Faigin v. Signature Grp. Holdings, Inc.

• Decision Date: 20 February 2013
• Docket Number: B224598
• Citation: 211 Cal.App.4th 726,150 Cal.Rptr.3d 123
• Court: California Court of Appeals Court of Appeals
• Parties: Alan W. FAIGIN, Plaintiff and Appellant, v. SIGNATURE GROUP HOLDINGS, INC., Defendant and Appellant.

211 Cal.App.4th 726

150 Cal.Rptr.3d 123

Alan W. FAIGIN, Plaintiff and Appellant,

v.SIGNATURE GROUP HOLDINGS, INC., Defendant and Appellant.

B224598

Court of Appeal,

Second District, Division 3, California.

Filed November 6, 2012

Review Denied February 20, 2013

APPEALS from a judgment and orders of the Superior Court of Los Angeles County, Robert H. O'Brien, Judge. (Retired judge of the L.A. Sup.Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Judgment and orders affirmed. (Los Angeles County Super. Ct. No. BC405550)

Woolls & Peer, H. Douglas Galt, Sean B. Dean; Kellman Hoffer and Daniel P. Hoffer for Plaintiff and Appellant.

Horvitz & Levy, Bradley S. Pauley, James A. Sonne; Bate, Peterson, Deacon, Zinn & Young, Linda Van Winkle Deacon, Stephanie M. Saito and Barri Lyn Friedland for Defendant and Appellant.

CROSKEY, Acting P.J.

Signature Group Holdings, Inc., formerly known as Fremont Reorganizing Corporation (FRC), appeals a judgment awarding Alan W. Faigin $1,347,000 in damages for breach of an implied-in–fact agreement to terminate his employment only for good cause.¹ FRC contends the evidence does not support the jury verdict and some of the jury's factual findings are contrary to law. FRC also contends the damages are excessive and challenges the admission of evidence and the refusal of its proposed jury instructions.

Faigin appeals a postjudgment order denying his motion for prejudgment interest. He contends he is entitled to an award of prejudgment interest on his unliquidated claim for damages under Civil Code section 3287, subdivision (b).

We conclude that substantial evidence supports the jury verdict and that FRC has shown no legal error or prejudicial abuse of discretion. We also conclude that the denial of Faigin's motion for prejudgment interest was proper. We therefore will affirm the judgment and the postjudgment orders.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

Faigin started working for Fremont General Corporation (Fremont General) in August 1980 while he was still attending law school. He became Assistant General Counsel for both Fremont General and its subsidiary Fremont Indemnity Company (Fremont Indemnity) upon passing the bar exam in 1983. He performed legal work for other subsidiaries of Fremont General as well, including FRC (then known as Fremont Investment & Loan) starting in 1990. The W–2 forms that he received identified Fremont General as his employer rather than FRC or another subsidiary.

Faigin began working for FRC as an Associate General Counsel. He became General Counsel and Secretary for all Fremont companies, including FRC, in 1996. He also became Chief Legal Officer for FRC in 2004. The Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order in March 2007 requiring FRC to replace its senior management and take other measures to improve its lending practices.

Faigin and Fremont General entered into a written employment contract dated April 11, 2007, stating that Faigin would be employed as Senior Vice President, General Counsel and Chief Legal Officer of Fremont General and would continue to have the same responsibilities and compensation as were in effect on the date of the agreement. It stated that Fremont General would pay Faigin an annual salary of $425,000 and that he would be eligible for an annual bonus and other executive benefits. It stated that the board of directors of Fremont General could change his responsibilities and compensation from time to time, but that he would be entitled to certain benefits if such a change constituted an “Involuntary Termination” as defined in the contract. It stated that Faigin would “devote his full business efforts and time to the Company [Fremont General] and its subsidiaries.” The agreed term of employment was three years.

The written employment contract defined an “Involuntary Termination” as including, among other things, a termination without cause or a significant change in his job duties. It stated that Faigin was entitled to a lump sum payment equal to three years of his base salary in the event of such an occurrence. It stated that Faigin had no duty to mitigate the amount of any such payment and that such payment would not be reduced by the amount of any earnings from another source.

Faigin was appointed interim President and Chief Executive Officer of FRC in June 2007. When the FRC board of directors considered hiring a new management group, Faigin informed the directors and major shareholders of his objections to the proposal.

The new management group began working at FRC in November 2007. Faigin sent a letter to Fremont General dated November 27, 2007, stating that an “Involuntary Termination” had occurred as a result of significant changes in his job duties. He stated that he therefore was entitled to a lump sum payment equal to three years of his base salary and other benefits due under the written employment contract. The new management group was formally appointed to FRC in December 2007, including a President, a Chief Executive Officer and a General Counsel replacing Faigin in those positions. Donald E. Royer replaced Faigin as General Counsel of FRC. Faigin also lost his title as Chief Legal Officer at that time. Faigin was formally relieved of his positions by vote of the FRC board of directors on December 20, 2007. He had been employed by FRC continuously for over 17 years.

Faigin's annual salary on the date of the termination of his employment with FRC was $425,000. He continued to perform legal work for other Fremont entities after December 2007 and received a $24,000 salary increase in January 2008 to compensate him for the loss of his automobile allowance.

Faigin initiated an arbitration proceeding against Fremont General in February 2008. He continued to receive his salary until March 12, 2008. On that date, he received a letter from Fremont General stating that his employment with Fremont General was being terminated for cause effective immediately. The letter stated four reasons for the termination of his employment. Fremont General filed a chapter 11 bankruptcy petition in June 2008. FRC ceased doing business as a bank in July 2008.

2. Pretrial Proceedings

Faigin filed a complaint against FRC on January 15, 2009, and filed a first amended complaint on January 23, 2009. He alleged that he was jointly employed by Fremont General and FRC pursuant to a written employment contract dated April 11, 2007. He alleged that the contract provided for certain payments in the event of an “Involuntary Termination” and that a significant change in his job duties constituting an “Involuntary Termination” had occurred in late 2007 when he was replaced as General Counsel. He also alleged that his employment was wrongfully terminated in March 2008 in retaliation for his requests for payments allegedly due to him because of the significant change in his job duties. Faigin alleged counts against FRC for breach of the written employment contract, breach of the implied covenant of good faith and fair dealing, wrongful termination in violation of public policy and Labor Code violations, among other counts.

FRC filed a cross-complaint against Faigin in April 2009 alleging that Faigin violated his fiduciary duties owed to FRC by informing the Insurance Commissioner acting as liquidator of Fremont Indemnity that Fremont General and FRC were in the process of auctioning certain artworks that purportedly were owned by Fremont Indemnity. FRC alleged that the Commissioner commenced an adversary proceeding against Fremont General and FRC in May 2008 as a result of Faigin's statements made to the Commissioner.

The trial court granted Faigin's special motion to strike FRC's entire cross-complaint in June 2009. On appeal, we reversed the order as to the striking of some counts and affirmed it as to the striking of others. (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1178, 131 Cal.Rptr.3d 478.)

FRC filed a motion in limine in December 2009 to exclude from trial any evidence or argument of any conduct, behavior or activity of Fremont General. FRC argued that FRC was not a party to the written employment contract between Faigin and Fremont General and that the written employment contract therefore could not be presented as evidence that FRC was Faigin's employer. FRC argued that any employment relationship between Faigin and FRC must be based on FRC's conduct rather than Fremont General's conduct. FRC argued that the written employment contract was irrelevant, 23unduly prejudicial and that its introduction in evidence would violate the bankruptcy stay.

Faigin served an offer to compromise (Code Civ. Proc., § 998) in January 2010, offering to accept $1,274,999, which was one dollar less than three times his 2007 annual salary, in exchange for the dismissal of his complaint. FRC did not accept the offer. The trial court granted FRC's motion in limine in February 2010, and the case proceeded to a jury trial.

3. Trial, Verdict and Judgment

After the close of Faigin's case-in-chief, FRC orally moved for a nonsuit against all remaining counts. Faigin opposed the motion and requested leave to amend his complaint to conform to proof at trial to allege a count for breach of an implied-in-fact employment contract with FRC. The trial court granted the motion for nonsuit against several counts, but denied the motion to the extent that Faigin could allege a count for breach of an implied-in-fact employment contract and granted Faigin leave to amend the complaint to allege such a count. The court also ruled at that time that Faigin could reopen his case to present additional evidence of an implied-in-fact employment contract, which he did.

The trial court instructed the jury on a single count for breach of an implied-in-fact employment contract between Faigin and FRC, including an implied-in-fact agreement to terminate his employment only for good...