van Der Steen v. Sygen International

Filed 2/10/10 van Der Steen v. Sygen International CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION FOUR

Defendants Sygen International, PLC, (Sygen) and Genus, PLC, (Genus)[1] appeal from a judgment entered after a bench trial in favor of plaintiff Henricus van der Steen on his causes of action for breach of contract, breach of an implied contract of continued employment, and breach of the implied covenant of good faith and fair dealing. Defendants raise numerous claims of error. We reverse the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Van der Steens Initial Employment with Sygen

In 1989, van der Steen began his employment with Sygen, which was then based in the United Kingdom and known as Pig Improvement Corporation (PIC), as a technical manager. In 1998, van der Steen moved from England to Berkeley, California, where he became the group genetics and research manager for PIC. On September 4, 1998, van der Steen signed an employment agreement (1998 employment agreement), which described the terms and conditions of his at-will employment relationship with PIC. The 1998 employment agreement included a repatriation clause, which provided for the payment of all reasonable costs of relocation back to Europe upon retirement from PIC. Van der Steen also signed an acknowledgement of receipt of PICs employee handbook. The acknowledgement of receipt, like the 1998 employment agreement, referenced the at-will nature of van der Steens employment, stating: I . . . understand that my employment at PIC can be terminated at any time, at the option of either myself or the company.

On March 8, 1999, van der Steen signed a letter agreement (1999 employment agreement), outlining the revised terms of his employment with PIC and appointing him as director of animal science research. Like the 1998 employment agreement, the 1999 employment agreement provided for repatriation to Europe upon retirement. The 1999 employment agreement referenced that either party could terminate the employment upon six months notice and also included a provision stating that [w]here [the 1999 employment a]greement is silent, all other terms of employment will be in accordance with PICs US employment conditions.

In January 2001, PIC amended van der Steens employment contract to give him  change of control protection, requiring the immediate payment of two years salary and bonus in the event that he was terminated following a sale of the company. Sometime thereafter, PIC changed its name to Sygen.

B. Sygens Relocation to Kentucky and Efforts to Establish Endowed Chair

In the spring of 2004, Sygen moved its corporate headquarters back to the United Kingdom and relocated its research and other facilities from California to Franklin, Kentucky. Van der Steen considered moving his family to Kentucky, but ultimately decided to continue to work for Sygen from his California base. At the same time, Sygen put into motion a proposal to establish and fund a chair position in biotechnology at Western Kentucky University (WKU).

On May 12, 2005, Sygen executed a letter of understanding (LOU) with WKU, detailing the proposed funding and establishment of the chair position. Pursuant to the LOU, a chair position was to be established effective July 1, 2005, for an initial period of 10 years, subject to and conditioned on the procurement of matching funds . . . . The LOU provided that at the end of the initial five[-]year period, the nature of the chair would be evaluated and a determination made regarding whether the chair would be continued and under what terms. Under the terms of the LOU, Sygen agreed to provide funding in the amount of $250,000 per year, which was to be used to cover salary and benefits and other costs. Additionally, during the first two years of the chair, WKU agreed to provide start-up costs in the amount of $225,000 per year. The LOU further stated that if the total funding to be provided by Sygen and WKU is insufficient to maintain the [c]hair], the [c]hair may be terminated by either party. The LOU also contained the following disclaimer: The general terms as set out above provide the framework on which the establishment and funding of the [c]hair shall be structured and will be subject to a more comprehensive agreement to be executed by [WKU] and Sygen. Neither [WKU] or Sygen will have obligations under this [l]etter or with regard to the [c]hair until the final agreement is signed.

In June of 2005, Sygen and van der Steen entered into extensive discussions regarding Sygens desire to secure the appointment of van der Steen to the chair position at WKU. During these negotiations, van der Steen asked for, and Sygen committed to, repatriating van der Steen back to the United Kingdom in four years time and paying for the cost of such repatriation.

In July of 2005, van der Steen signed a new letter agreement (2005 employment agreement), outlining the terms of his acceptance of the WKU chair and relocation to Kentucky. Pursuant to the 2005 employment agreement, Sygen agreed to pay van der Steen an annual salary of $210,000 and to pay for his costs of relocating to Kentucky. In the 2005 employment agreement van der Steen relinquished the previous change in control provision but acquired an enhanced repatriation clause: The company will pay the reasonable costs associated with relocation to Europe in 2009/10. Relocation to Europe will be upon termination of employment by either party . . . , retirement or transfer by Sygen. At the time van der Steen signed the 2005 employment agreement, the final details of the WKU chair position had not been worked out, including whether van der Steen would be selected by WKU for the position, and if so, whether van der Steen would be employed by WKU or Sygen. Also, the anticipated commencement of the chair position had been moved to October 2005.

C. Acquisition of Sygen by Genus; van der Steens Termination

In August 2005, van der Steen moved to Kentucky and continued in his role as director of animal science research from this location. At the same time, Genus approached Sygen about acquiring Sygen. As the negotiations between Genus and Sygen continued, the selection committee chose van der Steen as the WKU chair in mid-November 2005. Although the details of the agreement between Sygen and WKU had not been finalized, van der Steen was set to start as the chair on January 1, 2006, and he had prepared to announce his appointment at a press conference to be held on or about December 8, 2005. In the meantime, however, Genus purchased Sygen, and assumed control of its operations on or about December 2, 2005.

Following its acquisition of Sygen, Genus decided to forgo funding the WKU chair position due to its theoretical focus and emphasis on shrimp breeding. Genus was primarily focused on bovine and porcine development and was interested in research with immediate practical application. Additionally, because Genus had its own director of research, van der Steen was terminated on January 12, 2006, and received six months of severance pay (his regular wages through mid-July 2006). Following his termination, van der Steen did not immediately relocate to United Kingdom, but did so sometime in July 2006. During the summer of 2006, van der Steen started his own business.

D. Commencement of Litigation and Pretrial Proceedings

1. Motion for Summary Judgment

On June 30, 2006, van der Steen filed a complaint against Sygen and Genus, alleging six causes of action: (1) breach of contract, (2) wrongful discharge in violation of public policy (Gov. Code,  12940 et seq.), (3) breach of implied and/or express contract of continued employment, (4) breach of the implied covenant of good faith and fair dealing, (5) intentional infliction of emotional distress, and (6) negligent infliction of emotional distress. Van der Steen then filed an identical first amended complaint (FAC) on August 8, 2006.

Sygen and Genus moved for summary judgment, arguing, among other things, that van der Steen was at all times an at-will employee. Defendants also asserted that they made no knowingly false representations to van der Steen.

2. Trial Courts Summary Adjudication Ruling

The trial court denied in part and granted in part defendants motion. Specifically, the trial court granted summary adjudication of the second cause of action for wrongful discharge, the fifth cause of action for intentional infliction of emotional distress, and the sixth cause of action for negligent infliction of emotional distress. With respect to the contract-related causes of action,[2] the trial court determined they contained allegations that defendants breached van der Steens employment agreement in two distinct ways, to wit: (1) by cancelling the agreement to fund the research chair at WKU (first breach), and (2) by terminating van der Steen without cause (second breach). The trial court reasoned that pursuant to Code of Civil Procedure section 437c, subdivision (f)(1), these two distinct acts constituted two separate causes of action for purposes of the motion for summary adjudication, even though they were combined in a single cause of action. In other words, according to the trial courts logic, the first, third, and fourth causes of action each contained two separate causes of action.

The trial court then concluded that defendants failed to address the separate allegation of the first breach (failure to fund). In light of this alleged failure, the trial court denied summary adjudication of the first, third, and fourth causes of action, to the extent van der Steen was pursuing an action based on the first breach.

As to the second breach (alleged termination without cause), the trial court reasoned that regardless of whether the 2005 employment agreement modified van der Steens at-will status, thus requiring good cause for termination, it was uncontradicted that defendants had a valid business purpose for terminating van der Steen because his position was duplicative of the position occupied by Genuss own scientist, Dr. Dennis Funk. The trial court ruled that since van der Steen was unable to prove one or more of the elements of his claim of breach of the implied-in-fact employment agreement not to terminate him without good cause, summary adjudication was granted as to those parts of the first and third causes of action. In relation to the fourth cause of action (breach of implied covenant of good faith and fair dealing), the trial court ruled as follows: The only ground urged by [d]efendants is that an at will employee cannot state a claim for breach of the implied covenant. The motion is granted as to that [part of the] cause of action only.

E. Trial

1. Evidence

The matter proceeded as a three-day bench trial. The issues at trial were defendants alleged failure to fund the WKU chair and van der Steens resulting damages.

Van der Steen testified that he drafted the initial LOU at Sygens request. Van der Steens version of the LOU did not contain the disclaimer which provided that either Sygen or WKU could opt out of the LOU prior to the signing of the final agreement. Van der Steen believed that the LOU provided him with a position for a maximum period of 10 years.

On cross-examination, van der Steen conceded that nothing in his 2005 employment agreement described a term of employment. He further admitted that there was no mention of a guaranty of employment or a specific reference to the term or duration of his employment. Indeed, van der Steen confirmed that he had no written offer of employment at WKU. Rather, he had an oral offer. Van der Steen further admitted that no final agreement or other legal document had been drafted between WKU and Sygen for the chair position. According to van der Steen, a note . . . summarized the final agreement, but he did not have a copy of it. Although he testified that he would not have moved to Kentucky unless the chair position was an absolute certainty he acknowledged that when he decided to move there was not a 100 percent certainty that he would be selected for the chair position.

Phillip David, the former chief executive officer of Sygen, testified that he knew van der Steen and considered him to be a friend. At some point, David appointed van der Steen to the executive board, along with Graham Plastow, and the two shared the leadership of the technology department. David stated that he never had any discussions with van der Steen about a guaranteed job, termination for cause, or a specified term of employment.

Plastow, a long-time acquaintance of both van der Steen and David, testified that he had worked with van der Steen for a considerable period of time in the United Kingdom and in the United States. Plastow explained that he and van der Steen were two of the top technical people at Sygen. Plastow, like other Sygen executives, had obtained a change in control provision.

Plastow participated in the negotiations between Sygen and van der Steen, with respect to van der Steens relocation to Kentucky and appointment to the WKU chair position. According to Plastow, a final, comprehensive agreement between Sygen and WKU regarding the chair position was never completed. Plastow believed that van der Steen knew about the opt-out language (disclaimer) in the LOU.

Plastow did not have any discussions with van der Steen regarding a guaranty of employment. Plastow explained that the negotiated repatriation clause was in exchange for the termination of van der Steens change in control benefits. Plastow further explained that Sygen was prepared to guarantee repatriation in four years time. However, Sygen was concerned about the possibility of a funded repatriation without an available job. In response, Plastow suggested drafting something that guaranteed repatriation in four years time, but that did not guarantee a job at the time of repatriation.

Funk, chief scientist for Genus, explained that Genus decided not to fund the WKU chair because it had no direct application to its business, which focused primarily on cattle and pig breeding. He further explained that Genus decided not to fund the chair position because it was focused on theoretical or blue sky research involving pigs and shrimp and that Genus was interested in more practical research in the area of bovine and porcine reproduction. Genus also wanted to discontinue the shrimp research because it was too long-term and speculative.

Funk further testified that the failure to fund the WKU chair position was not the only reason for van der Steens termination. Funk explained that he and van der Steen had similar experience and training; Genus had no need for such an overlap of skills. Funk also explained that due to the scale back of the projects, Genus did not need van der Steens supervisory management . . . for the team of quantitative sciences.

Sandra Baylor-Schmidt, director of HR legal affairs for Genus, testified that Genus focused on commercially applicable research and development. She explained that integration of Genus and Sygen unfortunately resulted in some individuals being redundant, which she explained was a British term, meaning the job no longer exists. Baylor-Schmidt testified that van der Steen, like most Sygen employees, had been employed at-will. She found no documents that varied the at-will status of Sygens employees in general. Also, there were no specific documents that varied van der Steens at-will status. Indeed, Baylor-Schmidt did not discover any documents with respect to van der Steen that suggested he had a term of employment or that he could only be terminated for cause.

2. Nonsuit and Motion to Amend Pleading to Conform to Evidence

Following the close of van der Steens evidence, defendants moved for nonsuit. At the same time, van der Steen moved to amend the FAC to conform to proof. The proposed amended complaint added a seventh cause of action for promissory estoppel. The trial court expressed confusion about the newly added cause of action, finding that paragraph 13 of the FAC already raised the issue of promissory estoppel by its reference to the fact that van der Steen was induced and agreed to change his place of residence and employment to give up certain valuable employment rights. The trial court believed these facts sufficiently alleged detrimental reliance, but it deferred hearing the motion until after all the testimony had been heard.

Following the close of evidence, the trial court denied defendants motion for nonsuit. However, the record is silent as to van der Steens motion to amend the FAC to conform to proof.

3. Statement of Decision and Posttrial Motions

The trial court announced its tentative decision, finding in favor of van der Steen and awarding him $975,000, comprised of four years of income and bonuses, less the amounts paid by defendants and the income van der Steen earned from his own business. The trial court explained its ruling as follows: [I]ts absolutely clear that there was an opt-out provision, that opt-out provision was as between Sygen and [WKU]. Either side had the right to opt out. . . . [] When Genus came in and they found that the letter of intent between Sygen and [WKU] did not serve their purpose they had the right to terminate it. However, Genus also took Sygen with a set of facts that included an obligation to this long-term employee, [van der Steen]. And that was we want you to go to Kentucky, we want you to work there for four years. . . . [] . . . [A]s a demonstration of how this contract went from an at-will contact to a for-cause contract, [van der Steen] gave up . . . valuable contract provisions under his 99 contract and he signed a new one. And he signed it because he thought it was going to be four years, because he thought his employer was going to act in good faith in securing his appointment. In fact, there was no problem with [WKU]. . . . [I]f Genus hadnt come along I have no doubt that [van der Steen] would be in the endowed chair today because this deal was going to go through. . . . [] . . . Genus was able to opt out, but they also had the baggage of what the agreement was with Sygens employee, [van der Steen], and that was he had every right to expect that he was going to go to work at [WKU] for four years, and he relied on that. And his detriment for that was $674,000 [the value of the change in control provision].

In its written statement of decision, the trial court ruled that Sygen entered into a binding, enforceable contract with van der Steen regarding his selection and appointment to the research chair position. The trial court determined that this agreement was not subject to an understanding or condition that it could only be terminated or cancelled for good cause.  Rather, the trial court concluded that [t]he agreement to appoint did create an enforceable contract and commitment for [van der Steen] to work in Kentucky for four years in the proposed research chair.

Defendants objected to the trial courts proposed statement of decision on several grounds, including: (1) the statement of decision was irreconcilable with the prior summary adjudication ruling that good cause existed for van der Steens termination; (2) there was no basis for concluding that the parties entered an agreement with a four-year term; (3) the statement of decision failed to address van der Steens new un-plead promissory estoppel claim; and (4) the trial court failed to make the requisite findings regarding whether van der Steen properly mitigated his alleged damages. The trial court summarily denied defendants objections.

Defendants filed motions for judgment notwithstanding the verdict and for a new trial, which the trial court denied. The instant appeal followed.

II. DISCUSSION

A. Standard of Review

The parties urge different standards of review on appeal. Defendants contend that the appropriate standard of review is de novo because resolution of the issues rests on the trial courts summary adjudication ruling and on its interpretation of the 2005 employment agreement. Van der Steen implicitly relies on the substantial evidence standard of review. The correct standard is actually a blend of the two, depending on the issue addressed.

First, the standard of review for an order granting or denying a motion for summary adjudication is de novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860.) The trial courts stated reasons for granting summary adjudication are not binding on the reviewing court, which reviews the trial courts ruling, not its rationale. (Kids Universe v. In2Labs (2002) 95 Cal.App.4th 870, 878.)

Second, [w]hen a trial courts construction of a written agreement is challenged on appeal, the scope and standard of review depend on whether the trial judge admitted conflicting extrinsic evidence to resolve any ambiguity or uncertainty in the contract. If extrinsic evidence was admitted, and if that evidence was in conflict, then we apply the substantial evidence rule to the factual findings made by the trial court. But if no extrinsic evidence was admitted, or if . . . the evidence was not in conflict, we independently construe the writing. [Citations.] (De Anza Enterprises v. Johnson (2002) 104 Cal.App.4th 1307, 1315, italics omitted.) As a result, where the issue presented rests only on the interpretation of a written document and there is no need to consider conflicting extrinsic evidence regarding the proper interpretation, the issue is a question of law, and the correct standard of review is de novo. (See Morey v. Vannucci (1998) 64 Cal.App.4th 904, 913 (Morey).)

When, however, the meaning of the language of a contract is uncertain and parol evidence is introduced to aid in its interpretation, the duty of the trial court is to resolve the conflicts in the evidence and to interpret the language in light of the evidence found credible. (See Leep v. American Ship Management (2005) 126 Cal.App.4th 1028, 1041.) When the trial court resolves the conflict, we are bound to the facts as determined by the trial court if those factual findings are supported by substantial evidence. (Morey, supra, 64 Cal.App.4th at pp. 912‑913.) When interpretation turns upon the credibility of conflicting extrinsic evidence, we will uphold any reasonable construction of the contract by the trial court. (Ibid.)

In conclusion, the proper standard of review depends on whether and in what regard conflicting extrinsic evidence was needed to interpret a particular provision of the contract. (See City of Chino v. Jackson (2002) 97 Cal.App.4th 377, 382-384.) The paramount rule with regard to both of these standards, however is to give effect to the mutual intention of the parties as it existed at the time of contracting. Therefore, the intention of the parties must first be derived from the language of the contract. (See Warburton/Buttner v. Superior Court (2002) 103 Cal.App.4th 1170, 1180; Leo F. Piazza Paving Co. v. Foundation Constructors, Inc. (1981) 128 Cal.App.3d 583, 591.) It is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of a party, that controls. A partys undisclosed intent or understanding is irrelevant. (Cedars-SinaiMedicalCenter v. Shewry (2006) 137 Cal.App.4th 964, 980 (Cedars-Sinai).)

With these standards in mind, we turn to defendants claims of error.

B. Summary Adjudication

Defendants assert, first, that the trial courts summary adjudication ruling erroneously split the contract-related causes of action. The rule against splitting a cause of action prohibits the separation of a single primary right into two separate claims. (Hamilton v. Asbestos Corp. (2000) 22 Cal.4th 1127, 1145.)  The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action. [Citation.] . . . . . . As far as its content is concerned, the primary right is simply the plaintiffs right to be free from the particular injury suffered.  (Ibid.) Defendants contend that van der Steens complaint sought to vindicate a single primary rightthe loss of his job. Defendants insist that the trial court erred by splitting this indivisible claim into two causes of action and that the trial courts ruling is contrary to the purpose of Code of Civil Procedure section 437c, subdivision (f)(1), which prohibits the adjudication of issues and facts that do not completely dispose of a cause of action. We agree that the trial courts ruling is at odds with the purpose of section 437c, subdivision (f)(1).

The so-called failure to fund claim discerned by the trial court involves arguably discrete facts, which are perhaps identifiable as a separate issue within the FAC. But the failure to fund facts did not constitute a separate cause of action. Rather, van der Steens contract-related causes of action were based upon the failure to fund the WKU chair position and his termination of employment.[3] Moreover, even assuming that the contract-related causes could be split into two distinct claims, the trial courts finding that defendants had good cause to terminate van der Steens employment should have resulted in summary judgment in favor of defendants, due to the interrelation between the 2005 employment agreement and the LOU.

Despite this analysis, we conclude defendants have not established prejudice resulting from the trial courts error in denying their summary judgment motion. (Waller v. TJD, Inc. (1993) 12 Cal.App.4th 830, 833-836 (Waller).) In Waller, the appellate court declined a request to consider the merits of the order denying summary judgment as a basis to reverse a judgment entered after trial on the merits. (Id. at p. 836.) There, the defendant sought to establish the reversible error by contending that if its summary judgment motion had been granted, the matter would have been terminated in its favor at that point, there would have been no trial and it would not now be faced with an adverse judgment. (Id. at p. 833.) However, the appellate court rejected defendants theory that merely being compelled by force of an erroneous denial of a dispositive pretrial motion to participate in an otherwise fair trial constitutes prejudice warranting reversal. (Id. at p. 834.) In so ruling, the appellate court reasoned: When the trial court commits error in ruling on matters relating to pleadings, procedures, or other preliminary matters, reversal can generally be predicated thereon only if the appellant can show resulting prejudice, and the probability of a more favorable outcome, at trial. Article VI, section 13, [of the California Constitution] admonishes us that error may lead to reversal only if we are persuaded upon an examination of the entire cause that there has been a miscarriage of justice. In other words, we are not to look at the particular ruling complained of in isolation, but rather must consider the full record in deciding whether a judgment should be set aside. Since we are enjoined to presume that the trial itself was fair and that the verdict in plaintiffs favor was supported by the evidence, we cannot find that an erroneous pretrial ruling based on declarations and exhibits renders the ultimate result unjust. (Id. at p. 833, italics omitted.)

On this record we cannot conclude that the erroneous ruling denying defendants summary judgment motion, in and of itself, rendered unjust the judgment entered after full trial on the merits. (Waller, supra, 12 Cal.App.4th at pp. 833-836.) Nonetheless, we do conclude that the trial court committed reversible error in ruling after trial that the 2005 employment agreement created a specified term of employment. This ruling was not only inconsistent with the prior good cause finding made in connection with the motion for summary judgment, but as we shall discuss, there is no evidence in the record to support the courts finding that the parties intended the 2005 employment agreement to change the nature of van der Steens employment.

C. Trial Errors

Defendants contend that van der Steen had an at-will employment agreement, which was not transformed into a contract for a specified term by reason of the repatriation clause. They further claim that inasmuch as the contract between Sygen and WKU was never finalized, there is no evidence to support a breach of contract or promissory estoppel claim based upon the trial courts failure to fund theory.

1. Contract Claims

In interpreting the contract, we must give effect to the mutual intention of the parties as it existed at the time the contract was executed. (Civ. Code, 1636.) Where contract language is clear and explicit and does not lead to absurd results, we normally determine intent from the written terms alone. (Id., 1638, 1639.) Those terms are to be understood in their ordinary and popular sense, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage. (Id., 1644.) If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it. (Id., 1649.) [] Thus, we look to the reasonable expectation of the parties at the time of contract. To determine the reasonable expectation of the parties we examine the totality of the circumstances . . . . Agreement may be  shown by the acts and conduct of the parties, interpreted in the light of the subject matter and of the surrounding circumstances.   [Citation.] (Kashmiri v. Regents of University of California (2007) 156 Cal.App.4th 809, 831-832.)

a. Term of Employment

Labor Code section 2922 provides: An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month. This statute creates a presumption that an employer may terminate its employee at will, for any reason or no reason. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 350 (Guz).)

The statutory presumption of at-will employment under Labor Code section 2922, however, does not apply where the parties have enforceable expectations concerning either the length of employment or the grounds or manner of termination. (Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2009) 4:45, p. 4-9.) Thus, the presumption of at-will employment may be overcome by evidence of either an express or an implied-in-fact agreement limiting the employers termination rights. (Guz,supra, 24 Cal.4th at pp. 336-337; see also Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 675.)

In the instant case, the trial courts rulings at summary adjudication, and its rulings after the trial, are irreconcilable with van der Steens actual employment status. At summary adjudication, the trial court did not expressly determine whether van der Steens employment was at-will, but ruled that even if the 2005 employment agreement required good cause for termination, such good cause was established by reason of Genuss acquisition of Sygen and its business decision to opt out of establishing the WKU chair. However, the trial court later ruled that the parties had agreed on a four-year period of employment based on the LOU between Sygen and WKU and on van der Steens revised employment contract. Neither the law nor the facts of this case supports such a conclusion.

Employment for a specified term is governed by Labor Code section 2924, which provides: An employment for a specified term may be terminated at any time by the employer in case of any willful breach of duty by the employee in the course of his employment, or in case of his habitual neglect of his duty or continued incapacity to perform it. (See also Khajavi v. Feather River Anesthesia Medical Group (2000) 84 Cal.App.4th 32, 57 (Khajavi).) This rule, however, applies only when the employment agreement sets forth the length of employment. (See Lenk v. Total-Western, Inc. (2001) 89 Cal.App.4th 959, 969 (Lenk).

For example, in Lenk, a former employee asserted that he had an agreement for a minimum one-year term of employment, by reason of language in his written employment agreement that a performance evaluation would be conducted after 12 months of employment. (Lenk, supra, 89 Cal.App.4th at pp. 969-970.) Rejecting this contention, the court held that the reference to a performance evaluation  [t]o be completed after twelve (12) months of employment  could not be interpreted as guaranteeing a minimum one-year contract term. (Id. at p. 970.) In so holding, the court explained that the contract plainly did not contain any specific term of employment. Moreover, there was no evidence that the parties otherwise agreed that the employee would have a minimum one-year term of employment or would be terminated only for cause. (Id. at pp. 969-970.)

Similarly, in Kelly v. Stamps.com Inc. (2005) 135 Cal.App.4th 1088, 1102, an employee who was discharged following an economic reduction was unable to prevail on her claim that a two-stage bonus established either an implied promise that her employer would retain her until the second payment came due, or an offer for a new term of employment until such time. The appellate court explained the two-stage bonus may have represented an offer of unilateral contract for the bonus, calling for plaintiff to continue her employment. [Citations.] But by no means can it be said, or read, to have included a promise by defendant of continued employment. (Id. at p. 1103.) Rather, the memo by which the defendant extended the bonus expressed the defendants desire that plaintiff remain working for it, and provided as an incentive that to receive the two parts of the bonus plaintiff had to be employed with the company on each of the respective dates . . . .  (Ibid.)

Like the performance review in Lenk and the two-stage bonus in Kelly, the repatriation clause in the 2005 employment agreement, which promised relocation to Europe in four years, cannot reasonably be interpreted as creating a minimum four-year contract term. The 2005 employment agreement plainly does not contain any specific term of employment. In addition, no evidence was presented at trial tending to prove that the parties otherwise agreed van der Steen would have a minimum term of employment or would be terminated only for cause. To the contrary, van der Steen acknowledged receipt of an employee handbook with an explicit at-will provision. Moreover, David, Plastow, and Baylor-Schmidt each testified that there were no discussions about a guaranteed term of employment for van der Steen.

It is difficult to square the trial courts summary adjudication ruling that defendants had good cause to terminate van der Steens employment by reason of Genuss acquisition of Sygen, with its subsequent ruling that the 2005 employment agreement created a four-year term of employment. As we have noted, an employment for a specified term cannot be terminated by the employer except in the case of a willful breach of duty, habitual neglect of, or continued incapacity to perform a duty. (Khajavi, supra, 84 Cal.App.4th at p. 57.) Thus, the implication of the trial courts ruling is that Genus was required to employ van der Steen for a period of four years (assuming no willful breach, neglect, or incapacity), regardless of whether a position actually existed. There simply is no basis to reach such a conclusion. Accordingly, the first cause of action and the third cause of action, based on the claim of an implied contract guaranteeing van der Steen employment for at least four years, were improperly adjudicated in van der Steens favor. The same is true for the fourth cause of action, which asserted a breach of the covenant of good faith and fair dealing in the same alleged contract.

We can sympathize with the unfortunate circumstances in which van der Steen found himself. He gave up the very valuable change in control protection in exchange for what he understood was a guaranteed chair position and for the ability to repatriate to Europe at Sygens expense prior to retirement. But the words of the contract control, not one partys subjective understanding.[4] (Cedars-Sinai, supra, 137 Cal.App.4th at p. 980.) As discussed, the enhanced repatriation provision expressed the parties expectation that van der Steen would remain working for Sygen (or WKU) for at least four years. It did not establish a minimum four-year term of employment.

b. Failure to Appoint

Van der Steen contends, however, that he should prevail on an alternative theory. He points to a line of cases in which reliance damages have been held to be recoverable where a prospective employer makes an unambiguous promise to hire, the prospective employee incurs losses in reliance on that promise, and the prospective employer then reneges on the promise for no reason, or for an improper reason. Thus, for example, in Sheppard v. Morgan Keegan & Co. (1990) 218 Cal.App.3d 61, 64-65, a California resident was induced to quit his job and move to Tennessee upon the defendants promise that he would beand washired. After incurring the expense of moving and signing a lease, the prospective employee was abruptly terminated, before undertaking his duties. (Id. at p. 65.) The employer moved for summary judgment on the ground that the employment contract, once entered into, was terminable at will. (See id. at p. 66.) The court rejected this theory and concluded the prospective employee had a right to prove that he suffered damages based upon his reasonable reliance on the employers promise of employment. (Id. at pp. 66-67.) The court held the employers actions constituted an implied covenant of good faith and fair dealing. (Id. at p. 67; and see Comeaux v. Brown & Williamson Tobacco Co. (9th Cir. 1990) 915 F.2d 1264, 1266-1267, 1270-1272 [employee can sue to recover reliance damagesbut not expectancy damagesfor employers withdrawal of offer to hire after employee resigned his previous employment and moved with his wife to the location specified by the employer, where employer withdrew offer on ground that employee had bad credita hidden condition of employment that was neither disclosed nor agreed upon]; Bower v. AT & T Technologies, Inc. (8th Cir. 1988) 852 F.2d 361, 362 [employees who had been laid off were repeatedly promised preference in reemployment in other positions and were encouraged to wait for the promised jobs; in reliance on such promises the employees did not pursue or did not accept other positions; employer reneged and required terminated employees to pass a test in order to be considered for the new positions and none were rehired].)

Two key factors distinguish this case from Sheppard, Comeaux, and Bower. First, as the trial court found, the WKU chair was not funded and van der Steen was terminated not because Sygen reneged on a promise for an improper reason or for no reason; rather, the chair position did not materialize and van der Steen was let go due to a legitimate and significant change in circumstances, viz., the acquisition of Sygen by Genus. Second, there was never a failure to hire. Van der Steen was a long-term at-will employee of Sygen, who renegotiated the terms of his employment agreement to best serve his purposes, based on a set of good faith expectations shared by all parties at the time. Under contract law, those terms govern the parties respective rights and obligations, regardless of whether the result appears to this court to be harsh or unfair.

c. Repatriation Costs

There remains the question of the enforceability of the repatriation clause. According to Sygen, the parties agree that a limited post-employment obligation existed under the repatriation clause set forth in the 2005 employment agreement. However, it asserts that this obligation was excused when van der Steen  accepted a position with another company.  Alternately, Sygen argues that van der Steen waived his claim for repatriation costs by failing to seek them. Neither contention has any merit.

For ease of reference, we reiterate the terms of the repatriation clause: The company will pay the reasonable costs associated with relocation to Europe in 2009/10. Relocation to Europe will be upon termination of employment by either party (unless employee has accepted a position with another company), retirement or transfer by Sygen. (Italics added.)

The record clearly establishes that, upon his termination, van der Steen did not accept[] a position with another company. Rather, van der Steen started his own consulting company sometime in the summer of 2006. The plain and unambiguous language of the 2005 employment agreement does not preclude repatriation costs in the event of self-employment. Rather, it is limited to the situation where another company has offered a position that the employee accepts. The record supports this interpretation. Specifically, when negotiating the terms of the 2005 employment agreement, van der Steen expressed concern that the repatriation clause as worded had the possibility of acting as a noncompetition agreement. In response, Sygen advised van der Steen that [t]he only reason that Sygen would not relocate you would be if you have accepted an offer from another employer prior to moving. (Italics added.) Sygen further explained that if van der Steen accepted a position with another company, it would be the obligation of the new employer to move you . . . . (Italics added.) Accordingly, we reject Sygens claim that [t]he plain language of the [r]epatriation [c]lause expressly excludes any relocation reimbursement if . . . van der Steen accepted a position with another company, without regard to the ownership of the other company including whether . . . van der Steen started and/or controlled it.

Equally without merit, is Sygens contention that van der Steen waived his right to seek repatriation costs by not seeking them. The 2005 employment agreement sets forth no procedure for seeking repatriation costs, or otherwise sets a time limit for claiming them. Moreover, the record reflects that when van der Steen was presented with a severance package that did not contain repatriation expenses, he tried to address this omission. He was told, however, that it was take it or leave it. Van der Steen expressed dissatisfaction about his severance package, but advised Sygens human resources director that he would let the lawyers sort it out. Finally, van der Steen implicitly sought his repatriation costs in his complaint and FAC, by seeking damages for breach of the 2005 employment agreement.

Accordingly, the terms of the 2005 employment agreement and the circumstances under which it was negotiated necessitate the conclusion that defendants are liable for van der Steens repatriation costs.

2. Promissory Estoppel

It is unclear from the record whether the trial court found Sygen liable under a promissory estoppel theory. It appears that the trial court never ruled on van der Steens motion to amend the FAC to include a detrimental reliance claim. The trial courts statement of decision fails to provide any clarity, in that it references both detrimental reliance and contract damages. Specifically, the court found that [van der Steen] did rely to his detriment in entering into the 2005 agreement to move to Sygens headquarters in Kentucky from California, by agreeing to waive the . . . change of control protection provision he enjoyed in exchange for an increase in salary, bonus, and enhanced repatriation clause, and that, in anticipation and expectation that Sygen would complete the agreement with WKU and provide funding for the research chair[,] . . . he moved his place of employment and his family to Kentucky. The trial court further found that van der Steens reliance . . . was reasonable and that he fulfill[ed] his legal duty to mitigate contract damages.

Assuming the trial court did find in favor of van der Steen on the basis of promissory estoppel, that doctrine does not apply. In California, under the doctrine of promissory estoppel, A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (Rest.2d Contracts, 90, subd. (1), p. 242; see C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 6 . . . [ 90 has been judicially adopted in California].) Promissory estoppel is a doctrine which employs equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced. (Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 672 . . . .) (Kajima/Ray Wilson v. Los AngelesCounty Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310.)

The purpose of promissory estoppel is to make a promise binding under certain circumstances without consideration in the usual sense of something bargained for and given in exchange. [W]here the promisees reliance was bargained for, the law of consideration applies; and it is only where the reliance was unbargained for that there is room for application of the doctrine of promissory estoppel. (Healy v. Brewster (1963) 59 Cal.2d 455, 463 . . . ; see Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 249-250 . . . .) (Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara County Transit Dist. (1976) 65 Cal.App.3d 121, 133-134.)

As the above authority makes clear, van der Steens promissory estoppel claim could only succeed if the alleged promises were beyond the scope of the governing documents and not supported by consideration. However, van der Steens claim necessarily involved consideration, in that he gave up the change in control provision for the enhanced repatriation clause, increase in salary, bonus, and with the expectation that Sygen would complete the agreement with WKU and provide funding for the research chair. Accordingly, the contract provisions necessarily controlled and van der Steen could not maintain a successful action for promissory estoppel.

III. DISPOSITION

The judgment is reversed and the cause is remanded to the trial court for further proceedings limited to a determination of van der Steens damages due to defendants failure to pay the repatriation costs. The parties shall bear their own costs on appeal.

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RIVERA, J.

We concur:

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RUVOLO, P.J.

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REARDON, J.

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[1] We shall refer to Sygen and Genus individually and as defendants collectively where appropriate.

[2] The contract-related claims were the first cause of action (breach of contract), the third cause of action (breach of implied and/or express contact of continued employment), and the fourth cause of action (breach of the implied covenant of good faith and fair dealing).

[3] As noted, the contract-related claims consisted of the first cause of action (breach of contract), the third cause of action (breach of implied and/or express contract of continued employment), and the fourth cause of action (breach of the implied covenant of good faith and fair dealing).

[4] As we have noted, van der Steens testimony that he would not have moved to Kentucky unless the deal was an absolute certainty is undermined by his own statement, only days before signing the 2005 agreement, that he would make the decision to move to Kentucky expecting a 90% chance that [he] would be elected for the chair position.