Department of Industrial Relations v. UI Video Stores, Inc.
Decision Date | 16 May 1997 |
Docket Number | A075144,Nos. A074260,s. A074260 |
Citation | 55 Cal.App.4th 1084,64 Cal.Rptr.2d 457 |
Court | California Court of Appeals Court of Appeals |
Parties | , 97 Cal. Daily Op. Serv. 4586, 97 Daily Journal D.A.R. 7571 DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT, Plaintiff and Appellant, v. UI VIDEO STORES, INC., Defendant and Respondent. |
Eric A. Grover, Robert G. Hulteng, Littler, Mendelson, Fastiff, Tichy & Mathiason, San Francisco, for Defendant and Respondent.
The Division of Labor Standards Enforcement (DLSE) appeals from a summary judgment entered in favor of UI Video Stores, Inc., doing business as Blockbuster Video (Blockbuster). The issues presented are whether the DLSE has the authority to negotiate checks made out to employees for wages due from Blockbuster and whether settlement of an action against Blockbuster allowed it to retain the funds owed to employees that were not located. We determine that the trial court erred in entering judgment in favor of Blockbuster, in that the legal issues submitted to the court on undisputed facts must be resolved in favor of the DLSE, and reverse.
(Craib v. Bulmash (1989) 49 Cal.3d 475, 478, 261 Cal.Rptr. 686, 777 P.2d 1120.) In July of 1992, as the result of an investigation, the DLSE filed a complaint against Blockbuster seeking reimbursement to approximately 1,914 employees for the cost of uniforms which Blockbuster had required the employees to furnish in violation of Title 8, California Code of Regulations, section 11070, paragraph 9(A). 1 The complaint sought payment of $199,056 plus interest and costs. In December of 1993, Blockbuster entered into a settlement agreement to deliver to the DLSE checks in the amount of $38.51 made payable to each of the 1,914 employees and an additional check in the amount of $7,000, for a total of $80,708.14, between 14 and 21 days after execution of the agreement in complete settlement of the action. In addition, the agreement required Blockbuster to furnish a computer disk with the addresses of all employees entitled to payment.
Rather than comply with the settlement agreement, Blockbuster mailed checks directly to the addresses of the employees. A large number of checks were returned as undeliverable. 2 When the DLSE requested counsel for Blockbuster to instruct its client to forward all returned checks to the DLSE for deposit in the unpaid wage fund (Lab.Code, § 96.6), counsel refused. Eventually, Blockbuster turned over the undeliverable checks but instructed its bank not to honor any of the returned checks. Blockbuster's position was that it had fully complied with the settlement agreement by mailing the checks and that it intended to keep the funds represented by the undeliverable checks.
On April 4, 1995, the DLSE filed a second complaint against Blockbuster, this time alleging breach of the settlement agreement, breach of the covenant of good faith and fair dealing, conversion, and for penalties for willful failure to pay wages. 3 On January 31, 1996, the DLSE filed a motion for summary judgment, arguing that the facts were undisputed and that the DLSE was entitled to judgment on its complaint.
On February 23, 1996, Blockbuster filed a motion for summary judgment, arguing that its breach of the settlement agreement was "hypertechnical," and that the DLSE did not suffer any damages. The key to this argument was Blockbuster's contention that the DLSE had no authority to deposit the unclaimed checks in the unpaid wage fund since the checks were made out to employees. In the event the court found that the DLSE did have the authority to deposit checks in the unpaid wage fund, Blockbuster argued that the settlement agreement did not spell out the fact that Blockbuster could not keep the money owed to employees whose checks were returned.
On March 25, 1996, the trial court issued an intended decision which stated that the DLSE's motion for summary judgment was denied with the following reason. The court granted Blockbuster's motion giving the same reason. At the hearing on the motions, counsel for the DLSE pointed out that Labor Code section 200 provided for a broad definition of "wages." 4 In this context, DLSE counsel told the trial court that section 96.7 was irrelevant. The court stated that its tentative decision would stand, notwithstanding what it described as a "technical breach of a--one provision of the contract." The trial court concluded that there was no damage caused to the DLSE and, in fact, found a benefit in that Blockbuster saved DLSE the cost of postage to mail the checks. Judgment was entered on April 9, 1996, and the DLSE appealed.
On April 24, 1996, Blockbuster moved for an award of attorney fees and costs pursuant to the terms of the settlement agreement. On June 3, 1996, the court granted the motion and awarded fees and costs in the amount of $22,469.37. Appellant also appealed from this order. By our order dated August 12, 1996, we consolidated the appeals for purposes of briefing, oral argument, and decision.
"Any party may move for summary judgment in any action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding...." (Code Civ. Proc., § 437c, subd. (a).) (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 590, 37 Cal.Rptr.2d 653.) " (Van Dyke v. Dunker & Aced (1996) 46 Cal.App.4th 446, 451, 53 Cal.Rptr.2d 862.) (Flowmaster, Inc. v. Superior Court (1993) 16 Cal.App.4th 1019, 1026, 20 Cal.Rptr.2d 666.)
There is no dispute as to the material facts underlying this action. Blockbuster argues that appellant has failed to show that it suffered any damages, which is an essential element of a breach of contract claim. Blockbuster claims that because appellant cannot negotiate the returned checks, it would be in the same position regardless of whether the checks were mailed to employees or delivered to appellant. Blockbuster cites a single section of the California Uniform Commercial Code in support of this contention: (Cal.U.Com.Code, § 3110, subd. (a).) Declaring that its intent was to pay only those employees that could be located, Blockbuster concludes that appellant was not authorized to cash the checks. Alternatively, Blockbuster contends that even if the DLSE was authorized to deposit the checks, the settlement agreement did not give appellant the contractual right to retain the unclaimed funds due the employees. Finally, Blockbuster argues that the settlement agreement was a third party beneficiary contract, and the employees suffered no harm because Blockbuster remains willing to pay any of the workers that are located.
Benefits at Issue are "Wages"
By its initial statement that the benefits at issue were not "wages," the trial court apparently intended to negate any impact of section 96.7 on the issues of the instant case. 5 The purpose of section 96.7 is to empower the Labor Commissioner to investigate and prosecute actions and collect benefits without an assignment of the claim by the employee. (Millan v. Restaurant Enterprises Group, Inc. (1993) 14 Cal.App.4th 477, 487, 18 Cal.Rptr.2d 198; § 96.7, subd. (a).) Section 200 provides that wages include: "all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation." The term "wages" has been held to include money as well as other value given, including room, board and clothes. (Schumann v. California Cotton Credit Corp. (1930) 105 Cal.App. 136, 140, 286 P. 1068.) " " (Ware v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1972) 24 Cal.App.3d 35, 44, 100 Cal.Rptr. 791.) In United Air Lines, Inc. v. Industrial Welfare Com. (1963) 211 Cal.App.2d 729, 28 Cal.Rptr. 238, disapproved on another point in Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 728, footnote 15, 166 Cal.Rptr. 331, 613 P.2d 579, the court...
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