Adanna Car Wash Corp. v. Gomez

87 Cal.App.5th 642

303 Cal.Rptr.3d 753

ADANNA CAR WASH CORPORATION, Plaintiff and Appellant,

v.Jesus GOMEZ, Defendant and Respondent.

B313649

Court of Appeal, Second District, Division 5, California.

Filed January 18, 2023

Gulino Law Office and John J. Gulino, for Plaintiff and Appellant.

Telleria, Telleria & Levy and M. Anthony Jenkins, Los Angeles, for Defendant and Respondent.

RUBIN, P. J.

This appeal addresses the relationship between two statutory surety bonds required under different sections of the Labor Code.¹ Adanna Car Wash Corporation (Adanna) appeals from the superior court's dismissal of its trial de novo appeal from the Labor Commissioner's award of back wages and other damages in favor of Adanna's former employee, Jesus Gomez. The trial court dismissed the appeal for lack of jurisdiction because Adanna failed to post with the trial court an appeal bond required by section 98.2.

Adanna contends that it, in fact, had complied with section 98.2, pointing to a surety bond that it had posted earlier under a different Labor Code provision, section 2055. The section 2055 undertaking is required of all car wash owners as a condition of operating a car wash business. We agree with the trial court that the section 2055 bond was not the appeal bond required under section 98.2. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Following a hearing on Gomez's wage claim against Adanna, the Labor Commissioner awarded Gomez $23,915.59 for overtime earnings, meal period premium pay, rest period premium pay, liquidated damages, interest, and waiting time penalties. (The merits of the claim are not material to this appeal.) On August 13, 2020, the Labor Commissioner served its decision on Adanna.

Under section 98.2, subdivision (a), a party to a Labor Commissioner proceeding may seek review "of an order, decision, or award by filing an appeal to the superior court, where the appeal shall be heard de novo." Under subdivision (b) of the statute, if the employer is the appealing party, the employer must post a bond.

On August 18, 2020, Adanna filed with the superior court a document entitled "Department of Industrial Relations Notice of Appeal De Novo" and a "Notice of Posting Bond Re Department of Industrial Relations Notice of Appeal De Novo." The notice of posting bond stated: "NOTICE IS HEREBY GIVEN that, pursuant to California Labor Code, § 98.2(b), Appellant hereby posts an appeal bond in the amount of the Order, Decision, or Award from which Appellant appeals. The Original of the appeal bond is appended hereto as Exhibit ‘A.’ "

The first page of exhibit A was a "Hudson Continuation Certificate," which indicated the Hudson Insurance Company (Hudson) had issued Adanna Car Wash Corporation a California "Car Wash Bond" in favor of the Department of Industrial Relations. The corporate certificate stated its seal was affixed on May 8, 2020. Although the document had a line for the signature of Hudson's "Attorney-in-Fact," Julliet Adesuyan, the certificate attached to the notice was unsigned. The next two pages of exhibit A indicated that Hudson and ASI American Safety Casualty Insurance gave Julliet Adesuyan power of attorney up to $150,000.²

On February 16, 2021, Gomez moved to dismiss the appeal because Adanna "failed to deposit/post an undertaking, which is a jurisdictional prerequisite for [its] appeal under Labor Code section 98.2(b)." Gomez explained Adanna had attached a copy of its section 2055 car wash bond, not the required section 98.2 bond. We set out in the margin the two statutes, which, we observe, are in separate Divisions of the Labor Code.³

In his motion to dismiss and reply points and authorities, Gomez pointed out that the superior court did not have control over the section 2055 bond which is filed with the Labor Commissioner. Thus, the earlier bond could not necessarily (or at least not easily) secure payment to the employee following a successful appeal. Gomez argued the bond was a jurisdictional requirement and, without an appeal bond, the superior court lacked jurisdiction to hear Adanna's appeal from the Labor Commissioner's award.

In opposition, Adanna argued that the section 2055 bond satisfied the section 98.2 undertaking because the former was intended to benefit car wash employees and Gomez was a car wash employee. Adanna also asserted Gomez's motion was untimely under Code of Civil Procedure section 995.920.

The superior court granted Gomez's motion and dismissed the appeal. The court agreed that Adanna failed to file the required section 98.2 undertaking and concluded the court lacked jurisdiction to hear the appeal from the Labor Commissioner's decision. Adanna appealed to this court.

DISCUSSION

Adanna argues the superior court erred in dismissing its appeal because it satisfied section 98.2 ’s undertaking requirement with its section 2055 car wash bond.⁴

1. Standard of Review and Applicable Law

The basic framework of appeals of Labor Commissioner decisions to the superior court has been succinctly stated by our colleagues in the First District: "When an employer does not pay wages as required by law, an employee may file either a civil action in court or a wage claim with the [Labor] Commissioner. ( §§ 98 - 98.8.)" ( Cardinal Care Management, LLC v. Afable (2020) 47 Cal.App.5th 1011, 1018, 261 Cal.Rptr.3d 353 ( Cardinal Care ).) If the employee seeks administrative relief, a deputy commissioner holds an informal, expedited hearing on the employee's wage claims. ( Ibid. )

"Within 10 days after service of notice of the [Labor] Commissioner's order, decision, or award, either party may appeal to the superior court, which considers the matter de novo." ( Ibid. )

"An employer's right to appeal the [Labor] Commissioner's decision is further ‘conditioned on the necessary prerequisite that the employer post ... [an] undertaking for the amount of the award.’ [Citation.] ‘The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award.’ ( § 98.2 [, subd.] (b).) ‘The purpose of this requirement is to discourage employers from filing frivolous appeals and from hiding assets in order to avoid enforcement of the judgment.’ " ( Burkes v. Robertson (2018) 26 Cal.App.5th 334, 341–342, 237 Cal.Rptr.3d 89, fn. omitted.) The "undertaking requirement of section 98.2 [, subdivision] (b) is mandatory and jurisdictional, and ... the court has no authority to extend the deadline for posting the undertaking beyond the deadline for filing the notice of appeal."⁵ ( Palagin v. Paniagua Construction, Inc. (2013) 222 Cal.App.4th 124, 140, 165 Cal.Rptr.3d 612.)

Whether Adanna satisfied the required undertaking and whether the superior court had jurisdiction are legal issues that we review de novo. ( Deiro v. Los Angeles County Civil Service Com. (2020) 56 Cal.App.5th 925, 929, 270 Cal.Rptr.3d 761.)

2. Adanna Failed to Post the Required Undertaking

Without citation to any authority, Adanna asserts the documents it attached to the notice of the bond posting satisfied section 98.2, subdivision (b). We disagree.

a. The Certificate on Its Face Was Not a Legally Enforceable Bond

Preliminarily, we observe that although the "The Hudson Continuation Certificate" in exhibit A identified a bond number, the document itself was not executed. The signature of Hudson's attorney in fact, Julliet Adesuyan, is nowhere to be found. Execution by the surety is a prerequisite for a valid bond in an action or proceeding. (See Code Civ. Proc., § 995.140, subd. (a)(1) & (2) [" ‘Bond’ includes both of the following: [¶] (1) A surety, indemnity, fiduciary, or like bond executed by both the principal and sureties. [¶] (2) A surety, indemnity, fiduciary, or like undertaking executed by the sureties alone."].) The two pages that follow the continuation certificate purport to be powers of attorney, not a bond.

b. Adanna's Car Wash Bond Was Not the Required Section 98.2 Appeal Bond

Even if the continuation certificate were an enforceable bond for some purposes, it is simply not the undertaking required by section 98.2. We begin our analysis with the obvious: there are two types of bonds in play here – a section 98.2 appeal bond and a section 2055 car wash bond.

Section 98.2, subdivision (b) states "the undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award." ( § 98.2, subd. (b), italics added.) The appeal bond is forfeited to the employee where the employer's appeal fails or is withdrawn, and the employer does not timely pay the award. ( § 98.2, subd. (b).)

In contrast, a $150,000 car wash bond is a prerequisite to operating a car wash in California. ( § 2055.) On its face, section 2055 makes clear a car wash bond has nothing to do with litigation or appellate proceedings. It is condition that must be satisfied before the car wash employer may obtain a license or permit: "An employer shall not conduct any business until the employer obtains a new surety bond and files a copy of it with the [Labor Commissioner]." ( § 2055, subd. (b)(3).)

Here, "The Hudson Continuation Certificate" expressly states the undertaking is a "CA Car Wash Bond" that benefits the Department of Industrial Relations. Adanna admits in its appellate briefing that the bond was issued pursuant to section 2055.

Adanna's sleight-of-hand attempt to substitute a car wash bond for an appeal bond runs afoul of a rule that applies to bonds in general. Code of Civil Procedure section 995.140, subdivision (b) expressly distinguishes between a licensing bond and one furnished in connection with litigation. It provides: "A bond provided for or given ‘in an action or proceeding’ does not include a bond provided for, or given as, a condition of a license or permit." ( § 995.140, subd. (b) ; see Walt Rankin & Associates, Inc. v. City of Murrieta (2000) 84 Cal.App.4th 605, 618, 101 Cal.Rptr.2d 48 [bond for...