Untitled Document

Litigation Update

Litigation Section News: April 2015

Senior Editor
Eileen C. Moore, Associate Justice
California Court of Appeal, Fourth District

Managing Editor
Mark A. Mellor, Esq.

Table of Contents of This Issue

Social Security Funds In Bank Account Protected From Levy.

When a creditor served a writ of execution to levy funds in the debtor’s bank account, the debtor submitted a claim of exemption to the writ, asserting the funds in the account were Social Security payments exempt from levy under 42 U.S.C. § 407. The creditor opposed the claim of exemption, citing Code of Civil Procedure section 704.080 which states that only Social Security funds directly deposited into a bank account by the government are protected by the exemption. After finding the account contained only funds from Social Security payments, the trial court denied the claim of exemption because the funds were not directly deposited by the government. The appellate court reversed, holding that federal law protects Social Security funds and section 704.080 does not eliminate that protection. (Kilker v. Stillman (Cal. App. Fourth Dist., Div. 3; January 16, 2015) 233 Cal.Ap.4th 320 [182 Cal.Rptr.3d 712].)

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More than a dozen Halloween partygoers were swept up and detained by a Sheriff’s SWAT team for up to 14 hours. The party, an annual event with hundreds of costumed attendees, had drawn neighbor complaints over the years. Based on a flyer that advertised a “Casino Room,” at the party, the Sheriff’s department obtained a search warrant to look for evidence of illegal gambling at the party. The search yielded two slot machines and three grams of marijuana in an attendee’s purse. Citing 42 U.S.C. § 1983, the partygoers sued the department and some officers for violation of their civil rights “to be free from unlawful seizure by prolonging their detention beyond the conclusion of the search of the residence.” By the time of trial, there was only one defendant, an officer; the court granted a directed verdict in that officer’s favor after a six-week trial. The appellate court reversed as to plaintiffs’ claims alleging prolonged detention under § 1983 and affirmed in all other respects. (Guillory v. Hill (Cal. App. Fourth Dist., Div. 3; January 16, 2015) 233 Cal.App.4th 240 [182 Cal.Rptr.3d 513].)

Abandoned Alien Child

An abandoned, neglected or abused child who is not a citizen of the USA may be found to be a special immigrant juvenile [SIJ] which may serve as a first step in filing for citizenship in the USA. (8 U.S.C. § 1101 (a)(27) (J)). These children no longer need be under foster care, as was previously required, but the statute requires that reunification with “1 or both parents not be viable due to abuse, neglect, abandonment.” Appellant, who committed a misdemeanor in this country, was born in Mexico in 1999 and came to this country in 2005 with his older brother, and then lived here with his mother. The young man was abandoned by his father and has no memory of him. He said he would have no place to live and no one to provide for him if he is returned to Mexico. The juvenile court declined to make a finding the young man was an SIJ, and the Court of Appeal reversed, stating: “A state court’s role in the SIJ process is not to determine worthy candidates for citizenship, but simply to identify abused, neglected, or abandoned alien children under its jurisdiction who cannot reunify with a parent or be safely returned in their best interests to their home country.” The juvenile court was ordered to permit the young man to fill out the paper work necessary to apply to be a SIJ. (In re Israel O. (Cal. App. First Dist., Div. 3; January 16, 2015) 233 Cal.App.4th 279 [182 Cal.Rptr.3d 548].)

Fees/Costs Order Reversed In Public Records Act Request.

After a child was rendered permanently disabled following an accident that occurred when she was in a crosswalk, her family hired counsel. Under the Public Records Act [Government Code section 6250 et seq.; PRA], counsel requested all evidence including photos, reports, audio logs, handwritten notes, surveys, complaint letters and emails with respect to the accident. When the information requested was not forthcoming, a writ of mandate was filed. The superior court found the petition frivolous and awarded the City its costs and attorney fees. The appellate court, while noting the breadth of a public agency’s disclosure obligations under the PRA, reversed the grant of costs and fees. (Bertoli v. City of Sebastopol (Cal. App. First Dist., Div. 4; January 20, 2015) 233 Cal.App.4th 353 [182 Cal.Rptr.3d 308].)

State Prisoner Allowed To Have A Beard.

Arkansas’s state prison’s grooming policy prohibits the growth of facial hair for security reasons. A prisoner, who is fundamentalist Muslim, asserts the prison’s policy burdens his practice of religion. The United States Supreme Court held that the policy violates 42 U.S.C. § 2000cc [the Religious Land Use and Institutional Persons Act of 2000] which prohibits a state or federal government from taking any action that substantially burdens any exercise of an institutionalized person’s practice of religion unless the government demonstrates that the action constitutes the least restrictive means of furthering a compelling governmental interest. Approving of a 1/2 inch beard, the high court stated: “We conclude in this case that the Department’s policy substantially burdens petitioner’s religious exercise. Although we do not question the importance of the Department’s interests in stopping the flow of contraband and facilitating prisoner identification, we do doubt whether the prohibition against petitioner’s beard furthers its compelling interest about contraband.” (Holt v. Hobbs (U.S. Sup. Ct.; January 20, 2015) ___U.S.___ [135 S.Ct. 853, 190 L.Ed.2d 747].)

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Costco purchased luxury watches from a company in New York who had purchased them from an overseas company who had purchased them from the manufacturer, and sold the watches in its U.S. Costco stores. Omega, the Swiss manufacturer of the luxury watches, sued Costco for copyright infringement, specifically the importation of copyrighted work without the copyright holder’s permission. The first time around, a federal district court granted summary judgment to Costco based on the first sale doctrine under 17 U.S.C. § 109(a), which means that once a copyright owner consents to the sale of particular copies of the work, that same copyright owner cannot later claim infringement for distribution of those copies. After the case proceeded to the Ninth Circuit, which reversed because the watches were first sold overseas, and then to the United States Supreme Court which affirmed the Ninth Circuit’s decision [562 U.S. 40] (2010), the case was remanded to the trial court. On remand, the district court again granted summary judgment to Costco, finding that Omega misused its copyright to expand its limited monopoly impermissibly. The district court also granted Costco its attorney fees. This time, the Ninth Circuit affirmed, stating that Omega “eliminated price competition in the retail market for Omega watches and deprived consumers of the opportunity to purchase discounted gray market Omega watches from Costco. Omega misused its copyright by engraving the Globe Design on the underside of its watches, and attempting to use copyright law to eliminate intrabrand competition from Costco in the retail watch market.” (Omega S.A. v. Costco Wholesale Corp. (Ninth Cir.; January 20, 2015) 776 F.3d 692.)

Trial Court Abused Discretion In Failing To Set Aside Default.

Plaintiff was unsuccessful at personally serving defendant, and obtained the court’s permission to serve by publication. Defendant claims it first learned of the lawsuit and the default judgment of $372,403.81 after it received a lien notice from the county with the abstract of judgment attached. On appeal, defendant contended the trial court erred in denying its motion to set aside the default and default judgment on the ground that plaintiff did not comply with Civil Code section 587, which states: “An application by a plaintiff for entry of default . . . shall include an affidavit stating that a copy of the application has been mailed to the defendant’s attorney of record or, if none, to the defendant at his or her last known address and the date on which the copy was mailed. If no such address of the defendant is known to the plaintiff or plaintiff’s attorney, the affidavit shall state that fact. [¶] No default . . . shall be entered, unless the affidavit is filed. The nonreceipt of the notice shall not invalidate or constitute ground for setting aside any judgment.” In reversing, the appellate court rejected plaintiff’s argument that defendan's address was unknown because it had been unable to personally serve defendant at any of the addresses it discovered. (Murray & Murray v. Raissi Real Estate Development, LLC (Cal. App. Sixth Dist.; January 20, 2015) 233 Cal.App.4th 379 [182 Cal.Rptr.3d 611].)

Employee Must Arbitrate, Even If Terms Unknown.

The trial court denied an employer’s petition to compel arbitration of an action against it by a former employee. At the time the employee was hired, she completed an employment application containing an arbitration clause, which incorporated reference to an arbitration policy. The trial court was not persuaded that an undated four-page arbitration policy attached to defendant’s moving papers was in existence at the time the employee read and signed the employment application. In reversing, the appellate court stated: “We conclude the arbitration clause in the employment application, standing alone, is sufficient to establish the parties agreed to arbitrate their employment-related disputes.” (Cruise v. Kroger Co. (Cal. App. Second Dist., Div. 3; January 20, 2015) 233 Cal.App.4th 390 [183 Cal.Rptr.3d 17].)

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San Francisco’s rent control ordinance limits rent increases to tenants in occupancy. In this case, the son of parents who years ago rented a unit in the landlord’s building and who, along with his parents, was an original occupant, remained in the unit after his parents left it. At that point, the landlord attempted to establish a new unrestricted rental rate. The Rent Stabilization and Arbitration Board, the superior court and the appellate court all found that, despite the fact the son was a minor when the original agreement was signed by his parents, he nonetheless qualifies as an original occupant under the ordinance and is entitled to the continued protection of the rent control provision. (Mosser Cos. v. San Francisco Rent Stabilization & Arbitration Bd. (Cal. App. First Dist., Div. 3; January 21, 2015) 233 Cal.App.4th 505 [182 Cal.Rptr.3d 619].)

"You Can't Blow The Whistle On Us," Says TSA.

The Homeland Security Act of 2002 provides the Transportation Security Administration [TSA] shall prescribe regulations prohibiting disclosure of information detrimental to the country’s security, which regulations TSA passed. In 2003, TSA briefed all air marshals, including the plaintiff here, about a potential plot to hijack passenger flights. A few days later, in a move to save money, TSA cancelled all overnight missions for air marshals from Las Vegas, where plaintiff was stationed. Believing the cancelling of air marshals on those flights at the exact time of a high security alert for hijackings to be dangerous and illegal, plaintiff contacted a news reporter about the situation. A few years later, TSA discovered plaintiff was the source of the leak of information and fired him. Plaintiff challenged his firing, contending he was involved in whistleblowing activity under 5 U.S.C. § 2302(b)(8)(A), which protects employees who reveal “a substantial and specific danger to public health or safety.” The administrative board found plaintiff did not qualify for whistleblower protection because his disclosure was prohibited by law. The United States Supreme Court held that plaintiff’s violations of TSA’s regulations did not amount to a violation of law, noting that such a finding would permit every government agency to insulate itself from providing whistleblower protection by promulgating a regulation that specifically prohibits whistleblowing. (Department of Homeland Security v. MacLean (U.S. Sup. Ct.; January 21, 2015) ___U.S.___ [135 S.Ct. 913, 190 L.Ed.2d 771].)

Tracking Trademarks.

Rights to a trademark are determined by the date of the mark’s first use in commerce. The party who first uses a mark in commerce is said to have priority over other users. In limited circumstances, a party may modify its mark and still maintain its priority position, a doctrine known as tacking. The United States Supreme Court held that whether there has been tacking is a question for the jury, stating: “Because the tacking inquiry operates from the perspective of an ordinary purchaser or consumer, we hold that a jury should make this determination.” (Hana Fin., Inc. v. Hana Bank (U.S. Sup. Ct.; January 21, 2015) ___U.S.___ [135 S.Ct. 907, 190 L.Ed.2d 800].)

Membership in the ADR Subcommittee.  The Litigation Section ADR Subcommittee, which is comprised of both ADR professionals and advocates, focuses on recent case law and legislative developments in the field of alternative dispute resolution. The ADR Subcommittee also provides educational programs on ADR issues. Members of the Litigation Section who wish to join the ADR Subcommittee should send an e-mail and resume to the co-chairs of the Committee: Jeff Dasteel (Jeffrey.dasteel@gmail.com) and Don Fischer (donald.fischer@fresno.edu). Emil to Don Fischer Email to Jeffrey Dasteel Errors All Over The Place, Particularly In Grant Of Motions In Limine As Substitutes For Statutory Motions.

In an insurance coverage dispute, the trial court granted defendant’s motions in limine as substitutes for statutory motion of summary adjudication under Code of Civil Procedure section 437c, on the issue of the duty to defend, and on the statutory motion of nonsuit under Code of Civil Procedure section 581c, with regard to offset after settlement with other defendants. Since the appellate court independently reviews an order granting a motion for summary adjudication, that is what it did here with regard to the duty to defend issue. With regard to the offset issue, the appellate court stated it considered the motion in limine “as if it had been a motion for nonsuit after opening statement. As such, we review the trial court’s ruling de novo, viewing the evidence and offers of proof most favorably to [plaintiff], and resolving all presumptions, inferences and doubts in its favor; and we uphold the order granting [defendant’s] motion only if it is required as a matter of law.” In its appellate brief, defendant failed to cite to the record, and lost several of its arguments as a result of that omission. Apparently frustrated with defendant’s appellate briefing, the appellate court stated: "After merits briefing of 152 pages and amicus briefing of 32 pages, for the very first time in its letter brief, [defendant] advises that" the parties entered into a stipulation. Not surprisingly, the judgment in favor of defendant was reversed and the matter was remanded. (McMillin Cos., LLC v. American Safety Indemnity Co. (Cal. App. Fourth Dist., Div. 1; January 22, 2015) 233 Cal.App.4th 518 [183 Cal.Rptr.3d 26].)

New Trial Ordered In Negligence Case.

Plaintiff, who is a doctor himself, suffered a stroke while driving home from the hospital. A police officer at the scene did not immediately call an ambulance because she deduced from his slurred speech, disorientation and vomiting, that he was intoxicated, and, after a struggle, placed him in handcuffs. An ambulance arrived and left. A second ambulance took him to the hospital later, but the brain damage he suffered rendered him unable to care for himself. This lawsuit, alleging a damaging delay in medical treatment, is against the City, the responding officer, the ambulance company, and the paramedic who drove the first ambulance away without taking plaintiff to the hospital. Experts testified earlier treatment would have reduced the neurological effects of the stroke and the permanent brain damage. Counsel for the City argued plaintiff gambled with his own life because he did not take his blood pressure medication. One of the jury instructions given by the court was: “A police officer is not liable for his act or omission, exercising due care, in the execution or enforcement of any law.” The court also instructed on plaintiff’s comparative negligence. A jury returned a defense verdict. The appellate court reversed and remanded for a new trial with regard to the City and the police officer after finding it was likely the police immunity instruction was misunderstood by the jury and was prejudicial to plaintiff. As to the comparative negligence instruction, the appellate court also found error and prejudice to plaintiff since the alleged negligence of plaintiff with regard to his blood pressure medication occurred before the first responders arrived at the scene, concluding a new trial was warranted as to all the defendants. (Harb v. City of Bakersfield (Cal. App. Fifth Dist., Div. 1; January 23, 2015) 233 Cal.App.4th 606 [183 Cal.Rptr.3d 59].)

Summary Judgment Reversed In Truck Roll-Over Action

Two men were driving a tractor-trailer across the country. One was driving while the other slept in a berth when the vehicle rolled over. The man who was sleeping is the plaintiff here. Plaintiff sued the owners of the tractor and the owners of the trailer for negligence. The court granted summary judgment in favor of both defendants, concluding that as a matter of law neither was vicariously liable for the driver's negligence. On appeal, plaintiff argued the trailer owner owed him a nondelegable duty of care and is vicariously liable for the driver’s negligence. He also argued the tractor owner is vicariously liable under Vehicle Code section 17150, which states that a vehicle owner is vicariously liable for the negligence of a permissive user. The trailer owner argued on appeal that under Privette v. Sup. Ct. (1993) 5 Cal.4th 689 [21 Cal.Rptr.2d 72, 854 P.2d 721], a hirer is not vicariously liable for the negligence of a person hired by an independent contractor. The tractor owner argued it is not vicariously liable under 49 U.S.C. § 30106(a), which statute shields owners of leased vehicle “engaged in the business or trade of renting or leasing motor vehicles” from vicarious liability for the alleged negligence of their lessee’s drivers. The appellate court reversed the grant of summary judgment, stating: "Privette and its progeny have never been applied to a case like the present one, where the basis for liability is alleged to be a 'franchise granted by public authority' [] here, a federal motor carrier’s license." With regard to the tractor owner's argument, the appellate court stated it had not “established as a matter of undisputed fact that the tractor’s owner is entitled to the protection” of the statute in that “it presented no evidence that it was engaged in the trade or business of renting or leasing motor vehicles, or that it leased any motor vehicles other than the tractor involved in this case. (Vargas v. FMI, Inc. (Cal. App. Second Dist., Div. 3; January 23, 2015) 233 Cal.App.4th 638 [182 Cal.Rptr.3d 803].)

Masthead. Senior Editor: Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District. Managing Editor: Mark A. Mellor, Esq.. Executive Committee: Carol D. Kuluva, Chair; Reuben A. Ginsburg, Vice-Chair; Kathleen Brewer,Treasurer; Robert Bodzin, Immediate Past Chair; Megan A. Lewis, Secretary. Members: Bruce P. Austin; Cynthia Elkins; Terrance James Evans; J. Thomas Greene; Jewell J. Hargleroad; Susan Kay Horst; Kevin J. Kelly; Karen J. Petrulakis;  Edward A. Torpoco; Klnh-Luan Tran; George Walles. Judicial Advisors: Hon. Suzanne Bolanos; Justice Victoria Chaney; Hon. Lawrence W. Crispo (Ret.); Hon. M. Lynn Duryee; Hon. Elizabeth Feffer; Hon. Terry B. Friedman; Hon. J. Richard Haden (Ret.); Hon. Jamie A. Jacobs-May; Justice Eileen Moore; Hon. Ronald S. Prager; Hon. John L. Segal; Hon. James L. Warren (Ret.). Advisors: Donald Barber; Charles V. Berwanger: Paul S. Chan; Tanja L. Darrow; Elizabeth A. England; David P. Enzminger; Michael D. Fabiano; Terry Barton Friedman; Michael A. Geibelson; Ruth V. Glick; Kevin J. Holl; Jamie A. Jacobs-May; Joel Kleinberg; Mark A. Mellor; Eileen C. Moore; Bradley A. Patterson; Norm Rodich; Jerome Sapiro, Jr.; e. robert (bob) wallach; Joan Wolff; Herb Yanowitz. Board of Trustees Liaisons: Daniel Dean (District 1); Craig Holden and Mark Shem (District 6); David J. Pasternak, Board Liaison. Section Coordinator: Mitch Wood, 415-538-2594, mitch.wood@calbar.ca.gov. Administrative Assistant: Ana Castillo, 415-538-2071, ana.castillo@calbar.ca.govRelease Enforced.

As her parents watched, a 17-year-old died when the horse she was riding in a competition stumbled, threw her off and then fell on top of her. A release, signed by the rider and the rider’s mother, states they all agreed to hold the trainer/coach "completely harmless and not liable and release [Trainer] from all liability whatsoever, and AGREES NOT TO SUE them on account of or in connection with any claims, causes of action, injuries, damages, costs or expenses arising out of Rider’s use of Trainer’s services or facilities ... " The parents' complaint alleges the trainer/coach gave the girl a horse that "was unfit to ride because of prior falls and lack of practice." The court granted a Code of Civil Procedure section 631.8, motion after the parents presented their case in chief in a court trial. In affirming the judgment, the appellate court stated: "the release is enforceable and can be asserted by [trainer/coach] as a defense to the [parents'] wrongful death and NIED claims and [trainer/coach] can therefore be liable only if [decedent'] death was caused by [trainer/coach] gross negligence. In the unpublished portion, we conclude that the [parents] failed to establish that [trainer/coach] was grossly negligent." (Eriksson v. Nunnink (Cal. App. Fourth Dist., Div. 2; January 27, 2015) 233 Cal.App.4th 708 [183 Cal.Rptr.3d 234].)

Insufficient Minimum Contacts For California Jurisdiction.

A California resident owned an apartment building in Arkansas that was insured by a Michigan insurance company under a policy the owner obtained through an insurance agent in Arkansas. After fires damaged the building in Arkansas and the owner was not happy with the insurer's payout, the owner sued the insurance company in California state court for breach of contract and bad faith. The trial court's order granting the insurance compan's motion to quash was affirmed by the appellate court because "there was no substantial nexus between the insurer's activities in California and the present action because the owner is not suing the insurer for any California risk that came to fruition; he is suing the insurer because of something that happened to his business property in Arkansas, which is where he obtained the insurance at issue, the main purpose of which was to cover potential risks and damage to that Arkansas property." (Greenwell v. Auto-Owners Ins. Co. (Cal. App. Third Dist.; January 27, 2015) 233 Cal.App.4th 783 [182 Cal.Rptr.3d 873].)

"Most American Children Suffer Too Much Mother And Too Little Father," — Gloria Steinem.

By statute, a person is presumed to be the natural father of a child if he shows by a preponderance of the evidence that he received the child into his home and openly held the child out as his own. (Fam.Code § 7612 (a).) Here, the mother conceived the child through artificial insemination by an anonymous donor. R.M. prepared for the child’s birth by purchasing maternity clothes for the mother as well as nursery supplies and furniture, a car seat, playpen, high chair, swing set, sand box, club house, books clothes, diapers, toys, videos and other supplies. He designated the child as his primary beneficiary on a life insurance policy. Although they lived in California, for the first two years of the child’s life, the mother and the child regularly stayed in R.M.’s home in another state, and after two years, the mother bore another child, the biological child of R.M. Family portraits were taken of the four of them. After the mother and R.M. ended their relationship, the mother refused to permit R.M. to visit the child and R.M. filed a petition to establish his parental relationship with the child. The trial court ruled R.M. was the chil'’s presumed father and the mother appealed, arguing she chose to be a single parent. In affirming the trial court's ruling, the appellate court held: "We hold that application of the presumed parent statutory scheme in this case did not constitute an unconstitutional interference with Mother’s fundamental right to parent her child." (R.M. v. T.A. (Cal. App. Fourth Dist., Div. 1; January 27, 2015) 233 Cal.App.4th 760 [182 Cal.Rptr.3d 836].)

"The Cost Of Living Has Gone Up Another Dollar A Quart." — W.C. Fields.

An arbitrator with the American Arbitration Association [AAA], a practicing lawyer, in an action involving alleged fraud in the purchase of condominiums did not disclose his own involvement in the field of litigation financing for investment purposes. AAA denied requests to disqualify him, but a federal district court judge granted a motion to disqualify the arbitrator, after concluding the arbitration involved hundreds of plaintiffs, it was in the early stages and discovery had not yet commenced. The district court reasoned that at the end of the arbitration, the moving party would likely prevail on a motion to vacate any award the arbitrator issued on the ground of "evident partiality" under the Federal Arbitration Act [9 U.S.C. § 10(a)(2)]. The Ninth Circuit granted a writ of mandate, analyzing the situation under Bauman v. U.S. Dist. Court (9th Cir. 1977) 557 F.2d 650. The appeals court stated: "...even if [the arbitrator's] undisclosed activities did create a reasonable impression of partiality, the district court's equitable concern that delays and expenses would result if an arbitration award were vacated is manifestly inadequate to justify a mid-arbitration intervention, regardless of the size and early stage of the arbitration." (Sussex v. United States Dist. Court for the Dist. of Nev. (Turnberry/MGM Grand Towers) (Ninth Cir.; January 27, 2015) 776 F.3d 1092.)

New Trial Motion Procedure Muddier Than Ever.

After turning down defendant’s offer pursuant to Code of Civil Procedure section 998 of $200,000, a jury awarded $73,450 to plaintiff while assessing 40 percent fault to plaintiff. Plaintiff was then left with a total of $44,070. The court entered judgment on the jury’s verdict, but the clerk did not serve notice of entry of judgment. The following week, defendant filed a memorandum of costs, seeking $39,996.46 pursuant to Code of Civil Procedure section 998. A few weeks later, plaintiff filed a motion to tax costs. 57 days after judgment was entered, plaintiff filed a notice of intention to file a motion for new trial. 60 days later, the trial court announced its tentative ruling to grant the motion on the ground of insufficient evidence with respect to the jury’s allocation of 40 percent comparative fault. But when defendant raised the issue whether the court still had jurisdiction to hear the motion for new trial, the trial court “conditionally” granted the motion for new trial, not sure whether it still had jurisdiction to do so. Plaintiff lost on appeal. The appellate court said the trial court still had jurisdiction to rule on the motion for new trial, but stated: “[B]ecause there is no statutory authorization for the court to condition the grant of a new trial motion on subsequent appellate review of the jurisdictional issue, the order appealed from is a legal nullity that we can neither reverse nor affirm. Further, because the court did not file an effective order ruling on the new trial motion before its jurisdiction expired, the motion was denied by operation of law.” (Maroney v. Iacobsohn (Cal. App. Second Dist., Div. 3; January 27, 2015) 233 Cal.App.4th 900 [183 Cal.Rptr.3d 257].)

Attorney Fees: Is A Bird In The Hand Worth Two In The Bush?

Creditor spent years trying to collect a judgment from a guarantor/debtor. Around the time the creditor started to see a light at the end of the tunnel, the debtor's lawyer walked into the office of the creditor's lawyer late on a Friday afternoon with a cashier's check for almost $13 million, covering the entire judgment as well as all accumulated interest. But the creditor felt it was also due almost $3 million more for postjudgment attorney fees since it spent that money to try to collect the judgment. What to do? The creditor did not present the check for payment until it filed a motion for attorney fees in the superior court. The trial court ruled the motion for postjudgment costs and fees was untimely and the creditor appealed. The appellate court stated: “To be timely, the motion must be made before the underlying judgment has been fully satisfied” in order “to avoid a situation where a judgment debtor has paid off the entirety of what he believes to be his obligation in the entire case, only to be confronted later with a motion for yet more fees.” The creditor argued, however, that a judgment paid with a check is not fully satisfied until the check is cashed, but the debtor argued the judgment was fully satisfied when the creditor accepted a cashier’s check. The appellate court discussed two California statutes, Code of Civil Procedure section 724.010 [“Where a money judgment is satisfied by payment to the judgment creditor by check or other form of noncash payment that is to be honored upon presentation by the judgment creditor for payment, the obligation of the judgment creditor to give or file an acknowledgement of satisfaction of judgment arises only when the check or other form of noncash payment has actually been honored upon presentation for payment.”] and Commercial Code section 3310 [“Unless otherwise agreed, if a certified check, cashier’s check, or teller’s check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment for the obligation.” The appellate court affirmed the ruling of the trial court, stating: “When [the creditor] accepted the cashier’s check, which was subsequently honored, the effect was the same as if it had accepted cash.” With regard to what alternatives were available once the cashier’s check was tendered, the appellate court stated: “[H]ad [the creditor] rejected [debtor’s] payment with the intent to file a motion for postjudgment attorney fees before defendants returned with cash, no mischief would have been done on either side. [The creditor] could then have filed a timely motion for postjudgment costs, and interest on the judgment would have stopped accruing as defendant tendered full satisfaction of the outstanding judgment with accrued interest.” (Gray1 CPB, LLC v. SCC Acquisitions, Inc. (Cal. App. Fourth Dist., Div. 3; January 27, 2015) 233 Cal.App.4th 882 [182 Cal.Rptr.3d 654].)

"If I'd Observed All The Rules, I'd Never Have Got Anywhere," — Marilyn Monroe.

With regard to the purchase of additional land by a country club, members were given the option of paying a lump sum or making payments over a period of years. After some time, there was a dispute over the club’s treatment of that obligation vis-à-vis new members. Four members brought suit against the club, and the club, by then the defendant, petitioned to compel arbitration, based on an arbitration provision incorporated into its bylaws four months after plaintiffs’ complaint was filed. In affirming the trial court’s denial of defendant’s petition to compel arbitration, the appellate court stated: “And [defendant’s] basic premise, which is that each member’s agreement to the bylaw provision allowing for future amendments to its bylaws means those members are automatically bound by whatever amendments the Club makes in accordance with that provision – even after the members have resigned their membership – would doom the agreement as illusory if it were correct. Fortunately, it is not. (Cobb v. Ironwood Country Club (Cal. App. Fourth Dist., Div. 3; January 28, 2015) 233 Cal.App.4th 960 [183 Cal.Rptr.3d 282].)

Too Sick To Work For You.

An employee, who was on approved medical leave, was fired after his employer discovered he was engaged in outside employment, which was a violation of company policy. The employee brought an action for violation of the Moore-Brown-Roberti Family Rights Act [CFRA; Government Code sections 12945.1 and 12945.2]. An arbitrator held in the employer’s favor, finding the employer did not fire the man for discriminatory reasons as it had an honest belief the employee was abusing his medical leave and did not inform the employer of his outside employment. Eventually the Court of Appeal concluded the arbitrator violated the employee’s right to reinstatement under the CFRA when the arbitrator applied the honest belief defense to the claim. The California Supreme Court granted review and reversed the judgment of the Court of Appeal, stating: "We conclude that although the arbitrator may have committed error in adopting a defense untested in our court, any error that may have occurred did not deprive the employee of an unwaivable statutory right because the arbitrator found he was dismissed for violating his employer's written policy prohibiting outside employment while he was on medical leave." (Richey v. AutoNation, Inc. (Cal. Sup. Ct.; January 29, 2015) 60 Cal.4th 909 [182 Cal.Rptr.3d 644, 341 P.3d 438].)

Lemon Law Case.

The purchaser of a luxury automobile which had numerous problems eventually brought a lemon law action [Song-Beverly Consumer Warranty Act; Civil Code section 1790, et seq]. The car manufacturer served the consumer with an offer to compromise under California Code of Civil Procedure section 998, which stated: “Pursuant to California Civil Code section 1793.2(d)(2), MBUSA offers to repurchase Plaintiff’s 2008 [sic] Mercedes-Benz E550 (“E550”) ... in an undamaged condition, save normal wear and tear, for the amount of the vehicle down payment, any and all payments made, and the amount of Plaintiff’s outstanding loan obligation related to the purchase of the subject vehicle, if any, as well as any collateral charges and incidental costs in accordance with Civil Code section 1793.2(d)(2)(B), less a reasonable mileage offset in accordance with Civil Code section 1793.2(d)(2)(C), all to be determined by court motion if the parties cannot agree.” Plaintiff rejected the offer. A jury found the manufacturer did not willfully fail to comply with the lemon law act, and plaintiff appealed. The appellate court affirmed in favor of defendant, except with regard to denial of plaintiff’s costs because he did not do better than the California Code of Civil Procedure section 998 offer to compromise, stating: “[Plaintiff] contends the trial court erred in denying a portion of his costs on the grounds that [defendant]’s offer to compromise under section 998 was valid, and that [plaintiff] failed to receive a judgment more favorable than the offer. We agree the trial court erred in finding the section 998 offer valid. . . . We focus on one term in the section 998 offer as particularly undefined. Although for the most part the section 998 offer simply offered to comply with the restitution provision of the Act, it limited compliance to repurchase of the car, “in an undamaged condition, save normal wear and tear.” This condition inserted uncertainty into the offer, which otherwise tracked the language of the Act.” (MacQuiddy v. Mercedes-Benz USA, LLC (Cal. App. Second Dist., Div. 8; January 29, 2015) 233 Cal.App.4th 1036 [182 Cal.Rptr.3d 691].)

The Fall Of The Musician

A professional musician who was injured after he fell from a stage at a country club brought an action against the club for negligence. The stage, owned by the club and put together by the club on the day of the performance, consisted of four rows, known as risers, each approximately two feet high and three to four feet wide. To fit the stage into a corner, each row was narrower than the last, leaving triangular gaps at the end of each row between the walls and the risers. The musician came to the club during the late afternoon to set up for the evening performance. The lights were off, and he had to depend on natural light from the windows. He fell into one of the gaps and was seriously injured. The club brought a motion for summary judgment, contending it owed no duty to the musician and that the man regularly performed on stage and assumed the risk of falling. The trial court found the doctrine of primary assumption of the risk applied and granted summary judgment to the club. Although it agreed with the club that falling off the stage is an inherent risk for all stage performers, the appellate court reversed, finding there is a triable issue of fact whether the club constructed the stage in a way that unreasonably increased the risk of falling. (Fazio v. Fairbanks Ranch Country Club (Cal. App. Fourth Dist., Div. 1; January 29, 2015) 233 Cal.App.4th 1053 [183 Cal.Rptr.3d 566].)

City Council Gone Wild.

A long-established restaurant sits in a trendy marina area that includes a number of restaurants, bars, residences and condominiums. A City's planning commission voted to approve the restaurant's conditional use permit to allow it to have a patio cover and remain open until 2:00 a.m. on weekends with dancing inside the restaurant. The idea was to construct the patio cover to minimize noise on the patio after 11:00 p.m. Four days after the approval, a member of the City Council sent an email stating it was his "official request to appeal" the planning commission's approval. At a later City Council meeting, the restaurant's lawyer argued the council member did not have the right to appeal, but he was rebuffed by the city attorney who said: "Well, the Code does provide that the city council member can basically call it up for review." After a lively hearing, the City Council voted to reverse the decision of the planning commission. The restaurant unsuccessfully sought administrative mandate, and the City obtained a preliminary injunction, ordering no dancing and closure by 11:00 p.m. In finding in the restaurant's favor, the appellate court concluded the preliminary injunction was improvidently granted and that the city's own municipal code did not allow the City Council member to appeal in the first place. (Woody’s Group, Inc. v. City of Newport Beach (Cal. App. Fourth Dist., Div. 1; January 29, 2015) 233 Cal.App.4th 1012 [183 Cal.Rptr.3d 318].)

Limitations Of Psychotherapist/Patient Privilege.

A criminal defendant's step-daughter told her mother defendant had been sexually abusing her for a number of years. After police contacted defendant, he threatened suicide and was admitted to a psychiatric hospital pursuant to Welfare and Institution Code section 5150, for a 72-hour hold. During that hospitalization, defendant told a doctor and a nurse about acts of child abuse he committed. At his criminal trial, the prosecutor made a pretrial motion requesting permission to impeach defendant with these statements, should defendant decide to testify. The trial judge granted the prosecutor's motion, and after defendant was convicted of continuous child abuse, he appealed, claiming it was because of the court’s ruling that he could not testify in his own defense, and was forced "to elect between his constitutional right to testify on his own behalf, and his right to preserve the confidentiality of his psychotherapist-patient communications." The appellate court found no error, reasoning the nurse was a mandated child abuse reporter [Penal Code section 11164] and any statements she was required to report were excluded from statements protected by the Psychotherapist-patient privilege found in Evidence Code section 1010. (People v. Cannata (Cal. App. Fourth Dist., Div. 3; January 29, 2015) 233 Cal.App.4th 1113 [183 Cal.Rptr.3d 351].)

No Respondeat Superior For Acts Of Independent Contractor.

A production company hired a medical doctor as its performer’s personal physician for a concert tour. The performer died of acute intoxication by drug while under the doctor’s care. The performer’s family sued the production company for negligent hiring, retention and supervision of the doctor. The trial court granted summary adjudication for negligence and respondeat superior, and a jury found the doctor was not unfit or incompetent to perform the work for which he was hired. On appeal, the performer’s family argued the trial court erred in granting summary adjudication. The appellate court affirmed, stating the production company did not owe the performer a duty to refrain from exerting pressure over the doctor to keep the performer healthy so he could finish the tour, the doctor was an independent contractor as a matter of law, the production company was not liable under the peculiar risk doctrine and the doctor was not an agent of the production company. (Jackson v. AEG Live, LLC (Cal. App. Second Dist., Div. 5; January 30, 2015) 233 Cal.App.4th 1156 [183 Cal.Rptr.3d 394].)

Judgment In Personal Injury Case Reversed After Trial Judge Told Jury Plaintiff Was An Undocumented Immigrant.

In a lawsuit involving a rare lung disease allegedly caused by a toxic workplace substance, one of the elements of damages was the cost of a future lung transplant. In a motion in limine, the plaintiff sought an order prohibiting the defense from mentioning his immigration status. The defense argued that since plaintiff might be deported, he would not be getting a lung transplant in the U.S.A., and, therefore, evidence of his immigration status was relevant and necessary to argue against the cost of a lung transplant as well as plaintiff’s eligibility for a lung transplant in this country. The trial court ruled plaintiff’s immigration status was admissible, and the jury returned a verdict in favor of defendants. The appellate court reversed, finding the trial judge erred in informing the venire of prospective jurors that plaintiff is an undocumented immigrant and in denying plaintiff’s motion for mistrial after that disclosure, stating that in its Evidence Code section 352 analysis, "The court overweighed the probative value of the evidence of immigration status on the question of whether [plaintiff] could feasibly argue he expected to require, and to receive, a lung transplant in the future." (Velasquez v. Centrome, Inc. (Cal. App. Second Dist., Div. 8; January 30, 2015) 233 Cal.App.4th 1191 [183 Cal.Rptr.3d 150].)

Summary Judgment Reversed.

Plaintiff lived in a State-owned rental unit on the grounds of San Quentin prison, and he walked from his residence to the prison building where he worked. One day, a concrete step on a staircase collapsed underneath him and he suffered injuries in a fall. He filed a lawsuit and the trial court granted the State’s motion for summary judgment based on a "premises line" argument. That is, the trial court reasoned an employment relationship commences when an employee enters an employer's premises, and, accordingly, such an employee's remedy was exclusively under workers' compensation laws. The appellate court reversed, noting the State did not intend its workers compensations policy would insure plaintiff for all injuries he might suffer on the grounds since plaintiff's lease required he obtain a broad comprehensive insurance policy, naming the State as the insured, and concluding whether plaintiff's injury arose during the course and scope of his employment is a question of fact. (Wright v. State of California (Cal. App. First Dist., Div. 2; January 30, 2015) 233 Cal.App.4th 1218 [183 Cal.Rptr.3d 135].)

Another Limitation Of The Attorney-Client Privilege.

This case involves an intersection between two rules involving the attorney-client privilege. One rule is that in a lawsuit between an attorney and a client based on an alleged breach of a duty arising from the attorney-client relationship, attorney-client communications relevant to the breach are not protected by the privilege. Another rule is when multiple clients retain or consult with an attorney on a matter of common interest and the joint clients sue each other, then the communications between either client and the attorney made in the course of that relationship are not privileged in the suit between the clients. In the present situation, joint clients did not sue each other, but one of them sued their former attorney. The question is whether the non-suing client may prevent the parties to the lawsuit from discovering or introducing otherwise privileged attorney-client communications made in the course of the joint representation. The appellate court held: “In a lawsuit between the attorney and one or more of the attorney’s joint clients, based on an alleged breach of a duty arising from the attorney-client relationship, relevant communications between the attorney and any of the joint clients, made in the course of the attorney-joint-client relationship, are not privileged.” (Anten v. Sup. Ct. (Weintraub Tobin Chediak Coleman Grodin Law Corp.) (Cal. App. Second Dist., Div. 1; January 30, 2015) (As modified February 10, 2015) 233 Cal.App.4th 1254 [183 Cal.Rptr.3d 422].)

Trial Court Erred In Excluding Expert Opinion Testimony.

An excess insurance carrier covering Costco sued a tire manufacturer and its insurance carrier to recover sums the excess carrier expended in settlement of a personal injury claim resulting from tire defects. Both Costco and the tire manufacturer settled with the plaintiff in the underlying case. In a motion in limine in the present case, the trial court ruled the excess carrier’s proof of a tire defect would be limited to the opinions of the expert designated by the underlying plaintiff in the underlying case. The appellate court reversed and remanded, finding the exclusion of expert testimony “on a matter properly subject to expert opinion” was error. (National Union Fire Ins. Co. of Pittsburgh, PA v. Tokio Marine & Nichido Fire Ins. Co. (Cal. App. Second Dist., Div. 5; February 4, 2015) (As modified Mar. 5, 2015) 233 Cal.App.4th 1348 [185 Cal. Rptr.3d 296].)

Disentitlement Doctrine Results In Dismissal Of Appeal For Refusing To Follow Court’s Orders.

In a dispute over a family trust, the trial court ordered defendant to do certain things. Instead of filing an accounting or quitclaiming certain property to the other party as ordered, defendant did not file the accounting and quitclaimed the property to her daughter instead of to the person she was ordered to quitclaim it, and then defendant appealed those orders. Pursuant to the disentitlement doctrine, the appellate court dismissed defendant’s appeal due to defendant’s “flagrant violation of the court’s orders.” (Blumberg v. Minthorne (Cal. App. Fourth Dist., Div. 3; February 4, 2015) 233 Cal.App.4th 1384 [183 Cal.Rptr.3d 179].)

NCAA's Dirty Laundry To Be Aired In Public.

A former assistant football coach at the University of Southern California sued the National Collegiate Athletic Association [NCAA] for breach of contract, defamation and other torts after the NCAA issued its report on infractions about whether or not a running back named Reggie Bush received improper benefits while a student. The NCAA filed a motion to strike, arguing the lawsuit is a strategic lawsuit against public participation. Pending hearing on the motion, the trial court permitted discovery. Ultimately the trial court denied the motion to strike, as well as the NCAA’s motion to seal the records of the discovery taken, but did conditionally order those records sealed pending this appeal. The present appeal concerns only the trial court’s denial of the NCAA’s motion to seal those records of the discovery. The NCAA lost again when the appellate court ruled: “We conclude the NCAA failed to carry its burden to demonstrate that its interest in the confidentiality of its enforcement proceedings overrides the constitutional right of access and the presumption of openness, or how this interest in confidentiality would be prejudiced if the documents at issue were disclosed.”(McNair v. National Collegiate Athletic Assn. (Cal. App. Second Dist., Div. 5; February 6, 2015) 234 Cal.App.4th 25 [183 Cal.Rptr.3d 490].)

Trial Court Erred In Not Holding Evidentiary Hearing In Motion To Compel Arbitration.

In an action alleging investment mismanagement, defendants petitioned the court to compel arbitration. In opposition, plaintiffs argued, and supported their arguments with declarations, they were never provided with any agreements containing arbitration provisions, and what agreements they did enter were void for fraud in execution. The trial court ordered the case into arbitration, and plaintiffs lost. On appeal, plaintiffs argued their claims should not have been ordered into arbitration, contending among other things the trial court erred in not holding an evidentiary hearing. Agreeing the trial court should have held an evidentiary hearing, the appellate court reversed. (Ashburn v. AIG Financial Advisors, Inc. (Cal. App. First Dist., Div. 2; (February 6, 2015) 234 Cal.App.4th 79 [183 Cal.Rptr.3d 679].)

"Electricity Is Just Organized Lightening." — George Carlin.

In a jury trial, a jury awarded $1,050,000 in compensatory damages and $3,000,000 in punitive damages against an electric company and in favor of plaintiff on her claims for IIED, negligence and nuisance, based upon her contentions the company failed to control its electrical substation next door to plaintiff’s house. She said the company allowed uncontrolled stray electrical currents to enter her home, including low levels of electricity while showering. The company offered to replace plaintiff’s metal pipes with plastic pipes, but she refused, insisting the elimination of all stray voltage on her property. On appeal, the company contends all of plaintiff’s claims fall under the exclusive jurisdiction of the California Public Utilities Commission [PUC]. The appellate court reversed, stating: "We conclude that the PUC has not exercised its authority to adopt a policy regarding the issues in this lawsuit, and therefore it does not have exclusive jurisdiction over [plaintiff’s] claims. But we also conclude [plaintiff] failed to present sufficient evidence to support her IIED and negligence claims, or to support an award of punitive damages. Finally, we conclude the verdict on the nuisance claim cannot stand because the trial court refused to give [the electric company’s] proffered instruction regarding causation of [plaintiff’s] physical symptoms, and therefore the jury relied upon irrelevant evidence when determining that claim. Accordingly, we reverse the judgment, order judgment entered in favor of [the electric company] on the IIED and negligence claims, and remand to the trial court for a retrial on the nuisance claim." (Wilson v. Southern California Edison Co. (Cal. App. Second Dist., Div. 4; February 9, 2015) 234 Cal.App.4th 123 [184 Cal.Rptr.3d 26].)

Big Girls Don’t Cry .... They Sue.

In 1988, a lawyer/journalist entered into a written contract to ghostwrite the autobiography of one of the original members of the band Jersey Boys. After the work was completed, but prior to publication, the lawyer/journalist died in 1991. In 1999, the band member executed another agreement, this time granting the exclusive rights to two other band members to use aspects of his life and career to develop a musical. A third agreement, involving a different production company, was executed in 2004 or 2005 and this venture culminated in the musical “Jersey Boys.” The widow of the lawyer/journalist filed an action alleging copyright infringement, and the question for the court was “whether a contractual grant of the exclusive right to use an individual’s ‘biographies’ to create a Broadway musical stage play constitutes a transfer of a copyright ownership interest in that individual’s unpublished autobiography.” The trial court concluded the 1999 agreement constituted a license of the band member’s copyright interest, rather than a transfer of ownership, and granted summary judgment to the rest of the band members and the musical’s producers. The Ninth Circuit reversed and remanded, concluding there were many issues of fact and that the 1999 Agreement constituted a transfer of ownership, not a license. (Corbello v. Devito (Ninth Cir.; February 10, 2015) 777 F.3d 1058.)

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