Opinion
NOT TO BE PUBLISHED
Martin J. Tangeman, Judge Superior Court County No. CV060268A of San Luis Obispo
Law Offices of Kari L. Ley and Kari L. Ley for Defendants and Appellants.
Duggan Smith and Jane Ellen Heath for Plaintiff and Respondent.
COFFEE, J.
Alan Little and Alan Little Custom Homes, Inc. (Little) appeal from orders enforcing a stipulated judgment (Code Civ. Proc., § 664.6) and awarding attorney's fees and costs to Robert Brooks Benson (Benson) as a prevailing party pursuant to Labor Code sections 218.5 and 2699. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Little is engaged in the business of building custom homes. In 2004, Little and Benson entered into a written agreement pursuant to which Benson would become a construction superintendent for Little. With respect to compensation, the agreement provided: "Salary to be a fixed amount of $60,000 per year payable monthly" plus "$60,000 per year of equity building in a property such as the Paso de Vino Townhomes." The agreement stated that "You will work as a 'consultant' to [Little] which means that the entire $60,000 comes to you – you report and pay your taxes on your reported income." The agreement also provided that it was "intended to be for permanent full-time employment as long as each party fulfills their respective obligations to the other."
Little terminated Benson's employment on December 26, 2005. Benson made a claim for unpaid compensation before the California Labor Commission, and the Commission issued a right to sue letter. Benson then filed a lawsuit against Little seeking unpaid wages, penalties, attorney's fees and equity. His claims were primarily based on Labor Code violations, but also asserted contract and tort theories. His verified complaint asserted the following eight causes of action: (1) for $59,000 in unpaid wages and about $2,300 in accrued time off pursuant to Labor Code section 201 and for attorney's fees and interest pursuant to sections 218.5 and 218.6; (2) for about $13,800 in penalties based upon willful failure to pay wages in violation of section 203; (3) for attorney's fees and costs incurred as a private attorney general pursuing the wage claim, pursuant to section 2699; (4) for breach of the written employment contract based upon termination without cause and failure to pay to "those sums to which [Benson] was entitled under the express terms of the Agreement"; (5) for discharge in violation of public policy in retaliation for Benson's demand for wages and equity due, in violation of sections 201, 203, 218, and 218.5; (6) for breach of written agreement not to terminate without good cause; (7) for breach of the implied covenant of good faith and fair dealing based on termination in order to avoid "paying the equity payment to which [Benson] was entitled"; and (8) for quiet title, in which Benson asserted an equity interest in Paso de Vino Townhomes.
All further statutory references are to the Labor Code unless otherwise stated.
Little defended against Benson's claims, asserting that Benson was an independent contractor and not an employee under the Labor Code, that Little was exempt from the provisions of the Labor Code, that the agreement between the parties had been amended when Benson later elected to forfeit the equity claim and instead receive an additional $2,500 per month in salary, and that Benson was terminated for poor performance.
At a settlement conference in October of 2006, the parties reached agreement. The court recited the terms of the settlement in open court and Benson and Little acknowledged their agreement to the terms. The parties agreed that "the first of the properties to be sold at Spyglass Point [a development owned by Little will result in an immediate payment to [Benson] in the sum of $75,000. That is upon sale. [¶] . . . [¶] It is agreed that if none of the properties sell by . . . July 18, 2007, then [Benson] is free to restart this litigation . . . . [¶] If as of July 18 no property has been sold resulting in cash payment to [Benson], [Benson] may restart the litigation. Or, if [Benson] discovers that a property has sold, [Benson] can either enforce this settlement . . . or otherwise restart the litigation. [¶] It is agreed that upon payment, [Benson] will dismiss this case with prejudice and that all parties will waive all claims for fees and costs against each other." The court vacated the February 2007 trial date.
In March of 2007, Little sold a Spyglass Point property (Lot No. 8) and Benson demanded payment. Little took the position that, because the sale did not result in any net proceeds, Benson was not entitled to any payment. Benson moved to enforce the settlement agreement.
"Net proceeds" had not been mentioned on the record when the parties stipulated to settlement. In support of his motion to enforce the settlement, Benson and his counsel declared that during the October settlement negotiations they were never asked to agree that payment would be from "net proceeds." Benson declared that he would not have agreed to such a term because it would have enabled Little to avoid payment by ensuring that a sale resulted in no net proceeds. Little, on the other hand, declared that he understood and intended that payment would only be made if a sale resulted in net sale proceeds. Little declared that, during the negotiations, he and the judge had "discussed the possibility of conditioning any payment to [Benson] on the receipt of net sale proceeds." In response, Benson offered evidence that just after the parties stipulated to settlement and before Lot No. 8 was sold, Little granted a $1.6 million dollar second deed of trust for Lot No. 8 to an Alaskan limited liability corporation that was not registered to do business in either Alaska or California, and that satisfaction of that deed eliminated the net proceeds from the sale.
The trial court granted Benson's motion to enforce the settlement agreement and entered judgment in Benson's favor. The trial court found that the receipt of net proceeds was not an express condition of the agreement and that "it [is] more likely than not that the issue of net proceeds was not raised, or if it was raised it was raised in such a fashion that [it] led the parties to believe it wasn't really an issue."
Benson sought about $30,000 in attorney's fees as the prevailing party pursuant to sections 218.5 and 2699. In support of his motion, he offered the declarations of two attorneys who attested to the amount of fees incurred and their hourly rates. Attached billing records itemized the date, time and expense of each service performed. Descriptions were redacted. Little opposed the motion on the grounds that there was no prevailing party because the case settled, that the declarations were insufficient to support Benson's claims because they gave no basis for the hourly rates claimed and did not describe the services performed, that Benson had not allocated between fees that were incurred pursuing Labor Code claims and other claims, and that the fees should be reduced because the amount claimed was unjust in view of the amount recovered.
The trial court awarded $17,000 in fees and $1,049.40 in costs to Benson, finding that he was the prevailing party within the meaning of sections 218.5 and 2699 because he "pled the Labor Code, he was successful, and he obtained satisfaction for his loss," all of his claims were "the same basic cause of action," and (according to Little) Benson took entitlement to wages in lieu of his claim for equity. The court explained that it was reducing the claimed fees to $17,000 "based on just general fairness" because the matter had not been "litigated to the extent that would normally justify the amount of fees that are being requested," and because a reasonable fee to collect the amount claimed was about $10,000 and that another $7,000 had been incurred to enforce the settlement. The court did not consider partially unredacted billing records that were offered by Benson in his reply papers, because Little's counsel had not had an opportunity to review or respond to them.
DISCUSSION
The Order Enforcing The Settlement Agreement
If parties to litigation stipulate to settlement orally before the court, the court may, upon motion, enter judgment pursuant to the terms of the settlement. (Code Civ. Proc., § 664.6.) The settlement agreement is a contract, and contract principles apply. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.) On a motion to enforce the settlement, the trial court acts as a trier of fact and determines whether the parties have entered into an enforceable settlement agreement and upon what terms they have agreed. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) The trial court determines disputed facts based upon oral testimony or declarations. (Ibid.) It may not create any new material terms. (Ibid.) The court's findings are subject to limited appellate review and will not be disturbed if supported by substantial evidence. (Ibid.) We resolve all evidentiary conflicts and draw all reasonable inferences to support the trial court's finding that the parties entered into an enforceable settlement agreement. (Ibid.)
Substantial evidence supported the trial court's determination that the parties reached an enforceable mutual agreement that Benson would be entitled to $75,000 "upon sale" of a Spyglass property. These were the terms recited in open court and agreed to by the parties. The court did not mention net proceeds when it recited the terms of the settlement. Little personally assented to the recited terms on behalf of himself and his company, making no mention of net proceeds. A party that has stipulated to settlement before the court may not avoid enforcement by subsequently imposing conditions that were not discussed before the court. (See Richardson v. Richardson (1986) 180 Cal.App.3d 91, 97.)
The trial court did not create any new material term in order to enforce the settlement. It declined Little's invitation to create a material term that would have imposed a previously unexpressed condition to payment.
The Order Awarding Attorney's Fees
Relying on Civil Code section 1717, Little contends that Benson was not a prevailing party because the case settled. Little also contends that Benson was not entitled to fees because Benson was not an employee and only two of Benson's causes of action asserted claims for fees pursuant to section 218.5 and 2699. Finally, Little contends that the trial court erred in calculating the fee award. We disagree with each contention.
An award of attorney's fees to a prevailing party is a matter for the discretion of the trial court and its determination will not be disturbed on appeal unless it is clearly wrong. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) Civil Code section 1717 governs fees awarded pursuant to contract. The contract in this case did not contain a fee provision and fees were awarded only pursuant to statute. Statutory fees may be awarded to a party who obtains net monetary relief pursuant to settlement. (On-Line Power, Inc. v. Mazur (2007) 149 Cal.App.4th 1079 [salaried executive who settled claims for nonpayment was entitled to attorney's fees pursuant to section 218.5. An order denying his motion for attorney's fees was reversed].)
Section 2699 provides that the court shall award attorney's fees to an employee who prevails in an action to collect civil penalties for violation of the provisions of the Labor Code. Section 218.5 provides that the court shall award attorney's fees to the prevailing party in "any action brought for the nonpayment of wages." Attorney's fees should not be denied on claims for unpaid wages simply because failure to pay constituted breach of a contract.
The trial court correctly concluded that this was an action for unpaid wages and civil penalties. Benson claimed in his complaint that he was an employee and that Little willfully refused to pay his wages. Each cause of action was inextricably intertwined with the wage claim. Although Benson sought to quiet title based on the equity provision of his contract, Little took the position that Benson had elected to receive additional salary in lieu of equity. Benson claimed that the equity provision in the contract, "represent[ed] deferred compensation (wages). . . ." Little disputed these claims, but did not defeat them. Benson obtained a monetary recovery on his wage claims and was, therefore, the prevailing party within the meaning of sections 218.5 and 2699. Because all of Benson's claims were primarily based upon unpaid wages, allocation was not required.
The declarations submitted in support of Benson's motion for fees were sufficient to support the award in this case, notwithstanding the redaction of descriptions. The declarations assert personal knowledge of the facts declared, set forth professional qualifications of counsel and the claimed hourly rates, and incorporate by reference the itemized billing statements. The trial court had sufficient information about the brief law and motion and discovery history of the case to assess the reasonableness of the hours claimed.
The court acted within its discretion when it determined that $17,000 was the reasonable amount of attorney's fees incurred by Benson. To calculate a fee award, a trial court first determines a "lodestar" figure by multiplying the hours expended by a reasonable hourly rate. (Serrano v. Priest (1977) 20 Cal.3d 25, 48.) It may then exercise its discretion to apply a multiplier to adjust the lodestar upward or downward in order to arrive at a fee that reflects the fair market value of the service rendered, based on factors such as (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award." (Graham v. Daimler Chrysler Corp. (2004) 34 Cal.4th 553, 579.) The trial court acted within its discretion when it reduced the $30,000 claim to $17,000, based on general fairness. The declarations of Benson's counsel would have supported a lodestar award of about $30,000 based on hours expended and the attorneys' hourly rates. The trial court stated its reasons for reducing that amount, including the effort required and the amount recovered. There was no abuse of discretion.
The judgment is affirmed. Costs are awarded to respondent.
We concur: YEGAN Acting P.J., PERREN J.