SAUNDERS, Judge.
This is a case where two employees filed an unpaid wage claim against their employer under La.R.S. 23:631 and La. R.S. 23:632. The employer filed an exception of unauthorized use of summary proceedings based on the assertion that both employees' claims for unpaid wages were novated, one by written agreement, the other by oral agreement.
The trial court found that both employees entered into novations with their employer, granted the employer's exception, and dismissed the employees' claims for unpaid wages. The employees appeal. We affirm in part, reverse in part, and render.
Johnny Goulas (Goulas) and Vernon Wilkins (Wilkins) were salesmen at B & B Oilfield Services, Inc. (B & B,) and each earned a $10,000.00 monthly salary plus commissions. For all sales generated by Goulas and/or Wilkins, they earned a joint, four percent (4%) commission that was equally divided between them.
B & B had a regular procedure of deferred payment of commissions where all commissions earned quarterly were totaled, then dispersed in equal installments two quarters later. According to the parties, this deferment allowed for the money generated from the sales to be collected prior to the commissions being dispersed.
Goulas and Wilkins worked for B & B from January 2005 until 2009, at which time both resigned at differing points. B & B owed commissions to each Goulas and Wilkins when they resigned.
Wilkins resigned on January 5, 2009. According to B & B, Wilkins agreed to be paid his salary and benefits until March 31, 2009, in lieu of the outstanding commissions B & B owed to him, and Wilkins was paid as such prior to this litigation. Wilkins asserts that he remained on B & B's staff while also performing his new job at a different company and that his pay from January through March of 2009 simply reflected his agreed-upon salary for the work he was actually doing for B & B during that time.
Goulas resigned on July 6, 2009. Goulas and B & B entered into a post-resignation agreement whereby B & B would pay Goulas his commissions in six, equal, monthly installments rather than pay the entire amount of his outstanding commissions collectively. B & B paid the first installment, then transferred a building to Goulas in lieu of the second installment. B & B failed to make any other payments to Goulas.
On February 4, 2010, Goulas and Wilkins filed a petition for unpaid wages, penalty wages, and attorney fees as a summary proceeding under La.R.S. 23:631 and La.R.S. 23:632, setting the matter for trial on a rule to show cause. On March 24, 2010, B & B responded by filing a dilatory exception of unauthorized use of summary proceedings.
On March 30, 2010, the parties agreed to the trial court hearing the merits of both Goulas and Wilkins' petition and B & B's exception simultaneously. At the hearing, the trial court heard testimony from Goulas, Wilkins, and three former employees of B & B. On May 24, 2010, the trial court issued a judgment that granted B & B's exception with respect to both Goulas and
Goulas and Wilkins assert five assignments of error. Therefore, we must decide whether:
Goulas and Wilkins contend in their first assignment of error that the trial court erred in granting B & B's exception of unauthorized use of summary proceedings. We agree.
Whether the trial court was correct in granting B & B's exception raises a question of law. Questions of law are subject to a de novo review of whether the trial court was legally correct in its finding. Guillory v. Allied Waste Indus., Inc., 10-159 (La.App. 3 Cir. 10/6/10), 47 So.3d 23.
Louisiana Code Civil Procedure Article 2592(12) authorizes the use of summary proceedings in all matters in which it is permitted. An employee is granted the right to proceed against an employer for a wage claim via summary proceeding, and commissions are "wages" under La.R.S. 23:631. See Dugas v. Aaron Rents, Inc., 02-1276 (La.App. 3 Cir. 3/5/03), 839 So.2d 1205; Brown v. Navarre Chevrolet, Inc., 610 So.2d 165 (La.App. 3 Cir.1992).
It is clear from Goulas and Wilkins' petition that they are entitled to summary proceedings. Both alleged that they were employees of B & B and that they were owed commissions upon termination that each was not paid. Therefore, it is clear when reading La.Code Civ.P. art. 2592(12) and La.R.S. 23:631 together that the trial court erred in granting B & B's exception. As such, we reverse the trial court in this regard.
In their second assignment of error, Goulas and Wilkins assert that the trial court erred in ruling that a novation occurred between them and B & B, respectively, which extinguished the obligations of B & B to pay commissions. The trial court based its granting of B & B's exception on its finding that both Goulas and Wilkins entered into novations with B & B. We have already determined that the trial court was legally incorrect in granting B & B's exception. Therefore, this assignment of error is moot.
Goulas and Wilkins contend that the trial court erred in denying their petitions rather than ordering that any deficiency subject to the dilatory exception of unauthorized use of a summary procedure should have been allowed to be cured through amendment. Our finding in assignment of error number one that Goulas and Wilkins' petition can be properly adjudicated through summary proceedings pretermits this assignment of error.
Goulas and Wilkins, in their fourth assignment of error, contend that the trial court erred in ruling that the filing of suit did not constitute a demand for wages under La.R.S. 23:631 and La.R.S. 23:632. We need not address this assignment of error.
Our review of the trial court's judgment and reasons for judgment indicates no finding by the trial court regarding whether proper demand was made by Goulas and Wilkins for purposes of La.R.S. 23:631 and La.R.S. 23:632. The trial court's judgment is silent on the issue. Moreover, the trial court's reasons for judgment only reference Goulas failing to demand commissions upon separation as evidence that it found tended to show Goulas' intention to novate, not that Goulas failed to make proper demand of B & B for purposes of La.R.S. 23:631 and La.R.S. 23:632.
Finally, Goulas and Wilkins assert that the trial court erred in not awarding each commission as wages, penalty wages, and attorney fees. We find merit in this assignment.
The trial court did not address the issues raised in the assignment of error due to its erroneously granting B & B's exception of unauthorized use of summary proceedings. However, "[t]he appellate court shall render any judgment which is just, legal, and proper upon the record on appeal." La.Code Civ.P. art. 2164. The Louisiana Supreme Court, in Gonzales v. Xerox Corp., 254 La. 182, 320 So.2d 163, 165-66 (1975) (citations and footnote omitted), stated the following:
A full hearing on the merits of Goulas and Wilkins' petition was held. Goulas, Wilkins, and B & B submitted exhibits and testimony regarding the facts surrounding the issues, and no party contends that there is any other evidence available that is relevant to the adjudication of the issues before us. Thus, we find that the record is complete with regard to the issues presented by Goulas and Wilkins' petition.
The facts surrounding Goulas' petition are not in dispute. B & B admitted that it owed Goulas earned commissions when he
Goulas' petition alleges that he is entitled to unpaid wages, penalty wages, and attorney fees under La.R.S. 23:631 and La.R.S. 23:632. Louisiana Revised Statutes 23:631(A)(1)(b) states:
Louisiana Revised Statutes 23:632 states:
It is clear that B & B owes Goulas wages in the form of his commissions. B & B admits that it owes Goulas the final four payments made under the post-resignation agreement totaling $40,511.16. Thus, we render judgment awarding Goulas that amount as wages.
In order to be awarded penalty wages under La.R.S. 23:632, the plaintiff must "show that (1) wages were due and owing; (2) demand for payment thereof was made where the employee was customarily paid; and (3) the employer did not pay upon demand." Hebert v. Ins. Ctr., Inc., 97-298, p. 9 (La.App. 3 Cir. 1/7/98), 706 So.2d 1007, 1013, writ denied, 98-353 (La.3/27/98), 716 So.2d 888.
The language of La.R.S. 23:632 seemingly is such that penalty wages are mandatory regardless of any equitable defenses presented by an employer. However, the language has been interpreted otherwise. Our supreme court, in Wyatt v. Avoyelles Parish School Board, 01-3180, 02-131, 02-259, p. 15 (La.12/4/02), 831 So.2d 906, 916-17, pronounced:
Given this directive by our supreme court, we must look to whether B & B has any non-arbitrary, good-faith defense or reasonable basis for not paying Goulas his earned commissions. Louisiana courts have opined that a determination of whether an employer has an equitable defense under La.R.S. 23:631 and La.R.S. 23:632 is dependant on the facts of each case and should be recognized if greater justice will be served by the refusal to award penalty wages. Becker v. Choate, 204 So.2d 680 (La.App. 3 Cir.1967), overruled on other grounds by Carriere, 364 So.2d 555.
B & B first asserts as an equitable defense that it is entitled to a set-off with Goulas for the remaining outstanding commissions. We find this assertion lacks merit.
B & B has not produced any evidence of set-off other than vague testimony from Jeff Jeurgens, then chief executive officer of B & B, alluding to certain actions by Goulas. This court is aware that another matter is pending between Goulas and B & B. However, the record contains no description of what exactly that matter entails nor any evidence showing a likelihood of success by B & B in obtaining a judgment for damages against Goulas to act as a set-off to what B & B clearly owes Goulas.
This court can only consider items in the record before it. La.Code Civ.P. art. 2164. The record contains no evidence of a likely set-off between Goulas and B & B. Accordingly, given the framework from which this issue is to be adjudicated, we cannot say that the greater justice is in denying Goulas penalty wages based on a potential set-off between he and B & B.
Next, B & B asserts that it has an equitable defense in that the post-resignation contract with Goulas evidences a good-faith belief that any claims by Goulas under La.R.S. 23:631 and La.R.S. 23:632 were satisfied via novation. We find this assertion to be without merit.
Louisiana Civil Code Article 1879 states that "[n]ovation is the extinguishment of an existing obligation by the substitution of a new one." "The intention to extinguish the original obligation must be clear and unequivocal. Novation may not be presumed." La.Civ.Code art. 1880.
La.Civ.Code art. 1881.
This court, in Placid Oil Co. v. Taylor, 325 So.2d 313, 316 (La.App. 3 Cir.1975), writ denied, 329 So.2d 455 (La.1976), stated the following:
"When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. Civ.Code art. 2046.
The trial court found that the post-resignation agreement constituted a novation between Goulas and B & B because it indicated a clear expression by Goulas of his intent to extinguish B & B's debt to him under his employment contract, to create a new debt between him and B & B, to distinguish between old and new debt, and to novate. We do not agree.
The post-resignation agreement between Goulas and B & B first contains an accounting of what B & B owes to Goulas under the terms of Goulas' employment contract. Next is the following language:
We find that the language of the post-resignation agreement is clear and explicit. In that agreement there is no expression by Goulas of his clear and unequivocal intent to extinguish B & B's debt to him under his employment contract. Further, the language cited above does not contemplate creation of a new debt between Goulas and B & B, nor does it contain an expression of Goulas' intent to novate. The language merely modifies how Goulas is going to be paid the identical debt B & B owes to Goulas under his employment contract. That modification provides that Goulas will be paid via installments, similarly to how Goulas was paid his commissions under his employment contract.
Under the terms of the post-resignation agreement cited above, B & B still owes Goulas a "substantial part of the original performance," thus, "there is no novation." La.Civ.Code art. 1881. The post-resignation agreement was "[t]he execution of a new writing ... for the performance of an existing obligation ..." Id. This constitutes
Accordingly, we reject B & B's contention that this agreement evidences a good-faith belief that any claims by Goulas under La.R.S. 23:631 and La.R.S. 23:632 were satisfied via novation. B & B, a sophisticated entity, could not have reasonably believed that this agreement was a novation. Nor does this agreement absolve B & B from actually making the payments that it admittedly owes to Goulas.
Moreover, after briefs were submitted and oral arguments were originally conducted, this court ordered all parties to file a supplemental brief on the applicability of La.Civ.Code art. 2030 and Henderson v. Kentwood Spring Water, Inc., 583 So.2d 1227 (La.App. 1 Cir.1991). We did so because neither party initially raised the issue addressed in Henderson, i.e., that an employer and employee cannot contract away an employer's duties under La.R.S. 23:631 in order to avoid penalties. This court can notice such an issue under La. Civ.Code art. 2030, which states:
In Henderson, the employer and employee signed an agreement wherein the employee consented to a delay of his final paycheck. The employer used this fact as an equitable defense. In deciding Henderson, the Louisiana First Circuit Court of Appeal stated the following:
Henderson, 583 So.2d at 1232-33.
B & B argued that Henderson is not applicable to the case before us because the employee in Henderson signed the contract while still employed with Kentwood Spring Water, Inc., whereas Goulas and Wilkins entered into agreements with B & B after their employment ended. We are not persuaded by this argument. The timing of an absolutely null contract is irrelevant. The parties cannot enter into such a contract irrespective of when it was confected.
Finally, B & B argues that Goulas and Wilkins were not in the disadvantageous situation that the employee was in Henderson because neither Goulas' or Wilkins' employment depended upon their entering
Moreover, as to whether B & B has any leverage over either Wilkins or Goulas, Ricky James Poche, a former employee of B & B who was president of B & B at the time, testified that Goulas asked him about his commissions "a couple of days after" he resigned. Poche then stated that "after discovering that the CEO and the owner were going to pay [Goulas] his commission in full but they were going to try and pay it out in a six month period," he told Goulas "just to go in there calm, cool[,] and collected and accept the deal." This conversation between Poche and Goulas indicates that Goulas was concerned about his commissions and that B & B exerted some leverage over him by asking that he accept his commissions over a six-month period rather than all at once as he was entitled under La.R.S. 23:631.
Given the above, we agree with the analysis of our sister court in Henderson and find it applicable. Here, like Kentwood Spring Water, Inc.'s contract with Henderson, B & B's contract with Goulas and agreement with Wilkins affords B & B the right to violate La.R.S. 23:631. As such, these post-resignation agreements are absolutely null and cannot be the basis for the trial court's ruling that novation has transpired. Accordingly, we reverse the trial court's finding that Goulas and Wilkins entered into novation with B & B. Any novation that may have occurred between Goulas and Wilkins and B & B is absolutely null and against public policy.
Thus, not only did the post-resignation agreement, by its clear contents, not amount to novation, it is void, as it violates public policy. As such, it cannot support an assertion of an equitable defense under La.R.S. 23:631. See Henderson, 583 So.2d 1227.
Finally, B & B contends that it has an equitable defense in that it stopped paying Goulas under the post-resignation agreement due to a good-faith reliance on advice of counsel. We find no merit in this contention.
The Louisiana First Circuit Court of Appeal has specifically rejected this assertion as an equitable defense in cases involving La.R.S. 23:632. See Magee v. Engineered Mech. Servs., Inc., 415 So.2d 277 (La.App. 1 Cir.), writ denied, 420 So.2d 455 (La.1982). Moreover, B & B's contention that it was justified in refusing to pay Goulas the remaining payments under the post-resignation agreement based upon a good-faith reliance on advice of counsel assumes that the agreement is valid. It was not. B & B cannot plead an equitable defense based upon advice of counsel that it received months after it illegally contracted away its statutory duties under La.R.S. 23:631. Henderson, 583 So.2d 1227.
Given no equitable defense shown by B & B, we find that Goulas can recover penalty wages under La.R.S. 23:632. Goulas earned $10,000.00 per month. Under the calculations delineated in La.R.S. 23:632, Goulas is entitled to $40,909.09.
B & B argues in brief that it is exonerated from paying attorney fees due to Goulas to equitable defenses. We have already determined that B & B has exerted no such equitable defenses. Further, the argument raised by B & B misstates the jurisprudence interpreting La.R.S. 23:632. Unlike penalty wages, courts have consistently interpreted the award of attorney fees as mandatory under La.R.S. 23:632 if a "well-founded suit" for wages is filed regardless of equitable defenses. Carriere, 364 So.2d at 556. A "well-founded suit" is one wherein an employee recovers unpaid wages. Jeansonne v. Schmolke, 09-1467, 09-1468, 10-437 (La.App. 4 Cir. 5/19/10), 40 So.3d 347.
Here, Goulas filed suit, and we award him unpaid wages. Thus, it is incumbent on us to award reasonable attorney fees under La.R.S. 23:632. Additionally, Goulas has requested attorney fees for work done on this appeal. "Generally, when an award for attorney's fees is granted at the trial level, additional attorney's fees are proper for work done on appeal. This is to keep the appellate judgment consistent with the underlying judgment." Wilczewski v. Brookshire Grocery Store, 08-718, p. 18 (La.App. 3 Cir. 1/28/09), 2 So.3d 1214, 1226, writ denied, 09-456 (La.4/13/09), 5 So.3d 170.
After a thorough review of the record, we find that the work done on the trial warrants an award of $10,000.00 to Goulas in attorney fees. Further, we find that he is also entitled to $5,000.00 in attorney fees for work done on this appeal. Accordingly, we render judgment awarding these amounts to Goulas.
Unlike the situation between Goulas and B & B, the facts surrounding Wilkins' petition are in dispute. Wilkins contends that the wages and benefits he received following his resignation from January of 2009 to March of 2009 were simply in exchange for his continued employment with B & B. However, B & B contends that the wages and benefits that Wilkins received for the three months following his resignation were payment of his commissions per an oral agreement. The trial court found as fact that Wilkins received the wages and benefits not for his employment but for payment of Wilkins' commissions that B & B owed to him. Wilkins has appealed this finding of fact.
The applicable standard of reviewing such determinations is the well-settled manifest error or clearly wrong standard. Rosell v. ESCO, 549 So.2d 840 (La.1989). "[W]here two permissible views of the evidence exist, the factfinder's choice between them cannot be manifestly erroneous or clearly wrong." Stobart v. State, through DOTD, 617 So.2d 880, 883 (La.1993) (citing Canter v. Koehring Co., 283 So.2d 716 (La.1973)).
Here, Poche testified to the following:
The testimony of Poche and Comeaux provide a reasonable basis for the trial court to find that Wilkins' wages and benefits that he received for three months after his resignation constitute payment of commissions rather than wages for work performed during that timeframe. The standard of review dictates finding no error by the trial court in reaching this conclusion. There are "two permissible views of the evidence[,]" and the trial court's "choice between them cannot be manifestly erroneous or clearly wrong." Id. at 883 (citing Canter, 283 So.2d 716).
We upheld the trial court's finding of fact that the amount B & B payed to Wilkins from January 2009 to March 2009 were payments for his commissions rather than simply wages for work Wilkins was performing at that time. Given the nullity of the oral agreement between B & B and Wilkins, B & B's contention that these payments fully satisfied what it owed to Wilkins is incorrect. However, B & B is entitled to a set-off equal to what it paid to Wilkins from January of 2009 to March of 2009. Thus, we render judgment awarding Wilkins, as wages, his outstanding commissions minus the amount B & B paid to him from January of 2009 to March of 2009.
As was the case with Goulas, in order to be awarded penalty wages under La.R.S. 23:632, Wilkins must "show that (1) wages were due and owing; (2) demand for payment thereof was made where the employee was customarily paid; and (3) the employer did not pay upon demand." Hebert, 706 So.2d at 1013.
Wilkins has also met these three criteria. We found that Wilkins is due wages or commissions from B & B equal to his outstanding commissions minus the amount B & B paid to him from January of 2009 to March of 2009. He has made proper demand of those wages or commissions from B & B, and B & B has failed to remitted these wages or commissions. Like with Goulas above, we must look to whether B & B has an equitable defense based on the facts of Wilkins' case, and if greater justice will be served by the refusal to award penalty wages. Becker, 204 So.2d 680.
Similar to the Goulas situation, B & B asserts the equitable defense of novation as evidence of a good-faith belief that any claims by Wilkins under La.R.S. 23:631 and La.R.S. 23:632 were satisfied. We find that the situations differ.
In Goulas' situation, we found that B & B's contention of a reasonable belief that the contract was a novation was untenable. With Wilkins, according to the well-supported factual findings of the trial court, both B & B and Wilkins actually believed that they had entered into a novation for Wilkins' outstanding commissions.
Heeding this finding of fact, it follows that B & B was, in truth and in fact, acting in good faith and, unlike the situation in Goulas, fully complied with the admittedly invalid agreement. Thus, Wilkins has actually received benefits from that agreement, as he was continued on B & B's health insurance policy and was paid a salary from January of 2009 to March of 2009. Wilkins will, under the judgment we render in this opinion, receive all of his outstanding commissions as wages and attorney
B & B argues in brief that it is exonerated from paying Wilkins attorney fees due to its equitable defenses. We have already dispensed with this argument when addressing attorney fees for Goulas. It misstates the jurisprudence interpreting La.R.S. 23:632 where courts have found the award of attorney fees to be mandatory under La.R.S. 23:632 if a "well-founded suit" for wages is filed regardless of equitable defenses. Carriere, 364 So.2d at 556.
Here, Wilkins filed suit, and we award him unpaid wages. Thus, we must award reasonable attorney fees under La.R.S. 23:632. Our review of the record renders a finding that the work done on the trial level warrants an award of $10,000.00 to Wilkins in attorney fees. Further, we find that he is also entitled to $5,000.00 in attorney fees for work done on this appeal. Accordingly, we render judgment awarding these amounts to Wilkins.
John Goulas and Vernon Wilkins raise five assignments of error. We find that the trial court erred as a matter of law in granting B & B's exception of unauthorized use of a summary proceeding. Further, based on La.Civ.Code art. 2030 and Henderson, 583 So.2d 1227, we find that the trial court erred as a matter of law that novation occurred between either John Goulas or Vernon Wilkins and B & B Oilfield Services, Inc. Such contracts or agreements that allow B & B Oilfield Services, Inc. to thwart "the legislative intent behind [La.]R.S. 23:631, which was enacted for the protection of the public interest" are against public policy. Henderson, 583 So.2d at 1233. Accordingly, we reverse the trial court's finding that novation occurred between the parties.
We find the record before us on John Goulas and Vernon Wilkins' petition is complete. We render judgment awarding John Goulas $40,511.16 in unpaid wages from B & B Oilfield Services, Inc. We also render judgment awarding John Goulas $40,909.09 in penalty wages due to B & B Oilfield Services, Inc.'s lack of an equitable defense.
Further, we render judgment that Vernon Wilkins is entitled to his outstanding commissions. However, those commissions are subject to a set-off in the amount that B & B paid to him in wages and benefits from January of 2009 to March of 2009. However, we find that justice dictates that we deny Vernon Wilkins' request for penalty wages. According to the well-supported findings of fact made by the trial court, both B & B and Wilkins thought they had entered into a legal novation of Wilkins' outstanding commissions.
Finally, after reviewing the record, we render judgment awarding each John Goulas and Vernon Wilkins $10,000.00 in attorney fees for work done at the trial level
EZELL, J., concurs in the result for the reasons assigned by Judge GENOVESE.
PAINTER, J., concurs in the result for the reasons assigned by Judge GENOVESE.
GENOVESE, J., concurs in the result and assigns written reasons.
GREMILLION, J., concurs in part, dissents in part, and assigns written reasons.
GENOVESE, J., concurs in the result and assigns the following reasons.
I concur in the result of the majority opinion in this case; however, I disagree with the author of the opinion's reliance on Henderson v. Kentwood Spring Water, Inc., 583 So.2d 1227 (La.App. 1 Cir.1991). I find the facts in Henderson render it inapplicable to the instant matter.
In Henderson, the employee was forced to sign a written policy which contained a clause waiving his rights under La.R.S. 23:631 in order to begin or retain employment. I agree with Henderson to the extent that an employer and employee cannot contract away an employer's duties under La.R.S. 23:631 and that such a contract is in derogation of law enacted for the protection of the public interest and thereby contra bones mores. However, in the instant matter, neither Goulas nor Wilkins was forced to sign any contract requiring any waiver of any legal rights protected under La.R.S. 23:631. Consequently, the facts in Henderson are readily distinguishable from the instant matter, thereby rendering Henderson inapplicable.
GREMILLION, J., concurs in part, dissents in part, and assigns the following reasons.
I dissent from the majority's decision to award statutory penalties to John Goulas. As the majority opinion properly points out, no penalties should be awarded when there is any non-arbitrary, good-faith defense, or reasonable basis for not paying Goulas. Here there are two non-arbitrary, good-faith reasons. First, having dramatically changed the time frame within which Goulas was to expect payment, B & B had a good-faith argument that its obligation had been novated. Certainly the trial court agreed, having expressly found not only that B & B argued for a novation in good-faith, but indeed that a novation existed.
Second, I disagree with the majority opinion that there was no evidence of any non-arbitrary, good-faith allegations of setoff. Neither Jeff Jeurgens' testimony nor B & B's suit against Goulas proves that an offset is actually owed. However, it does, in my view, establish a good-faith argument that Goulas' claims should be relegated to an ordinary breach of contract proceeding which, in all likelihood, would be consolidated with B & B's setoff lawsuit.
I find the appellee's arguments regarding novation and setoff to be cogent, reasonable, fair, and offered in good-faith. Accordingly, I disagree with the majority's decision to impose statutory penalties. In all other respects, I concur with the majority's opinion for the reasons assigned by Judge Genovese.
