Opinion
D069386
02-21-2017
ANDY KHUU et al., Plaintiffs and Respondents, v. BAO NGUYEN et al., Defendants and Appellants.
Law Offices of David Dreyman and David Dreyman for Defendants and Appellants. The Butler Firm and Matthew B. Butler for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2013-00067999-CU-BC-CTL) APPEAL from a judgment of the Superior Court of San Diego County, Joan M. Lewis, Judge. Affirmed. Motion to augment is granted. Law Offices of David Dreyman and David Dreyman for Defendants and Appellants. The Butler Firm and Matthew B. Butler for Plaintiffs and Respondents.
Plaintiffs and respondents Trinh Nguyen and her husband Andy Khuu (sometimes together Respondents) prevailed at a court trial against their former business associates, defendants and appellants Bao Nguyen and his wife Ha-Thi Thu Lai and their company, Elite Nails of La Jolla, a California corporation ("Elite," or sometimes together, Appellants). In a statement of decision and judgment, the trial court awarded Trinh Nguyen, as a former employee of Elite, substantial sums for unpaid wages, overtime and interest. (Lab. Code, §§ 510, 1194 [day's work and overtime standards].) Job-related penalties were also imposed. (§§ 203, 226, subd. (f); §§ 512, 558 [remedies for unpaid wages and omitted meal/rest breaks, or nonprovision of records].) Additionally, the court awarded $36,300 in restitution to Respondents for improvements they made to the business premises, for a total recovery of over $140,000. However, the court ruled against Respondents on their claims that there was an existing oral agreement that they would become owners or partners of Elite.
All further statutory references are to the Labor Code unless otherwise specified.
Appellants challenge the judgment, asserting there was evidence of a valid existing oral partnership agreement with Respondents, such that no employment relationship existed. Appellants request that the monetary judgment be reversed and the matter retried on issues of breach of the alleged agreement. Our examination of the record reveals that substantial evidence supports the trial court's conclusions that no such partnership agreement was created, and that an employment relationship existed and restitution was appropriate. Appellants have not shown that any of the damages and penalties imposed were unjustified, and we affirm.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. Pleadings and Trial
The parties were formerly friends who discussed forming an oral partnership agreement for operation of Elite. In May 2011, Appellant Bao Nguyen signed a lease for the premises, made some improvements and filed a fictitious business name statement with himself as the sole owner. Up to $97,000-$98,000 more in investments for improvements was needed, and Appellant Bao Nguyen requested that Respondents contribute 50 percent of the cost of such construction and materials, or up to $50,000.
Beginning in August 2011, Trinh Nguyen worked long hours and days at Elite as its general manager. She did not receive compensation until April 2012. Both Respondents paid money to contractors for improvements to the premises. For a while, Trinh Nguyen shared a bank account with Appellant Ha-Thi Thu Lai, because they thought this would improve Respondents' credit rating.
From May 2012 through March 2013, Trinh Nguyen received $320 a week in compensation from Elite, but she did not receive meal or rest breaks, or accurate pay stubs. Appellant Bao Nguyen wrote the checks for the business and directed her work. In 2012 and 2013, Trinh Nguyen received W-2 tax forms from Elite. Her association with Elite ended in March 2013, when she was locked out by Appellants and replaced with a new managing employee. She was not allowed access to the business records. Appellant Bao Nguyen sold part of Elite's assets in 2013.
In their amended complaint, Respondents brought several statutory causes of action against Appellants as employers of Trinh Nguyen. (E.g., §§ 510, 1194 [unpaid wage and overtime recovery].) They also pursued an alternative theory that an oral partnership or ownership agreement had been reached, entitling them to a share in Elite. Appellants answered the complaint and the matter went to a bench trial.
The Industrial Welfare Commission (IWC) issues wage orders and definitions for employment matters. (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 581.) A claim under section 1194 is a claim under the applicable wage order and is subject to the wage order's definitional provisions. (Martinez v. Combs (2010) 49 Cal.4th 35, 63.)
At trial, testimony from the parties and the contractors was presented. The court admitted numerous exhibits into evidence, including two W-2 tax statements issued by Respondents to Trinh Nguyen as an employee (exhibits 12 and 13, from 2012 and 2013). Appellants took the position that Bao Nguyen was the only owner of the business, since Respondents could not show they had made the required monetary contributions.
An additional plaintiff, T&N Construction, was dismissed at trial and is not a respondent. Appellants' businesses included not only Elite but also another business, Pho Santee, and judgment was eventually rendered jointly and severally against all Appellants.
B. Statement of Decision and Judgment
At the close of argument, the court issued a tentative decision from the bench, later formalized into a statement of decision to which no objections were made. As factual findings, the court noted that from August 2011 through March 2013, Trinh Nguyen worked at Elite from 9:00 a.m. to 9:00 p.m., seven days a week, but she did not receive any compensation between August 2011 and April 2012. Her duties included managing the business on a day-to-day basis and tallying the daily receipts for Bao Nguyen, who took responsibility for them. From May 2012 through March 2013, she received $320 a week in compensation, but without any accurate paystubs with her paychecks. She did not receive her legally mandated meal or rest breaks during her employment at Elite. When that employment ended in March 2013, Trinh Nguyen did not receive her unpaid wages.
On the restitution issues, the court made findings that Trinh Nguyen had paid a contractor $10,000 for tenant improvements for the benefit of Elite, but was never repaid. Additionally, Andy Khuu made payments totaling $26,300 to a different contractor for additional tenant improvements to benefit Elite, but was never repaid.
In determining the legal issues presented, the trial court ruled in relevant part that the evidence did not support a conclusion that a contract had been reached for Respondents to become partners or owners of Elite. The court stated, "Additionally, the condition precedent for any purported contract - payment of money by Andy Khuu and Trinh Nguyen to Bao Nguyen - never occurred. Therefore, Andy Khuu and Trinh Nguyen were not owners or partners of Elite . . . . Accordingly, there was no fiduciary duty to Andy Khuu and Trinh Nguyen, and the remedies of an accounting and constructive trust are not appropriate."
As compensation for minimum wages and overtime due, the trial court determined Trinh Nguyen as an employee of Elite was entitled to receive the following:
(1) $59,264 in unpaid minimum and overtime wages (§§ 510, 1194);
(2) $13,687.55 in interest on unpaid wages (from April 1, 2013 at 10 percent);
(3) $9,632 as a penalty for unpaid or missed meal and rest breaks and premium pay (§ 203);
(4) $3,702.86 as a waiting time penalty for unpaid wages, at a daily rate of $123.43 (§ 203);
(5) $4,000 for violations of section 226, subdivision (f) [nonprovision of records], over 43 pay periods;
(6) $4,250 as a penalty for violations of sections 510/558 [unpaid wages];
(7) $4,250 as a penalty for violations of sections 512/558 [meal breaks];
(8) $4,250 as a penalty for violations of sections 512/558 [rest breaks];
(9) $4,250 as a penalty for violating IWC Wage Order No. 2-2001 [definition of employee].
Pursuant to section 558, subdivision (a)(3), an employer may be required to pay civil penalties for violations of IWC orders regulating hours and days of work, to the affected employee. --------
In addition, the court awarded a total of $36,300 to Respondents in restitution. They were also to receive $97,637.50 in costs. All recovery was stated to be against Appellants jointly and severally, and they appeal.
II
SCOPE OF ISSUES PRESENTED AND APPLICABLE REVIEW STANDARDS
Respondents brought a motion, opposed by Appellants, to augment the appellate record to include both parties' trial briefs and two admitted exhibits (Trinh Nguyen's W-2 employee tax statements). The motion was ordered to be considered concurrently with this appeal, and we now grant the augmentation as requested. We previously denied the motion filed by Respondents to strike a portion of Appellants' opening brief (arguments concerning her employee status).
Appellants essentially contend that no substantial evidence supports the trial court's conclusion that Respondent Trinh Nguyen was an employee of Elite. They take the position that an oral partnership agreement was proposed for the management and operation of partnership business, with sufficiently definite proposed terms to enable acceptance. (See Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811-812 (Weddington).) Appellants argue Respondents accepted such an offer and made enough contributions to the business to satisfy their agreed-upon condition precedent, to provide the equivalent of about $50,000 in money and/or labor. On Appellants' alternative view of the evidence, they request reversal of the monetary judgment that is based upon the employment theory, to enable a retrial on the alleged partnership obligations and whether they were breached.
Respondents reply that since Appellants defeated the theory pled in Respondents' amended complaint that an oral partnership existed, Appellants cannot be said to be aggrieved by the judgment. (Code Civ. Proc., § 902 [only aggrieved party may appeal].) Respondents claim that Appellants should be judicially estopped from claiming any valid partnership agreement existed, because they resisted such a theory in the trial court. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183 [summarizing elements of judicial estoppel doctrine].) Respondents further argue for a finding of waiver of any such issue on appeal, by citing to the arguments at trial and the augmented record containing Appellants' trial brief, which denied the existence of a partnership agreement.
Where, as here, the judgment being appealed represents a significant monetary obligation for the Appellants, we think the better approach is to liberally construe the concept of being "aggrieved" and to address the merits of this appeal. (Code Civ. Proc., § 902.) The trial court held a three-day trial and heard testimony from all the interested parties, and issued a statement of decision addressing all the issues presented by the pleadings. Where those documentary and statutory interpretation issues were decided on conflicting evidence, and by means of a statement of decision, "any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision." (In re Marriage of Hoffmeister (1987) 191 Cal.App.3d 351, 358.) The ultimate facts found in the court's statement of decision necessarily include findings on the intermediate evidentiary facts that sustain them. (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1125.)
Because of the credibility issues involved at trial, under substantial evidence principles, " ' "every intendment and presumption not contradicted by or inconsistent with the record on appeal must be indulged in favor of the orders and judgments of superior courts." ' " (Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th 1238, 1250.) "If the trial court's resolution of the factual issue is supported by substantial evidence, it must be affirmed." (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) We consider "whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.) We may not reweigh the evidence and are bound by the trial court's credibility determinations. (Ibid.; see Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1384.)
III
ANALYSIS
Utilizing the above-described standards of review, we address Appellants' argument that the trial court misconstrued the evidence. The nature of their business relationship with Respondents was placed at issue by the alternative theories pleaded in the amended complaint. Under common law standards, the courts will consider whether an employer-employee relationship exists by evaluating if the alleged employer has the " 'right to control and direct the activities of the alleged employee or the manner and method in which the work is performed, whether exercised or not . . . .' " (Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 533.) Statutes and regulations have created additional tests for employee status, such as in the IWC wage orders interpreted by the trial court in this case. (Martinez v. Combs, supra, 49 Cal.4th 35, 57-66; Ayala, supra, at p. 531.)
Appellants' arguments fail to account for the significant amount of evidence about how Bao Nguyen retained control of the duties performed by Trinh Nguyen, to such an extent that she was properly characterized as an employee of Elite. Appellants do not make specific attacks on the amounts of the various monetary awards. (See Brewer v. Premier Golf Properties, LP (2008) 168 Cal.App.4th 1243, 1254, fn. 9 [employer who fails to pay employee additional compensation required by statute may also be required to pay additional penalties for other defaults in payment of wages due].) Instead, Appellants only argue that she was actually a general partner in the business, based on their theory that Respondents succeeded in making a sufficient capital and/or labor contribution to satisfy the condition precedent supposedly existing in an oral partnership agreement.
This challenge must fail. Where the evidence regarding contract formation is conflicting, such as on the existence of mutual assent to its terms, the existence of the contract is treated as a question of fact. (Vita Planning and Landscape Architecture, Inc. v. HKS Architects, Inc. (2015) 240 Cal.App.4th 763, 772.) A trial court's factual findings are upheld if supported by substantial evidence. (Ibid.) Here, conflicting evidence was presented about the parties' different expectations about the evolving business relationship and what it would take for Respondents to become partners in the business. "An essential element of any contract is 'consent.' [Citations.] The 'consent' must be 'mutual.' " (Weddington, supra, 60 Cal.App.4th at p. 812.) Further, " 'The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.' [Citation.] Outward manifestations thus govern the finding of mutual consent required by Civil Code sections 1550, 1565 and 1580 for contract formation. [Citation.] The parties' outward manifestations must show that the parties all agreed 'upon the same thing in the same sense.' [Citation.] If there is no evidence establishing a manifestation of assent to the 'same thing' by both parties, then there is no mutual consent to contract and no contract formation." (Weddington, supra, at p. 811.)
Appellants' efforts to point out portions of the evidence that might support their view of things is not equivalent to demonstrating that there was no substantial evidence in support of the trial court's conclusions. They have not pointed to any evidence in the record that both parties agreed upon the same terms, to establish any mutually agreeable rights and limitations concerning the ownership of Elite. Bao Nguyen was the leaseholder and the only owner listed in the fictitious name statement on file. He instructed Trinh Nguyen what to do, issued W-2 tax forms to her, took charge of the daily receipts of the business, and ultimately excluded her from it. Throughout trial, Respondents' claim to ownership of the business was hotly disputed, and the trial court ultimately could not find evidence to support their partnership cause of action. Instead, the court evidently relied on the alternative, sufficient showing made about Trinh Nguyen's conditions of employment. The court was also justified in treating Respondents' payments toward the improvements at the business premises as deserving of the restitution awards.
The statement of decision fully explains the factual and legal basis for the trial court's rulings and sufficiently addresses the determinations challenged by Appellants, as they are relevant to the validity of the judgment. (Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424-425.) We are required to resolve any conflicts in the evidence, or in the inferences to be drawn from the facts, in a manner supporting the trial court's determinations in its statement of decision. (In re Marriage of Hoffmeister, supra, 191 Cal.App.3d 351, 358.) Doing so, we conclude that substantial evidence supports the judgment and its underlying conclusions of law and findings of fact.
DISPOSITION
Respondents' motion to augment the record is granted; judgment affirmed. Costs are awarded to Respondents.
HUFFMAN, J. WE CONCUR:
McCONNELL, P. J.
HALLER, J.