Opinion
No. 53670-2-I
Filed: April 25, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No. 98-3-00275-5. Judgment or order under review. Date filed: 12/12/2003. Judge signing: Hon. Jay V White.
Counsel for Appellant(s), Robert J. Blazak, Attorney at Law, 149 SW 154th St, Burien, WA 98166-2315.
Counsel for Respondent(s), Bernda L. Bacani, King Cty Pros Ofc, 610 W Meeker St Ste 203, Kent, WA 98032-5726.
Counsel for Other Parties, Jennie Lynn Benjaminson (Appearing Pro Se), 346 N. River Street, Montesano, WA 98563.
In order for an employer to be liable under RCW 49.52.070 for willfully refusing to pay an employee his or her full compensation the employer's refusal to pay must be volitional and the employee must not have deferred to the employer the decision of whether he or she would ever be paid. Furthermore, an employer's actions cannot be willful if there is a bona fide dispute over whether an employment relationship exists, or whether all or a portion of the wages must be paid. Here, South Sound Soils and its successive owners Suzanne Burke and Chuck Spoerer failed to pay Gilbert Satter various wages, commissions, and bonuses due under his contract. Because the evidence shows Satter merely agreed to a delay in payment and did not defer to anyone the decision of whether or not he would ever be paid, we reverse the superior court's decision absolving Burke from liability for Satter's pre-May 2001 wages. And because we find Spoerer's failure to find a copy of Satter's employment agreement on file, without more, did not establish a bona fide dispute as to his obligation to pay Satter his termination wages, we reverse the superior court's decision absolving Spoerer from liability for Satter's termination wages.
FACTS
South Sound Soils is a limited liability corporation in the business of taking municipal bio-solids and mixing them with wood waste to generate compost. In September 1999, South Sound Soils General Manager Chuck Keenan entered into an employment agreement with Gilbert Satter. The contract was for a minimum of 60 days and made Satter an independent sales consultant for South Sound Soils. Under the terms of the agreement, Satter was to be paid $3,000 per month plus a 10 percent commission on new sales, and reimbursement for travel.
In November 2000, Keenan asked Satter to sell a scarab machine for at least $60,000.00, and offered Satter a 10 percent commission if he did so. Satter sold the scarab for $62,500.00, but was never paid the commission.
In April 2001, Keenan hired Satter as a permanent employee. Under the employment agreement, Satter was to be paid $4,300.00 per month salary plus a bonus equal to 10 percent of South Sound Soils gross profits for any given month. The contract also reserved to the parties a right to terminate the agreement on 30 days notice.
South Sound Soils fell behind in its payments to Satter. In the summer of 2001, there was a meeting between Burke, Satter and Hans Kohn, who was interested in purchasing South Sound Soils. Satter believed that if Kohn purchased the company, he would make Satter a partner. Satter told Kohn that he did not mind that his past due wages and commissions "rode" and did not demand payment during the course of the negotiations.
Although Kohn took over operating South Sound Soils for a couple months, the sale never materialized. Instead, Burke sold the company to Chuck Spoerer, effective August 1, 2001. Subsequently, Satter demanded payment from Spoerer and South Sound Soils for his past due compensation. Spoerer made only one small payment to Satter for his past due compensation.
Spoerer terminated Satter without notice at the end of December 2001. On February 15, 2002, Satter's attorney sent both Burke and Spoerer a demand letter requesting payment for his past due salary, commissions, and bonuses. On February 21, Spoerer replied to the letter on behalf of South Sound Soils disputing all of Satter's demands and requesting documentation supporting his claims. Satter's attorney replied with Satter's billing statement of December 31, 2001, a copy of the employment agreement, and an acknowledgement that his demands for bonuses for May, June, July, October, November and December were estimates as they were tied to South Sounds Soils' profits — information that was not in Satter's possession at the time of the demand.
In April 2002, Satter sued South Sound Soils, Burke and Spoerer for his past due compensation. He asked for the following amounts relevant to this appeal:
Failure to give 30 days notice of termination (one month's wages) $4,300.00
Performance bonuses May-July $4,000.00 (est.) August $3,615.91 September $4,936.93 October-December $12,000.00 (est.) [SUB]TOTAL $24,552.84
. . .
Unpaid Wages [2000-2001] $4,814.87 [TOTAL] $33,667.71
He also made a claim for double damages and attorney fees. The amounts in the complaint were identical to those contained in the February demand letter.
The respondents filed an answer in which Burke and Spoerer denied owing Satter compensation, but South Sound Soils admitted it owed the following amounts:
January 2002 termination Wages $4,300.00 July 2001 commission 930.56 August 2001 commission 3,615.91 September 2001 commission 4,936.93 Wages 2000-2001 4,814.87 Total 18,597.77
The "18,597.77" figure is the result of South Sound Soils' calculation error. Based on the admitted amounts, the correct total is $18,598.27.
All parties denied that they were liable for double damages and attorney fees.
At the bench trial, the superior court also heard arguments concerning the $6,250.00 scarab commission, not mentioned in the complaint. While the superior court found that General Manager Chuck Keenan had offered Satter a 10 percent commission on the sale, it found that Keenan was not authorized by Burke to make such an agreement, and that such a sale was not within the scope of his employment. Therefore, the court determined that Burke was justified in denying Satter the commission.
As for Satter's other claims, the superior court assigned liability accordingly:
January 2002 Termination South Sound Soils Wages: $4,300.00 July 2001 Bonus: $930.56 South Sound Soils, plus double damages August 2001 Bonus: $3,615.91 South Sound Soils and Chuck Spoerer, plus double damages September 2001 Bonus: South Sound Soils and Chuck $4,227.70 Spoerer, plus double damages Wages and commissions prior South Sound Soils to May 1, 2001: $4,814.87
This $4,227.70 figure was revealed at trial and is less than the $4,936.93 listed in the complaint and admitted to by South Sound Soils in the answer.
The superior court also found South Sound Soils and Spoerer joint and severally liable for Satter's reasonable attorney fees.
Satter appeals and asks this court to remand for entry of judgment against Burke for all sums due to Satter before the August 1, 2001 sale of the company, his July 2001 bonus, and the scarab commission, plus double damages and reasonable attorney fees. He also seeks remand for judgment against South Sound Soils and Spoerer for double damages for the January 2002 termination salary. The respondents cross-appeal and ask this court to remand to the superior court to remove the award of attorney fees and costs against Spoerer and South Sound Soils.
ANALYSIS Scarab Machine Commission
Apparent authority of an agent can be inferred only from acts and conduct of the principal. The burden of establishing apparent authority rests upon the one who asserts it. "Facts and circumstances are sufficient to establish apparent authority only when a person exercising ordinary prudence, acting in good faith and conversant with business practices and customs, would be misled thereby, and such person has given due regard to such other circumstances as would cause a person of ordinary prudence to make further inquiry."
Schoonover v. Carpet World, Inc., 91 Wn.2d 173, 178, 588 P.2d 729 (1978).
Schoonover, 91 Wn.2d at 178-79.
Lamb v. General Assocs., Inc., 60 Wn.2d 623, 627-28, 374 P.2d 677 (1962).
The superior court found that South Sound Soils' General Manager Chuck Keenan asked Satter to sell a scarab machine for at least $60,000.00, and offered Satter a 10 percent commission if he did so. Satter later sold the scarab for $62,500.00. That Keenan had the authority to sell the scarab is not in dispute; however, the superior court determined that Keenan was not authorized by Burke to make the commission agreement with Satter to sell the scarab. Because Keenan did not have Burke's permission to contract with Satter to sell the scarab, and the sale of the scarab was outside the scope of Satter's original employment agreement, the superior court concluded that he was not entitled to the promised commission.
However, the court also specifically found that Keenan was South Sound Soils' general manager, and found that Burke had given Keenan the power to hire Satter in the first place. Indeed, Keenan signed both of Satter's employment agreements with South Sound Soils. By Burke's own admission at trial, it is apparent that she relied heavily on Keenan to manage South Sound Soils' employees. Burke testified that Keenan was her "personal representative to the company" and Keenan was trying to "keep everybody in place, feed them what he could that would help while I was trying to find somebody to buy" South Sound Soils. Burke admitted that she was aware that Keenan had hired Satter but professed that she never saw the employment agreements during the course of her ownership.
Burke's cursory involvement in the day-to-day operations of the business was readily apparent to Satter. Satter testified that during the entire time he was employed at South Sound Soils he only had two meetings with Burke. He also said that both of his employment contracts were negotiated with Keenan and that he did not recall any negotiations of employment with Burke.
This case is nearly identical to the decision in Schoonover v. Carpet World, where the Supreme Court found Carpet World liable for the unpaid wages of an employee hired by one of its salesmen. Carpet World argued that the salesman, Rodriguez, had no apparent authority to hire Schoonover. The Supreme Court disagreed based on the fact that Rodriguez was the only person permanently assigned to that particular outlet, the sales manager only paid occasional visits to the outlet, and the staffing arrangement placed Rodriguez in a position where it could be logically inferred by a job seeker of ordinary prudence, reasonably conversant with business custom, that he was in a position to hire sales personnel for the store.
Schoonover, 91 Wn.2d 173.
Schoonover, 91 Wn.2d at 178-79.
Likewise, Burke placed Keenan in a position where it could have been logically inferred by a person of ordinary prudence, reasonably conversant with business custom that Keenan was in a position to hire salesmen and set the terms of employment. Keenan was the general manager, and by Burke's own admission he was her "personal representative to the company" while she concentrated on trying to sell the business. Satter's reliance is further justified by the fact that he had twice before negotiated and contracted an employment agreement with Keenan. If Keenan had the authority to enter into an employment arrangement with Satter for the sale of South Sound Soil products, he certainly had the apparent authority to contract with Satter for the sale of the scarab machine.
South Sound Soils is liable for Satter's $6,250.00 commission on the scarab machine sale. The question remains whether or not the commission was willfully withheld by South Sound Soils and Burke. If there is a bona fide dispute over whether all or a portion of the commission must be paid, the commission was not willfully withheld. Here, Burke and South Sound Soils have presented a bona fide dispute as to whether Keenan had the authority to contract with Satter for the sale of the scarab and thus whether they were liable to pay the commission. Therefore, their withholding of the scarab commission was not willful, Burke is not personally liable for the commission, and Satter is not entitled to double damages for the $6,250.00.
Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 161, 961 P.2d 371 (1998).
South Sound Soils
Satter claims that South Sound Soils should be liable for double damages for willfully withholding $4,814.87 in pre-May 2001 compensation and $4,300.00 in termination wages. Whether an employer willfully withheld compensation owed an employee is a question of fact and our review is limited to whether substantial evidence supports the superior court's decision. Substantial evidence fails to support the superior court's finding that South Sound Soils did not willfully refuse to pay Satter's pre-May 2001 compensation and termination wages. He thus is entitled to double damages from South Sound Soils for those amounts. Under RCW 49.52.050:
Lillig v. Becton-Dickenson, 105 Wn.2d 653, 660, 717 P.2d 1371 (1986).
Any employer or officer, vice principal or agent of any employer, whether said employer be in a private business or an elected public official, who
(2) Wilfully and with intent to deprive the employee of any part of his wages, shall pay any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance, or contract
Shall be guilty of a misdemeanor.
Furthermore, under RCW 49.52.070:
Any employer and any officer, vice principal or agent of any employer who shall violate any of the provisions of subdivision (1) and (2) of RCW 49.52.050 shall be liable in a civil action by the aggrieved employee or his assignee to judgment for twice the amount of the wages unlawfully rebated or withheld by way of exemplary damages, together with costs of suit and a reasonable sum for attorney's fees: PROVIDED, HOWEVER, That the benefits of this section shall not be available to any employee who has knowingly submitted to such violations.
The test of willfulness is not stringent: "the employer's refusal to pay must be volitional." "Willful means `merely that the "person knows what he is doing, intends to do what he is doing, and is a free agent."'" However, an employer's actions cannot be willful if its withholding is the product of carelessness or inadvertence, or if there is a bona fide dispute over whether an employment relationship exists, or whether all or a portion of the wages must be paid.
Schilling, 136 Wn.2d at 160.
Schilling, 136 Wn.2d at 160.
Schilling, 136 Wn.2d at 160-61.
South Sound Soils admitted in its answer that it owed Satter both the $4,814.87 in pre-May compensation and the $4,300.00 in termination wages. The superior court found South Sound Soils liable for double damages for Satter's other wages and bonuses based on South Sound Soils' admission of liability and its failure to pay. South Sound Soils makes no claim of carelessness and has admitted to owing the amounts in question, so there is no bona fide dispute.
Nor can it be said that Satter knowingly submitted to a violation of RCW 49.52.050(2) with regards to the pre-May 2001 compensation. It is apparent from the court's reasoning at trial that a significant reason why it did not assign double damages for the $4,814.87 was because it found that Satter knowingly submitted to the willful withholding of his compensation. The court reasoned:
Now the prior commissions, he is entitled to that money, which is $4814.87. While it was interesting to hear from Ms. Burke that she would have fired him had he demanded the money, that was never communicated. I am satisfied that was Mr. Satter's decision to keep the business going and he is not entitled to double damages for that.
If the superior court's decision is to stand, substantial evidence must support a determination that Satter "deliberately and intentionally deferred to" South Sound Soils "the decision of whether [he] would ever be paid" the $4,814.87. Substantial evidence does not support that determination, because agreeing to a delay in compensation is not the same as assigning away to another party the decision of whether one will ever be paid.
Chelius v. Questar Microsystems, Inc., 107 Wn. App. 678, 682, 27 P.3d 681 (2001) (emphasis added).
The only evidence supporting the superior court's finding is Burke's testimony that she heard Satter tell a prospective buyer, Hans Kohn, that he did not mind if the money he was owed "rode." However, agreeing to a delay in payment is not the same as assigning away to another party the decision of whether one will ever be paid. Even Burke did not believe Satter was forfeiting his right to ever be paid. Of his past due compensation and his offer to let it ride, Burke testified, "I am sure it couldn't wait forever, but he had done this as a regular course."
At best, the evidence supports a determination that Satter agreed to wait to receive his compensation in an effort to keep the business running and facilitate the sale of the business. There is no evidence in the record that Satter ever deliberately and intentionally deferred to South Sound Soils or anyone else the decision of whether he would ever be paid. In fact, Burke's testimony that she believed Satter's compensation "couldn't wait forever" directly contradicts any assertion that he had deferred to anyone the decision of whether he would ever be paid. There is no other evidence in the record to support the finding that Satter knowingly submitted to a violation of RCW 49.52.050(2), thus South Sound Soils is liable for double damages on the $4,814.87 in pre-May 2001 compensation and the $4,300.00 in termination wages.
Burke
For similar reasons, Burke is also liable for the $4,814.87 in pre-May 2001 compensation plus double damages. First of all, there was no bona fide dispute over whether all or a portion of the wages must be paid. Burke knew the money was due to Satter because it was included in the accounting sheets when she sold the business to Spoerer. She testified at trial that when she sold the business to Spoerer she knew Satter was due between $4,000.00 and $6,000.00 in past due compensation. Thus, there was no bona fide dispute as to the money being due, or over the amounts that were due. Nor does Burke allege any carelessness or inadvertence that caused her not to pay Satter. And for the reasons stated above, the superior court erred in concluding that Satter had knowingly submitted to a violation of RCW 49.52.050(2) concerning the $4,814.87. Burke willfully withheld the $4,814.87 and is liable for double damages on that amount.
Schilling, 136 Wn.2d at 161.
However, Burke is not personally liable for Satter's July 2001 bonus and double damages. The superior court originally found that while Burke was South Sound Soils owner she had willfully withheld Satter's July 2001 bonus, but the court reversed the finding on reconsideration. In order for an action to be willful, the actor must know what he or she is doing. Substantial evidence supports the superior court's finding that Burke did not willfully refuse to pay Satter's July 2001 bonus because at the time Burke sold the company she did not know Satter was owed a bonus for July 2001. This is because the profit amount upon which the July bonus depended was calculated quarterly, after the CPA reviewed the company accounts, and was unavailable at the time she sold the company. Therefore, Burke is not personally liable for Satter's $930.56 July 2001 bonus.
Spoerer
The superior court found Spoerer liable for double damages for Satter's August and September bonuses, but did not find Spoerer liable for Satter's termination wages. Satter asks this court to find Spoerer liable for double damages for the termination wages, and in his cross appeal Spoerer argues that there was a bona fide dispute as to the amounts Spoerer owed Satter, which if true would absolve Spoerer of liability for the August and September bonuses. Spoerer bases his cross-appeal on the theory that he disputed the commission agreement and the amounts owed at trial, thus giving rise to a bona fide dispute.
The amounts of the August and September bonuses were never in dispute, so there is no dispute as to the amounts owed. As for Spoerer's knowledge that the money was owed at all, Satter provided Spoerer with a copy of his employment agreement with South Sound Soils showing that Satter was entitled to the termination wages and the bonuses. Moreover, South Sound Soils admitted in its answer that it owed Satter the bonuses and termination wages.
At trial, Spoerer could not provide the court with any reason why he should have doubted the validity of the agreement other than the fact that he could not find a copy of the agreement in Satter's personnel file. Satter's failure to find a copy of the agreement in South Sound Soil's office, without more, cannot give rise to fairly debatable dispute over the validity of the employment agreement. This is especially true given the fact that his own company had admitted to owing Satter the termination wages and the bonuses, thus stipulating to the agreement's validity. Absent a bona fide dispute, Spoerer's decision not to pay Satter his termination wages of $4,300.00 and the August and September bonuses totaling $7,843.61 was willful and he is personally liable for those amounts plus double damages.
Attorney Fees
South Sound Soils, Chuck Spoerer, and Suzanne Burke having been found liable for violating RCW 49.52.050(2) are thus joint and severally liable for Satter's attorney fees. They cannot escape liability for attorney fees under RCW 49.48.030 by claiming that they admitted to owing more in their answer than the court awarded. First of all, Spoerer and Burke admitted to owing nothing. As for South Sound Soils, it admitted to owing $18,598.27 and Satter was awarded $17,889.04 plus double damages at trial. The $709.23 difference in the principal amount is not the result of South Sounds Soils' efforts to reduce the award, but instead reflects the realization at trial that South Sound Soils' profits for September 2001 were less than had been originally thought by both parties.
RCW 49.48.030 states:
In any action in which any person is successful in recovering judgment for wages or salary owed to him, reasonable attorney's fees, in an amount to be determined by the court, shall be assessed against said employer or former employer: PROVIDED, HOWEVER, That this section shall not apply if the amount of recovery is less than or equal to the amount admitted by the employer to be owing for said wages and salary.
Compare the September 2001 bonus of $4,936.93 in Satter's complaint and South Sound Soils' answer to the $4,227.70 awarded at trial.
More importantly, however, is that RCW 49.52.070 is the more specific statute and controls. RCW 49.52.070 specifically assigns liability for attorney fees and costs to any "employer and any officer, vice principal or agent of any employer" who has been found to have violated RCW 49.52.050(2). Liability for the costs of the suit and reasonable attorney fees is thus part of the civil penalty established by the Legislature for those who violate RCW 49.52.050(1) and (2). South Sound Soils, Burke, and Spoerer, all having been found to have violated RCW 49.525.050(2), are joint and severally liable for Satter's reasonable attorney fees and the costs of the suit.
See State v. Stackhouse, 88 Wn. App. 963, 968, 947 P.2d 777 (1997) ("Following general rules of statutory construction, courts must give preference to the later adopted statute, and to the more specific statute if two statutes appear to conflict.")
For the above stated reasons, the superior court's assignments of liability for Satter's July, August and September 2001 bonuses are affirmed and the matter remanded for entry of judgment against: South Sound Soils and Suzanne Burke jointly and severally for Satter's $4,814.87 in pre-May 2001 compensation, plus double damages; South Sound Soils and Chuck Spoerer jointly and severally for Satter's $4,300.00 in termination wages, plus double damages; South Sound Soils for Satter's $6,250.00 scarab machine commission; and South Sound Soils, Chuck Spoerer and Suzanne Burke jointly and severally for Satter's reasonable attorney fees and the costs of the suit.
AGID and BAKER, JJ., Concur.