Moncada v. West Coast Quartz: Court Rules On Misrepresentation Claims

A quick word on Moncada v. West Coast Quartz Corporation (10/28/13, pub. 11/22/13) --- Cal.App.4th ---, which involves allegations that an employer failed to pay a promised retention bonus. (A retention bonus is a bonus paid to compensate employees who agree to remain employed for some period of time, typically during a transition period, such as a sale or shut-down.)

In this case, the plaintiffs alleged that their employer offered them a retention bonus pending the sale of the business, then refused to pay. The plaintiffs sued for fraud, breach of contract, and other causes of action, trial court sustained the defendants' demurrer, the plaintiffs appealed, and the Court of Appeal reversed, holding:

Plaintiffs adequately fraud by alleging that the defendants "concealed the fact that they wanted plaintiffs to remain employed at West Coast to make the company more attractive to potential buyers, and only intended to give plaintiffs a nominal or no bonus for remaining employed." Slip op. at 5-8.

Plaintiffs adequately alleged breach of contract by alleging that "defendants told plaintiffs that if they stayed and continued to work for West Coast until the company sold, defendants would give plaintiffs bonuses that would be sufficient for plaintiffs to retire." Slip op. at 8-11.

Plaintiffs adequately alleged promissory estoppel by alleging that defendants "promised to pay them an amount sufficient to retire upon the sale of West Coast if they remained employed." Slip op. at 11-12.

Plaintiffs did not allege conduct sufficiently extreme or outrageous to support a cause of action for intentional infliction of emotional distress. Slip op. at 12-13.

Plaintiffs did not allege a cause of action for negligent misrepresentation because they alleged that the defendants knew their promises to be false at the time offered. Slip op. at 13-14.

Plaintiffs did not allege a cause of action for estoppel in pais, or equitable estoppel, which is defensive only and cannot be stated as an independent cause of action in California. Slip op. at 14-15.

The opinion is available here.