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Shames v. Utility Consumers Action Network

California Court of Appeals, Fourth District, First Division

June 29, 2017

MICHAEL SHAMES, Plaintiff and Appellant,
v.
UTILITY CONSUMERS' ACTION NETWORK, Defendant and Respondent.

         APPEAL from an order of the Superior Court of San Diego County No. 37-2013-00036966- CU-DF-CTL, Ronald L. Styn, Judge. Affirmed.

          McDougal, Love, Eckis, Boehmer & Foley, McDougal, Love, Boehmer, Foley, Lyon & Canlas, Steven E. Boehmer and M. Anne Gregory for Plaintiff and Appellant.

          James D. Crosby for Defendant and Respondent.

          AARON, J.

         I.

         INTRODUCTION

         Plaintiff Michael Shames appeals from a postjudgment order regarding attorney fees. Shames filed this lawsuit against Defendant Utility Consumers' Action Network (UCAN) and two individual plaintiffs, alleging multiple causes of action, after UCAN terminated his employment. The case proceeded to trial, and Shames prevailed on three causes of action, including one in which he sought unpaid wages in the form of bonus payments that were due to him pursuant to an incentive program. After judgment was entered, Shames sought to recover the attorney fees that he incurred in litigating his claims. Shames relied on two statutes for his request for attorney fees, but only one of those statutes is at issue in this appeal. Specifically, Shames sought attorney fees pursuant to Labor Code section 218.5, [1] which provides in full:

         "(a) In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney's fees and costs to the prevailing party if any party to the action requests attorney's fees and costs upon the initiation of the action. However, if the prevailing party in the court action is not an employee, attorney's fees and costs shall be awarded pursuant to this section only if the court finds that the employee brought the court action in bad faith. This section shall not apply to an action brought by the Labor Commissioner. This section shall not apply to a surety issuing a bond pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code or to an action to enforce a mechanics lien brought under Chapter 4 (commencing with Section 8400) of Title 2 of Part 6 of Division 4 of the Civil Code.

         "(b) This section does not apply to any cause of action for which attorney's fees are recoverable under Section 1194." (Italics added.)

         The trial court denied Shames's request for attorney fees under section 218.5, concluding that he had failed to request attorney fees "upon the initiation of the action" because he did not request attorney fees in his initial complaint. The court also concluded, in the alternative, that Shames's request for attorney fees in his amended complaint was not sufficient to permit him to recover attorney fees as costs pursuant to section 218.5.

         On appeal, Shames challenges both of the trial court's conclusions regarding his failure to meet the requirements of section 218.5. We conclude that we need not decide whether the trial court correctly determined that a request for attorney fees under section 218.5 must be included in the initial pleading, as opposed to an amended pleading, because even if it would be sufficient under the statute to include a request for attorney fees under section 218.5 in an amended pleading, Shames's amended pleading did not request attorney fees generally, nor did it request attorney fees under section 218.5 with respect to the cause of action in which Shames alleged that UCAN had failed to pay him his full wages. Rather, the amended pleading included a reference to section 218.5 only as to a cause of action that was not brought on account of the nonpayment of wages, and one on which UCAN, not Shames, prevailed. We therefore affirm the order of the trial court.

         II.

         FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Background

         Shames founded UCAN, a nonprofit organization, in 1981 for the purpose of "educating San Diego consumers concerning regulated utility matters and representing their viewpoints before regulatory bodies and proceedings." Shames served as the executive director of UCAN for 27 years. A board of directors, which included attorneys and public agency administrators, oversaw Shames's activities and directed the policies of the organization.

         In May 2012, Shames left his role as executive director, and the UCAN board hired a new executive director. Shames offered to remain on at UCAN as a part-time employee in order to assist with ongoing legal actions until they were completed. According to Shames, UCAN accepted his offer of part-time employment. However, there was apparently a conflict between Shames and the new executive director with respect to how to litigate the cases, and, as Shames alleged in his original and amended complaints, UCAN terminated his employment as of June 20, 2012.

         B. Procedural Background

         1. The Pleadings and Pretrial Motions

         Shames filed an action against UCAN on February 28, 2013. The original complaint alleged 10 causes of action, including (1) libel, (2) libel per se, (3) malicious prosecution, (4) intentional interference with prospective business relations, (5) blacklisting, (6) unauthorized computer use and access, (7) publication of private facts, (8) wrongful termination, (9) failure to indemnify costs, and (10) breach of contract and declaratory relief.[2] Shames did not include a request for attorney fees in this complaint.

         UCAN filed an anti-SLAPP motion with respect to portions of the complaint. The court granted the anti-SLAPP motion with respect to the causes of action for libel, intentional interference with prospective economic damage, blacklisting, and publication of private facts. UCAN also demurred to the complaint, and the trial court sustained the demurrer, with leave to amend, with respect to the causes of action for wrongful termination and breach of contract.

         In the meantime, UCAN also cross-complained against Shames, alleging breach of fiduciary duty with respect to incentive bonuses that Shames had taken during his tenure at UCAN. UCAN alleged that the bonuses had not been approved by the Board. Shames answered the cross-complaint, denying UCAN's allegations and asserting a number of affirmative defenses. In the concluding paragraph of Shames's answer, he requested that judgment be entered in his favor on the cross-complaint, and that he recover "costs of suit and reasonable attorneys [sic] fees herein incurred, and any such other relief as the court may deem just and proper."

         Shames filed a first amended complaint in October 2013. In the first amended complaint, Shames alleged seven causes of action, including the following: (1) unauthorized computer use and access as to UCAN, (2) unauthorized computer use and access as to individual defendants Aguirre and Peffer, (3) illegal eavesdropping, (4) "waiting time penalties in violation of Labor Code section 203" (formatting omitted), (5) "knowing and intentional failure to comply with itemized employee wage statement provision, as per Labor Code section 226(a)" (formatting omitted), (6) failure to indemnify costs, and (7) breach of contract/declaratory relief.

         There are three references to a request for attorney fees in the first amended complaint. The first reference, in paragraph 46 of the pleading, alleged as part of the third count for illegal eavesdropping, provides: "46. Plaintiff is entitled to statutory damages of $5, 000 as per Penal Code Section 637.2(a)(1) and attorneys' fees pursuant to Civil Procedure Section 1021.5."

         The second reference, found in paragraph 52, alleged as part of the fourth count for "violation of Labor Code section 203" (formatting omitted), provides: "52. Plaintiff was forced to retain counsel to negotiate full and proper payment of wages and other reimbursables. In so doing, Plaintiff incurred legal costs of $3, 000. Pursuant to Labor Code Section 218.5, the court may award reasonable attorney's fees and costs."[3]

         The third reference, in paragraph 59, alleged as part of the fifth count for "knowing and intentional failure to comply with itemized employee wage statement provision" (formatting omitted) in violation of section 226, provides: "59. Plaintiff is entitled to penalties as follows: [¶] a. Fifty dollars ($50.00) for the initial pay period in which a violation occurred; and [¶] b. An award of costs and reasonable attorneys' fees."

         The first amended complaint does not include any reference to attorney fees in the paragraphs supporting count 7, in which Shames alleges the breach of contract/declaratory relief cause of action for failure to pay him multiple bonus payments, totaling more than $150, 000, that he alleges were due pursuant to UCAN's incentive plan. Nor does the first amended complaint include a request for attorney fees in the general prayer for relief.[4]

         UCAN filed an answer to the first amended complaint in November 2013. It did not request or otherwise mention attorney fees.

         2. The Trial

         Just prior to the start of trial, Shames filed a "Plaintiff's Trial Brief." (Formatting omitted.) In that brief, Shames discussed all of the claims alleged in the first amended complaint. With respect to count 7, for breach of contract with respect to the incentive payments, Shames included the following contention, which contains a reference to section 218.5:

         "Mr. Shames performed all, or substantially all, of the significant work that the incentive contract required him to do, resulting in a large award of attorney's fees to UCAN by the Public Utilities Commission. Mr. Shames' performance of these contractually obligated duties was predicated upon the receipt of the incentives. Mr. Shames therefore seeks all payments due as of time of judgment and a declaration that he has a right to future payments as they become due. ...


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