Litigation Section News:
Eileen C. Moore, Associate Justice
California Court of Appeal, Fourth District
Mark A. Mellor, Esq.
Table of Contents of This Issue
You Can't Make This Stuff Up!
The owner and supervisor of a company was
yelling and visibly upset that there was a sanitary
napkin by the toilet and blood around
the toilet seat. All female employees were ordered
to line up to be checked to see if they
were having their period, with a promise that
anyone who refused to get in line would be
fired. Each had to go into the restroom and
pull down her panties and expose her vaginal
area for inspection by a designated female
inspector. The group of employees sued for
various employment related claims, including
sexual harassment, invasion of privacy,
and false imprisonment. The company tendered
the action to its insurer, which denied
coverage. The trial court sustained the insurance
company's demurrer without leave
to amend. The insurance policy excluded
employment-related practices, and on appeal,
the company argued the exclusion is
ambiguous. In affirming the dismissal of the
action, the appellate court noted: "Indeed, it
is hard to conceive how the false imprisonment
claim of the employees at work in the
company bathroom could be unrelated to
their employment, and [the company] has
not suggested how the claim could be." (Jon
Davler, Inc. v. Arch Insurance Company (Cal.
App. Second Dist., Div. 7; August 25, 2014)
(As modified Sept. 15, 2014) 229 Cal.
Goodbye Tension, Hello Pension ... Not!
When DHL acquired Airborne
Express, it began to merge the two
companies’ retirement plans. Before the
merger, Airborne employees were able to
transfer the entire balance of a Profit Sharing
Plan to the Retirement Income Plan
upon retirement, and would be entitled to
at least $5,000 monthly from the Retirement
Income Plan, while leaving nothing
remaining in the Profit Sharing Plan account.
But DHL eliminated the right of
participants to transfer their account balances
from the Profit Sharing Plan to the Retirement Income Plan. Plaintiffs here
are former employees of Airborne who
contend the "anti-cutback" rule of the Employee
Retirement Income Security Act of
1974 [ERISA] prohibits the changes made
by DHL. A federal trial judge dismissed
the complaint. After inviting briefs from
the U.S. Dept. of Labor and the Dept. of
the Treasury, the Ninth Circuit agreed with
the trial court that plaintiffs failed to state a
cause of action, and affirmed. (Andersen v.
DHL Retirement Pension Plan (Ninth Cir.;
September 15, 2014) 766 F.3d 1205.)
The Complex World of Government Claims.
The Judicial Council
asked the appellate court to mandate the
trial court to grant its summary judgment
motion because plaintiff, who alleges she
was severely injured while on an elevator at
a Los Angeles courthouse, failed to present
a government claim to the Secretariat of the
Judicial Council. Plaintiff contends she complied
with the claim requirement set forth in
Government Code section 915 by mailing her
claim to defendant at the Victim Compensation
and Government Claims Board. The
appellate court noted that Government Code
section 915, subdivision (e)(1), requires actual
receipt of a misdirected claim by one of
the designated recipients, but plaintiff merely
produced evidence the claim was received
by the Victim Compensation and Government
Claims Board. The court also notes
that Government Code section 915, subdivision
(e)(4), “contains the qualifier that if the
government claim is against a judicial branch
entity, then there is compliance if it is actually
received by the secretariat.” In granting
the extraordinary relief requested, the appellate
court found plaintiff failed to present her
claim to the secretariat, and all her personal
injury claims are therefore barred. (Judicial
Council of California v. Sup. Ct. (Mari Bean) (Cal. App. Second Dist., Div. 5; September
16, 2014) 229 Cal.App.4th 1083, [177 Cal.
Class Action Judgment Against Auto Dealership Reversed In Part And Affirmed In Part.
This class action was brought by consumers
who purchased automobiles. It was tried
by the court, and judgment was entered in
favor of defendant automobile dealership.
The trial court awarded $1,503,084.50 to
defendant in attorney fees and costs. The
appellate court reversed portions of the
judgment and affirmed other portions. The
reversed portions included a finding that
defendant’s backdating second or subsequent
vehicle sales contracts to the original
sale date violates the Automobile Sales Finance
Act [Civil Code section 2981, et seq.],
the Consumer Legal Remedies Act [Civil
Code section 1750, et seq.] and the Unfair
Competition Law [Business and Professions
Code section 17200, et seq.] The matter was
remanded for further proceedings. The appellate
court did not address the fees and
costs award because the situation will likely
change on remand. (Raceway Ford Cases (Cal. App. Fourth Dist., Div. 2; September
16, 2014) 229 Cal.App.4th 1119, [177
Primary Versus Excess Coverage Dispute.
Both plaintiff and
defendant are insurance companies. A
trucker, who owned his own truck entered
into an agreement with a transportation
company to deliver loads in two states. The
agreement provided the trucker was an independent
contractor, the trucker agreed to
maintain liability insurance and to name
the transportation company as an additional
insured. The trucker purchased a trucker’s
liability policy from plaintiff that covered
his truck as well as any attached trailer. The
trucking company purchased a commercial
assigned risk policy from defendant; the
named insured on defendant’s policy was
“1 Trucker for Hire-Excess.” Both policies
were in effect when the trucker was hauling
goods for the transportation company and was involved in a collision resulting in the death of a woman. Plaintiff handled the defense of both the trucker and the transportation company for two years, but then reversed course and demanded indemnity from defendant pursuant to Insurance Code section 11580.9. Plaintiff settled the underlying case, but reserved its right to seek reimbursement from defendant. The trial court granted defendant’s motion for summary judgment in plaintiff’s declaratory relief action, after concluding plaintiff was the primary insurance carrier, and that the two were not co-primary insurers. In affirming, the appellate court quoted from subdivision (d) of section 11580.9, “Where two or more policies . . . it shall be conclusively presumed that the insurance afforded by that policy in which the vehicle is described. . . shall be primary and the insurance afforded by any other policy. . . shall be excess.” (Scottsdale Indemnity Company v. National Continental Insurance Company (Cal. App. Third Dist.; September 17, 2014) 229 Cal.App.4th 1166, [177 Cal.Rptr.3d 648].)
Competitive Bids Not Required For School District.
The question before the court was: Does Education Code section 17406 exempt school districts from obtaining competitive bids when entering into what are known as “lease-leaseback” agreements to improve school property? The appellate court concluded the answer is “yes” because the language of the statute is “plain, unambiguous and explicit, and does not impose bid requirements on school districts.” (Los Alamitos Unified School District v. Howard Contracting, Inc. (Cal. App. Fourth Dist., Div. 3; September 17, 2014) 229 Cal.App.4th 1222, [178 Cal.Rptr.3d 355].)
"Guilt Has Very Quick Ears To An Accusation" - Henry Fielding.
After a man was bound over for trial and in police custody, detectives became aware that additional demand-note robberies, perpetrated with the same distinctive modus operandi as those for which the man was being held, had occurred in the same part of Los Angeles. The detectives never disclosed the true state of affairs, and, instead falsely asserted in police reports that the crime spree caused by the Demand Note Robber ceased with the man’s arrest. The man was incarcerated pending trial for over two years. As soon as the prosecutor became aware of the evidence of someone else’s fingerprints found at the scenes, charges were dropped against the man. In the man’s action brought under 42 U.S.C. § 1983, a jury found the detectives liable for violating the man’s constitutional rights for failing to disclose compelling exculpatory evidence to the prosecutor, and that the detectives did so with deliberate indifference. The Ninth Circuit affirmed the district court’s judgment in favor of the wrongly-incarcerated man against the detectives as well as the award of attorney fees to the man. (Tatum v. Moody and Pulido, LAPD Detectives (Ninth Cir.; September 17, 2014) 768 F.3d 806.)
Dismissal Reversed In Case Where Website Owners Did Not Warn User Of Rapists.
Plaintiff is an aspiring model who posted information about herself on a networking website for models. In her action against the website owners, she alleges that two rapists used the website to lure her to a fake audition, where they drugged her, raped her, and recorded her for a pornographic video. She also alleges that the owners of the website knew about the rapists but did not warn her. The federal district court dismissed the action on the ground that her claim was barred by the Communications Decency Act [47 U.S.C. § 230(c); CDA]. The Ninth Circuit reversed after noting that California law imposes a duty to warn a potential victim of third party harm when there is a “special relationship,” and that barring this claim would stretch the CDA beyond its narrow language and purpose. (Jane Doe No. 14 v. Internet Brands, Inc., dba Modelmayhem.com (Ninth Cir.; September 17, 2014) 767 F.3d 894.)
Unacceptable Behavior By Lawyer In Court.
In a trial for injuries resulting from a car accident, the trial court ordered the defense lawyer to refrain from asking a certain question until a foundation was made demonstrating the witness had the expertise to testify on that issue, and that the court would make the foundation determination outside the presence of the jury. One of the first things defense counsel asked the witness was the prohibited question. The trial court denied plaintiff’s motion for mistrial, gave a strong admonition to the jury and fined the defense lawyer $500. The appellate court affirmed the underlying judgment in favor of the defendant, finding the trial court acted within its discretion. The appellate court added: “We strongly disapprove of [Gregory] Kane’s behavior. If it were up to us, he would have been sanctioned far more than $500. But the law is the law, and we must follow the relevant legal standards. Based on those standards, the trial court did not err by denying either of plaintiff’s motions. By stating our position in a published opinion, we have satisfied our obligation to take appropriate corrective action as required by Canon 3D(2) of the California Code of Judicial Ethics.” [Canon 3D(2) states: “Whenever a judge has personal knowledge, or concludes in a judicial decision, that a lawyer has committed misconduct or has violated any provision of the Rules of Professional Conduct, the judge shall take appropriate corrective action, which may include reporting the violation to the appropriate authority.”] (Pope v. Babick (Cal. App. Fourth Dist., Div. 3; September 18, 2014) 229 Cal.App.4th 1238, [178 Cal.Rptr.3d 42].)
"Violence Is One Of The Most Fun Things To Watch." - Quentin Tarantino.
A student at the University of California San Diego hit another student with his fist, causing the other student to fall to the ground, a loss of consciousness and a concussion. A student conduct review board did not recommend suspension, but the Council of Deans imposed a suspension for two quarters. The aggressive student filed an unsuccessful petition for writ of mandate in the superior court contending the Council of Deans exceeded its jurisdiction by reviewing the matter and increasing the recommended sanctions to include a two quarter suspension without further hearing. The appellate court affirmed, agreeing with the trial court that the Council of Deans did not exceed its powers and followed its own rules. (Berman v. Regents of the University of California (Cal. App. Fourth Dist., Div. 1; September 19, 2014) 229 Cal.App.4th 1265, [178 Cal.Rptr.3d 62].)
"No Person In The United States Shall, On The Basis Of Sex, Be Excluded From Participation In, Be Denied The Benefits Of, Or Be Subjected To Discrimination Under Any Educational Program Or Activity Receiving Federal Financial Assistance." — Title IX [Signed into law by Pres. Nixon on June 23, 1973.]
A class action was filed against a high school alleging unlawful sex discrimination by providing female students with unequal opportunities in athletic programs, inequitable practice and competitive athletic, locker and storage facilities in violation of Title IX of the Education Amendments of 1972 [20 U.S.C. § 1681]. In opposing plaintiff’s opposition to partial summary judgment, the school argued it had substantially complied, noting also that the school offered 23 programs for girls and 21 for boys. The district court granted summary judgment to the plaintiffs on their unequal participation claim, concluding the high school failed to provide female students with opportunities to participate in athletics in substantially proportionate numbers as males. In affirming, the Ninth Circuit stated: “We reject [the high school’s] attempt to relitigate the merits of the case. Title IX levels the playing fields for female athletes. In implementing this important principle, the district court committed no error.” (Ollier v. Sweetwater Union High School District (Ninth Cir.; September 19, 2014) 768 F.3d 843.)
This Contract Was Definitely Breached ... So Was The Sewer Pipe.
Plaintiff worked for decades in Navy shipyards. He died from mesothelioma six months after he sued 17 asbestos manufacturers in a California state court. His children were substituted as plaintiffs in a survivor action. The children brought another action against six more defendants in a federal court in California. That federal action was transferred to Pennsylvania as part of a multi-district litigation. In the federal action, the judge granted summary judgment in favor of a defendant because the purchaser of its asbestos, the United
States Navy, was a sophisticated user. Relying on that ruling, a defendant in the California state action successfully argued to the state judge that summary judgment should be granted because plaintiffs were collaterally estopped from relitigating the issue in superior court. On appeal, the appellate court stated: “We reverse, holding that the federal court’s resolution of this issue was wrong under California law, and thus collateral estoppels does not apply.” (Gottschall v. Crane Co. (Cal. App. First Dist., Div. 2; October 22, 2014) 230 Cal.App.4th 1115, [179 Cal.Rptr.3d 39].)
The first paragraph of the appellate opinion best describes why the appellate court reversed the grant of defendant bank’s demurrer and remanded the matter to the trial court for further proceedings: “This appeal represents another example of what is becoming a well-established and predictable pattern. A homeowner in distress because of the meltdown of the financial markets applies to a lender for mortgage relief. The lender approves the homeowner’s participation in a government-funded program meant to lower mortgage payments and avoid foreclosure. The homeowner tries to comply with the terms of the mortgage modification program. He or she contacts the lender to make sure everything is proceeding according to plan and either receives assurances that it is or is passed from person to person, each of whom professes to know nothing about the loan in question or its modification. Sometimes both. Then the foreclosure notice is posted on the door, and the house is sold.” (Fleet v. Bank of America (Cal. App. Fourth Dist., Div. 3; September 23, 2014) 229 Cal.App.4th 1403, [178 Cal.Rptr.3d 18].)
"Insurance Is Like Marriage. You Pay, Pay, Pay And You Never Get Anything Back." - Al Bundy
After a passenger in the insured’s car obtained a $333,300 judgment against the insured, the insurance company filed an action seeking a declaration it had no obligation due to the policy’s “resident exclusion,” which stated there was no coverage for bodily injury to anyone inhabiting the same dwelling as the insured. The trial court granted the insurance company’s motion for summary adjudication of the issue of whether the policy provided coverage for the passenger’s judgment. In reversing, the appellate court listed the permissible exclusions under Insurance Code section 11580, subdivision (c), and the court quoted: “Any exclusion not expressly authorized by section 11580.1 is therefore impermissible and invalid.” One of the permissible statutory exclusions states: “(5) Liability for bodily injury to an insured or liability for bodily injury to an insured whenever the ultimate benefits of that indemnification accrue directly or indirectly to an insured.” The appellate court went on to discuss that case law has developed the Insurance Code section 11580, subdivision (c), subsection (5), exclusion to the point that a policy may exclude a resident relative. In the present case, however, the injured passenger was a college roommate and not a relative. The appellate court stated: “We conclude no public policy consideration or legal authority justifies denying [the passenger/roommate’s] claim against the named insured of the policy. We find no significance in the mere status of cohabitation.” (Mercury Casualty Company v. Hung Chu (Cal. App. Fourth Dist., Div. 3; September 24, 2014) 229 Cal.App.4th 1432, [178 Cal.Rptr.3d 144].)
Anti-Slapp Motion Should Have Been Granted.
This action is for malicious prosecution. The plaintiff, a City Council member, was criminally prosecuted and acquitted in federal court. In this action, he sues the owner of a strip club who he alleges falsely testified he bribed plaintiff. At the heart of the matter is a city ordinance, referred to as the “no touch” ordinance, which prohibited touching between exotic dancers and customers. The strip club owner filed a special motion to strike the present malicious prosecution action pursuant to the anti-SLAPP statute [Code of Civil Procedure section 425.16], which the trial court denied. On appeal, the appellate court found the strip club owner satisfied the first prong of the statute in that the complaint arises from protected activity, and that, when the burden shifted to the City Council member plaintiff to establish a probability of prevailing on the merits, he did not meet it. The appellate court reversed. (Zucchet v. Galardi (Cal. App. Fourth Dist., Div. 1; September 25, 2014) 229 Cal.App.4th 1466, [178 Cal.Rptr.3d 363].)
Statute Of Limitations For In Utero Exposure To Toxics.
Plaintiff was born with a birth defect affecting the structure of her brain. She alleges in her action against her mother’s former employer that her injuries were caused by her mother’s exposure and her in utero exposure to hazardous and toxic chemicals at her mother’s workplace more than 20 years earlier. The suit was filed after family member's heard on the radio that plaintiff attorneys were investigating cases of birth defects caused by chemical exposures in the semiconductor industry. The two-year statute of limitations set forth in Code of Civil Procedure section 340.8, provides for actions “for injury or illness based upon exposure to a hazardous material or toxic substance,” and plaintiff contends that period is subject to tolling for minority or incapacity. Defendant argues plaintiff’s claims are subject to the six-year statute of limitations set forth in section 340.4, which applies to actions based on birth and pre-birth injuries, which statute is not subject to tolling for minority or mental incapacity. The trial court sustained defendant’s demurrer without leave to amend, concluding section 340.4 was the applicable statute. The appellate court held section 340.8 was the applicable statute and reversed. (Nguyen v. Western Digital Corporation (Cal. App. Sixth Dist.; September 25, 2014) 229 Cal.App.4th 1522, [178 Cal.Rptr.3d 897].)
Doesn't Matter If Litigant Has The Money To Pay. If Someone Is On Public Assistance, Courts Must Give Them A Free Ride And Waive Court Fees.
A woman’s fee waivers were denied by the trial court, after the court concluded that, even though she received public benefits, she had other sources of money. In reversing, the appellate court stated: “There is nothing in the court’s orders or findings to suggest the court did not believe appellant was receiving public benefits. The court was therefore required to grant appellant’s applications for a fee waiver, and relieve her of the expense of paying for the court reporter and any other court fees or costs assessed after the date of the initial application.” (C.S. v. W.O. (Cal. App. Second Dist., Div. 4; September 26, 2014) 230 Cal.App.4th 23, [178 Cal.Rptr.3d 328].)
Final Means Final.
In an underlying arbitration proceeding, the arbitrator initially issued a “Final Award” denying a request for an award of attorney fees by one of the parties. The arbitrator later modified the Final Award to include a fee award, and issued a “Revised Final Award.” The trial court confirmed the Revised Final Award. In reversing, the appellate court noted that under Code of Civil Procedure section 1284, an arbitrator may not reconsider the merits of the original award and make a new award under the guise of correcting the award. The matter was remanded for the trial court to strike the attorney fee award. (Cooper v. Lavely & Singer (Cal. App. Second Dist., Div. 4; September 26, 2014) 230 Cal.App.4th 1, [178 Cal.Rptr.3d 322].)
Lender's Lien Has Priority Over Mechanic's Lien.
A construction project fell through when the developer ran out of money. The construction company filed a mechanic’s lien on the development. In connection with the construction loan agreement, the lender required the developer to assign its rights and remedies under the construction contract, but not its obligations, to the lender, and the construction company was required to consent to the assignment. The trial court determined the construction company’s mechanic’s lien was superior to the lender’s construction loan deed of trust and ordered foreclosure and sale of the property to satisfy the mechanic’s lien. In reversing, the appellate court concluded the construction company’s agreement to subordinate its mechanic’s lien to the construction loan is enforceable. (Moorefield Construction, Inc. v. Intervest-Mortgage Investment Company (Cal. App. Fourth Dist., Div. 1; September 30, 2014) 230 Cal.App.4th 146, [178 Cal.Rptr.3d 709].)
"Don’t Worry, You Don’t Have To Pay My Legal Fees Unless We Win." Expected Response? ... Thank You; ... That’s A Relief;
... That’s Kind Of You. Yeah, Right.
A defendant served in the U.S. Marines a little over a year after the Korean War ended. His discharge document, known as a DD-214, states “N/A” with regard to medals awarded and wounds sustained. More than 40 years later, he filed a claim for Post-Traumatic Stress Disorder
[PTSD], claiming he suffered PTSD as a result of his participation in a secret combat mission in North Korea in August or September 1955. He claimed he was severely wounded in the mission, and received a Purple Heart Medal, the National Defense Medal, the Korean War Service Medal, the Korean War U.N. Service Medal and Ribbons, Navy Commendation Ribbons with a Bronze V and a Silver Star Medal. The Veterans Administration [VA] denied his claim. Thereafter the defendant submitted a different DD-214, listing the wounds and medals he claimed, and this time his claim was granted. However, the VA later received information the second DD-214 was fraudulent. The VA reversed its decision to grant the claim and required the defendant to pay back the benefits he had received. He was later charged with and convicted of several crimes, including wearing military medals without authorization in violation of 18 U.S.C. § 704(a) [the Stolen Valor Act]. After his conviction, the U.S. Supreme Court struck down that statute on First Amendment grounds in the case of United States v. Alvarez (2012) ___U.S.___, [132 S.Ct. 2537, 183 L.Ed.2d 574], in which the high court held that false speech is generally entitled to protection under the First Amendment. So, the defendant asked the trial court to set aside his conviction on First Amendment grounds, and his request was denied. The Ninth Circuit Court of Appeals affirmed the trial court’s denial of the defendant’s claim after considering this defendant’s specific conduct and concluding there was no violation of the Constitution or laws of the United States. (United States v. Swisher (Ninth Cir. October 29, 2014) 585 F.App’x 605.)
Insurance Commissioner Alleged To Be Asleep At The Switch.
A woman claims she should have been, but was not, provided with disability benefits under a group disability policy issued to her employer, a County. The insurer based its denial on language in the policy, which language the woman contends makes it “substantially easier than is permissible under settled California law for the insurer to deny benefits.” Thus, the woman brought a mandamus claim against the Department of Insurance [DOI], contending the DOI breached its mandatory duty under Insurance Code sections 12921.5(a), 12926 and 10291.5(b), to review a new group disability policy form for compliance with the law prior to approving the policy for distribution in the state. The trial court sustained DOI’s demurrer without leave to amend. In reversing, the appellate court concluded the woman states a viable claim for writ of mandate based on her allegation the DOI failed to review the group disability policy prior to approving it as required by the Insurance Code. (Ellena v. Department of Insurance (Cal. App. First Dist., Div. 2; October 1, 2014) 230 Cal.App.4th 198, [178 Cal.Rptr.3d 435].)
Statute Of Limitations In Medical Setting.
Plaintiff alleged a doctor committed battery and inflicted IIED. The trial court dismissed plaintiff’s action, after concluding the Code of Civil Procedure section § 340’s one-year statute of limitations, and not the general personal injury two-year limitations period, applies. In affirming, the appellate court explained: “We must look past the labels [plaintiff] uses and examine the specific conduct [plaintiff] alleged to determine which limitations period applies. [Plaintiff] bases his lawsuit on [the doctor’s] conduct in providing professional health care by performing a preoperative checkup and administering anesthesia. [Plaintiff] does not allege any other purpose for the challenged conduct. Because his claims constitute a challenge to how [the doctor] performed his professional services, [plaintiff’s] claims are based on professional negligence and barred by section 340.5’s one-year limitations period.” (Larson v. UHS of Rancho Springs, Inc. (Cal. App. Fourth Dist., Div. 3; October 2, 2014) (As mod. October 2, 2014) 230 Cal. App. 4th 336, [179 Cal.Rptr.3d 161].)
Attorney Fees Incurred By Law Firm, Redux.
Lawyers sued client for fees. Client cross-complained. Lawyers brought anti-SLAPP motion to strike cross-complaint. (Code of Civil Procedure section 425.16.) The trial court granted the motion to strike and awarded attorney fees to the lawyers. The appellate court, relying on case law holding attorneys may not recover fees for self-representation, reversed the award of fees after concluding the lawyer who worked on the motion, while he was paid in a manner different than regular law firm employees, and may have been considered an independent contractor for tax purposes, was not separate counsel for purposes of attorney fees under the anti-SLAPP statute. (Ellis Law Group, LLP v. Nevada City Sugar Loaf Properties, LLC (Cal. App. Third Dist.; October 3, 2014) 230 Cal.App.4th 244, [178 Cal.Rptr.3d 490].)
Battle Over Cost Of Discovery Of Electronically Stored Information.
Former students of a culinary school allege they were defrauded into enrolling by means of misrepresentations about graduation rates, employment prospects and anticipated income levels. Plaintiffs’ first attempt at obtaining information about school documents for 800 plaintiffs was pursuant to a business records subpoena. Under Evidence Code section 1563, defendants offered to comply if plaintiffs paid the processing fee of approximately $60,000. Finding that amount prohibitive, plaintiffs’ second attempt was for the same information, but in electronic form, and a cost estimate was requested. Defendants refused to supply a cost estimate, and instead filed a motion to quash. The trial court denied defendants’ motion to quash, finding the information sought by plaintiffs was relevant and not already in plaintiffs’ possession. The trial court ordered the parties to meet and confer, and the report back to the court was that defendants could comply with the electronic request at a cost of $18,848. Plaintiffs said they were willing to pay that cost, but subject to a credit of $11,487 for the cost of opposing and appearing for the motion to quash. After a lengthy hearing, the trial court awarded plaintiffs their $11,487 for attorney fees, and defendants appealed that order. In affirming the trial court’s award of attorney fees, the appellate court noted that under Code of Civil Procedure section 1985.8, even if the subpoenaed person establishes that the electronically stored information is not reasonably accessible because of undue burden or expense, the court may order its production if the court finds good cause for doing so. The appellate court also noted defendants refused to even provide a cost estimate for the electronically stored information until after the motion to quash was denied. (Vasquez v. California School of Culinary Arts, Inc. (Sallie Mae, Inc.) (Cal. App. Second Dist., Div. 2; September 26, 2014) 230 Cal.App.4th 35, [178 Cal.Rptr.3d 10].)
Lack Of Capacity Of Limited Partnership & Corporation.
In a California Environmental Quality Act [CEQA] case, plaintiffs, a limited partnership and two corporations voluntarily dismissed the action on May 9, 2013. The trial court awarded the defendant $37,528.14 in costs for preparation of the administrative record. On the appeal of the court’s order to pay costs, there was a motion to dismiss the limited partnership and two corporations. With regard to #1, a limited partnership, the allegation was that it lacked capacity to bring the appeal because it was a canceled limited partnership. On December 24, 2012, #1 had filed a certificate of cancelation under penalty of perjury stating “the above-named…has completed winding up its affairs and is cancelled.” The appellate court took the general partners at their word, and dismissed #1. As to #2, a corporation, the allegation was that it lacked capacity to bring the appeal because it was a suspended corporation. The California Franchise Tax Board suspended its powers, rights and privileges on September 3, 2013. The appellate court noted that a corporation may not prosecute or defend an action, nor appeal from an adverse judgment in an action while its corporate rights are suspended for failure to pay taxes, and dismissed #2. And as to #3, an active corporation, the allegation was that it should be dismissed because the three businesses are so intertwined that dismissal of the entire action is necessary to prevent #1 and #2 from benefitting from the appeal. The appellate court declined to dismiss #3, finding a lack of adequate showing by the moving party. A Pyrrhic victory for #3. It lost the appeal and had to pay the costs. (The Otay Ranch, L.P. v. County of San Diego
(Flat Rock Land Company, LLC) (Cal. App. Fourth Dist., Div. 1; September 29, 2014) 230 Cal.App.4th 60, [178 Cal.
"... Pretty Soon, You're Talking Real Money." - Sen. Everett Dirksen.
In an insurance bad faith case with alleged damages in excess of $500,000, the insurance company made an offer to settle for $30,000 pursuant to Code of Civil Procedure section 998. The offer to compromise was not accepted. Later, judgment was entered in favor of the insurance company, which then submitted its memorandum of costs, seeking a total of $86,022.84, $41,317.55 of which was for expert expenses. The trial court determined the offer was made in good faith and denied plaintiff’s motion to tax costs. The appellate court affirmed, stating that “although potential damages were extensive, given the reasonable possibility that liability did not exist, the trial court did not abuse its discretion in determining [the insurance company’s] offer was reasonable.” (Najah v. Scottsdale Insurance Company (Cal. App. Second Dist., Div. 4; September 30, 2014) 230 Cal.App.4th 125, [178 Cal.Rptr.3d 400].)
Same Story; Different Twist.
A man brought his computer in for servicing, and the repairman viewed what appeared to him "to be underage girls engaged in sexual activity." He called the police. The responding officer indicated the images the repairman saw did not appear to be pornographic, but asked the repairman to search the rest of the computer. The repairman did what the officer requested and found some files he could not open. At the officer’s instruction, the repairman placed those unopened files on a flash drive and gave the drive to the officer. The files were opened at the police department, and considered to be "juvenile pornographic material." In his criminal action, the man moved to suppress the evidence found by police, which the trial court denied. The appellate court reversed, concluding the warrantless search by the police exceeded the private search by the repairman. (The People v. Michael Evans (Cal. App. First Dist., Div. 2; October 3, 2014) (As Modified Oct. 10, 2014) 230 Cal.App.4th 261, [178 Cal.Rptr.3d 467].)
Massage Therapist Not Entitled To A Defense.
A massage therapist was sued by a client who contended he sexually assaulted her during a massage. The therapist contended an insurance company owed him a duty to defend the action because he was either a partner or an employee of the insured and the alleged assault occurred in the scope of employment. The insurer said that the therapist, even were he a partner or an employee, would be an additional insured only with respect to the [insured’s] business for acts within the scope of employment. The trial court sustained the insurer’s demurrer, and concluded the therapist was not entitled to a defense as a matter of law. In affirming, the appellate court stated: “Because the intentional sexual assault alleged in the underlying case cannot properly be characterized as within the scope of [the therapist’s] employment or having occurred while performing duties related to the conduct of [the insured’s] business, [the therapist] was not insured under the policy, and [the insurer] had no duty of defense or indemnity.” (Baek v. Continental Casualty Company (Cal. App. Second Dist., Div. 4; October 6, 2014) 230 Cal.App.4th 356, [178 Cal.Rptr.3d 622].)
New Trial Ordered In Breach Of Fiduciary Duty Action; Limited To Remedies Only.
Preferred shareholders in a now-dissolved software company brought action against the company’s chief financial and chief executive officers, contending they colluded to secure a preferential sale of the company’s assets to another company, thus violating their fiduciary duties. The court, after a bench trial, concluded the two had breached their fiduciary duties, but that plaintiffs did not prove damages. The appellate court reversed, stating it agreed “the trial court erred in failing to craft a remedy, as well as in conducting its own in camera review of financial documents. We will reverse and remand for a new trial limited to the issue of remedies.” (Meister v. Mensinger (Cal. App. Sixth Dist.; October 6, 2014) 230 Cal.App.4th 381 [178 Cal.Rptr.3d 604].)
"A Successful Lawsuit Is One Worn By A Policeman," Robert Frost.
In March 2004, a real estate broker signed an exclusive listing agreement with the seller of acreage. In September 2004, a potential buyer extended an offer directly to the seller. Meanwhile, as the seller negotiated with the potential buyer, plaintiff continued to market the property. The sale of the property closed in July 2005 with a sales price of $11,800,000; the buyer’s agent received a commission payment of $354,000, which was three percent of the gross sales price. The next day, the corporate seller transferred all but $474.45 out of its bank account and began dissolution proceedings. Plaintiff initiated arbitration against the seller. A default “prove-up” was conducted after the seller did not comply with the obligation to pay the required arbitration costs. The arbitrator issued a $906,640.30 award to plaintiff, which comprised six percent commission plus prejudgment interest and costs. The award was confirmed by the superior court and the judgment was affirmed on appeal. When it turned out that the seller’s corporation had dissolved after distributing all its assets, plaintiff filed another action against the individuals. After a jury verdict, the court entered judgment for plaintiff of $354,000, and denied plaintiff’s posttrial motions for fees and prejudgment interest. On appeal, the individuals claimed numerous instructional and evidentiary errors, which the appellate court rejected, and the judgment was affirmed. With regard to prejudgment interest, the appellate court held the trial court correctly denied plaintiff’s motion because the amount plaintiff was claiming due was unliquidated, noting that had plaintiff “consistently requested and advocated for a commission of $354,000, it would have been entitled to prejudgment interest.” But the appellate court reversed the trial court’s order regarding plaintiff’s attorney fees and remanded for the court to conduct a hearing as to the amount of attorney fees. (CB Richard Ellis, Inc. v. Terra Nostra Consultants (Cal. App. Fourth Dist., Div. 3;October 7, 2014) 230 Cal.App.4th 405, [178 Cal.Rptr.3d 640].)
No Clarification Needed For A Jury To Understand A Word That Is Readily Understood And Not Used In A Technical Sense.
A police officer on a motorcycle was killed when a man was exiting his employer’s driveway onto a highway at the end of the work day. The officer’s family brought a wrongful death suit against the employer, contending the employee was within the course and scope of his employment at the time of the collision. The trial court instructed in five different ways that a finding the employee was acting within the course and scope of his employment depended on a finding the employer derived some benefit from the availability of the employee’s car. The jury found in favor of the employer. On appeal, the officer’s family contended the instructions were insufficient because “benefit” was not defined. In affirming, the appellate court stated the word “benefit” is a word readily understood and was not used in any technical sense. (Lobo v. Tamco (Cal. App. Fourth Dist., Div. 2; October 8, 2014) 230 Cal.App.4th 438, [178 Cal.Rptr.3d 515].)
Pharmacist Loses His License.
Plaintiff is a pharmacist who appeals from a judgment denying his petition for writ of mandate in the trial court. His petition sought to overturn a decision by the California State Board of Pharmacy revoking his license to operate a pharmacy. An Accusation was filed by the Board which contended the pharmacy unlawfully received nearly $150,000 in CalOptima [an entity which administers Medi-Cal payments] payments through a covert arrangement with another pharmacy. The alleged scheme involved the pharmacist using the billing authority of another pharmacy to obtain payments for filling drug prescriptions of persons covered by CalOptima. An administrative law judge found the pharmacist had engaged in “dishonest conduct.” In his appeal, the pharmacist contended that license revocation is reserved only for dangerous conduct that threatens the safety of the public, but the appellate court affirmed, stating that it was unwilling to find the Board is precluded from revoking a license when there is a demonstrated history of professional dishonesty. (Hoang v. California State Board of Pharmacy (Cal. App. Fourth Dist., Div. 2; October 8, 2014) 230 Cal.App.4th 448 [178 Cal.Rptr.3d 522].)
Defendant Served With Notice Of Violation Of The Consumer Legal Remedies Act May Not Maintain A Declaratory Relief Action To Establish There Was No Violation.
A consumer served a dietary supplement manufacturer with a one page notice and demand, pursuant to Civil Code section 1782 [Consumer Legal Remedies Act; CLRA] via certified mail contending that its product “Amberen,” was being marketed falsely and misleadingly as a “natural remedy for Menopausal symptom relief,” in violation of the CLRA. The manufacturer then brought a declaratory relief action against the consumer and her attorneys seeking a declaration that it had not violated the CLRA. The consumer and the attorneys moved to strike the complaint under Code of Civil Procedure section 425.16 [anti-SLAPP statute], which motion the trial court granted. In affirming the order, the appellate court stated: “[W]e hold that under the reasoning of Filarsky v. Sup. Ct. (2002) 28 Cal.4th 419, [49 P.3d 194, 121 Cal.Rptr.2d 844], (Filarsky), a potential defendant in a CLRA damages action after receiving the statutory notice may not maintain a declaratory relief action to establish that there was no violation of the CLRA.” (Lunada Biomedical v. Nunez (Cal. App. Second Dist., Div. 5; October 9, 2014) 230 Cal.App.4th 459, [178 Cal.Rptr.3d 784].)
Another Creative Declaratory Relief Action ... This One Concerning Who Makes A Decision, The Court Or The Arbitrator.
An employee filed a wage and hour claim. His employer filed a declaratory relief action alleging its arbitration with the employee required the employee’s wage and hour claims to be arbitrated on an individual basis rather than classwide. The employee petitioned the trial court to order the employer to submit its declaratory relief claims to arbitration. The trial court denied the employee’s petition, concluding it must decide whether the arbitration agreement authorized class arbitration, and in doing so, the trial court found this particular agreement did not allow class arbitration. The appellate court affirmed, stating: “Because [the] arbitration agreement does not clearly and unmistakably designate the arbitrator to determine whether the agreement authorizes class arbitration, we conclude the trial court properly decided that question.” (Network Capital Funding Corporation v. Papke (Cal. App. Fourth Dist., Div. 3; October 9, 2014) 230 Cal.App.4th 503, [178 Cal.Rptr.3d 658].)
Buyer Of Real Property May Not Rely On Appraisal Ordered By Lender.
Plaintiff entered into a written contract to buy vacant land. His lender hired a real estate appraiser to perform an appraisal of the property. Upon determining the property he purchased was unsuitable for his purposes, plaintiff brought an action against the appraiser for negligent misrepresentation, alleging the property value in the appraisal was in excess of the true value of the property. The trial court granted summary judgment in favor of the appraiser. In affirming the appellate court stated: “[Plaintiff] failed to raise a triable issue of material fact to show the [appraisers] intended to supply information to him to influence his decision whether to buy the property.” (Willemsen v. Mitrosilis (Cal. App. Fourth Dist., Div. 3; October 14, 2014) 230 Cal.App.4th 622, [178 Cal.Rptr.3d 735].)
Table of Contents of This Issue
- You Can't Make This Stuff Up!
- Goodbye Tension, Hello Pension ... Not!
- The Complex World of Government Claims.
Class Action Judgment Against Auto Dealership Reversed In Part And Affirmed In Part.
- Primary Versus Excess Coverage Dispute.
- Competitive Bids Not Required For School District.
- Trial Court Properly Denied Anti-SLAPP Motion Of Lawyers.
- "Guilt Has Very Quick Ears To An Accusation."
- Dismissal Reversed In Case Where Website Owners Did Not Ward User Of Rapists.
- Unacceptable Behavior By Lawyer In Court.
- "Violence Is One Of The Most Fun Things To Watch." - Quentin Tarantino.
- "No Person In The United States Shall, On The Basis Of Sex, Be Excluded From Participation In, Be Denied The Benefits Of, Or Be Subjected To Discrimination Under Any Educational Program Or Activity Receiving Federal Financial Assistance." — Title IX [Signed into law by Pres. Nixon on June 23, 1973.]
- This Contract Was Definitely Breached ... So Was The Sewer Pipe.
- The Run-Around
- "Insurance Is Like Marriage. You Pay, Pay, Pay And You Never Get Anything Back." - Al Bundy
- Anti-SLAPP Motion Should Have Been Granted.
- Statute Of Limitations For In Utero Exposure To Toxics.
- Doesn't Matter If Litigant Has The Money To Pay. If Someone Is On Public Assistance, Courts Must Give Them A Free Ride And Waive Court Fees.
Final Means Final.
- Lender's Lien Has Priority Over Mechanic's Lien.
- "Don’t Worry, You Don’t Have To Pay My Legal Fees Unless We Win." Expected Response? ... Thank You; ... That’s A Relief;
... That’s Kind Of You. Yeah, Right.
- Insurance Commissioner Alleged To Be Asleep At The Switch.
- Statute Of Limitations In Medical Setting.
- Attorney Fees Incurred By Law Firm, Redux.
- Battle Over Cost Of Discovery Of Electronically Stored Information.
- Lack Of Capacity Of Limited Partnership & Corporation.
- "... Pretty Soon, You're Talking Real Money." - Sen. Everett Dirksen.
- Same Story; Different Twist.
- Massage Therapist Not Entitled To A Defense.
- New Trial Ordered In Breach Of Fiduciary Duty Action; Limited To Remedies Only.
- "A Successful Lawsuit Is One Worn By A Policeman," Robert Frost.
- No Clarification Needed For A Jury To Understand A Word That Is Readily Understood And Not Used In A Technical Sense.
- Pharmacist Loses His License.
- Defendant Served With Notice Of Violation Of The Consumer Legal Remedies Act May Not Maintain A Declaratory Relief Action To Establish There Was No Violation.
- Another Creative Declaratory Relief Action ... This One Concerning Who Makes A Decision, The Court Or The Arbitrator.
- Buyer Of Real Property May Not Rely On Appraisal Ordered By Lender.