Durand v. HIMC CORP.

214 P.3d 189
CourtCourt of Appeals of Washington
DecidedAugust 25, 2009
Docket37088-3-II
StatusPublished
Cited by42 cases

This text of 214 P.3d 189 (Durand v. HIMC CORP.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Durand v. HIMC CORP., 214 P.3d 189 (Wash. Ct. App. 2009).

Opinion

214 P.3d 189 (2009)

Michael DURAND and Natasha Durand, both individually, and the marital community comprised thereof, Respondents,
v.
HIMC CORPORATION a/k/a/ Health Guard International Marketing Corporation, a corporation licensed and doing business within the State of Washington; ITI Internet Services, Inc., a corporation licensed and doing business *190 within the State of Washington; Judy Morton Johnston and "John Doe" Morton Johnston, both individually, and the marital community comprised thereof; Jerry Cornwell and "Jane Doe" Cornwell, both individually, and the marital community comprised thereof, Appellants.

No. 37088-3-II.

Court of Appeals of Washington, Division 2.

August 25, 2009.

*193 David B. Adler, Attorney at Law, Seattle, WA, for Appellants.

Paul Alexander Lindenmuth, Ben F. Barcus & Associates PLLC, Tacoma, WA, for Respondents.

Kristopher Ian Tefft, Association of Washington Business, Olympia, WA, Amicus Curiae on behalf of Association of Washington Business.

PART PUBLISHED OPINION

ARMSTRONG, J.

¶ 1 Health Guard International Marketing Corporation (HIMC), ITI Internet Services, Inc. (ITI), Judy Johnston, and Jerry Cornwell appeal the trial court's judgment in favor of Michael Durand on his claims for breach of employment contract and wrongfully withholding wages. They maintain that substantial evidence does not support the trial court's judgment for wrongful withholding of wages; they also argue that the trial court erred in (1) denying their motion for additional discovery time, (2) interpreting Durand's employment contracts, (3) admitting evidence of settlement negotiations to determine whether a bona fide dispute existed as to the amount owed Durand, and (5) awarding attorney fees to Durand. We affirm.

FACTS

¶ 2 HIMC is a holding company based in Tacoma, Washington. ITI is a wholly owned subsidiary of HIMC.

¶ 3 In 2005, Ron Ehli, the then principal of HIMC/ITI,[1] recruited Durand to leave his job in Vancouver, Washington, and relocate to Tacoma to work for the companies. Durand signed a formal job offer agreement (contract 1) on March 24, 2005. The job offer included a severance package authorizing one month's pay for each month worked as head of sales, with a maximum of 12 months. The contract provided Durand a $150,000 annual salary, a signing bonus if certain conditions were met, stock and stock options, and a 10 percent guaranteed bonus for 2005.

¶ 4 Durand started work at HIMC/ITI on April 18, 2005. On the same day, Virgil Llapitan, chief executive officer of ITI and president of HIMC, presented Durand with an employment agreement (contract 2) containing a five-year commitment. Llapitan testified that the purpose of contract 2 was to formalize the original terms of contract 1. Contract 2's termination provision states that "Durand shall receive compensation from the remaining contract term upon termination." Exhibit (Exh.) 3A. It also provides that Durand will receive $20,000 for relocating to Tacoma.

¶ 5 ITI paid Durand $12,500 per month under the contract terms until September 2005, when ITI's president, Ron Ehli, asked Durand to take a pay cut because of the company's deteriorating financial situation. Durand agreed to accept 56 percent of his salary as long as he would receive the full compensation, including back pay, once ITI's financial condition improved. Other employees also took a pay cut. Ehli confirmed that the pay cut was intended to be temporary.

¶ 6 A few months later, on February 21, 2006, the director of HIMC, Melissa Duthie, terminated Durand's employment.[2] After his termination, Durand notified HIMC/ITI that he had never received his relocation compensation, the 2005 annual bonus, or back wages from taking the temporary wage cut.

¶ 7 At a meeting on March 7, 2006, shareholders elected a new board of directors for HIMC/ITI. Johnston was elected secretary, and the board appointed Cornwell as chief executive officer of ITI.[3] Johnston and Cornwell were given check writing authority.

*194 ¶ 8 On March 23, 2006, Durand requested reemployment from HIMC/ITI, but their financial situation had not improved.[4] When the companies refused to rehire him, Durand demanded that they pay him under his contract. He requested a total of $692,708.26, which included compensation for the remaining four years of employment under the contract. Johnston testified that HIMC/ITI did not have sufficient funds to meet Durand's request. Durand testified that Cornwell told him that HIMC/ITI would not honor contracts from the prior board. HIMC/ITI asserted that contract 1's severance package (one month pay for each month worked) must be considered in determining the amount Durand could receive under contract 2 (compensation for the remaining term). HIMC/ITI eventually offered Durand a final settlement of $125,000, which Durand rejected.

Procedure

¶ 9 On November 22, 2006, Durand sued HIMC/ITI, Johnston, and Cornwell (collectively, the employers) alleging breach of contract, promissory estoppel, and wrongful withholding of wages. Durand based his wage claim on RCW 49.48.010 and chapter 49.52 RCW, arguing that the corporations and individuals named in the complaint were liable for double damages under RCW 49.52.070. He demanded (1) severance in the form of his future salary for the remaining time under the five-year term at $12,500 per month ($618,750), (2) his deferred salary from withheld wages ($38,958.26), (3) his relocation payment ($20,000), and (4) his 2005 annual bonus ($15,000), for a total of $692,708.26.

¶ 10 The court expedited the trial schedule at Durand's request. It set discovery cutoff for April 11, 2007, about 20 weeks after the complaint was filed, and the trial for May 23, 2007, about 6 weeks after the discovery cutoff.

¶ 11 Johnston and Cornwell did not file an answer; instead, they filed a CR 12(b)(6) motion to dismiss the lawsuit. The trial court granted the motion in part, dismissing Cornwell and Johnston from the breach of contract and promissory estoppel claims but declining to dismiss them on the wrongful withholding claim. After the trial court denied the employers' motion to certify the trial court's ruling for appeal, they moved for discretionary review, which we denied.

¶ 12 On April 26, 2007, Durand moved for summary judgment on the breach of contract and wrongful withholding claims. On April 27, 2007, the employers filed a motion to continue the trial date and for supplemental discovery, arguing that their motion for discretionary review, the unavailability of counsel, and their inability to conduct discovery entitled them to additional discovery time. The employers relied on CR 56(f), but they offered no explanation, other than their pretrial pleading practice, as to why they failed to timely complete discovery.

¶ 13 On May 4, 2007, the trial court continued the trial date to June 15, 2007. But it denied the employers' motion for additional discovery time. The trial court told the employers that they "ha[d] to live with [their] decision" over the previous 20 weeks to engage in pretrial litigation instead of discovery. Report of Proceedings (RP) at 98.

¶ 14 Before trial, the parties submitted a joint statement of evidence in which the employers included a series of settlement negotiation letters between Durand and HIMC/ITI.

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Cite This Page — Counsel Stack

Bluebook (online)
214 P.3d 189, Counsel Stack Legal Research, https://law.counselstack.com/opinion/durand-v-himc-corp-washctapp-2009.