Judge Kerry Bensinger, Case Number: 22STCV30867, Date: 2024-06-26 Tentative Ruling

MOVING PARTIES: Defendants Santa Barbara Asset Management LLC and Nuveen Investment, Inc.

This action arises from a breach of employment agreement. Plaintiff James R. Boothe (“Boothe” or “Plaintiff”) was the Portfolio Manager and Chief Investment Officer for Santa Barbara Asset Management (“SBAM”). During his employment, SBAM was twice acquired by two separate entities, Nuveen Investments, Inc. (“Nuveen”) in 2005, and TIAA-CREF (“TIAA”) in 2014. Shortly after the TIAA acquisition, Booth entered into a new employment agreement (“Employment Agreement”) with SBAM and Nuveen. As relevant here, the Employment Agreement gave Boothe the right to resign for “Good Reason” if his employment was “moved, consolidated, or otherwise transferred to any other Affiliate” and if Boothe did not retain the ability to hire and fire members of his team. In 2017, Boothe’s employment was moved from SBAM/Nuveen to a division of TIAA. On March 14, 2019, Boothe met with Nuveen executive William Huffman (“Huffman”) regarding unfilled vacancies in SBAM. Boothe alleges that he orally requested to fill vacancies, and Huffman denied Boothe’s request. Thereafter, Boothe resigned from his position on June 7, 2019, citing the foregoing grounds as the ”Good Reason” for his resignation. Boothe argues that by resigning for a “Good Reason,” SBAM and Nuveen (hereafter, “Defendants”) are required to pay Boothe a pro rata bonus, enhanced severance, one year of benefits and his unvested equity. Defendants refuse to pay Boothe the foregoing compensation.

On June 7, 2019—the same day Boothe resigned—Boothe filed an action in Los Angeles Superior Court (Case No. 19STCV20069) against Defendants alleging claims for declaratory relief and unfair competition. Boothe later amended the complaint to add a cause of action for breach of the Employment Agreement. Defendants moved to compel arbitration. The court granted the motion on September 9, 2020. The matter proceeded to arbitration before Judge Friedman (Ret.). In January 2022, Judge Friedman issued a ruling which, in relevant part, found that Boothe did not have “Good Reason” to resign and denied Plaintiff’s breach of Employment Agreement claim.

In April 2022, Plaintiff initiated another action in Los Angeles Superior Court (Case No. 22STCP01195) to correct the arbitration award by deleting Judge Friedman’s findings on the “Good Reason” claim. In August 2022, the court (Hon. Maurice A. Lieter) found that the claim for breach of Employment Agreement was not arbitrable and as such the arbitrator exceeded his authority. The court struck references and findings related to that claim.

On September 21, 2022, Plaintiff filed this action against Defendants for breach of Employment Agreement.

When reviewing a motion for summary judgment or summary adjudication, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿ (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)¿ A motion for summary judgment must be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).)

“[T]he initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact.”¿ (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)¿ A defendant seeking summary judgment “bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.”¿ (Code Civ. Proc., § 437c, subd. (p)(2).)¿ A moving defendant need not conclusively negate an element of plaintiff’s cause of action.¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿

To meet this burden of showing a cause of action cannot be established, a defendant must show not only “that the plaintiff does not possess needed evidence” but also that “the plaintiff cannot reasonably obtain needed evidence.”¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿ It is insufficient for the defendant to merely point out the absence of evidence.¿ (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.)¿ The defendant “must also produce evidence that the plaintiff cannot reasonably obtain evidence to support his or her claim.”¿ (Ibid.)¿ The supporting evidence can be in the form of affidavits, declarations, admissions, depositions, answers to interrogatories, and matters of which judicial notice may be taken.¿ (Aguilar, supra, 25 Cal.4th at p. 855.)¿

“Once the defendant … has met that burden, the burden shifts to the plaintiff … to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)¿The plaintiff may not merely rely on allegations or denials of its pleadings to show that a triable issue of material fact exists, but instead, “shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action.”¿(Ibid.)¿ A plaintiff opposing summary judgment defeats the motion by showing one or more triable issues of material fact exist as to the challenged element. (Aguilar, supra, 25 Cal.4th at p. 849.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)¿

The court must “liberally construe the evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party,” including “all inferences reasonably drawn therefrom.”¿ (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037; Aguilar, supra, 25 Cal.4th at pp. 844-45.)¿ “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence.¿ While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues.¿ [Citation.]¿ Only when the inferences are indisputable may the court decide the issues as a matter of law.¿ If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)¿ “Put another way, have defendants conclusively negated a necessary element of the [plaintiff’s] case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial?” (Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, 860, internal citation omitted.) Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true.¿ [Citation.]¿ Nor may the trial court grant summary judgment based on the court’s evaluation of credibility.¿ [Citation.]” ¿(Id. at p. 840; see also Weiss v. People ex rel.¿Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)¿¿

Defendants seek judicial notice of five documents. The unopposed requests are GRANTED. (Evid. Code, § 452, subd. (d)(1).)

Plaintiff also seeks judicial notice of five documents. The unopposed requests are GRANTED. (Evid. Code, § 452, subd. (d)(1).)

Plaintiff submits twenty-two (22) objections to portions of the Declaration of Katherine Handy, and two (2) objections to portions of the Declaration of William Huffman.

The court declines to rule on these objections because they are not relevant to the disposition of this motion. (Code Civ. Proc., § 437c, subd. (q).)

In support of its reply, Defendants submit nineteen (19) objections to portions of the Declaration of James R. Boothe (“Boothe Decl.”).

As relevant here, Defendants’ Objection No. 15 takes aim at Paragraph 40 to the Boothe Decl. on the grounds it is hearsay, incomplete, misleading, and argumentative. Paragraph 40 concerns Plaintiff’s account of the March 14 meeting with Huffman.

Objection No. 15 is OVERRULED. Plaintiff may provide his account and impressions of the March 14 meeting with Huffman. Further, Defendants do not show how Paragraph 40 is incomplete, misleading, or argumentative.

The court declines to rule on Defendants’ remaining objections because they are not relevant to the disposition of this motion. (Code Civ. Proc., § 437c, subd. (q).)

On June 24, 2024, Plaintiff filed objections and a motion to strike new evidence submitted by Defendants in support of their reply. The court declines to rule on Plaintiff’s additional objections and motion to strike as they are not relevant to the court’s ruling.

Plaintiff alleges two bases for his “Good Reason” resignation: (1) his reporting lines changed because he no longer reported to the Office of the Chairman of Nuveen, and (2) he was denied the authority to hire and fire SBAM employees on March 14, 2019. (Complaint, ¶¶ 26-30.)

Defendants bring this motion for summary judgment on the following grounds: (1) Plaintiff did not notify Defendants of any “Good Reason” within 90 days of becoming aware of the basis for the “Good Reason” as required by the Employment Agreement; (2) Plaintiff’s alleged change in reporting does not give rise to “Good Reason” because of the requisite notice was not timely provided; (3) denial of the authority to hire and fire does not give rise to a “Good Reason” to terminate his employment because Plaintiff cannot establish (i) that Nuveen or another Nuveen affiliate provided administrative, operations, and infrastructure resources and other support to SBAM and (ii) Plaintiff did not retain authority to hire and fire members of his team. To resolve the foregoing issues, the court is called upon to interpret the Employment Agreement.

“The rules governing the role of the court in interpreting a written instrument are well established. The interpretation of a contract is a judicial function. In engaging in this function, the trial court gives effect to the mutual intention of the parties as it existed at the time the contract was executed. Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract’s terms.” (Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432 (cleaned up); accord, State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 195; Wolf v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107, 1125-26.)

The Executive's employment may be terminated at any time by the Executive[1] for Good Reason by Notice of Termination provided to the Company[2] and Nuveen in accordance with Section 3(d) within 90 days after the Executive becomes aware of such basis for Good Reason. For purposes of this Agreement, "Good Reason" shall mean in the absence of a written consent of the Executive (i) any action by the Company or Nuveen that results in a material diminution in the Executive's position, authority, duties or responsibilities as contemplated by Section 2(a) of this Agreement, excluding for this purpose any action not taken in bad faith that is remedied by the Company or Nuveen promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company or Nuveen to comply with any of the provisions of Section 2(b) of this Agreement (other than a failure not occurring in bad faith and which is remedied by the Company or Nuveen promptly after receipt of notice thereof given by the Executive); (iii) any reduction in the Executive's Base Salary; (iv) any requirement by the Company or Nuveen that the Executive be based at any office or location more than 30 miles from that established herein, provided that reasonable travel required in connection with Executive's reporting relationships and responsibilities shall not be deemed a breach hereof; (v) any failure by the Company or Nuveen to comply with any further additions to the definition of Good Reason set forth in Exhibit A hereof; and (vi) any failure by the Company or Nuveen to comply with Section 6(b) below.

Defendants argue that Plaintiff did not give timely written notice of the “Good Reason” as required by the Employment Agreement. In support, Defendants point to a letter that Plaintiff received on December 6, 2016, notifying him that his employer had changed and that he was going to be reporting to a new individual. (Defendants’ Separate Statement of Undisputed Material Facts (UMF) 17.) As such, as of December 6, 2016, Plaintiff knew of at least one basis for his “Good Reason”—a change of his reporting lines. Yet, Plaintiff did not notify Defendants of the “Good Reason” until June 7, 2019 which is more than 90 days later. (Complaint, ¶ 26.)

It is undisputed that Plaintiff’s reporting lines changed in 2016 and that Plaintiff knew of the change. However, as alleged, Plaintiff’s “Good Reason” arises under Section 3(c)(v) of the Employment Agreement. (See Complaint, ¶ 27.) Section 3(c)(v) references an Exhibit A to the Employment Agreement. Exhibit A to the Employment Agreement further defines “Good Reason” as follows:

Defendants argue in their motion and reply papers that the foregoing language requires Plaintiff establish that the following occurred: (1) “Nuveen Asset Management, LLC or another Nuveen affiliate [began] providing administrative, operations and infrastructure resources and other support to [SBAM],” and (2) Plaintiff “did not retain the ability to hire and fire members of Executive’s team… defined as employees of the Company as of the Effective Date.”

The court disagrees with Defendants’ interpretation. Rather, the court finds the proper and most natural interpretation when read in the context of the entire provision, is the one advanced by Plaintiff: the “[f]or the avoidance of doubt” clause is a safe harbor provision which states that a qualifying event as set forth in romanettes (i) to (iv) must occur to trigger a Good Reason. In other words, the change in Plaintiff’s employer in 2017 (and of which Plaintiff was notified on December 6, 2016) did not alone give rise to the Good Reason. Rather, as alleged in the Complaint, and supported by Plaintiff’s testimony, the triggering event was Plaintiff’s request at the March 14 meeting with Huffman to hire for the vacant positions and Huffman’s denial of the request. (Complaint, ¶ 29; see Handy Decl., Plaintiff’s Depo., pp. 362-363.)

Having construed the relevant language of the Employment Agreement, the court arrives at two conclusions. First, the operative date from which to calculate when a “Good Reason” arose is March 14, 2019. Second, based on the March 14 date, Plaintiff timely provided notice of the Good Reason on June 7, 2019.

Defendants next argue there is no proof that Plaintiff orally requested to fill the vacancies at the March 14 meeting. In support, Defendants point to Huffman’s testimony wherein he testified that Plaintiff’s request to hire for the vacant positions was neither made nor denied at the March 14 meeting. (UMF 25.) Defendants’ argument, however, fails from the start. Defendants acknowledge that Plaintiff testified having made the request at the March 14 hearing.^{^[3]} (See UMF 26; see also Boothe Decl., ¶ 40.) The issue whether Plaintiff made an oral request to hire is plainly in dispute. Essentially, Defendants seeks a credibility determination between conflicting testimony.[4] When ruling on a motion for summary judgment, “[t]he court may not weigh the evidence or make credibility determinations.” (Colt v. Freedom Commc’ns, Inc. (2003) 109 Cal.App.4th 1551, 1557.) This is an improper basis for granting summary judgment. There exists a triable issue of material fact.

Kerry Bensinger

Judge of the Superior Court

[1] “Executive” is defined as “James R. Boothe.”

[2] “Company” is defined as “SBAM.”

[3] This is to say, Defendants selectively cite the evidentiary record to omit Plaintiff’s testimony on whether he made a request to hire at the March 14 meeting with Huffman. At bottom, Defendants take issue with a lack of documentary evidence of a request to hire. But Defendants do not provide any authority that testimony (and a supporting declaration) of an evidentiary fact cannot raise a triable issue. This case will turn on the credibility of Huffman’s testimony and Plaintiff’s testimony which, as the court has explained, is not a determination that can be made on summary judgment.

[4] Defendants also take issue with Plaintiff’s “self-serving” declaration which states that he made a request to hire at the March 14 meeting with Huffman. However, this is not the only evidence in the record. As stated above, Plaintiff testified to the same when arbitrating his claims with Defendants before Judge Friedman. (Plaintiff’s Depo., pp. 362-363.)