Voris v. Lampert

• Citation: 7 Cal.5th 1141,446 P.3d 284,250 Cal.Rptr.3d 779
• Decision Date: 15 August 2019
• Docket Number: S241812
• Court: United States State Supreme Court (California)
• Parties: Brett VORIS, Plaintiff and Appellant, v. Greg LAMPERT, Defendant and Respondent.

7 Cal.5th 1141

446 P.3d 284

250 Cal.Rptr.3d 779

Brett VORIS, Plaintiff and Appellant,

v.Greg LAMPERT, Defendant and Respondent.

S241812

Supreme Court of California.

August 15, 2019

Anderson Yeh, Edward M. Anderson and Regina Yeh for Plaintiff and Appellant.

Jean H. Choi, Zachary Genduso and Jay Shin for Asian Americans Advancing Justice-Los Angeles, Bet Tzedek, Los Angeles Alliance for a New Economy and The Wage Justice Center as Amici Curiae on behalf of Plaintiff and Appellant.

Paul Kujawsky ; Wilson, Elser, Moskowitz, Edelman & Dicker and Robert Cooper for Defendant and Respondent.

Orrick, Herrington & Sutcliffe, Julie A. Totten and Katie E. Briscoe for Employers Group and California Employment Law Council as Amici Curiae on behalf of Defendant and Respondent.

Opinion of the Court by Kruger, J.

For a little more than a year, Brett Voris worked alongside Greg Lampert to launch three start-up ventures, partly in return for a promise of later payment of wages. But after a falling out, Voris was fired and the promised compensation never materialized. Voris sued the companies and won, successfully invoking both contract-based and statutory remedies for the nonpayment of wages. He now seeks to hold Lampert personally responsible for the unpaid wages on a theory of common law conversion. Voris claims that by failing to pay the wages, the companies converted his personal property to their own use and that Lampert is individually liable for the companies’ misconduct. The question before us is whether such a conversion claim is cognizable. We conclude it is not: The conversion tort is not the right fit for the wrong that Voris alleges, nor is it the right fix for the deficiencies Voris perceives in the existing system of remedies for wage nonpayment. We affirm the judgment of the Court of Appeal, which reached a similar conclusion.

I.

In November 2005, Voris joined Lampert and a friend, Ryan Bristol, to launch a real estate investment company called Premier Ten Thirty One Capital (PropPoint).¹ Voris performed marketing and advertising work for PropPoint and was later recruited to do similar work for two other ventures formed by Lampert and Bristol: Liquiddium Capital Partners, LLC (Liquiddium) and Sportfolio, Inc. (Sportfolio). Voris worked for all three companies in exchange for promises of later payment of wages, stock, or both. He also invested significant sums of money in PropPoint and Liquiddium in exchange for additional equity.

In the fall of 2006, Voris discovered what he believed to be improprieties in his colleagues’ management of the companies’ finances. He raised his concerns with Lampert and Bristol. In early 2007, after a series of contentious negotiations, Voris’s employment with all three companies was terminated. Save for a portion of compensation paid by PropPoint during his employment, Voris was never paid the wages or stock he was owed.

Voris sued the three companies, as well as Bristol and Lampert. The operative complaint raised 24 causes of action, including breach of oral contract, quantum meruit, fraud, failure to pay wages in violation of the Labor Code, conversion, breach of the implied covenant of good faith, and breach of fiduciary duty. Voris sought $91,000 in unpaid wages from PropPoint, $66,000 in unpaid wages from Sportfolio, and various percentages of equity in all three companies. He also sought to hold Lampert and Bristol personally liable on all counts based on a theory of alter ego liability.

Voris prevailed against all three companies. His claims against Sportfolio and Liquiddium were tried to a jury.² The jury found in Voris’s favor on the claims against Sportfolio for breach of contract, failure to pay wages, failure to pay for services rendered, and conversion of stock. The jury awarded $70,782 in damages. The jury also found in Voris’s favor against Liquiddium on the claims for breach of contract and conversion of stock. The jury awarded $100,218, including an award of $2,500 in punitive damages on the stock conversion claim. Voris’s claims against PropPoint proceeded to a bench trial. PropPoint did not enter an appearance, and the court ruled in Voris’s favor on the claims for breach of contract, quantum meruit, failure to pay wages in violation of the Labor Code, and conversion of stock and wages. The court awarded Voris $171,951 in damages, plus prejudgment interest, costs, and attorney fees.

Although Voris prevailed against all three companies, he alleges that his efforts to collect on the judgments have been frustrated due to the companies’ lack of funds and assets. Voris has therefore now focused his efforts on Lampert, the remaining individual defendant.

At the outset of the litigation, Lampert had successfully demurred to the claims of fraud and breach of the implied covenant of good faith. He then filed a motion for summary judgment on the remaining claims, citing Voris’s barebones responses to special interrogatories pertaining to the alter ego allegations. The trial court agreed that Voris failed to adequately support his claims of alter ego liability and granted Lampert’s motion for summary judgment. In an unpublished decision, the Court of Appeal affirmed in part and reversed in part. It upheld the trial court’s ruling on Voris’s alter ego allegations based on his failure to identify supporting facts. But the Court of Appeal nevertheless reversed the trial court’s grant of summary judgment with respect to Voris’s conversion claims, explaining that individual officers may be held personally liable for their intentional torts "without any need to pierce the corporate veil."

On remand before the trial court, Lampert moved for judgment on the pleadings on the stock and wage conversion claims. He argued that Voris failed to allege a sufficient deprivation of ownership interests in the stocks and that California law does not recognize a claim for the conversion of wages. The court granted the motions, and Voris again appealed.

In a second unpublished decision, the Court of Appeal once again affirmed the trial court in part and reversed in part. All three justices agreed that Voris’s stock conversion claims should be permitted to proceed; they relied for this ruling on a " ‘ "uniform rule of law that shares of stock in a company are subject to an action in conversion." ’ "³ But the justices were divided on whether Voris had pleaded a cognizable claim for conversion of wages—a claim that had not been previously recognized in California precedent.⁴

The majority concluded that neither existing case law nor policy considerations warranted extending the tort of conversion to the wage context. The majority observed that the Labor Code already requires prompt payment of a discharged employee ( Lab. Code, § 201 ) and authorizes penalties for noncompliance (id. , § 203). "[I]f Voris’s approach were credited," the Court of Appeal reasoned, "any claimed wage and hour violation would give rise to tort liability for conversion as well as the potential for punitive damages." The concurring and dissenting justice took a different view. He opined that "employees have a vested property interest in their earned wages, that failure to pay them is a legal wrong that interferes with this property interest, and that an action for conversion may therefore be brought to recover unpaid wages."

We granted review to address this disagreement. Our review is de novo. ( Angelucci , supra , 41 Cal.4th at p. 166, 59 Cal.Rptr.3d 142, 158 P.3d 718.)⁵

II.

To place the question before us in its proper context, we begin with a brief overview of existing law governing the payment of workers’ wages. The employment relationship, we have explained, is "fundamentally contractual," meaning it is governed in the first instance by the mutual promises made between employer and employee. ( Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 696, 254 Cal.Rptr. 211, 765 P.2d 373 (Foley ); see Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 352, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) The promise to pay money in return for services rendered lies at the heart of this relationship. Historically, when that promise has been broken, the "usual remedy" has been an action for breach of contract. ( Glendale City Employees’ Assn., Inc. v. City of Glendale (1975) 15 Cal.3d 328, 343, 124 Cal.Rptr. 513, 540 P.2d 609, citing Elevator Operators etc. Union v. Newman (1947) 30 Cal.2d 799, 808, 186 P.2d 1, and cases cited therein.) Even in the absence of an explicit promise for payment, the law will imply one, and thus authorize recovery, when circumstances indicate that the parties understood the employee was not volunteering his or her services free of charge. (E.g., Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 458, 9 Cal.Rptr.3d 693, 84 P.3d 379 [describing principle of quantum meruit].)

Beginning more than a century ago, the Legislature began to supplement existing contract remedies with additional worker protections designed to "safeguard" the worker "in his relations to his employer in respect of hours of labor and the compensation to be paid for his labor." ( Moore v. Indian Spring etc. Min. Co. (1918) 37 Cal.App. 370, 379, 174 P. 378 (Indian Spring ); see In re Ballestra (1916) 173 Cal. 657, 161 P. 120 (Ballestra ).) The end product is what we have described as "a mass of legislation touching upon almost every aspect of the employer-employee relationship." ( Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 178, 164 Cal.Rptr. 839, 610 P.2d 1330.) As relevant here, the Legislature has repeatedly acted to ensure employees receive prompt and full compensation for their labor. Recognizing that the problem of wage nonpayment can take a number of forms, the Legislature has responded with a variety of targeted legislative solutions. (See, e.g., In re Trombley (1948) 31 Cal.2d 801, 809–810, 193 P.2d 734 (Trombley ) [criminal penalties for willful failure to timely pay wages due]; Ballestra , at pp. 658–659, 161 P. 120 [...