J. KITCHING, J.