Shin v. Farmers Group

 

 

 

 

 

 

 

Filed 6/24/13  Shin v. Farmers Group CA2/2

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>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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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  This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
TWO

 

 
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SUN-WOO SHIN,               Plaintiff and Appellant,               v.   FARMERS GROUP, INC., et al.,               Defendants and Respondents.

B240989         (Los Angeles County       Super. Ct. No. BC448413)

 

            APPEAL from
a judgment of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County.

Susan Bryant-Deason, Judge. 
Affirmed.

 

            The
Anfanger Law Office, Nancy B. Anfanger for Plaintiff and Appellant.

 

            Locke Lord,
Stephen A. Tuggy, Nina Huerta for Defendants and Respondents.

 

___________________________________________________

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            Plaintiff Sun-Woo (Sunny) Shin appeals from a judgment
after an order granting summary judgment
was entered in favor of defendants Farmers Group, Inc., Farmers Insurance
Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century
Insurance Company, and Farmers New World Life Insurance Company (collectively,
Farmers).  Shin brought various claims,
all of which were dependent on the existence of an employer-employee
relationship with Farmers.  The trial
court found that Shin was an independent contractor and on that basis granted
summary judgment in favor of Farmers.  We
affirm.

BACKGROUND

Facts

            Shin was
experienced in insurance sales and marketing. 
In 2002, he became a Farmers reserve district manager, with the goal of
eventually becoming a district manager. 
In late 2003, he applied for a district manager position with Farmers,
believing that he would run the district assigned to him as his own
business.  In connection with his
application, Shin submitted a “personal history form” that stated:  “This is not an application for employment,
but an application for appointment as an independent-contractor district
manager representing our organization.”

            Shin
prepared a “business continuation plan” that contained a mission statement, a
strategic plan, a description of how he would organize and manage his business,
and a detailed expense budget.  Among
other things, Shin’s plan contained the statement:  “As the business owner the district manager
needs to select quality candidates to staff his office.”  It further stated that he would organize the
business as a separate corporation and would invest his own funds and a
percentage of his overwrite (commission) into the business.

            Shin was
appointed as a Farmers district manager in January 2004.  The “District Manager’s Appointment
Agreement” (DMAA) signed by Shin stated: 
“Nothing contained herein is intended or shall be construed to create
the relationship of employer and employee. 
The time to be expended by District Manager is solely within his/her
discretion, and the persons to be solicited and the area within the district
involved wherein solicitation shall be conducted is at the election of the
District Manager.  No control is to be
exercised by [Farmers] over the time when, the place where, or the manner in
which the District Manager shall operate in carrying out the objectives of this
Agreement provided only that they conform to normal good business practice, and
to all State and Federal laws governing the conduct of [Farmers], and [its]
Agents.”  Related agreements, also signed
by Shin, expressly stated he was being retained as an independent contractor.  The DMAA stated that, as district manager,
Shin would “recruit for appointment and train as many agents acceptable to
[Farmers] as may be required to produce sales in accordance with goals and
objectives established by [Farmers].” 
Shin described his “main duty” as “increas[ing] policies sold in the
district where I was assigned as District Manager . . . and to market.”

            After
appointment as district manager, Shin incorporated his business as “Sunny Shin
Insurance Agency” (SSIA) and acquired an employer identification number from
the Internal Revenue Service.  Shin
invested $20,000 of his own cash in the business and leased a set of offices in
Anaheim Hills.  He hired staff for the
business, determining whom to hire, how much he and his staff would be paid,
and what hours they would work.  Shin
retained a payroll services firm to process SSIA’s payroll, and he paid his
employees’ salaries.  He bought computer
equipment and services, office supplies, and other business expenses.  Eventually, Shin refinanced his home three
times to provide cash to support the district manager business.

            Farmers
communicated with Shin to encourage him to achieve Farmers’ desired results;
i.e., that Shin, through SSIA, would train and recruit agents to achieve a
certain level of sales in the district. 
Farmers developed marketing programs to promote the sale of its
insurance products.  Under the DMAA, Shin
was required to train agents in his district to use those marketing programs.

Procedural Background

            Shin’s district manager relationship with Farmers was not
financially successful and ended in August 2008.  In October 2010, Shin initiated this
lawsuit.  The operative third amended
complaint, filed in August 2011, alleged claims for (1) failure to pay wages
(Lab. Code, § 200 et seq.); (2) wrongful termination in violation of public
policy; (3) failure to indemnify (Lab. Code, § 2802); (4) withholding of wages
(Lab. Code, § 221); (5) failure to pay minimum wages and overtime
compensation (Lab. Code, §§ 1194, 1197); and (6) unfair business practices
(Bus. & Prof. Code, § 17200 et seq.). 
Shin contended that as a district manager he was improperly classified
as an independent contractor, when he was actually an employee of Farmers.

            Farmers
brought its motion for summary judgment in September 2011.  In support of its motion, Farmers submitted a
considerable amount of evidence obtained through discovery and by declaration,
and referred to the evidence in detail in its separate statement.  Shin’s responsive separate statement, on the
other hand, was defective.  It purported
to dispute a number of facts without actually disputing the primary content of
the facts, it often cited to irrelevant or nonexistent evidence, and citations
to the record were overly vague or otherwise deficient.  Shin relied almost entirely on his own
declaration for evidence, and much of the declaration was struck when Farmers’
objections were sustained by the trial court.

            The trial
court heard Farmers’ motion for summary judgment in January 2012.  Finding that Shin’s claims could only be
asserted by an employee and determining that the evidence submitted by Farmers
demonstrated that Shin was an independent contractor, the trial court granted
the motion for summary judgment.

            Shin timely
appealed.

>DISCUSSION

I.  Standard of review

            The judgment is appealable.  (Code Civ. Proc., § 437c, subd. (m)(1).)  Summary judgment “shall be granted if all the
papers submitted show that there is no triable issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.”  (Id., subd. (c).)  The moving papers are strictly construed,
while the opposition is liberally construed in the most favorable light;
evidentiary doubts or ambiguities are resolved in plaintiff’s favor.  (Saelzler
v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.)  Nevertheless, plaintiff “may not rely upon
the mere allegations or denials of its pleadings” but instead must “set forth
the specific facts showing that a triable issue of material fact exists.”  (Code Civ. Proc., § 437c, subd. (p)(2).)  “The purpose of the law of summary judgment
is to provide courts with a mechanism to cut through the parties’ pleadings in
order to determine whether, despite their allegations, trial is in fact
necessary to resolve their dispute.”  (>Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 843.)  Review is de
novo.  (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990,
1003.)

II.  Plaintiff’s claims were all dependent on
employee status

            Shin
acknowledges that each of his claims (including the unfair business practices
claim, which is derivative of the others) can only be asserted by an employee,
not an independent contractor.

            The common
law test for determining whether an employment relationship exists was set
forth in S.G. Borello & Sons, Inc. v.
Department of Industrial Relations (1989) 48 Cal.3d 341  (Borello):  “‘[T]he principal test of an employment
relationship is whether the person to whom service is rendered has the right to
control the manner and means of accomplishing the result desired. . . .’”  (Id.
at p. 350.)  This primary test is often
insufficient when applied in isolation, however, and so courts look to a number
of other factors, including “whether the principal has the right to discharge
at will, without cause; whether the one performing services is engaged in a
distinct occupation or business; the kind of occupation, with reference to
whether, in the locality, the work is usually done under the direction of the
principal or by a specialist without supervision; the skill required in the particular
occupation; whether the principal or the worker supplies the instrumentalities,
tools, and the place of work for the person doing the work; the length of time
for which the services are to be performed; the method of payment, whether by
the time or by the job; whether or not the work is a part of the regular
business of the principal; and, whether or not the parties believe they are
creating the relationship of employer-employee.”  (Arnold
v. Mutual of Omaha Ins. Co. (2011) 202 Cal.App.4th 580, 584 (>Arnold); Borello, supra, 48 Cal.3d
at pp. 350-351.)  These factors are not
“‘applied mechanically as separate tests,’” but instead are “intertwined” and
their weight depends on a combination of factors.  (Borello,
at p. 351.)

            This common
law test for determining an employment relationship applies to Shin’s first,
third, and fourth causes of action for failure to pay wages (Lab. Code, § 200
et seq.), failure to indemnify (Lab. Code, § 2802), and withholding of wages
(Lab. Code, § 221).  Each of these causes
of action refers to an “employee” without defining the term, and none is
subject to a definition of “employee” found in the Labor Code.  As such, the common law definition of
“employee” applies to each.  (>Arnold, supra, 202 Cal.App.4th at pp. 586-587; Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th
1, 10 (Estrada); Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491,
500.)  Because Shin’s unfair business
practices cause of action is derivative of these three causes of action, it is
also governed by the common law definition. 
(See Arnold, at pp.
586-587.)  Likewise, Shin’s second cause
of action for wrongful termination in violation of public policy is subject to
the common law standard.  (>Varisco v. Gateway Science & Engineering,
Inc. (2008) 166 Cal.App.4th 1099, 1102-1104 [applying Borello test to claim of “tortious termination of employment
contract in violation of public policy”]; Miklosy
v. Regents of University of California (2008) 44 Cal.4th 876, 898-900
[wrongful termination in violation of public policy claim requires
employer-employee relationship].)

            The only
cause of action asserted by Shin that is not strictly subject to the common law
standard for deciding whether a party is an independent contractor or an employee
is his claim for failure to pay minimum wages and overtime compensation (Lab.
Code, §§ 1194, 1197).  Rather, for
this cause of action, to determine whether an employment relationship existed,
we turn to the relevant wage order promulgated by the Industrial Welfare
Commission.  (Martinez v. Combs (2010) 49 Cal.4th 35, 52, 56-57 (>Martinez).)  Martinez
examined the wage order applicable to agricultural occupations, but the wage
order at issue here, Wage Order No. 4-2001 (Cal. Code Regs., tit. 8,
§ 11040), contains the same definitions of “employ” and “employer” that
were analyzed in Martinez.  (See
Martinez, at p. 59.)  The wage order defines “employ” as “to
engage, suffer, or permit to work.” 
(Cal. Code Regs., tit. 8, § 11040, subd. 2(E).)  The definition of “employer” “logically
incorporates the separate definition of ‘employ’ (i.e. ‘to engage, suffer, or
permit to work’) as one alternative.”  (>Martinez, supra, 49 Cal.4th at p.
59.)  It also includes anyone who
“‘exercises control over . . . wages, hours, or working conditions.’”  (Ibid.;
Cal. Code Regs., tit. 8, § 11040, subd. 2(H).)

            The Martinez decision noted that, although the wage order definition is
not entirely synonymous with common law definition of employment, the common
law rule “does play an important role.” 
(49 Cal.4th at p. 65.)  Moreover, >Martinez declined to give the wage order
definition an overly broad reading. 
Rather, the Court saw “no reason to refrain from giving the IWC’s
definition of ‘employ’ its historical meaning. . . .  A proprietor who knows that persons are
working in his or her business without having been formally hired, or while
being paid less than the minimum wage, clearly suffers or permits that work by
failing to prevent it, while having the power to do so.”  (Id.
at p. 69.)  Applying the >Martinez analysis to the minimum wage
and overtime compensation claim as stated in this case, the decision counsels a
two-step process for determining whether an employment relationship
existed:  (1) whether a common law employment
relationship was present and, if not, (2) whether Farmers exercised control
over Shin’s wages, hours, or working conditions.

III.  Shin was not an employee of Farmers

            The
determination of whether a person is an employee or an independent contractor
is generally one of fact if it is dependent on the resolution of disputed
evidence, but it can be decided as a matter of law if the evidence supports
only one credible conclusion.  (>Borello, supra, 48 Cal.3d at p. 349; Angelotti
v. The Walt Disney Co. (2011) 192 Cal.App.4th 1394, 1404.)  The trial court found that the evidence
submitted in connection with the motion for summary judgment established that
Shin was an independent contractor.  We
agree.

            In support
of the motion for summary judgment, Farmers introduced evidence that when
seeking the district manager position, Shin believed that he would run the
district assigned to him as his own business. 
The documents and agreements signed by Shin in connection with his
application and acceptance of the district manager position expressly attested
to the fact that the position was one of an independent contractor, not an
employee.  Although materials of this
sort are not dispositive, the fact that the parties believed they were creating
an independent contractor relationship, rather than an employer-employee
relationship, is relevant to determining independent contractor status under
the common law test.  (>Borello, supra, 48 Cal.3d at p. 349; Arnold,
supra, 202 Cal.App.4th 580, 584.) 

            Further
evidence supported the conclusion that Shin had the right to control the manner
and means of accomplishing the result desired by Farmers.  He incorporated his own separate business,
SSIA, in which he invested substantial amounts of his own funds.  He found and rented an office for the SSIA
business.  He hired his own staff and
determined how much he and his staff would be paid and what hours they would
work.  In addition, he paid for computer
equipment and services, office supplies, and other business expenses.  These facts are all indicative of independent
contractor status.  (See >Borello, supra, 48 Cal.3d at p. 349; Arnold,
supra, 202 Cal.App.4th 580, 584.)

            Unlike
cases relied on by Shin, such as Borello,  in which the petitioners were
cucumber-harvesting laborers (48 Cal.3d at p. 345), or Estrada, where the
plaintiffs were delivery truck drivers and needed no experience or skills other
than the ability to drive (154 Cal.App.4th at p. 12), Shin had extensive
experience in the insurance sales and marketing field, had previously run and
then sold his own Allstate agency, and was licensed to sell insurance in
California.  Shin’s work as a district
manager was a high-skill job, a factor weighing in favor of independent
contractor status.  (See >Arnold, supra, 202 Cal.App.4th 580, 584.) 
Indeed, the relevant case law overwhelmingly favors the position that
parties in positions similar to Shin’s are independent contractors.  (See, e.g., id. at p. 582 [independent insurance agent found to be independent
contractor]; Murray v. Principal Fin.
Group, Inc. (9th Cir. 2010) 613 F.3d 943, 944 [“[w]e, along with virtually
every other Circuit to consider similar issues, have held that insurance agents
are independent contractors and not employees”].)

            In opposing
the motion for summary judgment, Shin did not directly dispute most the above
evidence, and his responsive separate statement generally lacked reference to
facts evidencing an employer-employee relationship.href="#_ftn1" name="_ftnref1" title="">^[1]  On appeal, Shin lists numerous “facts” that
did not appear in his separate statement and/or that were struck by the trial
court.  By failing to properly reference
evidence in his responsive statement, we find that Shin forfeited the right to
rely on such evidence on appeal.  (See
Code Civ. Proc., § 437c. subd. (b)(3) [failure to comply with separate
statement requirement “may constitute a sufficient ground, in the court’s
discretion, for granting the motion”]; Laabs
v. City of Victorville (2008) 163 Cal.App.4th 1242, 1266-1267; >North Coast Business Park v. Nielsen
Construction Co. (1993) 17 Cal.App.4th 22, 30-31.)  Further, Shin relied almost entirely on his
own declaration for evidence, and much of it was struck by sustained
objections.  It is the appellant’s
“burden on appeal to affirmatively challenge the trial court’s evidentiary ruling,
and demonstrate the court’s error.”  (>Roe v. McDonald's Corp. (2005) 129
Cal.App.4th 1107, 1114.)  The appellant
must “identify the court’s evidentiary ruling as a distinct assignment of
error” and provide a separate argument heading and analysis of the issue.  (Ibid.)  Shin has not demonstrated how the evidentiary
rulings were incorrect, and thus has forfeited his right to argue that the
trial court abused its discretion by excluding evidence.  (See Salas
v. Department of Transportation (2011) 198 Cal.App.4th 1058, 1075.) 

            The
evidence properly before the court does not demonstrate a triable issue of
material fact.  Even considering the
evidence that Shin relies on in his appeal (most of which he failed to properly
refer to in his separate statement), we do not find that it tips the balance in
favor of an employment relationship.  The
facts that he had to attend meetings and trainings, write reports, issue
business plans, promote the Farmers brand, and maintain his office in a
respectable manner are consistent with Farmers’ expectation as a contracting
party that services would be delivered in an acceptable manner.  (See Mission
Ins. Co. v. Workers’ Comp. Appeals Bd. (1981) 123 Cal.App.3d 211, 224
[establishing quality standards is not indicative of an employer-employee
relationship; “[o]n the contrary, an employer who controls the manner in which
the work is done has little need of establishing quality standards for
completed work”].)  The fact that SSIA
received payment at regular intervals, based at least in part on a percentage
of premiums paid on policies sold in his district, also does not evidence an
employment relationship.  (See >Arnold, supra, 202 Cal.App.4th at p. 589 [independent contractor insurance
agent was paid every two weeks, and payment was based on results and not the
amount of time spent working].)  Nor does
the fact that the DMAA could be terminated by either party on 30 days’ notice
show that he was an employee of Farmers. 
(Ibid.; Varisco v. Gateway Science & Engineering, Inc.,> supra, 166 Cal.App.4th 1099,
1107.)  And the fact that he was
contractually prohibited from working for other insurance companies during his
time as district manager does not require a finding that he was an employee.  (See Murray
v. Principal Fin. Group, Inc., supra,
613 F.3d at p. 944 [“career agent” deemed an independent contractor]; >Mt. Meadow, etc. v. Indus. Acc. Com.
(1938) 25 Cal.App.2d 123, 125 [independent contractor distributor not allowed
to handle competing products].)

            “Even if one or two . . . individual
factors might suggest an employment relationship, summary judgment is
nevertheless proper when . . . all the factors weighed and considered as a
whole establish that [plaintiff] was an independent contractor and not an
employee.”  (Arnold, supra, 202
Cal.App.4th at p. 590.)  Based on the
summary judgment papers, the only reasonable conclusion is that Shin was an
independent contractor under the common law test. 

            We also
find that there is no triable issue of material fact whether Farmers exercised
control over Shin’s wages, hours, or working conditions for purposes of his
minimum wage and overtime compensation claim. 
Shin controlled the timing and amount of wages he was paid by SSIA, and
he could increase his compensation by recruiting and training successful
insurance agents for his district. 
Farmers did not monitor or supervise the hours Shin worked and did not
require Shin to report his hours worked. 
Moreover, Shin rented SSIA’s office himself, and he supplied the
equipment and supplies.

            In sum,
Farmers did not exercise the sort of control over Shin that is consistent with
an employment relationship.  The trial
court did not err by finding that Shin was an independent contractor.  Accordingly, summary judgment was properly
granted.

IV.  A continuance was not warranted

            A trial
court’s decision to deny a request for a continuance so that a party may seek
more evidence to oppose a motion for summary judgment is reviewed for an abuse
of discretion.  (Rodriguez v. Oto (2013) 212 Cal.App.4th 1020, 1038.)  “In exercising its discretion the court may
properly consider the extent to which the requesting party’s failure to secure
the contemplated evidence more seasonably results from a lack of diligence on
his part.”  (Ibid.) 

            Shin fails to show that the trial
court abused its discretion in denying a continuance.  It appears from the record that, after filing
the case on October 29, 2010, Shin propounded no discovery for almost an entire
year.  Finally, beginning on
October 28, 2011, Shin began the process of discovery.  His opposition to the motion for summary
judgment was due on November 23, 2011, however, meaning that discovery
responses were not even due prior to the deadline for the opposition.  Shin provides no satisfactory excuse for this
lack of diligence.  Accordingly, we find
no abuse of discretion.

DISPOSITION

            The
judgment is affirmed.

            NOT TO
BE PUBLISHED IN THE OFFICIAL REPORTS.

 

                                                                        BOREN,
P.J.

We concur:

 

            ASHMANN-GERST,
J.                     CHAVEZ, J.