Lazar v. Superior Court

In Lazar v. Superior Court (1996) 12 Cal.4th 631, the plaintiff alleged that the defendant induced him to leave his employment in New York and accept an insecure position with the defendant that was terminated in two years, causing him to lose the security and income associated with his former employment in New York and to incur costs in moving his family from New York to California. The court held that the plaintiff had stated a cause of action for promissory fraud. The plaintiff claimed that defendant induced him to relinquish a secure job in New York as head of the family company where he had worked all his life and relocate to Los Angeles with his family, based on defendant's verbal representations of continued employment, the defendant's financial position, and pay raises, all of which were false. Two years later, plaintiff was terminated and was unable to find comparable employment either in California or New York. (Lazar, supra, 12 Cal.4th 631, 635-637.) Plaintiff sued alleging causes of action for fraud in the inducement in addition to breach of employment contract and violation of Labor Code section 970. Over defendant's argument that plaintiff should be limited to contract damages, our state Supreme Court held that, under the circumstances of Lazar's case, he was entitled to pursue tort damages under a fraud theory, as well as benefit-of-the-bargain damages under his breach of contract claim. (Lazar, supra, 12 Cal.4th 631, 646.) "It is a truism that contract remedies alone do not address the full range of policy objectives underlying the action for fraudulent inducement of contract. In pursuing a valid fraud action, a plaintiff advances the public interest in punishing intentional misrepresentations and in deterring such misrepresentations in the future. Because of the extra measure of blameworthiness inhering in fraud, and because in fraud cases we are not concerned about the need for 'predictability about the cost of contractual relationships' , fraud plaintiffs may recover 'out-of-pocket' damages in addition to benefit-of-the-bargain damages. For example, a fraudulently hired employee . . . may incur a variety of damages 'separate from the termination' itself, such as the expense and disruption of moving or loss of security and income associated with former employment." (Lazar, supra, 12 Cal.4th 631, 646.)