Court Opinion

ID: 4269657
Source: CourtListenerOpinion
Date Created: 2018-04-24 20:00:31.484058+00
Date Added: 2024-06-11T14:31:39.279667
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            APR 24 2018
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

JOSHUA SALAZAR, an individual,                   No.     16-56817

              Plaintiff-Appellant,               D.C. No. 5:16-cv-00641-R-KK

 v.
                                                 MEMORANDUM*
GERARD DANIEL WORLDWIDE, INC.;
et al.,

              Defendants-Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                     Manuel L. Real, District Judge, Presiding

                             Submitted April 9, 2018**
                               Pasadena, California

Before: BOGGS,*** BYBEE, and WATFORD, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
            The Honorable Danny J. Boggs, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
                                                                            Page 2 of 4
      1. The district court erred in granting summary judgment for Gerard Daniel

Worldwide, Inc. (GDW) on Joshua Salazar’s claim that the company breached his

employment contract with respect to the application of the prime interest rate in

determining Salazar’s quarterly incentive payment. As to all other issues related to

Salazar’s breach-of-contract claim, the district court properly granted summary

judgment.

      The Employment Agreement provides that the “interest charge . . . will be

based on the Employer’s investment in the Business Unit’s working capital and

equipment times the prime interest rate in effect at the end of each quarter.” The

parties agree that the applicable prime interest rate at all relevant times was 3.25

percent, but disagree as to how that interest charge should have been assessed. In

his opposition to summary judgment, Salazar argued that “the yearly interest rate

on a quarterly basis”—i.e., 0.8125 percent—should have been used, whereas GDW

argued that the rate of 3.25 percent should have been assessed each quarter.

Because the district court did not address this issue in its summary judgment order,

we vacate and remand for the district court, in the first instance, to determine the

proper amount of interest to be charged in accordance with the Agreement.

      Apart from the interest charge, the district court properly granted summary

judgment on Salazar’s breach-of-contract claim. Salazar argues that GDW
                                                                              Page 3 of 4
wrongly included expenses in calculating his business unit’s operating income, but

the terms of the Agreement make clear that such expenses were properly included.

The Agreement defines “operating income” as the unit’s “sales less its Direct

manufacturing costs of goods sold, its Direct operating expenses and an imputed

interest charge.” The definition of “Direct,” in turn, includes “costs and expenses

directly related to” the unit’s operations, but excludes “general corporate

overhead.” Costs and expenses associated with inventory, taxes, repairs,

employees, advertising, and the like, were all specifically attributable to Salazar’s

unit and, thus, properly counted in calculating the unit’s operating income.

      Rent expense was likewise properly included when deriving the unit’s

operating income. Per the Agreement, GDW had an obligation to provide

Salazar’s unit with housing at its Fontana facility or another similar facility. That

obligation, however, does not foreclose GDW from counting rent expense as a

direct expense of the unit and therefore including it in the operating income

formula. The rent expense was therefore properly deducted from the unit’s sales

amount.

      Salazar also argues that GDW breached the Agreement when it “marked up

the cost for its wire cloth or . . . wire mesh,” but he fails to provide any evidence in
                                                                               Page 4 of 4
support of this claim. The district court therefore properly determined that Salazar

could not maintain his breach-of-contract claim as to this issue.

      2. The district court properly granted summary judgment for GDW on

Salazar’s claim for breach of the implied covenant of good faith and fair dealing.

Because this “implied covenant claim seeks simply to invoke terms to which the

parties did agree, it is superfluous.” Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089, 1112

(Cal. 2000). To the extent Salazar argues that GDW’s alleged breach constitutes a

tort, this claim fails because “there is no tort of ‘bad faith breach’ of an

employment contract.” Id.

      3. The district court properly granted summary judgment for GDW on

Salazar’s intentional and negligent misrepresentation claims. Both of these claims

require that the plaintiff allege a misrepresentation. See Chapman v. Skype Inc.,

220 Cal. App. 4th 217, 230–31 (2013). Salazar failed to do so. In fact, Salazar

testified at his deposition that neither of the GDW employees with whom he spoke

during the process of selling his company made any false statements.

      AFFIRMED in part, VACATED in part, and REMANDED.

      The parties shall bear their own costs on appeal.