I. BACKGROUND
The underlying facts of this matter are largely undisputed.
Whеn Brown applied for unemployment benefits, EDD initially determined that he was eligible, stating: "[Brown] just wore his own shirt by mistake. [BCP] should have given him warning instead of terminating him. [BCP] did not give opportunity to [Brown] to correct this mistake. [He] was even ready to go back home and change his shirt. Hence, [his action] does not constitute a willful misconduct." After BCP appealed, however, an administrative law judge concluded that Brown had "willfully breach[ed] his duty and obligation to the employer" by wearing the wrong shirt and thus reversed EDD's initial eligibility determination. Brown subsequently appealed this denial of benefits, but the Board affirmed it.
In August 2013, EDD filed a return to the Writ, stating that the Board had swiftly reversed its prior eligibility determination and that EDD had subsequently paid Brown "all the benefits for which he has been found eligible ...." EDD further noted, however, that it was requiring Brown to submit benefit certification forms for the weeks related to the past-due benefits and that an eligibility issue had arisen with respect to a particular three-week period that would need to be resolved beforе further benefits could be paid or certification forms sent for any additional weeks. It claimed that it would continue to pay Brown "for the weeks that [he] is eligible and for which he submits the required certification claim forms demonstrating his continued eligibility for unemployment benefits."
Over a year later, in October 2014, Brown filed a motion to enforce the Writ, claiming that EDD had unilaterally imposed improper conditions on the
In April 2015, the trial court issued its order granting in part and denying in part Brown's motion to enforce the Writ (Enforcement
In contrast, the court determined that the correct rate of interest for wrongfully withheld unemployment benefits was not the 10-percent contract rate, as Brown argued, but was instead 7 percent, the "generic interest rate on judgments" suggested by EDD. Prior to the instant enforcement action, however, EDD had conceded that the appropriate rate of interest was the 10-percent contract rate, and had paid interest to Brown based on that rate.
Brown's timely notice of appeal from the Enforcement Order now brings the matter before this court.
II. DISCUSSION
A. Standard of Review
We recently described the correct standard of review with respect to an order enforcing a writ of mandate as follows: In such proceedings, the validity of the underlying writ is not before us. ( Robles v. Employment Development Dept. (2015)
In addition, when analyzing the issues before us, we are cognizant of the fact that " '[t]he fundamental purpose of California's Unemployment Insurance Code is to reduce the hardshiр of unemployment ....' " ( Robles II , supra ,
B. Interest Payable on Wrongly Denied Unemployment Benefits
We begin by delineating the aspects of this dispute to which clear rules apply. First, it is beyond dispute that EDD was required to pay
When calculating such prejudgment interest, " 'each payment of benefits ... should be viewed as vesting on the date it becomes due.' " ( Aguilar , supra , 223 Cal.App.3d at pp. 245-246,
Finally, "[a]bsent a statutory provision specifically governing the type of claim at issue, the prejudgment interest rate is 7 percent under article XV, section 1 of the California Constitution." ( Bullock v. Philip Morris USA, Inc. (2011)
We conclude that a former employee's right to unemployment benefits is sufficiently tied to his or her employment contract to justify imposition of prejudgment interest at the contractual rate of 10 percent. " 'To finance
Although not directly on point, we believe that Bell , supra ,
Bell is also useful for its conclusion that section 218.6 of the Labor Codе was declarative of existing law-specifically, section 3289. ( Bell , supra , 135 Cal.App.4th at pp. 1145-1150,
Finally, given that the prompt payment of benefits is crucial to thе unemployment compensation insurance system, we believe our construction of section 3289 to include actions for the payment of wrongfully withheld unemployment benefits is consistent with the legislative objective of the Unemployment Insurance Act (Act)-reducing the hardship of unemployment. ( Robles II , supra ,
In reaching this conclusion, we acknowledge that in Rivera , supra ,
Whether we agree or disagree with the federal court's analysis and conclusions in Rivera , we see it as answering a different question than the one before us. We are not here concerned with whether the entire unemployment insurance system established by the state creates contract rights which are constitutionally protected from impairment, such that the legislation could not be changed to the overall detriment of vested claimants. That is a much different and broadеr inquiry. We hold only that once a court has determined that such a claimant was wrongfully denied unemployment insurance benefits in a liquidated amount under existing law, that
Before we leave our interest rate discussion, however, we must further determine if and when Brown's right to prejudgment interest was superseded by a judgment and therefore converted to a right to receive postjudgment interest. (See § 3289, subd. (a) ["[a]ny legal rate of interest stipulated by a contract remains chargeable after a breach thereof, as before, until the contract is superseded by a verdict or othеr new obligation"]; Howard v. American National Fire Ins. Co. (2010)
Pursuant to subdivisions (a) and (c) of section 965.5 of the Government Code, interest on a "judgment for the payment of money against the state or a state agency" commences to accrue "180 days from the date of the final judgment or settlement." The rate is the constitutional rate of 7 percent. (See Cal. Const., art. XV, § 1 ["[i]n the absence of the setting of such rate by the Legislature, the rate of interest on any judgment rendered in any court of the state shall be 7 percent per annum"]; see also California Fed. Savings & Loan Assn. v. City of Los Angeles (1995)
We conclude that, for purposes of determining when Brown's right to prejudgment interest must give way to his entitlement to postjudgment interest, the trial court's Writ and related order, issued on May 23, 2013, are the relevant judgment in these proceedings. Pursuant to subdivision (f) of Code of Civil Procedure section 1094.5, a court in an administrative mandamus proceeding "shall enter judgment either commanding respondent to set aside the order or decision, or denying the writ" (italics added). Moreover, Code of Civil Procedure section 1095 provides that "[i]f judgment be given for the applicant, the applicant may recover the damages which ...may be enforced in the manner provided for money judgments generally." Thus, although further efforts at enforcement may subsequently have been required in this case, the Writ and related order were "the final determination of the rights of the parties" and therefore a judgment. ( Code Civ. Proc., § 577.) Indeed, and his assertion to the contrary notwithstanding, the very fact that
It is clear that the trial court below did not consider the many different ways in which various rates of interest must be applied in this case in order to determine whether Brown has been properly awarded the "unemployment insurance benefits that were withheld in the administrative proceedings in this matter plus interest on thоse benefits" as mandated by the Writ. We therefore reverse the Enforcement Order solely with regards to its discussion of the interest payable on the benefits at issue and remand the matter so that further enforcement of the Writ can occur if, and only if, additional amounts are due to Brown which remain unpaid under our analysis. Should EDD at this point finally agree to meet and confer regarding any amounts due, the matter may perhaps be able to be resolved without further court order.
C. Due Process
As a final matter, Brown urges us to conclude that EDD's conduct in requiring retroactive certification of complicated work search requirements as a precondition to payment of the wrongfully withheld benefits at issue violated due process. Although the trial court did not reach this constitutional claim, Brown asks us to declare a due process violation based on his assumption that-without our intervention-EDD will routinely continue to impose these invalid conditions on others who successfully obtain writs of mandate. EDD, in contrast, argues that no live controversy exists here implicating due process, as Brown complied with EDD's certification requirements and was paid with interest.
It is true that this situation is somewhat distinguishable from that presented in Robles II in that EDD did ultimately pay the bulk of thе benefits and interest due to Brown prior to the court's Enforcement
On the other hand, it is beyond dispute that the procеss chosen by EDD in this case did not lead to "immediate" payment of the improperly withheld benefits, a fact recognized by the trial court when it fined the agency for failure to reasonably comply with the Writ. Most troubling, in our view, were EDD's repeated refusal to meet and confer, its attempt to contact Brown directly rather than through his attorney, and its focus on irrelevant information related to Brown's current employment situation. Nevertheless, while we certainly do not condone the process here employed by EDD, the agency has since had the benefit of our decision in Robles II and has been subject to fines bоth in that case and in the present matter based on its utter failure to effect the immediate payment of the wrongfully withheld benefits at issue. (See Robles II , supra ,
III. DISPOSITION
The Enforcement Order is affirmed other than with respect to the calculation оf interest, and the matter is remanded to the trial court for further enforcement of the Writ as may be necessary, consistent with the terms of this opinion. Brown is entitled to his costs on appeal.
We concur:
RUVOLO, P.J.
STREETER, J.
Notes
All further statutory references are to the Civil Code unless otherwise specified.
Although not part of our record of appeal, we take judicial notice of the administrative record in these proceedings. (Evid. Code, §§ 452, 459.)
Government Code section 800 allows a litigant who successfully challenges a public agency's determination to recover attorney fees up to $7,500 "if the litigant demonstrates that the agenсy acted in an arbitrary or capricious manner." (Zuehlsdorf v. Simi Valley Unified School Dist. (2007)
Specifically, EDD had instructed its staff: "Please issue interest on unpaid benefits for the claimant (Mark A. Brown) from the time benefits were due (week ending date) until paid in 2013. Interest is payable at the statutory rate of 10% (Civil Code Sections 3287 and 3289 )."
This is not-as EDD now incorrectly asserts on appeal-an imprоper compounding of interest. Rather, it is simply a rule acknowledging that interest is owed with respect to any additional principal still outstanding after payments are received and correctly applied. It is thus not a claim that interest should be paid on interest.
EDD argues that this interest rate dispute is moot because it has already paid Brown the maximum allowable unemployment insurance benefit to which he is entitled, as well as 10 percent interest on that benefit, and the trial court held that EDD could not recoup any overpayment. Brown, however, does not concede that all required amounts have been paid. In particular, as discussed above, he argues that the payments made by EDD have not been properly applied first to accrued interest as required, thereby leaving a balance due. Under these circumstances-where further relief can potentially be granted and where the interest issues raised are likely to recur-we believe a continuing controversy exists sufficient to support reaching the merits of Brown's claim. (See Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000)
Since we have concluded that Brown is entitled to prejudgment interest at the rate of 10 percent pursuant to section 3289, we need not reach Brown's additional claim that he is also entitled to prejudgment interest at the rate of 10 percent under Labor Code section 218.6.
While, as asserted by EDD, recent amendments to section 3287 and Government Code section 965.5 -establishing an interest rate potentially significantly lower than the generic 7-percent postjudgment rate for "interest on a tax or fee judgment for the payment of moneys against the state"-may very well evince a trend towards lower interest rates where the State is a litigant, they are completely irrelevant here, as these proceedings do not involve payment of either a "tax" or a "fee." (See § 3287, subd. (c) [setting interest "at a rate equal to the weekly average one year constant maturity United States Treasury yield," but not to exceed 7 percent per annum]; Gov. Code, § 965.5, subd. (d) [same]; see generally City of Clovis, supra,
Given our resolution of this appeal, we deny EDD's request for judicial notice, filed on May 18, 2016, as the materials proffered are irrelevant to our decision.
Brown's attorney declared below that, during the certification process, Brown informed him "that he had made numerous applications, but he had not previously been notified regarding the new instructions and did not keep records or recall the information that EDD was requiring." On his attorney's advice, Brown "therefore wrote 'I do not recall' on the certified claim forms where he truthfully did not recall." EDD eventually paid all of the claims related to these certifications.