Court Opinion

ID: 4880369
Source: CourtListenerOpinion
Date Created: 2021-08-31 17:06:11.07415+00
Date Added: 2024-06-11T08:02:17.167437
License: Public Domain

Filed 8/31/21
                  CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                           DIVISION SIX

 SUBIONO WASITO et al.,                 2d Civil No. B308826
                                    (Super. Ct. No. 18CV03322)
      Plaintiffs and Respondents,     (Santa Barbara County)

 v.

 ADI KAZALI et al.,

      Defendants and Appellants;

 BRENDAN MALONEY,

   Third Party Claimant and
 Respondent.

            Adi Kazali, Santy Kazali, and Harry Kazali (Kazalis)
appeal from two postjudgment orders awarding costs to Subiono
Wasito and Enny Soenjoto and attorney fees to their attorney,
Brendan Maloney. The Kazalis contend the trial court erred
when it found the cost-shifting provision of Code of Civil
Procedure1 section 998 did not apply to their pretrial section 998

        Further unspecified statutory references are to the Code
        1

of Civil Procedure.
offer. Here we hold that Labor Code sections 206 and 206.5
preclude a section 998 offer that resolves disputed wage claims if
there are undisputed wages due at the time of the offer. We
affirm.
           FACTUAL AND PROCEDURAL HISTORY
             For more than 28 years, Wasito and Soenjoto were
employed as resident managers of a motel owned by the Kazalis.
They were each paid biweekly salaries and annual bonuses. In
2017, the Kazalis decided to close the motel for renovations.
Wasito and Soenjoto were told that their employment would be
terminated. When Wasito and Soenjoto demanded their unpaid
wages, the Kazalis paid their biweekly salaries, but not the 2017
bonuses, despite conceding that they were owed.
             Wasito and Soenjoto filed a complaint against the
Kazalis seeking unpaid wages including the 2017 bonuses. The
complaint alleged, among other things, that the Kazalis refused
to pay the “bonuses in retaliation for [Wasito and Soenjoto’s]
earlier demand for unpaid wages.”
             The Kazalis made a section 998 offer to pay $300,000
in “settlement of all claims, damages, causes of action, costs,
expenses, attorneys’ fees, interest, and any other damages
claimed by [Wasito and Soenjoto] in this action up to the date of
this offer.” It stated: “If the Offer is accepted, the Offer with
proof of acceptance shall be filed with the Court for judgment
accordingly.” The offer was set to expire 30 days later.
             After the section 998 offer expired, the Kazalis sent
Wasito and Soenjoto checks in the amount of $75,876.90 for the
2017 bonuses including interest and penalties. Wasito and
Soenjoto accepted the checks.

                                2
             The case proceeded to trial, and the jury found in
favor of Wasito and Soenjoto. The jury found the Kazalis owed
them unpaid wages, which totaled $30.86 plus interest to each of
them after the trial court adjusted the jury award based on
posttrial pleadings. The jury also found that the Kazalis did not
pay bonuses when due, and that Wasito and Soenjoto’s complaint
for unpaid wages “was a substantial motivating reason for [the
Kazalis’] refusal to pay.” The jury found the Kazalis owed
waiting time penalties in the amount of $1.80 each after
adjustment of the jury award. The jury also found the Kazalis
failed to provide Wasito and Soenjoto with accurate itemized
wage statements and awarded them $1,100 each.
             Both parties filed a memorandum of costs and moved
to tax costs. The Kazalis argued they were entitled to postoffer
costs pursuant to section 998 because Wasito and Soenjoto failed
to obtain a better result at trial.
             The court found the cost-shifting provisions of 998
“violated Labor Code [section] 206.5 by withholding undisputed
compensation while attempting to settle all claims. Therefore,
CCP § 998 does not preclude any costs.” The court granted
Wasito and Soenjoto’s motion to tax the Kazalis’ memorandum of
costs.
             Wasito and Soenjoto moved for attorney fees
pursuant to Labor Code section 218.5. The court granted the
motion in part and awarded $66,700 in attorney fees.2 In so

      2After the notices of appeal were filed in this case, the trial
court amended the order for attorney fees to make it directly
payable to Maloney. Maloney is a respondent and third-party
claimant in this appeal.

                                  3
ruling, the court found that Wasito and Soenjoto were the
“prevailing party” (Lab. Code, § 218.5) because they “were paid
substantially more than . . . after filing the case” and there was
“no indication that [the Kazalis] would have paid those additional
sums without the complaint being filed and served in this case.”
                            DISCUSSION
              The Kazalis contend the trial court erred when it
determined the section 998 offer violated Labor Code sections 206
and 206.5. We disagree.
              Pursuant to section 998, a party may make an offer
to resolve a dispute no less than 10 days before trial commences.
(§ 998, subd. (b).) “If an offer made by a defendant is not
accepted and the plaintiff fails to obtain a more favorable
judgment or award, the plaintiff shall not recover his or her
postoffer costs and shall pay the defendant’s costs from the time
of the offer.” (Id. at subd. (c).)
              The cost-shifting provision of section 998 will not
apply if the offer is invalid. (See McKenzie v. Ford Motor Co.
(2015) 238 Cal.App.4th 695, 706 [section 998 offer conditioned
upon release of all known and unknown claims and release of
claims that had not yet accrued was invalid].) Where, as here,
the parties dispute the validity of a section 998 offer and the
relevant facts are undisputed, the issue is a legal question that
we review de novo. (Barella v. Exchange Bank (2000) 84
Cal.App.4th 793, 797.)
              Respondents contend the section 998 offer violated
sections 206 and 206.5 of the Labor Code. They are correct.
Labor Code section 206 provides that in “case of a dispute over
wages, the employer shall pay, without condition . . . all wages, or
parts thereof, conceded by [the employer] to be due, leaving to the

                                 4
employee all remedies [the employee] might otherwise be entitled
to as to any balance claimed.” Labor Code section 206.5 provides
that an “employer shall not require the execution of a release of a
claim or right on account of wages due, or to become due, or made
as an advance on wages to be earned, unless payment of those
wages has been made. A release required or executed in violation
of the provisions of this section shall be null and void as between
the employer and the employee.” (Emphasis added.)
             “Wages are considered ‘due’ within the meaning of
section 206 . . . when the employer concedes they are due . . . .
Reading this provision in conjunction with section 206.5, the
Labor Code requires payment by the employer of all wages
considered ‘due’ within the meaning of section 206 before a
release may be obtained from an employee in a wage and hour
dispute.” (Shine v. Williams-Sonoma, Inc. (2018) 23 Cal.App.5th
1070, 1077-1078.)
             In Reid v. Overland Machined Products (1961) 55
Cal.2d 203, 206 (Reid), an employee brought a wage claim
against his employer seeking an accounting for wages earned
under his employment contract. The employer sent a check to
the employee for wages it conceded it owed with an endorsement
that the payment was “‘payment in full for all commissions due’
under the contract.” (Id. at p. 206.) Our Supreme Court held
that “no accord and satisfaction could result” from the retention
of the check. (Id. at p. 208.) The court noted that Labor Code
section 206 required an employer to pay without condition the
amount conceded to be due and leave to the employee all
available remedies for the balance. (Reid, at p. 207.) This is so
because “the employer may not withhold wages concededly due to
coerce settlement of the disputed balance.” (Ibid.) “An employer

                                5
and employee may of course compromise a bona fide dispute over
wages but such a compromise is binding only if it is made after
the wages concededly due have been unconditionally paid.”
(Ibid.)
              Here, the Kazalis conceded they owed the 2017
bonuses to Wasito and Soenjoto. They were therefore required to
pay the bonuses before seeking a settlement of the wage claims.
However, they did not do so. Instead they made a section 998
offer, which attempted to settle “all claims, damages, causes of
action, costs, expenses, attorneys’ fees, interest, and any other
damages claimed by [Wasito and Soenjoto] in this action.”
Because they made the section 998 offer before paying the
conceded bonuses, the offer was invalid. (Reid, supra, 55 Cal.2d
at p. 207.) Accordingly, the cost-shifting provision of section 998,
subdivision (c), did not apply.
              The Kazalis argue that Labor Code section 206.5 does
not invalidate the section 998 offer, arguing that they never
required a release in exchange for payment of the bonuses. This
claim lacks merit. The terms of the section 998 offer sought to
settle “all claims, damages, causes of action,” which included
Wasito and Soenjoto’s claims regarding payment of the 2017
bonuses. If the offer was accepted, the acceptance “shall be filed
with the Court for judgment accordingly.”
              As the trial court correctly observed, had the Kazalis
“paid the undisputed commissions before making the CCP § 998
offer or if [they] had made a new CCP § 998 offer after paying the
undisputed commissions, the court would take a different view.”

                                 6
But because the Kazalis did not do so, the section 998 offer was
invalid.3
                        DISPOSITION
            The judgment is affirmed. Respondents shall recover
costs on appeal.
            CERTIFIED FOR PUBLICATION.

                                   TANGEMAN, J.

We concur:

             GILBERT, P. J.

             PERREN, J.

     3 Because we conclude the section 998 offer violated Labor
Code sections 206 and 206.5, we need not decide respondents’
remaining contentions.

                               7
                   Pauline Maxwell, Judge

           Superior Court County of Santa Barbara

               ______________________________

           Edward Lowenschuss for Defendants and Appellants.
           Brendan Patrick Maloney for Plaintiffs and
Respondents.
           Brendan Patrick Maloney, in pro. per., for Third
Party Claimant and Respondent.