Cooper v. Yeager Skanska

Filed 6/6/07 Cooper v. Yeager Skanska CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of Riverside County. Stephen D. Cunnison, Judge. Affirmed.

Law Offices of Mark R. Haddon and Mark R, Haddon for Plaintiff and Appellant.

Best Best & Krieger and J. Michael Summerour for Defendant and Respondent.

The trial court granted defendant Yeager Skanska, Inc.s (Yeager) motion for summary judgment. Plaintiff appeals. Finding no error, we affirm.

I. THE COMPLAINT

On August 15, 2005, Gregory Cooper (Cooper) filed a complaint for unpaid overtime wages and unfair business practices. He alleged that he had been an employee of Yeager, a corporation which provides construction services. Cooper alleged that he worked overtime, and that he was entitled to overtime pay under circumstances set forth in the applicable state wage order. Cooper further alleged that he was not compensated for the overtime he worked, in violation of Labor Code section 1198.^[1]

II. DEFENDANTS SUMMARY JUDGMENT MOTION

After filing a general denial, Yeager filed its summary judgment motion. The motion raised a legal defense to the action by contending that Cooper had signed a separation agreement in which he waived future wage claims in return for a severance payment he would not otherwise have received.

In response, Cooper argued that the section of the separation agreement in which he waived his right to seek overtime damages is void under section 206.5.

The issue on summary judgment, therefore, is a legal issue: the interpretation of section 206.5. The trial court found that section 206.5 does not preclude an employer and employee from negotiating an agreement with respect to a disputed entitlement to wages.

III. UNDISPUTED FACTS

Cooper was employed by defendant from 1996 to March 21, 2005. He was terminated on that date and given a final paycheck, including accrued vacation time. He was not entitled to severance pay.

Yeagers Director of Human Resources then gave Cooper a copy of a proposed separation agreement. She told him that he had 45 days to sign it, that he would have seven days to rescind after he signed it, and that a check would be sent to him if the agreement was not rescinded. Cooper signed the agreement the next day and he was sent a lump sum severance check for six weeks salary, less required deductions, in the sum of $6,799.30.

The separation agreement provided that Cooper release Yeager from any claim arising out of the employment relationship, including wage claims under state statutes. The entire five-page agreement was submitted with the motion.

IV. DISCUSSION

Section 206 states: (a) In case of a dispute over wages, the employer shall pay, without condition and within the time set by this article, all wages, or parts thereof, conceded by him to be due, leaving to the employee all remedies he might otherwise be entitled to as to any balance claimed.

Section 206.5 states: No employer shall require the execution of any release of any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made. Any release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee and the violation of the provisions of this section shall be a misdemeanor.

Yeager contends that it paid all wages concededly due, and that section 206.5 does not prevent an employer and employee from entering into an agreement which compromises a disputed claim to additional wages.

To support its contention that the release language in the agreement is valid, Yeager cites Skrbina v. Fleming Companies (1996) 45 Cal.App.4th 1353: Civil Code section 1541 provides: An obligation is extinguished by a release therefrom given to the debtor by the creditor, upon a new consideration, or in writing, with or without new consideration. [] In general, a written release extinguishes any obligation covered by the releases terms, provided it has not been obtained by fraud, deception, misrepresentation, duress, or undue influence. [Citations.] [] The general rule is that when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped from saying that its provisions are contrary to his intentions or understanding; but it is also a general rule that the assent of a party to a contract is necessary in order that it be binding upon him, and that, if the circumstances of a transaction are such that he is not estopped from setting up his want of assent, he can be relieved from the effect of his signature if it can be made to appear that he did not in reality assent to it. [Citation.] [Citations.] (Id. at pp. 1366-1367.) As Yeager notes, the facts of Skrbina are quite similar to the facts here, and it supports Yeagers argument that the release is valid.

Yeager therefore met its initial burden on summary judgment of showing that there was no triable issue of material fact, and in establishing the release as a complete defense to the action. The burden then shifted to Cooper to establish the invalidity of the release. (Code Civ. Proc.,  437c, subd. (p)(2).)

Cooper first argues that he did not waive his right to be compensated for overtime wages already earned. He cites the following language in the separation agreement: You further acknowledge that except for (i) the specific financial consideration set forth in this Agreement, (ii) any accrued but unused vacation time as of the Separation Date, which will be paid to you promptly, and (iii) where applicable, the balance of any overtime pay earned by you since your last regular paycheck, which shall be paid to you as soon as practicable after you submit an acceptable Yeager time report reflecting such overtime hours, you are not now and shall not in the future be entitled to any other compensation including, without limitation, other wages . . . . Although Cooper attempts to enlarge the exception to include all overtime earned during his employment, the language of the exception clearly refers only to overtime earned since his last regular paycheck.^[2] The balance of the sentence establishes that he is not entitled to any payments other than the severance pay provided for in the agreement.^[3]

Assuming the exception is inapplicable, Cooper relies on section 206.5 to establish the illegality of the release provisions. He argues: The overtime wages are wages under California law, and the overtime wages are unpaid as of this date. By a simple and literal reading of [section 206.5] the Release of Claims is an illegal waiver of wages which were due, yet unpaid at the time of the execution of the Separation Agreement. Cooper thus posits a conflict between section 206.5 and section 206. As stated above, section 206 only requires payment of undisputed sums which are due or will become due, leaving the employee to his other remedies for disputed sums. Under Coopers reading of section 206.5, no release of claimed wages would be valid unless the full amount of the claim had already been paid. Such an interpretation would effectively prevent the parties from compromising disputed claims.

In this regard, the trial court considered Sullivan v. Del Conte Masonry Co. (1965) 238 Cal.App.2d 630. In that case, the employer tendered a check which stated that it was full payment for all sums owing. Although there was an issue as to whether the amount of the check was concededly due or not, the trial court found that the amount was not in dispute, and the appellate court upheld that finding. Attaching the condition on the check was therefore a violation of sections 206 and 206.5: Thus, upon termination of an employees services, the employer is bound to pay the employee all wages conceded to be due, and can require no condition in connection with payment. [Citation.] (Sullivan v. Del Conte Masonry Co., supra, at p. 633.)

After finding the violation, the court said: This is not to say, however, that an employer and employee may not compromise a bona fide dispute over wages. But such a compromise is binding only if made after wages concededly due have been unconditionally paid. [Citation.] (Sullivan v. Del Conte Masonry Co., supra, 238 Cal.App.2d at p. 634.)

The separation agreement in this case was clearly such a compromise. It was made at the time of termination, a day after Cooper was given a check for the wages concededly due at that time. The agreement provided for an additional severance payment if Cooper would waive future claims, including future wage claims. The trial court therefore found that the section did not preclude an employer from negotiating an agreement regarding a disputed entitlement to wages. Finding nothing remarkable about an agreement to resolve a disputed claim, we agree with the trial court.

Consideration of the statutory purpose does not change our conclusion. We agree with Yeager: Clearly the purpose of [section 206.5] is to prevent an employer from coercing an employee to sign a release of claims in exchange for the payment of wages which the employer concedes are due. There was no evidence of any such coercion here.

Cooper argues that the statutory purpose was to invalidate releases which would eliminate entitlement to overtime wages earned. He cites County of Riverside v. Superior Court (2002) 27 Cal.4th 793. In that case, our Supreme Court cited section 206.5 as an example of a statute which was enacted for the protection of a class of employees, and which therefore cannot be the subject of a blanket waiver. (County of Riverside v. Superior Court, supra, at p. 804.) It also cited Civil Code section 3513, which provides: Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement. (County of Riverside v. Superior Court, supra, at p. 804.) Nevertheless, in that case, a police officers waiver of his rights under a statute applicable to police officers (Gov. Code,  3303) was held to be valid. (County of Riverside v. Superior Court, supra, at p. 806.)

Similarly, in Henry v. Amrol, Inc. (1990) 222 Cal.App.3d Supp. 1, the court considered a case in which an employee did not take vacations, although he knew that his employer did not allow carryover of unused vacation time, and it did not pay for unused vacation time. The court held that the employees failure to take vacations did not constitute a waiver of his right under section 227.3 to be paid for accrued but unused vacation.

But these cases do not apply to disputed claims. In this case, the employee did not waive a claim for wages due, or to become due. He merely settled a disputed claim for overtime wages. The employer bought its peace by paying a lump sum to avoid the possibility of various possible future claims by the employee. Thus, there was no waiver, and Civil Code section 3513 is inapplicable.

Finally, Cooper argues that he signed the separation agreement under economic duress because he was not given any warning that his employment would be terminated and he needed to support his family while he secured other employment as a result of being terminated. He cites CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631. In that case, the court said: The doctrine of economic duress can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract. [Citation.] The party subjected to the coercive act, and having no reasonable alternative, can then plead economic duress to avoid the contract. (Id. at p. 644.) Although there was no such wrongful act here, Cooper also cites Rich & Whillock, Inc. v. Ashton Development, Inc. (1984) 157 Cal.App.3d 1154. The court there described the doctrine as follows: As it has evolved to the present day, the economic duress doctrine is not limited by early statutory and judicial expressions requiring an unlawful act in the nature of a tort or a crime. [Citations.] Instead, the doctrine now may come into play upon the doing of a wrongful act which is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the perpetrators pressure. [Citations.] The assertion of a claim known to be false or a bad faith threat to breach a contract or to withhold a payment may constitute a wrongful act for purposes of the economic duress doctrine. [Citations.] Further, a reasonably prudent person subject to such an act may have no reasonable alternative but to succumb when the only other alternative is bankruptcy or financial ruin. [Citations.] (Id. at pp. 1158-1159.)

We think this argument was sufficiently answered by the trial court: The issue of economic duress was not raised in the Complaint. Even if it had been, it would not have saved Plaintiffs case. It is uncontested that Plaintiff was given ample time to consider the release agreement, had he wished to take it. The fact that Plaintiff had no immediate employment prospects or sources of income after his termination does not amount to economic duress. Defendants conduct in offering severance pay in exchange for a release of claims was not wrongful.

It is not duress to do what a person is legally entitled to do. (U. S. Hertz, Inc. v. Niobrara Farms (1974) 41 Cal.App.3d 68, 81; London Homes, Inc. v. Korn (1965) 234 Cal.App.2d 233, 240.) Again, we agree with Yeager: Most settlements require the party who is asserting the claim to decide between the security of accepting a smaller amount and the risks and delays of pursuing claims for larger amounts. Here, Cooper chose to take the certain amount.

We also note that Yeager was not obligated to pay Cooper additional sums under a separation agreement. It could have merely paid him the sums concededly due and, as provided in section 206, left him to his legal remedies for the claimed balance. In any event, we find no merit in the economic duress argument.

Yeager having established a legal defense to the claim, and Cooper having failed to overcome it, the trial court properly granted the motion for summary judgment.

V. DISPOSITION

The judgment is affirmed. Respondent shall recover its costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

/s/ King

J.

We concur:

/s/ Richli

Acting P.J.

/s/ Miller

J.

Publication courtesy of San Diego free legal advice.

Analysis and review provided by Santee Property line attorney.

^[1]All further statutory references are to the Labor Code unless otherwise indicated.

^[2] In addition, there was no evidence that an acceptable time report was ever submitted.

^[3] Other provisions of the separation agreement specifically release, in great detail, claims for violations of state regulations regarding wages, hours, or other terms and conditions of employment.