Modification: King v. U.S. Bank National Assn.

TIMOTHY KING,

Plaintiff and Appellant,

v.

U.S. BANK NATIONAL ASSOCIATION,

Defendant and Appellant.

No. C085276

(Super. Ct. No. 34201300154644CUDFGDS)

California Courts of Appeal

Third Appellate District

(Sacramento)

Filed August 24, 2020

THE COURT:

It is ordered that the opinion filed herein on July 28, 2020, be modified. We address the arguments in the order presented by U.S. Bank in its petition for rehearing as follows:

1. On page 8, the first FULL paragraph, second sentence, that begins "McGovern, however, confirmed that" delete the word "an" before the word "understanding" and add it its place the words "a thorough" so that the second sentence reads: McGovern, however, confirmed that, at the time of her deposition, she still did not have a thorough understanding of what internal and external initiative meetings were and she never contacted anyone during the investigation to help her understand the definition of an initiative meeting.

2. On page 9, add the following paragraph before the first FULL paragraph:

In its petition for rehearing, U.S. Bank argues the summary of McGovern's testimony that "it was not necessary to have more than one person at an initiative meeting" and "[a]lthough it was preferable to include product partners at such meetings, it was not required" disregards the evidence and testimony provided by "employees whom McGovern interviewed." U.S. Bank recites testimony presented by several trial witnesses regarding initiative meetings. This portion of the opinion recites McGovern's testimony. U.S. Bank does not assert the recitation of McGovern's testimony is unsupported by the record. We see no reason to modify the opinion.

3. On page 22, add the following paragraph as the fourth FULL paragraph under heading 4 "Neal":

In its petition for rehearing, U.S. Bank argues the foregoing statement regarding Neal's understanding of initiative meetings misstates Neal's testimony. U.S. Bank believes Neal testified "she did not have an understanding of 'what an external [building deeper relationships] meeting was.' " During Neal's testimony, she testified an initiative meeting was "a meeting that would include all of the product partners, the relationship managers, and portfolio managers were kind of optional." When asked whether she had an understanding of what external and internal initiative meetings were at the time she spoke to McGovern, Neal said she did not. Neal confirmed she "didn't know what an internal versus an external [initiative meeting] was." We see no reason to modify the opinion.

4. On page 29, add the following paragraph after the second FULL paragraph:

U.S. Bank argues in its petition for rehearing that, in noting some of Thakur's accusations were contradicted by others to support the conclusion "McGovern knew Thakur was an unreliable source," the opinion fails to consider and discuss testimony corroborating Thakur's claims. We do not reweigh the evidence on appeal. Our review is limited to whether there was substantial evidence in the record to support the jury's finding of malice. (Sanborn v. Chronicle Publishing Co. (1976) 18 Cal.3d 406, 414.) We thus summarize the evidence in support of the verdict.

5. On page 30, delete the first FULL paragraph and replace it with:

As another example, the investigation into the vacation allegation also demonstrates a deliberate failure to investigate. Gerlach acknowledged at trial that they (human resources) should have obtained information from someone with responsibility for recording King's vacation before concluding King "stole vacation time." Although the vacation records showed King was paid out some hours in 2010, 2011, and 2012, it also showed he took a substantial portion of his 160 hours of vacation in each of those years. The jury further heard McGovern's deposition testimony that she took Flinn's statement that King told Flinn he (King) got paid for vacation and "it's a nice check" " 'to mean that Mr. King did not report vacation in order . . . to get paid out for it.' " McGovern, however, acknowledged she knew of no evidence King was taking vacation and not reporting it and no one said King said to take vacation and not report it.

6. On page 11, the first FULL paragraph, after the first sentence that begins "McGovern relayed the findings," add the following footnote:

In its petition for rehearing, U.S. Bank asserts the passage describing the conversation that follows was "drawn from a question by King's counsel that does not refer to any particular meeting" and "conflicts with the evidence regarding the meetings among McGovern, Gerlach, and Walker." The testimony discussed in this portion of the opinion is drawn from McGovern's testimony alone; it does not consider any testimony by Gerlach and Walker. McGovern testified: "On December 19th is when Ms. Gerlach and myself met with Mr. Walker to let him know the information that had been gathered in the investigation." McGovern explained her typed notes in trial exhibit 32 reflected what she had discussed with Walker and Gerlach. Those notes are in the appellant's appendix at pages 224 and 225. McGovern's testimony regarding what she told Gerlach and Walker "about [her] findings regarding Mr. King" mirrored in substantial part the information contained in McGovern's typed notes. Gerlach's dispute with regard to the dates and substance of the conversations between herself, McGovern, and Walker are addressed in the portion of the factual and procedural background pertaining to Gerlach's trial testimony.

7. On page 11, the last paragraph, after the first sentence that begins "McGovern did not ask Walker," add the following footnote:

In its petition for rehearing, U.S. Bank argues this statement is inaccurate because the record shows Walker spoke to King about the initiative reports "at McGovern's request." None of the record citations provided by U.S. Bank supports its position that McGovern testified (which is what is summarized here) that she asked Walker to speak to King about the initiative reports. At trial, McGovern was asked: "Did you ask Mr. Walker to speak to anyone or gather any documents, look at any reports?" McGovern answered: "I don't recall asking Mr. Walker to do so." As U.S. Bank notes, in footnote 6 post (now footnote 8), we explained that, in her deposition, McGovern recalled asking Walker to address two issues with King: the initiative reports and a scorecard issue.

8. On page 35, add the following to the end of footnote 10 (now footnote 12):

In its petition for rehearing, U.S. Bank asks us to delete this footnote because it believes it "made the same point in its opening brief" and thus the argument was not raised for the first time in its reply brief. We disagree. In its opening brief, U.S. Bank argued the 2012 Plan provided the payment of a bonus required an employee to be employed with the bank on the date the bonus was paid and thus "[t]he implied covenant cannot impose a duty to pay a bonus that contradicts the plan's express terms." (Italics added.) It further argued King became ineligible to receive a bonus due to his termination. At no point in its opening brief, as noted ante (which U.S. Bank does not challenge), did U.S. Bank challenge the jury's finding that King had earned a bonus in 2012.

9. On page 50, add the following paragraphs after the first FULL paragraph before heading 3:

U.S. Bank asserts it had argued in the trial court in its memorandum of points and authorities in support of the motion for judgment notwithstanding the verdict and request for new trial that, even if the reputation damages were not " 'purely duplicative,' " the damages were " 'excessive.' " U.S. Bank believes the correct remedy is to remand for the trial court to consider whether the reputation damages were excessive based on insufficient evidence because it is "an argument that the trial court did not reach and that this court implicitly agreed would have merit by noting that 'King introduced no evidence of actual damage to his reputation.' " We disagree.

First, our statement that King introduced no evidence of actual damage to his reputation does not signal the reputation damages were excessive. That issue is not before us on appeal. Second, this is the first time U.S. Bank has presented this argument; it did not request remand in its response to the cross-appeal. We do not consider new arguments asserted in a petition for rehearing. (City of Saratoga v. Huff (1972) 24 Cal.App.3d 978, 1006 [" 'The courts have on numerous occasions declared that they will not grant rehearings on points newly urged in the petition. It is the duty of counsel to see that all points are properly presented in the original briefs or argument, before submission' "].) Third, U.S. Bank failed to include in the record on appeal a copy of its memorandum of points and authorities upon which it relies. As the appellant, U.S. Bank had the burden of producing an adequate record to consider the issues on appeal. (Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.) As the respondent to the cross-appeal, U.S. Bank also had the prerogative to add missing records supporting its position in its brief. (See Tagney v. Hoy (1968) 260 Cal.App.2d 372, 377.) We thus find no basis for considering whether to remand the matter to the trial court.

10. On page 37, add the following paragraphs after the first FULL paragraph before heading 1:

In its petition for rehearing, U.S. Bank states the opinion "appears to suggest that because of the manner in which [U.S. Bank] organized its briefing of the punitive-liability issue, it has either (1) forfeited its right to challenge punitive liability for wrongful termination; or (2) forfeited its right to have the Court separately analyze punitive liability for wrongful termination and defamation." U.S. Bank asserts "neither holding would be justified" because "King argued a single course of conduct supported both claims," citing King's respondent's brief and Civil Code section 3294 "as applied to a corporate employer requires examination of the mental state and duties of the person asserted to be 'an officer, director, or managing director of the corporation,' not the type of tort." In U.S. Bank's view, King "targeted a single set individuals [sic] at [U.S. Bank] with the culpable mental state, without differentiating between conduct relating to defamation and conduct relating to wrongful termination." U.S. Bank "therefore believed that it could most efficiently address the issue of punitive liability on both claims by analyzing whether each person involved in the so-called 'scheme' was a managing agent and demonstrating that none of them was proven to have engaged in despicable conduct with respect to either defamation or wrongful termination."

This appeal does not turn on what King's theory or arguments were at trial or on appeal. The appeal turns on U.S. Bank's assertions of error with respect to the jury's findings, if any. With respect to wrongful termination, the jury found U.S. Bank's decision to terminate King was committed with malice, oppression, or fraud, in accordance with Civil Code section 3294, subdivision (a). On appeal, this finding is presumed correct unless U.S. Bank affirmatively demonstrates error. (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408.) If U.S. Bank wished to challenge the sufficiency of the evidence to support this finding, it had to cite the evidence in the record supporting the judgment and explain why such evidence is insufficient as a matter of law. (Ibid.) U.S. Bank makes no attempt to do so and thus we surmise it does not challenge the jury's finding.

To illustrate this point, we note that, as to Gerlach and McGovern, U.S. Bank argues neither's conduct was despicable given the investigation undertaken, and asserts "upholding the finding of punitive liability here would put employers in a no-win situation" because it "would risk punitive damages for defamation if a jury were to decide after the fact that the employer too readily believed the accusers." (Italics added.) In his brief, King argues substantial evidence "shows [McGovern] decided to terminate King," providing citations to the record. King further asserts, "[l]ike any other relevant matter, evidence that U.S. Bank's decision-makers gave false explanations for the termination decision -- which they did as to both (i) in its pretextual grounds and (ii) who made it -- supports a finding that their conduct was willful and in conscious disregard of King's rights." King also asserts there was substantial evidence to support the jury's finding that Gerlach made the decision to terminate King. U.S. Bank fails to address these arguments in its reply brief, and never addresses whether McGovern's or Gerlach's actions in the termination decision could support the jury's finding of malice, oppression, or fraud. If U.S. Bank wished to challenge the jury's finding of malice, oppression, or fraud with regard to wrongful termination, it had the burden of setting forth all of the evidence on this issue in support of the jury's finding and explaining why the finding is unsupported by the evidence. We thus find no basis for modifying the opinion.

There is no change in the judgment. The petition for rehearing is denied.

BY THE COURT:

Hull, Acting P. J.

Robie, J.

Butz, J.

^* Retired Associate Justice of the Court of Appeal, Third Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.