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Esprit de Corp. v. Baker2/19/2002
Esprit de Corp. (Esprit) successfully sued to recover money loaned to a former company executive, Richard Baker, and his wife. Baker and his wife contend they were denied a hearing on their claim that the money they owed Esprit was partially offset by severance pay allegedly due to Mr. Baker from Esprit. They also assert the court erred in concluding the Bakers failed to accept a final offer of compromise by Esprit in 1996. Lastly, they complain the court did not make findings of fact on their affirmative defenses. We affirm.
I. FACTS
Between 1988 and 1992, Baker signed eight promissory notes in favor of Esprit to secure a total amount of $250,000 in relocation and mortgage assistance loans. In late 1992, his employment with Esprit terminated, and Esprit paid him severance until he announced he had accepted a new job. In 1994, Baker, his wife, and Esprit signed an amendment to the promissory notes. The amendment reduced the amount owed to roughly $160,000 plus interest, but stated: "If Baker fails to make any payment of principal and interest due on the dates set forth above, Baker shall be deemed to be in default under the Notes and the full amount of principal and interest under the Notes shall be immediately due and payable." Baker made two payments of $25,000 each in 1994. He did not make the two remaining payments due in 1994, nor any of the three payments due in 1995.
In June 1996, Baker and Esprit's general counsel, Kathleen Anderson, discussed handling the issue of the missed payments with a new agreement. Anderson sent a proposed agreement to Baker, who forwarded it to his attorney while also sending a $25,000 check to Esprit. As to whether a new agreement was thereby formed, the trial court eventually ruled: "Although Mr. Baker may have been operating under a belief that the parties had reached a settlement in June 1996, there is no evidence that he had signed the Release, Covenant Not To Sue and Indemnity Agreement sent to him by Ms. Anderson. Additionally, there was no agreement on the settled amount, as Ms. Anderson communicated $123,579.70 but Mr. Baker testified he thought the amount was less [,]even before $25,000.00 was forwarded to plaintiff. . . . The fact that plaintiff [Esprit] accepted and deposited the $25,000.00 check is not proof of a settlement as Mr. Baker had not made a payment to plaintiff for a year and the $25,000.00 could be credited to the balance due." The Bakers now appeal.
II. DISCUSSION
The Bakers contend that when the trial court refused to admit into evidence the severance agreement between Baker and Esprit, the court effectively denied them a hearing on their offset claim. The court heard testimony and extensive argument on the issue of severance, but excluded the severance agreement at the close of trial on the grounds it was irrelevant. A trial court has "wide discretion" to determine the relevancy of proffered evidence, and reversal is warranted only if "a prejudicial abuse of discretion has occurred." (Depalma v. Westland Software House (1990) 225 Cal.App.3d 1534, 1538.) The court did not err.
Baker testified that the $160,000 figure in the 1994 amendment was "based on the balance of the notes combined with my severance package." As such, the trial court correctly perceived that the severance agreement itself was not the issue, but rather "whether or not [Baker] still has severance grievances against Esprit, which is a separate issue." The court queried Baker's counsel on this point. "The Court: You don't dispute the `94 note? Am I correct? [ ] Mr. Jencks: That's correct. [ ] The Court: Okay. So that would have taken care of any severance owed; is that correct - [ ] Mr. Jencks: Correct.
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