Shaun Lacoursiere v. Camwest Development, Inc. & Eric H. Campbell

To be considered compensation protected by the



provisions of Washington's anti-kickback statute, chapter 49.52 RCW (the Wage



Rebate Act or WRA), a bonus that is discretionary must be given regularly to create an



implied contract and reliance, otherwise it is a mere gratuity. Additionally, the Wage



Rebate Act is violated only where an employer collects a "rebate" of wages already



paid.



Here, the discretionary bonuses provided to Shaun LaCoursiere by his employer



CamWest Development were not given regularly, did not create an implied contract



that they would be paid every year, and LaCoursiere could not have relied upon them,



given he knew CamWest had no obligation to provide them. Moreover, even if the



bonuses amount to wages, the record here shows there was no rebate to CamWest,



and that instead, CamWest paid LaCoursiere precisely as he agreed to be paid under



the employment contract. As such, the trial court properly dismissed LaCoursiere's



WRA claim, and we affirm that order.



We reverse, however, the court's order denying CamWest's motion for attorney



fees. A trial court may award attorney fees for claims other than breach of contract



when the contract is central to the existence of the claims, i.e., when the dispute



actually arose from the agreements. Here, LaCoursiere's claim arose out of the parties'



employment agreement and that agreement was central to the dispute.



Affirmed in part, reversed in part, and remanded for further proceedings.



FACTS



CamWest Development, Inc. ("CamWest") is in the business of building of new



homes in King and Snohomish Counties. Eric Campbell is president of CamWest.



Shaun LaCoursiere started working at CamWest in May 2003. On January 1, 2005,



CamWest promoted LaCoursiere to the position of project manager, entering into a



written employment agreement with LaCoursiere.



Under the employment agreement, LaCoursiere agreed to participate in a



discretionary bonus structure ("the LLC Bonus Structure") associated with membership



in CamWest Managers, LLC ("the LLC"). The LLC is a separate entity from CamWest.



Its primary purposes are to loan money to CamWest for real estate investment and to



provide a return to its members. The LLC's members consist primarily of CamWest



management employees who have chosen to acquire membership interests in the LLC.





The LLC Bonus Structure involves the payment of a discretionary bonus to



CamWest's project managers, the amount of which is based upon employee



performance and CamWest's construction profits. If CamWest exercises its discretion



and issues a bonus to a project manager, the bonus is calculated and paid as follows:



? The Project Manager's performance for the year is rated on the

basis of several criteria, and the Project Manager is assigned a score

based upon that performance rating;



? CamWest credits the Project Manager with a percentage of the net

profits generated by projects managed by the Project Manager that

year;



? CamWest credits a percentage of the same net profits to a "pool" of

funds;



? The Project Manager is credited with a pro rata share of the "Project

Manager pool," based upon his performance rating for the year;



? CamWest distributes the resulting bonus amount to the Project

Manager, with 44% of the bonus issued as a direct payment to the

employee;



? The remaining 56% of the bonus is contributed to the Project

Manager's capital account in the LLC.



Clerk's Papers (CP) 102-03, 160.



Once a project manager makes his first capital contribution to the LLC, he



acquires a membership interest in the LLC. That interest is subject to a vesting



schedule set forth in the LLC Agreement. A new member's membership interest in the



LLC is 20 percent vested upon the member's first capital contribution. After the first



anniversary of membership in the LLC, the individual's membership interest is 40



percent vested and thereafter vests an additional 20 percent annually. The above-



described LLC Bonus Structure is voluntary, and some CamWest employees opt out of



the LLC Bonus Structure, choosing to instead receive a pure percentage-of-salary



bonus. Participation in the LLC Bonus Structure and membership in the LLC are not



requirements of employment with CamWest.



When he was promoted, LaCoursiere reviewed and voluntarily signed the



Employment Agreement. He testified that he did not need more time to review it, and



that he did not sign it under threat of any kind. LaCoursiere received bonuses for three



years: 2005, 2006, and 2007. For 2005, LaCoursiere's total bonus amount was



$121,021.00. Of that amount, CamWest issued $49,961.80 (41.28 percent) as a



contribution on behalf of LaCoursiere to the LLC. CamWest paid LaCoursiere directly



in the amount of $30,255.25 (the remaining 58.72 percent of the bonus minus tax



withholdings).



For 2006, LaCoursiere's total bonus amount was $98,690.00. Of that amount,



CamWest issued $40,348.96 (40.88 percent) as a capital contribution on behalf of



LaCoursiere to the LLC. CamWest paid LaCoursiere directly in the amount of



$24,672.50 (the remaining 59.12 percent of the bonus minus tax withholdings).



For 2007, LaCoursiere's total bonus amount dropped to $31,745.00. Of that



amount, CamWest issued $16,710.36 (52.64 percent) as a contribution on behalf of



LaCoursiere to the LLC. CamWest paid LaCoursiere directly in the amount of



$4,444.30 (the remaining 47.36 percent of the bonus minus tax withholdings).



Due to the economic downturn, CamWest did not pay any discretionary bonuses



for work performed in 2008. LaCoursiere does not claim that he was entitled to any



bonus for that year. In fact, he acknowledges that he was never told by CamWest



management that he would "receive a bonus every year." CP at 56.



Because of reduced business in 2008, CamWest's need for project managers



declined. Rather than immediately laying off the Project Managers, CamWest chose to



transfer the affected employees to "Senior Laborer" positions, providing them with the



option to leave if they did not want to accept the change in position. CamWest initiated



two rounds of transfers and layoffs of project managers, ultimately reducing the number



of project managers from approximately 27 to 12. LaCoursiere was one of the project



managers affected by the second round. LaCoursiere chose to accept the transfer to



senior laborer, rather than ending his employment with CamWest. According to



CamWest, following his transfer to senior laborer, LaCoursiere demonstrated a pattern



of poor attendance and punctuality. CamWest fired LaCoursiere on March 6, 2009.



According to the LLC Agreement, when a member of the LLC leaves CamWest,



that individual must sell his membership interest to Eric Campbell, CamWest, or the



remaining LLC members. For purposes of determining the individual's vested



membership interest in the LLC, "the purchase and sale [of the membership interest]



shall be deemed to have occurred upon the date of the event triggering the purchase



and sale." CP at 196. "[I]n the event of the termination of a Member's employment with



CamWest [the triggering event] shall be the date of such termination." Id. On the date



he was fired, LaCoursiere's membership interest in the LLC was 60 percent vested.



LaCoursiere does not appear to dispute that he received payment for his 60 percent



vested membership interest.





LaCoursiere sued CamWest and Campbell, arguing he was entitled to



reimbursement for the full amount of his capital contributions to the LLC, and that those



contributions amounted to violations of the WRA. CamWest moved for summary



judgment, arguing the discretionary bonuses were not "wages" subject to the WRA.



CamWest also sought prevailing party attorney fees under the employment agreement.



The trial court granted the motion for summary judgment, but denied CamWest's motion



for fees. LaCoursiere appeals dismissal of his case, and CamWest cross-appeals the



order on its motion for fees.



DISCUSSION



Discretionary Bonuses as Wages



LaCoursiere argues the bonus structure set forth in CamWest Managers' LLC



agreement violates the prohibition against rebate of wages in Washington's Anti-



Kickback statute, the Wage Rebate Act. We disagree.



The criminal provision of the WRA bars the rebate of wages back to employers:



Any employer or officer, vice principal or agent of any employer,

whether said employer be in private business or an elected public

official, who



(1) Shall collect or receive from any employee a rebate of any

part of wages theretofore paid by such employer to such

employee;



. . . .



Shall be guilty of a misdemeanor.



RCW 49.52.050(1). The Washington Legislature enacted the WRA as an Anti-Kickback



statute in 1939 "to prevent abuses by employers in a labor-management setting, e.g.,



coercing rebates from employees in order to circumvent collective bargaining



agreements." Ellerman v. Centerpoint PrePress, Inc., 143 Wn.2d 514, 519-20, 22 P.3d



795 (2001). The "fundamental purpose of the legislation, as expressed in both the title



and body of the act, is to protect the wages of an employee against any diminution or



deduction therefrom by rebating, underpayment, or false showing of overpayment of



any part of such wages." Id.



LaCoursiere contends the percentage of the bonuses (56%) that went into



project managers' capital accounts in CamWest Managers, LLC amount to prohibited



wage rebates under RCW 49.52.050(1). A threshold question we must answer is



whether the bonus structure described in the employment contract amounted to



"wages" under chapter 49.52 RCW. LaCoursiere argues the bonuses are wages. He



asserts that under Flower v. T.R.A. Industries, Inc., 127 Wn. App. 13, 34, 111 P.3d



1192 (2005), wages are simply anything that is paid "by reason of employment,"



(quoting Hayes v. Trulock, 51 Wn. App. 795, 806, 755 P.2d 830 (1988). LaCoursiere



misreads Flower, and moreover, the facts of that case are significantly different than



those at issue here.



In Flower, an employer in Washington State, Huntwood, heavily recruited



Wesley Flower, who lived with his family in Alabama. To entice Flower to accept its job



offer, Huntwood offered him a $20,000 "moving allowance" consisting of $10,000 to



cover moving expenses and a $10,000 signing bonus. The agreement further provided



that all moving expenses over $10,000 reduced the signing bonus and that if Flower left



the company within one year of employment, he agreed to repay the moving expenses.



Flower accepted the job, sold his house, and relocated to Washington. His moving



expenses were well under $10,000. Very shortly after his arrival, Huntwood fired Flower



and did not pay the bonus. Flower sued, and the trial court granted summary judgment



in favor of Huntwood. This court reversed. Huntwood argued it was not obligated to pay



the bonus because it was intended merely an "expense" for Flower's relocation and



further, that Flower was not entitled to it because he left the company within a year of



being hired. Flower, 127 Wn. App. at 33. We rejected Huntwood's argument, not



because all bonuses amount to wages; but rather, because "[t]he terms of the contract



clearly state that the bonus is to compensate Mr. Flower for signing on with the



company. His act of taking the job entitled him to the bonus." Flower, 127 Wn. App. at



36. Thus, we held only that Flower was entitled to the bonus because he had



performed under the terms of the contract by signing with Huntwood. We did not hold,



as LaCoursiere contends, that Flower was entitled to the bonus simply by reason of his



employment with Huntwood.



It is undisputed that the bonuses at issue here are discretionary. Discretionary



bonuses are generally considered gratuities and not wages. Byrne v. Courtesy Ford,



Inc., 108 Wn. App. 683, 690-91, 32 P.3d 307 (2001). But if the bonus is given regularly



so as to create an expectation that it will continue, then it may be considered a wage



under an implied contract. Id. "[T]o be considered compensation, a discretionary bonus



must be given regularly to create an implied contract and reliance, otherwise it is a



mere gratuity." Id. at 691. In Byrne, we held that an employee's bonus, which was a



single television given to the employee one year, did not establish reliance or an



implied contract to include televisions as wages. Id. at 690-91. As such, the television



was nothing more than a gratuity. Id.1



Byrne relied on two cases: Simon v. Riblet Tramway Co., 8 Wn. App. 289, 505



P.2d 1291 (1973) and Powell v. Republic Creosoting Co., 172 Wash. 155, 19 P.2d 919



(1933). In Simon, this court found an implied contract where the plaintiff received a



bonus in each of the 10 years he was employed before leaving, and where his bonuses



had increased or remained the same each year. Simon, 8 Wn. App. at 290-91.



Likewise, in Powell, the court found bonuses amounted to wages where the employee



received bonuses that increased in amount every year from 1916 until 1929. Powell,



172 Wash. at 156.



While the facts in this case are not as clear cut as those in Byrne, they are



clearly distinguishable from those in Simon and Powell. Unlike the employees in Simon



and Powell, LaCoursiere did not receive ever-increasing bonuses for more than a



decade. Instead, he received bonuses in three of the four years he worked at



CamWest: 2005, 2006, and 2007. As LaCoursiere admits, he received no bonus in



2008, and the three bonuses he did receive decreased each year. Moreover,



LaCoursiere signed an employment contract in this case. That contract was remarkably



clear regarding the nature of LaCoursiere's bonuses. CamWest could provide a bonus



"in its sole discretion and determination[.]" CP at 102. Indeed, LaCoursiere



acknowledged to the superior court that CamWest was not obligated to give him a



bonus every year: "the plaintiff is not arguing that an implied contract somehow



obligates the defendants to pay him a fourth bonus (either in full, or in a pro rata



amount)." CP at 394. Moreover, LaCoursiere admitted he was never told by CamWest



that he would receive a bonus every year. Under these circumstances, the bonuses



were mere gratuities: they were not given regularly, did not create an implied contract



that they would be paid every year, and LaCoursiere could not have relied upon them,



given he knew CamWest had no obligation to provide them. Byrne, 108 Wn. App. at



689, 691.



LaCoursiere also argues that even although CamWest had the discretion to pay



no bonus at all, once it exercised its discretion and decided to pay a bonus, that bonus



qualified as wages under the WRA, and as such, the percentage of the bonus that was



directed into his project manager capital account was a prohibited rebate. But even if



the bonus did amount to wages, we reject LaCoursiere's argument. To violate



subsection (1) of RCW 49.52.050, an employer must collect or receive a "rebate" of



wages already paid. Here, there was no rebate to CamWest. Although LaCoursiere



characterizes the capital account funds as having been "diverted" from him, they were



not. Indeed, CamWest paid LaCoursiere just as he agreed to be paid under the



employment contract, i.e., 44 percent of his bonus (less withholding) being paid directly



to him, and 56 percent being paid into his own capital account with the LLC.





LaCoursiere implies the funds in the capital account were not truly his because



he did not actively manage how those funds were used or invested. See Reply Brief at



8. But again, LaCoursiere agreed in writing that the funds in the capital account would



be used "for loans to CamWest for its use as working capital." CP at 178. LaCoursiere



also appears to argue CamWest received a rebate in that it distributed only 60 percent



of the funds in his capital account at the time he left the company. See Reply Brief at



11 ("they still possess 40% of that sum and refuse to disgorge it"). This argument



ignores the plain language of the LLC agreement, which contains a vesting schedule



for capital account funds. Given LaCoursiere left when his capital account funds were



only 60 percent vested, he received precisely the funds he agreed to receive when he



signed the LLC agreement.



Thus, even if the LLC bonus structure amounts to a prohibited rebate of wages,



LaCoursiere knowingly submitted to the violation, and under the WRA, he cannot



receive the benefits of the WRA:



. . . PROVIDED, HOWEVER, That the benefits of this section shall

not be available to any employee who has knowingly submitted to

such violations.



RCW 49.52.070. LaCoursiere claims this provision applies only if the employee knows



about the rebates and also knows the rebates are illegal under chapter 49.52 RCW.



We reject this argument. LaCoursiere cites no authority for his proposition, and it is



contrary to caselaw on the issue, which holds the requisite knowledge is not potential



illegality under the WRA, but is instead the employee's knowledge that he is deferring



payment decisions to the employer. See Chelius v. Questar Microsystems, Inc., 107



Wn. App. 678, 682, 27 P.3d 681 (2001) (knowing submission requires deliberately and



intentionally deferring to employer's decision on payment).



Here, as is described above, LaCoursiere voluntarily entered into the



employment and LLC agreements. These agreements made it clear that the bonuses



were entirely discretionary; that the purpose of the capital accounts was to provide the



LLC with capital; and that the capital account funds were subject to a vesting and



forfeiture schedule. Under these circumstances, we conclude LaCoursiere "knowingly



submitted" to any violation.2



We affirm the order granting CamWest's motion for summary judgment.



Attorney Fees



On cross-appeal, CamWest argues that the trial court erred by denying its



motion for attorney fees under the employment agreement, which provides for



prevailing party fees in the event of an action arising under the agreement. CamWest



notes that the trial court interlineated in its order denying the motion for fees that the



complaint alleged "only a violation of the Wage Rebate Act" and not breach of contract



claims. CP at 525. CamWest contends this is an erroneous interpretation of the law,



because although LaCoursiere did include a breach of contract claim in its complaint,



the action here arose out of the employment agreement and that agreement was



central to the dispute. LaCoursiere does not respond to this argument. Instead, he



asserts that "employers are never entitled to fees under the WRA" without



acknowledging CamWest's argument.



We agree with CamWest on this issue. A court "may award attorney fees for



claims other than breach of contract when the contract is central to the existence of the



claims, i.e., when the dispute actually arose from the agreements." Deep Water



Brewing, LLC v. Fairway Resources, Ltd., 152 Wn. App. 229, 278, 215 P.3d 990 (2009)



(citing Hemenway v. Miller, 116 Wn.2d 725, 742-43, 807 P.2d 863 (1991) and Seattle-



First Nat'l Bank v. Wash. Ins. Guar. Ass'n, 116 Wn.2d 398, 413, 804 P.2d 1263



(1991)); see also Hill v. Cox, 110 Wn. App. 394, 411-12, 41 P.3d 495 (2002)



(contractual fees awarded when prevailing party elected to proceed on statutory tort



claim rather than contract); Edmonds v. John L. Scott Real Estate, Inc., 87 Wn. App.



834, 855-56, 942 P.2d 1072 (1997) (contract-based fees awarded for negligence claim



when duty breached was created by parties' agreement); 25 David K. DeWolf et al.,



Washington Practice: Contract Law and Practice § 14:18, at 357 (2d ed. 2007) (even in



cases where plaintiff's claims are founded in tort or another legal theory, award of



contract attorney fees may be appropriate).



Here, the terms and proper enforcement of the employment agreement is central



to LaCoursiere's WRA claim. In other words, this action arose out of the parties'



employment agreement and that agreement was central to the dispute. As such, the



trial court erred in denying CamWest's motion for attorney fees, and we therefore



reverse that order and remand for further proceedings.3



* * *



See: http://www.courts.wa.gov/opinions/?fa=opinions.disp&filename=670344MAJ

We affirm the order dismissing LaCoursiere's claims against CamWest, but



reverse the order denying CamWest's motion for fees, and remand for further



proceedings.