Filed 9/15/14 RG Garcia Corp. v. Loftis CA2/6
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                   DIVISION SIX


RG GARCIA CORPORATION,                                                     2d Civil No. B248784
                                                                     (Super. Ct. No. 56-2012-00427138-
     Plaintiff and Appellant,                                                   CU-JR-VTA)
                                                                              (Ventura County)
v.

STEVEN W. LOFTIS,

     Defendant and Respondent.

RG GARCIA CORPORATION,                                                     2d Civil No. B249067
                                                                     (Super. Ct. No. 56-2012-00427136-
     Plaintiff and Appellant,                                                   CU-JR-VTA)

v.

CHRISTOPHER BITETTI,

     Defendant and Respondent.



                   RG Garcia Corporation appeals the dismissals for failure to post an
undertaking of its appeals from the Labor Commissioner's awards to Steven W. Loftis
and Christopher Bitetti.1 RG Garcia contends that the trial court erred by failing to waive




         1 On our own motion, we consolidated the two appeals for purposes of decision
only.
the undertaking requirement on account of the corporation's indigence and inability to
obtain the necessary bond. We affirm.
                   FACTUAL AND PROCEDURAL BACKGROUND
              RG Garcia had a contract with the U.S. Army Corps of Engineers to extract
and remove rock from the Santa Paula Creek. It formed a second entity, Santa Paula
Rock, Gravel & Sand LLC (SPRGS), to screen, clean, and sort the rock. RG Garcia and
SPRGS employed Loftis and Bitetti to perform personal services as operators.
              From January 15, 2010, through May 21, 2011, RG Garcia paid Loftis's and
Bitetti's wages. From May 22 through July 2, SPRGS paid their wages. Beginning July
3, Loftis and Bitetti were not remunerated for their services. Bitetti quit without notice
on July 29. Loftis's employment was terminated on August 5.
              Loftis, Bitetti, and four other individuals filed claims with the Labor
Commissioner alleging that RG Garcia and SPRGS owed them unpaid wages, penalties,
and interest. RG Garcia argued that it was never the claimants' employer and that it
merely acted as SPRGS's payroll service. The Commissioner concluded, however, that
RG Garcia and SPRGS jointly employed the claimants through May 21, 2011, when RG
Garcia severed its joint employer status. The Commissioner cited several factors
supporting its conclusion, including the following: (1) RG Garcia was a partner in
Solrick LLC, the majority owner of SPRGS; (2) RG Garcia hired some of the claimants
and paid all of their wages during the relevant time frame; (3) RG Garcia offered no
evidence that SPRGS had ever reimbursed it or paid it any fees for providing payroll
services; (4) RG Garcia paid for SPRGS's equipment; and (5) RG Garcia and SPRGS
both exercised control over the claimants' wages, hours, and working conditions until
May 21, 2011.
              The Commissioner awarded Loftis $40,588.53 from RG Garcia and SPRGS
jointly and severally, consisting of $29,767.50 in unpaid overtime wages (Cal. Code
Regs., tit. 8, § 11160), $7,200.00 in waiting time penalties (Lab. Code, § 203),2 and


       2 All further statutory references are to the Labor Code unless otherwise stated.

                                             2
$3,621.03 in interest (§ 98.1, subd. (c)), for the period ending May 21, 2011. Similarly,
Bitetti received an award of $26,811.31, consisting of $19,605.00 in unpaid overtime
wages, $4,800.00 in waiting time penalties, and $2,406.31 in interest.3
              RG Garcia timely appealed the Commissioner's awards to the superior court
for a trial de novo. It filed its notices of appeal on the fifteenth and final day of the
statutory period. (See § 98.2, subd. (a) [setting forth 10-day period to appeal
Commissioner's award]; Code Civ. Proc., § 1013 [extending party's time limit to appeal
by five days when served by mail].) Loftis and Bitetti moved to dismiss the appeals from
their respective awards on the ground that RG Garcia had failed to post the required
undertaking. (See § 98.2, subd. (b).) In its oppositions to these motions, RG Garcia
requested a waiver of the undertaking requirements. It relied on Code of Civil Procedure
section 995.240, which provides a court with discretion to waive a bond requirement if
"the principal is unable to give the bond because the principal is indigent and is unable to
obtain sufficient sureties, whether personal or admitted surety insurers."
              The superior court granted the motions to dismiss. First, as a matter of law,
the court held that a corporation cannot be "indigent" within the meaning of Code of
Civil Procedure section 995.240. (Citing Williams v. FreedomCard, Inc. (2004) 123
Cal.App.4th 609, 615.) Alternatively, the court made the factual finding that RG Garcia
had not established its indigence because it failed to provide financial statements and
other documentary evidence of its financial position and it failed to discuss the possibility
of capital contributions from stockholders or disclose recent distributions to them. RG
Garcia timely appealed both dismissals.
                                        DISCUSSION
              RG Garcia contends that the superior court erred by failing to waive the
undertaking requirement. Loftis and Bitetti argue that the court's waiver analysis was


       3 The Commissioner also awarded $12,583.89 to Loftis and $7,494.57 to Bitetti
from SPRGS individually, based on unpaid wages, penalties and interest accruing after
RG Garcia terminated its status as a joint employer.
                                               3
correct. In addition, they maintain that RG Garcia's failure to post undertakings before
the expiration of time to appeal the Commissioner's awards deprived the superior court of
jurisdiction over the appeals. We agree that the superior court lacked jurisdiction to
consider the merits of RG Garcia's waiver argument. Consequently, we need not decide
whether a corporation may ever be eligible for a waiver of the undertaking or, if so,
whether the superior court abused its discretion in finding that RG Garcia did not make
an adequate showing in this case.4 (Cf. Yee v. Cheung (2013) 220 Cal.App.4th 184, 192
["'"A judgment of dismissal after a demurrer has been sustained without leave to amend
will be affirmed if proper on any grounds stated in the demurrer, whether or not the court
acted on that ground". . .'"].)
               Section 98.2, subdivision (b) provides that "[a]s a condition to filing an
appeal" from an award of the Labor Commissioner, "an employer shall first post an
undertaking with the reviewing court in the amount of the order, decision, or award." In
Palagin v. Paniagua Construction, Inc. (2013) 222 Cal.App.4th 124, 140 (Palagin), the
court held that "the undertaking requirement of section 98.2(b) is mandatory and
jurisdictional, and . . . the [superior] court has no authority to extend the deadline for
posting the undertaking beyond the deadline for filing the notice of appeal."
               In reaching its holding, Palagin first considered the plain meaning of
section 98.2, subdivision (b), taking into account its context in the statutory scheme. The
court observed that the 10- or 15-day deadline for filing the notice of appeal set forth in
subdivision (a) is undisputedly jurisdictional (citing Pressler v. Donald L. Bren Co.
(1982) 32 Cal.3d 831, 837–838) and that subdivision (b) requires that the employer post
the undertaking "first"—i.e., before the jurisdictional notice-of-appeal requirement—as a
"condition" to filing the notice of appeal. (Palagin, supra, 222 Cal.App.4th at p. 132.)



       4 Likewise, we express no opinion on what happens when a waiver request is
made before the expiration of time to appeal but the superior court does not rule on it
until afterwards. RG Garcia did not request a waiver until three months after the deadline
for posting the undertakings.
                                               4
              Palagin then examined the legislative intent behind the statutory text. Prior
to 2010, the statute was much less specific as to when the undertaking was due. It merely
stated that "'"[w]henever an employer files an appeal pursuant to this section, the
employer shall post an undertaking with the reviewing court in the amount of the order,
decision, or award."'" (Palagin, supra, 222 Cal.App.4th at p. 133.) A case interpreting
this prior version of the statute, Progressive Concrete, Inc. v. Parker (2006) 136
Cal.App.4th 540, 547–548, found the language to be directory rather than jurisdictional,
in part because it failed to specify the consequences of not filing an undertaking.
Progressive Concrete contrasted the language in the prior version of section 98.2 with
language in another statute requiring an undertaking—where the requirement was
jurisdictional—that characterized the undertaking as "a condition precedent to filing an
appeal." (§ 2673.1, subd. (g).) By amending section 98.2, subdivision (b) to include
similar language in 2010, the Legislature sought to overturn Progressive Concrete,
which, according to a senate committee analysis, "'is plainly inconsistent with the clear
purpose behind enactment of Section 98.2(b).'" (Palagin, supra, 222 Cal.App.4th at p.
135, italics omitted.)
              Lastly, Palagin explained that a jurisdictional interpretation of the
undertaking requirement was consistent with the public policy underlying the statute.
The purpose of section 98.2, subdivision (b) "is to 'discourage employers from filing
frivolous appeals and from hiding assets in order to avoid enforcement of the judgment.'"
(Palagin, supra, 222 Cal.App.4th at p. 137.) Palagin reasoned that treating the
undertaking deadline as jurisdictional furthers these goals by discouraging employers
from filing frivolous appeals merely for the purpose of delay and minimizing the time in
which an employer might hide assets. (Ibid.)
              We agree with Palagin that the undertaking requirement in section 98.2,
subdivision (b) is mandatory and jurisdictional. Because RG Garcia failed to post the




                                             5
required undertakings or request a waiver before the time to appeal expired, the superior
court lacked jurisdiction over the appeals and properly dismissed the actions.
              The judgments are affirmed. Costs to respondents.
              NOT TO BE PUBLISHED.




                                          PERREN, J.


We concur:




              GILBERT, P. J.




              YEGAN, J.




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                                  Rebecca S. Riley, Judge
                             Superior Court County of Ventura




               Law Offices of Peter C. Giffin, Peter C. Giffin, Rosa E. Shelton for
Appellant.
               Division of Labor Standards Enforcement, William A. Reich for
Respondents.




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