Schmidt v. Bd. of Trustees, CSU CA3 ( 2014 )

Filed 6/25/14 Schmidt v. Bd. of Trustees, CSU CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(Butte)
----
DIANE SCHMIDT, C069835
Plaintiff and Appellant, (Super. Ct. No. 150151)
v.
BOARD OF TRUSTEES OF THE CALIFORNIA
STATE UNIVERSITY CHICO et al.,
Defendants and Respondents.
In this action, plaintiff Diane Schmidt, a professor in political science at California
State University, Chico, sued the Board of Trustees of the California State University1
and several individuals for disability discrimination, harassment, retaliation, and other
causes of action. Defendants sought summary judgment on the ground that Schmidt had
1 We will refer to California State University, Chico and the Board of Trustees of
the California State University interchangeably as the university.
1
released all of the claims asserted in this action by signing a settlement agreement two
months before she commenced the action. The trial court agreed and entered judgment
for defendants.
On appeal, Schmidt primarily contends that when the extrinsic evidence she
offered of the negotiations leading up to the settlement agreement is considered, the
release provisions in the agreement are ambiguous and thus there is a triable issue of fact
as to whether those provisions encompassed the claims asserted in this action. We
disagree. Even considering the evidence of the negotiations, the release language in the
settlement agreement is not reasonably susceptible to the interpretation Schmidt offers
because her interpretation would require us to ignore a substantial part of that language,
whereas the interpretation the university advances gives meaning to all of the release
language in the agreement. Thus, we conclude the trial court did not err in construing the
settlement agreement as encompassing the claims asserted here.
We do, however, agree with Schmidt that the evidence she offered of the
negotiation of the settlement agreement raises a triable issue of fact as to whether her
release of the claims asserted here was procured by fraudulent misrepresentations made
to her by a representative of the university. If Schmidt can prove such fraudulent
inducement to sign the settlement agreement, then she will be entitled to enforce her
understanding of the release, rather than its broader, more comprehensive terms, and will
therefore be allowed to proceed with her claims in this action. Accordingly, we will
reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Schmidt has been a professor in the political science department at the university
since 1998. She is disabled because of back and neck injuries from a car accident and
because she has fibromyalgia.
In December 2007, Schmidt filed a grievance with the university (R03-2007-433;
hereafter, grievance 433), asserting “[d]iscrimination because of disability. Improper
2
process that led to reprimand.” According to Schmidt, this grievance related to a letter of
reprimand she received in November 2007 based on an incident at a hiring meeting in
April 2007. According to Schmidt, the participants at the meeting were arguing over
potential job candidates. After two participants in the meeting made discriminatory
comments about the older candidate, Schmidt asserted that the older candidate was in a
protected class and another participant agreed. In response, Schmidt’s supervisor,
defendant Diana Dwyre, allegedly said, “ ‘Fine, I’ll just write in the report that Diane
says we have to hire a guy over 40.’ ” Schmidt responded, “ ‘well then why don’t you
put in that report all the shit you have been putting me through too.’ ” Schmidt later
asserted that her outburst was related to medication she was taking for her medical
conditions.
In February 2008, Schmidt filed another grievance with the university (R03-2008-
022; hereafter, grievance 022), asserting “hostilities, including character assassination,
threats, violation of academic freedom, verbal abuse, filing false/malicious complaints,
instigating harmful rumors, violation of due process, violation of ADA accommodation,
violation of free speech, violation of HIPAA privacy protection, [and] unauthorized
performance review.” In a later administrative response to this grievance, it was noted
that “the majority of . . . Schmidt’s claims [were] based upon incidents that occurred in
late 2007.”
In April 2008, Schmidt filed a third grievance with the university (R03-2008-171;
hereafter, grievance 171), asserting “work overload” based on her course assignments for
fall 2008 and spring 2009. As a remedy, she asked to be removed from assignment to a
particular course (680) in both semesters. A later administrative response to this
grievance in the fall of 2009 indicated that enrollment in course 680 requires permission
of the instructor, Schmidt did not permit any student to enroll in her course 680 in the fall
2008 semester, and Schmidt was not listed as an instructor for course 680 after fall 2008.
3
In June 2008, Schmidt filed a complaint for disability discrimination and
retaliation with the United States Department of Education, Office for Civil Rights. This
complaint related to the letter of reprimand stemming from the April 2007 incident and
the “hostile work environment” Schmidt claimed had ensued following that incident.
Schmidt specifically mentioned the grievances she had filed in December 2007 and
February 2008.
In September 2008, Schmidt filed a charge of disability discrimination and
retaliation with the Equal Opportunity Employment Commission (EEOC) (and
simultaneously with the California Department of Fair Employment and Housing
(DFEH)), alleging “harass[ment] because of [her] disability,” “a hostile work
environment,” and “retaliat[ion] against [her] because” she “participated in a protected
activity . . . during an interview in April 2007.” According to Schmidt, this latter
complaint related to her comments at the hiring meeting in April 2007 regarding the older
job candidate.
On the same day the EEOC received this charge, Schmidt sent defendant Gayle
Hutchinson, dean of the college of behavioral & social sciences, via e-mail a “formal
complaint” that she was “still experiencing a substantial hostile work environment which
apparently continues from the unabated harassment and discrimination [she] experienced
and reported . . . from September 2007 through May 2008.” Schmidt specified that her
current complaint was “related to actions against [her] from August 2008 to the present.”
Those actions included being voted off a faculty committee, “shunning” by other faculty,
and “[a]ggressive behavior” such as being “virtually shoved away from the mailboxes.”
In late September 2008, Schmidt met with her union representative and defendant
Leslie Nix-Baker (vice provost for faculty affairs). In that meeting, Nix-Baker agreed to
conduct an investigation and prepare a report relating to Schmidt’s complaints and her
treatment in the department. Subsequently, Nix-Baker promised many times to provide
Schmidt with a copy of the investigative report.
4
In December 2008, Schmidt filed a fourth grievance with the university (R03-
2008-491; hereafter, grievance 491) relating to the department process of funding
sabbaticals. Apparently the only relief Schmidt requested was that she receive her
sabbatical, and because she eventually did, her union ultimately (in May 2010) declined
to take the matter to arbitration.
In September 2009, Schmidt met with Hutchinson and complained of retaliation,
hostile work environment, and disability discrimination (among other things). Also in
September, Nix-Baker told Schmidt that she had not yet completed the investigative
report she had promised a year before but would make every effort to get it to Schmidt as
soon as possible.
In October 2009, Schmidt filed a fifth grievance with the university (R03-2009-
395; hereafter, grievance 395) asserting “[d]isability discrimination.” Specifically, she
complained of “[d]ifferential treatment with respect to [the] hand[ling of] workplace
violence complaints” because she “was reprimanded . . . for saying a cuss word in an
argument” when she “was disabled due to [a] medication reaction at the time,” while
“[n]on-disabled faculty who said the same word in a meeting . . . , who had violent
altercations . . . , engaged in hostility . . . or who assaulted [her] were not reprimanded or
processed.”
On the same day she filed grievance 395, Schmidt also filed a sixth grievance
(R03-2009-396; hereafter, grievance 396) in which she alleged that complaints she had
made “regarding discriminatory retaliatory actions . . . and associated hostile work
environment issues related to [her] disability ha[d] not been responded to by
administration.” Specifically, she complained that the investigative report Nix-Baker had
promised had been “repeatedly stalled with no remedy.” As part of her proposed remedy,
she requested that Nix-Baker issue the report.
In November 2009, Nix-Baker sent Schmidt the level I responses to grievances
395 and 396. Schmidt communicated her intent to take the grievances to level 2 (a
5
faculty hearing committee). At the same time, she asked Nix-Baker for an informal
resolution of the grievances. In mid-December, Nix-Baker notified Schmidt that she had
a draft of an agreement but needed to show it to others and await their responses.
In early January 2010, Schmidt learned that Nix-Baker had retired during the
semester break. Meanwhile, the grievance process on grievances 395 and 396 moved
forward, with faculty members being chosen for the hearings that needed to be scheduled
soon. On January 21, however, Jorge Salinas, director of labor relations at the university,
transmitted a written settlement offer to Schmidt through her union representative,
Richard Soares. The proposed agreement encompassed all six grievances Schmidt had
filed with the university, as well as the complaints she had filed with the Department of
Education and the EEOC. The draft agreement offered Schmidt $7,244, restoration of 15
days of sick leave, removal of the letter of reprimand from her file, a copy of Nix-Baker’s
investigative report, relief from teaching course 680, and sensitivity training within the
college of behavioral & social sciences. It also included a release provision under which
both sides released “all . . . liabilities of any kind whatsoever arising out of” the six
grievances and the two complaints.2
2 The complete proposed release provision read as follows: “The parties, for
themselves, their relatives, heirs, successors, assigns, attorneys, agents and
representatives, release and forever discharge each other, and each other’s relatives, heirs,
successors, assigns, employees, attorneys, agents, officers, insurers, constituent
universities, and representatives from all complaints, grievances, actions, causes of
action, in law or equity, suits, administrative claims, attorneys’ fees, debts, liens,
demands, damages, injunctive relief, costs, expenses, agreements, promises, obligations
or liabilities of any kind whatsoever, whether known or unknown, which the parties may
have or claim against each other including but not limited to those arising out of the
following grievances: 03-2007-433, 03-2008-022, 03-2008-171, 03-2009-396, 03-2009-
395, 03-2008-491, and discrimination complaints 09-09-2088 (Dept of Education) and
550-2008-02335 (EEOC), including but not limited to, claims and/or charges filed with
the Department of Fair Employment and Housing, The CA Department of Industrial
Relations, the Equal Employment Opportunity Commission, Department of Education-
Office of Civil Rights, under the Americans with Disability Act, CA Fair Employment
6
Schmidt immediately sent a copy of the draft agreement to an attorney for review.
Three days later, on January 24, Schmidt sent a revised copy of the proposed settlement
agreement to Soares and Salinas, indicating that her attorney had suggested the changes
shown on the revision. Schmidt complained in her e-mail that the draft was “overly
broad and vague, and it require[d] her to waive future rights.” She further stated, “I have
been consistently clear that I will not waive future rights, nor will I waive rights
associated with laws that are not in dispute at this time. The agreement should only
address grievances and causes of action pending at this point in time.”
On February 2, Schmidt was notified that the hearings on grievances 395 and 396
were scheduled for February 17 and 26. On February 2 she also received a right-to-sue
letter from the EEOC.
On February 3, Soares asked Schmidt for her “final say” on the university’s
settlement offer, and she responded (to Soares and Salinas) that she “ha[d]n’t seen
anything in writing from the administration concerning [her] revisions.” She suggested
that “[o]ne way to move this along [would be] to settle the grievance regarding the Nix-
Baker investigation [grievance 396] simply by giving [her] the report” and “sever this
grievance” from the others, with the university “respond[ing] to the rest of [her]
revisions.”
By February 8, Schmidt was unable to find an attorney to represent her at the
upcoming grievance hearings, and the attorney who had reviewed the first draft
settlement agreement for her was out of town. That day, Soares communicated to her the
summary of a new settlement offer from the university. According to Soares, the
and Housing Act, Unruh Civil Rights Act, the Rehabilitation Act of 1973, Title VII 42
U.S.C. §2000e et seq., 42 U.S.C. §1983 and §1988, the Older Worker Benefit Protection
Act, Age Discrimination in Employment Act, the California Whistleblower Protection
Act and/or for discrimination, harassment, retaliation, injunctive relief, property damage,
negligence, medical costs, earning losses, legal costs, attorneys’ fees and any other legal
claims and/or theories.”
7
university was offering to remove the reprimand letter and associated reports from her
file and provide her with Nix-Baker’s investigative report in exchange for the elimination
of grievances 433, 022, 395, and 396. Soares told her that the university was still willing
to commit to the previous settlement agreement after she agreed to this new one.
Because grievances 433 and 022 had already “ ‘ended’ ” at the university level in
September 2009 when her union told her it was not going to appeal the decisions in those
grievances, Schmidt believed that the university’s new proposal would result in “only a
limited, partial settlement” that would eliminate the upcoming hearings on grievances
395 and 396 in exchange for removal of the reprimand from her file and provision of
Nix-Baker’s investigative report.
Schmidt told Soares she wanted to discuss the university’s new proposal with an
attorney, but she was able to speak by telephone with the attorney who had reviewed the
previous settlement proposal for her only briefly on February 10, and she did not have a
draft of the new proposal at that time. Following that conversation, Schmidt told Soares
she would not agree to include grievance 022 in the partial settlement because it was
beyond the scope of what the hearings on grievances 395 and 396 would address. The
university apparently found that acceptable, because Salinas represented in an e-mail that
since they had been unable to reach agreement on a global settlement, the university was
now offering to settle three grievances. Schmidt expressed some confusion about what
the university was now willing to do. In response, Salinas wrote in an e-mail as follows:
“This offer calls for resolution of grievances: 433, 395, and 396. In exchange for
removal of the Letter of Reprimand, Workplace Violence Committee Report from your
official personnel file and all department files. In addition, we would provide you with
the 2008 Investigation report from Leslie Nix Baker. The other grievances and suits that
you have will continue forward and will not be affected by this Settlement Agreement &
Release. [¶] We can continue to have discussions about a global settlement should we
8
reach agreement on these matters. We have made a global settlement offer and we would
be willing to continue to explore these options.”
Schmidt understood from this e-mail that the agreement was limited to dropping
only the three specific grievances with respect to the administrative process, and if she
still wanted to file a lawsuit she was free to do so. Still, Schmidt sought further
clarification that there would still be the opportunity to continue discussions about a
global settlement including monetary and nonmonetary offers. Salinas responded,
“YES.” He further asserted that while the reprimand “would no longer exist in [her]
personnel file or any other department file on campus,” he would still have a copy
because “there is still pending litigation.”
Understanding that the terms of the settlement did not preclude her from pursuing
litigation that could encompass all of her complaints, including those involving the
reprimand, Schmidt told Salinas to send her the document and she would be “happy to
sign it with these understandings and provisions.” Less than an hour later, Salinas e-
mailed her the proposed settlement agreement, saying, “We can sign this agreement right
now. Let’s get this resolved.”
Schmidt was unable to discuss the proposed agreement with her attorney or retain
another attorney to assist her before she signed the agreement the next day. She signed
the agreement in reliance on Salinas’s representation that “[t]he other grievances and
suits that [she had would] continue forward and [would] not be affected by this
Settlement Agreement & Release.”
The agreement the parties signed on February 11, 2010, recited the filing of
grievance 433 “alleging discrimination based on disability,” grievance 395 “regarding an
incident that occurred in April 2007 and differential treatment,” and grievance 396
“alleging on-going hostile environment.” The agreement provided that the university
would remove the letter of reprimand and the workplace violence complaint from
Schmidt’s file and provide Schmidt with a copy of the 2008 investigation report; in
9
exchange, Schmidt would immediately withdraw all three grievances with prejudice. The
agreement then provided as follows:
“5. The parties, for themselves, their relatives, heirs, successors, assigns,
attorneys, agents and representatives, release and forever discharge each other, and each
other’s relatives, heirs, successors, assigns, employees, attorneys, agents, officers,
insurers, constituent universities, and representatives from all complaints, grievances,
actions, causes of action, in law or equity, suits, administrative claims, attorneys’ fees,
debts, liens, demands, damages, injunctive relief, costs, expenses, agreements, promises,
obligations or liabilities of any kind whatsoever, which the parties may have or claim
against each other arising out of the events, facts, claims and circumstances surrounding
the following grievances: 03-2007-433, 03-2009-395, 03-2009-396, including but not
limited to, claims and/or charges filed with the Department of Fair Employment and
Housing, The CA Department of Industrial Relations, the Equal Employment
Opportunity Commission, Department of Education-Office of Civil Rights, under the
Americans with Disability Act, CA Fair Employment and Housing Act, Unruh Civil
Rights Act, the Rehabilitation Act of 1973, Title VII 42 U.S.C. §2000e et seq., 42 U.S.C.
§983 and §1988, the Older Worker Benefit Protection Act, Age Discrimination in
Employment Act, the California Whistleblower Protection Act and/or for discrimination,
harassment, retaliation, injunctive relief, property damage, negligence, medical costs,
earning losses, legal costs, attorneys’ fees and any other legal claims and/or theories.
“6. This Agreement pertains to the events, facts, claims and circumstances
surrounding the following grievances: 03-2007-433, 03-2009-395, and 03-2009-396
only. Any and all other grievances, suits or claims that Employee is currently pursuing
shall not be affected by the execution of this Agreement.”
The agreement included an integration clause, as follows: “This Agreement
contains the sole and entire agreement and understanding of the parties with respect to the
10
entire subject matter hereof, and supersedes any and all prior discussion, negotiations,
commitments and understandings.”
In April 2010, a little over two months after the parties signed the settlement
agreement, Schmidt commenced this action by filing a complaint for damages against the
university, Nix-Baker, Dwyre, and two others. She subsequently filed a 70-page first
amended complaint (not including attachments), which is the operative pleading for our
purposes, in which she alleged causes of action for discrimination, harassment,
retaliation, and other theories. The events alleged in her complaint spanned from March
2000 through the present (the date of filing). With respect to the February 2010
settlement agreement, Schmidt alleged that it was merely “an agreement to withdraw two
of the three pending formal grievances in exchange for receiving the 2008 investigative
report and removal of the November 2007 Report and Reprimand from [her] personnel
file.”
In their answer to the first amended complaint, defendants alleged as an
affirmative defense that by means of the February 2010 settlement agreement Schmidt
had released them from all liability to her “relating to, among other things, the claims
alleged in her complaint.”
In June 2011, defendants moved for summary judgment (or summary
adjudication) on the ground that Schmidt’s action was barred by the February 2010
settlement agreement.3 Defendants argued that the agreement “specifically releases
defendants from claims arising from all facts, events, and circumstances surrounding the
three grievances Schmidt filed: the same facts, events, and circumstances on which she
3 As an alternate basis for summary adjudication of Schmidt’s fifth cause of action,
brought under the California Whistleblower Protection Act (Gov. Code, § 8547 et seq.),
defendants asserted there was no evidence Schmidt exhausted her administrative
remedies. We discuss this aspect of defendants’ motion in section III of the Discussion,
infra.
11
bases her causes of action in this suit.” Anticipating Schmidt’s response to the motion,
defendants also argued that the parol evidence Schmidt would seek to introduce regarding
the negotiations that led to the settlement agreement was “improper and irrelevant”
because Schmidt was going to try to use that evidence to advance an interpretation of the
settlement agreement that “contradicts [its] plain language.”
In opposing the summary judgment motion, Schmidt argued the settlement
agreement was void and the release provision was unenforceable due to mistake
(“misapprehension”) or lack of mutual assent based on fraud.
On August 26, 2011, the trial court granted the motion for summary judgment. A
week later, Schmidt moved for reconsideration, claiming (among other things) that in
recently reviewing documents defendants had produced only 11 days before her
opposition to the summary judgment motion was due, she had discovered admissions by
Salinas and others that the settlement agreement “was by no means the end.” In
particular, Schmidt produced an e-mail Salinas wrote on the day the agreement was
signed, in which he told the others that the university had “a signed settlement agreement
from . . . Schmidt resolving three (3) of her grievances,” but they “were unable to reach a
global settlement after over a week of negotiations. Initially, [Schmidt] had a total of
seven (7) grievances and a complaint filed with the EEOC. Five of those grievances have
been resolved and/or withdrawn. We still have to deal with Professor Schmidt’s other
issues. This is by no means the end.” According to Schmidt, this evidence showed that
Salinas and the others had committed perjury in their depositions in the case.
On October 14, the trial court granted the motion for reconsideration, but on
reconsideration affirmed its earlier ruling granting summary judgment. The court
concluded that the February 2010 settlement agreement was “unambiguous on its face
and, therefore, parol evidence is inadmissible to interpret it.” The court further concluded
that the causes of action alleged in the first amended complaint were “encompassed
12
within the claims and causes of action released by [Schmidt] in the . . . Settlement
Agreement.”
The court entered judgment against Schmidt on October 26, 2011. Schmidt timely
appealed.
DISCUSSION
I
Interpretation Of The 2010 Settlement Agreement
Schmidt’s primary contention on appeal is that the trial court erred in construing
the 2010 settlement agreement as encompassing the claims in the present action. She
contends that when the extrinsic evidence she offered of the negotiations leading up to
the settlement agreement are taken into consideration, “the release provisions of the
settlement agreement may be reasonably interpreted as a limited release that did not
affect [her] ability to pursue her EEOC complaint, which resulted in this lawsuit.” As we
will explain, we disagree.
To the extent Schmidt first claims the trial court erred in “refusing to provisionally
consider [the] extrinsic evidence [she] offered . . . to demonstrate a latent ambiguity in
the [settlement agreement],” we need not resolve this claim of error because “[w]e
independently review an order granting summary judgment.” (Lackner v. North (2006)
135 Cal. App. 4th 1188, 1196.) Thus, irrespective of what the trial court did with respect
to the extrinsic evidence in deciding to grant summary judgment, we will consider that
evidence in accordance with applicable legal principles in reviewing the trial court’s
ultimate decision.
“The decision whether to admit parol evidence involves a two-step process. First,
the court provisionally receives (without actually admitting) all credible evidence
concerning the parties’ intentions to determine ‘ambiguity,’ i.e., whether the language is
‘reasonably susceptible’ to the interpretation urged by a party. If in light of the extrinsic
evidence the court decides the language is ‘reasonably susceptible’ to the interpretation
13
urged, the extrinsic evidence is then admitted to aid in the second step--interpreting the
contract.” (Winet v. Price (1992) 4 Cal. App. 4th 1159, 1165.) Following these rules, we
will consider the extrinsic evidence Schmidt offered in opposition to the motion for
summary judgment in determining whether the 2010 settlement agreement is reasonably
susceptible to the interpretation urged by Schmidt.
As Schmidt acknowledges, paragraph 5 of the settlement agreement releases the
university from all claims whatsoever “arising out of the events, facts, . . . and
circumstances surrounding” grievances 433, 395, and 396, including any charge filed
with the EEOC for discrimination, harassment, and retaliation. Significantly, Schmidt
concedes that, “read in isolation, the broad language of paragraph 5 would foreclose the
present lawsuit.” Thus, she concedes that all of the claims at issue in the present action
arise out of the events, facts, and circumstances surrounding grievances 433, 395, and
396. Her contention is that this broad release language from paragraph 5 of the
agreement must be read in conjunction with the “equally broad” language of paragraph 6,
the second sentence of which provides that “[a]ny and all other grievances, suits or
claims that Employee is currently pursuing shall not be affected by the execution of this
Agreement.”
According to Schmidt, while she argued to the trial court that these two paragraphs
were “inherently contradictory,” she claims to now believe “that the two provisions can
be largely reconciled.” In her view, “If paragraph 5 is construed as an all-encompassing
general release, . . . the second sentence of paragraph 6 is left meaningless.” On the other
hand, if the second sentence of paragraph 6 is understood as “carv[ing] out an exception
to the broad language of the release contained in paragraph 5, effectively exempting the
other claims [Schmidt] was pursuing from the scope of the release,” “[t]his interpretation
gives meaning to both paragraphs 5 and 6 of the settlement, and is entirely consistent
with the intent of the parties as expressed in Salinas’ email and Schmidt’s declaration.”
Under Schmidt’s interpretation of the agreement, “the parties intended that [Schmidt]
14
release only three administrative grievances, leaving her free to pursue her remaining
grievances as well as the EEOC and DOE discrimination complaints, and any resulting
civil suit.” Relying on the extrinsic evidence, she contends that “for whatever reason,
whether by poor drafting, time demands or by demand -- [Salinas] took boilerplate
language for a general release of all claims, and tried, rather clumsily, to engraft that
language into an agreement that the parties all intended to result in a very limited release
of three administrative grievances.”
Although her effort is valiant, Schmidt ultimately has to admit that her
interpretation of the settlement agreement does not actually reconcile all of the provisions
of paragraph 5 and paragraph 6. Indeed, she concedes that her reading of the agreement
“negates some of the general release language from paragraph 5.” In her view, however,
“that is a necessary consequence when providing that the excepted grievances, suits and
claims ‘shall not be affected by the execution of this Agreement.’ ”
As we see it, Schmidt’s interpretive efforts do more than negate “some” of the
general release language from paragraph 5. Instead, Schmidt’s interpretation of the
agreement almost entirely guts that paragraph. According to Schmidt’s construction, the
broad release language in paragraph 5, when read in conjunction with paragraph 6,
accomplishes only “a very limited release of three administrative grievances.” For that to
be true, however, we would have to read paragraph 5 as though most of the language in
that paragraph were not there, as follows:
“The parties, for themselves, their relatives, heirs, successors, assigns, attorneys,
agents and representatives, release and forever discharge each other, and each other’s
relatives, heirs, successors, assigns, employees, attorneys, agents, officers, insurers,
constituent universities, and representatives from all complaints, grievances, actions,
causes of action, in law or equity, suits, administrative claims, attorneys’ fees, debts,
liens, demands, damages, injunctive relief, costs, expenses, agreements, promises,
obligations or liabilities of any kind whatsoever, which the parties may have or claim
15
against each other arising out of the events, facts, claims and circumstances surrounding
the following grievances: 03-2007-433, 03-2009-395, 03-2009-396, including but not
limited to, claims and/or charges filed with the Department of Fair Employment and
Housing, The CA Department of Industrial Relations, the Equal Employment
Opportunity Commission, Department of Education-Office of Civil Rights, under the
Americans with Disability Act, CA Fair Employment and Housing Act, Unruh Civil
Rights Act, the Rehabilitation Act of 1973, Title VII 42 U.S.C. §2000e et seq., 42 U.S.C.
§1983 and §1988, the Older Worker Benefit Protection Act, Age Discrimination in
Employment Act, the California Whistleblower Protection Act and/or for discrimination,
harassment, retaliation, injunctive relief, property damage, negligence, medical costs,
earning losses, legal costs, attorneys’ fees and any other legal claims and/or theories.”
We cannot accept a construction of the release language in the 2010 settlement
agreement that requires us to ignore the greater part of that language. Furthermore, we
need not do so when there is an alternate interpretation of the release language that does
not require such wholesale jettisoning of the agreement’s provisions. That alternate
interpretation is this: Paragraph 5 releases the university from all claims whatsoever
“arising out of the events, facts, . . . and circumstances surrounding” grievances 433, 395,
and 396. As Schmidt admits, this “broad language” encompasses the present lawsuit.
Paragraph 6 then confirms that the settlement agreement “pertains to the events, facts,
claims and circumstances surrounding the following grievances: 03-2007-433, 03-2009-
395, and 03-2009-396 only” and “[a]ny and all other grievances, suits or claims that
Employee is currently pursuing shall not be affected by the execution of this Agreement.”
The first sentence of paragraph 6 thus confirms that the broad release contained in
paragraph 5 encompasses only claims “arising out of the events, facts, . . . and
circumstances surrounding” grievances 433, 395, and 396. The second sentence of
paragraph 6 then confirms that the settlement agreement does not affect “[a]ny and all
other grievances, suits or claims that [Schmidt was] pursuing” when she executed the
16
agreement, i.e., any and all grievances, suits or claims that Schmidt was pursuing at the
time other than those “arising out of the events, facts, . . . and circumstances
surrounding” grievances 433, 395, and 396.
Read in this manner, the second sentence of paragraph 6 is not “meaningless,” as
Schmidt contends. Rather, paragraph 6 operates as a whole to confirm what claims
survive the broad release language in paragraph 5. Reading the agreement in this
manner, we honor the rules of contract interpretation by giving meaning to all of the
agreement’s provisions -- something Schmidt’s interpretation of the agreement does not
do. (See Heidlebaugh v. Miller (1954) 126 Cal. App. 2d 35, 38 [“ ‘The court will if
possible give effect to all parts of the instrument and an interpretation which gives a
reasonable meaning to all its provisions will be preferred to one which leaves a portion of
the writing useless or inexplicable’ ”].)
To the extent this construction of the agreement may not be entirely reconcilable
with the extrinsic evidence of the negotiations that led to the agreement, any such
inconsistency is of no legal significance at this point because, as we have explained,
extrinsic evidence is admissible to aid in the interpretation of the agreement only if the
language of the agreement is reasonably susceptible to the interpretation the proponent of
the evidence advances. (Winet v. Price, supra, 4 Cal.App.4th at p. 1165.) Here, we have
concluded that the language of the settlement agreement is not reasonably susceptible to
the interpretation Schmidt offers -- even though we have provisionally considered
Schmidt’s extrinsic evidence in analyzing the initial question of ambiguity. Given that
conclusion, the extrinsic evidence is ultimately not admissible here and therefore any
inconsistency suggested by that evidence cannot affect our interpretation of the
agreement.
For the foregoing reasons, we find no error in the trial court’s interpretation of the
2010 settlement agreement with respect to its effect on Schmidt’s claims in this action.
17
II
Fraud
In the trial court, citing Frusetta v. Hauben (1990) 217 Cal. App. 3d 551, Schmidt
argued -- albeit in an abbreviated manner -- that the extrinsic evidence she offered raised
a triable issue of fact as to fraud.4 She renews that argument in somewhat greater detail
on appeal. Specifically, she contends there is a triable issue of fact as to the validity of
the settlement agreement based on false representations Salinas made to her in the
negotiations leading up to the signing of the agreement. For their part, defendants
contend there is no evidence the university made a promise without the intent to perform
it and any reliance by Schmidt on promises Salinas made to her was unjustifiable as a
matter of law.5 For the reasons that follow, we agree with Schmidt.
At the outset, we observe that to the extent both sides discuss this issue as though
Schmidt were asserting fraud in the nature of a “false promise” -- that is, “[a] promise
made without any intention to perform” -- they are mistaken. The gist of Schmidt’s fraud
claim is that Salinas “misled her concerning the scope and effect of the settlement
agreement he drafted,” specifically, the scope and effect of the release language in the
agreement. Such a claim does not invoke principles of promissory fraud; although there
was valuable consideration for the release, the release that Schmidt gave the university
4 Schmidt’s trial court argument referred to “fraud in the factum,” but that concept
does not apply here. Fraud in the factum -- also referred to as fraud in the execution or
inception of a contract -- occurs when the signer is deceived as to the nature of what he or
she is signing, and the signer does not know that he or she is entering into a contract.
(See Frusetta v. Hauben, supra, 217 Cal.App.3d at p. 556; Rosenthal v. Great Western
Fin. Securities Corp. (1996) 14 Cal. 4th 394, 415.) Schmidt’s claim of fraud here is
properly characterized as fraud in the inducement.
5 To the extent defendants contend Schmidt “does not challenge the validity of the
Agreement,” that contention is plainly wrong. Schmidt specifically contends the
extrinsic evidence she offered “creates a triable issue of fact as to the validity of the
settlement agreement.”
18
did not require the university to do anything or refrain from doing anything in the future,
and thus Salinas cannot be understood to have misled Schmidt about what the university
would or would not do.
Rather than involving promissory fraud, Schmidt’s claim of fraud here invokes a
long line of cases involving fraudulent inducement to sign an overly broad release.
Frusetta v. Hauben, supra, 217 Cal.App.3d at page 551 -- the case Schmidt cited in the
trial court in support of her claim of fraud -- falls within that line of cases. As the court
in Frusetta explained, “The California Supreme Court, in Casey v. Proctor (1963) 59
Cal. 2d 97 [28 Cal. Rptr. 307, 378 P.2d 579], stated, ‘It has often been held that if the
releaser was under a misapprehension, not due to his own neglect, as to the nature and
scope of the release, and if this misapprehension was induced by the misconduct of the
releasee, then the release, regardless of how comprehensively worded, is binding only to
the extent actually intended by the releaser.’ ” (Frusetta, at p. 557.)
“[A] release because of . . . deception practiced upon the claimant must be
construed as a settlement of those matters only as to which the minds of the parties met,
and may not be considered to be in satisfaction of anything not consented to by the
plaintiff. . . . [¶] [I]n any case it is for the trier of the facts to determine what the plaintiff
understood was covered by the writing and whether his understanding different from the
writing was induced by the defendant. If a misconception be found and that the
defendant was responsible therefor, the contract insofar as it purports to release claims
other than those understood by the plaintiff to be included, is ineffective to that extent,
and rescission and tender as to the excluded items are unnecessary. . . . [¶] It is the
province of the jury to determine whether the circumstances furnished the opportunity for
overreaching, whether the defendant or his agent took advantage of it, and whether the
plaintiff was thereby misled.” (Jordan v. Guerra (1943) 23 Cal. 2d 469, 475-476.)
Here, viewing the evidence in the light most favorable to Schmidt (as we must do)
(Lackner v. North, supra,135 Cal.App.4th at p. 1196), we conclude there is a triable issue
19
of fact as to whether the university’s representative, Salinas, was responsible for
Schmidt’s failure to understand that the broad release language in the settlement
agreement Salinas drafted did far more than release the university from the three
grievances specifically mentioned in the agreement.
As we have previously explained, on January 21, 2010, Salinas, in his capacity as
director of labor relations at the university, transmitted a written settlement offer to
Schmidt through her union representative, Soares, that specifically proposed to resolve all
six grievances Schmidt had filed with the university, as well as the complaints she had
filed with the Department of Education and the EEOC, in exchange for $7,244,
restoration of 15 days of sick leave, removal of the letter of reprimand from her file, a
copy of Nix-Baker’s investigative report, relief from teaching course 680, and sensitivity
training within the college of behavioral & social sciences. The draft global settlement
agreement included a broadly worded release provision under which both sides released
“all . . . liabilities of any kind whatsoever arising out of” the six grievances and the two
complaints. Schmidt was able to have that draft reviewed by an attorney, who proposed
various revisions to it, and Schmidt transmitted the proposed revisions back to Salinas a
few days later. In sending the agreement back to Salinas, Schmidt communicated that his
draft was “overly broad and vague” and she wanted the agreement to “only address
grievances and causes of action pending at this point in time.”
On February 2, 2010, more than a week after she had returned the proposed
agreement to Salinas, without having heard anything from him, Schmidt learned that the
hearings on her most recent grievances (395 and 396) had been scheduled for
February 17 and 26 -- about two and three weeks in the future, respectively. At the same
time, she also received her right-to-sue letter from the EEOC, which gave her 90 days to
commence a civil action against the university. The right-to-sue letter was dated
January 26, 2010, and showed that it had been copied to the university. Schmidt assumed
that Salinas was aware of the right-to-sue letter in the negotiations that followed.
20
On February 3, Soares asked Schmidt for her “final say” on the university’s
settlement offer, and she responded to Soares and Salinas that she “ha[d]n’t seen anything
in writing from the administration concerning [her] revisions” to the global settlement
agreement. To make some progress, she suggested narrowing the agreement to cover
only grievance 396, which would be resolved by giving her a copy of Nix-Baker’s
investigative report.
Five more days passed. Finally, at 10:50 a.m. on the morning of February 8,
Soares sent Schmidt an e-mail (copied to Salinas) with a summary of a new, limited
settlement offer from the university. According to Soares, the university was willing to
remove the reprimand letter and associated reports from her file and provide her with
Nix-Baker’s investigative report in exchange for “elimination of your grievances ending
in 395, 396, 433, and 022.” Soares told her the university was still willing to commit to
the previous global settlement agreement after she agreed to this new one. He reminded
her that “[t]ime [wa]s of the essence since [she] ha[d] one of [her] hearings for
[grievances] 395/396 on Feb. 17th.”
Schmidt told Soares she wanted to discuss the university’s new proposal with an
attorney, but she was able to speak with the attorney who had reviewed the previous
global settlement proposal for her only briefly on February 10, and she did not have a
draft of the university’s new proposal at that time. Following that conversation, in an e-
mail at 10:15 a.m. on February 10, which was copied to Salinas, Schmidt told Soares that
she could accept “expunge[ment] of the reprimand letter and associated reports from all
files” and provision of the investigative report “[i]n exchange for eliminating grievances
395, 396, and 433.” She said she would not agree to include grievance 022 in the partial
settlement because “[g]rievance 022 is part of the full settlement of all claims and is not
related to grievance 395 or 396 for which we have hearings set up to resolve. Grievance
433 is related to the reprimand, and while it asks for a stop to the discrimination, it also
asks for removal of the reprimand, so I reluctantly accept elimination of it as well.”
21
Following this e-mail, there was confusion about what was to happen to the
remainder of the global settlement proposal. In an e-mail to Soares and Salinas at 2:39
p.m., Schmidt posed the following question directly to Salinas:
“[W]hat exactly is CSU offering? Is it:
“Option A: Accept the previous offer (global settlement) as is.
“Option B: Accept the new offer (settle 395, 396, 433 etc[.]) without any
opportunity for a final settlement including the monetary and non-monetary offers
available in the global settlement.
“Option C: Accept the new offer (settle 395, 396, 433 etc[.]) with the opportunity
for a final settlement including the monetary and non-monetary offers available in the
global settlement once I have reviewed the Leslie report and if I’m willing to accept the
global settlement terms.”
In response, in an e-mail at 3:15 p.m., Salinas wrote as follows: “This offer calls
for resolution of grievances: 433, 395, and 396. In exchange for removal of the Letter of
Reprimand, Workplace Violence Committee Report from your official personnel file and
all department files. In addition, we would provide you with the 2008 Investigation
report from Leslie Nix Baker. The other grievances and suits that you have will continue
forward and will not be affected by this Settlement Agreement & Release. [¶] We can
continue to have discussions about a global settlement should we reach agreement on
these matters. We have made a global settlement offer and we would be willing to
continue to explore these options.”
Schmidt understood from this e-mail that the agreement was limited to dropping
only the three specific grievances, and if she still wanted to file a lawsuit she was free to
do so. Still, she sought further clarification, asking Salinas in an e-mail at 3:35 p.m. if the
university was offering her “Option C,” which she characterized as encompassing
“resolution of grievances: 433, 395, and 396” along with the opportunity to continue
discussions about a global settlement including monetary and nonmonetary offers.
22
Salinas responded at 3:55 p.m., “YES.” He further asserted that while the reprimand
“would no longer exist in [her] personnel file or any other department file on campus,” he
would still have a copy because “there is still pending litigation.”
Understanding that the terms of the settlement did not preclude her from pursuing
litigation that could encompass all of her complaints, including those involving the
reprimand, Schmidt responded to Salinas at 4:03 p.m., saying, “Well then, yes! Send me
the document and I’m happy to sign it with these understandings and provisions.” Less
than an hour later, at 4:50 p.m., Salinas e-mailed her the proposed settlement agreement,
saying, “We can sign this agreement right now. Let’s get this resolved.”
Schmidt was unable to discuss the proposed agreement with her attorney or retain
another attorney to assist her before she signed the agreement the next day. She signed
the agreement in reliance on Salinas’s representation that “[t]he other grievances and
suits that [she had would] continue forward and [would] not be affected by this
Settlement Agreement & Release.”
The foregoing evidence is sufficient to raise a triable issue of fact as to whether
Salinas wrongfully induced Schmidt to sign the partial settlement agreement in which he
had included broad release language encompassing all claims whatsoever “arising out of
the events, facts, . . . and circumstances surrounding” grievances 433, 395, and 396, when
he knew that she believed, based on his representations to her, that the release was going
to encompass only resolution of the grievances themselves. There is evidence that
Salinas knew Schmidt was operating under time pressure, because the first hearing on her
most recent grievances was only a week away and because she had received her 90-day
right-to-sue letter from the EEOC, and the trier of fact could find that he deliberately
sought to take advantage of that pressure. (Recall his closing exhortation: “We can sign
this agreement right now. Let’s get this resolved.”) From the draft of the partial
settlement agreement Salinas ultimately provided, along with the earlier draft of the
global settlement agreement he had prepared, the trier of fact could also find that all
23
along Salinas intended to keep in the draft the broad release language regarding the
release of all claims whatsoever “arising out of the events, facts, . . . and circumstances
surrounding” the named grievances, but at the same time he harbored the intent to keep
this language in the agreement he was telling Schmidt that the partial settlement
agreement provided only “for resolution of grievances: 433, 395, and 396. . . . The other
grievances and suits that you have will continue forward and will not be affected by this
Settlement Agreement & Release.” (Italics added.) The trier of fact could reasonably
conclude that this statement was calculated to lead Schmidt to believe that only the three
grievances themselves were being resolved by the partial settlement -- particularly given
the narrow scope of the relief that was being offered: removal of the letter of reprimand
and provision of the investigative report. Indeed, it is particularly telling that at no time
in the exchange of e-mails that occurred on February 10, the day before the parties signed
the settlement agreement, did Salinas ever tell Schmidt that the partial settlement
agreement was going to include the broad release language contained in the previous
global settlement proposal with only slight modification. Instead, he represented, and
confirmed Schmidt’s understanding, that the partial settlement agreement would involve
only the resolution of grievances 433, 395, and 396, and in exchange all she was going to
get was the investigative report and removal of the reprimand from her file. He never
told her the partial agreement would also involve the more sweeping resolution of any
claims whatsoever arising out of the events, facts, and circumstances surrounding those
grievances, which would be sufficient to also preclude any lawsuit that she might seek to
bring based on the right-to-sue letter she had recently received.
To the extent defendants contend Schmidt “read and underst[oo]d the Agreement
when she signed it,” the evidence they cite consists only of Schmidt’s admission that she
read the agreement before she signed it and “believe[d]” she understood it. This evidence
certainly does not support the suggestion that Schmidt’s understanding of the agreement
24
when she signed it was consistent with our construction of the agreement now, four years
later.
To the extent defendants contend Schmidt “represented to Salinas and . . . Soares
[that] she had reviewed a draft of the Agreement ‘with counsel,’ ” defendants are
mistaken. From the e-mail chain on February 10, 2010, it clearly appears that all Schmidt
had reviewed “with counsel” as of 10:15 that morning, when she made that statement,
was Soares’s summary of the terms of the university’s new offer, which he had sent to
her two days earlier. It was not until nearly 5:00 that evening that Salinas finally
provided Schmidt with a draft of the new partial settlement agreement, only after Schmidt
had agreed to sign it based on her understanding (confirmed by Salinas) that it would
encompass only the “resolution of grievances: 433, 395, and 396.”
Finally to the extent defendants rely on Rosenthal v. Great Western Fin. Securities
Corp., supra, 14 Cal.4th at page 394, that reliance is misplaced because Rosenthal
involved a claim of fraud in the execution, which is distinguishable from a claim of fraud
in the inducement. (See id. at pp. 402, 415.) Defendants fail to show that the principles
articulated in Rosenthal applicable to the former type of fraud can be rightfully applied to
the latter fraud at issue here. In the absence of such a showing, we are guided by the
principles articulated in Frusetta, Casey, and Jordan.
Under those cases, on the evidence here, it is for the trier of fact to decide whether
the circumstances furnished the opportunity for overreaching by the university, whether
the university or its agent took advantage of that opportunity, and whether Schmidt was
thereby misled. (Jordan v. Guerra, supra, 23 Cal.2d at p. 476.) If Schmidt prevails on
this claim of fraudulent inducement, then the release provisions in the 2010 settlement
agreement are binding only to the extent Schmidt actually intended (Frusetta v. Hauben,
supra, 217 Cal.App.3d at p. 557), and under that circumstance the release provisions
would not bar this action.
25
By the foregoing, we do not intend to suggest that a finding of fraudulent
inducement is a foregone conclusion here. Depending on all of the evidence that is
ultimately presented, a trier of fact could conclude that Salinas did not intentionally
mislead Schmidt as to the scope of the release in the proposed agreement. As we have
noted, Salinas told Schmidt the “suits that you have will continue forward and will not be
affected by this Settlement Agreement & Release.” (Italics added.) A trier of fact could
find that because Schmidt had not yet filed the present lawsuit, she did not “have” this
suit at the time she signed the settlement agreement, and thus there was no
misrepresentation. It would also be possible for a trier of fact to find that Salinas simply
did not understand the legal import of the release language, and thus did not intend to
mislead Schmidt or misrepresent the effect of the proposed agreement.
“The elements of fraud are (a) a misrepresentation (false representation,
concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to
induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v.
Oakshade Town Center (2005) 135 Cal. App. 4th 289, 294.) “Fraud in the inducement is a
subset of the tort of fraud.” (Ibid.) Fraud in the inducement occurs when the promisor
knows what she is signing but her consent is induced by fraud. (Id. at pp. 294-295.)
Mutual assent is present and a contract is formed, but the contract is voidable by virtue of
the fraud. (Id. at p. 295.) Here, following a full presentation of the evidence at trial, it
could be determined that the elements for fraud in the inducement are not present. For
our purposes, however, it is sufficient to conclude that there is a triable issue of material
fact that precludes summary judgment.
III
Exhaustion Of Administrative Remedies
Under The California Whistleblower Protection Act
As we have noted, as an alternate basis for summary adjudication of Schmidt’s
fifth cause of action for violation of the California Whistleblower Protection Act (Gov.
26
Code, § 8547 et seq.), defendants contended there was no evidence Schmidt exhausted
her administrative remedies. The trial court did not reach this argument because it
granted summary judgment based on the 2010 settlement agreement. Having concluded
that the trial court erred in that ruling, we must now resolve this one remaining issue:
namely, can part of the summary judgment -- specifically, summary adjudication of the
fifth cause of action -- be upheld based on Schmidt’s failure to exhaust her administrative
remedies? We conclude it cannot be because of the insufficiency of the record on appeal.
Subdivision (a) of Government Code section 8547.12 provides as follows: “A
California State University employee, including an officer or faculty member, or
applicant for employment may file a written complaint with his or her supervisor or
manager, or with any other university officer designated for that purpose by the trustees,
alleging actual or attempted acts of reprisal, retaliation, threats, coercion, or similar
improper acts for having made a protected disclosure, together with a sworn statement
that the contents of the written complaint are true, or are believed by the affiant to be
true, under penalty of perjury. The complaint shall be filed within 12 months of the most
recent act of reprisal complained about.” Subdivision (c) of the statute provides in
pertinent part that “any person who intentionally engages in acts of reprisal, retaliation,
threats, coercion, or similar acts against a university employee, including an officer or
faculty member, or applicant for employment for having made a protected disclosure
shall be liable in an action for damages brought against him or her by the injured
party. . . . However, any action for damages shall not be available to the injured party
unless the injured party has first filed a complaint with the university officer identified
pursuant to subdivision (a), and the university has failed to reach a decision regarding
that complaint within the time limits established for that purpose by the trustees. Nothing
in this section is intended to prohibit the injured party from seeking a remedy if the
university has not satisfactorily addressed the complaint within 18 months.”
27
In moving for summary adjudication on the fifth cause of action based on failure
to exhaust administrative remedies, defendants asserted there was no “evidence in this
case that, within the time period required by Government Code section 8547.12,
[Schmidt] filed a written complaint with a University official supported by a sworn
statement that the contents of the written complaint [were] true, or [were] believed by
plaintiff Schmidt to be true, under penalty of perjury.” The foregoing argument,
contained in their memorandum of points and authorities, did not reference their separate
statement of facts, or any other document for that matter. Thus, looking at the
memorandum alone, we are at a loss to know the evidentiary basis for defendants’
assertion. (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 855 [a defendant
moving for summary judgment may “present evidence that the plaintiff does not possess,
and cannot reasonably obtain, needed evidence -- as through admissions by the plaintiff
following extensive discovery to the effect that he has discovered nothing. But . . . the
defendant must indeed present ‘evidence’ ”], fn. omitted.)
Schmidt did not include defendants’ separate statement in her appendix, and
defendants did not submit their own appendix to remedy that omission, so we cannot
directly reference that statement ourselves. Schmidt’s separate statement does show that
defendants’ undisputed fact No. 65 addressed this point by asserting there was no
evidence that Schmidt filed the complaint required by Government Code section 8547.12
within the time period required by that statute. According to Schmidt’s separate
statement, the supporting evidence defendants cited for their fact No. 65 was their
“Request for Judicial Notice.” Unfortunately, Schmidt did not include defendants’
request for judicial notice in her appendix, and (again) defendants did not remedy that
omission by including it within an appendix of their own. Thus, based on the record
before us, we are unable to verify whether defendants offered any evidence to support
their factual assertion that Schmidt never filed the complaint required by Government
Code section 8547.12 within the time period required by that statute.
28
Absent verification that defendants produced evidence sufficient to support their
motion for summary adjudication of the fifth cause of action based on failure to exhaust
administrative remedies, we cannot affirm the trial court’s resolution of that cause of
action on this alternate ground.
DISPOSITION
The judgment is reversed, and the case is remanded to the trial court with
directions to vacate its order granting defendants’ motion for summary judgment and
enter a new order denying defendants’ motion for summary judgment or summary
adjudication. Schmidt shall recover her costs on appeal. (Cal. Rules of Court, rule
8.276(a)(2).)
ROBIE , Acting P. J.
We concur:
BUTZ , J.
MAURO , J.
29