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GOOD NITE INN MANAGEMENT, INC. et al v. SARA AHMED et al

November 29, 2010

GOOD NITE INN MANAGEMENT, INC. ET AL., PLAINTIFFS AND RESPONDENTS,
v.
SARA AHMED ET AL., DEFENDANTS AND APPELLANTS.



The opinion of the court was delivered by: Lambden, J.

Good Nite Inn Management v. Ahmed

CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Good Nite Inn Management, Inc. and Good Nite Inn, Redwood Inc. (collectively, the Good Nite Inns) employed Kazi Ahmed (Kazi) for about 12 years; Kazi worked as the business manager at Good Nite Inn in Redwood City (the Redwood Hotel). Kazi stopped working for the Redwood Hotel on September 29, 2006, and, on this same date, he sued Good Nite Inns for compensation for overtime and missed meal periods. The matter proceeded to a bench trial, and the court ruled that Kazi was not an exempt employee and that the Good Nite Inns owed him for overtime and missed meal periods. It also found that the failure to pay overtime wages violated the Unfair Competition Law. In November 2007, the court awarded damages of $293,999.55 and attorney fees to Kazi; Good Nite Inns appealed. We affirmed in a nonpublished decision, Ahmed v. Good Nite Management, Inc. (Mar. 19, 2009, A120400) (Ahmed).

Sara Ahmed (Sara), the wife of Kazi, was employed as a desk clerk at the Redwood Hotel until March of 2008, when she resigned. She wrote Good Nite Inns requesting unpaid wages, including overtime and meal break compensation. Good Nite Inns checked Sara's payroll records and asserted that her time clock entries had been altered. Good Nite Inns sued Sara and Kazi (the Ahmeds) for fraud, conversion, breach of fiduciary duty, breach of contract, and negligent misrepresentation. Sara filed a cross-complaint against Good Nite Inns for overtime and missed break compensation. The action and cross-action proceeded to a bench trial. The court ruled against Good Nite Inns on all of their causes of action, and in favor of Sara on her cross-complaint. Good Nite Inns appeal and contend that the lower court erred by basing its ruling on Good Nite Inns' motive for bringing the lawsuit. They also maintain, among other things, that substantial evidence did not support the judgment. We are not persuaded by the arguments of Good Nite Inns and affirm the judgment.

BACKGROUND

Good Nite Inns operate 12 economy class hotels throughout California. Philip Ho has been the president of Good Nite Inns since 2000. Good Nite Inns employed Kazi as the business manager*fn1 at the Redwood Hotel for about 12 years. The Redwood Hotel had about 126 guest rooms.

Kazi stopped working for the Redwood Hotel on September 29, 2006, and, on this same date, he sued Good Nite Inns for compensation for overtime and missed meal periods. The matter proceeded to a bench trial, and the court ruled that Kazi was not an exempt employee and that the Good Nite Inns owed him for overtime and missed meal periods. It also found that the failure to pay overtime wages violated the Unfair Competition Law. In November 2007, the court awarded damages of $293,999.55 and attorney fees to Kazi; Good Nite Inns appealed. We affirmed in Ahmed, supra, A120400.

Sara, the wife of Kazi, also worked for the Redwood Hotel. She was employed as a desk clerk until March of 2008, when she resigned after working for the hotel for approximately 13 years. Her wage at the time she resigned was $13.05 per hour. She wrote Good Nite Inns a letter requesting approximately $23,000 in unpaid wages, including overtime and meal break compensation.

On July 15, 2008, Good Nite Inns filed a complaint against the Ahmeds for conversion, breach of fiduciary duty, fraud or misrepresentation, negligent misrepresentation, fraud or concealment, breach of contract, and breach of implied covenant of good faith and fair dealing. Good Nite Inns alleged that it investigated Sara's overtime claim and discovered that she had been compensated for more than 4,200 hours that she never worked. They asserted that Kazi inflated Sara's hours "by overriding the hours inputted by Sara in the time logs to increase the number of hours that were reported to [Good Nite Inns]." In December 2008, Sara filed a counter-claim seeking the wages she had previously requested.

Prior to trial, the Ahmeds testified that they could not explain specific changes to the time logs and entered a stipulation that they would not attempt to do so at trial.

A bench trial began on July 28, 2009, on both Good Nite Inns' complaint and Sara's cross-complaint. At trial, the evidence was that Sara requested unpaid overtime and unpaid meal break wages when she resigned her employment. Almut Fleck, the director of human resources at Good Nite Inns, advised her that she would be contacted with questions. She was not contacted and she disposed of her notes showing the basis of her estimate. About four months after Sara had resigned, Good Nite Inns filed their lawsuit against the Ahmeds.

Good Nite Inns presented evidence establishing that all hourly employees, such as Sara, were required to "punch" an electronic time clock, which was part of the Mirage hotel management system. Mirage is an outside company that provides timekeeping services. Employees clocked in and out by typing their employee number into the Mirage computer. Mirage automatically recorded the time and date each employee clocked in and out. Kazi had a password that allowed him to override an employee's time clock entry when an employee mistakenly failed to clock in or out at the time an employee started or stopped work. Kazi gave his secret password to Sara.

Frank Chang, the payroll manager for Good Nite Inns, reviewed Good Nite Inns' historical payroll records, or the Mirage records, and determined that Good Nite Inns owed Sara $1,500 in overtime. He did not prepare a calculation as to meal break wages. Chang testified that in all of his years in dealing with the Ahmeds he never had reason to believe that the payroll information submitted by the Ahmeds was inaccurate.

Kazi submitted payroll end period reports. Chang testified that both of the Ahmeds provided period end reports for the payroll summary of time worked, including overtime and holiday hours.

Ho spent over 100 hours reviewing the historical detail of the electronic payroll records for Sara, which was referred to as exhibit 1. He was not familiar with the payroll collection procedure and had no knowledge of key components. Ho testified that prior to performing his analysis he had no opinion about Sara. On cross-examination, he testified that he believed Sara had lied profoundly in Kazi's wage and hour trial. He testified that Sara had worked 2,597 days and that, according to exhibit 1, her time had been changed 2,485 times on a total of 1,795 days. He claimed that Sara was given $88,576 as a result of the changes made to her time clock entries. He found that Sara failed to log out until 24 hours or more in the future. When that occurred, Ho gave Sara no credit for these hours, even though Sara had later reduced the entry to actual hours worked.

Ho admitted that he included in his calculations only those changes in the payroll records that were consistent with his allegations of fraud. He acknowledged that similar changes to Sara's payroll records that occurred after Kazi had left his employment with Good Nite Inns were not treated as fraudulent.

The historical time records were always available, but Ho testified that he never analyzed them until Sara resigned and requested compensation for her previously unpaid meal breaks and overtime. When asked why he examined only Sara's payroll records, Ho testified: " 'Because there has been no issue with payroll records of other employees. Therefore, there is no need to ask questions about it.' "

Good Nite Inns had asserted that the Ahmeds' systematically stole time from other employees and gave it to Sara. Ho testified that the times of Carmen and Angeles Martinez were transferred to Sara. Neither of these women, however, ever filed a complaint with anyone or ever mentioned that hours had been taken away from them.

Sara testified that she did not receive meal breaks. She stated that she entered an agreement pursuant to Good Nite Inns' policy that required her to take on-duty meal breaks. She estimated that she was owed $16,800 for her unpaid meal break wages over the four-year statutory period. Good Nite Inns produced evidence that, during the four-year period, Sara took 26 meal breaks.

After hearing all of the evidence and closing arguments, the court issued its tentative decision in favor of the Ahmeds on Good Nite Inns' complaint and in favor of Sara on her cross-complaint, and directed counsel for the Ahmeds to prepare the proposed statement of decision pursuant to California Rules of Court, rule 3.1590. The proposed statement of decision was submitted, and counsel for Good Nite Inns filed their opposition. The court noted in its final statement of decision that the proposed statement of decision "closely reflects the court's tentative oral decision and accurately reflects the rulings and observations of this court." The court also observed that Good Nite Inns filed a 49-page opposition to the proposed statement of decision. The court concluded that "the vast majority of the 'objections' are an attempt to reargue matters already submitted to the court."

The court in its statement of decision ruled that Good Nite Inns would take nothing by way of their complaint as they failed to carry their burden of proof as to all causes of action. The court awarded Sara $26,590.66 on her cross-complaint.

Good Nite Inns filed a timely notice of appeal. Subsequently, Good Nite Inns requested that we continue oral argument until their appeal from the order on attorney fees was fully briefed. The ...


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