Plata v. Darbun Enters., Inc.

JAVIER TENORIO PLATA, et al., Plaintiffs and Appellants, v. DARBUN ENTERPRISES, INC., Defendant and Respondent.

D062517

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

Filed: January 31, 2014

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2011-00059024-

CU-MC-NC)

APPEAL from a judgment of the Superior Court of San Diego County, Thomas P. Nugent, Judge. Reversed.

Stillman & Associates and Philip H. Stillman for Plaintiffs and Appellants.

Squires, Sherman & Bioteau and Bruce Sherman for Defendant and Respondent.

Eighteen individuals (plaintiffs) filed a superior court complaint against Darbun Enterprises, Inc. (Darbun) seeking recognition of a 2004 Mexican judgment that was renewed in July 2008. The court sustained Darbun's demurrer without leave to amend on the ground that the Mexican judgment is a "penalty" and thus not enforceable underCalifornia's Uniform Foreign-Country Money Judgments Recognition Act ("Foreign-Country Judgments Act" or "Act"). (Code Civ. Proc., § 1713 et seq.)¹

The Foreign-Country Judgments Act does not permit enforcement of a foreign judgment "to the extent" the judgment is a "fine or other penalty." (§ 1715, subd. (b)(2).) We determine the court erred in ruling at the pleadings stage that the entire Mexican judgment is a "penalty" as a matter of law and thus unenforceable in California. Although a substantial portion of the Mexican judgment constitutes a penalty, plaintiffs have pled sufficient facts to overcome the Act's enforcement bar with respect to the remaining portions of the judgment. Accordingly, we reverse.²

FACTUAL AND PROCEDURAL BACKGROUND

In reviewing the court's ruling sustaining the demurrer, we are limited to considering facts alleged in the complaint and the attached incorporated documents. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) In its respondent's brief, Darbun discusses numerous facts that are beyond the scope of the complaint and are unsupported by any citation to the appellate record. Under settled rules, we disregard these unsupported factual assertions. (See Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856.)

Complaint

Plaintiffs' complaint alleges the following. Plaintiffs were employees of Soluciones Tecnologicas de Mexico, S.A. de C.V. (Soluciones). Darbun was part of a production unit responsible for paying wages to Soluciones employees. After plaintiffs were not paid their wages due, they "commenced an action" before a Mexican governmental entity known as the "Labor Relations Board."³ Plaintiffs filed this claim on May 31, 2000 and sought "back wages."

Darbun was notified of the action by the Mexican Consulate General and allegedly appeared and defended the action through its counsel. Darbun's counsel presented evidence at several hearings before the Labor Relations Board. In January 2002, the Labor Relations Board held a hearing "where Darbun's attorneys . . . appeared on behalf of Darbun and presented written answers to questions . . . by the Labor Relations Board . . . ."

Two and one-half years later, in August 2004, the Labor Relations Board entered a judgment against Darbun in plaintiffs' favor. Plaintiffs attached to their complaint a copy of the 44-page Mexican judgment and an English translation of this judgment.

In the Mexican judgment, the Labor Relations Board found "plaintiffs proved their claims [at] trial," and awarded monetary amounts to each plaintiff. The translated judgment states that Darbun and others were responsible for the "rescission" of plaintiffs' employment on May 9, 2000 after the plaintiffs were informed that "starting on April 28,[2000] [their] salaries would not be paid." Although the judgment awards various forms of monetary relief to plaintiffs, the precise nature and amount of these damages are not entirely clear. But viewing the translated Mexican judgment in the light most favorable to plaintiffs, the amounts Darbun was required to pay to each plaintiff included: (1) 20 days' salary for each year worked; (2) three months' salary; (3) vacation pay for the years 1998, 1999 and a portion of vacation payment for the year 2000; (4) a vacation pay bonus; (5) a seniority bonus; (6) payment equal to 30 days of each plaintiff's last salary; and (7) payment of all unpaid salaries starting on May 9, 2000 until the day the judgment is paid.

With respect to the last category above, plaintiffs alleged: "Under Mexican Labor Code, an employee is not deemed to have been effectively terminated until the employee has been paid all back wages, sick pay and vacation pay. Accordingly, payroll continues to accrue under Mexican law until the [judgment] is paid. Thus, the [judgment] continues to grow at the rate of $16,996.12 Mexican pesos per day, representing the per diem wages for each of the plaintiffs until such judgment is paid in full."

Plaintiffs renewed the judgment in July 2008. In 2010, Darbun challenged the validity of the Mexican judgment in the Mexican court system, "claiming the statute of limitations had run on the judgment due to an alleged 'conspiracy' between the plaintiffs and the Mexican Labor Relations Board. . . ." Plaintiffs allege that this challenge was rejected, and all appeals have been finally resolved in favor of plaintiffs and against Darbun.

Plaintiffs first sought to enforce the Mexican judgment in this country by filing an action in federal court, but that action was dismissed after the grounds for diversity jurisdiction were eliminated. (See Plata v. Darbun Enterprises, Inc. (S.D. Cal. 2011) 2011 WL 98405, p. *1.) Several months later, in October 2011, plaintiffs filed their superior court complaint alleging a single cause of action under the Foreign-Country Judgments Act. Plaintiffs alleged the Mexican judgment "grants a sum of money" and is "final, conclusive and enforceable" under Mexican law, and the judgment satisfies all statutory criteria, including that the Mexican court had personal jurisdiction over Darbun, the proceeding was before a "fair tribunal," and Darbun appeared with legal counsel and presented evidence in its defense. According to plaintiffs, the amount of the Mexican judgment (including the per diem charge) as of October 1, 2011 is $58,333,994.17 Mexican pesos, and in United States dollars that amount is approximately $4.2 million.

Demurrer

Darbun filed a demurrer on the sole ground that "the judgment shows on its face that it is for a penalty and therefore cannot be recognized under California law." Darbun acknowledged that the Mexican judgment indicates Darbun was legally responsible for the "rescission" of plaintiffs' employment and that plaintiffs were unpaid for work performed from April 28, 2000 to May 9, 2000. But Darbun claimed the Labor Relations Board "did not find that Plaintiffs were owed any 'back wages' " and "did not award a single peso for work performed by Plaintiffs for which they were not paid." Darbun also asserted that the bulk of the monetary award serves only to penalize it for failing to pay the judgment.

In support, Darbun submitted copies of several translated Mexican statutes. Of relevance, these statutes: (1) state a wrongfully terminated worker is entitled to be reinstated or "be given severance pay in the amount of three months of wages"; (2) set forth the amount and circumstances under which a worker is entitled to vacation pay and bonuses; and (3) state that if the employer does not prove the cause of termination at trial, the employee "shall be entitled, additionally, regardless of what the attempted action had been, to be paid the due wages from the date of termination until the time the judgment is fulfilled." (Italics added.) Darbun cited to Mexican Amended Federal Labor Law sections 48, 49, 50, 76, 80, 87.

In opposition, plaintiffs argued that their pleadings show they sought and recovered compensatory damages, and not merely "penalt[ies]." They relied on their allegations that in the underlying Mexican action they sought " 'back wages' due upon termination . . . .' " They also identified portions of the Mexican judgment that "set forth seniority bonuses, lunch breaks, vacation pay, sick pay, and unpaid profit sharing required by the terms of employment that was required to be paid but was not." They further noted that the Mexican judgment "recites that the plaintiffs worked from April 28 through May 9 without being paid." Plaintiffs thus urged the court to overrule the demurrer because "at least a part of the judgment compensates" them for unpaid actual wages and other losses resulting from Darbun's improper conduct.

After a hearing, the court sustained the demurrer without leave to amend, concluding that "as a matter of law . . . the judgment constitutes an unenforceable penalty under" California's Foreign-Country Judgments Act.

DISCUSSION

I. Review Standard

On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the "reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be affirmed 'if any one of the several grounds of demurrer is well taken. [Citations.]' [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment." (...