Court Opinion

ID: 821575
Source: CourtListenerOpinion
Date Created: 2013-02-28 07:23:18.264538+00
Date Added: 2024-06-11T12:19:11.445649
License: Public Domain

Filed 2/27/13 Faris v. Cingular Wireless CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

RAMSEY FARIS,

     Cross-complainant and Respondent,                                 G045602, G045895, G046131

         v.                                                            (Super. Ct. No. 04CC12638)

CINGULAR WIRELESS LLC,                                                 OPINION

     Cross-defendant and Appellant.

                   Appeals from a judgment and orders of the Superior Court of Orange
County, Thierry Patrick Colaw, Judge. Appeal Nos. G045602 and G045895 dismissed.
Appeal No. G046131 affirmed in part, reversed in part, and remanded.
                   Reed Smith, Margaret M. Grignon and Brandon W. Corbridge for Cross-
defendant and Appellant.
                   Waldron & Bragg, Gary A. Waldron, Sherry S. Bragg; Duarte & Associates
and James M. Duarte for Cross-complainant and Respondent.
                                          *                  *                  *
              Respondent Ramsey Faris filed a cross-complaint against appellant
Cingular Wireless LLC, now known as AT&T Mobility LLC (Cingular), for failing to
defend him in the suit brought against him by The Consulting Group, Inc. (TCG) and
Michael Flynn (collectively, plaintiffs) and to indemnify him. The trial court found in
Faris’s favor and awarded him damages, including attorney fees, costs, and expenses of
his original attorney, James M. Duarte. The parties stipulated the court could determine
the amount of attorney fees, costs, and expenses (further damages in this case) accrued by
another of Faris’s attorneys in a posttrial proceeding. The court filed what purported to
be a judgment awarding Faris damages and stating Faris was entitled to recover the
additional attorney fees, costs, and expenses, and left the amount to be awarded blank.
Cingular filed a notice of appeal (No. G045602).
              The court then heard the reserved issue and awarded Faris additional
attorney fees, costs, and expenses as damages. Cingular filed another notice of appeal
(No. G045895). The court then entered its final judgment and Cingular filed its third
appeal (No. G046131).
              We granted the parties’ joint request to consolidate the appeals. Cingular
contends, inter alia, the trial court erred in finding it breached a duty to defend and
indemnify Faris, Faris failed to mitigate his damages, Faris was not entitled to be
indemnified for his time spent in litigation, Duarte’s interest charges were excessive as a
matter of law, and the court was without jurisdiction to award Faris the attorney fees,
costs, and expenses of his second attorney because the court had previously issued its
judgment and Cingular appealed prior to that award. We affirm the judgment except with
regard to the award of $65,743 to Faris for his own time and effort in connection with
the lawsuit and reverse the award. We therefore remand the matter to the trial court to
recalculate the prejudgment interest based on the reversal of the award for Faris’s time
and effort.

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                                             I
                    FACTS AND PROCEDURAL BACKGROUND
              We set forth the facts consistent with the judgment. (Tyler v. Children’s
Home Society (1994) 29 Cal.App.4th 511, 522, fn. 3.)

A. Faris’s Brokerage Business
              Faris worked for a company that brokered the sale of businesses, V.R.
Business Brokers. He started brokering the sale of small businesses for V.R. Business
Brokers and then began brokering businesses on his own. Faris’s company, The Faris
Company, provided the brokerage services. Faris would find companies interested in
selling, and then would look for buyers. He had one client, H.I.G. Group (H.I.G.).
H.I.G. paid Faris a $1,000 a month retainer and was interested in purchasing architectural
and engineering design companies.
              Faris would go to the library and scan reference books looking for potential
businesses to sell. He would then call the businesses and inquire whether the owner was
interested in selling. If H.I.G. bought the business, H.I.G. would pay Faris a finder’s fee
based on the purchase price. Faris ran his company brokering the sale of businesses
while he worked his other job at Bechtel as a regional site acquisition manager. He
continued to run his brokerage business after being hired by Cingular.

B. Faris’s Work at Cingular
              Wanting to return to Southern California, Faris applied to Cingular for a job
as a project manager in January 2002. As a project manager, he would manage the
vendors doing the work: “a build plant for some cell sites.” He had been informed
Cingular was looking to replace an employee who left the company. He interviewed with
Charlie Vranek and Mark Rivera of Cingular, believing he would be an employee if
hired. Vranek was a vice-president at Cingular. Vranek and Rivera told Faris the former

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employee left to work at TCG and they were looking to fill the position with an
independent contractor.
              On January 18, 2002, Cingular offered Faris a position as project manager
in its real estate and network deployment department. Faris reported to Cingular for
work at the beginning of February 2002, and was assigned a cubicle in its office housing
over 100 employees, provided a computer mapped into Cingular’s network, a desk, chair,
and telephone. Cingular also provided Faris with a Cingular identification badge/key
card and Cingular business cards stating Faris was a project manager. The business cards
contained the Cingular address, telephone numbers, fax number, and a Cingular business
e-mail address. Cingular also provided Faris with a cell phone. Faris was not free to
work as and when he pleased; he was required to keep standard office hours. His work
hours were “like everyone else in the office.” He had to request vacation time off and it
had to be approved before he could take time off. If he were going to be late or take a
long lunch, he called his supervisor, Vranek.
              Faris said Cingular was not sure how he was to be paid. Vranek suggested
Faris could be brought in through a company owned by a former Cingular employee,
Sandra Jacobs. Faris informed Vranek that Jacobs’ company did not have health
insurance, something he needed for his family. Varnek suggested Faris could be paid
through another company, Manpower Professional Services, Inc. (Manpower). Faris
filled out an application for Manpower, but does not recall ever meeting with anyone
from Manpower. Manpower hired Faris and assigned him to work for Cingular as a
project manager. Faris never reported to any supervisor at Manpower while working at
Cingular.
              Faris worked with a number of people at Cingular. He supervised people
working in the field. Vranek decided what work Faris would perform and who he would
work with. Vranek’s office was a few yards from Faris’s cubicle and Faris saw Vranek
several times a day. During the first year, as Faris neared completion of the project on

                                             4
which he was working, Vranek asked Faris to work with a new team and review invoices
submitted by TCG, a vendor of Cingular’s. Faris was told there was a “history of issues”
with TCG’s invoices and was asked to review the invoices to see if it “made sense” to
pay them. Faris worked with a new team on the accounting project and reported to
Elizabeth Martinez and Rivera. Martinez, the head of accounting, had overall
responsibility for this project and Rivera had a working relationship with TCG for years.
Faris continued to report to Vranek as well. Faris did not have project manager
responsibilities while working on the audit.
              This was completely different work than the job he had been performing as
project manager, but Faris felt he had no choice because he needed the job. He checked
TCG invoices from as far back as January or February 2001 because the invoices were in
progress or were being questioned by Cingular. Before Faris sent any materials to TCG,
the materials were reviewed by his supervisors. Faris was also asked to review TCG’s
proposal to do additional work for Cingular.
              Another member of the team found duplicate billings after sifting through
thousands of pages of billings. Faris developed a spreadsheet to track the billings.
Because billings had been submitted on the project Faris had supervised, his knowledge
of the project gave him the ability to substantiate whether certain bills were valid.
              TCG representatives came to Cingular once a week during the audit period
and Martinez reviewed the status of the invoices with them. Faris did not attend the
meetings absent a request to attend. Cingular ultimately put a hold on TCG performing
further work for it. In late 2002, Cingular decided it would not renew any contracts with
TCG. Faris had no say in the decision and was not asked whether he felt Cingular should
continue to use TCG as a vendor.
              Vranek also asked Faris to work with Vic Allen from Cingular’s Atlanta
office and provide Allen with information about vendors, those who desired to be
vendors, and those vendors Cingular would be interested in keeping. According to Faris,

                                               5
Cingular wanted to formulate a single database containing its vendors to streamline
contracts.
              Faris continued to run his brokerage business on the side while working at
Cingular. He used his personal fax, e-mail and equipment, not Cingular’s, when he
conducted any brokerage business. While working at Cingular, Faris arranged the sale of
a candy company in Puerto Rico. He also contacted the owner of Delta Group
Engineering (Delta) after finding information on the company at the library. Delta is
located in Irvine and did site acquisition work and construction management. Faris asked
Albert Teng, the owner of the Delta, if Teng was interested in selling. Teng replied that
he was not actively looking to sell, but would be willing to listen to an offer. H.I.G. met
with Teng but no sale was made.
              Faris then took the information about Delta and placed a teaser, containing
minimal information about the company, on the Merger Network on the Internet. If more
information were revealed, a potential buyer could discover the name of the company and
negotiate the sale directly with the company, depriving Faris of a finder’s fee. Darin
Anderson, the owner of Bridge Equity and a former officer of TCG, contacted Faris about
the Delta teaser, but upon learning Delta was located in Southern California, Anderson
withdrew due to a non-compete agreement. Faris did not know Anderson had been at
TCG and did not learn of Anderson while working at Cingular.
              The day after Anderson e-mailed Faris informing him of the non-compete
agreement, Faris received an e-mail from Cingular stating Delta should be added to the
list of companies Cingular would be interested in using as a vendor.
              In March 2003, Faris terminated his working relationship with Cingular
through Manpower. Faris’s company then became a vendor for Cingular. At some point
in time, Faris asked that his company be considered as a site development vendor for
Cingular, a position TCG had held through the end of 2002. Faris’s company received
some work, but that ended when Allen found out about Faris’s brokerage work.

                                             6
C. TCG’s Lawsuit Against Cingular and the Indemnification Agreement
              TCG filed suit against Cingular in February 2003, for Cingular’s alleged
failure to pay for services rendered. Faris’s deposition was taken on two occasions by
TCG’s attorney. Prior to the first deposition, Faris expressed concern about whether he
was protected in the litigation. Al Jimenez, Cingular’s in-house counsel, told Faris
Cingular would provide him with an attorney. Faris prepared for the first deposition with
Attorney Robert Cocchia, an attorney for Cingular. Cocchia told Faris he was Faris’s
“assigned attorney.”
              Faris was asked at the first deposition if he was represented by counsel. He
said he was, and named Cocchia, who was present at the deposition, as his attorney.
Cocchia did not correct Faris and at the conclusion of the day told Faris he had done fine.
Cocchia did not advise Faris of any possible conflict of interest.
              Prior to the second deposition, Faris spoke with Cocchia about having an
agreement in place to protect himself. Faris e-mailed Cocchia a blank indemnity
agreement he had received and asked if it was acceptable. Cocchia responded that he did
not receive the attachment to the e-mail, but that it appeared the agreement was one
Cingular was considering for third party vendors “who were threatened by TCG/Flynn,”
and he would look into the issue. Faris, who did not know what an indemnity agreement
was prior to 2004, wanted one because Sandra Jacobs worked next to him at Cingular and
she was being sued by Flynn, the owner of TCG. Faris was worried he could be next.
              Cingular subsequently provided Faris with an indemnity agreement before
the second deposition. Cingular and Faris entered into the agreement prepared by
Cingular. Paragraph 2 of the indemnification agreement provides: “CINGULAR hereby
agrees to indemnify, defend, and hold FARIS harmless from and against, and in respect
to, any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable attorney fees, that
FARIS may suffer or incur which arise or result from any action or claim brought by The

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Consulting Group, Inc. (aka, ‘TCG’), Michael Flynn, and/or any entity owned or
controlled by Michael Flynn as a result of FARIS’s testimony in The Consulting Group,
Inc. v. Cingular Wireless, LLC, Case No. SACV 03-109 DOC (MLGX).” (Italics added.)
              Also before the second deposition, Cocchia asked Faris if he had a
brokerage business. Faris said he did. Cocchia did not ask any follow-up questions
about it, but told Faris the subject may come up during the second deposition. Cocchia
did not advise Faris how to respond if the subject came up during the deposition.
Cocchia did not express any concern about the matter and did not advise Faris to obtain
independent counsel.
              The second deposition was held on August 3, 2004. Faris was questioned
about the indemnity agreement by TCG’s attorney. TCG’s counsel made a point of the
fact that at the time Cingular terminated Faris’s services, Faris was performing the same
job TCG had previously performed and that Faris reviewed TCG’s invoices to determine
whether they should be rejected. TCG’s attorney asked Faris the name of the company
Faris attempted to have Anderson buy. Faris said it was Delta. Faris denied he actively
solicited Delta as a possible replacement company for TCG.
              TCG and Cingular settled their lawsuit. As part of the November 30, 2004
settlement agreement, and upon full payment of the negotiated consideration, TCG
agreed to “release and discharge Cingular and its managers, officers, directors,
shareholders, employees, independent contractors while acting on behalf of Cingular, . . .
from any claims, demands, causes of action, . . . including losses and liabilities of
whatever kind or nature . . . .”

D. TCG Sues Faris: Faris’s Cross-Complaint
              A month after the signing of the settlement in the TCG/Cingular lawsuit,
TCG sued Faris, Anderson, a former CFO and treasurer of TCG, Charles O’Neal, a
former part owner of TCG, and Brian Bloss. The complaint alleged Faris conspired with

                                              8
Anderson and O’Neal to “take business opportunities developed by TCG with Cingular
and to use them for his own personal gain and to harm TCG’s business relationship with
Cingular.” In furtherance of TCG’s cause of action for intentional interference with
contractual relations, the complaint alleged Faris worked as a business broker while
working for Cingular, serving his own interest, and worked to intentionally damage
TCG’s relationship with Cingular.
              Faris tendered his defense to Cingular and to Manpower. Cingular turned
Faris down, as did Manpower initially. Manpower changed its mind and offered to
defend Faris with a reservation of its right on the issue of indemnification with the added
requirement that its counsel would take over Faris’s defense. Faris rejected Manpower’s
offer to defend because Manpower’s reservation of rights on the issue of indemnification
would place Manpower in an adverse position, which would be exacerbated by the fact
Manpower would be in control of Faris’s defense. Duarte informed Manpower he could
not permit Manpower to control Faris’s defense while reserving its right on the issue of
indemnification
              In April 2005, Faris retained Attorney James M. Duarte to represent him,
with an initial retainer of $1,000. The retainer set forth Duarte’s hourly rate ($350) and
informed Faris he would be responsible for payment of attorney fees as well as costs and
expenses. Faris testified he understood Duarte’s fees would be paid by a third party.
Apparently to that end, a provision in the retainer agreement provided for a contingency
fee agreement in the amount of 50 percent of any gross recovery from any action filed
against any insurer. Almost two years later, Duarte increased his hourly rate to $500.
              Duarte filed a cross-complaint in intervention against Manpower and
Cingular, alleging breach of contract, breach of contract to defend, and seeking
indemnity. He also filed an action against TCG.
              In May 2009, TCG and Faris settled their lawsuit, agreeing judgment would
be entered in favor of Faris. Flynn and TCG agreed to cooperate with Faris in his

                                             9
prosecution of the action against Manpower and Cingular, with the understanding TCG
and Flynn did not warrant that any information they supplied Faris would be beneficial to
his cause of action. In exchange, Faris agreed to pay 15 percent of the gross amount
received from Manpower and Cingular.
             The stipulated judgment stated facts contradicting allegations TCG made in
its three complaints and stated Faris’s actions were in furtherance of his employment for
Cingular. Almost two years later, Manpower settled with Faris, agreeing to pay him
$655,000. TCG was paid $92,500 out of the settlement with Manpower.

E. Trial, Stipulation, Statement of Decision, Judgment, and Appeals
             The cross-complaint against Cingular was tried to the court without a jury.
On July 5, 2011, the court issued its statement of decision. The court found Faris had
been an employee of Cingular, was sued for his conduct in the course and scope of his
employment, and Cingular breached its duty to indemnify Faris under Labor Code
section 2802. The court further found Cingular breached its duty to defend and
indemnify Faris pursuant to its limited liabililty company bylaws and the indemnification
agreement between Faris and Cingular. Additionally, the court found Faris incurred
reimbursable damages and did not fail to mitigate his damages, but that Cingular failed to
mitigate its damages.
             The court awarded Faris just over $1.2 million in attorney fees, costs, and
expenses related to his defense of the TCG lawsuit and $613,555.96 in attorney fees
related to Faris’s efforts to enforce his indemnity rights under Labor Code section 2802.
It further awarded over $65,000 as compensation for time expended by Faris in the
defense of the TCG lawsuit. The award for Faris’s damages based on his time spent
defending the TCG lawsuit was reduced by $25,000, a sum Faris received from the
Manpower settlement.

                                            10
              Finally, the court found fees and costs incurred by Waldron & Bragg, the
law firm that represented Faris at trial against Cingular, were incurred in an effort to
obtain indemnification from Cingular, and accepted the parties’ stipulation that the
amount of the fees, costs, and expenses would be determined in a posttrial proceeding.
              What purported to be a judgment reflected the amounts set forth in the
statement of decision. The amount designated for the costs of suit, the attorney fees,
costs and expenses accrued by Waldron & Bragg were left blank. Cingular filed a notice
of appeal (No. G045602) prior to the hearing on the reserved issues.
              At the hearing on attorney fees, costs, and expenses accrued by Waldron &
Bragg, Cingular argued the court lacked jurisdiction to determine the amounts once it
issued its judgment and a notice of appeal had been filed. Nonetheless, the court awarded
Faris further attorney fees, costs, and expenses. The court found it had erred in awarding
Cingular a $25,000 credit for the Manpower settlement. It found such a credit was
duplicative because the court had also awarded Cingular a $655,000 credit for the
Manpower settlement. Cingular then filed a second notice of appeal (No. G045893)
purporting to be from an order after judgment affecting the substantial rights of the
parties. (See Code Civ. Proc., § 904.1, subd. (a)(1).)
              On November 3, 2011, the court amended and corrected the judgment
reflecting elimination of the $25,000 credit to Cingular, and insertion of the attorney fees,
costs, and expenses accrued by Waldron & Bragg, additional attorney fees accrued by
Duarte in seeking indemnification from Cingular, and interest awarded Faris. Cingular
then filed its third notice of appeal (No. G046131), this one being from the final
judgment. We ordered all three appeals consolidated.

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                                              II
                                       DISCUSSION
A. Indemnity
               1. Labor Code Section 2802
               Labor Code section 2802 requires an employer to “indemnify his or her
employee for all necessary expenditures or losses incurred by the employee in direct
consequence of the discharge of his or her duties, or of his or her obedience to the
directions of the employer, even though unlawful, unless the employee, at the time of
obeying the directions, believed them to be unlawful.” (Lab. Code, § 2802, subd. (a).)
Cingular argues the trial court erred in awarding Faris damages under Labor Code section
2802, contending Faris was sued for conduct outside the course and scope of his
employment with Cingular. According to Cingular, Faris was sued for his side business’s
brokerage activities which were entirely separate from his work at Cingular. We review
for substantial evidence the trial court’s decision finding Faris suffered losses incurred in
direct consequence of his discharge of his duties while working for Cingular. (Markley v.
Beagle (1967) 66 Cal.2d 951, 962.) “‘The gist of the “substantial evidence” rule is: [¶]
“When a trial court’s factual determination is attacked on the ground that there is no
substantial evidence to sustain it, the power of an appellate court begins and ends with the
determination as to whether, on the entire record, there is substantial evidence,
contradicted or uncontradicted, which will support the determination . . . .” [Citations].’”
(Rupf v. Yan (2000) 85 Cal.App.4th 411, 429, fn. 5.)
               TCG’s complaint against O’Neal, Anderson, Brian Bloss, and Faris alleged
a number of causes of action. Faris was not named in every cause of action. In those
causes of action naming Faris as a defendant, including intentional interference with
contractual relations, intentional interference with prospective advantage, and conspiracy,
the complaint alleged Faris was an independent contractor with Cingular at all relevant
times, he operated his brokerage business while working for Cingular, and during that

                                             12
time “he wrongfully alleged to Cingular headquarters that TCG was too expensive and
submitted fraudulent billings, all the while promoting Delta Engineering, a TCG
competitor . . . .” TCG further alleged Faris’s actions were performed in furtherance of
his brokerage business, not in his capacity as a Cingular contractor or representative.
According to the complaint, Faris’s communications to Cingular caused TCG to lose
future opportunities. We note it would seem TCG thought it necessary to characterize
Faris’s conduct as arising from his brokerage business given that under the settlement
between TCG and Cingular, TCG agreed to “release and discharge Cingular and its
managers, officers, directors, shareholders, employees, independent contractors while
acting on behalf of Cingular . . . from any claims, demands, causes of action, . . .
including losses and liabilities of whatever kind or nature . . . .” (Italics added.)
              Substantial evidence supports the trial court finding “Faris was required to
defend himself against the allegations raised by TCG because of acts that Faris performed
within the course and scope of his employment with Cingular, i.e., the audit of TCG’s
invoices, the analysis of TCG’s proposed new contract, and the interaction with Michael
Flynn, all of which Cingular expressly tasked Faris to do.” As the trial court found, Faris
was assigned the job of reviewing TCG’s invoices. All of Faris’s contact with TCG and
Flynn occurred because he worked as a project manager for Cingular and was assigned to
the audit. Although the complaint alleged Faris was acting as a broker and for his own
benefit, the act TCG deemed actionable was Faris’s representation to Cingular that TCG
was too expensive and had submitted fraudulent billings. Additionally, “[t]he allegations
of the complaint are not determinative of whether the employee is deemed to be in the
scope of his or her employment.” (Nicholas Laboratories, LLC v. Chen (2011) 199
Cal.App.4th 1240, 1248, fn.2.)
              Whatever Faris’s intent in providing Cingular the information it requested,
his representations were made in the course and scope of his work for Cingular. Cingular
assigned him to the audit. It sought his input on TCG’s billings as part of his

                                              13
employment. Faris gave Cingular what it wanted — his input on TCG’s billings — and
was sued because of it. This substantial evidence supports the trial court’s finding.
              TCG and Flynn settled their lawsuit against Faris, agreeing judgment would
be entered in Faris’s favor. The judgment stated that after making the allegations alleged
in the latest amended complaint, additional allegations arose, including the fact that
Cingular assigned Faris to an audit of TCG’s billings to Cingular, Cingular instructed
Faris to review TCG’s proposed new contract, to advise Cingular, and Faris had contact
with TCG and Flynn in Faris’s employment by Cingular as a project manager. The
stipulated judgment further provides: “Most of the acts alleged by TCG against Faris are
acts that he allegedly undertook or committed between February and October 2002, while
acting within the course and scope of his employment for Cingular. TCG acknowledges
that one of the reasons that Faris was named as a Defendant in this action was Faris’s
testimony in the TCG v. Cingular action.” Finally TCG acknowledged it uncovered
evidence during the action which led it to conclude Faris was acting in the scope and
course of his employment at all time relevant to the action.
              Cingular contends the stipulated judgment between TCG and Faris was the
result of collusion and should not have been admitted into evidence. The trial court
rejected the same argument and admitted the stipulated judgment into evidence, finding
the stipulated judgment was “reasonable and valid, and should be given its full
evidentiary effect.” A trial court has wide discretion in admitting evidence and we will
not disturb its ruling on appeal absent a clear abuse of discretion. (People v. Johnson
(1974) 39 Cal.App.3d 749, 762.)
              In an analogous situation, when an insured is sued and the insurance
company rejects the tender of the defense, the insured is “free to negotiate the best
possible settlement consistent with his or her interests, including a stipulated judgment
accompanied by a covenant not to execute. Such a settlement will raise an evidentiary
presumption in favor of the insured (or the insured’s assignee) with respect to the

                                             14
existence and amount of the insured’s liability. The effect of such presumption is to shift
the burden of proof to the insurer to prove that the settlement was unreasonable or the
product of fraud or collusion. If the insurer is unable to meet that burden of proof then
the stipulated judgment will be binding on the insurer and the policy provision
proscribing a direct action against an insurer except upon a judgment against the insured
after an ‘actual trial’ will not bar enforcement of the judgment.” (Pruyn v. Agricultural
Ins. Co. (1995) 36 Cal.App.4th 500, 509.)
              Cingular has not demonstrated an abuse of discretion. Although Cingular
alleged the stipulated judgment between TCG and Faris was the result of collusion, as the
trial court recognized, there was no proof in support of the allegation. Although Cingular
contends the stipulated judgment was “collusive as a matter of law,” it did not set forth
any facts precluding a determination the stipulated judgment was reached in good faith.
Again, although TCG’s complaints alleged Faris was acting outside the scope and course
of his employment with Cingular, it was Faris’s act of providing Cingular with his
analysis of TCG’s billings — the very task Faris was charged with performing by
Cingular — that TCG deemed actionable. Faris was irrefutably acting within the scope
and course of his employment with Cingular when he gave Cingular his analysis of the
material he was tasked with reviewing.
              Cingular’s reliance on Peter Culley & Associates v. Superior Court (1992)
10 Cal.App.4th 1484, is misplaced. The present matter does not fit within Culley’s
unique facts and there is no evidence the stipulated judgment between TCG and Faris was
reached through collusion. TCG and Faris did not stipulate to a large settlement in
TCG’s favor, a settlement Cingular would have to pay to TCG if Faris established
Cingular was obligated to indemnify him. Instead, judgment was found in Faris’s favor.
The trial court did not err in considering the stipulated judgment.
              Neither did the court use a strict liability test in finding Faris was sued for
work performed in the scope and course of his employment with Cingular. “‘In

                                             15
determining whether for purposes of indemnification an employee’s acts were performed
within the course and scope of employment, the courts have looked to the doctrine of
respondeat superior. [Citations.] [¶] Under that doctrine, an employer is vicariously
liable for risks broadly incidental to the enterprise undertaken by the employer—that is,
for an employee’s conduct that, in the context of the employer’s enterprise, is “not so
unusual or startling that it would seem unfair to include the loss resulting from it among
other costs of the employer’s business. [Citations.]” [Citations.]’ [Citations.] An
employee’s conduct may fall within the scope of his or her employment ‘even though the
act does not benefit the employer, even though the act is willful or malicious, and even
though the act may violate the employer’s direct orders or policies.’ [Citation.]”
(Cassady v. Morgan, Lewis & Bockius LLP (2006) 145 Cal.App.4th 220, 231.)
              Although Faris’s brokerage business was not for Cingular’s benefit and the
TCG’s complaints alleged Faris was acting out of his own self-interest, the conduct that
allegedly damaged TCG occurred when Faris gave Cingular his analysis of TCG’s
billings, the task Cingular had Faris perform for its benefit. Based on the record before
us the trial court did not err in concluding Faris did not deviate from his employment
duty, much less substantially deviate from that duty, in providing Cingular with his
analysis of TCG’s billings. (Farmers Ins. Group v. County of Santa Clara (1995) 11
Cal.4th 992, 1004-1005.)

              2. The Indemnity Agreement
              Prior to TCG taking Faris’s deposition a second time, Faris requested and
obtained an indemnity agreement from Cingular. Pursuant to the agreement, Cingular
agreed “to indemnify, defend, and hold FARIS harmless from and against, and in respect
to, any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable attorney fees, that
FARIS may suffer or incur which arise or result from any action or claim brought by The

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Consulting Group, Inc. (aka, ‘TCG’) . . . as a result of FARIS’s testimony in The
Consulting Group, Inc. v. Cingular Wireless, LLC, Case No. SACV 03-109 DOC
(MLGX).” (Italics added.) “Where, as here, the parties have expressly contracted with
respect to the duty to indemnify, the extent of that duty must be determined from the
contract and not by reliance on the independent doctrine of equitable indemnity.
[Citation.]” (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628.)
              Cingular agreed to defend Faris in any lawsuit brought by TCG or Flynn as
a result of Faris’s testimony in TCG’s lawsuit against Cingular. According to Cingular, it
was only required to indemnify Faris for a lawsuit brought by TCG or Flynn based on
Faris’s “act of providing ‘testimony.’” We do not accept Cingular’s stilted interpretation
of the agreement. Faris approached Cingular to obtain protection from a possible lawsuit
by TCG or Flynn prior to testifying a second time in a deposition. There is no reason to
believe Cingular’s response was to offer to defend Faris only against a lawsuit based on
protected activity, i.e., the mere act of testifying. (See Civ. Code, § 47, subds. (a), (b).)
Faris sought real protection from Cingular. He did not intend Cingular would defend him
only if TCG were to sue him on a ground that could not survive a demurrer.
              The agreement was to defend and indemnify Faris in any lawsuit by TCG
or Flynn resulting from Faris’s testimony. TCG discovered during Faris’s testimony that
he had attempted to broker the sale of Delta. TCG then used this information to create a
cause of action against Faris it would not otherwise have had. In such a case, the
resulting lawsuit may be fairly said to have resulted from Faris’s testimony. Having
found Cingular was required to defend and indemnify Faris for his necessary
expenditures and losses incurred in the discharge of his duties to Cingular (Lab. Code, §
2802, subd. (a)) and Cingular was obligated to defend and indemnify Faris pursuant to
their indemnity agreement, there is no need to determine whether Cingular also had the
duty to defend or indemnify Faris under its limited liability company bylaws.

                                              17
B. Mitigation of Damages
                Faris tendered his defense to Cingular and to Manpower. Cingular turned
Faris down, as did Manpower initially. Manpower then stated its intent to defend Faris
with a reservation of its right on the issue of indemnification and to retain its own counsel
to take over Faris’s defense. Faris cited Labor Code section 2802, its indemnification
requirement, and refused Manpower’s offer, keeping his retained counsel to defend the
TCG lawsuit. Cingular now maintains Faris was obligated to accept Manpower’s offer
due to his duty to mitigate damages and as a result, the judgment should be reduced to
$20,480, the amount Faris owed his attorney, Duarte at the time Manpower offered to
defend Faris.
                Notwithstanding the fact that Faris obtained a $655,000 judgment on his
cross-complaint against Manpower, which may itself speak to the merits of Cingular’s
mitigation argument, Manpower’s acceptance of the duty to defend was conditional in
two respects. First, Manpower reserved its right to contest indemnity and to withdraw
from the defense. Second, it required Faris to turn control of the defense in the TCG
lawsuit to Manpower’s attorney. Faris was not, however, required to turn the defense
over to Manpower. Civil Code section 2778, subdivision 4 provides: “The person
indemnifying is bound, on request of the person indemnified, to defend actions or
proceedings brought against the latter in respect to the matters embraced by the
indemnity, but the person indemnified has the right to conduct such defense, if he so
chooses[.]” (Italics added.) Because Faris had the right to conduct his defense in the
TCG lawsuit filed against him (Civ. Code, § 2778, subd. 4) and wanted his attorney to
conduct his defense, he was not required to accept Manpower’s offer to defend on the
condition its attorney would conduct any defense. Accordingly, we deny Cingular’s
request to reduce the judgment to $20,480.

                                             18
C. Compensation for Faris’s Time Expended on the Litigation
              The trial court awarded Faris $65,743 for his time and effort spent in
litigating this matter. The court found Faris’s time to have been a reasonable, necessary
expense and properly compensated pursuant to Labor Code section 2802. The court
calculated this amount by multiplying the 438 hours Faris purportedly devoted to the
defense of the lawsuit by TCG and in attempting to obtain indemnification by Faris’s
“customary” billing rate of $150. Cingular argues that just as those individuals who
represent themselves are not entitled to attorney fees, Faris is not entitled to be
compensated for his time in connection with the lawsuit.
              Cingular contends there are three fatal problems with the court’s conclusion
Faris should be compensated for his time in litigating this matter. First, a party is not
entitled to compensation for time devoted to litigation. Second, Faris did not testify to
putting in 438 hours in litigating this matter. Rather, he testified he prepared exhibit 41
so he could be “compensated for something” and that the exhibit reflects the time he
spent reviewing “documents and so forth.” The exhibit, however, was not admitted into
evidence. Third, there is no evidence $150 was Faris’s customary billing rate. His rate
working for Cingular was, at its highest, $120 an hour.
              “The ‘costs’ of a civil action consist of the expenses of litigation, usually
excluding attorney fees. Under the common law rule, parties to litigation must bear their
own costs. The right to recover any of such costs is determined entirely by statute. ‘It is
axiomatic that the right to recover costs is purely statutory, and, in the absence of an
authorizing statute, no costs can be recovered by either party.’ [Citations.]” (Davis v.
KGO-T.V., Inc. (1998) 17 Cal.4th 436, 439.) Labor Code section 2802 requires an
employer to “indemnify his or her employee for all necessary expenditures or losses
incurred by the employee in direct consequence of the discharge of his or her duties.”
(Lab. Code, § 2802, subd. (a).) Included within the phrase necessary expenditures or
losses are “all reasonable costs, including, but not limited to, attorney’s fees incurred by

                                              19
the employee enforcing the rights granted by this section.” (Lab Code, § 2802, subd. (c).)
              “Our primary task in interpreting [Labor Code section 2802] is to ascertain
the Legislature’s intent and to adopt an interpretation that best gives effect to that intent.
[Citation.] We examine the entire substance of a statute and the scheme of law of which
it is a part to determine its scope and purpose, construe its words in context and
harmonize its various parts. [Citation.] We begin by examining the statutory language
because that is the most reliable indicator of legislative intent. [Citation.]” (Thornton v.
California Unemployment Ins. Appeals Bd. (2012) 204 Cal.App.4th 1403, 1413.)
              Section 2802 makes no mention of compensating a party for his or her time
devoted to litigating the indemnity matter. There is nothing in the language of section
2802, indicating the Legislature intended “necessary expenditures and losses” to include
time the employee spends advising his or her attorney or otherwise taking part in the
litigation. We will not read what would amount to a unique exception, and a drastic
change in the law, into the statute absent some indication the Legislature intended such
result.
              Traditionally the time and effort a party spends litigating a matter is not
compensated as costs or attorney fees. A case in point is Trope v. Katz (1995) 11 Cal.4th
274. There the issue was whether an attorney who was a prevailing party on a contract
action could be awarded attorney fees to compensate him for the time he devoted to the
lawsuit acting in persona propria. (Id. at pp. 279-280.) Civil Code section 1717
authorizes the court to award attorney fees on a contract action when the contract permits
awarding the prevailing party attorney fees. (Id. at p. 280.) The court held an attorney
who represents himself in a lawsuit cannot be said to “incur” or become liable for
services he himself provided, a prerequisite an award of attorney fees. (Ibid.)
              Although the present issue is one of costs, not attorney fees, Trope v. Katz,
supra, 11 Cal.4th 274 is still relevant to the issue presented. In denying the in propria
persona party/attorney attorney fees, the court observed nonattorney litigants are not

                                              20
entitled to reimbursement for their time spent in litigating a case. “The time that a doctor,
for example, spends litigating a case on his own behalf also has value, both to the doctor
himself and to society generally, for that time could otherwise be spent treating the sick
or pursuing medical research for the benefit of all; an architect’s time could otherwise be
spent designing or building houses; a painter’s time could be spent creating works of art
for future generations to enjoy. However, it is clear that when it enacted [Civil Code]
section 1717 the Legislature did not intend to allow doctors, architects, painters, or any
other nonattorneys to receive compensation for the valuable time they spend litigating a
contract matter on their own behalf.” (Trope v. Katz, supra, 11 Cal.4th at p. 285.)
              The Legislature was aware of the Supreme Court’s observations in Trope v.
Katz, supra, 11 Cal.4th 274 when it enacted subdivision (c) of Labor Code section 2802
in 2000. (In re W.B. (2012) 55 Cal.4th 30, 57 [“the Legislature is presumed to know
about existing case law when it enacts or amends a statute”]; see Stats. 2000, ch. 990, §
1.) There is nothing in the language “the term ‘necessary expenditures or losses’ shall
include all reasonable costs, including, but not limited to, attorney’s fees incurred by the
employee enforcing the rights granted by this section” (Lab. Code, § 2802, subd. (c)) to
lead us to believe the Legislature decided to make an abrupt change in the law and for the
first time to compensate a party for the time he or she spent litigating. “[A] court is
without the power to saddle on the vanquished party in such cases costs which are not
thus strictly authorized.” (Naylor v. Adams (1911) 15 Cal.App. 353, 356.)
              Unlike attorney fees, where each party ordinarily is responsible for paying
his or her own attorney’s fees (Trope v. Katz, supra, 11 Cal.4th at p. 278), the Legislature
has generally provided prevailing parties be awarded their costs as set forth in the Code
of Civil Procedure. (See Code Civ. Proc., § 1021.) Indeed, section 1033.5 of the Code of
Civil procedure sets forth a laundry list of items that may be compensated as costs.
Although Code of Civil Procedure section 1033.5 states the items listed in subdivision (a)
of that section are deemed costs for purposes of section 1032 of the same code, it is

                                             21
useful in this instance as it provides a list of items the Legislature has classified as
compensable costs in at least one context. The time a party devotes to pursuing the
litigation is not included in this list. When the Legislature has enacted a statute expressly
listing those items that may be considered costs and a list of items that cannot be
considered costs absent an express provision of law, it is reasonable to assume that when
and if the Legislature intends to expand the items that may be considered costs, it would
do so expressly, rather than merely stating necessary expenditures or losses are “all
reasonable costs, including, but not limited to, attorney’s fees incurred by the employee
enforcing the rights granted by this section.” (Lab. Code, § 2802, subd. (c).)
              We conclude Labor Code section 2802 does not authorize a trial court to
award as costs, compensation to a party for the time the party spent in litigation.
Accordingly, we find the trial court erred in awarding Faris $65,743 as costs for his time
attending to the present litigation.

D. Pretrial Interest
              The court awarded Faris $613, 555.96 in damages under Labor Code
section 2802 for enforcing his indemnity rights, $325,818.42 in attorney fees accrued by
Waldron & Bragg, additional attorney fees for Duarte in the amount of $57,154.24, and
$8,493.25 in prejudgment interest. Subdivision (b) of Labor Code section 2802 requires
all orders for reimbursement of necessary expenditures “carry interest at the same rate as
judgments in civil actions. Interest shall accrue from the date on which the employee
incurred the necessary expenditure or loss.” The statutory interest rate is “10 percent per
annum on the principal amount of a money judgment remaining unsatisfied.” (Code
Civil Proc., § 685.010, subd. (a).)
              Cingular urges us to reduce the award of Duarte’s attorney fees because
Faris’s retainer agreement with Duarte purported to set the interest at one percent a
month. We presume the trial court’s judgment is correct, we also indulge in all

                                              22
intendments and presumptions in favor of correctness, and Cingular has the burden of
providing an adequate record affirmatively proving error. (Fladeboe v. American Isuzu
Motors Inc. (2007) 150 Cal.App.4th 42, 58.) Cingular has not carried its burden here.
The only references in the section of Cingular’s opening brief dealing with the issue of
interest, are to the retainer agreement between Attorney Duarte and Faris, wherein the
interest amount is set at one percent a month, and Duarte’s billing record admitted into
evidence below. According to Duarte’s billing, he accrued $2,430,636.60 in attorney
fees and interest. The court, however, awarded Faris substantially less. Based on
Cingular’s limited citations to the record in connection with this issue, we cannot find the
court committed legal error in its award.
              As a practical matter, the trial court will have to reconsider its award of
interest given we have found Faris was not entitled to reimbursement for his time and
effort put into this litigation. Any interest awarded Faris based on his award of $65,743
will need to be omitted on remand.

E. Jurisdictional Issues
              At trial, the parties stipulated the court could determine the attorney fees,
costs, and expenses accrued by Waldron & Bragg in posttrial proceedings. However,
prior to the court issuing its original judgment in this matter and the court determining
Waldron & Bragg’s fees, costs, and expenses, Cingular argued the court should
determine the issue before it issues a judgment because it would not have jurisdiction to
do so thereafter. Cingular maintains the trial court was without jurisdiction to determine
and award Faris attorney fees, costs, and expenses accrued by Waldron & Bragg once the
court issued its original judgment and Cingular filed its notice of appeal. We note that
while a court retains jurisdiction to award costs, including attorney fees, after issuance of
a judgment (Code Civ. Proc., § 1032; Cal. Rules of Court, rule 3.1700(a)), the award in
this case was not pursuant to Code of Civil Procedure section 1032. The award was

                                             23
made as part of Faris’s damages under Labor Code section 2802, subdivision (c). “For
purposes of this section, the term ‘necessary expenditures or losses’ shall include all
reasonable costs, including, but not limited to, attorney’s fees incurred by the employee
enforcing the rights granted by this section.” (Lab. Code, § 2802, subd. (c).)
              In issuing its original judgment, the court expressly stated it “retains
“jurisdiction over this case to address and resolve as a part of this proceeding the issues
relating to the appropriate amount of additional attorneys’ fees, costs, and expenses to be
awarded [Faris], and award such fees, costs, and expenses in the amount of           .” The
court also left blank the amount of “costs of suit” to be awarded Faris.
              Rather than finding the trial court lacked jurisdiction to make these awards
based on a conclusion there is but one final judgment and the filing of a notice of appeal
deprived the court of jurisdiction to alter the judgment, we find the initial judgment was
not a final judgment. “A judgment is the final determination of the rights of the parties in
an action or proceeding.” (Code Civ. Proc., § 577.) The terms contained in the initial
judgment reserving jurisdiction to award costs and further attorney fees as damages
demonstrates the court did not view the purported judgment as a final determination of
the rights of the parties; issues remained to be decided.
              “There is only one final judgment, the last or ultimate judgment that
determines the rights of the parties.” (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment,
§ 7, p. 551.) In this case, the final judgment was entered on November 3, 2011, after the
trial court resolved all the issues, including Waldron & Bragg’s fees, costs, and expenses.
Cingular’s appeal from the first purported judgment did not deny the trial court
jurisdiction to resolve the remaining issues because the appeal was premature. The
appeal in No. G045602 taken from the initial judgment is thus dismissed.
              The appeal in No. G045895 is dismissed as well. It purports to be taken
from an order after judgment affecting the substantial rights of the parties (Code Civ.
Proc., § 904.1, subd. (a)(2)), but as the initial judgment was not a final judgment, the

                                             24
order setting the amount of attorney fees, expenses, and costs accrued by Waldron &
Bragg as damages was not an order after an appealable judgment. We have addressed the
issues raised herein because Cingular’s notice of appeal from the subsequent final
judgment (No. G046131) was timely.
                                             III
                                       DISPOSITION
              The appeals in Nos. G045602 and G045895 are dismissed. In appeal No.
G046131, the judgment provision awarding Faris $65,743 for his time and energy in
litigating the underlying matter is reversed. The matter is remanded to the superior court
to recalculate the prejudgment interest award to the extent the award reflects
consideration of the $65,743 award we reversed. In all other respects the judgment is
affirmed. Faris is entitled to his costs on appeal.

                                                   MOORE, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

IKOLA, J.

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