Lorta v. Bishop, Inc.

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JACOB LORTA et al., Plaintiffs and Appellants, v. BISHOP, INC., Defendant and Respondent.

G062166

California Court of Appeals, Fourth District, Third Division

February 13, 2024

NOT TO BE PUBLISHED

Appeal from a postjudgment order of the Superior Court of Orange County, No. 30-2018-010006766 Melissa R. McCormick, Judge. Reversed and remanded.

Donahoo & Associates, Richard E. Donahoo, and Judith L Camilleri for Plaintiffs and Appellants.

Sheppard, Mullin, Richter &Hampton, Richard J. Simmons and Robert Mussig for Defendant and Respondent.

OPINION

SANCHEZ, J.

Plaintiffs Jacob Lorta, Warren Little, Jorge Lopez, Douglas Boal, and Daniel Velasco appeal from the court's denial of their motion to recover attorney fees from defendant Bishop Inc. (Bishop). After plaintiffs initiated the instant action for recovery of wages, Bishop voluntarily paid certain wages to plaintiffs. The parties also reached a stipulation for settlement whereby Bishop would pay $225,000 to plaintiffs in "new money." The agreement indicated each party would bear its own attorney fees and costs. Bishop ultimately did not sign a long form settlement agreement and made no payment under the stipulation for settlement. Plaintiffs then filed a motion to enforce the settlement agreement pursuant to Code of Civil Procedure section 664.6. After writ and appellate proceedings, plaintiffs successfully enforced the settlement agreement.

Plaintiffs thereafter filed a motion for attorney fees seeking to recover fees they incurred after Bishop's deadline to pay under the settlement agreement. This included attorney fees incurred to enforce the settlement agreement and fees to litigate the case to trial while simultaneously seeking to enforce the agreement. In denying plaintiffs' motion for attorney fees, the trial court held plaintiffs prevailed on their interpretation of the settlement agreement, and the agreement stated each party would bear its own fees and costs. The court emphasized plaintiffs had not prevailed under any statute because there was no adjudication of any claims.

On appeal, plaintiffs contend the court erred because they were prevailing parties entitled to attorney fees under Labor Code sections 1194 and 226^[1] as well as Code of Civil Procedure section 1021.5. They claim they were prevailing parties because they obtained a net monetary recovery in the lawsuit, and the relevant statutes do not require an adjudication of liability. (Code Civ. Proc., § 1032, subd. (a)(4).) For the reasons below, we agree plaintiffs were prevailing parties under section 1194 and are entitled to any post-settlement attorney fees incurred to litigate the action prior to trial. But plaintiffs are not entitled to any fees incurred to enforce the settlement agreement. We accordingly reverse and remand for the trial court to conduct further proceedings consistent with this opinion.

FACTS^[2]

The Underlying Lawsuit

"In July 2018, the five individual plaintiffs filed a complaint against Bishop, alleging they were employed in various construction capacities on public works projects for which Bishop was a contractor. They asserted six causes of action (1) failure to pay wages and overtime; (2) failure to pay prevailing wages on public works; (3) failure to pay wages of terminated or resigned employees; (4) failure to provide or otherwise compensate for missed meal and rest breaks; (5) recovery under public works bonds; and (6) unfair competition in violation of Business and Professions Code section 17200 et seq.

"In November 2018, Bishop wrote a letter to plaintiffs' counsel stating it had 'discovered an inadvertent shortfall in the payment of wages made to [plaintiffs].' It enclosed checks for each plaintiff that, in aggregate amounted to $112,410.66. The payments were broken down by checks for each plaintiff's wages (less withholdings) and penalties and interest (without any withholdings). Bishop claimed in the letter that these checks fully compensated plaintiffs for back wages, interest, and waiting time penalties. It stated, 'Bishop is providing these payments in good faith based on its discovery of this inadvertent payroll error in 2016. These payments are not conditioned on any settlement or release proposal.' (Italics added.) The letter went on to acknowledge that these payments did not cover meal and rest break violations, which Bishop denied, but it included a settlement offer pursuant to Code of Civil Procedure section 998. That offer is not in our record but was presumably rejected.

"The parties commenced discovery and eventually began informal settlement negotiations that reached a point where the parties mutually agreed to suspend litigation activities while they pursued a settlement. To facilitate those discussions, the court continued the trial date from July 2019 to January 2020.

"The parties' settlement negotiations culminated in a mediation on May 28, 2019. At that mediation, the parties executed a three-page stipulation for settlement. Pursuant to that stipulation, Bishop agreed to pay plaintiffs 'the total sum of $225,000 in "new money" in full settlement and compromise of this action and in release and discharge of any and all claims and causes of action ....' The words 'in "new money"' were handwritten and inserted by interlineation into the agreement. Although the stipulation stated that plaintiffs would later provide Bishop with 'a standard form of a Release of all . . . claims,' it was binding, stating 'that the settlement and compromise stated herein is final and conclusive forthwith, and each attorney represents that his/her client(s) has freely consented to and authorized this agreement.' Elsewhere it stated, 'Any provisions of Evidence Code §§ 1115-1128 notwithstanding, this Stipulation is binding and, if the parties request the court to retain jurisdiction for purposes of enforcement, may be enforced by a motion under Code of Civil Procedure § 664.6 .... This Stipulation may also be enforced by any other procedure permitted by law in the applicable state or federal court.' 'Prior to the entry of a Dismissal with Prejudice, the parties agree to request the court to retain jurisdiction for purposes of enforcing this Stipulation pursuant to California Code of Civil Procedure § 664.6.' The stipulation provided that payment pursuant to the settlement was to be made by June 29, 2019.

"Over the ensuing two weeks, the parties' respective attorneys negotiated a long form settlement agreement to a point where both sides had agreed on its terms. The long form settlement agreement provided, without objection from Bishop's counsel, that Bishop would pay plaintiffs $225,000 in "new additional money." It further provided a breakdown of exactly how the $225,000 would be divided among the plaintiffs. On June 7, 2019, Bishop's counsel wrote, 'we will sign it immediately if you can get the signatures back to us quickly and, if so, everything should be fine to make the payment by June 29.' On June 14, 2019, after plaintiffs forwarded Bishop all of the signatures it requested, Bishop's counsel stated, 'Thank you, I will get my client's signatures and start preparing the checks.'

"As the payment deadline approached without any executed settlement from Bishop, plaintiffs' counsel began making inquiries. On June 27, 2019, just two days before the payment deadline, Bishop's counsel acknowledged that Bishop was refusing to sign the agreement. No reason was given other than "buyer's remorse." Ultimately, Bishop did not sign the long form settlement agreement and made no payment under the stipulation for settlement.

"The following month, plaintiffs filed a motion to enforce the settlement pursuant to Code of Civil Procedure section 664.6. Plaintiffs' motion did not address whether 'new money,' as contemplated by the settlement, included the prior payment of $112,000 because, up to that point, Bishop had never made that claim.

"In response to the motion, Bishop changed counsel and opposed the motion. In its opposition, Bishop now took the positions that (1) the settlement was an unenforceable agreement to agree, and (2) the earlier payment 'extinguished some or all' of plaintiffs' claims. Bishop's president provided a declaration in which he stated, 'My understanding was that as part of any final agreement, Bishop would only be required to pay the difference between the amount stated in the Stipulation - $225,000 - and the amount Bishop had already paid to Plaintiffs to resolve most of the claims in the case - approximately $112,000. In other words, I understood that if the parties were able to reach agreement on a Long Form Settlement, Bishop would only be obligated to pay Plaintiffs an additional $113,000 as part of the deal.' This was the first time Bishop had ever made this claim.

"The court ultimately rejected Bishop's claim that the stipulation for settlement was merely an agreement to agree but it concluded there had been no meeting of the minds as to the amount of the settlement. The court was persuaded by Bishop's claim in the letter accompanying the earlier $112,000 payment that the checks were to fully compensate plaintiffs for the wage claims. The court commented, 'The cover letter would seem to say it all; however, there is one very curious sentence in the letter that now sits near the heart of the pending dispute. In the letter, defense counsel offered that "these payments are not conditioned on any settlement or release proposal." On its face, this just means that payments were admittedly owed and defendant was offering the money in good faith without quid pro quo. What the letter should have said was that plaintiffs' acceptance and deposit of the funds would be treated as an accord and satisfaction for the aforementioned...