Ravella

Filed 10/11/06 Ravella CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

I. INTRODUCTION

Plaintiff Lance L. Ravella is a former employee of the Osborne division of defendant The McGraw-Hill Companies, Inc. (McGraw-Hill). Ravella resigned from McGraw-Hill and took early retirement, claiming he had been subjected to a campaign of harassment from a superior. Ravella filed an action for wrongful termination, which proceeded to trial on claims for breach of an implied employment contract and intentional infliction of emotional distress. Following the close of Ravella’s case, nonsuit was granted on his claim for punitive damages. The jury found for Ravella on both of his causes of action, but the trial court subsequently granted judgment notwithstanding the verdict (JNOV) on his claim for intentional infliction of emotional distress.

Ravella challenges the adverse rulings on his claims for punitive damages and intentional infliction of emotional distress. He also takes issue with the manner in which the trial court calculated prejudgment interest. In its cross-appeal, McGraw-Hill contends that the claim for breach of contract was preempted by a federal statute and precluded by a novation and that any award of prejudgment interest was improper. We affirm the trial court’s rulings on the merits of Ravella’s claims, but we vacate its award of prejudgment interest and remand for recalculation.

II. BACKGROUND

Ravella became employed by McGraw-Hill as a computer designer in July 1988. He received favorable annual performance reviews for the first nine years, until Stephen Emry became Ravella’s superior in 1997. Beginning in that year, Emry began what Ravella characterizes as a “sophisticated and multi-faceted vendetta to embarrass and intimidate” him, which Ravella came to believe was a prologue to his termination. Instead, Ravella preempted any termination by announcing that he would take early retirement. In October 1998, having completed the 10 years necessary to qualify for pension benefits, Ravella formally retired.

In February 1999, Ravella filed a complaint in superior court alleging age discrimination, defamation, breach of an implied employment agreement, termination for the purpose of avoiding benefits under the federal Employment Retirement Income Security Act (ERISA) (29 U.S.C. § 1140 et seq.), intentional infliction of emotional distress, and other claims. Because he resigned, Ravella’s claims for wrongful termination were necessarily based on the theory of constructive discharge.

McGraw-Hill removed the case to federal court. In July 1999, the district judge remanded the action to state court after granting judgment on the pleadings as to all of Ravella’s federal claims, the three causes of action alleging age discrimination and termination to avoid ERISA responsibilities.

Ravella filed a first amended complaint in February 2000, asserting only claims for defamation, breach of an implied employment agreement, and intentional infliction of emotional distress. In response to McGraw-Hill’s demurrer, the trial court dismissed Ravella’s claim for intentional infliction of emotional distress without leave to amend on the ground that it was barred by the exclusive remedy provision of the workers’ compensation laws. Ravella’s remaining causes of action for breach of contract and defamation were dismissed after the granting of a later summary judgment motion in May 2001.

On appeal, this court reversed the trial court’s rulings on the causes of action for breach of implied contract and intentional infliction of emotional distress. (Ravella v. Osborne/McGraw-Hill Companies, Inc. (July 24, 2002, A095708, A095762) [nonpub. opn.] (Ravella I).) With respect to the claim for intentional infliction of emotional distress,[1] we concluded that Ravella’s allegations of on-the-job harassment did not “appear to offer any reasonable possibility of an amendment to allege” acts outside the exclusive remedy provisions of workers’ compensation. On the other hand, we found that Ravella had alleged statements by Emry indicating a “willingness to use concealment and deception to inflict personal injury” on Ravella and noted that proof of “assaults and fraudulent concealment” would avoid the exclusive remedy. In addition, we found that, “[l]iberally construed,” the complaint could be read to allege “instances of deliberate fabrication of matters relevant to job evaluation and tenure” that might also avoid the exclusive remedy. Finally, we concluded that the complaint might be amended to allege “a purpose to entrap Ravella in situations leading to apparent failure” and harassment motivated by age discrimination, both of which would successfully avoid the exclusive remedy provisions.[2] We summed up our analysis by agreeing with the trial court that “the [existing] allegations . . . are insufficient to constitute a cause of action for intentional infliction of emotional distress,” but we reversed because, for the reasons stated ante, Ravella might have amended the complaint to make adequate allegations, had he been given a proper opportunity.

Trial began in March 2005. Ravella presented evidence demonstrating that, in general terms, his work had been respected at McGraw-Hill by both his supervisors and his colleagues until the arrival of Emry. Emry took a dim view of Ravella’s skills, was publicly critical of him, pressured Ravella’s immediate supervisor, Marcela Hancik, to give him a bad performance review, and treated Ravella in a demeaning manner.[3] Following the conclusion of Ravella’s case, the trial judge granted a nonsuit on his request for punitive damages, concluding that there was insufficient evidence that an officer, director or managing agent of McGraw-Hill was aware of the allegedly outrageous conduct, a prerequisite to the imposition of punitive damages on a corporation under Civil Code section 3294, subdivision (b).

The jury found for Ravella on his causes of action for intentional infliction of emotional distress and breach of contract, awarding damages of $61,750 and $119,000, respectively. Subsequently, the trial judge granted McGraw-Hill’s motion for JNOV on Ravella’s claim for intentional infliction of emotional distress, concluding that the claim was barred by the exclusive remedy provisions of workers’ compensation. The court awarded prejudgment interest to Ravella on the breach of contract damages, but it refused any interest accruing prior to filing of the complaint. (See Civ. Code, § 3287, subd. (b).) Both parties appealed from the judgment.

III. DISCUSSION

Ravella challenges the trial court’s grant of nonsuit on his claim for punitive damages and JNOV on his claim for intentional infliction of emotional distress. He also contends that the trial court should have awarded prejudgment interest under Civil Code section 3287, subdivision (a), which would have allowed an earlier commencement date for the calculation of interest. In its cross-appeal, McGraw-Hill responds that Ravella was not entitled to prejudgment interest at all. McGraw-Hill also argues that ERISA preempted Ravella’s breach of contract action and, alternatively, that any implied contract was subject to a novation barring Ravella’s claims.

A. Punitive Damages

Civil Code section 3294, subdivision (b), enacted in 1980, holds that a corporate employer is not liable for punitive damages resulting from the acts of an employee unless the acts were authorized or ratified by a corporate officer, director, or managing agent. Ratification requires, at a minimum, actual knowledge by the appropriate corporate official of the acts supporting punitive damages. (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 726.)

The statute does not define “managing agent.” The Supreme Court supplied a definition in White v. Ultramar, Inc. (1999) 21 Cal.4th 563 (White), holding that a managing agent for purposes of Civil Code section 3294 is a corporate employee “who exercise[s] substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.” (White, at pp. 566--567.) Such a person must be “more than a mere supervisory employee”; a corporate employee is not a managing agent merely because he or she has the power to hire and fire other employees. (Id. at pp. 573, 577.) The employee at issue in White supervised eight retail stores, constituting a “significant aspect” of the defendant’s business, had been delegated most, if not all, responsibility for running those stores by her superiors, and “exercised substantial discretionary authority over vital aspects of [the defendant’s] business” by “making significant decisions affecting both store and company policy.” (Id. at p. 577.) The court concluded that this was sufficient to satisfy section 3294, subdivision (b).

The burden is on the plaintiff to introduce evidence sufficient to support a finding that a ratifying corporate official qualifies as an officer, director, or managing agent. (Gelfo v. Lockheed Martin Corp. (2006) 140 Cal.App.4th 34, 63 (Gelfo).) In Gelfo, plaintiff claimed that the knowledge of a particular corporate supervisor, who did not testify at trial, could support punitive damages against the employer. Despite testimony by one employee that this supervisor was a corporate vice-president, the court affirmed a JNOV denying punitive damages, holding that plaintiff’s failure to introduce any evidence of the supervisor’s position in the corporate hierarchy or of his duties or authority precluded a finding of officer or managing agent. (Ibid.)

We independently review the trial court’s grant of a motion for nonsuit, guided by the same rules that govern the trial court. We will not sustain the judgment unless, interpreting the evidence most favorably to plaintiff’s case and most strongly against the defendant and resolving all presumptions, inferences and doubts in favor of the plaintiff, a judgment for the defendant is required as a matter of law. (Pinero v. Specialty Restaurants Corp. (2005) 130 Cal.App.4th 635, 639.)

Ravella cites several employees who, he contends, satisfied Civil Code section 3294, subdivision (b). Two of these employees, Brandon Nordin and Scott Rogers, bore job titles that could have identified them as corporate officers. Nordin, the general manager of the McGraw-Hill division that employed Ravella, was a vice-president and publisher, and Rogers was a vice-president.[4] Ravella also submitted deposition testimony from another high-ranking employee, Jeanne Bertelle, the director of human resources for McGraw-Hill. Although all three of these officials were aware of Ravella’s purported performance problems, there is no evidence that any of them was aware of the allegedly outrageous conduct, primarily by Emry, that supported Ravella’s claim for punitive damages. Accordingly, their conduct and knowledge could not support a claim for punitive damages under section 3294, subdivision (b). (College Hospital, Inc. v. Superior Court, supra, 8 Cal.4th at p. 726.)

Emry is the only potential managing agent identified by Ravella who was aware of the conduct supporting the claim for punitive damages.[5] Emry’s title was director of editing, design and production, and he managed two groups of employees within the Osborne division. Beyond this bare information, however, the record contains no evidence of Emry’s responsibilities and authority. We do not know how many employees Emry supervised, what his daily duties were, what policy-making functions he might have served, or where he was located on the McGraw-Hill organizational chart.[6] While it is certainly possible, based on his job title and his responsibility for “groups” of employees, that Emry was a managing agent of McGraw-Hill, no concrete evidence was presented from which the jury could have made such a finding. Consequently, as in Gelfo, there is insufficient evidence to support a finding that Emry was a managing agent of McGraw-Hill. Because Ravella failed to present substantial evidence that the acts underlying his claim for punitive damages were authorized or ratified by a corporate officer, director, or managing agent, the trial court properly granted a nonsuit on this claim.

B. Exclusive Remedy Provisions of Workers’ Compensation

“There are several essential conditions to an employer’s liability to an employee under the workers’ compensation law. [Citation.] Where those ‘conditions of compensation’ concur, the right to recover such compensation is generally the employee’s exclusive remedy against his or her employer.” (Gibbs v. American Airlines, Inc. (1999) 74 Cal.App.4th 1, 9--10, fn. omitted; Lab. Code, §§ 3600 & 3601, subd. (a).) The basis for the exclusive remedy rule is the “presumed ‘compensation bargain,’ pursuant to which the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.” (Shoemaker v. Myers (1990) 52 Cal.3d 1, 16.)

The courts have recognized, however, “that certain types of injurious employer misconduct remain outside this bargain. There are some instances in which, although the injury arose in the course of employment, the employer engaging in that conduct ‘ “stepped out of [its] proper role[]” ‘ or engaged in conduct of ‘ “questionable relationship to the employment.” ‘ [Citations.]” (Fermino v. Fedco, Inc. (1994) 7 Cal.4th 701, 708.) The Supreme Court articulated this principle most fully in Cole v. Fair Oaks Fire Protection Dist. (1987) 43 Cal.3d 148 (Cole). The complaint in Cole alleged that the employer took disciplinary action against the plaintiff on false pretexts because of his union activities. (Id. at p. 152.) Affirming a demurrer to a cause of action for intentional infliction of emotional distress, the court enunciated the following rule: “[W]hen the misconduct attributed to the employer is actions which are a normal part of the employment relationship, such as demotions, promotions, criticism of work practices, and frictions in negotiations as to grievances, an employee suffering emotional distress causing disability may not avoid the exclusive remedy provisions of the Labor Code by characterizing the employer’s decisions as manifestly unfair, outrageous, harassment, or intended to cause emotional disturbance resulting in disability.” (Cole, at p. 160.) Such misconduct “can be expected to occur with substantial frequency in the working environment. Some harassment by superiors when there is a clash of personality or values is not uncommon. Disciplinary hearings and demotions and friction in negotiations as to grievances are also an inherent part of the employment setting . . . .” (Id. at p. 161.)

While Cole held that performance-related harassment by supervisors is a normal risk of employment, courts have found that emotional distress caused by such conduct as spoliation of evidence (Gomez v. Aquistapace (1996) 50 Cal.App.4th 740, 751), physical disability-based discrimination (Fretland v. County of Humboldt (1999) 69 Cal.App.4th 1478, 1492), fraudulent misrepresentations made to induce employment (Lenk v. Total-Western, Inc. (2001) 89 Cal.App.4th 959, 972), false imprisonment committed by an employer against an employee (Fermino v. Fedco, Inc., supra, 7 Cal.4th at p. 723), and the broad dissemination of adverse performance criticism (Operating Engineers Local 3 v. Johnson (2003) 110 Cal.App.4th 180, 190 (Operating Engineers)) was outside the compensation bargain and therefore not subject to the exclusive remedy provisions of workers’ compensation.

“On an appeal from a JNOV, we ordinarily use the same standard the trial court used in granting the JNOV. We independently determine whether the record, viewed in the light most favorable to the verdict, contains any substantial evidence to support the verdict. If substantial evidence supports the verdict, the trial court erred in granting the JNOV and we reverse.” (Mason v. Lake Dolores Group (2004) 117 Cal.App.4th 822, 829.) Ravella claims that he demonstrated conduct outside the normal risks of employment by providing evidence of “fabrication, entrapment, and violation of privacy.”

Ravella’s claim of fabrication is based on evidence that Emry improperly blamed him for “causing the bad printing of the CorelDraw 8 book and other fabrications of incompetence,” including Emry’s ordering Hancik to issue a more critical performance review than she believed appropriate. Having reviewed the evidence, we conclude that Ravella demonstrated, at most, that he was the victim of the type of finger-pointing, blame-shifting, confusion about responsibility, and harsh judgments that, for better or worse, are a normal part of the employment relationship. As we noted in our original decision, citing Cole, supra, 43 Cal.3d at p. 161, Emry’s conduct constituted the type of “ ‘harassment by superiors’ resulting from ‘a clash of personality or values’ that is a common incident of the employment relationship.” (Ravella I, supra, A095708, A095762.) The evidence of “fabrication” cited by Ravella did not demonstrate any conduct beyond that found inadequate to avoid the exclusive remedy provisions in our prior decision.[7]

Ravella’s claim of entrapment is premised on Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, in which the plaintiff, suspected of malingering, was placed under surveillance by her employer’s workers’ compensation insurance carrier. An employee of the investigator feigned romantic interest in the plaintiff for the purpose of enticing her to go to Disneyland. There she was secretly filmed while engaging in various activities allegedly beyond her ordinary physical capabilities so as to create the impression that she was healthy. (Id. at pp. 620--621.)

Ravella’s claim is based generally on the fact that Emry told Hancik “to hunt [Ravella] down and kill him,” which she interpreted as meaning to “get rid of him.” Ravella contended that Hancik set out to implement this direction by training him on a new skill and then administering an impossibly difficult examination in the skill, which he would necessarily fail. This failure would then become grounds for his termination. The evidence shows that in his performance review covering 1997, Ravella was told that he was expected to learn the computer graphics skill known as “page layout” and “demonstrate the level of . . . performance required from others in [his] position.” Although Ravella claimed this program was devised to entrap him, his 1996 performance review, which occurred prior to Emry’s involvement, showed a similar goal, as did the prior year’s review. Ravella testified that Hancik later told him he would be required to pass a proficiency test in page layout. According to Ravella, the level of proficiency she told him he would be expected to achieve was “outrageous. No one was [performing at that level]. . . . Even the proficient.”[8] He testified that only two other people had taken the proficiency test. Both failed, and both had been terminated. In the end, however, Ravella never completed training in the page layout skill, and the scheduled test was postponed. It had not been administered by the time he announced his resignation, and he was never actually tested.

We agree with the trial judge that this evidence fails to demonstrate conduct that was not a “normal part of the employment relationship.” (Cole, supra, 43 Cal.3d at p. 160.) McGraw-Hill had intended for Ravella to learn the skill of page layout from at least 1996, well before Emry’s involvement in Ravella’s job performance. He was trained in that skill, and a plan was made for his skills to be tested. These activities are at the core of a normal employment relationship. Even if it could be argued that the imposition of an unrealistically high standard for the skill would have constituted “entrapment” outside the normal relationship, the entrapping test was never administered and the outrageous standard was never imposed. The factual basis for such a claim of entrapment was entirely absent.

Finally, Ravella’s evidence of invasion of privacy is based on evidence that (1) Emry used unspecified harsh language with Ravella that was overheard by another employee, Jean Butterfield, and made critical comments about Ravella to Butterfield; (2) Emry mentioned Ravella’s purported performance problems at a weekly editorial department meeting, attended by 12 people, apparently not including Ravella; and (3) Emry remarked to a colleague of Ravella’s, Mark Karmendi, that he wanted to get rid of Ravella.

While there is little doubt that Emry’s conduct showed poor judgment, we agree with the trial judge that it was not sufficiently extreme to exceed the bounds of the ordinary employment relationship. The case relied on by Ravella, Operating Engineers, featured a particularly humiliating personal reprimand administered in the employee’s presence at a managerial meeting, followed by distribution of the minutes of that meeting to a large group of employees. (Operating Engineers, supra, 110 Cal.App.4th at p. 184.) Even with conduct this intrusive, the court in Operating Engineers found the issue to be a “close question” and expressed “some discomfort” with its decision. (Id. at pp. 189, 191.) Accordingly, the court restricted its holding to “extreme” cases of dissemination of personal information to co-employees with no need to know. (Id. at p. 190.) Ravella’s evidence of a single discussion at a meeting of a dozen employees and private comments to two others does not rise to the level of such “extreme” conduct.

C. Prejudgment Interest

As damages under his breach of contract claim, Ravella sought the value of salary and nonsalary benefits he would have received had he not retired. Ravella’s expert witness calculated the damages by summing the salary and the cash value of the benefits that Ravella would have earned at McGraw-Hill had he not retired, then offsetting the wages actually earned by Ravella at other employment following his retirement. McGraw-Hill’s expert witness used a similar method to calculate the income forfeited by Ravella as a result of his retirement. However, instead of offsetting Ravella’s actual earnings in mitigation, McGraw-Hill’s expert postulated two scenarios under which Ravella regained full-time employment within four months after his retirement, resulting in nearly complete mitigation of the contract damages. The jury’s damages award essentially split the difference, awarding a figure roughly halfway between those urged by the parties.

In a posttrial motion to amend the judgment to include prejudgment interest, Ravella sought interest on the award of contract damages, calculated from the date the payments of salary and benefits would have been made. In opposing the motion, McGraw-Hill argued that prejudgment interest should not be awarded at all or, at most, that it should be calculated from the date of filing of the complaint because there were substantial factual issues associated with the award of damages. The trial judge awarded prejudgment interest, “omitting interest to amounts attributable to the time period prior to filing the complaint, items of non-cash compensation, and amounts that would have been withheld from his pay.” Both parties now contend this was error, consistent with the positions they took in the trial court.

Prejudgment interest is governed by Civil Code section 3287. The traditional rule, stated in section 3287, subdivision (a), allows an award of prejudgment interest if the plaintiff is entitled to recover damages that are “certain, or capable of being made certain by calculation” and the plaintiff’s right to recover those damages vested on a particular day. If the two conditions of subdivision (a) are satisfied, the interest is calculated from the date the payments became due. Section 3287, subdivision (b), added in 1967 (Stats. 1967, ch. 1230, § 1, p. 2997), supplements the traditional rule by permitting the recovery of prejudgment interest in a contract action even when the claim is unliquidated, but subdivision (b) restricts accrual of interest to the period after the filing of the complaint.

“[T]he policy underlying the requirement for prejudgment interest where the damages are deemed ‘certain’ or ‘capable of being made certain . . .’ (Civ. Code, § 3287) is that in situations where the defendant could have timely paid that amount and has thus deprived the plaintiff of the economic benefit of those funds, the defendant should therefore compensate with appropriate interest.” (Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948, 962 (Wisper Corp.).) Courts have given a “generally liberal construction of ‘certainty’ under section 3287.” (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 907 (Chesapeake Industries).)

In Mass v. Board of Education (1964) 61 Cal.2d 612 (Mass), the Supreme Court held that a wrongfully suspended teacher, entitled by statute to recover his full salary from the date of the suspension, could recover prejudgment interest under Civil Code section 3287, calculated from the date each salary payment became due. (Mass, at p. 624.) Since Mass, it has been accepted that “[a]mounts recoverable as wrongfully withheld payments of salary or pensions are damages within the meaning of [section 3287, subdivision (a)]. [Citations.] Interest is recoverable on each salary or pension payment from the date it fell due. [Citation.]” (Olson v. Cory (1983) 35 Cal.3d 390, 402; see similarly Currie v. Workers’ Comp. Appeals Bd. (2001) 24 Cal.4th 1109, 1115 [award of backpay under Lab. Code, § 132a entitled to interest calculated under Civ. Code, § 3287, subd. (a)].) The principle was reaffirmed most recently in Espinoza v. Classic Pizza, Inc. (2003) 114 Cal.App.4th 968, 975.

Given its purpose of compensating a plaintiff when damages are readily calculated, “Civil Code section 3287[, subdivision (a)] looks to the certainty of the damages suffered by the plaintiff, rather than to a defendant’s ultimate liability, in determining whether prejudgment interest is mandated.” (Wisper Corp., supra, 49 Cal.App.4th at p. 958.) Accordingly, the existence of a defendant’s offset against a liquidated damages award, even when the offset is unliquidated, does not preclude the allowance of prejudgment interest calculated under subdivision (a). (Coleman Engineering Co. v. North American Aviation, Inc. (1966) 65 Cal.2d 396, 409 (Coleman Engineering).) “If the rule were otherwise, a plaintiff might be encouraged to forego opportunities to mitigate damages so as not to jeopardize his right to prejudgment interest.” (Id. at p. 409; see similarly Wisper Corp., supra, 49 Cal.App.4th at p. 960 [a plaintiff’s right to prejudgment interest cannot be defeated by setting up an unliquidated counterclaim as an offset]; Chesapeake Industries, supra, 149 Cal.App.3d at p. 907 [same].)

As noted above, however, the plaintiff’s damages must be certain or capable of being certain to qualify under Civil Code section 3287, subdivision (a). Accordingly, interest under that subdivision is unavailable when “ ‘the amount of damage, as opposed to the determination of liability, “depends upon a judicial determination based upon conflicting evidence and is not ascertainable from truthful data supplied by the claimant and his debtor.” [Citations.]’ “ (Wisper Corp., supra, 49 Cal.App.4th at p. 960.) A tort action for negligent handling of checks, Wisper Corp. featured a substantial factual dispute regarding which checks were subject to recovery, and the plaintiff ultimately recovered only 25 percent of the amount it sought. As a result of the uncertainty surrounding the proper measure of damages, the court concluded that prejudgment interest was not available under subdivision (a). (Id. at p. 961; see also Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987) 195 Cal.App.3d 1032, 1073 [prejudgment interest under subdivision (a) unavailable in unlawful detainer action where reasonable rental value the subject of conflicting evidence].)

As unpaid salary and benefits, Ravella’s damages were presumptively subject to the rule of Mass. McGraw-Hill argues that interest under Civil Code section 3287, subdivision (a) was nonetheless inappropriate because there were factual disputes regarding the amount to which Ravella was entitled, citing Wisper Corp. and similar cases. While there was certainly a factual dispute surrounding damages, that dispute related almost exclusively to the parties’ mitigation calculations. There was little dispute about the manner in which Ravella’s backpay was to be calculated, despite the relative complexity of Ravella’s benefits package.[9] While it is true that McGraw-Hill was entitled to an offset of an uncertain, and disputed, amount as mitigation, it has long been held, as noted ante, that unliquidated offsets in mitigation do not, as a matter of policy, defeat an otherwise valid claim for prejudgment interest under section 3287, subdivision (a). (Coleman Engineering, supra, 65 Cal.2d at p. 409; Wisper Corp., supra, 49 Cal.App.4th at p. 960.) Accordingly, the trial court erred in ruling that Ravella’s prejudgment interest was to be calculated from the date of filing of the complaint.

Because we find that Ravella was entitled to an award of prejudgment interest under Civil Code section 3287, subdivision (a), we need not address McGraw-Hill’s claim on its cross-appeal that Ravella was not entitled to prejudgment interest at all, even under subdivision (b). We note, nonetheless, that the case relied on by McGraw-Hill in contending that an award of interest was improper, Chesapeake Industries, supra, 149 Cal.App.3d at p. 906, addresses the traditional rule predating the 1967 enactment of subdivision (b), at which time prejudgment interest was not permitted on an unliquidated contract claim. McGraw-Hill does not even attempt to demonstrate an abuse of discretion in awarding interest under subdivision (b).

We also find no legal support for the trial court’s refusal of interest on items of noncash compensation or amounts that would have been withheld from Ravella’s pay, unless, in the latter instance, those items actually and permanently reduced Ravella’s compensation.[10] McGraw-Hill claims that prejudgment interest is unavailable on the cash value of noncash benefits because interest “is only appropriate for dollar amounts upon which Ravella [w]ould have had [an] opportunity to earn interest.” The only support for the claim is cases holding, generally, that an award of prejudgment interest is intended to make the plaintiff whole. Given this purpose, however, it is clear that McGraw-Hill’s distinction between cash and noncash compensation has no legal significance. Ravella was deprived of the opportunity to take advantage of these noncash benefits in their original form by McGraw-Hill’s wrongful constructive discharge. In compensation, Ravella was awarded their cash value as damages. In effect, the cash value was substituted for the noncash benefits he was not permitted to enjoy as a result of McGraw-Hill’s wrong. Had Ravella been given that cash value at the time the benefits were due to be enjoyed, he would “have had [an] opportunity to earn interest” on it, just as he would on the cash compensation. Accordingly, for purposes of calculating prejudgment interest, there is no difference between cash and the cash value of noncash compensation.

D. ERISA Preemption

The California Supreme Court summarized the law underlying a claim of ERISA preemption in Betancourt v. Storke Housing Investors (2003) 31 Cal.4th 1157 (Betancourt): “ ‘ERISA is a comprehensive federal statutory scheme designed to promote the interests of employees and their beneficiaries in employee benefit plans.’ [Citations.] . . . ERISA’s preemption clause states, in pertinent part: ‘[T]he provisions of this subchapter . . . shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title. . . .’ (29 U.S.C. § 1144(a), italics added.) ‘The basic thrust of the pre-emption clause . . . was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans.’ [Citation.] In its 1983 decision in Shaw [v. Delta Air Lines, Inc. (1983) 463 U.S. 85], the high court pronounced that ‘[a] law “relates to” an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.’ [Citation.] . . . The high court has also held that ‘state laws providing alternative enforcement mechanisms also relate to ERISA plans, triggering pre-emption. See Ingersoll-Rand [Co. v. McClendon (1990) 498 U.S. 133 [(Ingersoll-Rand)]].’ [Citation.]” (Betancourt, at pp. 1163--1164, fns. omitted.)

In Ingersoll-Rand, the court held that a state-law wrongful termination claim based on the theory that the termination was motivated by an intent to prevent vesting of the plaintiff’s pension rights is preempted by ERISA because it “relates to” a plan covered by ERISA. (Ingersoll-Rand, supra, 498 U.S. at p. 140.)

McGraw-Hill relies largely on Ingersoll-Rand in contending that Ravella’s claim was preempted by ERISA. McGraw-Hill first argues that the claim is preempted because Ravella testified that, at the time he was being harassed, he believed one of Emry’s motives might be to frustrate the vesting of his pension benefits. Ravella’s counsel made clear, however, that evidence of the nearness of Ravella’s vesting date was intended to prove Ravella’s subjective mental state, not serve as a basis for liability. There was no attempt to prove that Emry actually intended to frustrate the vesting of benefits, nor did Ravella purport to assert a claim based on such an intent. To the contrary, it was clear from the evidence at trial that Emry harassed Ravella because he believed Ravella was incompetent, not out of any concern for the vesting of his pension, and Ravella’s claim, as presented to the jury, did not mention his pension. The claim did not “relate to” Ravella’s pension plan merely because evidence regarding the vesting of his pension benefits was proffered in the course of testimony.

McGraw-Hill also argues that Ravella’s claim is preempted by ERISA because his decision to resign was motivated by a desire to protect his pension benefits, which would have been compromised had he been terminated prior to vesting. While that argument could have been asserted as a defense to Ravella’s claim of constructive discharge--that is, Ravella decided to resign to protect his pension benefits rather than because he was presented with an intolerable employment situation--it does not constitute a basis for asserting ERISA preemption. As noted above, Ravella’s claim for wrongful discharge was premised on his employment agreement and the intolerable conditions created by Emry, not fear for his pension. The mere fact that Ravella’s pension rights played a role in his decision to resign, rather than await termination, did not cause his claim to “relate to” the pension rights.

We also find no substance in McGraw-Hill’s claim that Ravella could not have been constructively discharged because his reason for resigning--to preclude a termination that would prevent vesting of his pension--was moot at the time of his actual retirement, since by that time his pension rights had successfully vested. The pertinent date for determining intolerable conditions was the date of Ravella’s resignation, rather than, as McGraw-Hill contends, his last day of work. (Mullins v. Rockwell Internat. Corp. (1997) 15 Cal.4th 731, 738 [constructive discharge occurs if the employer created or knowingly permitted intolerable working conditions at the time of the employee’s resignation].)

Nor is Ravella barred from asserting a constructive discharge merely because he stated that his reason for resigning was to protect his pension benefits. This is not a situation in which purportedly intolerable conditions were a false pretext for a resignation motivated by other concerns. In Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, 1255, relied on by McGraw-Hill, the court granted summary judgment on a claim for constructive discharge because there was insufficient evidence of intolerable conditions, necessarily implying that intolerable conditions were not the true cause of the plaintiff’s resignation. That is not the case here. It is clear that Emry’s harassment, rather than concern for his pension benefits, motivated Ravella’s decision to separate from the company. Were it not for the intolerable conditions created by Emry, Ravella would have remained with McGraw-Hill. Pension concerns merely caused Ravella to choose resignation as the method of separation, rather than to await the termination he believed was inevitable.[11]

E. Novation

McGraw-Hill contends that Ravella’s decision to take early retirement, and his subsequent receipt of pension benefits in lieu of a salary, constituted an implied novation. To quote McGraw-Hill’s brief, “If there ever was an implied in fact employment contract to protect Ravella from being terminated without good cause, it was substituted for a new contract granting Ravella pension benefits in exchange for his retirement.”

McGraw-Hill’s novation theory fails for several reasons, but it is necessary to discuss only one. A novation is the substitution of a new obligation for an existing one. (Civ. Code, § 1530; Wells Fargo Bank v. Bank of America (1995) 32 Cal.App.4th 424, 431.) There was no new obligation here. In accepting early retirement, Ravella was simply taking advantage of the terms of his existing employment agreement.

Ravella’s testimony at trial established this point clearly. When asked about his retirement, Ravella confirmed that McGraw-Hill’s employee handbook allowed any employee to take advantage of early retirement once he or she had spent 10 years at McGraw-Hill and reached the age of 55. As defense counsel summarized it, “once you [satisfied the two conditions], they couldn’t stop you from taking early retirement.”

Accordingly, the early retirement benefit was a part of the same employment agreement on which Ravella premised his claim for breach of contract. He did not negotiate any new terms with McGraw-Hill prior to his departure; indeed, there was nothing to negotiate once Ravella satisfied the two conditions because he became entitled under his existing employment agreement to take early retirement at any time. The necessary precondition for a finding of novation, a new agreement intended to replace the old agreement, was absent.

IV. DISPOSITION

The trial court’s judgment is affirmed, except that the trial court’s award of prejudgment interest is vacated. The matter is remanded to the trial court solely for the purpose of calculating and awarding prejudgment interest in a manner consistent with this decision. Costs on appeal are awarded to Ravella.

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Margulies, J.

We concur:

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Marchiano, P.J.

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Stein, J.

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[1] Our ruling on Ravella’s claim for implied agreement not to terminate without good cause is not at issue in this appeal.

[2] As to any claim based on age discrimination, however, we noted that “the federal court judgment precludes Ravella from relitigating the issue whether the allegations in the original complaint describe conduct” constituting age discrimination. (Ravella I, supra, A095708, A095762.) Relying on this statement, McGraw-Hill sought a motion in limine prior to trial precluding evidence of age discrimination. Ravella’s counsel conceded that the third amended complaint, on which Ravella proceeded to trial, contained “basically the same facts” as the original complaint. Accordingly, the court granted the motion in limine “in the absence of plaintiff coming up with something new.”

[3] We will review the evidence presented at trial in more detail as necessary when discussing the individual legal arguments raised by the parties.

[4] Despite their titles, both denied that they were officers of the corporation, and Nordin denied that he determined corporate policy.

[5] Ravella makes no attempt to argue that his direct supervisor, Hancik, was a managing agent.

[6] The entirety of the evidence cited by Ravella in his reply brief to support his claim that Emry was a managing agent was Emry’s statement that he was “in management” at McGraw-Hill, plainly inadequate to demonstrate that he was a managing agent. (White, supra, 21 Cal.4th at p. 573.)

[7] As we noted there, Ravella’s allegations “were much less inflammatory than those in Livitsanos [v. Superior Court (1992) 2 Cal.4th 744]” (Ravella I, supra, A095708, A095762), in which an employee was subjected to a campaign of harassment based on entirely fabricated claims that he had engaged in conduct designed to defraud and destroy the company. (Livitsanos, at pp. 748--749.)

[8] Hancik and Emry both testified that the true rate expected of Ravella was half the rate he claimed Hancik had quoted to him. Emry denied that the test, had it been administered, would have been used as justification to terminate Ravella.

[9] McGraw-Hill contends, without elaboration, that Ravella’s backpay was not certain because “the experts differed on the types of benefits that [Ravella] would have received (e.g., tuition benefits), the amount of Social Security contributions that McGraw-Hill would have made on Ravella’s behalf, and the estimation of expected pay increases,” citing the trial exhibits prepared by the two experts. While it is true there are small differences in the experts’ estimates, they concern relatively minor aspects of Ravella’s compensation package. The level of dispute is not such as to destroy the certainty of the calculations, given our obligation to construe “certainty” with some liberality. (Chesapeake Industries, supra, 149 Cal.App.3d at p. 907.)

[10] For example, if the cash value of health insurance benefits was awarded, Ravella would not be entitled to interest on any sum that would have been deducted from his pay as an employee contribution toward the cost of those benefits.

[11] Notably, McGraw-Hill did not challenge the sufficiency of the evidence on Ravella’s claim for constructive discharge.