Plaintiff public employees brought an action for wrongful discharge against defendant housing authority. The housing authority filed a counterclaim against one employee for money paid to him as reimbursement for legal fees. The jury in the Superior Court of Los Angeles County (California) found for employees on their discharge claim and for the authority on its counterclaim. All parties appealed.

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The court upheld the employment contracts, because the authority had the power to give fixed terms of employment, the contracts delegated administrative duties only, and the compensation was not a gift forbidden by Cal. Const. art. IV, §§ 31, 32. The contracts were binding upon the authority beyond the term of the commissioners who entered the contracts. Therefore, employees could be discharged only for good cause, which was an issue of fact for the jury. The jury properly found that a secret monitoring system to prevent communist infiltration was installed in good faith to further the best interests of the authority and did not justify discharge of employee who installed it. Employee’s compelled testimony was not grounds for discharge. On the authority’s counterclaim, the court held that the authority could not assume the legal expense of its agents in these circumstances. Cal. Gov’t Code § 1956. The applicable statute of limitations was the three-year statute in Cal. Civ. Proc. Code § 338(4), governing an action for relief on the ground of mistake, not the two-year statute governing actions for money had and received. Cal. Civ. Proc. Code § 339.


The court affirmed both judgments.

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Procedural Posture

May 8, 2021