Carroll v. Truthin Home Loans

Filed 2/23/07 Carroll v. Truthin Home Loans CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Dennis S. Choate, Judge. Affirmed in part and reversed in part.

Law Office of Vida M. Holguin and Vida M. Holguin; Lascher & Lascher, Wendy Cole Lascher and Aris Karakalos for Plaintiff and Appellant.

Landegger & Baron, Larry C. Baron and Christopher L. Moriarty for Defendants and Respondents.

* * *

I. INTRODUCTION

In early 2003 Joseph Carroll went to work for Truthin Home Loan pursuant to a written employment contract that expressly precluded modifications, unless made in writing. Carroll was fired in late 2004. He then brought this action for (basically) wrongful termination. After filing his third amended complaint the case was dismissed pursuant to a demurrer.

This appeal presents four relatively dissimilar issues or sets of issues. The first set of issues revolve around claims of religious discrimination. Essentially, Carroll, a non-Scientologist, alleges that he was fired because he wasnt a Scientologist at a company run by a Scientologist. We will affirm the judgment insofar as it precludes such religiously-based claims. In a word, in four tries at drafting the complaint, Carroll failed to allege any actual facts that would support the inference that he was fired because he failed to hold or follow his or her employers religious beliefs. (See Shapolia v. Los Alamos National Laboratory (10th Cir. 1993) 992 F.2d 1033, 1038.)

The second issue involves a defamation claim, based on a statement so oblique that it could not reasonably be construed to allege anything defamatory against Carroll. At meeting in the context of noting that profits were down, somebody asked, where did the money go? No reasonable person could construe this mere question as a statement to the effect that Carroll had been dishonest.

The third set of issues involve contract claims based on an allegation of a new oral agreement. This new oral agreement was entered into long after the parties signed a written employment agreement which expressly precluded modification except by written agreement. The matter would be relatively easy except for one thing highlighted by Carrolls counsel in supplemental briefing: Carrolls written contract was with one company owned by a common owner, but the oral promises contemplated new duties and work for another company owned by that same owner.

However, even though the promises involve work for a new entity, we are still forced to conclude that the new oral promises are not enforceable as an independent, or independent and collateral, agreement.

The prior written contract contemplated that Carrolls services to the one company would be exclusive. The oral promises, in contemplating work for the other company, are inconsistent with the written contract. Obviously anything that is collateral to an existing agreement cannot be inconsistent with it.

Secondly, by Carrolls own allegations, the alleged oral agreement was not independent of the earlier contract. For one thing, the parties obviously did not intend the oral promises to be the only terms governing their new deal. A fair reading of the allegations (in accord with common sense) shows that the July 2003 promises involved extra pay for extra duties: Carroll would continue working for the loan company, but get a pay raise by also working for the real estate company.

For the same reason, the alleged July 2003 oral promises cannot qualify as a novation. In substance, the facts as alleged in the complaint do not reflect an intention to substitute a new oral agreement for the old written one; rather they only reflect an intent to embellish, i.e., modify, the old agreement, by changing merely two terms of that agreement.

Lucky for Carroll, though, that he loses on the novation issue. If the facts showed a novation, Carroll would be stuck with an agreement without a severance provision, and severance is the fourth issue, and one on which he prevails in this appeal. Since the written agreement is operative, not only is Carroll stuck with it, but so is his former employer. And in that agreement his employer promised to pay Carroll a certain amount of severance pay in the event he was ever terminated. We reverse the judgment to the degree that it precludes any amendment to add a claim for severance pay based on the written contract that we find otherwise dispositive on the contract issues.

II. FACTS

A. Background

Since the case comes to us from a sustained demurrer without leave to amend, we take the facts from the complaint -- here the third amended complaint -- and, also, the written contract earlier appended to original complaint of which the trial court could take judicial notice. (E.g., Progressive West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 270, fn. 1 [taking judicial notice of terms of insurance policy attached to original complaint].) We will begin with the written contract, signed by Carroll in December 2002. Oral promises made at or before the time that contract was signed in December 2002 will be set forth afterwards. We stress that those particular oral promises are only relevant as providing background for oral promises made about six months after the contract was signed, in July 2003.

We should also add at this point that the parties are the plaintiff Carroll, and these three defendants:

-- Truthin Home Loans,

-- First Team Real Estate-Orange County, and

-- Cameron Merage, who owns both Truthin and First Team.

To make it easier for readers to distinguish between Truthin and First Team -- and indeed to emphasize the fact each is a different company doing different things -- we shall refer to the former as the loan company and latter as the real estate company.[1]

B. The Integrated Written Contract

of December 2002

The contract itself was between Carroll and only the loan company. After the heading in all caps, employment agreement, the contract opens with these lines: This Employment Agreement (the Agreement), dated as of this 11th day of December, 2002 (Effective Date) is made by and between Truthin Home Loans, Inc. (Truthin or the Company) and Joe Carroll (Employee).

More particularly Carroll was to undertake the jobs of managing and supervising the loan company and increasing its market share, as well as adhering to an otherwise unarticulated company philosophy: 2. Responsibilities of Employee [] Employee is responsible for managing and supervising the Company as directed by Truthins President. Employees duties, without limitation, shall include: [] 2.1 To oversee and supervise the Companys mortgage division in all respects in accordance with the policies, goals and objectives established by senior management. [] 2.2 To increase the market share by recruiting and training existing and newly recruited loan reps. [] 2.3 To read, be totally familiar with, and be governed by the Real Estate and Mortgage Laws of the State of California, the Code of Ethics of the National Association of Realtors, DRE regulations, all state and federal regulations pertaining to mortgage lending, and the existing and future policies, rules, and regulations of the Company. [] 2.4 To follow Truthins economic and business philosophy.

While the contract contemplated that Carroll would work for the loan company as its vice president, it also said the loan company could change his duties and job title: 1.4 Truthin reserves in its sole discretion the right, at any time, to change the duties and responsibilities that Employee is required to perform. Nothing within this Agreement shall be construed as a commitment by Truthin that Employee shall continue to be employed as Executive Vice President, nor that Employee shall continue to be assigned in any particular location or office. Truthin reserves the right to assign Employee to work in a location of the Companys choice. Nothing within this Agreement shall be construed as a commitment by Truthin that Employee shall hold any particular title or perform any particular set of duties.

The contract further provided that Carroll was to devote his skills and services exclusively to the loan company: 1.2 Duties and Extent of Services. Employee agrees to devote his primary business time, energies, skills, efforts and attention to his duties hereunder, and will not, without prior written consent of the Company, render any material services to any other business concern. [Italics added.] Employee shall use his best efforts and abilities faithfully and diligently to promote Truthins business interests. Employee shall be responsible for the supervision of the Companys market share and recruiting loan representatives with the powers and duties customarily accorded to the position of Executive Vice President, including but not limited to, the powers and duties as may be assigned to Employee from time to time. Until notified otherwise, Employee shall report and be responsible to Truthins President.

In return for his work, the contract provided that Carrolls complete compensation would be that set forth in an addendum attached to the contract: 3. Compensation; Taxes [] Compensation to Employee shall be paid pursuant to the schedule set forth in Addendum A attached hereto and shall constitute the complete compensation which Employee will receive for his services. All compensation paid to Employee shall be reported by Truthin on Internal Revenue Form W-2.

The contract had an integration clause: 13. Entire Agreement. [] This Agreement contains the entire agreement of the parties hereto and supersedes any prior written, verbal or implied agreement, promise or understanding between them relating to the subject matter contained therein. Employee and the Company acknowledge and agree that no representations, inducements, promises or agreements, verbal or otherwise, have been made between Employee and the Company, or anyone acting on behalf of the Employee or the Company, which are not included in this Agreement. Employee and the Company acknowledge and agree that no other agreement, statement or promise not included in this Agreement shall be valid or binding.)

The contract also clearly made Carrolls employment at-will: 5. At-Will Employment. [] It is expressly understood that Employees employment by Truthin is strictly at-will. Employee may quit or be transferred, reassigned, suspended, demoted and/or discharged at any time, with or without cause and with or without prior notice  . . . . 

The contract had a severance clause providing that Carroll would receive six months base salary in the event he was terminated by the loan company in the second year: 6. Severance. [] This agreement and the employment created thereby may be terminated at any time without cause by either party. . . . However, if the Company terminates Employees employment at-will during the second year of this Agreement, the Company agrees to pay to Employee the equivalent of six (6) months base compensation as set forth in Addendum A hereto  . . . . Addendum A had a chart with the words, Guaranteed Base of $145,000.

Finally, the contract had a clause precluding modification or amendment without another written agreement, signed by the loan companys president. To pick up where we left off in quoting the 5. At-Will Employment paragraph: . . . This is an integrated agreement concerning Employees at-will employment status. It may not be modified or amended by oral agreement by oral agreement or course of conduct. It can only be modified or amended by a written agreement signed by Truthins President. Any and all previous agreements or representations, whether written, verbal or implied, which are contrary to this paragraph are hereby suspended.

C. Prior and Contemporaneous Oral

Promises As Alleged In

The Third Amended Complaint

While no argument (as such) is made in this appeal that certain oral promises made prior to or contemporaneously with the December 2002 written agreement should be enforced or are otherwise enforceable, we now set forth those promises as alleged in the complaint because they provide background for the July 2003 oral promises that are the subject of this appeal.

In August of 2002, Carroll, while still residing in Massachusetts, was contacted by an agent of Merage regarding the possibility of employment with Truthin. Carroll said he was interested if the salary were right. Merage told Carroll he wanted a chief operating officer (referred to in the pleadings as a COO) and Carroll told Merage he wanted an annual salary of $300,000. Merage (orally) promised Carroll this salary and position within six months of employment.

Merage also represented that the corporations market share was at an excellent level. After five months of discussing this arrangement and relying upon Merages representations that he would make Carroll the chief operating officer within six months of hire, Carroll agreed to work for Merage temporarily as the executive vice president of Truthin for a lower salary of $205,000.

Merage further promised Carroll an equity interest in the corporation with phantom stock or a long term compensation plan.

Carroll then moved from Massachusetts to California in January 2003. When Carroll began working he discovered the market share of the business was less than represented by Merage.

D. The Subsequent Oral Promises

Which Are the Subject of This Appeal

Six months later, in July 2003, Carroll threatened to quit. The threat led Merage to make certain promises. Here are those promises as taken verbatim from the third amended complaint. (The acronym THL stands for the loan company and the acronym FTRE stands for the real estate company): In or about July 2003, plaintiff met with defendant Merage in his office and informed Merage that he no longer saw opportunity in his employment with Corporate Defendants in just running THL and that the job was not working out. Defendant Merage, on behalf of Corporate Defendants, offered Plaintiff the COO position as well as a salary of $300,000 by the end of the year if plaintiff would not quit. Merage made the following representations to plaintiff: [] a. take responsibility and supervision of all office administrators for his real estate company, FTRE; [] b. take responsibility and supervision of all transaction coordinators for FTRE; c. take responsibility and supervision of manager Jack Elitzak to assume the pull model to generate more corporate business. (Italics added.)

The promises were never implemented. According to the complaint, after July 2003, Carroll had several conversations with Merage, in which Merage reaffirmed that he wanted a chief operating officer and that Carroll would be paid an annual salary of $300,000 for the job. However, Merage stalled Carroll with the excuse that he needed Carroll to continue to run the loan company while he replaced two key individuals, Joe Capriotti and Bill Platos. And the plan to promote Carroll had to be kept secret because Merage did not want Capriotti and Platos to know of his intention to remove them and, (this is significant so we quote directly from the complaint) to make Plaintiff the COO by entering into a written agreement with plaintiff.

There is no allegation that Carroll ever assumed any duties on behalf of the real estate company. However, there is an allegation that a human resources meeting in November 2004 -- that is, more than a year after the July 2003 oral promises were made

-- Merage denied any agreement that plaintiff would have the chief operating officer position with a salary of $300,000.

E. Allegations Bearing on

the Religious Discrimination Claims

After Carroll began work in California, Merage required executive employees to take personality and IQ tests that bore the name of L. Ron Hubbard of the Church of Scientology. In March 2003, Carroll met with Merage to discuss the inclusion of Hubbards name (exactly how he described it in the third amended complaint) on the employee tests. Merages position in the conversation was that he considered Hubbard brilliant and that the religion was the best way to avoid taxes. During Carrolls employment, Merage told Carroll to administer the Scientology personality and IQ tests to all employees. Carroll never did, and the complaint contains no allegations that Merage ever took any action based on Carrolls disobedience to that directive.

In May 2003, Carroll presented Merage with a business plan on increasing mortgage market share. Carroll asked Merage about the plan a month later and Merage told Carroll that he had not read it and the plan had to be in a format devised by Greg Andrews who also practiced Scientology.

In August 2003 Merage gave Carroll an organizational chart. Carroll looked over the chart and saw that it bore the name of the Church of Scientology. To quote the complaint exactly at this point: Carroll looked at the chart and saw that it bore the name of the Church of Scientology. Plaintiff questioned the wisdom of placing the name of a church on company documents. In response to plaintiffs remarks, defendant Merage ceased inviting Plaintiff to high level corporate meetings.

In early 2004 Andrews met with Ginger McCully, Merages newly promoted chief communications officer. Andrews gave McCully three books from the Church of Scientology and wanted her to study them. McCully shared the books with Carroll. In one of the books Carroll discovered an organizational chart that resembled the chart presented to Carroll by Merage in August 2003.

In October 2004, Merage asked Carroll to interview a candidate, Burt Price, for a position as a loan officer. Merage told Carroll that Price was an expert on mortgages. Price was also recommended by Andrews. During the interview Price informed Carroll that he practiced Scientology with Andrews. Merage hired Price who proved to be a less than productive loan officer, though the complaint does not identify any person more productive than Price.

On October 29, 2004, Carroll solicited the help of Merages Human Resource department regarding Merages promises as to his salary and title as well as the agreement between Merage and Carroll. At a human resources meeting on November 2, 2004, Merage denied that he had entered into any agreement with Carroll regarding the chief operating officer position or a salary of $300,000. Less than a week after this meeting Merage requested that Carroll resign, and placed him on administrative leave. After Carroll was put on leave, Merage attempted to contract with Price to perform Carrolls mortgage management functions.

On December 3, 2004, Merage fired Carroll, alleging for the very first time that Carrolls performance was unsatisfactory. In fact, prior to the time Carroll had contacted Merages human resources department, Merage had never discussed any shortcoming on Carrolls part.

F. The Defamation Allegation

Finally, about one week after he was terminated, the complaint states that an unnamed manager at a management meeting said, the profits of Assurance Capitol for 2004 would be one half of what they were in 2003, and where did the money go?

III. DISCUSSION

A. The Religious Discrimination Claims

Claims of adverse employment action based on a failure to conform to the particular religion of an otherwise ostensibly secular employer are relatively rare.[2] Much more common are failure to accommodate religious discrimination claims, which often involve requests for time off for religious reasons (e.g., Trans World Airlines, Inc. v. Hardison (1977) 432 U.S. 63 [Saturday Sabbath], Klein v. Derwinski (D. D.C. 1994) 869 F.Supp. 4 [Jewish Holy Days]).

At the outset, it is important to define precisely the nature of Carrolls religious discrimination claims: This is not a case, like Venters v. City of Delphi (7th Cir. 1997) 123 F.3d 956 or Equal Employment Opportunity Commission v. Townley Engineering & Manufacturing Company (9th Cir. 1988) 859 F.2d 610, where a secular employer sought to impose some kind of behavioral change on an employee out of a strictly religious motivation. (In Venters a supervisor hectored a police dispatcher about her lifestyle -- one gets the idea that he thought the lady was a painted Jezebel -- while in Townley the company sought to compel a machinist at a mining equipment plant to attend weekly devotional services, albeit at the plant and on company time.)

Rather, the discrimination alleged in this case is more simple: At its core Carrolls claim is that the mere fact of a difference in religious beliefs between employer and employee served as the motivation for his employers adverse employment action. (Cf. Reed v. The Great Lakes Companies, Inc. (7th Cir. 2003) 330 F.3d 931, 934 [dicta that the employee can survive summary judgment if, while declining to specify his religious beliefs, he attests that they differ from his employers and that that is why he was fired].)[3]

So framed, this case is closer to Blalock v. Metals Trades, Inc. (6th Cir. 1985) 775 F.2d 703, which can be described as a how much slack you are cut depends on your religion case. In Blalock, the plaintiff was originally a salesman for a metals company, hired because of his religious affinity with the boss. His poor performance was initially tolerated because of that religious affinity. But there was a religious falling out (because of a third party who styled himself an apostle and demanded the plaintiffs obedience to him, and the employers siding with the apostle), so the previous tolerance dried up and the salesman was fired. For a panel on the Sixth Circuit, that was enough to reveal that religion played a role in the discharge. (Id. at p. 708.)

To reframe Carrolls case in terms most favorable to him (and taking our cue from Blalock[4]), here is the absolute best ore one can mine from the complaint concerning the religious discrimination claims: When Carroll objected to the materials mentioning L. Ron Hubbard or Scientology, he signaled he was not a Scientologist.[5] He also signaled that he was weary of using even ostensibly secular Scientology materials in the course of the loan companys business. So, in late 2004, there was less tolerance when he complained about Merages failing to follow through on the July 2003 oral promises. And to cap it off, Carroll was replaced with Price, who, though less than the most productive loan officer, at least practiced or otherwise adhered to the same religion as Merage.

Even framing the claim so favorably, a nexus between the difference in religion and the adverse employment action is lacking here. Blalock itself went to some lengths to explain the proper causation standard for discrimination claims: It is a straight but for test, defined as satisfied when the plaintiff establishes that the defendants discriminatory intent more likely than not was the basis of the adverse employment action. (Blalock, supra, 775 F.2d at p. 709, our italics, and citing Texas Department of Community Affairs v. Burdine (1981) 450 U.S. 248, 256, Furnco Construction Corp. v. Waters (1978) 438 U.S. 567, 577, and Bibbs v. Block (8th Cir. 1984) 749 F.2d. 508, 511.)

Moreover, even in a dual motive (a mixture of permissible and impermissible reasons for the employment actions) case, courts begin with the more likely than not standard: The plaintiff first must show that the adverse action was more likely than not motivated by a criterion proscribed by the statute. (Blalock, supra, 775 F.2d at p. 712.) The twist in a dual motive case is that after the plaintiff meets the initial burden, the burden shifts back to the employer to show that the adverse employment action would have been taken even in the absence of the impermissible motivation. (Ibid.)

Another case that illustrates the issue of causation in a religious discrimination context is Reed, supra, 330 F.3d 931. There, the Gideons showed up to deliver free Bibles to a newly opened Holiday Inn, and there was a ceremonial meeting where the delivery would take place. The manager joked to the executive housekeeper that they were going to pray with the Gideons, but the joke was prophetic: At the meeting the Gideons indeed began praying and Bible reading. The executive housekeeper was offended and walked out, embarrassing the manager in front of the Gideons. The manager told the executive housekeeper not to do that again. The executive housekeeper replied that he couldnt be compelled to attend a religious event. The manager retorted that the executive housekeeper would do as he was told. The executive manager responded Oh, hell no on issues regarding his spirituality. The manager promptly fired him. (Id. at p. 933.)

In affirming a summary judgment for the hotel owner on those facts, the federal appellate court concluded there was no indication the executive housekeeper was fired because of his religious beliefs. The manager was not a Gideon, and his reason for firing the plaintiff was apparent -- the insubordination which embarrassed the manager and might ultimately threaten the supply of free Bibles to the hotel chain. (Reed, supra, 330 F.2d at p. 934.)

On a more-likely-than not standard of causation, no reasonable jury could find termination based on religious discrimination under the facts alleged. Moreover, as in Reed, the reason for the adverse action is also apparent and it was not religious. When we look at the timeline in this case we see a long period of inaction after Carrolls voiced misgivings about Scientology materials, but a firing that comes immediately on the heels of Carroll going to the human resources department to press Merages alleged oral promises. The timeline overwhelms any possibility that it was more likely than not that the religious difference with his employer played any role in his discharge. If, all of a sudden, he was cut less slack, it was because Merage could see that he was going to be trouble concerning the July 2003 promises. That conclusion is also underscored when we realize that early on Carroll was ordered to give employees Scientology IQ and personality tests and Carroll just outright didnt do it. Yet Merage tolerated what one would gather from the complaint was an act of outright insubordination -- and, to boot, insubordination that at least bore a tangential relationship to the religious difference between the two men. And yet the complaint shows that for Merage, a subordinates refusing an order to administer Scientology IQ tests was no big deal. It was only when that subordinate took action that threatened Merages pocketbook that Merage acted. (But as we have noted in the margin, the complaint hardly paints Merage as a zealous Scientologist, so the relative indifference to Carrolls insubordination on the IQ tests seems logical.)

The timeline also swamps the best fact in Carrolls arsenal, his exclusion from high level corporate meetings after a remark questioning the wisdom of placing the name of Scientology on company documents. Carroll was excluded for over a year from the time of his remark (about August 2003) to his firing in December 2004. Nothing in the complaint indicates that he objected or was hurt in his performance by the exclusion from the executive club. Realistically speaking, the exclusion is not the reason he is suing, his firing is.

B. The Defamation Claim

Asking where did the money go in the context of a discussion about why company profits were about half of what they previously had been does not reasonably constitute an assertion that Carroll acted dishonestly. (See Blatty v. New York Times Co. (1986) 42 Cal. 3d.1033, 1042 [In defamation actions the First Amendment . . . requires that the statement on which the claim is based must specifically refer to, or be of and concerning, the plaintiff in some way.].)

C. The Contract Claims

There is no argument that the modification-preclusion language in the contract is not otherwise plain: A written agreement was needed to modify Carrolls contract with the loan company.

But Carrolls appellate counsel raises a good point in that connection: The oral promises of July 2003 contemplated work for the real estate company. For this reason Beggerly v. Gbur (1980) 183 112 Cal.App.3d 180 and Marani v. Jackson (1986) 183 Cal.App.3d 695 -- both cases enforcing non-modification clauses in written contracts against subsequent oral promises -- are not ipso facto dispositive of this appeal. Both Beggerly and Marani involved real estate salespeople working clearly for a single entity and the oral promises related to services to be performed for that entity. (In Beggerly, the oral promises involved a change in office floor time and there was a modification-preclusion clause in the written contract; in Marani the oral promises involved a change in normal commission structure, and again there was a modification-preclusion clause.)[6]

Whats more, differentiating the modification of a previous contract from the formation of a new one is not always an easy task. Our Supreme Court, for example, wasnt all that sure in the early case of Gard v. Gard (1895) 108 Cal. 19 whether it was dealing with a new, independent (albeit collateral) contract, or with a novation, though either way the plaintiff had to lose.[7]

Threading our way through the alleged oral agreement, however, shows that it clearly is not a separately enforceable independent and collateral agreement, or merely an independent agreement, or a novation.

First, it cannot be an independent and collateral agreement because a collateral oral contract cannot be affirmatively inconsistent with the prior written contract to which it is collateral. Even if we assume that Carroll unilaterally performed his part of the bargain concerning the July 2003 oral promises by not quitting,[8] it is indisputable that the July 2003 oral promises are directly inconsistent with the December 2002 written agreement in at least one clear respect: The earlier agreement provided that Carroll would work only for the loan company. The new agreement contemplated that he would work for the real estate company. (Cf. Lacy Manufacturing Company v. Gold Crown Mining Co., Ltd. (1942) 52 Cal.App.2d 568, 578 [finding fully performed independent contract for extra charges on moving job where the oral contract to pay extra charges was entirely consistent with and in no way changes or contradicts the written contract].)

And substantively, the alleged July 2003 agreement was clearly not independent of the December 2002 written agreement. The allegation is that Merage promised Carroll additional duties. The promise was on behalf of corporate defendants -- plural. The loan company was in on the agreement. Carroll was going to be the COO or chief operating officer over both the loan company and the real estate company, which was also the very promise made to him in December 2002 when he was induced to join Merages company. Carroll was unhappy in just running the loan company. And the pay raise for running two companies for Merage is roughly twice what Carroll was making running one company. Substantively, then, the July 2003 agreement was a substantive modification of the December 2002 written agreement, and as such prohibited by the terms of the anti-preclusion clause.

What about novation? A novation requires a clear intent to extinguish the original agreement. (Howard v. County of Amador (1990) 220 Cal.App.3d 962, 977-978.) Any intent here is clearly the other way. A good way to know whether parties intended a novation is to ask: How complete is the agreement that has been supposedly substituted for a prior agreement? In Goodman v. Citizens Life and Casualty Insurance Co. (1967) 253 Cal.App.2d 807, 816-817, for example, the court concluded that oral promises could not possibly have shown an intent to abandon the prior contract, because: Had the parties abandoned the entire contract and substituted the claimed oral agreement, the sole agreement would have consisted of a termination clause without any underlying contract. In other words, if all you have after a novation is what would ordinarily be just a few lost terms out looking for the rest of their contract, its not a novation. Here, the July 2003 terms included a substantive modification (to be precise, an expansion) of his duties and a pay raise, but thats all it did. Did Carroll mean to give up his severance rights from the prior contract? Or his own right to quit without good cause? Nothing in the complaint indicates an intent to actually substitute the (relatively few) July 2003 oral promises for the December 2002 (complete) written agreement, only modify and supplement it.

D. The Special Problem of Severance Pay

In his original and first amended complaints, Carroll asserted a claim for $150,000 in severance pay on the theory that that was one-half of his base salary, which it indeed would have been if the oral promises of July 2003 were enforceable. In his second amended complaint Carroll merely asked for severance pay in the amount of six months salary, and in the last complaint, the third amended, the claim for severance pay was dropped altogether. Now, on appeal, he seeks leave to amend his complaint to re-assert a claim for severance pay for one-half of what the contract provided as Guaranteed Base of $145,000, namely $72,500.

In response, the defendants contend that allowing such an amendment would be a sham, because the claim for $72,500 contradicts his earlier claims for $150,000.

We cannot agree. There is no sham in Carrolls pleadings at all, just an incorrect legal position on the efficacy of Merages subsequent oral promises. Indeed, Carroll is unable to proceed on his oral contract and fraud claims precisely because of the viability of that integrated written agreement and the fact that the subsequent oral terms of pay and duties would substantively modify it in contradiction to its own anti-modification clause.

But the logical flip side of our conclusion that Carroll is bound by the written agreement (and therefore loses his oral contract breach and fraud claims) is that he at least retains the benefits of the written agreement, including severance pay. (The defendants real grievance about the request to amend to add back the severance claim is that it is the product of their own education of the plaintiff as to exactly the nature of his rights as found in the December 2002 contract.)

IV. DISPOSITION

The judgment is affirmed in its entirety except to this extent: The case is remanded to allow Carroll to file a fourth amended complaint based solely on the breach of the written contract for failure to pay him severance.

The trial judge shall, in the interests of justice, have discretion to award the costs of this appeal to the ultimately prevailing party or to require each side to bear its

own costs.

SILLS, P. J.

WE CONCUR:

RYLAARSDAM, J.

IKOLA, J.

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[1] This rhetorical differentiation works to emphasize Carrolls best contract argument, namely that oral promises that he should run another company show that he had a new agreement as distinct from a mere modification of the old written agreement.

For reader convenience, any direct quotations from the original contract that were originally in all caps will be converted to normal capitalization.

[2] Such claims are of course fairly common when the employer is an ostensibly religious one, like a church school or hospital founded by a religious order.

[3] The parties have cited no state court employer-employee religious conflict cases. Under Reno v. Baird (1998) 18 Cal.4th 640, we find guidance in analogous federal law, which is much more developed in the area. (Cf. id. at p. 647 [Because the antidiscrimination objectives and relevant wording of title VII of the Civil Rights Act of 1964 are similar to those of the FEHA, California courts often look to federal decisions interpreting these statutes for assistance in interpreting the FEHA.].)

[4] Arguably. Blalock is not entirely convincing as it regards its plaintiff. After all, the plaintiff really had nothing to complain about -- he was fired because he lost the enhanced tolerance (the district courts phrase) he previously had, but shouldnt have had. The appellate court thought it was enough that religion played a role in the discharge. (Blalock, supra, 775 F.2d at p. 708.) The withdrawal-of-enhanced tolerance aspect of the case seems more in the category of a sexual-harassment-based-on-favoritism-shown-to-another case (e.g., Miller v. Department of Corrections (2005) 36 Cal.4th 446) where the correct plaintiff is not the individual who is shown special favoritism, but invidious solicitude, but his or her co-workers are not shown that solicitude. That said, there was also evidence in Blalock that the plaintiff would have been kept on the payroll until he refused to discuss his situation with the apostle, which is probably better evidence that religion played a role in his firing, though the court did not emphasize it as much. (See Blalock, supra, 775 F.2d at p. 709.)

[5] In his briefs (by way of quotations from Venters, supra, 123 F.3d at p. 972 [plaintiff need not put a label on her own religious beliefs and Reed, supra, 330 F.3d at p. 934 [If we think of religion as taking a position on divinity, then atheism is indeed a form of religion]) Carroll indicates that there should be no need to articulate his own religious beliefs, and on that point he is of course thoroughly correct -- given the nature of his religious discrimination claims, it makes no difference what he is. For all the legal difference it makes, he could be a Rastafarian, a Pastafarian, an atheist or anything as long as he is not a Scientologist, and of course the complaint is readily susceptible to the inference that he is not a Scientologist.

We also note the irony from the other side -- while the complaint gives rise to a valid inference that Merage is a Scientologist, it also insinuates that he is a pretty lukewarm one, as shown by his comment about Scientology being the best way to avoid taxes.

[6] In the arbitration context, non-modification clauses have had a way of coming back to bite the party they were supposed to protect. The typical situation is where overreaching on one partys part means that the arbitration provision is otherwise unenforceable. The party will make a last-ditch effort to enforce the arbitration clause by waiving any overreaching provisions, but will be prevented from doing so by the non-modification clause. (E.g., Martinez v. Master Protection Corporation (2004) 118 Cal.App.4th 107, 116; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 181; Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1535-1536.

[7]Gard was -- to use the analogy drawn by Justice Henshaw writing for the high court majority -- King Lear revisited. In 1890, an old man, feeble and decrepit signed and gave a deed to his son, for a named consideration of $950. The son, though, had not paid the money. Rather there was an agreement (contract 1, in writing) that the deed should not be operative until the mode, manner, and time of payment should at some indefinite future date be agreed upon. (Gard, supra, 108 Cal. at p. 21.) That time came three years later, in 1893, when father and son agreed that the son would pay the father three-quarters of all rent received by the son for rent on the property during the fathers natural life (contract 2, oral), and in case the son should occupy the premises himself, to pay the father $15 a month for the rest of the fathers natural life. Well -- shades of Goneril and Regan who took the kingdom but paid their father no homage -- the son did indeed occupy the place himself, but didnt pay the $15. The property was homesteaded, which the opinion implies precluded any real recovery if the father sued for breach of contract, though the court was clear that the father indeed had that remedy. (Id. at p. 24 [Under the agreement the defendant became personally bound only and subject to an action for damages for breach of his contract, the only remedy open to plaintiff.].) Unfortunately for the father, the second agreement -- which the court (adopting the able opinion of the learned judge of the trial court) found it clear that the second contract was an independent and collateral contract though the court also was willing to entertain, for sake of argument, the idea that the second contract was a novation for the original indebtedness. (Id. at pp. 23-24.) Either way, the contract was wholly contingent, and dependent upon the uncertainty of human life and therefore too uncertain to sustain the fathers best remedy. (Ibid.) One senses from the opinion that the court thought that the required result was sharper than a serpents tooth.

[8] And even this is dubious given the lack of new consideration: As was the case in Marani, Carroll the employee was only doing what he had promised to do under the old contract. It is also clear that the alleged July 2003 agreement was never fully executed, an element which, in fact, appellate courts has required for the enforceability of independent and collateral agreements. (Cf. Simmons v. Sweeney (1910) 13 Cal.App. 283 [auctioneer followed terms of oral bargain made after written agreement, though oral bargain ended up being worse for auctioneer than original written contract]; Producers Fruit Co. of California v. Goddard (1925) 75 Cal.App. 737 [parties performed second agreement for a number of years]; San Gabriel Valley Ready-Mixt v. Casillas (1956) 142 Cal.App.2d 137 [both parties treated second agreement as operative]; Alexander v. Angel (1951) 37 Cal.2d 856 [original buyer released from obligation in restaurant sale]; Eluschuk v. Chemical Engineers Termite Control, Inc. (1966) 246 Cal.App.2d 463, 469 [new duties for same firm were enforceable so far as changes were fully executed]; accord, Coldwell Banker & Company v. Pepper Tree Office Center Associates (1980) 106 Cal.App.3d 272, 280-281 [modification consisted of doing no further work giving rise to commission, so modification enforced].)