Marino v. Pro Sports &
Entertainment
Filed 5/6/13
Marino v. Pro Sports & Entertainment CA2/7
OFFICIAL REPORTS
California Rules of Court, rule
8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
LLOYD MARINO,
Plaintiff and Appellant,
v.
PRO SPORTS
& ENTERTAINMENT, INC., et al.,
Defendants and Respondents.
B233940
(Los Angeles County
Super. Ct. No.
BC348109)
APPEAL
from a judgment of the Superior Court of
County, Yvette M. Palazuelos, Judge. Affirmed.
Henry
J. Josefsberg for Plaintiff and Appellant Lloyd Marino.
TroyGould,
Christopher A. Lilly and Amy Fitzhenry, for Defendants and Respondents Pro
Sports & Entertainment, Inc., Paul H. Feller and Stratus Media Group.
______________________________
Lloyd
Marino appeals from the judgment entered following a jury trial on his claims
for unpaid wages and breach of employment
contract against his former employer, Pro Sports & Entertainment, Inc.
(Pro Sports); its president, Paul H. Feller; and Stratus Media Group, the
parent of Pro Sports. We affirm.
factual and procedural background
Marino, the chief technology
officer of another company, met Feller in July 2005. After several discussions Feller offered
Marino the position of chief technology officer and vice president of business
development at Pro Sports, a promoter of sports and live entertainment
events. Marino’s responsibilities would
include technological strategic planning, advising a rewards program for a
credit card sponsored by Pro Sports and financial management of some
operational functions, including reporting, budgeting and marketing for the
credit card program. Marino accepted the
position.
A written employment agreement
dated August
26, 2005 provided Marino’s base salary was
$150,000. Marino could be terminated for
“good cause†and could also resign for “good reason,†defined to include
“knowingly unlawful events uncured in a timely manner.†If Marino resigned for “good reason,†he was
entitled to recover from Pro Sports the “unpaid portion of the Base Salaries,
computed on a pro rata basis through March 15, 2008.â€
Marino began working for Pro
Sports on September
1, 2005.
His first paycheck, dated September 15, 2005, was drawn on
one of Pro Sports’ accounts at U.S. Bank, which promptly honored the
check. Marino’s second paycheck, drawn
on the same account on October 3, 2005, was initially rejected by U.S. Bank, a
fact that did not surprise Marino because several of Pro Sports’ vendors had
complained to him they had not been paid for their services. The check cleared on October 6, 2005.
The following week Marino left
on a business trip for New York. He had pre-paid his own
expenses and requested reimbursement from Feller. He also asked for his mid-month paycheck,
which Feller told him had been sent to him via United Parcel Service. Marino
received the check, dated October 15, 2005, on October 21, 2005 and deposited it. It was
rejected. Feller gave Marino conflicting
reasons for the funds shortage and instructed Marino to redeposit the check the
following Monday. Marino presented the
check to U.S. Bank on October 24, 2005; but, again, it
did not clear.
Marino resigned on October 26, 2005 because his paycheck had not cleared. He gave notice to Feller he had resigned for
“good reason†and was invoking his rights under the employment agreement. Feller described Marino’s claim as ludicrous
but accepted his resignation. Feller
denied any knowledge Pro Sports’ checks had been dishonored for insufficient
funds. Initially blaming the bank for
applying funds incorrectly, he subsequently claimed Pro Sports had been the
victim of fraud that had depleted the accounts.
Marino was unable to cash the October 15, 2005
check until November
7, 2005.
He never received any payment for his work between October 16 and October 26, 2005.
On February 27, 2006 Marino sued Pro Sports and Feller, alleging causes of action for
breach of contract, wages owed, conversion and unfair business practices.
which was set aside on March 12, 2008. (See Marino
v. Pro Sports et al. (June 23, 2009, B208065) [nonpub.
opn.] [affirming trial court order setting aside default judgment].)
The case was tried to a
jury. On July 28, 2010 the jury returned a unanimous verdict in favor of all defendants on
the breach of contract and conversion claims.
However, the jury found in favor of Marino on his cause of action for
wages owed and awarded him $3,202.34, plus $17,307.60 in waiting time
penalties. The court denied Marino’s
motions for a new trial and for judgment notwithstanding the verdict but
awarded him $1,594.12 in interest on the wages owed. No interest was awarded on waiting time
penalties.
Pro Sports, Feller and Stratus
Media moved for an award of attorney fees.
The court awarded Feller and Stratus Media $167,104.87 in fees, 50
percent of the total requested. Marino
also moved for an award of attorney fees, seeking $151,400, plus another
$18,901.72 in interest and penalties. The
court awarded Marino $15,140 against Pro Sports.
contentions
Marino contends the trial court
committed instructional error that negated provisions of the Labor Code based
on its erroneous admission of extrinsic evidence to interpret portions of the
employment agreement; improperly instructed the jury on a good faith defense;
abused its discretion by failing to order production of documents related to
Feller’s knowledge the U.S. Bank accounts were overdrawn and to alter ego
allegations against Feller and Pro Sports; erred in allowing certain hearsay
evidence; erred by disallowing prejudgment interest on waiting time penalties;
and abused its discretion in awarding attorney fees.
discussion
1.
The Trial Court
Properly Allowed Parol Evidence To Interpret the Employment Agreement
The fundamental goal of contract
interpretation is to give effect to the mutual intention of the parties as it
existed at the time they entered into the contract. (Bank of the West v. Superior Court
(1992) 2 Cal.4th 1254, 1264; Parsons v. Bristol Development Co. (1965)
62 Cal.2d 861, 865; see also Civ. Code, § 1636.)
according to objective, rather than subjective, criteria. (Wolf v. Walt Disney Pictures &
Television (2008) 162 Cal.App.4th 1107, 1126 (Wolf II).) When the contract is clear and explicit, the
parties’ intent is determined solely by reference to the language of the
agreement. (§§ 1638 [“language of a
contract is to govern its interpretation, if the language is clear and
explicit, and does not involve an absurdityâ€]; 1639 [“[w]hen a contract is
reduced to writing, the intention of the parties is to be ascertained from the
writing alone, if possibleâ€].) The words
are to be understood “in their ordinary and popular sense†(§ 1644) and the
“whole of [the] contract is to be taken together, so as to give effect to every
part, if reasonably practicable, each clause helping to interpret the
other.†(§ 1641.)
Although
unambiguous terms of a written, integrated contract (Code Civ. Proc., § 1856,
subd. (a); Wolf II, supra, 162 Cal.App.4th at p. 1126),
interpret the agreement when a material term is ambiguous. (City of Hope Nat. Medical Center v.
Genentech, Inc. (2008) 43 Cal.4th 375, 395 (City of Hope); see Pacific Gas & Electric Co. v. G.W. Thomas
Drayage & Rigging Co. (1968) 69 Cal.2d 33, 39-40 [if extrinsic evidence
reveals that apparently clear language in the contract is, in fact,
“susceptible to more than one reasonable interpretation,†it may be used to
determine contracting parties’ intent]; Code Civ. Proc., § 1856, subd. (g)
[extrinsic evidence admissible to interpret terms of ambiguous
agreement].)
As we explained in Wolf II,
supra, 162 Cal.App.4th 1107, when the meaning of words used in a contract
is disputed, the trial court engages in a three-step process: “First, it provisionally receives any
proffered extrinsic evidence that is relevant to prove a meaning to which the
language of the instrument is reasonably susceptible. [Citations.]
If, in light of the extrinsic evidence, the language is reasonably
susceptible to the interpretation urged, the extrinsic evidence is then
admitted to aid the court in its role in interpreting the contract. [Citations.]
When there is no material conflict in the extrinsic evidence, the trial
court interprets the contract as a matter of law. [Citations.]
This is true even when conflicting inferences may be drawn from the
[citations] or [when] extrinsic evidence renders the contract terms susceptible
to more than one reasonable interpretation.
[Citations.] If, however, there
is a conflict in the extrinsic evidence, the factual conflict is to be resolved
by the jury.†(Wolf II, at
pp. 1126-1127, fn. omitted.)
The language of the employment
agreement at issue here is “knowingly unlawful events that are uncured in a
timely manner,†the condition Marino invoked as “good reason†for his
resignation, which he claimed entitled him to recover his salary through
March 15, 2008. Marino contends
this language is unambiguous: Relevant
portions of the Labor Code provide ample clarification of its terms. For instance, the failure to make timely wage
payments and the payment of wages with nonnegotiable checks are both
misdemeanors under the Labor Code and are thus unlawful acts. (See Lab. Code, §§ 204
[semi-monthly/monthly payments]; 212 [non-negotiable checks]; 215 [misdemeanor
for violations of §§ 204, 212].)
Further, because a “notice or memorandum of protest or dishonor is
admissible as proof of presentation, nonpayment and protest and is presumptive
evidence of knowledge of insufficiency of funds or credit with the draweeâ€
(Lab. Code, § 212, subd. (b)), the Pro Sports defendants were presumed to have
had knowledge Marino’s paychecks were nonnegotiable. Finally, Marino argues, the phrase “cured in
a timely manner†requires no interpretation because the Labor Code requires
bi-monthly salary to be paid within seven days of the 15th or last day of the
month. In this case, his inability to
cash his third paycheck dated October 15, 2005 by October 26, 2005
violated the non-waivable requirements of Labor Code sections 204 and 212,
subdivision (b).
Pro Sports and the other
defendants disagreed with both Marino’s contention the contract was unambiguous
and his interpretation of the crucial language.
At a pretrial hearing, after considering the differing interpretations
urged by the parties, the trial court ruled the terms “knowingly,†“unlawfulâ€
and “timely†were each susceptible to differing interpretations that were not
unreasonable under the circumstances.
(See City of Hope, supra, 43
Cal.4th at p. 395; cf. Wolf v. Superior Court (2004)
114 Cal.App.4th 1343, 1350-1351 (
error for a trial court to refuse to consider such extrinsic evidence on the
basis of the trial court’s own conclusion that the language of the contract
appears to be clear and unambiguous on its faceâ€].) Based on this ruling, the jury heard
testimony that Feller understood Pro Sports’ accounts at U.S. Bank had
overdraft protection he assumed would allow any particular check to be paid
from one of several accounts. That
testimony supported Feller’s contention he did not “knowingly†give Marino a
bad check. Although Marino presented
evidence Feller had no such understanding, the factual dispute whether Feller
knew there were inadequate funds to cover Marino’s paycheck was ultimately a
question for the jury. (See
here, ascertaining the intent of the parties at the time the contract was
executed depends on the credibility of
extrinsic evidence, that credibility determination and the interpretation
of the contract are questions of fact that may properly be resolved by the
juryâ€].)
Feller
was also allowed to testify he and Marino had discussed the meaning of “good
cause†for termination during their original contract negotiations. Feller told Marino he intended the term to
encompass actions “outside the scope of [the] agreement,†“not following
directions,†failure to comply with management or the direction of the board of
directors, or crimes like theft, bank robbery or driving under the influence of
drugs or alcohol. Feller also explained
“good reason†for Marino to recover under the contract should he resign would
include violations of a similar nature or substantive and significant illegal
conduct. According to Feller, Marino
did not object to this interpretation or offer any different examples.
Even
if Feller’s understanding of these terms did not comport precisely with the
requirements of the Labor Code, the trial court did not err in admitting his
testimony. Marino was certainly entitled
to invoke the Labor Code to protect his statutory rights. But with respect to his contract claim, as
long as Feller’s understanding of the terms was reasonable, evidence of that
expressed intent was fully admissible under the parol evidence rule. (See, e.g., Pacific Gas & Electric Co.
v. G.W. Thomas Drayage & Rigging Co., supra, 69 Cal.2d at pp.
39-40; City of Hope, supra, 43
Cal.4th at p. 395.)
2.
The Modified
Version of CACI No. 314, as Supplemented by Labor Code Provisions Requested by
Marino, Adequately Informed the Jury of the Law Governing Marino’s Contract
Cause of Action
The trial court instructed the
jury with a slightly modified version of CACI No. 314, addressing the
interpretation of disputed terms of a contract:
“[Marino] and [Pro Sports] dispute the meaning of the following term
contained in the contract, quote:
‘Knowingly, unlawful events that are uncured in a timely manner,’
unquote. [Marino] and [Pro Sports] claim
that the contract term means different things.
To prevail, [Marino] must prove that his interpretation of the contract
is correct. In deciding what the terms
of a contract mean, you must decide what the parties intended at the time the
contract was created. You may consider
the usual and ordinary meaning of the language used in the contract as well as
the circumstances surrounding the making of the contract.â€
Labor Code section 212,
subdivision (b), however, establishes a presumption of knowledge when an
employer’s check is dishonored: A
“notice or memorandum of protest or dishonor is admissible as proof of
presentation, nonpayment and protest and is presumptive evidence of knowledge
of insufficiency of funds or credit with the drawee.†(See People
v. Hampton (1965) 236 Cal.App.2d 795, 805 [defendants’ assertion of lack of
knowledge insufficient to rebut presumption under Lab. Code, § 212, subd. (b);
to overcome presumption defendants were required to show they took reasonable
steps to inform themselves whether funds would be available].) Marino contends, by instructing pursuant to CACI
No. 314 that he was required to prove his interpretation of the contract was
correct, the trial court improperly shifted the burden of proof in violation of
this provision of the Labor Code.
Appellate courts do not readily
reverse jury verdicts for instructional error.
“A party is not entitled to have the jury instructed in any particular
fashion or phraseology, and may not complain if the court correctly gives the
substance of the applicable law.†(Thompson
Pacific Construction, Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th
525, 553; accord, Cristler v. Express Messenger Systems, Inc. (2009)
171 Cal.App.4th 72, 82.) “[T]here
is no rule of automatic reversal or ‘inherent’ prejudice applicable to any
category of civil instructional error,
whether of commission or omission. A
judgment may not be reversed for instructional
entire cause, including the evidence, the court shall be of the opinion that
the error complained of has resulted in a miscarriage
of justice.’†(Soule v. General
Motors Corp. (1994) 8 Cal.4th 548, 580, quoting Cal. Const., art. VI, §
13]; see also Code Civ. Proc.,
§ 475 [“[n]o judgment, decision, or decree shall be reversed or
affected by reason of any error, ruling, instruction,
or defect, unless it shall appear from the record that such error,
ruling, instruction, or defect was prejudicial
. . . and that a different result would have been probable if such
had not occurred or existedâ€].) In
assessing the likelihood that instructional
court should consider not only the nature of the error . . . but
[also] the likelihood of actual prejudice as reflected in the individual trial
record, taking into account ‘(1) the state of the evidence, (2) the effect of
other instructions, (3) the effect of counsel’s arguments, and (4) any
indications by the jury itself that it was misled.’†(Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953,
983; accord, Soule, at pp.
580-581.)
Here, the trial court properly
instructed the jury Marino had the burden of proving his breach of contract
claim and supplemented this instruction with the text of Labor Code provisions
requested by him to refine the legal principles applicable to his claim. The jury was specifically instructed with
Labor Code section 212, subdivision (b), which informed it that, with respect to
the element of knowledge, the jurors could presume Feller knew of the lack of
funds, subject to any evidence provided by Feller to rebut that evidentiary
presumption. (See Cristler v. Express
Messenger Systems, Inc., supra, 171 Cal.App.4th at p. 82 [
not in isolation].)
Moreover, Marino’s counsel
explained the nuance of this presumption in his closing argument. The jury’s lack of confusion on this point is
demonstrated by its verdict on the wage continuation penalties under Labor Code
section 203, which required the jury to find that Pro Sports had “willfullyâ€
failed to pay Marino his wages in a timely manner. Thus, even assuming some instructional error,
Marino cannot demonstrate the necessary prejudice for appellate relief.
3.
Feller’s Testimony
About His Knowledge of the U.S. Bank Accounts Was Properly Admitted Over
Marino’s Hearsay Objection
Similarly, a trial court’s
error in excluding evidence is grounds for reversing a judgment only if the
party appealing demonstrates a “miscarriage of justiceâ€â€”that is, that a
different result would have been probable if the error had not occurred. (See Zhou
v. Unisource Worldwide, Inc. (2007) 157 Cal.App.4th 1471, 1480, quoting
§ 354 [“[a] verdict or finding shall not be set aside, nor shall the
judgment or decision based thereon be reversed, by reason of the erroneous
exclusion of evidence unless the court which passes upon the effect of the
error or errors is of the opinion that the error or errors complained of
resulted in a miscarriage of justiceâ€];
Oakland (1986) 42 Cal.3d 1051, 1069; City of Oakland v. Public
Employees’ Retirement System (2002) 95 Cal.App.4th 29, 51-52
[prejudice will not be presumed; burden rests with party claiming error to
demonstrate not only error, but also a resulting miscarriage of justice].)
Over Marino’s hearsay
objection, the trial court allowed Feller to testify to his understanding of
overdraft protections in place for Pro Sports’ U.S. Bank checking
accounts. Feller’s understanding was
based on bank statements reflecting certain overdraft charges and
credits—instances in which Pro Sports checks had been honored notwithstanding a
negative balance in its accounts—and his past conversations with two U.S. Bank
employees. Feller and Pro Sports contend
this evidence was admissible because it was not offered for the truth but to
establish Feller’s state of mind.
Alternatively, they contend, the testimony was admissible under the
state-of-mind exception to hearsay evidence found in Evidence Code section 1250.
Feller’s testimony about his
understanding was not hearsay. He did
not testify to any out-of-court statements; nor was his understanding offered
for the truth. Although Marino anticipated
that Feller might cite specific out-of-court statements in support of his
understanding of the banking arrangements between Pro Sports and U.S. Bank, his
personal understanding—incorrect or not—was both relevant and admissible. (See generally Wegner et al., Cal. Practice
Guide: Civil Trials and Evidence
8:1557, pp. 8D-127 to 8D-128.)
Moreover, even if Feller’s
testimony had been wrongly admitted, his testimony did not prejudice
Marino. As explained, in awarding
waiting time penalties, the jury necessarily concluded Feller “willfully†paid
Marino with a check drawn on an account with insufficient funds, thereby
rejecting the state-of-mind, good faith defense.
4.
The Trial Court
Did Not Abuse Its Discretion in Sustaining Defendants’ Objection to Marino’s
Notice To Produce at Trial
Pursuant to Code
of Civil Procedure section 1987, a party can serve a notice to appear at trial
in lieu of a subpoena. If served at
least 20 days before trial, the notice can “include a request that the party or
person bring with him or her books, documents, electronically stored
information, or other things. The notice
shall state the exact materials
or things desired and that the party or person has them in his or her
possession or under his or her control.â€
(Id., subd.
(c).) Notably, however, the description
of the document must be “exactâ€: Code of
Civil Procedure section 1987 may not be used to compel production of a category
of documents after discovery is closed.
(See Wegner et al., Cal. Practice Guide:
Civil Trials and Evidence, supra,
¶¶ 1.114 to 115.1, p. 1-29.)
Although there is scant case
law addressing this section, Code of Civil Procedure section 1985, governing
issuance of subpoenas duces tecum, contains similar language, requiring the
affidavit accompanying the subpoena to “specify[ ] the exact matters or things
desired to be produced . . . .†(Id., subd. (b).) The language of section 1985 has been
interpreted literally, requiring specificity in the designation of materials to
be produced. (See, e.g., Grannis v.
Board of Medical Examiners (1971) 19 Cal.App.3d 551, 565 [“[t]he principal
reason for the specificity requirement is to adequately apprise the custodian
of what records are desired and the requested identification may be defeated by
generality of descriptionâ€]; Flora Crane Service, Inc. v. Superior Court
(1965) 234 Cal.App.2d 767, 785-786.)
Contrary to the language of Code of Civil
Procedure section 1987, Marino’s notice to appear did not specify “exactâ€
materials to be brought to trial.
Rather, in the manner of a discovery request, it listed broad and
general subject matter categories,
name="_ftnref4" title="">[4] instructing Pro Sports and
Feller to bring documents fitting those categories, should any exist. Defendants timely objected to the generality
of the requests. Given the breadth of
the categories of the notice and its failure to designate any specific
materials, the trial court properly concluded the notice did not satisfy the
requirements of section 1987 and was an attempt to conduct untimely discovery.
5.
Any Error in
Instructing the Jury on a Good Faith Defense to Marino’s Claim for Wage
Continuation Penalties Was Harmless
Labor Code section 203,
subdivision (a),
title="">[6]
mandates an additional penalty up to a maximum of 30 days’ pay if an employer
willfully fails to pay the wages of an employee who is discharged or
quits. “The statute is designed ‘to
compel the prompt payment of earned wages’†and “‘is to be given a reasonable
but strict construction.’ [Citation.] ‘The object of the statutory plan is to
encourage employers to pay amounts concededly owed by [them] to [a] discharged
or terminated employee without undue delay and to hasten settlement of disputed
amounts.’†(Mamika v. Barca (1998) 68 Cal.App.4th 487, 492.) Labor Code section 203.1 imposes a similar
penalty, again limited to a maximum of 30 days, against employers who pay their
employees with a check that is declined for insufficient funds, unless the
employer’s violation of the section was unintentional.
At Marino’s request the trial
court instructed the jury with the text of both sections. At Pro Sports’ request and over Marino’s
objection no such defense had been asserted in the answer, the jury was also
instructed with an administrative regulation that a good faith dispute that
wages were due constitutes a defense to any penalties owed under Labor Code
section 203. (See Cal. Code Reg., tit.
8, § 13520.) The trial court
construed Pro Sports’ general denial as sufficient to raise the issue of its good
faith, which had been placed at issue by the terms of each section that
violations must be either “willful[]†(Lab. Code, § 203) or not “unintentionalâ€
(Lab. Code, § 203.1). The jury awarded
“waiting time†penalties in the amount of $17,307.60 (30 days’ pay for Marino),
as requested by Marino in a chart of damages he presented in closing
argument.
The jury’s verdict makes any
possible error harmless. “If a plaintiff
was fully informed of a defense and the case was fairly tried on the merits,
any defect in the pleading of the defense is usually harmless.†(Harper
v. Kaiser Cement Corp. (1983) 144 Cal.App.3d 616, 620-621; see Code
Civ. Proc., § 469 “[n]o variance between the allegation in a pleading and the
proof is to be deemed material, unless it has actually misled the adverse party
to his prejudice in maintaining his action or defense upon the meritsâ€].) Here, state of mind was an element of both
offenses; the court’s instruction based on the administrative regulation
defining that state of mind could not possibly prejudice Marino.
Moreover, in awarding waiting
time penalties the jury plainly rejected Pro Sports’ asserted good faith
defense to liability under either section.
The jury’s failure to calculate penalties under both sections, instead
of only one, can likely be attributed to Marino’s failure to provide them with
the desired calculation of damages and to ensure the verdict form advised the
jury how they should proceed. A party
cannot allow defects to go to the jury without objection
and then claim later those defects misled the
v. Bolin (1998) 18 Cal.4th 297, 330 [failure to
object to a defect in the verdict form at the time the
court proposed to submit it or when the jury returned its
findings forfeits the issue]; People v. Jones (2003) 29 Cal.4th 1229,
1259 [same]; Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1287
[“belated references during posttrial proceedings to purported defects in the
special verdict forms [do] not preserve the issueâ€];
Cal.App.4th 1630, 1639-1640 [trial court error induced by party forfeits issue
on appeal: “Having invited the error, [appellant] cannot profit from itâ€]; Olson
v. Arnett (1980) 113 Cal.App.3d 59, 66 [contention trial court erred in
submitting the case on the special verdict form rather
than instructing the jury in detail on principles of
contract law was forfeited by failure to object to the
special verdict form].)
6.
The Trial Court
Did Not Err in Failing To Award Prejudgment Interest on the Wage Continuation
Penalties
Marino contends he was entitled
to prejudgment interest on the waiting time penalties awarded by the jury
because they are “capable of being made certain by calculation†under section
3287, subdivision (a).
name="_ftnref8" title="">[8] Like the trial court, we adopt the reasoning
of the district court in Drumm v.
Morningstar, Inc. (N.D. Cal. 2010) 695 F.Supp.2d 1014. There, faced with the same issue, Judge
Henderson declined to award prejudgment interest on waiting time penalties: “The purpose of prejudgment interest ‘is to provide just compensation
to the injured party for loss of use of the award during the prejudgment
period—in other words, to make the plaintiff whole as of the date of the
injury.’†(Id. at p. 1022, quoting Lakin v. Watkins Associated Industries
(1993) 6 Cal.4th 644, 663.) “This
rationale applies to unpaid wages:
prejudgment interest compensates an employee for loss of use of the
amount owed. Indeed, [section 218.6 of]
the California Labor Code explicitly provides for prejudgment interest in ‘any
action brought for the nonpayment of wages.’â€
(Drumm, at p. 1022
awarding prejudgment interest on punitive damages,’ which ‘are not intended to
make the plaintiff whole by compensating for a loss suffered.’†(Ibid.,
quoting Lakin, at p. 664.)
“The waiting time penalty, like a punitive damage award, is designed not
to make employees whole, but to act ‘as a disincentive to employers who are
reluctant to pay wages in a timely manner.’â€
(Ibid., quoting Mamika v.
Barca, supra, 68 Cal.App.4th at
p. 493.) “Awarding prejudgment
interest would ‘give a windfall’ to plaintiffs[ (Lakin, at
p. 664)], and does not fall within the mandate of section 3287.†(Drumm,
at p. 1022.)
Marino
argues Labor Code section 203 penalties are not punitive in nature but are
instead simply a statutory disincentive for failure to pay wages. (See Smith
v. Superior Court (2006) 39 Cal.4th 77, 92 [“[t]he plain purpose of [Labor
Code] sections 201 and 203 is to compel the immediate payment of earned wages
upon a dischargeâ€].) This distinction is
unpersuasive: Although penalties differ
from punitive damages in some important ways,
damages, [they] are intended to punish the wrongdoer and
to deter future misconduct.†(
(2002) 104 Cal.App.4th 721, 732, citing People v. Superior Court (Kaufman)
12 Cal.3d 421, 431.)
Accordingly, the trial court
did not err in denying prejudgment interest on the waiting time penalties
awarded to Marino.
7.
The Trial Court
Did Not Abuse Its Discretion in Determining the Attorney Fee Motions
a. Governing Law
Section 1717, subdivision (a),
authorizes the trial court to award reasonable attorney fees to the prevailing
party in a contract action if the contract specifically provides for an award
of such fees.
be the party who recovered a greater relief in the action on the
contract.†(§ 1717,
subd. (b)(1).) Likewise, section
1717, subdivision (b)(1), authorizes the trial court to “determine that there
is no party prevailing on the contract for purposes of this section.â€
“[I]n deciding whether there is
a ‘party prevailing on the contract,’ the trial court is to compare the relief
awarded on the contract claim or claims with the parties’ demands on those same
claims and their litigation objectives as disclosed by the pleadings, trial
briefs, opening statements, and similar sources. The prevailing party determination is to be
made only upon final resolution of the contract claims and only by ‘a
comparison of the extent to which each party ha[s] succeeded or failed to
succeed in its contentions.’†(Hsu v.
Abbara (1995) 9 Cal.4th 863, 876 (Hsu).) When the judgment is a “‘simple, unqualified
win’†for one party on the only contract claims presented at trial, a trial
court has no discretion to deny an attorney fee award to that party under
section 1717. (Ibid.; see also id.
at pp. 875-876 [“when the decision on the litigated contract claims is purely
good news for one party and bad news for the other—the Courts of Appeal have
recognized that a trial court has no discretion to deny attorney fees to the
successful litigantâ€].) “Where neither
party achieves a complete victory, the trial court has discretion to determine
‘which party prevailed on the contract or whether, on balance, neither party
an award of attorney fees.’†(
209 Cal.App.4th 431, 439-440, quoting Scott Co. v. Blount, Inc. (1999)
20 Cal.4th 1103, 1109.) Nonetheless,
“‘the party who obtains greater relief on the contract action is the prevailing
party entitled to attorney fees under section 1717, regardless of whether another party also obtained lesser relief
on the contract or greater relief on
noncontractual claims.’†(Douglas
E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 240 (Barnhart), italics
omitted; see also Silver Creek, LLC v. Blackrock Realty Advisors, Inc.
(2009) 173 Cal.App.4th 1533, 1541 (Silver Creek) [finding trial court
abused its discretion in refusing to award fees to prevailing party in mixed
result case]; Frog Creek Partners, LLC v. Vance Brown, Inc. (2012)
206 Cal.App.4th 515, 531 [“[s]ection 1717 as amended in 1987, makes it
clear that the party who obtains greater relief on the contract action is the
prevailing party entitled to attorney fees under section 1717, regardless of
whether another party also obtained lesser relief on the contract or greater
relief on noncontractual claimsâ€].)
b.
The fee award to
Feller and Stratus Media
Marino
contends the trial court abused its discretion, or else failed to exercise it,
by awarding fees to Feller and Stratus Media.
Although the jury found in favor of Feller and Stratus Media on all
claims, Marino argues they had a unity of interest with Pro Sports, which
unsuccessfully defended Marino’s claim for unpaid wages. In asserting this unity-of-interest theory,
Marino relies on the decision in Hilltop
Investment Associates v. Leon (1994) 28 Cal.App.4th 462 (
affirmed an order denying attorney fees to the prevailing individual defendant,
who had been sued on all claims as the alter ego of a partnership found liable
to the plaintiffs. When the individual
sought attorney fees as a prevailing party, the trial court found “‘[
[the individual] should
not be declared
the prevailing party’â€
because the evidence shows the individual “‘was
diversion of funds
[to] which [the
plaintiffs] were rightfully
entitled.’†(
The appellate court affirmed the trial court’s exercise of discretion,
concluding, although “[t]echnically speaking,
appellant was ‘a
prevailing party’. . .
prevailing parties in
relation to the
partnership over which
appellant exerted controlâ€
and thus the trial court could conclude the “result was a
draw . . . .†(
This decision, assuming it has
any viability after the Supreme Court’s decision a year later in Hsu, supra,
9 Cal.4th 863,
title="">[11]
is of no assistance to Marino. True, the
contract claims against Feller and Stratus Media were predicated on alter ego
allegations. But, more importantly, Pro
Sports, although found liable on the statutory claim for unpaid wages,
successfully defended itself against the far greater liability sought by Marino
under the employment agreement. In
short, unlike the partnership defendant in Hilltop,
supra, 28 Cal.App.4th 462, Pro Sports was a prevailing party on the claims
arising from the contract. (See Barnhart,
supra, 211 Cal.App.4th at
p. 240; Silver Creek, supra, 173 Cal.App.4th at p. 1541.) Whether Pro Sports was entitled to recover
its fees as a prevailing party is not before us, but Marino has plainly failed
to demonstrate any abuse of discretion in awarding fees to Feller and Stratus
Media.
c.
The fee award to
Marino
Marino also contends the trial
court abused its discretion in failing to award him more than 10 percent of his
attorney fees, based on his successful claim for unpaid wages in the amount of
$3,202.34, plus interest and penalties.
In his motion for an award of attorney fees, Marino cited both section
1717 (because he prevailed on a claim under the employment agreement) and Labor
Code section 218.5, which authorizes an award of reasonable attorney fees and
costs to the prevailing party in an action for nonpayment of wages.
Under Frog Creek, Barnhart and Silver
Creek discussed above, Marino was not a prevailing party on the contract
claim and was not entitled to an award of attorney fees under section
1717. As for Labor Code section 218.5,
however, the statute requires the court to award fees if the prevailing party
on a wage claim has requested them at the outset of the action, which Marino
did.
Notwithstanding the mandatory
nature of an award under Labor Code section 218.5, the trial court
retained discretion to apportion fees.
(See, e.g., Amtower v. Photon
Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1604 [“[w]here fees are
authorized for some causes of action in a complaint but not for others,
allocation is a matter within the trial court’s discretionâ€]; accord,
209 Cal.App.4th at p. 443.) “The
reasonableness of attorney fees is within the discretion of the trial court, to
be determined from a consideration of such factors as the nature of the
litigation, the complexity of the issues, the experience and expertise of
counsel and the amount of time involved.
[Citation.] The court may also
consider whether the amount requested is based upon unnecessary or duplicative
work.†(Wilkerson v. Sullivan
(2002) 99 Cal.App.4th 443, 448.) “The
‘experienced trial judge is the best judge of the value of professional
services rendered in his [or her] court, and while his [or her] judgment is of
course subject to review, it will not be disturbed unless the appellate court
is convinced that it is clearly wrong.’â€
(Serrano v. Priest (1977) 20 Cal.3d 25, 49; accord,
of Sunnyvale (2007) 155 Cal.App.4th 525, 556.)
Although not required to
articulate the basis for its award (see Ketchum
v. Moses (2001) 24 Cal.4th 1122, 1140), the trial court explained the
steep reduction in fees was justified because the litigation was principally
driven by Marino’s “more lucrative†claim for separation damages, not the
unpaid wages. The fees requested by
Marino ($151,400) far exceeded the amount recovered on the wage claim, which
including interest and waiting time penalties totaled $17,307.60. By awarding $15,140 the trial court amply
rewarded the effort Marino expended in prevailing on his wage claim. There was no abuse of discretion.
disposition
The judgment is affirmed. Pro Sports, Feller and Stratus Media are to
recover their costs on appeal.
PERLUSS,
P. J.
We
concur:
WOODS, J.
JACKSON, J.
name="_ftn1" title="">[1] Stratus Media, which became the parent
of Pro Sports as of March 14, 2008, was added as a defendant on September
22, 2009.
name="_ftn2" title="">[2] Statutory references are to the Civil
Code unless otherwise specified.
