Taylor v. Financial Casualty & Surety, Inc.

Decision Date17 August 2021
Docket NumberD076869
Citation67 Cal.App.5th 966,282 Cal.Rptr.3d 757
Parties Will TAYLOR et al., Plaintiffs and Appellants, v. FINANCIAL CASUALTY & SURETY, INC., Defendant and Respondent.
CourtCalifornia Court of Appeals Court of Appeals

The McMillan Law Firm and Scott A. McMillan, La Mesa, for the Plaintiffs and Appellants.

Lewis Brisbois Bisgaard & Smith and Ernest Slome, Jeffry A. Miller, Lann G. McIntyre, San Diego, Timothy J. Watson, San Francisco, Katherine C. DenBleyker and Caroline E. Chan, Los Angeles, for the Defendant and Respondent.

O'ROURKE, J.

Plaintiffs and appellants Will Taylor, Ken Gorman and Nicholas Wayman, individuals who formerly conducted bail fugitive recovery, appeal from a summary judgment in favor of defendant and respondent Financial Casualty & Surety, Inc. (FCS), a surety admitted to write bail in California. Plaintiffs sued FCS and other bail-agent entities and individuals for, inter alia, fraud, various Labor Code1 violations (wage and hour, classification, and notice) as well as statutory damages under the Labor Code, conversion, unfair competition, discrimination and wrongful termination, alleging in part that FCS was a co-employer with the right to control the manner in which they performed their assignments. FCS moved for summary judgment on grounds plaintiffs were not FCS employees as a matter of law, disposing of their claims based on the Labor Code as well as for fraud and conversion, which related to misrepresentations of their employment status or withholding final paychecks. The trial court granted the motion, in part ruling FCS did not employ plaintiffs for purposes of causes of action based on the Labor Code or dependent on an employment relationship; plaintiffs' claims for fraud and conversion were barred by the "new right-exclusive remedy doctrine"; and plaintiffs could not make out a claim for unfair competition on their allegations that FCS violated the law.

Plaintiffs contend the trial court erred by its ruling. With the exception of their conversion cause of action which they concede is unavailable, they argue summary judgment was improperly granted because (1) the court ignored their operative complaint's allegations of agency and too narrowly construed that pleading; (2) FCS failed to present admissible evidence to shift the summary judgment burden to them; (3) the agreements between FCS and the other defendants purporting to limit FCS's liability are unlawful; (4) FCS's liability stems from its agency relationship with the codefendant bail agents; (5) FCS is directly liable for Labor Code violations as an employer as it exercised control over their wages, hours and working conditions, knew of their work, and had a common law employment relationship with plaintiffs; and (6) they brought valid causes of action for fraud, unfair competition, discrimination and wrongful termination. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND2

On review of the court's grant of summary judgment, " we view the evidence in the light most favorable to plaintiffs as the losing parties, resolving evidentiary doubts and ambiguities in their favor.’ " ( Gund v. County of Trinity (2020) 10 Cal.5th 503, 508, fn. 2, 268 Cal.Rptr.3d 119, 472 P.3d 435.)

FCS, a Texas corporation, is a casualty and surety company. It writes surety bonds that guarantee a bond principal's performance and issues them through licensed bail bondsmen throughout the country. FCS contracts with the bail bond companies for those companies to sell FCS's surety bonds at a fixed premium. Plaintiffs are former bail fugitive recovery persons3 who were hired by or took assignments from defendant Daniel McGuire and/or one or more of Daniel McGuire's brothers. Among other tasks, plaintiffs located and apprehended criminal defendants who violated their conditions of bail.

In mid-2009, FCS and Daniel McGuire, doing business as Bail Hotline Bail Bonds (Hotline), as well as others related to McGuire,4 entered into two bail bond agreements. One, entitled "Retail Producer Bail Bond Agreement" (the producer agreement), was made in April 2009. The producer agreement identifies as the producer Daniel McGuire and/or Hotline "and such other companies and businesses, which may be established in furtherance of Producer's expansion of its bail bond business." It describes the relationship between FCS and the producer as principal and independent contractor, defining the producer as "an independent contractor duly licensed by its state of operation as a bail bondsman and contracted by [FCS] to issue bail bonds for [FCS]." The producer agreement further states the producer has "no power or authority to bind [FCS] with respect to any obligation or liability whatsoever" and is "not authorized to act as a general agent" under its terms. The producer agreement provides that the producer "shall have exclusive control over its agency and employees"; "shall set its own working hours"; "shall retain or discharge employees or independent contractors at Producer's sole discretion"; and was "solely responsible ... for the proper screening, selection, and hiring/retaining of all its employees and/or independent contractors."

The second agreement, entitled "General Agent Bail Bond Agreement" (the general agent agreement), was made in June 2009. The agreement defines "General Agent" as "an independent contractor duly licensed by its state(s) of operation to legally perform the obligations of the General Agent under this Agreement." It likewise states that despite using the phrase "General Agent," the relationship between FCS and the general agent is that of principal and independent contractor: "The use of the term ‘General Agent’ in this Agreement is for the convenience of the parties only and is not intended to alter the relationship of principal and independent contractor." It further provides: "General Agent is not an employee of [FCS], and shall have no power or authority to bind [FCS] with respect to any obligation or liability whatsoever, except as specifically set forth herein." The general agent agreement contains similar language to the producer agreement giving the general agent "exclusive control over his or her general agency and/or retail bail agency or subproducers." It provides that the general agent "shall set his or her own working hours"; "shall retain or discharge employees or independent contractors at General Agent's sole discretion"; is "solely responsible for seeking out and obtaining any and all specialized knowledge and skills necessary in his or her professional function"; and is "solely responsible for the proper screening, selection and hiring/retaining of all its employees, and/or independent contractors and/or sub-producers." It places "sole[ ] responsibil[ity] on the agent for itself, its subproducers, employees and independent contractors for bail bond-related activities, and all dealings with bail bond defendants, obligating the agent to comply with all applicable laws, statutes, regulations and prudent business practices used in the bail bond business."

Under the general agent agreement, FCS and the general agent are to "jointly establish and maintain a direct contractual relationship with sub-producers" with FCS having the option of taking over the direct enforcement of those contracts. That provision contains the agent's irrevocable offer to assign FCS the right it might have to enforce the agent's agreements with sub-producers, employees, and/or independent contractors, and FCS "shall have the right, but not the duty, to accept this assignment."

Both agreements prohibit the producer or general agent from using or allowing the use of FCS's name in any advertising "or in any manner, which may induce a belief that [they are] an employee of or in any way associated with [FCS] other than [FCS's] supplying of bonds to [them] in a wholesale manner." Both agreements include a provision requiring FCS to provide "bail bond Powers of Attorney" to the producer or general agent. That provision states that the producer or general agent "shall be authorized to utilize such bail bond Powers of Attorney to post bail bonds at such time as [the producer or general agent] has obtained collateral for [FCS's] benefit, consistent with the guidelines set forth in the Letter of Underwriting Authority ...." Both agreements require the producer or agent to "comply with any and all procedural directions, rules and regulations distributed by [FCS]" for the producer or general agent's adoption. The agreements require the producer or agent "to ensure that [they] will solicit, collect, protect, insure, return, apply and deliver" bond collateral as directed by FCS, and permit FCS at its discretion to direct the agent or producer to deliver the collateral to it as bond security.

After being terminated from their jobs in 2015, plaintiffs sued FCS, Daniel McGuire, Hotline, DMCG, Inc. (DMCG), other licensed bail agents and related entities for fraud, various wage and notice violations of the Labor Code, conversion, unfair competition, discrimination and wrongful termination.5 Plaintiffs allege that each of the defendants employed them under California law as set forth in Martinez v. Combs (2010) 49 Cal.4th 35, 109 Cal.Rptr.3d 514, 231 P.3d 259 ( Martinez ). They allege that FCS in the regular scope of its business posted bail bonds and appointed DMCG as its general agent to sign those bonds. They allege FCS had the right to control the manner in which fugitive recovery personnel performed their assignments, and exercised control over plaintiffs' wages, hours and working conditions, suffered or permitted plaintiffs to work; or created a common law employment relationship with plaintiffs such that FCS was plaintiffs' "co-employer." Plaintiffs allege defendants misclassified them as independent contractors and committed numerous wage and hour violations, including by failing to pay overtime wages, failing to provide specified information, and failing to...

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