Tentative Ruling

Judge Donna Geck
Department 4 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION
Craig Shallenberger vs Westmont Construction Inc
Case No: 19CV02417
Hearing Date: Fri Oct 25, 2019 9:30

Nature of Proceedings: Demurrer

TENTATIVE RULING: Defendant Westmont Construction, Inc.’s demurrer to the complaint is overruled. Defendant shall file and serve its answer to the complaint on or before November 4, 2019.

BACKGROUND:

This is an employment dispute. On March 12, 2015, plaintiff Craig Shallenberger was hired by defendant Westmont Construction, Inc. as Project Manager to oversee a series of construction projects in Goleta, California. Before being hired, plaintiff was presented with a written offer of employment from defendant, which he accepted. The offer stated that plaintiff would be compensated at the rate of $17,333.34 per month, equating to an annual salary of $208,000.00 per year. The offer also stated that plaintiff would be eligible for a ten percent (10%) bonus should certain project deadlines be achieved. The bonus was to be paid fifty percent (50%) at the project halfway point and the remainder upon completion of the project. Finally, plaintiff was told that, as a full-time employee, he would be eligible to enroll in defendant’s health benefits program that included medical, dental, and vision coverage.

Plaintiff alleges that after he began his employment, defendant paid him less than the agreed salary. Rather than pay him what was promised, defendant compensated plaintiff at the rate of $15,600.00 per month, or $187,200.00 per year. Plaintiff repeatedly brought to defendant’s attention the fact that he was not being compensated properly, but defendant never addressed the issue. For over two years, plaintiff worked for defendant at the reduced salary rate. However, on August 1, 2017, plaintiff resigned after concluding that he had been misled about his salary and bonus structure. On May 7, 2017, plaintiff filed his complaint for (1) breach of contract, (2) constructive discharge in violation of public policy, (3) breach of the covenant of good faith and fair dealing, (4) failure to pay wages, (5) waiting time penalties, (6) intentional misrepresentation, (7) negligent misrepresentation, (8) conversion, (9) unfair business practices, and (10) unlawful denial of minimum wage.

Defendant now demurs to the complaint, and each and every cause action, for failure to state an actionable claim. Plaintiff opposes the demurrer.

ANALYSIS:

A general demurrer will be sustained if “[t]he pleading does not state facts sufficient to constitute a cause of action.” Code Civ. Proc. §430.10, subd. (e). The objective of a general demurrer is to test the legal sufficiency of the pleading to determine whether the plaintiff has alleged facts sufficient to establish every element of the cause of action at issue. Cantu v. Resolution Trust Corporation (1992) 4 Cal.App.4th 857, 879. It is not the function of a general demurrer to test the truth of the plaintiff’s allegations or the accuracy with which it describes the defendant’s conduct. Committee on Children’s Television, Inc. v. General Foods Corporation (1983) 35 Cal.3d 197, 213. In general, a complaint is sufficient to withstand a demurrer if it alleges enough facts to apprise the defendant of the specific conduct at issue in the case. Wise v. Southern Pacific Company (1963) 223 Cal.App.2d 50, 60.

Defendant contends that all ten causes of action are subject to demurrer because the letter offering employment to plaintiff was not a contract. The court disagrees. “A contract is an agreement to do or not to do a certain thing.” Civ. Code §1549. The essential elements of a contract are (1) parties capable of contracting, (2) their consent, (3) a lawful object, and (4) sufficient consideration. Civ. Code §1550. To establish that a contract was created, the plaintiff must prove that the contract terms were clear enough that the parties could understand what each was required to do, that the parties agreed to give each other something of value, and that the parties agreed to the terms of the contract. CACI 302. Whether parties have reached a contractual agreement and on what terms are questions for the fact finder. Hebberd-Kulow Enterprises, Inc. v. Kelomar, Inc. (2013) 218 Cal.App.4th 272, 283.

In this case, plaintiff has alleged sufficient facts demonstrating the existence of an employment contract between the parties. Following the requirements of Civil Code Section 1550, plaintiff has alleged (1) the parties’ capacity to contract, (2) the parties consented to the contract through each of their signatures, (3) the parties contracted for a lawful object – employment services, and (4) the parties bargained for an exchange of wages and benefits from defendant for labor and services from plaintiff. (Complaint, ¶¶ 1, 2, 9, 17, Ex. A.) The letter agreement sets forth the specific terms of employment, including the salary of plaintiff and his bonus structure, the starting date of employment, the hourly work schedule, and plaintiff’s eligibility for defendant’s medical, dental, and vision plans. (Complaint, Ex. A.) The letter then concludes by stating that “[t]his document supersedes and replaces any and all other written and verbal agreements or representations concerning [plaintiff’s] employment.” (Ibid.)

Defendant points to certain language in the letter to suggest that the letter was merely an offer of employment (e.g., “[t]his offer is contingent on the successful completion and passing of a pre-employment physical, drug testing, [and] and background check” and “your job duties, title, compensation, and benefits . . . may change from time to time”), but a letter of intent can constitute a binding contract, depending on the expectations of the parties, their conduct, and the surrounding circumstances. California Food Service Corporation, Inc. v. Great American Insurance Company (1982) 130 Cal.App.3d 892, 897; see also, Moncada v. West Coast Quartz Corporation (2013) 221 Cal.App.4th 768, 778 (the failure to specify the amount or formula for determining the amount of a bonus does not render the agreement too indefinite for enforcement). Here, the letter agreement was signed by both plaintiff and defendant and clearly manifests an intent to create an employment relationship. The terms of the employment contract are not too indefinite, as defendant contends.

Defendant next argues that plaintiff’s first, third, sixth, seventh, and eighth causes of action for breach contract, breach of the covenant of good faith and fair dealing, intentional and negligent misrepresentation, and conversion are time-barred. A breach of contract claim based on a writing must be brought within four years of the alleged breach. Code Civ. Proc. §337. A cause of action for breach of the implied covenant of good faith and fair dealing is subject to the same four-year statute of limitations. Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 352. An intentional misrepresentation claim is required to be filed within three years of the plaintiff’s discovery of the facts constituting the misrepresentation. Code Civ. Proc. §338, subd. (d). A negligent misrepresentation claim is required to be filed within two years of the plaintiff’s discovery of the facts constituting the misrepresentation. Butcher v. Truck Insurance Exchange (2000) 77 Cal.App.4th 1442, 1468. Finally, a conversion claim is subject to a three-year limitation period. Code Civ. Proc. §338, subd. (c).

In his complaint, plaintiff alleges that “[d]efendant’s intention to pay him less than his agreed salary became apparent” after beginning his employment on March 12, 2015. (Comp., ¶10.) Plaintiff waited until May 7, 2019, however, well past the two, three, and four-year statutes of limitations, to file his complaint. Under the “discovery rule,” a cause of action accrues when “the plaintiff discovers, or has reason to discover, the cause of action.” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806-807. A plaintiff has reason to discover a cause of action when he or she “has reason at least to suspect a factual basis for its elements.” Norgart v. The Upjohn Company (1999) 21 Cal.4th 383, 398; see also, Jolly v. Eli Lilly & Company (1988) 44 Cal.3d 1103, 1110-1111 (limitations period begins once the plaintiff “has notice or information of circumstances to put a reasonable person on inquiry”). Accordingly, defendant argues, plaintiff’s claims are time-barred.

The court again disagrees. California has long followed the “continuous accrual doctrine.” This doctrine provides that whenever an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new statute of limitations. Hogar Dulce Hogar v. Community Development Commission (2003) 110 Cal.App.4th 1288, 1295. Because each new breach of such an obligation provides all the elements of a claim – wrongdoing, harm, and causation – each may be treated as an independently actionable wrong with its own time limit of recovery. Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1199. In Jones v. Tracy School District (1980) 27 Cal.3d 99, for example, an employee sued her employer for sex discrimination in her wages. The unlawful practice had gone on for six years. The court held that, because the obligation not to discriminate when paying wages was an ongoing one, the employee’s suit was not barred by the applicable two-year statute of limitations, though the employee could recover only those wages owed during the preceding two years. Id., at 103-107. Likewise, in Green v. Obledo (1981) 29 Cal.3d 126, 141, the court held that “each deficient payment [by the defendant] constitute[d] a separate violation triggering the running of a new period of limitations.”

As in the above cases, plaintiff has alleged recurring breaches of duty and instances of misconduct with regard to underpaid wages, starting soon after he began working for defendant on March 12, 2015 and continuing until his employment ended on August 1, 2017. (Comp., ¶¶ 10, 11, 12, 13.) Thus, while the relief plaintiff can obtain, if successful, will be limited to the wages that came due within the applicable limitations period, the claims on the whole are not time-barred.

Based on the foregoing, defendant’s demurrer to the complaint will be overruled. Defendant shall file and serve its answer to the complaint on or before November 4, 2019.