no actual breach by F & G of the terms of the GAA.
F & G also argues that EPIS cannot prove the prima facie element of
damages suffered by EPIS as a proximate result of an alleged breach of
the GAA because, assuming that F & G failed to properly notify EPIS of
the termination and therefore breached the agreement, EPIS' damages would
be limited to thirty days. Under California law, F & G argues, the
measure of damages for any breach of contract that is terminable upon the
giving of notice is the amount of money the party who breaches the
contract would have been required to pay had it exercised its option to
terminate. See T.L. Martin v. U-Haul Company of Fresno, 204 Cal.App.3d 396,
410, 251 Cal.Rptr. 17(1988) (because of a 30 day notice provision, party
limited to damages potentially accruing during a 30-day period after the
breach); see also Pecarovich v. Becker, 113 Cal.App.2d 309,
248 P.2d 123(1952).
As F & G continued to process applications and credit commissions to
EPIS thirty days after the March 19, 1999 letter, F & G argues that EPIS
has not and cannot have sustained any damages from F & G's breach. See
McGarity Decl., ¶¶ 5-6; Stout Depo., Vol. II at 43, line 7 —
44, line 2. As discussed above, EPIS has not submitted admissible
evidence to counter F & G's assertion that it continued to process
applications for policies from EPIS agents and credit EPIS with
commissions. Therefore, assuming that F & G improperly notified EPIS of
the termination and breached the GAA, EPIS has failed to raise a material
question of fact as to whether it suffered damages during the March 19,
1999 through April 19, 1999 thirty day notice period. F & G's motion for
summary judgment on the breach of contract claim is GRANTED.
B. Breach of Implied Covenant of Good Faith and Fair Dealing
In the SAC, EPIS alleges that F & G's contractual right to terminate
EPIS was restricted by the implied term that "F & G would not arbitrarily
terminate the General Agent's Agreement under Section 22 or any other
section of the Agreement. The implied covenant of good faith and fair
dealing, coupled with the terms, conditions and purposes of the General
Agent's Agreement, also impliedly limited F & G's ability to terminate
the General Agent's Agreement upon 30 days notice." SAC ¶ 50. F & G
argues that these implied terms are contrary to the express terms of the
Agreement and, as such, EPIS' cause of action for breach of the implied
covenant must fail as a matter of law.*fn7
"The covenant of good faith and fair dealing, implied by law in every
contract, exists merely to prevent one contracting party from unfairly
frustrating the other party's right to receive the benefits of the
agreement actually made." Guz v. Bechtel Nat. Inc., 24 Cal.4th 317, 349,
100 Cal.Rptr.2d 352, 8 P.3d 1089(2000). However, the "covenant thus
cannot be endowed with an existence independent of its contractual
underpinnings." Id. (internal quotations omitted). Therefore, it "cannot
impose substantive duties or limits on the contracting parties beyond
those incorporated in the specific terms of their agreement." Id.
Additionally, as to acts authorized by the express provisions of the
contract, no covenant of good faith can be implied which would forbid
those express acts.
See Carma Developers (Cal.), Inc. v. Marathon Development California,
Inc., 2 Cal.4th 342, 374, 6 Cal.Rptr.2d 467, 826 P.2d 710(1992) ("We are
aware of no reported case in which a court has held the covenant of good
faith may be read to prohibit a party from doing that which is expressly
permitted by an agreement. On the contrary, as a general matter, implied
terms should never be read to vary express terms."); PMC, Inc. v.
Porthole Yachts, Ltd., 65 Cal.App.4th 882, 76 Cal.Rptr.2d 832(1998)
(where acts and conduct authorized by the express provisions of the
contract, no covenant of good faith and fair dealing can be implied which
forbids such acts and conduct).
EPIS does not address the case law relied upon by defendant and
proffers no case law addressing the implied covenant that supports its
argument. EPIS appears to argue in opposition to F & G's motion that the
implied covenant of good faith and fair dealing at issue does not prevent
F & G from arbitrarily terminating EPIS under the 30 day notice
provision, as plead in the SAC, but that the implied covenant prevents F &
G from terminating the GAA and then reassigning EPIS' agents within 12
months of EPIS' termination. See Oppo. at 9 ("[b]ecause even if there had
been a fair 30 day termination, theft of sub agents cannot be a proper
purpose"), 12 ("[t]he implied Covenant of Good Faith asserted here is
actually an F & G policy, and F & G's own witnesses raise issues showing
that the implied covenant in this case would not be inconsistent with the
agreement, but would be necessary for the General Agency Agreement to
function."). However, the termination and alleged recontracting of EPIS'
agents in violation of any F & G or industry policy not to recontract for
12 months is not alleged as a violation in the SAC, and it is quite
different from EPIS' allegation that F & G breached the implied covenant
of good faith and fair dealing by arbitrarily terminating the GAA.
The Court finds that EPIS has failed to raise a genuine issue of
material fact on its claim for breach of the implied covenant of good
faith and fair dealing and summary judgment on this cause of action is
GRANTED to F & G.
C. Defamation/Trade Libel
F & G argues that EPIS cannot establish all of the essential elements
for defamation or trade libel.*fn8 To succeed on a claim for
defamation, the plaintiff must prove that the defamatory matter was
published or communicated to some third person. It is for the Court to
determine "as a question of law whether a statement is reasonably
susceptible of a defamatory interpretation; if the statement satisfies
this requirement, it is for the jury to determine whether a defamatory
meaning was in fact conveyed to the listener or reader." See Kahn v.
Bower, 232 Cal.App.3d 1599, 1608, 284 Cal.Rptr. 244 (1991).
F & G asserts that EPIS' grounds for defamation and trade libel rest on
the contents of the letters F & G sent to EPIS' sales agents notifying
them that F & G was terminating their individual agreements,*fn9 and
comments made by
Patricia Cole concerning EPIS during her conversations with sales
F & G argues that it is entitled to summary judgment as a matter of law
because the letters sent to EPIS' agents contain no language that could
be construed as defamatory and because Ms. Cole did not publish any
defamatory statements regarding EPIS.
The letters that F & G sent to EPIS' agents stated in part:
In accordance with the terms of your agreement dated
[date] section 22, we are exercising our right to
terminate that agreement, by giving you this 30 Day
notice, due to a marketing decision.
We ask that you return, to my attention, any and all
marketing, sales, and agent contract information you
may have for F & G Life in addition to any and all
administrative materials you may have in your
See Declaration of Patricia Cole ("Cole Decl."), Exh. A ("Termination
Letter"). Because the letters did not mention EPIS or the circumstances
surrounding the termination of the GAA, F & G argues that there is
nothing defamatory about the language contained in these letters. With
respect to the statements of Ms. Cole, Ms. Cole declares that she did not
have any knowledge about why EPIS was terminated, and therefore could not
make any defamatory remarks about EPIS or the termination. See Cole
Decl. ¶ 4.