Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Tuesday, June 28, 2011

At-will employment & claims of fraud, fraudulent inducement, and breach of fiduciary duty

NO DETRIMENTAL RELIANCE ON PROMISE OF FUTURE EMPLOYMENT IN THE EMPLOYMENT-AT-WILL CONTEXT Both common-law fraud and fraudulent inducement require proof of detrimental reliance. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179 (Tex. 1997). In the employment context, courts have held that an employee cannot establish justifiable reliance on alleged promises of continued employment when the employment is at-will. See, e.g., Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 379, 381 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (holding promissory estoppel and fraud claims were barred because of at-will employment); Brown v. Swett & Crawford of Tex., Inc., 178 S.W.3d 373, 379-80 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (holding status as at-will employee precluded claim for fraudulent inducement in wrongful termination lawsuit). As this court [14th CoA] stated in Collins v. Allied Pharmacy Management, Inc.: A promise to provide employment which is subject to termination at any time or for any reason does not provide any assurances about the employer’s future conduct, and does not provide a basis for detrimental reliance as a matter of law. 871 S.W.2d 929, 937 (Tex. App.—Houston [14th Dist.] 1994, no writ). We agree with the trial court that the same reasoning bars [ FORMER EMPLOYER-PLAINTIFF ] from claiming that it justifiably relied on promises or statements of intent by its at-will employee to remain employed. See Collins, 871 S.W.2d at 937-38 (“An employee may quit at any time, or may never start performance and suffer no liability. . . . [E]mployees are not indentured servants.”). BREACH OF FIDUCIARY DUTY The elements of a breach of fiduciary duty claim are (1) a fiduciary relationship between the plaintiff and defendant, (2) a breach by the defendant of his fiduciary duty to the plaintiff, and (3) an injury to the plaintiff or benefit to the defendant as a result of the defendant’s breach. Lundy v. Masson, 260 S.W.3d 482, 501 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). DETRIMENTAL RELIANCE NOT AN ELEMENT OF BoFD Unlike a fraud claim, a claim for breach of fiduciary duty does not require a plaintiff to establish reliance. See id. (listing elements of the claims). Consequently, the fact that at-will employment precludes [ PLAINTIFF ] from establishing justifiable reliance for purposes of its fraud claim on alleged statements by [ EMPLOYEE ] regarding future employment with [ DEFENDANT ] does not bar its breach of fiduciary duty claim. See Wilson, 305 S.W.3d at 74-75 (although similarity existed “in the abstract” between the elements of the two claims, claims had different elements and thus exception did not apply); see also Lundy, 260 S.W.3d at 506-07 (fraud and breach of fiduciary duty claims, although based on the same set of facts, were separate theories of liability for which plaintiff had to make an election of remedies). SOURCE: Houston Court of Appeals - 14-10-00513-CV - 6/28/11

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