Untitled Document

Litigation Update

Litigation Section News : August 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

That Pile Of Documents Signed When Taking Out A Home Mortgage!

A homeowner sued the Federal Home Loan Mortgage Corporation [Freddie Mac] for breach of contract and breach of fiduciary duty. Freddie Mac had purchased the homeowner’s mortgage from the loan originator on the secondary market. The loan originator continued to service the loan and failed to pay the insurance premium from an escrow account which caused the homeowner’s insurance to be cancelled. The federal district court dismissed the complaint against Freddie Mac. The Ninth Circuit affirmed because the homeowner “expressly agreed in the mortgage contract that a subsequent purchaser of the loan would not assume any servicing obligations.” (Johnson v. Fed. Home Loan Mortg. Corp. (Ninth Cir. July 14, 2015) 793 F.3d 1005.)

Create Your Member Profile. On-line My State Bar Profile allows you to access the Litigation Section’s members only area, update your contact information, pay your dues online, and more. To set up your account, go to calbar.ca.gov/members. Link to My State Bar Profile Lis Pendens Void.

An adverse possessor obtained a lis pendens but failed to mail it to the address shown in the assessor’s roll, an address known to be invalid. The Court of Appeal found the lis pendens void, stating: “[U]nder the applicable statues, the lis pendens had to be mailed to the [property owner’s] address as shown on the assessor’s roll, regardless of whether that address was actually valid; because this was not done, the lis pendens is void.” (Carr v. Rosien (Cal. App. Fourth Dist., Div. 2; July 14, 2015) 238 Cal.App.4th 845 [190 Cal. Rptr.3d 245].)

In Affirming Grant Of Summary Judgment, Appeals Court Declined To Extend Case Of Mary M. v. City Of Los Angeles [Case Involving Late Night Rape By A Police Officer Who Stopped Female Motorist.]

A social worker, who was not assigned to the then-15-year-old foster child volunteered to transport the child to his new foster home. The transfer was completed without incident, but the social worker went back to the new foster home after hours and picked up the child. He took him to a liquor store and then back to his apartment where he sexually attacked the child. The child thereafter brought an action against the County, relying on the holding in Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202 [285 Cal. Rptr. 99, 814 P.2d 1341], a case involving a female motorist stopped late at night by a city police officer who raped her, which case held the woman could sue the city under a theory of respondeat superior. In the present case, the trial court granted summary judgment in favor of the County. Expressing doubt that Mary M could be applied beyond the narrow context of an arrest performed by a uniformed, armed police officer in the normal course of that officer’s duties, the Court of Appeal affirmed, finding the undisputed facts here take this case out of Mary M.’s reach. The appeals court noted the attack took place several hours after the social worker finished his shift and that he had already delivered the child to the new home without incident. (Z.V. v. County of Riverside (Cal. App. Fourth Dist., Div. 3; July 16, 2015) 238 Cal.App.4th 889 [189 Cal.Rptr.3d 570].)

Disabled Plaintiff May Proceed Under Both Disabled Persons Act And The Unruh Civil Rights Act.

Plaintiff, who is disabled, was denied service at defendant’s restaurant due to presence of plaintiff’s service dog. After hearing various motions, the trial court concluded plaintiff could assert a claim under the Disabled Persons Act [DPA; Civil Code section 54055.3], but not under the Unruh Civil Rights Act [Civil Code sections 51, 52]. Plaintiff voluntarily dismissed his action, which ordinarily does not result in an appealable judgment or order, but the Court of Appeal permitted the appeal, stating that “appellate courts treat a voluntary dismissal with prejudice as an appealable order if it was entered after an adverse ruling by the trial court in order to expedite an appeal of the ruling.” Noting the DPA specifically states its remedies are nonexclusive, the Court of Appeal reversed, stating plaintiff could proceed under both statutes. (Flowers v. Prasad (Cal. App. Second Dist., Div. 4; July 17, 2015) 238 Cal. App.4th 930 [190 Cal.Rptr.3d 33].)

Lemon Laws.

Plaintiff purchased a used automobile from a private party, and thereafter sued Ford Motor Co. alleging violations of the Song-Beverly Consumer Warranty Act [Civil Code section 1790 et seq.]. Ford’s motion for summary judgment was granted because Civil Code section 1791(l) requires the seller to be a “retail seller” engaged in the business of selling or leasing consumer goods to retail buyers. However, after the motion had been filed, plaintiff sought leave to amend to allege violation of the federal “lemon law” under the Magnuson-Moss Act [15 U.S.C. § 2301], but the trial court denied the request. The Court of Appeal affirmed the grant of summary judgment, but reversed and remanded on the amendment request, finding the trial court abused its discretion. (Dagher v. Ford Motor Co. (Cal. App. Fourth Dist., Div. 1; July 17, 2015) 238 Cal.App.4th 905 [190 Cal.Rptr.3d 261].)

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If At First You Don’t Succeed, Don’t Wait Too Long To Try, Try Again.

In a dispute involving construction of a condominium project, defendants failed to file a responsive pleading after the court denied defendants’ petition to order the matter into arbitration. The trial court entered a $1.7 million default judgment. Defendants moved for mandatory relief pursuant to Code of Civil Procedure section 473(b), which the trial court denied because the attorney declaration was “not credible” and “too general.” Weeks later, defendants renewed their motion with a more detailed declaration. Several times the trial court stated the more detailed explanation was not credible, but granted relief nonetheless. The trial court also expressed that, although the renewed motion did not meet the requirements for a motion for reconsideration under Code of Civil Procedure section 1008, it felt bound to follow Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868 [102 Cal.Rptr.3d 140], a decision that held Code of Civil Procedure section 1008, does not apply to a renewed Code of Civil Procedure section 473(b), motion for mandatory relief. After declining to follow the holding in Standard Microsystems, the appellate court reversed and ordered reinstatement of the judgment, concluding the trial court lacked jurisdiction to consider the renewed motion as Code of Civil Procedure section 1008, requires action within a short period of time. (Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2013) 215 Cal.App.4th 277 [155 Cal.Rptr.3d 321] –NOT CITABLE.)

Recent review by California Supreme Court.

The California Supreme Court stated the Court of Appeal is correct. The high court held Code of Civil Procedure section 1008, governs renewed applications under Code of Civil Procedure section 473(b), for relief from default based on an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect. The court stated that because defendants concede their renewed application did not satisfy Code of Civil Procedure section 1008, the Court of Appeal‘s decision vacating the superior courts order granting relief from default is affirmed. (Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (Cal. Sup. Ct.; July 20, 2015) 61 Cal.4th 830 [189 Cal.Rptr.3d 824, 352 P.3d 391].)

“Moving On Is Easy. It’s Staying Moved On That’s Trickier.” -- Katerina Stoykova Klemer.

Family Code section 771, subdivision (a), provides that earnings and accumulations of a spouse while living separate and apart from the other spouse are separate property of the spouse. In this case, the couple was separated but still living in the same home. The Court of Appeal concluded Family Code section 771, subdivision (a), requires the spouses to be living in separate residences in order for their earnings and accumulations to be their separate property. (In re Marriage of Davis (Cal. Sup. Ct.; July 20, 2015) 61 Cal.4th 846 [189 Cal.Rptr.3d 835, 352 P.3d 401].)

$3,751,969 Personal Injury Verdict Affirmed.

In a special verdict, a jury found two defendant motorists were negligent but concluded only one of them was a substantial factor is causing injuries to a bicyclist on a sidewalk. Thus, only one of the defendants was held responsible for plaintiff’s $3,751,969 in damages. On appeal the defendant who was left on the hook claimed the verdict was inconsistent. The appellate court disagreed, holding the jury was entitled to conclude the other defendant only slightly exceeded a reasonable speed and was not a substantial factor in causing the injuries to plaintiff. The remaining defendant also argued on appeal that she is entitled to a new trial on damages because there was insufficient evidence of the reasonable value of the uninsured plaintiff’s medical bills. She contends plaintiff’s experts, who testified the medical bills were fair and reasonable, needed to do more to establish that their testimony was rooted in the “market value” of medical services. The appellate court rejected this argument, noting plaintiff’s experts testimony was based on the medical costs incurred as well as on the experts’ own experiences treating patients. (Bermudez v. Ciolek (Cal. App. Fourth Dist., Div. 3; July 20, 2015) 237 Cal.App.4th 1311 [188 Cal.Rptr.3d 820].)

CEB Benefits for Litigation Section Members.
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        10% discount for Section members on continuing ed programs cosponsored by the CEB and the Section. See ceb.com/litigationsection for additional details. Link to Litigation Section page on CEB site Telephone Call Sufficient Contact For Jurisdiction In California.

A California lawyer telephoned an Arizona lawyer to inquire about title and ownership of equipment the California lawyer’s client was contemplating buying from a Texas company. He left a voicemail message, and the Arizona lawyer returned the call. The Arizona lawyer represented he was the lawyer for the Texas company, and that his client was the sole owner of the equipment. Based on the Arizona lawyer’s representations, the California lawyer advised his client to go forward with the equipment purchase. As it turned out, a New York bank also had an interest in the equipment, and the purchaser brought a legal malpractice action against the California lawyer. The California lawyer cross-complained against the Arizona lawyer for equitable indemnity, negligence, intentional and negligent misrepresentation and concealment. The trial court granted the Arizona lawyer’s motion to quash, finding the Arizona lawyer did not purposefully avail himself to benefits in California, commenting: “It seems just such a random attenuated and insufficient contact to establish specific jurisdiction.” In reversing, the Court of Appeal stated: “Clark personally availed himself other benefits of California when he reached into California to induce Moncrief’s client to complete the equipment purchase.” (Moncrief v. Clark (Cal. App. Sixth Dist., July 21, 2015) 238 Cal.App.4th 1000 [189 Cal.Rptr.3d 864].)

Hearsay Evidence Twist

In a criminal matter involving drugs being smuggled from Mexico into the U.S., the defendant was precluded from testifying about the “favors” a friend in Mexico had asked of him. Defendant’s contention was that in granting his friends “favors,” he had been manipulated into smuggling drugs across the border. One “favor” was a request defendant drive someone to the DMV in San Ysidro, about eight miles north of the border. Another “favor” was to drive someone to a tire shop in San Diego. Government lawyers objected to the proffered testimony as hearsay and the federal district court sustained the objection. In affirming, the Ninth Circuit noted that as a general rule, a party is prohibited from introducing a statement made by an out-of-court declarant when it is offered at trial to prove the truth of the matter asserted. Here, defendant argued he offered the testimony, not for its truth, but to show its effect on the listener. The appeals court, however, found the proffered questions fell within the realm of hearsay, even though sometimes questions may constitute non-hearsay. The court stated: “[Defendant] offered the questions for this intended implied message to show it was [the friend] who was calling the shots and who unknowingly set him up on the drug importation scheme. Thus, [defendant] offered the statements for the truth of the defense asserted.” (United States v. Torres (Ninth Cir.; July 22, 2015) 794 F.3d 1053.)

One Trial Judge Cannot Overrule Another Trial Judge

In a marital dissolution action, Judge #1 ruled an agreement was not enforceable. Judge #2 reconsidered the matter over three years later, on the court’s own motion, and ruled the agreement was enforceable. On appeal, the wife asserted Judge #2 erred in granting reconsideration of Judge #1’s ruling. In reversing, the Court of Appeal found Judge #2’s actions were not covered by any recognized exceptions to the general rule that one trial judge cannot overrule another trial judge. Rather, the appeals court found the record reflected that Judge #2 disagreed with the ruling of Judge #1 and overruled Judge #1. (In re Marriage of Oliverez (Cal. App. Sixth Dist., July 24, 2015) 238 Cal.App.4th 1242 [190 Cal.Rptr.3d 436].)

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 Out-Of-State Class Action Lawyer Denied Fees.

In a class action involving a retailer’s practice of requesting personal information from consumers during credit card transactions, the settlement agreement between the parties provided the retailer would not oppose class counsel’s application for court approval of attorney fees and costs in the amount of $210,000 and payment to plaintiff of an incentive award in the amount of $3,500. The initial complaint listed California counsel as plaintiffs’ counsel of record and several out-of-state lawyers with the notation “pro hac vice admittance to be sought.” One of the lawyers practices in Illinois, but while an application for admission pro hac vice in California was filed, no order was ever issued because the application was defective. At the time of the motion to confirm the settlement, the court conducted a hearing on a renewed application and denied it because of “the great number of pro hac vice applications” [Rule 9.40(b) of the California Rules of Court states: “Absent special circumstances, repeated appearances by any person under this rule is a cause for denial of an application.”] The trial court approved the settlement, awarded $11,000 in fees and $500 as a plaintiff’s incentive. The Court of Appeal affirmed, stating “A fundamental principle of California law, enshrined in the State Bar Act (Business & Professions Code section 6000 et seq.), is that no person may ‘practice law in California’ unless that person is an active member of the State Bar. (Bus. & Prof. Code § 6125.) As a corollary principle, no person may recover compensation for practicing law ‘in California’ unless that person was a member of the State Bar or admitted pro hac vice at the time the services were performed, or the legal services fall within an exception.” (Golba v. Dick’s Sporting Goods, Inc. (Cal. App. Fourth Dist., Div. 3; July 24, 2015) 238 Cal.App.4th 1251 [190 Cal.Rptr.3d 337].)

Probate Court May Reform A Will If There Is Clear And Convincing Evidence Establisheing a Mistake In Testator’s Intent.

A man prepared a holographic will providing that, upon his death, his wife would inherit his estate and that if he and his wife died at the same time, specific charities would inherit his estate. The handwritten will, however, contained no provision addressing the disposition of his estate if, as occurred here, he lived longer than his wife. Finding the man died intestate, the probate court entered judgment in favor of the heirs at law, and the charities appealed. The California Supreme Court held that an unambiguous will may be reformed if clear and convincing evidence establishes that the will contains a mistake in the expression of the testator’s intent at the time the will was drafted and also establishes the testator’s actual specific intent at the time the will was drafted. The high court stated: “We further conclude that the charities’ theory that the testator actually intended at the time he drafted his will to provide that his estate would pass to the charities in the event his wife was not alive to inherit the estate is sufficiently particularized, with respect to the existence of such a mistake and the testator’s intent, that the remedy of reformation is available so long as clear and convincing evidence on both points is demonstrated. Therefore, we will direct this matter to be remanded to the probate court for consideration of whether clear and convincing evidence establishes that such a mistake occurred at the time the will was written and that the testator at that time intended his estate to pass to the charities in the event his wife was not alive to inherit the estate when he died.” (Estate of Duke (Cal. Sup. Ct.; July 27, 2015) 61 Cal.4th 871 [190 Cal.Rptr.3d 295, 352 P.3d 863].)

Extrinsic Evidence Considered In Motion To Quash.

In an unlawful detainer action in which the defendant filed a motion to quash contending she was not properly served with the three-day notice to pay rent or quit in a manner prescribed by law. She included evidence the notice was left on the ground in an unmarked envelope on the side of her apartment unit. The trial court denied the motion to quash, twice, once before and once after an alternative writ of mandate was issued directing the court to either vacate its order denying the motion to quash service of summons and complaint or show cause why a preemptory writ should not issue. The second time around, the trial court determined the proper scope and standard of a motion to quash is the same as that of a demurrer and therefore limited to challenging the sufficiency of the pleadings. Defendant asked the appellate division of the superior court to rule that a trial court may consider extrinsic evidence in support of a motion to quash. The appellate division granted a writ of mandate, stating: “Affidavits and declarations contained in the motion to quash together with the verified complaint may be competent evidence sufficient for the trial court to determine the jurisdictional issues raised by the motion.” (Borsuk v. Sup. Ct. (La Hillcreste Apartments, LLC) (Cal. Super. Ct.; July 22, 2015) 238 Cal.App.4th Supp. 1, [190 Cal.Rptr.3d 529].)

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.govThe Morning-After Pill.

A Commission in the State of Washington regulates the practice of pharmacy. Violation of the Commission’s rules constitutes grounds for revocation of a pharmacy license. The rules require a pharmacist to deliver lawfully prescribed drugs or devices to patients, and a pharmacy objecting to the rules may not refer a patient to another pharmacy. The rules do not require an individual pharmacist to dispense medication if the pharmacist has a religious, moral, philosophical, or personal objection, and a pharmacy may accommodate an objecting pharmacist in any way the pharmacy deems suitable, including having another pharmacist available in person or by telephone. Plaintiffs are the owners of a pharmacy, which declines to stock emergency contraceptive drugs because the owners have religious objections to their use and two individual pharmacists who have religious objections to delivering emergency contraceptives to patients, all of whom challenge the rules under the Free Exercise and Equal Protection Clauses of the United States Constitution. Defendants are members of the Commission and the Secretary of Washington State Department of Health. After a bench trial, the trial court found the Commission’s rules were unconstitutional under the Free Exercise Clause. The Ninth Circuit Court of Appeals reversed the judgment, stating: “We recognize that there is a ‘trend of protecting conscientious objectors to abortions,’ []and that most—if not all—states do not require pharmacies to deliver prescriptions, such as Plan B and ella [emergency contraceptives], in a timely manner. On balance, however, we are unconvinced that the right to own, operate, or work at a licensed professional business free from regulations requiring the business to engage in activities that one sincerely believes leads to the taking of human life is ‘so rooted in the traditions and conscience of our people as to be ranked as fundamental.’ [] Accordingly, we decline to recognize a new fundamental right. [¶] Because the rules do not infringe a fundamental right, they need only be ‘rationally related to legitimate government interests.’ [T]he rules meet that test.” (Stormans, Inc. v. Wiesman (Ninth Cir.; July 23, 2015) 794 F.3d 1064.)

Interesting Costs Discussion In Excessive Force Case.

In an excessive force wrongful death action against police officers, a jury found that two of the three officers did not use excessive force and the third did use excessive force, but, that force was not a substantial factor in causing the death. The court entered judgment in favor of defendants and awarded defendants costs of $66,453.02. On appeal, the plaintiff, decedent’s mother, contended the trial court erred in denying her motion in limine to exclude evidence of decedent’s cocaine intoxication at the time of the incident, but the appeals court found no abuse of discretion. Additionally, the appellate court found the trial court’s failure to instruct on negligence regarding the officers’ tactical decisions to be harmless error. With regard to other claims of inadequate jury instructions, the Court of Appeal noted the officer “had to make a series of split-second decisions as to whether and how to detain [decedent] and what degree of force was required…Thus, [the officer] could not be held liable unless he acted with a purpose to cause harm.” As to the costs’ award, the appellate court rejected defendants’ argument a separate appeal was necessary. The court stated: “A cost award that is incidental to a judgment may be challenged on an appeal from the judgment even though the amount of costs was filled in on the judgment after the notice of appeal was filed.” Because there was no basis for awarding attorney fees, plaintiff contended that defendants’ claim for over $40,000 in paralegal costs should have been rejected, but the appellate court stated: “[T]hese costs reflected amounts the defendants incurred for preparation and presentation of electronic evidence, including videos of deposition testimony, exhibits and excerpts from audio recordings, at trial,” and that “these costs are neither specifically allowable under Code of Civil Procedure section 1033.5, subdivision (a), nor prohibited by subdivision (b). They may be awarded provided they are ‘reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.’” The court noted that jurors expect the use of technology and the trial court did not abuse its discretion in awarding the cost of that technology. The judgment was affirmed. (Green v. County of Riverside (Cal. App. Fourth Dist., Div. 1; July 29, 2015) 238 Cal.App.4th 1363 [190 Cal.Rptr.3d 693].)

Copyright Infringement.

Plaintiff is a stock photography company that serves as a licensing agent for dozens of photographers, authorizing third parties to use copyrighted photographs. Plaintiff brought an action against a textbook publisher it claims exceeded its license by publishing more books than permitted under the license. The trial court ruled that plaintiff, as a licensing agent, lacked statutory standing to bring an infringement suit. In reversing, the Ninth Circuit stated: “Because we conclude the Agency Agreements convey the rights to reproduce, distribute, and display the photographs to [plaintiff] via an ‘exclusive license’ to grant licenses to third parties, we hold that [plaintiff] may bring an infringement action to remedy the unauthorized reproduction, distribution, and display of the photographs by those to whom it has granted licenses.” (Minden Pictures, Inc. v. John Wiley & Sons, Inc. (Ninth Cir.; July 29, 2015) 795 F.3d 997.)

Employer Can’t Have It Both Ways.

Defendant’s business arranges for transportation of cargo from the Long Beach and Los Angeles ports to warehouses, and plaintiffs are truck drivers. Prior to implementation of a clean air program at the ports in 2008, truck drivers generally owned their own trucks and worked as independent contractors. After the clean air program was implemented, older higher-emission trucks were no longer permitted at the ports, so defendant purchased trucks to comply with the new rules. But defendant continued to treat the drivers as independent contractors, requiring them to enter into lease agreements for the use of the trucks and deducting lease and insurance payments from their paychecks. Plaintiffs brought this action to recover those deductions on the basis they are now employees and not independent contractors. Both the Labor Commissioner and the Superior Court held the drivers are now employees and not independent contractors. The Superior Court awarded damages to the truck drivers. Stating the principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired, the Court of Appeal affirmed. (Garcia v. Seacon Logix (Cal. App. Second Dist., Div. 4; July 30, 2015) 238 Cal.App.4th 1476 [190 Cal.Rptr.3d 400].)

Table of Contents of This Issue