IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
November 29, 2010
GOOD NITE INN MANAGEMENT, INC. ET AL., PLAINTIFFS AND RESPONDENTS,
SARA AHMED ET AL., DEFENDANTS AND APPELLANTS.
The opinion of the court was delivered by: Lambden, J.
Good Nite Inn Management v. Ahmed
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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.
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 Ahmeds filed opposition and we denied the request.
I. Standard of Review
To the extent that Good Nite Inns are challenging a question of law, we use the de novo standard of review. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 461.) However, when the appeal is from a judgment after trial, as here, the appellant must show actual prejudice. (Gann v. Williams Brothers Realty, Inc. (1991) 231 Cal.App.3d 1698, 1704.)
We review Good Nite Inns' assertion that the evidence does not support the judgment for substantial evidence. (Gann, supra, 231 Cal.App.3d at p. 1704.) "In general, in reviewing a judgment based upon a statement of decision following a bench trial, 'any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations.]' [Citation.] In a substantial evidence challenge to a judgment, the appellate court will 'consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.]' [Citation.] We may not reweigh the evidence and are bound by the trial court's credibility determinations. [Citations.] Moreover, findings of fact are liberally construed to support the judgment. [Citation.]" (Estate of Young (2008) 160 Cal.App.4th 62, 75-76.)
Further, " '[a]n appellate court will not disturb the implied findings of fact made by a trial court in support of an order, any more than it will interfere with express findings upon which a final judgment is predicated. . . . So far as it has passed on the weight of evidence or the credibility of witnesses, its implied findings are conclusive." (Griffith Co. v. San Diego Col. for Women (1955) 45 Cal.2d 501, 507-508.)
II. Good Nite Inns' Motive for Bringing this Action
Good Nite Inns contend that the lower court erred because it based its judgment on a finding that Good Nite Inns' motive for bringing this action was revenge for Kazi's prior lawsuit. They maintain that the motive for bringing an action is immaterial, and that this error was prejudicial.*fn2
A "[p]laintiff's motive in bringing or prosecuting the action is immaterial. If [the plaintiff] has a good cause of action any malice in prosecuting it cannot subtract from the merits. If [the plaintiff] does not have one the event will prove the fact. . . ." (Rosenthal v. Rosenthal (1961) 197 Cal.App.2d 289, 301.)
Good Nite Inns extracts six separate quotes from the court's statement of decision to support their claim that the court improperly decided against them because of their motivation for filing their complaint against the Ahmeds.*fn3 None of these quotes, however, establishes that the court ruled against Good Nite Inns because of their motivation for bringing the action. Moreover, almost all of these quotes refer to Ho's motivation, which was relevant to the court's assessment of his credibility as a witness.
The trial court's statement of decision makes it clear that it rejected Good Nite Inns' claims because they had not met their burden of proof. The court stressed that they failed to present sufficient evidence to support any of their claims. Good Nite Inns argue that the court considered Good Night Inns' motives for initiating this action to be "the most telling single thing, which explains this case." Good Nite Inns, however, ignores that the court was referring to Ho's testimony when commenting about "the most telling single thing[.]" Immediately preceding this comment, the court noted that Ho testified that he believed that Sara had "lied profoundly" in Kazi's wage and hour trial. The court found that this testimony explained the case as it found "this entire action was predicated on a desire to make the Ahmeds pay a severe price for the successful wage and hour action." The court added, "[A]lthough the court was not influenced in any manner by the prior action initiated by Kazi Ahmed, it was clear that this was constantly an irritant to Mr. Ho and his analysis of the issues presented to this court."
Thus, the court considered motivation when assessing the prejudices, biases, and credibility of Ho, Good Nite Inns' principal witness. The court when weighing his credibility properly considered evidence of Ho's bias or motive. (See Evid. Code, § 780, subd. (f).) As a general rule, evidence is admissible to show a witness's bias, interest, or corrupt motives. (Evid. Code, § 780, subd. (f); see also Boyle v. Hawkins (1969) 71 Cal.2d 229, 239.) "Credibility is an issue for the fact finder." (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622.) The present situation is therefore contrary to the cases cited by Good Nite Inns, because in those cases the evidence on motive was outside any issue in the case, was not relevant to any witness's credibility, and was prejudicial. (See, e.g., Storch v. McCain (1890) 85 Cal. 304, 308 [evidence on the value of real estate when the suit was brought was irrelevant to the lawsuit, which concerned the agent's authority to release the mortgage]; National Etc. Mfg. Co. v. Producers' R. Co. (1915) 169 Cal. 740, 743 [evidence is admissible to show the bias and prejudice of a witness but, where motive does not effect the right of action or measure of recovery, it is irrelevant].)
The trial court concluded that Kazi's prior lawsuit against Good Nite Inns influenced their decision to bring this lawsuit primarily because Good Nite Inns provided no evidence to support their claims that the Ahmeds conspired to alter the timecards. The court remarked that Ho's analysis of the historical time records for Sara, or exhibit 1, was "amazing and indicative of the mechanistic approach that Mr. Ho employed in terms of evaluating what Sara . . . was entitled to, what her claim was predicated on and how this presented an opportunity for [Good Nite Inns] to exact some measure of revenge for [Kazi's] success in his litigation." The court noted that 135 of Sara's hours were changed, which reduced the time Sara reported. These decreases in the reported hours caused the court to conclude that there was "very strong circumstantial evidence that, in fact, this was not a concerted plan, a conspiracy between Sara Ahmed and her husband, Kazi Ahmed, to defraud [Good Nite Inns]."
The court further explained: "There was no corroborative evidence suggesting that Sara Ahmed had not performed the work reported as evidenced in exhibit 1. The analysis is statistical[,] and devoid of independent confirmation. Most importantly, exhibit 1 was never analyzed, prepared, or even reviewed until Sara Ahmed resigned and sent the e-mail . . . requesting compensation for her previously unpaid meal breaks and overtime. These . . . time records always existed, but were never relied on by Good Nite Inns for any purpose until this litigation." The court stressed that Good Nite Inns produced no evidence that "someone other than Sara Ahmed was performing the work reported to be performed by her."
Ho's motive was directly relevant to explaining Ho's incomplete and rigid analysis of exhibit 1. The trial court pointed out that the errors in exhibit 1 did not establish any intent to deceive and that Ho made no attempt to garner independent confirmation that the Ahmeds deliberately increased Sara's hours or had reason to know they were inaccurate.
Additionally, the court cited evidence supporting an inference that there was an innocent explanation for the numerous changes in the time sheets. The evidence was uncontradicted that Redwood Hotel was under-staffed 90 percent of the time and the evidence showed that Sara had to do the work of an assistant manager as well as other positions in addition to carrying out her own job responsibilities as the desk clerk. The court explained that this latter factor was the likely reason for the numerous changes in the time sheets and the likely explanation for failing to clock out. The court stated: "[T]he most plausible explanation for the volume of changes to [Sara's] time records was the way that the business was conducted with a perpetual shortage of personnel, with [Kazi] doing many non-managerial functions; that [Sara] was indeed given access to [Kazi's] payroll password, not to defraud [Good Nite Inns], but in order to keep [the Redwood Hotel] operational and afloat during very busy and understaffed times. Work that would have normally been done by the assistant manager could not have been done by the assistant manager: there was not one."
The court emphasized that Good Nite Inns submitted no evidence that Sara did not work any of the hours she claimed on her payroll sheets. Finally, the court found that Sara was a credible witness. The court believed that she made some errors on her timesheets, but the errors were simply errors and not a conspiracy to defraud Good Nite Inns.
Thus, the trial court's judgment was based on Good Nite Inns' failure to present evidence to support their claims, the lack of credibility of Good Nite Inns' witnesses, the evidence supporting innocent reasons for making the changes to the time sheets, and the credibility of the Ahmeds. Not only was the court's basis for making its judgment proper, Good Nite Inns cannot establish prejudice because, as discussed below, substantial evidence supports the judgment.
Although not expressly argued, Good Nite Inns also implies that the lower court abused its discretion in admitting evidence of Ho's motive and seems to be arguing that such evidence was irrelevant. We review the trial court's rulings on the admissibility of evidence for an abuse of discretion; we will not reverse on this basis " 'unless the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice.' " (Employers Reinsurance Co. v. Superior Court (2008) 161 Cal.App.4th 906, 919.)
Good Nite Inns maintain that the court's consideration of motive was contrary to its prior ruling on Good Nite Inns' motion in limine, which sought to exclude any mention of Kazi's wage and hour lawsuit. The court denied that motion, but indicated that Kazi's action was irrelevant.
The trial court expressly stated in its statement of decision that Kazi's lawsuit did not influence it in any manner. Nothing in the statement of decision indicates that the court considered this lawsuit to be relevant to the Good Nite Inns' action. The fact that the lawsuit was irrelevant to the issues at trial did not mean that a witness's attitude about that lawsuit was irrelevant to the court's assessment of that witness's credibility. Ho's attitude towards Sara was directly relevant since he was the person who analyzed exhibit 1. Therefore, the court did not abuse its discretion in permitting Ahmeds' counsel to cross-examine Ho regarding his attitude towards Sara and his feelings about her testimony in Kazi's wage and hour action. The court properly considered this testimony when assessing Ho's credibility and evaluating his analysis of exhibit 1.
III. Substantial Evidence Supports the Judgment on Good Nite Inns' Complaint
Good Nite Inns argue that "most of the court's findings are contrary to all of the evidence" and, again, they assert that the court's ruling was based on its conclusion that Good Nite Inns brought this action as revenge for Kazi's wage and hour action rather than upon the evidence. For the reasons discussed above and explained more fully below, we disagree.
Preliminarily, we note that the Ahmeds contend that Good Nite Inns failed to set forth a complete or accurate statement of facts and therefore they have waived their substantial evidence challenge. It is well established that a challenge based on substantial evidence not supporting the judgment requires Good Nite Inns to set forth in their brief all of the material evidence relevant to the question, including that which supports the judgment. (E.g., Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; see also Cal. Rules of Court, rule 8.204(a)(2)(C).) "Accordingly, if, as defendants here contend, 'some particular issue of fact is not sustained, they are required to set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error [assigned] is deemed to be waived.' (Italics added.) [Citations.]" (Foreman & Clark Corp., at p. 881.)
Here, Good Nite Inns ignore the lower court's findings on credibility with regard to Ho and the Ahmeds. Additionally, they fail to cite to the evidence showing that Sara had to perform various functions and often had to act as the assistant manager. Although their rendition of the facts is insufficient, we will address the merits of Good Nite Inns' argument.
Good Nite Inns sued 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. All of Good Nite Inns' claims were based on an assertion that the Ahmeds deliberately or negligently misrepresented or concealed Sara's time records. The record on appeal amply supports the lower court's finding that the evidence did not support a claim for deliberate or negligent misrepresentation or concealment.
Good Nite Inns submitted evidence showing that Sara's time records had been frequently changed. They presented no comparative evidence of changes in time sheets of other employees. The record did include evidence supporting the court's finding that such changes were likely a result of the understaffing at the Redwood Hotel. It was undisputed that the hotel had insufficient staff and that Sara, the desk clerk, had to perform the work of an assistant manager. The court found that Sara "testified candidly, and forthrightly" at trial.
The court stressed that Good Nite Inns' evidence was simply exhibit 1, but there was no evidence of a conspiracy to defraud because, other than two instances over the approximately 13-year employment period for Sara, there was no evidence that Sara did not work any of the hours she claimed. The court agreed that Sara's time was billed simultaneously in two different departments on two separate occasions, but it found this error not a conspiracy to defraud, but error.
Good Nite Inns argue that the evidence established that Sara violated policy by failing to clock out and adding 3,600 hours by backdating her time entries. Good Nite Inns cite the testimony of Armond Esmalian, the owner of Mirage, that Sara violated policy by clocking in and then failing to clock out. Similarly, Kazi testified that an employee's failure to clock out was an improper practice. This evidence, however, did not establish fraud. This evidence simply showed that Sara violated policy.
Good Nite Inns also disagree with the court's conclusion that the 135 changes in the Mirage records that reduced, rather than increased, Sara's time provided strong evidence that there was no conspiracy between the Ahmeds to defraud Good Nite Inns. Good Nite Inns argue that many of the changes that reduced Sara's time "merely eliminated overlapping hours that were created by changes to Sara's original time clock entries." They complain that the Ahmeds offered no explanations for these changes and they stipulated to the fact that they could not explain any of the changes. Again, Good Nite Inns ignore their burden on appeal. They cannot merely disagree with the conclusion of the lower court, but must establish that the court's findings were not based on the evidence. Here, the court listened to the testimony and determined that the changes showed no intention to defraud. The Ahmeds could not explain any particular change, but the evidence indicated that changes were made as a result of staffing shortages. Whatever the reason for the changes that reduced Sara's hours, the fact that some of the changes did result in fewer reported hours, supported the lower court's conclusion that Sara did not make these changes to inflate the hours worked.
Good Nite Inns also argue that the lower court "wrongfully put the onus" on them to provide corroborative evidence of Sara's hours. They argue that the Ahmeds could not provide them with any corroborative evidence and they were only people who could provide any corroborative evidence. Thus, they argue, it was unreasonable for the court to state that they had the burden of providing corroborative evidence.
The above-mentioned argument by Good Nite Inns lacks merit. It is elementary that Good Nite Inns had the burden of proof. Indeed, the court admonished them during the trial that reliance on exhibit 1 was insufficient. The court warned: "If [exhibit 1] is all we have for the plaintiffs' case, they can't prevail because they need to connect and show this court and meet the burden of proof to establish the necessary allegations in the complaint." Good Nite Inns could have provided corroborative evidence by showing that other employees did the work that Sara claimed to have done. Additionally, they could have presented testimony of area supervisors, other documentary evidence, and forensic analysis of payroll records. The court properly found that evidence of changes to Sara's time sheets and a failure to clock out did not prove any intent by the Ahmeds to defraud. This is especially true given that Sara needed to perform job duties outside of her own job classification. Furthermore, as the trial court stressed, the court found that the payroll records were not falsified and, except for two mistakes, accurately reflected work performed.
Moreover, the court pointed out the problems with Ho's analysis of the time sheets. The court explained that it was attempting to determine the number of hours Sara actually worked and that Ho "testified that essentially if one clocked in and didn't clock out, he's not giving credit for that. [¶] Well, how does that accurately reflect anything?" The trial court was entitled to infer that Ho's analysis was seriously flawed, because he made no attempt to determine the actual number of hours Sara worked. (See, e.g., Primm v. Primm (1956) 46 Cal.2d 690, 694 ["When two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court"].)
Good Nite Inns maintain that the court "erroneously" concluded that Ho should have been aware of Sara's inflated hours. Good Nite Inns complain that Ho testified that he would typically notice hours that exceeded 10 percent of the overall budget for the hotel, and Sara's overbilling was under that percentage so he would not notice it. During cross-examination, Ho was asked whether he scrutinized the actual payroll of the properties and he responded: "We review the actual hours expended in each department against the budget every month." He testified that he would notice the deviation if the hours per room sold was in excess of the housekeeping or front desk budget. If Sara's desk hours had consistently exceeded the budget, Ho testified, "[W]e would have talked amongst the corporate management team. I would probably have brought it to our VP of operation's attention and raised the question with him as to why." Ho admitted that he did not recall that "the budget was exceeded such that it needed immediate attention" and no one ever brought this issue to the attention of Kazi. Thus, evidence supported the lower court's finding that Ho would have noticed if Sara's hours had been significantly inflated.
Good Nite Inns also challenge the court's inference that Sara's times were changed because of the Redwood Hotel's being short-staffed, and they argue that this was contrary to the stipulated order where the Ahmeds admitted that they did not know and would not offer any testimony as to why Sara's times were changed. These stipulations did not relate to the staffing of the Redwood Hotel. Kazi testified that the Redwood Hotel was short-staffed in all departments about 90 percent of the time during his employment there. He testified that the staffing shortage resulted in no meal breaks for front desk employees. The record therefore contains evidence to support the court's conclusion that staff shortages and the manner in which the Redwood Hotel was run could explain the changes to payroll.
Another challenge to the trial court's finding raised by Good Nite Inns is that the court found that the hours of Carmen and Angeles Martinez had not been reduced. They maintain that they introduced this evidence to show that hours were shifted from housekeeping to maintenance so that the housekeeping times added for Sara would not exceed the allocated hours for that department. They ignore, however, that an allegation in their complaint was that Sara had stolen time from other employees, such as the Martinez sisters. Indeed, during opening statement, counsel for Good Nite Inns asserted: "[The Ahmeds] shaved or deleted some of the hours of the housekeepers . . . . So the Ahmeds were willing to sacrifice the wages of other employees to line their own pockets." Chang, the payroll manager/benefits plan administrator for Good Nite Inns testified that he never received any complaints from any of the employees at the Redwood Hotel that they were not properly paid for their time. Accordingly, the court properly found that Good Nite Inns submitted no evidence to support their allegation that the Ahmeds stole hours from other employees.
Good Nite Inns disagree with the court's findings that Kazi's non-credible testimony could be excused by the pretrial orders. The court explained: "After lengthy argument concerning the matters to which he could testify based on pre-trial stipulations, Mr. Ahmed also testified. The court initially found his testimony to be less than forthright and candid. The court later concluded that because Mr. Ahmed was present for the lengthy argument about pre-trial stipulations, he was trying to respond appropriately given the restrictions imposed on his testimony. Additionally, Mr. Ahmed was present during the majority of the trial and witnessed the numerous objections to his testimony and that of his wife Sara, and the argument that a significant portion of their testimony violated the stipulations and orders entered prior to trial. The court finds Mr. Ahmed to have been candid, forthright and believable. . . ." As already stated, the trial court's determination of the credibility of a witness is "conclusive"; it is not the role of the appellate court to second-guess the lower court's conclusions regarding the credibility of a witness. (Griffith Co. v. San Diego Col. for Women, supra, 45 Cal.2d at p. 508.)
Finally, Good Nite Inns object to the trial court's finding that the Mirage time clock system was secondary to the operation of the Redwood Hotel payroll. The court explained that Esmalian, the owner of the Mirage system, testified about exhibit 1, but such testimony, absent any attempt to provide context, was not useful. The court stated that it considered Kazi's testimony that the Mirage time clock system was secondary to the operation of the Redwood Hotel payroll. The court observed that, more importantly, "was that the payroll end period reports accurately reflect the work that Mrs. Ahmed and all the employees performed." The court stressed that Chang testified that both of the Ahmeds provided period end reports for the payroll summary of time worked, including overtime and holiday hours. The court also considered the fact that Ho did not even consider the Mirage time sheets until after Sara resigned and had not used them when assessing whether hours reported seemed excessive. Thus, we cannot conclude on this record that the court's determination that this evidence had minimal relevance was incorrect.
IV. Good Nite Inns' Cause of Action for Negligent Misrepresentation
Good Nite Inns' fourth cause of action was for negligent misrepresentation arising from the instances where Sara reported working simultaneously in two departments. The trial court found that these two instances of error were simply error, and no more than ordinary negligence; thus, the evidence did not support the claim for negligent concealment or negligent misrepresentation. Good Nite Inns claim that the court erred because establishing ordinary negligence was sufficient.
An action for fraud based on concealment requires that a person intentionally conceal a fact with the intent to defraud another. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.) Negligent misrepresentation or negligent concealment requires proof that the plaintiff lacked any reasonable ground for believing the statement to be true. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.)
Here, it was undisputed that the Ahmeds made two errors in reporting Sara's payroll over the approximately 13 years that she worked at the Redwood Hotel. Sara testified that she never intentionally misreported payroll. Good Nite Inns can cite to the record where the Ahmeds had no explanation for the error, but that did not necessarily establish intent.
Good Nite Inns' argument is somewhat incomprehensible, but they seem to be contending that the court erred because it did not recognize that simple negligence can be asserted by an employer against employees. They then proceed to cite cases and treatises that state an employee may be liable to an employer for negligence. (E.g., Division of Labor Law Enforcement v. Barnes (1962) 205 Cal.App.2d 337, 348-349.) Good Nite Inns, however, did not sue the Ahmeds for negligence and, as the trial court explained, even if there was evidence of negligence, there was no evidence supporting negligent concealment or negligent misrepresentation. Rather, the evidence was that the Ahmeds made a simple mistake. The evidence did not establish that Sara had any reasonable ground to believe her time sheets were incorrect, and the trial court did not commit any error in ruling against Good Nite Inns on their fourth cause of action.
We therefore conclude that substantial evidence supported the court's judgment that Good Nite Inns could not prevail on any of their claims against the Ahmeds.
V. Sara's Cross-Claim for Meal Break Compensation
With regard to Sara's cross-complaint, the court explained that Sara testified that she was not relieved for uninterrupted 30-minute meal breaks and that during 2005 she sometimes worked seven days a week. After the court applied the four-year statute of limitations to her claim, and deducted 26 meal breaks from Sara's estimate, the court found that she was owed $16,460.70 for unpaid meal-break compensation. Good Nite Inns contend that the lower court erred when it imposed the burden of proof onto them for Sara's meal break cross-claim.
Labor Code sections 226.7 and 512 mandate that non-exempt employees receive a 30-minute meal break for every five hours worked. An employer who fails to provide such a break shall pay the employee one additional hour of pay. (Lab. Code, § 226.7, subd. (b).) By law, the employer is obligated to keep accurate records of all hours worked, including overtime and meal periods. (Lab. Code, §§ 226, subd. (a); 1174, subd. (d); see also Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 961.) "[W]here the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages." (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 727.)
Good Nite Inns argue that they had a time clock system, and the extent to which the Mirage records were not accurate was due to Sara's failure to clock in and out as required by policy. Since Sara did not clock in or out, Good Nite Inns maintain that she should have the burden of proof and should not be able to benefit from her failure to comply with policy. Further, they argue, even if the burden of proof shifted to Good Nite Inns, Sara failed to satisfy her threshold burden of presenting sufficient evidence as to the amount and extent of the precise work she performed.
The record established that Good Nite Inns did not have accurate records of all the hours worked by Sara. The evidence was undisputed that the Redwood Hotel was on a very tight budget, and that budget did not provide for relief personnel to provide meal breaks. The court found that the changes to Sara's payroll records were due to a perpetual shortage of personnel and an attempt to keep the Redwood Hotel operational and afloat during very busy and understaffed times. Thus, the record does not support Good Nite Inns' argument that Sara was responsible for the inaccuracy of Mirage records. The lower court did not err in permitting Sara to rely on estimates to prove her meal break claim, which shifted the burden to Good Nite Inns to establish the exact amount.
The court noted that Good Nite Inns had an unlawful policy regarding meal breaks. Ho admitted that the policy was to require employees to enter agreements waiving their right to a meal break. Sara testified that she did not receive meal breaks and that she entered an agreement pursuant to Good Nite Inns' policy that required her to take on-duty meal breaks. Sara estimated her meal break wages based on her payroll records. Good Nite Inns complain that Sara did not know the exact times or dates she worked. However, as already discussed, the trial court found the payroll records were not falsified and accurately reflected work performed. Thus, it properly used Sara's estimates based on these payroll records. The court noted that Good Nite Inns produced evidence that Sara took only 26 meal breaks during the four-year statutory period. Consequently, the court deducted 26 meal breaks from Sara's estimate and applied the four-year statute of limitations when it awarded her $16,460.70 for unpaid meal break compensation.
Accordingly, we conclude that the lower court applied the proper burden of proof and substantial evidence supported its determination of Sara's claim for meal break compensation.
VI. Sara's Cross-Claim for Overtime Compensation
The trial court noted that Sara could not estimate her unpaid overtime, but she acknowledged that it decreased after her husband left his employment because other employees went to the Redwood Hotel. The court concluded that, since Sara could not establish the amount of unpaid overtime, it would adopt the testimony of Chang and Ho that Good Nite Inns owed her $1,500 in unpaid overtime.
Good Nite Inns object to the award of $1,500 in overtime compensation to Sara and maintain that substantial evidence did not support that sum. They argue that Sara did not know the actual number of hours she worked and she had the burden to establish the amount of unpaid wages she was owed.
The record, however, supported the lower court's award. The court found that the payroll records were accurate and, based on those records, Chang and Ho acknowledged that Good Nite Inns owed Sara $1,500 in unpaid overtime.
The judgment is affirmed. The Ahmeds are awarded the costs of appeal.
We concur: Haerle, Acting P.J. Richman, J.