Laty v. Samuel

Filed 5/14/07 Laty v. Samuel CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appeal from a judgment of the Superior Court of Orange County, Charles Margines, Judge. Affirmed.

Law Offices of Joseph A. Shuff III and John J. Gulino for Plaintiff and Appellant.

Bruce G. Schweitzer for Defendant and Respondent.

* * *

Plaintiff Elias Laty, doing business as Laty & Associates, sued defendant Nabil Samuel, his former employee, seeking damages for breach of a contracts noncompetition clause, money had and received, and fraud. The trial court entered judgment for defendant. Because the evidence supports the judgment, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff operates a bookkeeping and income tax preparation business. Defendant worked for plaintiff. His duties included performing payroll and bookkeeping services for clients, but not income tax preparation.

In 1998, plaintiff and Paul Brown, who operated his own financial planning and income tax preparation business, created Brown, Laty & Associates. During this entitys existence, defendant signed a confidentiality and nondisclosure agreement. In it defendant acknowledged he would receive confidential information about clients belonging to the company and/or associated companies providing joint services that constituted a valuable company asset. As a material consideration for . . . [his] employment, defendant promised that, for a period of five . . . years after his termination[,] he w[ould] not solicit the client(s) [or] their business associates, affiliates, or representatives of Brown, Laty and Associates . . . and those associated Companies . . . . Plaintiff and Brown terminated their association in 2002. Defendant continued to work for plaintiff, and plaintiff testified they had an understanding the confidentiality and nondisclosure agreement remained in force.

One of plaintiffs clients owned some restaurants. In early 2004, plaintiff told Isaac Alexander, the companys manager, he would no longer perform any work for the business. Several weeks later, Alexander contacted defendant and asked him to provide accounting and tax preparation services for him. Defendant agreed to do so, performing the work at home using his own computer and software.

Plaintiff provided payroll services to a company named Mission Ranch Market (Mission), and testified its owner said he would also get [the businesss] bookkeeping. Plaintiff claimed he later learned Missions owner took those services to [defendant]. Defendant denied doing any independent work for Mission. He testified that, in March 2005, he began working for AMM Market, Inc., a business which had purchased Mission.

In late 2004, plaintiff assisted a Mr. Bashier in forming a corporation named A.C.T. Plaintiff claimed Bashier asked him to do the businesss bookkeeping. Later, Bashier told plaintiff that defendant was providing the bookkeeping and tax services for A.C.T. Defendant testified Bashier was his friend and that he had been preparing Bashiers tax returns for several years. After A.C.T.s formation, Bashier asked defendant to handle the businesss bookkeeping and tax preparation.

Both plaintiff and Brown allowed their employees to prepare tax returns for family and friends at work and retain the fees for these efforts so long as it did not interfere with the employees normal duties. Plaintiff testified he understood the term friends meant only very close friends such as a neighbor or someone you associate with on a daily . . . or weekly basis. A former Brown employee who had personally prepared 30 annual tax returns, testified he understood the company policy meant he could prepare a return for anybody . . . I wanted to prepare taxes for, including the employees of business clients. A third employee testified she had prepared 10 to 15 returns for friends and . . . relatives, plus a business client that was her friend, which she claimed had been cleared by plaintiff. Before being terminated, defendant annually prepared tax returns for at least 30 people, whom he testified included members of his church and persons brought to him by his dentist and others.

Plaintiff fired defendant in February 2005 and filed this lawsuit. The complaint alleged that [i]n violation of the written agreement, defendant solicited work for his own account from . . . [p]laintiffs customers, both before and following [his] termination . . . . It also alleged defendant falsely informed clients . . . [he] was permitted . . . to collect and retain fees for services, represent[ed] . . . that he was working on [p]laintiffs behalf when he actually performed services for his own account, and failed to inform [p]laintiff . . . that [he] had begun his own accounting business . . . and was soliciting . . . [p]laintiffs clients . . . .

After a nonjury trial, the court entered judgment for defendant. On the contract counts, it found, Read literally, defendant was not prohibited from soliciting clients during his employ by Brown, Laty & Associates, plaintiff lack[ed] standing to pursue . . . claim[s] under the written agreement, and [i]n any case, defendant did not solicit any of plaintiffs clients . . . . As for fraud, the court cited its finding that defendant did not solicit plaintiffs clients. Concerning defendants tax return preparation work, the court found the permission to do so was sufficiently vague that defendant could reasonably interpret it to allow him to prepare tax returns for anyone who was not a client of the business . . . . The court expressly noted that it resolve[d] witness credibility calls and conflict[s] in the evidence in favor of defendant.

DISCUSSION

Plaintiff contends the court erred as a matter of law by finding he lacked standing to enforce the confidentiality and nondisclosure agreement, and construing that contracts language to mean defendant could compete with him before termination of defendants employment. Defendant argues plaintiff has misconstrued the trial courts findings and, in any event, the courts decision, including its finding he did not solicit plaintiffs clients, is supported by the evidence. This latter contention has merit. Assuming the trial court erred by ruling plaintiff lacked standing and in its interpretation of the agreement, we cannot undo the effect of the ruling or the ensuing judgment on the ground that the court may have misapplied [the law] as long as any other correct legal reason exists to sustain its decision. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) We conclude substantial evidence supports the trial courts judgment.

Initially, we note plaintiff failed to comply with the rules governing the preparation of appellate briefs. Many of the factual assertions made in the opening brief are bereft of any supporting citation to the record. Even where plaintiff does cite to the record, the citations, particularly those appearing on page 5, are inaccurate. It is the duty of a party to support the arguments in its briefs by appropriate reference to the record, which includes providing exact page citations. [Citation.] Because [t]here is no duty on this court to search the record for evidence [citation], an appellate court may disregard any factual contention not supported by a proper citation to the record [citations]. (Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, 1379; see also former Cal. Rules of Court, rule 14(a)(1)(C), now rule 8.204(a)(1)(C).)

But even on the merits, plaintiffs argument is unpersuasive. An agent or employee is under a duty not to compete with his or her principal on matters connected with the agency, unless the principal and the agent otherwise agree. [Citations.]

(3 Witkin, Summary of Cal. Law, Agency and Employment (10th ed. 2005)  100, p. 147.) [A]n employer has the right to expect the undivided loyalty of its employees and when the employee takes action which is inimical to the best interests of the employer, that duty of loyalty is breached, and may give rise to a cause of action in the

employer . . . . (Stokes v. Dole Nut Co. (1995) 41 Cal.App.4th 285, 295; see also Fowler v. Varian Associates, Inc. (1987) 196 Cal.App.3d 34, 41.)

The duty of loyalty does not, however, preclude an employee from engaging in all outside business pursuits. An employee may conduct a business enterprise independent from, though similar to, that conducted by his or her employer, so long as the employee acts in good faith and does not seize . . . business opportunities in the companys line of activities which the company has an interest and prior claim to obtain . . . . (Industrial Indem. Co. v. Golden State Co. (1953) 117 Cal.App.2d 519, 533; see also Lab. Code,  2863 [An employee who has any business to transact on his own account, similar to that intrusted to him by his employer, shall always give the preference to the business of the employer]; 3 Witkin, Summary of Cal. Law, Agency and Employment, supra,  100, p. 147.) These principles are applicable in all situations in which a person manages or transacts business for another or for others to whom he stands in a fiduciary relation . . . . (Industrial Indem. Co. v. Golden State Co., supra, 117 Cal.App.2d at p. 533; see also MacIsaac v. Pozzo (1947) 81 Cal.App.2d 278, 285.)

The determination of the particular factual circumstances under which a fiduciary takes business opportunities for himself and the application of the ethical standards of fairness and good faith required from a fiduciary to said set of facts is mainly for the trier of facts. Both the issues of good faith and of sufficient performance of contractual obligations are normally questions of fact [citation]. (Industrial Indem. Co. v. Golden State Co., supra, 117 Cal.App.2d at p. 534.)

Concerning defendants independent accounting and bookkeeping services, the evidence supports the trial courts conclusion defendant did not solicit plaintiffs clients. (Aetna Bldg. Maintenance Co. v. West (1952) 39 Cal.2d 198, 203 [Solicit is defined as: To ask for with earnestness, to make petition to, to endeavor to obtain and implies personal petition and importunity addressed to a particular individual to do some particular thing].) A persons mere willingness to discuss business upon invitation of another party [does not] constitute solicitation on the part of the invitee. (Id. at p. 204.)

Plaintiff admitted terminating his relationship with the restaurant business before the companys manager sought defendants assistance. While plaintiff hoped to receive A.C.Ts accounting work, he failed to present evidence that an agreement to do so was actually consummated. To the contrary, defendant testified A.C.T.s owner asked him to perform these services. Finally, not only did defendant deny soliciting work from Mission, he claimed his accounting services for its successor only began after plaintiff fired him. The court found defendants testimony more credible. (Estate of Odian (2006) 145 Cal.App.4th 152, 168 [the testimony of a witness whom the trier of fact believes, whether contradicted or uncontradicted, is substantial evidence, and we must defer to the trial courts determination that these witnesses were credible].)

As for defendants preparation of income tax returns, the parties agreed employees were entitled to prepare tax returns for family and friends at work and retain any proceeds from their efforts. Given the conflicting trial testimony, the record supports the trial courts conclusion that the class of persons for whom an employee could prepare a tax return was sufficiently vague to support defendants conclusion he could prepare returns for any nonclient. (Estate of Odian, supra, 145 Cal.App.4th at p. 168.) Thus, we conclude the record supports the trial courts evidentiary findings and its decision.

DISPOSITION

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

RYLAARSDAM, J.

WE CONCUR:

SILLS, P. J.

FYBEL, J.

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