Opinion
D057448 Super. Ct. No. 37-2009-00050618- CU-BC-NC
01-24-2012
FRANK MILIAN, Plaintiff and Respondent, v. JET SOURCE, INC., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from a judgment and an order of the Superior Court of San Diego County, Earl H. Maas, III, Judge. Affirmed.
In this breach of contract action, Jet Source, Inc. (Jet Source) appeals a judgment in favor of its former employee, Frank Milian. Jet Source contends the jury's finding that it terminated Milian's employment is unsupported by substantial evidence and the court erred by refusing to instruct the jury on its waiver theory, admitting irrelevant and inflammatory evidence and awarding Milian statutory attorney fees. We affirm the judgment and the order.
FACTUAL AND PROCEDURAL BACKGROUND
We summarize the facts in the light most favorable to the judgment. (Behr v. Redmond (2011) 193 Cal.App.4th 517, 522, fn. 1.)
Jet Source provides private aviation services, including the operation, maintenance and storage of aircraft. In 2002 Jet Source was losing money, and its owner, Richard McWilliam, sought an experienced executive to turn the company around. Milian became a licensed pilot in 1968 and he had worked in the aviation industry for many years. In September 2002 the parties entered into a written contract for Milian's at-will employment as Jet Source's chief operating officer. The contract sets forth Milian's base salary and his entitlement to vacation days, participation in a bonus program, and six months' severance pay on termination without cause after one year of employment.
Under Milian's management, Jet Source's business tripled. By 2004 the business was breaking even and in 2005 it became profitable. McWilliam named Milian the company president.
In 2008 Jet Source was affected by the economic downturn, and Milian and McWilliam differed over its management. In a May 18, 2008 e-mail, Milian wrote to McWilliam: "I know you are extremely busy and I do not mean to create another issue for you but I feel its [sic] time that I move on. I have made significant progress in getting Jet Source to be recognized as a first class aviation company and I do not want to do anything that would comprise [sic] that. My departure will not sit well with many of the staff and that is what I would like to focus on. The timing can be something that we mutually agree to . . . . I know you are out this coming week, I would be happy to talk to you about this now or when you return."
In a meeting a few days later, McWilliam told Milian he was pleased with Milian's performance and he wanted Milian to stay with Jet Source. Milian agreed and he continued his duties, including the implementation of cost-cutting measures.
In a meeting on July 7 or 8, however, McWilliam fired Milian and said he had hired Milian's replacement. Milian was "completely surprised." McWilliam handed Milian a document that stated "the employment relationship between Milian and Jet Source is now being terminated."
In a July 13, 2008 e-mail to Milian, McWilliam wrote, "I accepted your resignation[,] now is the [time] to make a decision on going forward." Milian responded, "For the record I did not resign, the document you handed me last week states clearly that my employment is being terminated." McWilliam then gave Milian a document that stated he had resigned.
In January 2009 Milian sued Jet Source for breach of contract based on its failure to pay him severance and bonus pay after his termination. Jet Source argued that Milian's May 18, 2008 e-mail was a resignation, and thus he was not entitled to severance pay. Jet Source also sought to show Milian waived any right to contractual bonuses by previously accepting bonuses that were not based on the formula set forth in the contract, but the court refused to instruct the jury on waiver. The jury found in favor of Milian and awarded him $111,800 in severance pay, $29,347.50 for 2007 bonus pay, $15,896.56 for 2008 bonus pay, and a $15,480 penalty for withheld vacation pay. Judgment was entered on March 30, 2010.
Jet Source filed a cross-complaint against Milian, but it is not at issue on appeal.
The court denied Jet Source's alternative motions for judgment notwithstanding the verdict (JNOV) and a new trial. Milian then moved for attorney fees under section 218.5 and prejudgment interest. The court awarded him $101,100 in fees and $29,412.71 in interest.
Jet Source's opening brief notes the appealability of the June 1, 2010, order denying its motions for JNOV and a new trial. Jet Source, however, did not appeal that order.
DISCUSSION
I
Severance Pay
Jet Source challenges the sufficiency of the evidence to support the jury's finding that it terminated Milian's employment, thus entitling him to severance pay. "When an appellant contends the evidence is insufficient to support a judgment, order, or factual finding, we apply the substantial evidence standard of review." (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 957.) "We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor . . . . [Citation.] 'Substantial evidence' is not synonymous with 'any' evidence; rather, it means the evidence must be of ponderable legal significance, reasonable, credible, and of solid value. [Citation.] An appellate court presumes in favor of the judgment or order all reasonable inferences. [Citation.] If there is substantial evidence to support a finding, an appellate court must uphold that finding even if it would have made a different finding had it presided over the trial. [Citations.] An appellate court does not reweigh the evidence or evaluate the credibility of witnesses, but rather defers to the trier of fact." (Id. at pp. 957-958.)
Milian testified that his May 18, 2008, e-mail to McWilliam was not intended as a resignation. He explained, "I did not want to quit Jet Source. What I needed to do is let [McWilliam] know that there were some problem areas I had some concerns. And I really needed to talk to him about those." He elaborated, "I wasn't quitting. But . . . prior to this [e-mail] there were just some things that were going on that were uncomfortable. And that I didn't see where we would be able to accomplish the goals that we had talked about. And I may need to leave the company at some point in time. And I wanted to provide—you know, if we did that, I would want to provide for a transition, so the company that I built would continue." Milian also explained that "if we were not able to talk about the issues that I needed to bring up to him, then I may have to leave the company." Milian was working on a number of projects for Jet Source he wanted to complete, and he had no other employment arranged.
Milian also testified that about 10 days after he sent the May 18 e-mail, he and McWilliam met and he agreed at McWilliam's request to stay with Jet Source. Milian continued to work at Jet Source until McWilliam unexpectedly fired him a few weeks later. Further, McWilliam initially gave Milian a document that acknowledged his employment was terminated, but McWilliam later gave him a document that claimed he resigned.
In 2008 James Grindrod was Jet Source's director of operations and McWilliams's personal pilot. Grindrod testified that on May 18, 2008, McWilliam forwarded him Milian's e-mail of that date. Grindrod was aware that Milian had job frustrations. McWilliam asked Grindrod to contact Milian "to figure out what was going on." Grindrod had the impression McWilliam wanted Milian to remain at Jet Source. Grindrod testified "we were trying to . . . figure out what the problems are and continue in a positive direction with Jet Source and [Milian]." Grindrod was concerned because if Milian left "there was nobody at Jet Source that really could run Jet Source."
Additionally, Grindrod testified that when he spoke with Milian on May 18, 2008, he was not definite about leaving the company. After the subsequent meeting between Milian and McWilliam, Grindrod asked Milian what the outcome was and he gave no indication he was leaving Jet Source. Grindrod testified that to the contrary, "there was a little bit more of a spring in his step afterwards. He was going forward with Jet Source trying to evaluate, figure out what he was going to do. Maybe looking at doing massive layoffs, which I knew he didn't want to do. But it was something that needed to be done." Additionally, Grindrod spoke with Milian on a daily basis during the remainder of May, June, and early July 2008, and he did not indicate he planned to leave Jet Source or that there was any transition plan underway. Grindrod learned Milian's employment would be terminated only the day before Milian was told.
Jeffrey Graw was Jet Source's director of human resources. He testified that he sent a letter dated July 15, 2008, to Milian, which states, "This letter is to acknowledge termination of your employment with Jet Source . . . effective . . . July 15, 2008. The letter was prompted by a phone call "from a Richard Foltynewicz[], that himself and [McWilliam] were on the way over to Jet Source and that they had a new president of the company with them and that [Milian] had been let go." McWilliam met with Jet Source's executive management group and then with all employees and announced that Milian "was let go." Graw had no indication Milian had supposedly resigned weeks earlier.
Foltynewicz was the human resources director at Upper Deck, another McWilliams company.
This evidence amply supports the jury's verdict. The jury was instructed as follows: "Resignations are contractual in nature. As such, a resignation, like any offer, . . . may be withdrawn prior to its acceptance. An offer to resign, to be effective, must demonstrate a clear, unequivocal intent to resign." The jury could reasonably find that Milian's May 18, 2008 e-mail was not a clear, unequivocal intent to resign, or alternatively, he withdrew any resignation before it was accepted by continuing to work at Jet Source at McWilliam's request.
Jet Source disputes Milian's argument that to be effective, a resignation must be "clear" and "unequivocal." Jet Source, however, does not challenge the propriety of this jury instruction. Rather, it ignores the instruction.
Similarly, the jury could reasonably reject Jet Source's theory that the May 18, 2008 e-mail modified the employment contract to show Milian had resigned and would be leaving Jet Source after a successor was found. The jury was given this instruction: "Jet Source . . . claims that the original contract with [Milian] cannot be enforced because the parties substituted a new and different contract for the original. [¶] To succeed, Jet Source . . . must prove that all parties agreed, by words or conduct, to cancel the original contract and to substitute a new contract in its place. [¶] If you decide that Jet Source . . . has proved this, then the original contract is not enforceable." Jet Source focuses on McWilliam's testimony favorable to Jet Source, but we do not reweigh the evidence or make credibility determinations. When the jury's finding is supported by substantial evidence, as here, we must affirm the judgment.
II
Bonus Pay
Jet Source also contends the court erred by denying its request for a jury instruction on waiver of Milian's right to contractual bonuses for 2007 and 2008. Jet Source asserts that because Milian accepted bonuses between 2002 and 2006 that were not calculated strictly in accordance with the formula attached to the employment contract, he waived his right to future contractual bonuses and any bonuses were strictly within McWilliam's discretion.
The bonus formula attached to the employment contract contains a financial component based on Jet Source's performance, and a nonfinancial component of a specified percentage of Milian's base salary. The performance criterion was not met and Milian claimed entitlement only to the nonfinancial component. When hired, his base salary was $160,000, and on that amount he was entitled to a nonfinancial bonus of $21,000. He received raises during his employment, which increased the amount of his bonus pay. In 2007 his base pay was $223,600, which entitled him to a $29,347.50 bonus for that year and a $15,896.56 bonus for part of 2008.
Jet Source paid Milian the following bonuses: 2002, $10,000; 2003, $15,000; 2004, $20,000; 2005, $25,000, and; 2006, $40,000. As to the 2002 bonus, Milian testified he began working for Jet Source in the third quarter of the year and since he did not expect a bonus that year, "I was happy with it." As to the 2003 bonus, he testified "my target was roughly $20,000," but "I was over paid [the] prior year, so I wasn't going to make an issue of it." As to the 2004 bonus, Milian testified he expected approximately $20,000, and thus, "I really didn't spend any time thinking about it." As to his 2005 bonus, Milian explained that with his "salary going up" the "bonus should have been in the vicinity of $25,000" and his bonus was very close. He elaborated that each of his bonuses was in the ballpark according to his calculations, and "as long as it [his bonus]
was in the target of what I was looking for, it was close enough. I was okay with that."The general rule regarding jury instructions is that "a party is entitled to have the jury instructed as to his theory of the case provided (1) that he requests and submits legally correct instructions, and (2) that there is sufficient evidence to support the theory." (Bains v. Western Pacific R.R. Co. (1976) 56 Cal.App.3d 902, 905, italics added.) We review the court's ruling on a jury instruction request de novo. (Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal.App.4th 72, 82.)
Milian's attorney informed the court, "A couple of years, he got more than the formula. And a couple of years, he got slightly less." Jet Source did not object to the representation.
We conclude Jet Source's waiver theory lacks merit. Waiver is the intentional relinquishment of a known right after knowledge of the facts. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.) Jet Source claims waiver on the ground Milian "relied on his own subjective feelings about bonuses, rather than the contractual provisions he relied on so heavily at trial." Milian's testimony, however, shows he calculated his bonuses under the contractual formula, they were close to what he expected, and he decided not to quibble over a small shortage for some years. In our view, his conduct does not permit a reasonable factual finding of waiver of future contractual bonuses.
Moreover, a waiver instruction would have been legally incorrect because an employee cannot through conduct waive his or her right to the payment of wages. A terminated employee is immediately entitled to all wages earned to the date of
termination. (Lab. Code, § 201, subd. (a).) The term "wages" is broadly construed to include incentive pay such as bonuses. (Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610, 618 (Schachter).) Section 219, subdivision (a), which applies to section 201, provides that "no provision of this article can in any way be contravened or set aside by a private agreement, whether written, oral, or implied." "[S]ection 219 prohibits an employer and employee from agreeing, even voluntarily, to circumvent provisions division 2, part 1, chapter 1, or article 1 (consisting of §§ 200-243) of the Labor Code." (Schachter, supra, at p. 619.) Jet Source's reliance on Bettelheim v. Hagstrom Food Stores, Inc. (1952) 113 Cal.App.2d 873, is misplaced because it pertains to the waiver of a payment specified under a sublease rather than to the ostensible waiver of the statutory right to wages. (Id. at pp. 875-878.)
Further statutory references are also to the Labor Code unless otherwise stated.
In its reply brief, Jet Source asserts Milian's acceptance of bonuses that varied from the contract formula modified the parties' contract by negating the bonus component and making bonuses subject to McWilliam's sole discretion. Despite section 219, "employers and employees are free to prospectively and bilaterally alter the terms of employment." (Schachter, supra, 47 Cal.4th at pp. 620, 619.) Jet Source, however, forfeited review by not raising the modification issue in its opening brief. (California Recreation Industries v. Kierstead (1988) 199 Cal.App.3d 203, 205, fn. 1.) "Obvious considerations of fairness in argument demand that the appellant present all of his or her points in the opening brief. To withhold a point until the closing brief would deprive the respondent of an opportunity to answer it or require the effort and delay of an additional brief by permission. Hence, the rule is that points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before." (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 723, p. 790 (Witkin).) Jet source has not shown any reason for its delay.
For the same reason, Jet Source has forfeited review of the argument in its reply brief that Milian was not entitled to any nonfinancial bonuses because a condition precedent, the threshold amount of Jet Source's net income, was not met. We also note that substantial evidence supports a finding that the nonfinancial portion of bonuses was not dependent on Jet Source's performance.
Further, Jet Source does not cite the record to show that at the trial court it raised any modification issue pertaining to bonuses. Issues not presented to the trial court are forfeited on appeal (Royster v. Montanez (1982) 134 Cal.App.3d 362, 367); a party may not ordinarily change the theory of his or her case for the first time on appeal (Panopulos v. Maderis (1956) 47 Cal.2d 337, 340). "The reviewing court is not required to make an independent, unassisted study of the record in search of error or grounds to support the judgment. It is entitled to the assistance of counsel." (Witkin, supra, Appeal, § 701, p. 769.)
III
Admission of Evidence
Additionally, Jet Source contends the court improperly admitted evidence about a prior sexual harassment suit against it. Jet Source asserts the evidence violated the terms of the court's ruling on an in limine motion, and the evidence should have been excluded under Evidence Code section 352, which gives the court discretion to exclude evidence if its probative value is substantially outweighed by the probability its admission will "create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury."
The in limine motion sought the exclusion of "any testimony regarding [Jet Source's] prior lawsuits." The motion states Jet Source had been a plaintiff in a suit for breach of contract and a defendant in a sexual harassment suit, and Jet Source anticipated Milian would attempt to introduce evidence of the suits to show costs of litigation unfairly reduced the amount of net income available for his bonuses. Jet Source argued the associated costs were an exercise of business judgment and an ordinary cost of business, and thus evidence of the suits was irrelevant or unduly prejudicial. Jet Source accused Milian of wishing to use the evidence to "defame" Jet Source and "paint [it] as a big, bad, litigious corporation."
At the hearing on the motion, Milian indicated he did not intend to rely on any evidence of the prior suits insofar as bonuses were concerned. The court tentatively excluded the evidence, and cautioned the parties not to mention the evidence absent permission from the court.
During trial, Milian referred to an incident concerning the sexual harassment suit, but not to show the suit affected his bonuses. Rather, he sought to show that he sent the May 18, 2008 e-mail to McWilliam out of frustration rather than as a resignation. Milian testified that in May 2008 Jet Source was involved in ongoing litigation involving sexual harassment and McWilliam asked him to shred the personnel file of an employee. Milian did not shred the file, and instead locked it in his desk. Jet Source did not object to this evidence. It merely objected to the disclosure of the plaintiff's identity in the sexual harassment suit, and the court sustained the objection on the ground of relevancy.
Rulings on motions in limine are subject to an abuse of discretion standard of review. (Ajaxo Inc. v. E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 44.) The court found no violation of its ruling on the in limine motion, and we cannot say the finding constitutes abuse of discretion. Moreover, Jet Source did not object to the evidence of which it now complains, and thus it forfeited appellate review of the matter. "[T]o preserve a claim of evidentiary error for appellate review, the appealing party must make a contemporaneous and specific objection in the trial court." (Mundy v. Pro-Thro Enterprises (2011) 192 Cal.App.4th Supp. 1, 6; Evid. Code, § 353, subd. (a).) Further, we may not reverse a judgment for evidentiary error absent a miscarriage of justice. (Evid. Code, § 353, subd. (b).) Jet Source has made no showing that had the brief testimony been excluded, it would have obtained a more favorable outcome. (Mundy v. Pro-Thro Enterprises, supra, at p. Supp. 6.)
IV
Attorney Fees
Additionally, Jet Source contends the court erred by awarding Milian fees under section 218.5. The statute provides in part: "In any action brought for the nonpayment of wages [or] fringe benefits, . . . the court shall award reasonable attorney's fees and costs to the prevailing party if any party to the action requests attorney's fees and costs upon the initiation of the action." (§ 218.5.)
The interpretation of a statute presents a question of law subject to our independent review. (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1332.) "Generally, a trial court's determination that a litigant is a prevailing party, along with its award of fees and costs, is reviewed for abuse of discretion. [Citations.] However, the issue here involves the interpretation of a statute, a question of law that we review de novo." (Ibid.)
"In interpreting a statute, our primary goal is to determine and give effect to the underlying purpose of the law. [Citation.] 'Our first step is to scrutinize the actual words of the statute, giving them a plain and common-sense meaning.' [Citation.] ' "If the words of the statute are clear, the court should not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history." ' [Citation.] In other words, we are not free to 'give the words an effect different from the plain and direct import of the terms used.' " (Goodman v. Lozano, supra, 47 Cal.4th at p. 1332.)
Jet Source advises us that a "review of the legislative history of Labor Code [section] 218.5 sheds no further light" on the issue.
When an " 'employer fails to pay wages in the amount, time, or manner required by contract or by statute, the employee has two principal options. The employee may seek judicial relief by filing an ordinary civil action against the employer for breach of contract and/or for the wages prescribed by statute. [§§ 218, 1194.]" (Smith v. Rae- Ventner Law Group (2002) 29 Cal.4th 345, 350.) Jet Source asserts section 218.5 is inapplicable because this is a contractual action rather than an action for the "nonpayment of wages." Section 218.5, however, expressly applies to "any action" based on the nonpayment of wages or fringe benefits (§ 218.5), which plainly includes a breach of contract action. Had the Legislature intended to exclude a breach of contract action from the reach of section 218.5, it could have easily done so. Notably, the Legislature has expressly specified that section 218.5 is inapplicable to an action brought by the Labor Commissioner, to a surety issuing a bond, to an action to enforce a mechanic's lien, and to an action for which attorney fees are recoverable under section 1194. (§ 218.5.)
Jet Source also asserts section 218.5 is inapplicable because Milian's complaint does not specifically cite the statute. Section 218.5, however, includes no such requirement. Rather, it provides that attorney fees are available "if any party to the action requests attorney's fees and costs upon the initiation of the action." (§ 218.5.) Milian's complaint prayed for "reasonable attorneys' fees as provided by statute." Since the action was for unpaid wages, we disagree with Jet Source's assertion that the complaint did not put it on notice of potential liability for Milian's attorney fees under section 218.5.
Jet Source's reliance on Californians for Population Stabilization v. Hewlett- Packard Co. (1997) 58 Cal.App.4th 273 (Hewlett-Packard), is misplaced as the opinion was overruled by Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 175-178.
California Service Station etc. Assn. v. Union Oil Co. (1991) 232 Cal.App.3d 44, is also unhelpful. The opinion merely acknowledges that "[a]s a general rule, in the absence of an express agreement or statute, each party to a lawsuit is responsible for its own attorney fees." (Id. at p. 58, citing Code Civ. Proc., § 1021.) Attorney fees are allowed as an item of costs when they are authorized by contract, statute or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Here, fees are authorized by section 218.5.
Jet source does not dispute the amounts of the jury's awards for severance and bonus pay or the amount of the court's award of attorney fees.
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DISPOSITION
The judgment and the order awarding attorney fees are affirmed. Milian is entitled to costs on appeal.
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MCCONNELL, P. J.
WE CONCUR:
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NARES, J.
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AARON, J.