Harper v. Kaiser Cement Corp.

• Court: California Court of Appeals
• Writing for the Court: KING; LOW, P.J., and HANING
• Citation: Harper v. Kaiser Cement Corp., 192 Cal.Rptr. 720, 144 Cal.App.3d 616 (Cal. App. 1983)
• Decision Date: 01 July 1983
• Parties: , 1983-2 Trade Cases P 65,529 Claude E. HARPER, Plaintiff and Appellant, v. KAISER CEMENT CORPORATION and Kaiser Gypsum, Inc., Defendants and Respondents. A010345. Civ. 51278.

Page 720

192 Cal.Rptr. 720

144 Cal.App.3d 616, 1983-2 Trade Cases P 65,529

Claude E. HARPER, Plaintiff and Appellant, v. KAISER CEMENT CORPORATION and Kaiser Gypsum, Inc., Defendants and Respondents.

A010345.

Civ. 51278.

Court of Appeal, First District, Division 5, California.

July 1, 1983.

J. Jay Schnack, Moore, Clifford, Wolfe, Larson & Trutner, P.C., Oakland, for plaintiff and appellant.

James K. Cameron, Gordon Johnson, Thelen, Marrin, Johnson & Bridges, San Francisco, for defendants and respondents.

KING, Associate Justice.

In this case we hold that a criminal defendant's acceptance of a condition of probation that he not accept reimbursement from his corporate employer of a fine and costs assessed against him precludes him from doing so not only during the term of probation, but permanently thereafter.

Plaintiff Claude E. Harper filed a complaint for express and implied indemnity against Kaiser Cement and Gypsum Corporation (formerly Kaiser Cement Corporation) and Kaiser Gypsum Company, Inc. (collectively "Kaiser") alleging that they improperly refused to reimburse him for his payment of a fine and costs imposed against him as part of a criminal proceeding for violating federal antitrust laws while employed as an officer and director of both corporations. Harper and Kaiser each filed motions for summary judgment which were denied. The matter was tried by the court on an agreed statement of facts and Harper appeals a judgment rendered for Kaiser. We affirm the judgment.

Harper was an officer and director of Kaiser during the 1960's and until December 31, 1973. On December 27, 1973, Harper and Kaiser were indicted in federal court, along with other corporations and individuals, for engaging in an unlawful combination and conspiracy in the manufacture and sale of gypsum board in violation of the Sherman Act. (15 U.S.C., § 1.)

On January 16, 1975, Harper pleaded nolo contendre. The court sentenced him to six months imprisonment, suspended execution of sentence, placed him on probation for eighteen months, and ordered him to pay, within three months, a fine of $40,000 and the costs of prosecution. The sentence also included the following special condition of probation:

"It is a special condition of probation that fines and costs are to be paid from defendant's personal assets and defendant shall not accept reimbursement from his corporation directly or indirectly." (Emphasis added.)

Harper paid the fine and his share of the costs of prosecution (which share amounted to $5.18). On October 7, 1976, he was discharged from probation and the proceedings against him were terminated.

Indemnification of corporate directors and officers for expenses and fines incurred in connection with a criminal action against them in such capacity was permitted by both states in which Kaiser was incorporated. (Former Corp.Code, § 830, subd. (f) [now Corp.Code, § 317]; 23A Rev.Code of Wash., § 23A.08.025.) The bylaws of Kaiser Cement provided that the corporation "shall" provide such indemnification if its board of directors determined that the individual "was acting in good faith within what he reasonably believed to be the scope of his employment or authority and for a purpose which he reasonably believed to be in the best interests of the Corporation or its shareholders." The bylaws of Kaiser Gypsum provided for such indemnification unless the individual was adjudged to be liable for "negligence or misconduct in the performance of duty."

Kaiser adopted a resolution that Harper had acted in good faith when he committed the antitrust violation and was entitled to indemnification for the expenses incurred in defending himself. Appellant was so indemnified. Because of the special condition of probation, however, the resolution did not provide reimbursement for the $40,000 fine and the costs of prosecution. Harper commenced the present litigation to obtain the reimbursement. The trial court determined that Harper permanently waived any right to reimbursement by accepting the special condition of probation.

Appellant claims that the special condition required only temporary forbearance from accepting reimbursement, inasmuch as the federal government could not enforce the special condition after termination of appellant's probation. (See 18 U.S.C., §§ 3651, 3653; United States v. Rosello (D.C.P.R.1961) 193 F.Supp. 900, 901.) This interpretation of the probation order is patently absurd. As a result, this appeal borders on the frivolous. It requires no speculation by us to conclude that the federal court intended the imposition of the $40,000 fine to have a punitive and deterrent effect, and imposed the special condition to accomplish that goal. (Compare City of Ukiah v. Fones (1966) 64 Cal.2d 104, 108, 48 Cal.Rptr. 865, 410 P.2d 369 [stipulation only that wrongful discharge would entitle employee to back salary for period before filing of complaint; improper to speculate that employee intended to waive claim for back pay after filing of complaint].) A mere requirement of "temporary forbearance" from accepting reimbursement (or what Kaiser characterizes as "an eighteen month interest free loan" to them by Harper) would have been wholly at odds with the purpose of the special condition. It may be that the federal court had no authority to enforce the special condition beyond the probationary period, but it had the power to require a waiver of the right of reimbursement, which it clearly did.

Harper claims there was insufficient evidence of waiver. "Waiver is the intentional relinquishment of a known right after knowledge of the facts." (City of Ukiah v. Fones, supra, 64 Cal.2d at p. 107, 48 Cal.Rptr. 865, 410 P.2d 369, quoting Roesch v. De Mota (1944) 24 Cal.2d 563, 572, 150 P.2d 422.) The burden is on the party claiming waiver "to prove it by clear and convincing evidence that does not leave the matter open to speculation, and 'doubtful cases will be decided against a waiver.' " (City of Ukiah v. Fones, supra, 64 Cal.2d at pp. 107-108, 48 Cal.Rptr. 865, 410 P.2d 369, quoting Church v. Public Utilities Com. (1958) 51 Cal.2d 399, 401, 333 P.2d 321.) Waiver may occur by intentional relinquishment or by conduct so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished. (Crest Catering Co. v. Superior Court (1965) 62 Cal.2d 274, 278, 42 Cal.Rptr. 110, 398 P.2d 150; Medico-Dental Etc. Co. v. Horton & Converse (1942) 21 Cal.2d 411, 432, 132 P.2d 457.) Waiver precludes any subsequent assertion of the right. (L.A. City Sch. Dist. v. Landier Inc. Co. (1960) 177 Cal.App.2d 744, 752, 2 Cal.Rptr. 662.)...