Opinion
NUMBER 2011 CA 1416
07-10-2012
BRIAN HUNT v. CDI CORPORATION
J. Chandler Loupe A. Gregory Rome Baton Rouge, LA Counsel for Plantiff/Appellee Brian Hunt Richard F. Zimmerman, Jr. Jennifer A. Hataway Baton Rouge, LA Counsel for Defendant/Appellant CDI Corporation
NOT DESIGNATED FOR PUBLICATION
On appeal from the
Nineteenth Judicial District Court
In and for the Parish of East Baton Rouge
State of Louisiana
Suit Number 559,918
Honorable Timothy E. Kelley, Judge
J. Chandler Loupe
A. Gregory Rome
Baton Rouge, LA
Counsel for
Plantiff/Appellee
Brian Hunt
Richard F. Zimmerman, Jr.
Jennifer A. Hataway
Baton Rouge, LA
Counsel for
Defendant/Appellant
CDI Corporation
BEFORE: WHIPPLE, KUHN, AND GUIDRY, JJ.
GUIDRY , J.
In this wage dispute claim, a former employer appeals a judgment finding it liable pursuant to La. R.S. 23:631-642, Louisiana Wage Payment Act, for past due wages, penalties, and attorney fees.
FACTS AND PROCEDURAL HISTORY
CDI Corporation, a Pennsylvania corporation licensed and authorized to conduct business operations in Louisiana, entered into an employment agreement with Brian Hunt in March 2000 to employ him as a manager of project controls. The employment agreement with CDI provided, in pertinent part, that in addition to a weekly wage of $1,840.00, equal to an hourly wage of $46.00 per hour, Mr. Hunt would be paid for hours he worked in excess of 40 hours a week ("overtime") at his hourly pay rate as a "bonus." In March 2003, CDI changed Mr. Hunt's classification to "corporate staff," and he was no longer compensated for overtime in his bi-weekly pay cycle. This change was made without notice to Mr. Hunt; however, Mr. Hunt continued to document the overtime he earned and received compensation in a lump sum check issued on April 27, 2004.
According to email correspondence submitted at trial, Mr. Hunt's classification was changed at the prompting of Richard Paul Hough, Mr. Hunt's supervisor.
A month later, in late May 2004, Mr. Hunt resigned from CDI to work for another company; but barely a month later, on June 30, 2004, he returned to CDI. At the time of his resignation, Mr. Hunt was paid $55.00 per hour. On reemployment, Mr. Hunt's supervisor, Mr. Hough, instructed the human resources department to reinstate Mr. Hunt "in the same position and the same function that he was in when he left." A new employment agreement was not executed. Mr. Hunt's rate of pay, however, was increased to $65.00 per hour, but he received no compensation for overtime performed when he returned to CDI.
Following Mr. Hunt's return, CDI secured a contract with Performance Contractors, Inc. ("Performance") to perform engineering design work on a project for Advanced Elastromer System ("AES"), a company owned by Exxon Corporation. The contract with Performance was a fixed-price contract for approximately $1.5 million; however, because of several design changes, the project greatly exceeded the original estimate for man hours needed to complete the project. In particular, the original estimate on which the contract was based specified that 1,500 man hours would be expended on project management, the component of the project administered by Mr. Hunt, but upon completion, the project resulted in 3,485 man hours for project management. Of those additional hours, 1,885 were attributable to overtime worked by Mr. Hunt.
Based on the extensive overrun on the AES project, in February 2005, Mr. Hunt began to submit his timesheets showing calculations that reflected the total amount of time he worked for a pay cycle, with a deduction of the overtime hours worked, to equal a total of forty hours, which total he would submit for compensation for the pay cycle. The overtime hours documented by Mr. Hunt in this manner on his timesheets were later used in composing a change order to submit to Performance upon completion of the project. The total amount that CDI sought to bill Performance in the change order was approximately $750,000.00, but after lengthy negotiations, a settlement was reached whereby CDI received $250,000.00 as compensation for the additional man hours expended on the project.
Work on the AES project began on October 6, 2004, and the project was completed by August 20, 2006. A change order seeking additional compensation for the expanded scope of the project was submitted to Performance in June 2006, and by November 2006, a settlement agreement regarding the amount of additional compensation to be paid to CDI, in the amount of $250,000.00, was reached. Payment of the settlement amount was remitted to CDI in December 2006.
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On December 8, 2006, CDI terminated Mr. Hunt's employment for violation of its computer-use policy. In June 2007, Mr. Hunt sent a letter to CDI seeking compensation for the overtime he performed on the AES project. CDI rejected Mr. Hunt's demand, so Mr. Hunt filed a petition for past due wages, vacation pay, bonus, penalties and attorney fees on October 4, 2007.
CDI denied owing Mr. Hunt any additional pay and later filed a motion for summary judgment seeking dismissal of all the claims filed by Mr. Hunt. Following a hearing on the motion, the trial court granted partial summary judgment dismissing Mr. Hunt's claim for a bonus in the amount of $30,000.00; however, the trial court denied summary judgment on Mr. Hunt's claims for wages and vacation pay. Thus, the matter proceeded to a two-day bench trial on the merits of those claims. The trial court found in favor of Mr. Hunt and awarded him past due overtime in the amount of $115,821.31, penalty wages in the amount of three months pay for a total of $34,985.60, and attorney fees in the amount of $63,894.56.
It is from this judgment, signed April 8, 2011, that CDI appeals, asserting the following assignments of error:
1. The Trial Court erred in finding that the Agreement was "reinstated" upon Hunt's reemployment and that Hunt was entitled to any past due overtime wages.
2. If the Agreement was reinstated, which is denied, then there was a novation of the Agreement (and the Trial Court erred in not so holding) by which Hunt would be compensated for overtime hours worked in the AES Project by a bonus or time off but not an hourly bonus.
3. The Trial Court erred in finding that the Louisiana Wage Payment Act applied to Hunt's claims and thus erred in awarding penalty wages and attorney's fees.
4. If the Louisiana Wage Payment Act applies to Hunt's claims, which is denied, the Trial Court erred in awarding penalty wages because the claim was the subject to a good faith dispute.
5. If the Louisiana Wage Payment Act applies to Hunt's claims, which is denied, the Trial Court erred in awarding an excessive amount of attorney's fees.
DISCUSSION
CDI's primary contention is that the trial court erred in finding that the employment contract executed by the parties on March 20, 2000, was reinstated when Mr. Hunt resumed his employment with CDI on June 30, 2004. The trial court found that Mr. Hunt's supervisor, Mr. Hough, as a representative of CDI, effectively reinstated the employment agreement when he informed the human resources department to place Mr. Hunt back in the same position and same function as when he left the company. Mr. Hough testified that a new employment agreement was not signed because he considered the March 20, 2000 agreement to be reinstated based on his instructions to human resources.
Based on our review of the record before us, we find no manifest error in the trial court's finding that the March 20, 2000 employment agreement was reinstated. Mr. Hough testified that upon rehiring Mr. Hunt, it was his intention to reinstate Mr. Hunt's prior employment agreement with the company. Mr. Hunt's return to employment with CDI and his testimony that it was his understanding that he would be compensated for any overtime he accrued further support the finding that the employment agreement was reinstated. As such, we cannot say that the trial court was clearly wrong in finding that the agreement was reinstated.
In its second assignment of error, CDI alternatively argues that the trial court erred in not finding that the obligation to pay Mr. Hunt overtime at his hourly rate of pay was extinguished by novation.
Novation is the extinguishment of an existing obligation by the substitution of a new one. La. C.C. art. 1879. "The intention to extinguish the original obligation must be clear and unequivocal. Novation may not be presumed." La. C.C. art. 1880. Futher, La. C.C. art. 1881 states:
Novation takes place when, by agreement of the parties, a new performance is substituted for that previously owed, or a new cause is substituted for that of the original obligation. If any substantial part of the original performance is still owed, there is no novation.
Novation takes place also when the parties expressly declare their intention to novate an obligation.
Mere modification of an obligation, made without intention to extinguish it, does not effect a novation. The execution of a new writing, the issuance or renewal of a negotiable instrument, or the giving of new securities for the performance of an existing obligation are examples of such a modification. [Emphasis added.]
Based on the testimony of Mr. Hunt and Mr. Hough, there is no indication of a clear and unequivocal intention by the parties to extinguish the obligation of CDI to compensate Mr. Hunt for the overtime he worked at his hourly rate of pay. At most, the conversation between Mr. Hunt and Mr. Hough regarding the extensive overtime Mr. Hunt accrued on the AES project amounted to a mere modification of the obligation relative to when Mr. Hunt would be compensated for the overtime worked. According to their testimony, Mr. Hunt and Mr. Hough were not only aware, but concerned about the cost of the extensive labor overrun experienced on the AES project due to several design changes requested by Exxon. Nevertheless, Mr. Hunt complained to Mr. Hough that he was not compensated for the overtime he was working during his bi-weekly pay cycle like the other project managers. Mr. Hough explained that the other projects were not "in trouble" like the AES project, but he assured Mr. Hunt that "we would make sure that he was compensated for the efforts that he had made on the project." Hence, the record does not establish that there was a clear and unequivocal indication by the parties of an intention to extinguish CDI's obligation to compensate Mr. Hunt for the overtime he performed, and thus, the trial court did not err in failing to find that novation of the obligation had occurred.
In its third assignment of error, CDI asserts that the trial court erred in finding that the Louisiana Wage Payment Act, La. R.S. 23:631-642, applies to Mr. Hunt's claim for overtime. Louisiana Revised Statute 23:631(A)(1)(a) provides, in pertinent part, that "[u]pon the discharge of any laborer or other employee of any kind whatever, it shall be the duty of the person employing such laborer or other employee to pay the amount then due under the terms of employment." (Emphasis added.) According to the terms of Mr. Hunt's employment agreement, which was reinstated upon his re-employment, Mr. Hunt was entitled to be compensated at this hourly pay rate for overtime performed. At the time Mr. Hunt's employment was terminated, he had performed the overtime claimed, but had not been compensated for the hours worked. As such, Mr. Hunt's claim for overtime constitutes an "amount then due under the terms of employment" to which the Louisiana Wage Payment Act applies. We find no merit in this assignment of error.
In its next assignment of error, CDI contends that because a good faith dispute existed as to whether CDI owed any additional wages to Mr. Hunt, the trial court erred in awarding Mr. Hunt penalty wages. Louisiana Revised Statute 23:632 provides:
Any employer who fails or refuses to comply with the provisions of R.S. 23:631 shall be liable to the employee either for ninety days wages at the employee's daily rate of pay, or else for full wages from the time the employee's demand for payment is made until the employer shall pay or tender the amount of unpaid wages due to such employee, whichever is the lesser amount of penalty wages. Reasonable attorney fees shall be allowed the laborer or employee by the court which shall be taxed as costs to be paid by the employer, in the event a well-founded suit for any unpaid wages whatsoever be filed by the laborer or employee after three days shall have elapsed from time of making the first demand following discharge or resignation.
Generally, when there is a good-faith question of whether the employer actually owes past due wages, resistance to payment will not trigger penalty wages. Schuyten v. Superior Systems, Inc., 05-2358, p. 12 (La. App. 1st Cir. 12/28/06), 952 So. 2d 98, 106. To recover penalties under La. R.S. 23:632, the employee must prove that (1) wages were due and owing; (2) demand for payment was made at the place where the employee was usually paid; and (3) the employer failed to pay upon demand. Berard v. L-3 Communications Vertex Aerospace, LLC, 09-1202, pp. 13-14 (La. App. 1st Cir. 2/12/10), 35 So. 3d 334, 344-345, writ denied, 10-0715 (La. 6/4/10), 38 So. 3d 302. When the employer is arbitrary, sets out procedural pitfalls for the employee, or is merely negligent in failing to pay past due wages, penalty wages will be assessed. Berard, 09-1202 at p. 14, 35 So. 3d at 345. A trial court's findings of fact with regard to whether the plaintiff is entitled to penalty wages cannot be reversed on appeal in the absence of manifest error. Schuyten, 05-2358 at p. 12, 952 So. 2d at 107.
In this instance, the trial court found CDI to be arbitrary and capricious in failing to compensate Mr. Hunt based on the testimony of another employee, Ronald Marks. Mr. Marks testified that like Mr. Hunt, he initially was not compensated for the overtime he performed on the AES project, but later he started keeping record of his overtime hours on a separate spreadsheet, per Mr. Hunt's instructions. Mr. Marks admitted that although he was not paid for the overtime at the time it was earned, he was eventually compensated for all of the overtime he performed on the AES project. The trial court therefore found that GDI's failure to compensate Mr. Hunt for the overtime he performed on the AES project was arbitrary in light of the fact that it paid Mr. Marks for all of the overtime Mr. Marks had performed. Considering this evidence, we cannot say that the trial court manifestly erred in finding CDI arbitrary in its failure to pay the overtime wages demanded by Mr. Hunt, and therefore liable for penalty wages.
Finally, CDI contends that the trial court awarded Mr. Hunt an excessive amount of attorney fees. In support of this contention, CDI identified several time entries on the accounting submitted by counsel for Mr. Hunt, pointing out that some of the entries were obvious double entries and otherwise erroneous. Following the hearing on the motion for attorney fees and costs filed by Mr. Hunt, the trial court gave the following reasons for the award of attorney fees granted:
I also looked through the billings, and in some instances I found the billings were excessive for the description granted and I lowered those, and some I found there was some duplication. I lowered those. ... At the end of the day though, you all still, in the court's mind, reasonably expended in excess of the thirty-five per cent of the judgment value in pursuing this claim, Mr. Zimmerman raises a valid point with regard to looking at the time sheets, how much of that time was spent on issues that you were not successful for. When I subtract that out, we basically get right to about the thirty-five per cent range. I think that the thirty-five per cent range is basically very reasonable. If I were to give you what your time is based upon what I determined off the timesheets is reasonable for each of the entries, it would far exceed the thirty-five per cent; therefore, I agree with you that the thirty-five per cent is a reasonable fee, certainly considering you expended time and effort, or the value of your time and effort at least doubled what you're going to recover on this from my judgment.
An award of reasonable attorney fees is mandatory in the event an employee brings a well-founded suit for unpaid wages. A suit in which the recovery of back wages is granted is considered well-founded. Schuyten, 05-2358 at p. 12, 952 So. 2d at 107. Factors to be taken into consideration in determining the reasonableness of attorney fees include: (1) the ultimate result obtained; (2) the responsibility incurred; (3) the importance of the litigation: (4) amount of money involved; (5) extent and character of the work performed; (6) legal knowledge, attainment, and skill of the attorneys; (7) number of appearances made; (8) intricacies of the facts involved; (9) diligence of counsel; and (10) the court's own knowledge. Anglin v. Anglin, 09-0844, p. 7 (La. App. 1st Cir. 12/16/09), 30 So. 3d 746, 752; see also Rule 1.5(a) of the Rules of Professional Conduct.
The evidence introduced at the hearing on the motion for attorney fees revealed that Mr. Hunt was represented by two attorneys in the proceedings below and had signed a contingency fee contract providing for compensation at the rate of forty percent of the amount recovered on his claim. The contract was signed in April 2007, and a favorable judgment in this matter was signed on April 8, 2011. The two attorneys representing Mr. Hunt began practicing in 1990 and 1991, respectively, and counsel testified that the normal hourly rate for their representation is generally between $150.00 to $200.00. Counsel for Mr. Hunt further testified that prior to trial, a block of days was set aside wherein they consulted with witnesses, thoroughly reviewed all of the evidence, and prepared the exhibits to be introduced at trial. Counsel further testified that not all of the work performed in representing Mr. Hunt, such as time spent by one of the attorneys reviewing emails and other correspondence, was documented on the itemization of time and costs submitted into evidence.
The trial court has much discretion in fixing an award of attorney fees, and its award will not be modified on appeal absent a showing of an abuse of discretion. Anglin, 09-0844 at p. 7, 30 So. 3d at 752. While this matter did not entail extensive discovery nor a lengthy trial or pre-trial proceedings, the matter did extend over a period of four years, involved consideration of over fifty exhibits introduced by the parties, and resulted in a favorable judgment award to the plaintiff of $150,806.91. As noted above, the trial court expressly found that an award of thirty-five percent of Mr. Hunt's total recovery to be a reasonable attorney fee, and we cannot say such a finding is an abuse of discretion.
However, we do find that the trial court erred in calculating the exact amount of the fee, as the amount awarded exceeds the thirty-five percent found to be reasonable. According to our calculations, thirty-five percent of Mr. Hunt's total recovery would equal $52,782.42, Accordingly, we will amend the trial court's judgment to reflect this figure.
CONCLUSION
Therefore, finding no error in the determinations made by the trial court in this matter, we affirm the trial court's judgment in favor of the plaintiff awarding him compensation for past due overtime wages and penalty wages pursuant to the Louisiana Wage Payment Act. However, we amend the judgment to reduce the award of attorney fees to $52,782.42. In all other respects, the judgment is affirmed. All costs of this appeal are cast to the appellant, CDI Corporation.
AMENDED AND, AS AMENDED, AFFIRMED.