Filed 3/7/14 Weseman v. Hertle CA5



                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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

                                       FIFTH APPELLATE DISTRICT

CHRISTOPHER WESEMAN et al.,
                                                                                           F065375
         Plaintiffs and Appellants,
                                                                                 (Super. Ct. No. 670699)
                   v.

JOHN WILLIAM HERTLE,                                                                     OPINION
         Defendant and Respondent.



         APPEAL from a judgment of the Superior Court of Stanislaus County. William
A. Mayhew, Judge.
         Mayall Hurley, Nicholas J. Scardigli and John P. Briscoe for Plaintiffs and
Appellants.
         Law Offices of Brunn & Flynn, Timothy T. Flynn and John K. Peltier for
Defendant and Respondent.
                                                        -ooOoo-
       This is an appeal from a judgment of the Superior Court of Stanislaus County.
Appellants, Christopher and Angela Weseman,1 leased a single-family unit at a complex
managed by respondent, John William Hertle. Hertle hired Chris to report incidents,
maintain the complex, and perform other tasks for a monthly rent reduction. Angela was
informed by one of Hertle’s employees that she was hired to do the same. The
Wesemans served in this capacity for the period August 1, 2009 to January 31, 2011, at
which point Hertle terminated Chris’s services. The Wesemans subsequently claimed
unpaid wages, interest, penalties, fees, and costs pursuant to Labor Code section 1194,
inter alia. The superior court found neither Chris nor Angela to be an employee and ruled
in favor of Hertle. On appeal, the Wesemans contend the judgment was not supported by
substantial evidence and the statement of decision did not adequately explain the court’s
determination as to the material issue of employment status. We find substantial
evidence an employment relationship did not exist. Hertle did not have complete or
authoritative control over the results of the Wesemans’ work. We also find the statement
of decision adequately disclosed the basis for the judgment.




1      In this opinion, we distinguish between appellants by their first names. No
disrespect is intended.
       In keeping with the way appellants were referenced in the trial court pleadings,
exhibits and settled statement, we will refer to Christopher as Chris. Angela was
sometimes referenced as Angie in the record.



                                            2.
                                  FACTUAL HISTORY2
       Hertle, a licensed real estate broker, owns and operates EXIT Realty Touchstone
(EXIT) in Modesto, California. He manages and facilitates purchases and sales of
residential real property. On June 15, 2007, Hertle was hired by Maurea “Ray” Mitchell
to manage 15 two-bedroom single family units at 456 B Street in Empire, California (B
Street). He served in this capacity until late 2011.
       Prior to May 26, 2009, one of B Street’s residents functioned as Hertle’s “‘eyes
and ears.’”3 For reduced rent, he apprised Hertle of what he observed on-site. When this
resident “disappeared,” Hertle and Mitchell agreed to find someone else for the job. On
May 26, 2009, the Wesemans applied for one of the vacant units at B Street.4 They
subsequently signed a lease and agreed to pay $625 per month. The Wesemans lived at B
Street from June 2009 to February 2012. In July 2009, they were invited by Bertha
Mercado, EXIT’s receptionist, to apply for the “eyes and ears” position. Hertle



2       The record consists of the clerk’s transcript and, in lieu of the reporter’s transcript,
a settled statement. (See Cal. Rules of Court, rule 8.137; see also People ex rel. Dept.
Pub. Works v. Bond (1964) 231 Cal.App.2d 435, 437 [“Evidence to support the findings
of fact and conclusions of law and the judgment must appear in the settled statement
[citation]; we are bound to assume that enough appears in the settled statement to enable
us to decide whether reversible error was committed; and we must make our ruling upon
what is affirmatively shown by the record [citations].”].)
3      Unsurprisingly, the parties disagree on the name of the position: Hertle favors
“eyes and ears” while the Wesemans prefer “manager,” “on-site manager,” “landlord,”
and so forth. “The label placed by the parties on their relationship is not dispositive ….”
(S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341,
349 (Borello).) Solely for the sake of consistency, we refer to the position as “eyes and
ears.”
4      Although the Wesemans indicated in their rental application that they had never
been evicted, they later admitted that they had been evicted twice prior to May 26, 2009.
Hertle maintained that he would not have rented the unit to Chris or hired him as “eyes
and ears” had he been aware of these evictions.



                                               3.
interviewed Chris5 and specified that “eyes and ears” maintained the property, picked up
litter, posted three-day notices, and reported tenants’ disputes, theft, vandalism, and other
disruptions to EXIT’s staff, all of which amounted to an estimated 10 to 20 hours of work
per month. In return, “eyes and ears” received a monthly rent reduction. Hertle also
advised that, outside of his “eyes and ears” role, Chris could submit bids for repair jobs at
B Street. Shortly after the interview, with Mitchell’s authorization, Hertle hired Chris.
Mercado later informed Angela she was also hired.6
       For the period August 1, 2009 to January 31, 2011, the Wesemans served as “eyes
and ears” for a monthly rent reduction of $175, later increased to $225 after March 31,
2010. Hertle provided a lawnmower to Chris for use in maintenance and told him how,
when, and where to post three-day notices, but otherwise did not offer directions
concerning his duties. He did not authorize either Chris or Angela to collect rent, screen
tenants, negotiate leases, investigate crimes, or make citizen’s arrests. Mercado, who
regularly communicated with the Wesemans via telephone and e-mail, occasionally
instructed them to check pets, post advertisements, show vacant units, and notify her
about potential tenants. Kimberly Baker and Linda Mello, two of EXIT’s other
employees, gave instructions regarding smoke detector inspections and other
maintenance-related matters.
       The Wesemans testified they monitored B Street, listened to tenants’ complaints,
picked up garbage, chased away trespassers, posted advertisements, showed vacant units



5      Angela, who drove Chris to EXIT’s office for the interview, waited in the car.
6      Hertle denied that he hired Angela as “eyes and ears,” but the record suggests that
he and his staff treated her as such. For instance, in an e-mail dated August 31, 2010,
Hertle thanked Angela for her help, counseled her regarding a tenant’s cockroach
infestation, and encouraged her to “[k]eep it up!” He also identified her in the
termination letter dated January 31, 2011 (see post, p. 5).



                                             4.
three to five times,7 and cooperated with police officers dispatched to the complex. Chris
fixed pilot lights, inspected smoke detectors, mowed lawns, performed yard work and
other maintenance, checked pets, posted a three-day notice once, and cleaned the units.
Angela distributed rental applications to prospective tenants, leased units, collected rent
once, posted notices, and mediated domestic disputes. Between August 13, 2009 and
February 2, 2011, she sent 600 e-mails to EXIT staff detailing various incidents and
activities on-site. Chris worked an average of four-to-six hours daily while Angela
worked between three and 12 hours daily.
       Besides his duties as “eyes and ears,” Chris submitted and won bids for three to
four repair jobs at B Street, for which he was paid a total sum of approximately $3,000.
He also advertised himself as an independent contractor on Craigslist and worked roughly
twice a week for American Info Mart, a property maintenance company. In that capacity,
Chris cleaned, secured, and maintained various real estate properties.
       In a letter dated January 31, 2011, Hertle informed “Chris & Angie” their
“services as on-site manager are no longer needed.” On October 15, 2011, Mitchell hired
Sandy Preston to replace Hertle. Preston testified she worked one to two hours daily as
property manager of B Street and another 24-unit complex. She collected rent, paid bills,
showed units, and scheduled maintenance calls.
                               PROCEDURAL HISTORY
       The Wesemans filed individual claims with the Labor Commissioner on July 22,
2011, for unpaid wages, interest, and penalties. Following a hearing, the commissioner
awarded each $1,332.45. The Wesemans appealed to the superior court, which

7      Hertle and Baker testified that prospective tenants who wanted to look at a vacant
unit usually needed to visit EXIT’s office and put down a $20 deposit for the key. They
inspected the unit on their own and rarely, if ever, interacted with the Wesemans.
Nonetheless, Hertle did not dispute that Chris showed units on occasions when the latter
was performing maintenance on those units and already possessed the keys.



                                             5.
conducted a de novo bench trial. The court found neither Chris nor Angela to be an
employee. In its statement of decision,8 the superior court detailed both the plaintiffs’
position and the defendant’s position and then made the following findings:

       “The Court finds that the Plaintiffs were simply not credible. The
       testimony of Sandra Preston stands in vivid contrast to that of the Plaintiffs.
       Ms. Preston is a true property manager because her duties exceed those
       duties which Plaintiffs claim to have performed. For example, Ms. Preston
       actually collects rents, pays bills, shows the units and schedules
       maintenance. In addition, Ms. Preston manages forty (40) units, including
       those units in question here. Ms. Preston testified that she spends four (4)
       to ten (10) hours per week managing the forty (40) units. [¶] … [¶][9]
       … [T]he Court finds against Plaintiffs on all causes of action and all legal
       theories that they have advanced in this matter. The Court finds that neither
       Defendant nor Ray Mitchell engaged the services of Plaintiff ANGELA
       WESEMAN. The Court further finds that Ray Mitchell … engaged the
       services of Plaintiff CHRISTOPHER WESEMAN as an independent
       contractor in his role as ‘eyes and ears’ at 456 B Street in Empire,
       California.”
The Wesemans filed a notice of appeal on June 25, 2012.




8      Over the Wesemans’ objection, the court adopted Hertle’s proposed statement of
decision.
9      The court further remarked:
       “In addition, each Plaintiff committed fraud on his and her rental
       application at [456] B Street by denying two (2) previous evictions. The
       Court finds that it is probable that Defendant would not have rented a
       residence to the Plaintiffs had Plaintiffs been truthful in their response to
       the question about eviction. Defendant thus would not ever have retained
       Plaintiffs in any sort of an ‘eyes and ears’ capacity. Plaintiffs’ fraud on the
       applications for a rental unit at 456 B Street in Empire is sufficient to bar
       any recovery by either of them in this matter.”
Because our holding hinges on the issue of employment status, we need not address the
Wesemans’ contention that the court improperly applied the after-acquired-evidence
doctrine.



                                              6.
                                      DISCUSSION
       The question before us is whether substantial evidence supported the superior
court’s judgment10 and whether the statement of decision provided adequate findings
regarding employment status.11
I.     Substantial evidence supports the superior court’s judgment that the
       Wesemans were not Hertle’s employees.
       a. Standard of Review
       Under the general rules applicable to a trial court’s statement of decision, an
appellate court applies the substantial evidence rule to findings of fact. (Central Valley
General Hospital v. Smith (2008) 162 Cal.App.4th 501, 513; see also In re Marriage of
Schmir (2005) 134 Cal.App.4th 43, 49-50 & fn. 11 [appellate court reviews entire record
as well as statement of decision to determine whether substantial evidence supports trial
court’s judgment].) “‘[T]he determination of employee or independent-contractor status
is one of fact ….’ [Citation.] As a result, appellate case law in this area arises primarily
in the context of substantial evidence review of the determinations of the relevant fact
finder.” (Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal.App.4th 72, 78.)

10     The Wesemans ask us to review de novo the issue of employment status. We
decline. Ordinarily, the question of whether an individual engaged to perform services
for another is an employee or independent contractor is one of fact and subject to the
substantial evidence rule. The question becomes one of law only if a single conclusion
may be inferred from the facts. (See Borello, supra, 48 Cal.3d at p. 367.) In view of the
record, we find de novo review inappropriate.
11      Hertle asserts that the Wesemans cannot challenge the adequacy of the statement
of decision because they did not specifically raise this argument in the settled statement.
(See Cal. Rules of Court, rule 8.137(b)(2) [“If the condensed narrative describes less than
all the testimony, the appellant must state the points to be raised on appeal; the appeal is
then limited to those points unless, on motion, the reviewing court permits otherwise.”].)
We disagree. In the instant case, the settled statement reads, in part: “The issue[] on
appeal [is] whether the Court erred … in ‘finding against the Plaintiffs on all causes of
actions and all legal theories that they have advanced in this matter.’” We construe this
language to encompass the Wesemans’ argument.



                                             7.
       In an earlier decision, we explained the substantial evidence rule:

       “‘“Where findings of fact are challenged on a civil appeal, we are bound by
       the ‘elementary, but often overlooked principle of law, that … the power of
       an appellate court begins and ends with a determination as to whether there
       is any substantial evidence, contradicted or uncontradicted,’ to support the
       findings below. [Citation.] We must therefore view the evidence in the
       light most favorable to the prevailing party, giving it the benefit of every
       reasonable inference and resolving all conflicts in its favor in accordance
       with the standard of review so long adhered to by this court.” [Citation.]’
       [Citations.] [¶] Moreover, we defer to the trier of fact on issues of
       credibility. [Citation.] ‘[N]either conflicts in the evidence nor “‘testimony
       which is subject to justifiable suspicion … justif[ies] the reversal of a
       judgment, for it is the exclusive province of the [trier of fact] to determine
       the credibility of a witness and the truth or falsity of the facts upon which a
       determination depends.’” [Citations.]’” (Lenk v. Total-Western, Inc.
       (2001) 89 Cal.App.4th 959, 968; see also In re Dakota H. (2005) 132
       Cal.App.4th 212, 228 [“We do not reweigh the evidence, evaluate the
       credibility of witnesses, or resolve evidentiary conflicts.”].)
Substantial evidence is reasonable, credible, of solid value, and of ponderable legal
significance. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627,
1633.) A judgment will be upheld if it is supported by substantial evidence, even if
substantial evidence to the contrary also exists and the trial court might have rendered a
different result had it believed this evidence. (In re Dakota H., supra, at p. 228; see also
In re Michael G. (2012) 203 Cal.App.4th 580, 589 [“The substantial evidence standard of
review is generally considered the most difficult standard of review to meet, as it should
be, because it is not the function of the reviewing court to determine the facts.”].)
       b. Analysis
       “[W]hen a statute fails to define the term ‘employee,’ courts routinely look at the
common law definition for guidance ….” (Bradley v. Department of Corrections &
Rehabilitation (2008) 158 Cal.App.4th 1612, 1626.) Traditionally, whether the hirer has
the right to control the manner and means of accomplishing the desired result is the most
significant indicium of an employment relationship. (See Borello, supra, 48 Cal.3d at



                                              8.
p. 350.) The Supreme Court has recognized at least 14 additional “‘secondary’” factors
to consider: (1) whether the hirer has the right to discharge at will; (2) whether the
individual engaged to perform services for the hirer is also engaged in a distinct
occupation or business; (3) whether the work is usually performed under the direction of
the hirer or by a specialist without supervision; (4) the skill needed to perform the work;
(5) whether the hirer supplies the instrumentalities, tools, and place of work; (6) how long
the services are to be performed; (7) whether payment is based on time or by the job; (8)
whether the work is part of the hirer’s regular business; (9) whether the parties believe
they are creating an employment relationship; (10) the putative employee’s opportunity
for profit or loss depending on managerial skill; (11) the putative employee’s investment
in equipment or materials required for the task, or his employment of helpers; (12)
whether the service rendered requires a special skill; (13) the degree of permanence of the
relationship; and (14) whether the service rendered is an integral part of the hirer’s
business. (Id. at pp. 350-351, 355.) These indicia “‘cannot be applied mechanically as
separate tests; they are intertwined and their weight depends often on particular
combinations.’ [Citation.]” (Id. at p. 351, fn. omitted.) “The prevailing view is to
consider the totality of the circumstances, reflect[] upon the nature of the work
relationship between the parties, and plac[e] emphasis on the control exercised by the
[putative] employer over the [putative] employee’s performance of … duties.” (Bradley
v. Department of Corrections & Rehabilitation, supra, at p. 1626.)
       Control remains the principal factor in determining employment status. (Varisco
v. Gateway Science & Engineering, Inc. (2008) 166 Cal.App.4th 1099, 1103.)
Specifically, “‘the right to exercise complete or authoritative control, rather than mere
suggestion as to detail, must be shown. [Citations.]’” (Ibid.; see also McDonald v. Shell
Oil Co. (1955) 44 Cal.2d 785, 790 [hirer of independent contractor may exercise broad
general power of supervision and control over the results of the work to ensure
satisfactory performance, including the right to inspect, the right to stop the work, the

                                             9.
right to make suggestions or recommendations as to details for the work, and the right to
prescribe alterations or deviations in the work, without creating an employment
relationship].) EXIT’s staff routinely interacted with the Wesemans via telephone and e-
mail and instructed them to perform certain tasks, but did not direct them to do so in any
particular manner. Hertle gave instructions to Chris about posting three-day notices and
supplied a lawnmower for use in maintenance, but otherwise offered minimal guidance.
Meanwhile, the Wesemans served as “eyes and ears” at B Street without supervision and
were vested with the discretion to determine precisely how to carry out their assorted
duties. These circumstances do not evince Hertle’s complete or authoritative control over
the Wesemans. Moreover, the record shows that Chris advertised himself as an
independent contractor on Craigslist and performed services for a separate property
maintenance company. Substantial evidence supports the superior court’s ruling that
neither Chris nor Angela were Hertle’s employees.
II.    The superior court adequately disclosed the basis for its judgment in the
       statement of decision.
       Upon the request of any party in a nonjury trial, the superior court shall issue a
statement of decision “explaining the factual and legal basis for its decision as to each of
the principal controverted issues ….”12 (Code Civ. Proc., § 632.) “[A] statement of
decision is adequate if it fairly discloses the determinations as to the ultimate facts and
material issues in the case.” (Central Valley General Hospital v. Smith, supra, 162
Cal.App.4th at p. 513.) An ultimate fact refers to a core fact, such as an essential element
of a claim, and is distinguished from evidentiary facts and legal conclusions. (Ibid.; see
also Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1124-1125 [“A statement
of decision need not address all the legal and factual issues raised by the parties. Instead,


12     The court may issue a statement of decision sua sponte. (See In re Marriage of
Rising (1999) 76 Cal.App.4th 472, 476-477, fn. 7.)



                                             10.
it need do no more than state the grounds upon which the judgment rests, without
necessarily specifying the particular evidence considered by the trial court in reaching its
decision.”]; cf. Miramar Hotel Corp. v. Frank B. Hall & Co. (1985) 163 Cal.App.3d
1126, 1127, 1129 [minute order enumerating legal conclusions and lacking any
explanation does not constitute a proper statement of decision].) A material issue is
“‘relevant and essential to the judgment and closely and directly related to the trial
court’s determination of the ultimate issues in the case.’” (R. E. Folcka Construction,
Inc. v. Medallion Home Loan Co. (1987) 191 Cal.App.3d 50, 53, quoting Kuffel v.
Seaside Oil Co. (1977) 69 Cal.App.3d 555, 565.)13
       We find the statement of decision adequate.14 Regarding the essential element of
employment status (see Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th
1193, 1198 [an employee may assert statutory labor claims while an independent
contractor cannot]; Grubb & Ellis Co. v. Spengler (1983) 143 Cal.App.3d 890, 897
[minimum wage laws do not apply to individuals who do not qualify as employees under
common law “control” rule]), the superior court determined that neither Chris nor Angela
were Hertle’s employees. Therefore, neither was eligible to advance a wage claim. The
court highlighted the Wesemans’ lack of credibility and Preston’s testimony. Although
the Wesemans assert that the court should have articulated its findings as to each
indicium of employment, it was under no obligation to do so. (See Muzquiz v. City of
Emeryville, supra, 79 Cal.App.4th at p. 1125 [“‘[A] trial court rendering a statement of

13    In R. E. Folcka Construction, Inc. v. Medallion Home Loan Co., supra, 191
Cal.App.3d at page 54, the Fourth Appellate District found no meaningful distinction
between the terms “‘material’” and “‘principal.’”
14     Even if we found otherwise, the error would be deemed harmless “unless the
evidence is sufficient to sustain a finding in favor of the complaining party which would
have the effect of countervailing or destroying other findings.” (Kazensky v. City of
Merced (1998) 65 Cal.App.4th 44, 68; Sperber v. Robinson (1994) 26 Cal.App.4th 736,
745.)



                                             11.
decision under [Code of Civil Procedure] section 632 is required to state only ultimate
rather than evidentiary facts because findings of ultimate facts necessarily include
findings on all intermediate evidentiary facts necessary to sustain them. [Citation.]’
[Citations.]”].)
                                     DISPOSITION
       The judgment of the superior court is affirmed. Costs on appeal are awarded to
respondent.


                                                                 _____________________
                                                                            DETJEN, J.
WE CONCUR:


 _____________________
 POOCHIGIAN, Acting P.J.


 _____________________
 PEÑA, J.




                                            12.
