Davis v. Farmers Ins. Exch.

Citation245 Cal.App.4th 1302,200 Cal.Rptr.3d 315
Decision Date28 March 2016
Docket NumberB257970
CourtCalifornia Court of Appeals
Parties William A. DAVIS, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE et al., Defendants and Respondents.

The Anfanger Law Office and Nancy B. Anfanger, Beverly Hills, for Plaintiff and Appellant.

Locke Lord and Stephen A. Tuggy, Los Angeles, for Defendants and Respondents.

MANELLA

, J.

Appellant William A. Davis brought suit against respondents Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid–Century Insurance Company and Farmers New World Life Insurance Company (Farmers), contending that as a district manager for Farmers he had been wrongfully classified as an independent contractor rather than an employee, that he had been wrongfully terminated, and that Farmers had failed to pay wages due during and at the termination of his employment.

Appellant asserted a common law claim for wrongful termination in violation of public policy; he did not assert a claim under the Fair Employment and Housing Act (Gov.Code, § 12940 et seq.

, "FEHA"). While the case was pending, the California Supreme Court held in Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 152 Cal.Rptr.3d 392, 294 P.3d 49 (Harris ) that where an employee supports a FEHA claim by establishing that an illegitimate criterion was a substantial factor in the adverse employment decision at issue, the employer may avoid liability for damages by establishing that it would have made the same decision without the wrongful motivation. The court held, however, that other remedies might be available to a plaintiff, such as declaratory relief, injunctive relief and attorney fees.

At trial, the court instructed the jury with CACI instructions amended to reflect the holding in Harris

. It issued a directed verdict in Farmers's favor on the wage claim. On the remaining claim for wrongful termination in violation of public policy, the jury first found that appellant was an employee. It further found that his age was a substantial motivating factor in his termination, but concluded that Farmers would have made the same termination decision for legitimate reasons. Accordingly, appellant was awarded no damages. Post-trial, appellant sought declaratory and/or injunctive relief, but the trial court denied his request for multiple reasons, both procedural and substantive. The court rejected appellant's request for attorney fees under Code of Civil Procedure section 1021.5

, concluding he did not meet the applicable criteria.

On appeal, appellant contends the trial court erred in giving instructions based on the holding in Harris

. He further contends he was entitled to declaratory relief, injunctive relief and attorney fees. Finally, he asserts the court erred in granting a directed verdict on his wage claim. We conclude the court did not err in giving the Harris instructions or in denying appellant alternative relief when the jury rejected his claim for damages. However, we conclude appellant presented sufficient evidence to allow his wage claim to go to the jury. We, therefore, reverse and remand for partial retrial on that claim. We otherwise affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Background Facts

Appellant became an insurance agent for Farmers in 1977. In December 1983, he entered into a "District Manager's Appointment Agreement" with Farmers.1 Under the agreement, Farmers appointed appellant district manager of District Number 84, effective December 1, 1983, "and continuing until [the agreement is] terminated or cancelled...." Farmers agreed to pay appellant "an overwrite on all business produced by Agents of, and written by the Exchanges, Mid–Century and Farmers New World Life, in the District ... in accordance with schedules and rules adopted from time to time by [Farmers]...."2 Appellant agreed to "recruit for appointment and train as many agents acceptable to [Farmers] as may be required to produce sales in accordance with goals and objectives established by [Farmers]"; to "actively represent [Farmers] in the conduct of the District"; to "represent no other insurer"; and to "conform to all regulations, operating principles and standards of [Farmers]...."

The agreement stated that it "may be cancelled without cause by either [appellant] or [Farmers] on 30 days' written notice...." At the time of termination, Farmers could elect to pay " ‘contract value’ " to appellant, defined as the service commission overwrite paid to appellant during the six months immediately preceding the cancellation, increased by a multiplier based on the number of years of appellant's services. In October 2006, Farmers cancelled the appointment agreement, giving 30 days' notice and thereafter paid appellant a total of approximately $500,000 in a series of payments made between April 2007 and April 2009. Appellant was 57 when the agreement was terminated.

B. The Complaint

In September 2008, appellant filed a complaint naming the entities that were parties to the appointment agreement.3 The complaint alleged that Farmers exercised control over appellant's operations and that appellant was an employee of Farmers. The complaint contended that appellant, as well as a number of other district managers whose contracts were terminated at approximately the same time, were wrongfully terminated due to their age.

The complaint asserted claims for wrongful termination in violation of public policy, failure to pay wages under the Labor Code, and unfair business practices under the Unfair Competition Law (Bus. & Prof.Code, section 17200 et seq.

(UCL)).4 In the cause of action for wrongful termination in violation of public policy, the complaint alleged that California public policy requires employers to treat all persons equally without regard to age. It asserted that defendants violated California public policy by terminating appellant's employment. It sought compensatory and punitive damages and attorney fees.

The cause of action for failure to pay wages alleged that defendants violated Labor Code section 200 et seq.

, and that Farmers failed to pay wages owed appellant, including those due immediately after his termination.

In the cause of action for violation of the UCL, the complaint alleged, among other things, that Farmers "intentionally and improperly failed to pay [required] compensation and benefits," "breached the parties' contracts and breached their fiduciary duties to [appellant]," and "discriminated against [appellant] based on his age...." In the body of the complaint and prayer for relief, appellant requested restitution of all compensation wrongfully retained by defendants, and "a temporary and permanent injunction requiring [d]efendant[s] to refrain from withholding earned and/or owed money and property from [him]."

The operative complaint at the time of trial was the Fifth Amended Complaint (5th AC). The 5th AC asserted substantially the same claims for failure to pay wages, termination in violation of public policy and violation of the UCL, and sought essentially the same remedies.5 Farmers answered the 5th AC, including several affirmative defenses. Under those entitled "Unclean Hands," "Plaintiff's Own Act," and "Justification/Privilege," the answer alleged that appellant failed to recruit and train a sufficient number of agents to meet Farmers's goals and objectives.

C. Motion to Amend Complaint

In 2010, shortly before the original trial date and after the parties had completed extensive discovery, appellant moved to amend the complaint to add a claim under Labor Code section 2802

, which requires an employer to "indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer...." Appellant contended that the claim had "always been part of the case." The court denied the motion, stating it was untimely, and that appellant had failed to explain the delay in seeking to amend. Appellant's subsequent motions to amend also were denied.

D. Trial
1. Motion for Bifurcation

Prior to trial, appellant moved to bifurcate the proceedings, having the jury first determine whether he was an employee or an independent contractor before addressing liability and damages. The trial court granted the motion. During the lengthy discussions of bifurcation, appellant's counsel never suggested there would be equitable or UCL issues remaining to be tried by the court after the jury reached its verdict.

2. First Phase

In the first phase of trial, the jury heard evidence from appellant and three other former district managers about the level of control Farmers exercised over their duties.6 After hearing the evidence, the jury found that appellant was Farmers's employee.7

3. Second Phase
a. Evidence Pertinent to Age Discrimination Claim

In support of his claim that he was terminated due to age discrimination, appellant presented evidence that while a district manager, he received multiple awards and commendations up to and including the year he was terminated. In each of the four previous years, the value of the insurance sold from his district went up. Appellant and other witnesses testified that it was not unusual for district managers to fail to achieve specific assigned goals, and that appellant had failed to achieve goals assigned to him in the past without being terminated or threatened with termination. Appellant testified that the goals assigned him by his supervisors—Charles Dabelgott, the Southern California marketing manager, and Elizabeth Stella, the Southern Los Angeles Division marketing manager—in the year prior to his termination were higher than had ever been assigned him before. He was told by the division marketing manager who preceded Stella that it looked like Dabelgott was "out to get [him]."

Appellant presented evidence that the district managers in ...

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