Opinion
B330483
10-29-2024
O'GARA COACH COMPANY, LLC, Plaintiff and Respondent, v. VIKEN CHELEBIAN, Defendant and Appellant.
Brown Neri Smith &Khan, Ethan J. Brown and Rowennakete P. Barnes for Defendant and Appellant. Kolar &Associates, Elizabeth L. Kolar and Tami S. Crosby for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. 21STCV04596, Armen Tamzarian, Judge. Affirmed.
Brown Neri Smith &Khan, Ethan J. Brown and Rowennakete P. Barnes for Defendant and Appellant.
Kolar &Associates, Elizabeth L. Kolar and Tami S. Crosby for Plaintiff and Respondent.
DAVIS, J. [*]
Viken Chelebian appeals a judgment granting summary adjudication of a breach of contract action brought by his former employer, O'Gara Coach Co., LLC (OGC). OGC alleged, and the trial court agreed, that Chelebian breached a non-cooperation provision in his severance agreement by voluntarily executing a declaration in support of a third party's claim against OGC. On appeal, Chelebian argues the non-cooperation clause is contrary to public policy and therefore unenforceable, and that summary adjudication was improper because he raised triable issues of fact. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Chelebian was an employee of OGC. For reasons not in the record, OGC decided to terminate Chelebian. In exchange for Chelebian agreeing to a written severance agreement, OGC allowed him to resign rather than be terminated. The severance agreement included paragraph 9(B), which provided: "Employee's Obligation Not to Cooperate: Employee agrees that he will not counsel or assist any attorneys or clients in the presentation or prosecution of any disputes and/or differences by any third party against Released Parties unless pursuant to a lawfully issued subpoena or other order by a court or agency of competent jurisdiction, or in response to an official inquiry of a governmental agency. Employee further agrees to give Released Parties notice within three (3) business days of his receipt of a subpoena or other order by court or agency pursuant to this Paragraph." Paragraph 11 of the severance agreement provided Chelebian's breach of paragraph 9 (among others) would give rise to "actionable causes of action for claims including, but not limited to[,] breach of contract," and paragraph 15 further provided "in the event litigation is initiated by any Party to enforce this Agreement, the prevailing party will be entitled to recover its costs and reasonable attorneys' fees incurred in conjunction with the litigation."
In 2017, OGC filed a lawsuit against another former employee, Darren Richie. In response, Richie filed a crosscomplaint accusing OGC of, inter alia, wrongful termination, breach of contract, fraud, defamation, and intentional infliction of emotional distress. OGC filed a special motion to strike (SLAPP) under Code of Civil Procedure section 425.16. In violation of the noncooperation clause in his severance agreement, Chelebian voluntarily submitted a declaration in support of Richie's opposition to OGC's SLAPP motion.
On February 4, 2021, OGC filed its action against Chelebian, alleging causes of action for breach of contract, breach of the covenant of good faith and fair dealing, intentional and negligent misrepresentation, and for declaratory relief. Thereafter, in April of 2021, OGC filed a motion for summary adjudication of its cause of action for breach of contract against Chelebian. Chelebian opposed the motion, arguing the severance agreement was illegal and therefore unenforceable. He did not, however, submit a response to OGC's statement of undisputed facts. Instead, he submitted his own list of 10 allegedly undisputed facts. None of these facts raised a triable dispute as to any material fact presented in OGC's motion. At oral argument, Chelebian's counsel conceded that he had not raised a dispute of fact, and that Chelebian's opposition to the motion was based on legal grounds only, including the litigation privilege under Civil Code section 47. The trial court granted OGC's motion, finding the severance agreement legal and therefore enforceable, and that the litigation privilege under Civil Code section 47 did not shield Chelebian from breaching that agreement. The court awarded damages of $28,406.56, comprised of the $16,200 OGC paid to Chelebian to enter into the severance agreement, and $12,206.56 in attorney's fees incurred in Richie's lawsuit as a result of Chelebian's declaration.
OGC dismissed its remaining causes of action against Chelebian and then moved for attorney's fees as the "prevailing party" under the severance agreement. The trial court agreed OGC was the "prevailing party" and awarded attorney's fee in the amount of $73,692.50, observing that attorney's fees were proper under the severance agreement and Civil Code section 1717 and that O'Gara's attorneys' attorneys litigated the breach-of-contract action against Chelebian "efficiently, skillfully, and successfully" and "charg[ing] modest hourly rates." Chelebian filed a timely notice of appeal from the judgment in OGC's favor.
DISCUSSION
I. Standard of Review
We apply a de novo standard of review to the court's order granting summary adjudication, "considering all the evidence set forth in the moving and opposing papers except that to which objections were made and sustained," "liberally constru[ing] the evidence in support of the party opposing summary judgment," and "resolv[ing] doubts concerning the evidence in favor of that party." (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) As with any appeal, we presume the order appealed from is correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) Thus,"' "[o]n review of a summary judgment, the appellant has the burden of showing error, even if he did not bear the burden in the trial court. [Citation.]" '" (Dinslage v. City and County of San Francisco (2016) 5 Cal.App.5th 368, 379.)
A plaintiff meets his burden on a motion for summary adjudication "if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto." (Code Civ. Proc., § 437c, subd. (p)(1).)
II. Chelebian Presented No Triable Dispute As to the Enforceability of the Severance Agreement
The elements of a cause of action for breach of contract are (1) the contract; (2) the plaintiff's performance of the contract; (3) the defendant's breach; and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) OGC met this burden by introducing evidence of the severance agreement itself, OGC's own performance of its obligation under the agreement -- i.e., payment to Chelebian of the agreed -upon consideration as well as permitting Chelebian to resign rather than be terminated, Chelebian's breach of the agreement, and resulting damage to OGC in the form of the consideration paid to Chelebian and the attorney's fees OGC incurred as a result of Chelebian's breach. OGC's showing was sufficient to shift the burden of introducing evidence demonstrating a triable issue of fact as to one or more element of the cause of action, or as to one or more of Chelebian's affirmative defenses. Chelebian did neither. Not only did he fail to controvert any of the material facts identified by OGC, his counsel conceded at oral argument that Chelebian had not raised any disputes of fact.
Chelebian argues for the first time on appeal that the severance agreement was illegal and therefore unenforceable.In the trial court Chelebian not only failed to introduce any evidence in support of his argument that the severance agreement was illegal, he cited no case or statutory authority to that effect. He now argues that the severance agreement is unenforceable because it violates Evidence Code section 911 and Civil Code section 1668. Our general rule is that arguments not raised in the trial court are deemed waived and will not be entertained for the first time on appeal. However, we recognize a limited exception to that rule for arguments that raise an issue of law. (Gilliland v. Medical Board (2001) 89 Cal.App.4th 208, 219.) We therefore address both statutes, if only to point out that neither one is apposite.
Chelebian's seventh and eighth affirmative defenses in his amended answer allege, respectively, the unenforceability and illegality of the "restrictive covenants at issue."
Evidence Code section 911 provides: "Except as otherwise provided by statute: [¶] . . . [¶] (c) No person has a privilege that another shall not be a witness or shall not disclose any matter or shall not produce any writing, object, or other thing." The effect of this statute is to declare that all privileges are statutory, not that a private contact containing a confidentiality clause is illegal or unenforceable as against public policy. Chelebian points to nothing in the record indicating that OGC based its summary adjudication motion, or the trial court its order granting that motion, on a claimed nonstatutory privilege having the effect of silencing Chelebian. Civil Code section 1668, in turn, provides that" '[a]ll contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.'" (Castelo v. Xceed Financial Credit Union (2023) 91 Cal.App.5th 777, 789.) This statute, too, is inapplicable to the severance agreement between Chelebian and OGC: because its purpose is "to prohibit parties from granting themselves licenses to commit future aggravated wrongs . . . [c]ourts have therefore held the statute does not prevent parties from agreeing to settle disputes or to release claims relating to past conduct." (Ibid., italics added.)
Contrary to Chelebian's argument on appeal, our cases have long recognized that confidentiality clauses encourage settlements and are generally enforceable." 'The privacy of a settlement is generally understood and accepted in our legal system, which favors settlement and therefore supports attendant needs for confidentiality.' [Citation.]" (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 793.) By contrast, routine disclosure of private settlement terms risks "chill[ing] the parties' ability in many cases to settle the action before trial. Such a result runs contrary to the strong public policy of this state favoring settlement of actions." (Board of Trustees of California State University v. Superior Court (2005) 132 Cal.App.4th 889, 899; see also Hinshaw, Winkler, Draa, Marsh &Still v. Superior Court (1996) 51 Cal.App.4th 233, 241 ["We find a private settlement agreement is entitled to at least as much privacy protection as a bank account or tax information"].)
The only authority Chelebian cited in the trial court to support his argument that the severance agreement was unenforceable was Olson v. Doe (2022) 12 Cal.5th 669 (Olson), a case that is readily distinguishable. Olson arose in the context of ongoing litigation between the parties -specifically, Doe's application for a civil harassment restraining order against Olson. Olson and Doe entered into an agreement to dismiss and mediate the civil harassment petition; the mediation agreement included a boilerplate clause providing that Olson and Doe agreed" 'not to disparage one another.'" (Id. at p. 674.) The parties' truce proved short-lived, and Doe soon brought another action against Olson, complaining of the same harassment. Olson filed a cross-complaint alleging that Doe had breached the non-disparagement clause. The trial court granted Doe's special motion to strike Olson's cross-complaint, and the Supreme Court affirmed, holding that Doe did not breach the nondisparagement clause by filing her suit against Olson. Notably, the court did not hold that nondisparagement clauses in general were illegal or unenforceable; instead, it held that the specific clause at issue, in the context of the ongoing dispute between Doe and Olson, was not the equivalent of a release that would bar Doe's later harassment action by preventing Doe from "disparaging" Olson in the context of that action. (Id. at p. 681.) We see nothing about the facts of Olson that affect the enforceability of the noncooperation clause in Chelebian's severance agreement. OGC is not preventing Chelebian from vindicating any right of his own, or from protecting himself from any form of harassment. Rather, in violation of a noncooperation clause in his severance agreement, for which he was paid valuable consideration, Chelebian deliberately insinuated himself into litigation between OGC and a third party - the very thing he agreed not to do, and accepted money to refrain from doing.
Recent amendments to existing law do not alter our conclusion that the noncooperation clause in Chelebian's severance agreement was enforceable. Civil Code section 1670.11, effective January 1, 2020, provides that a party cannot be barred from testifying "in an administrative, legislative or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the other party to the contract . . . when the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the Legislature." (Civ. Code, § 167011, italics added.) Government Code section 12964.5, as amended effective January 1, 2021, permits confidentiality clauses in employment severance agreements, except for information about "harassment or discrimination or any other conduct that the employee has reasonable cause to believe is unlawful." (Gov. Code, § 12964.5, subds. (c) &(f).) Critically, Chelebian furnished a declaration voluntarily, without a subpoena, on topics that did not involve harassment, discrimination, or other illegal conduct by OGC.
Chelebian's final argument to the trial court was that his declaration was a privileged publication under Civil Code section 47. Once again, Chelebian's argument lacks merit. The litigation privilege does not extend to publications that breach an express confidentiality agreement. (ITT Telecom Products Corp. v. Dooley (1989) 214 Cal.App.3d 307, 320.) "[O]ne who validly contracts not to speak . . . has []waived the protection of the litigation privilege.... [¶] . . . This breach was not simply a communication, but also wrongful conduct or performance under the contract." (Wentland v. Wass (2005) 126 Cal.App.4th 1484, 1494.) "The paper trail of contractual performance and course of dealing between parties under a contract cannot be immunized from use in later judicial proceedings just because that paper trail is also a publication that serves a litigation purpose. If that same paper trail amounts to wrongful performance or conduct under the contract, it escapes [Civil Code] section 47(b)." (Stacy &Witbeck v. City and County of San Francisco (1996) 47 Cal.App.4th 1, 7-8.)
III. The Damage and Fee Awards Were Proper
Chelebian also challenges the trial court's award of damages in the amount of $28,406.56. "An appellant's challenge to damages, depending upon its specific nature, may be subject to a substantial evidence, abuse of discretion, or de novo standard of review. The question of whether a plaintiff was, in fact, damaged by the defendant's breach of contract is reviewed for substantial evidence. [Citation.] The question of whether 'a certain measure of damages is permissible given the legal right the defendant has breached, is a matter of law, subject to de novo review. [Citation.]' [Citations.] But where the measure of damages is legally permissible, a trial court's choice of that measure, among other legally permissible measures of damages, is reviewed for abuse of discretion. [Citation.]" (JMR Construction Corp. v. Environmental Assessment &Remediation Management, Inc. (2015) 243 Cal.App.4th 571, 583.)
Chelebian has waived any challenge to either the fact or the amount of damage by failing to address those issues in the trial court. Specifically, Chelebian offered no response to OGC's undisputed facts 11-12, which claimed $16,200 in compensatory damages for Chelebian's breach of his noncooperation covenant, and undisputed facts 28 and 32, which claimed $12,206.56 in damages consisting of attorney's fees OGC incurred in responding to Chelebian's declaration in the Richie lawsuit. Nor did Chelebian object to any of the evidence OGC offered in support of these damage claims. His failure to present evidence, to controvert OGC's evidence, and to object to OGC's evidence in support of its damage claims, waives any issue on appeal as to the amount of damage awarded. (SCI California Funeral Services, Inc. v. Five Bridges Foundation (2012) 203 Cal.App.4th 549, 563-565 [appellant forfeited challenge to plaintiff's damage evidence and methodology for calculating damages by failing to object at trial]; Evid. Code, § 353, subd. (a) [no review of evidence admitted absent "an objection to or a motion to exclude or to strike the evidence that was timely made and so stated as to make clear the specific ground of the objection or motion"].) Thus, we confine our review to whether the trial court applied a legally permissible measure of damages. We conclude that it did.
Civil Code section 3300 states that the measure of damages for breach of contract is "the amount which will compensate . . . for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom." "These damages include: (1) 'general damages,' which are damages that 'flow directly and necessarily from a breach of contract' [Citations] . . .; (2) 'special' or consequential damages, which are damages that 'do not arise directly and inevitably' but which are recoverable to the extent they 'were either actually foreseen . . . or were "reasonably foreseeable" when the contract was formed' [Citation]; (3) nominal damages [Citations]; and, if the contract so provides, (4) attorney's fees to the prevailing party [Citations.].)" (Mission Beverage Co. v. Pabst Brewing Co., LLC (2017) 15 Cal.App.5th 686, 710-711.)
Both items of damage awarded by the trial court fall within the permissible measures of damages under Civil Code section 3300. First, "[t]he primary measure of damages for breach of contract is the amount expended on the faith of the contract." (Mendoyoma, Inc. v. County of Mendocino (1970) 8 Cal.App.3d 873, 879.) This specifically includes the non-breaching party's" 'reasonable outlay or expenditure toward performance.'" (Buxbom v. Smith (1944) 23 Cal.2d 535, 541.) Thus, awarding OGC the amount it paid Chelebian to enter into the noncooperation agreement - i.e., OGC's "reasonable outlay" on the faith of the contract - is permissible. Likewise, our cases recognize that attorney's fees incurred to mitigate the effect of a party's breach of contract are recoverable as damages in an action for breach. (Mai v. HKT Cal, Inc. (2021) 66 Cal.App.5th 504, 512, 519 ["where a defendant's conduct requires the plaintiff to incur attorney's fees in prosecuting or defending a lawsuit (generally involving a third party), the defendant should pay the plaintiff's legal fees."]; Copenbarger v. Morris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th 1, 10 (dictum).)
Chelebian also argues that the trial court erred when it awarded OGC attorney's fees under paragraph 15 of the severance agreement. His argument on appeal is limited to the illegality of that agreement. As we have rejected Chelebian's argument that the severance agreement was unenforceable, it necessarily follows that the only argument for reversing the award of attorney's fees must also fail.
DISPOSITION
The judgment is affirmed. OGC shall recover its costs on appeal. Any application for attorney's fees incurred in this appeal shall be presented to the trial court.
WE CONCUR: MOOR, Acting P. J. KIM, J.
[*] Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to Article VI, section 6 of the California Constitution.