Joshua Salazar, an individual v. Gerard Daniel Worldwide, Inc.;

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOSHUA SALAZAR, an individual,
Plaintiff-Appellant,
v.
GERARD DANIEL WORLDWIDE, INC.;
et al.,
Defendants-Appellees.
No. 16-56817
D.C. No. 5:16-cv-00641-R-KK
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Submitted April 9, 2018**
Pasadena, California
Before: BOGGS,*** BYBEE, and WATFORD, Circuit Judges.
FILED
APR 24 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Danny J. Boggs, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.

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1. The district court erred in granting summary judgment for Gerard Daniel
Worldwide, Inc. (GDW) on Joshua Salazar’s claim that the company breached his
employment contract with respect to the application of the prime interest rate in
determining Salazar’s quarterly incentive payment. As to all other issues related to
Salazar’s breach-of-contract claim, the district court properly granted summary
judgment.
The Employment Agreement provides that the “interest charge . . . will be
based on the Employer’s investment in the Business Unit’s working capital and
equipment times the prime interest rate in effect at the end of each quarter.” The
parties agree that the applicable prime interest rate at all relevant times was 3.25
percent, but disagree as to how that interest charge should have been assessed. In
his opposition to summary judgment, Salazar argued that “the yearly interest rate
on a quarterly basis”—i.e., 0.8125 percent—should have been used, whereas GDW
argued that the rate of 3.25 percent should have been assessed each quarter.
Because the district court did not address this issue in its summary judgment order,
we vacate and remand for the district court, in the first instance, to determine the
proper amount of interest to be charged in accordance with the Agreement.
Apart from the interest charge, the district court properly granted summary
judgment on Salazar’s breach-of-contract claim. Salazar argues that GDW

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wrongly included expenses in calculating his business unit’s operating income, but
the terms of the Agreement make clear that such expenses were properly included.
The Agreement defines “operating income” as the unit’s “sales less its Direct
manufacturing costs of goods sold, its Direct operating expenses and an imputed
interest charge.” The definition of “Direct,” in turn, includes “costs and expenses
directly related to” the unit’s operations, but excludes “general corporate
overhead.” Costs and expenses associated with inventory, taxes, repairs,
employees, advertising, and the like, were all specifically attributable to Salazar’s
unit and, thus, properly counted in calculating the unit’s operating income.
Rent expense was likewise properly included when deriving the unit’s
operating income. Per the Agreement, GDW had an obligation to provide
Salazar’s unit with housing at its Fontana facility or another similar facility. That
obligation, however, does not foreclose GDW from counting rent expense as a
direct expense of the unit and therefore including it in the operating income
formula. The rent expense was therefore properly deducted from the unit’s sales
amount.
Salazar also argues that GDW breached the Agreement when it “marked up
the cost for its wire cloth or . . . wire mesh,” but he fails to provide any evidence in

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support of this claim. The district court therefore properly determined that Salazar
could not maintain his breach-of-contract claim as to this issue.
2. The district court properly granted summary judgment for GDW on
Salazar’s claim for breach of the implied covenant of good faith and fair dealing.
Because this “implied covenant claim seeks simply to invoke terms to which the
parties did agree, it is superfluous.” Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089, 1112
(Cal. 2000). To the extent Salazar argues that GDW’s alleged breach constitutes a
tort, this claim fails because “there is no tort of ‘bad faith breach’ of an
employment contract.” Id.
3. The district court properly granted summary judgment for GDW on
Salazar’s intentional and negligent misrepresentation claims. Both of these claims
require that the plaintiff allege a misrepresentation. See Chapman v. Skype Inc.,
220 Cal. App. 4th 217, 230–31 (2013). Salazar failed to do so. In fact, Salazar
testified at his deposition that neither of the GDW employees with whom he spoke
during the process of selling his company made any false statements.
AFFIRMED in part, VACATED in part, and REMANDED.
The parties shall bear their own costs on appeal.

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