Litigation Update

Litigation Section News: December 2016

 • Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
 • Managing Editor, Reuben Ginsburg
 • Editor, Jessica Riggin


Table of Contents of This Issue

No Rubber Stamp For Pro Hac Vice Application.

An out-of-state lawyer applied to be admitted to practice in California pro hac vice in a high profile criminal case. A federal trial court denied the application, and the lawyer asked the Ninth Circuit Court of Appeals for a writ of mandamus directing the lower court to admit him. In declining to issue the writ, the appellate court stated there are ample reasons not to grant the application since the lawyer is “involved in an ethics proceeding before the District of Columbia Bar, and he was not candid with the court about the status of those proceedings; he disclosed that he was twice barred in perpetuity from appearing pro hac vice before the judges in the Central District of California and the Southern District of New York . . . he failed to list numerous cases—all available on Westlaw or LEXIS—in which he has been reprimanded, denied pro hac vice status, or otherwise sanctioned for violating various local rules; and he has a record of going after judges personally. . . .” (In re: Cliven D. Bundy (9th Cir., Oct. 28, 2016) 840 F.3d 1034.)

Medical Malpractice Statute of Limitations: “when the plaintiff first becomes aware that a preexisting disease or condition has developed into a more serious one.”

Plaintiff consulted with a defendant doctor in 2006 and 2007 about headaches, and the doctor diagnosed them as tension headaches and prescribed medication and physical therapy. In 2009, plaintiff was taken to the emergency room with head and neck pain “so severe he could not lift his arms.”  Defendant doctor added acupuncture to the treatment. Plaintiff last consulted with that defendant doctor in 2011. In 2010, plaintiff had also consulted with a defendant neurologist who diagnosed him with carpal tunnel syndrome and prescribed other medications and a wrist splint. In 2013, another doctor ordered an MRI, which showed a very large brain tumor requiring surgical removal. Because the tumor was so large, surgeons had to sever plaintiff’s cranial nerves to remove it, which caused plaintiff to have loss of vision in his left eye, loss of hearing in his left ear, facial paralysis, loss of musculature and strength, depression, and sexual dysfunction. Later in 2013, plaintiff brought suit against the two doctors with whom he consulted, and the trial judge granted defendants’ motions for summary judgment based upon the statute of limitations. In reversing, the Court of Appeal stated: “Code of Civil Procedure section 340.5 provides that a plaintiff in an action for medical malpractice must file the action within three years of the date of injury or one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the injury, whichever occurs first. We hold that, when the plaintiff in a medical malpractice action alleges the defendant health care provider misdiagnosed or failed to diagnose a preexisting disease or condition, there is no injury for purposes of section 340.5 until the plaintiff first experiences appreciable harm as a result of the misdiagnosis, which is when the plaintiff first becomes aware that a preexisting disease or condition has developed into a more serious one.” (Drexler v. Petersen (Cal. App. 2nd Dist., Div. 7, Oct. 31, 2016) 4 Cal.App.5th 1181.)

No Disability Retirement.

Plaintiff worked servicing automobiles for a county from 2001 until December 8, 2007, when he was arrested for discharging a firearm in a grossly negligent manner during a non-work related incident. As a result, his required security clearance was suspended pending reassessment by the county. Effective December 10, 2007, he was placed on administrative leave, pending the county’s investigation. Part of the county’s investigation required plaintiff to receive a psychological evaluation; the evaluator concluded plaintiff was not fit for duty and that he was “potentially a danger to others based on his recurrent and poorly controlled mood states, coupled with poor impulse control and reactivity.” On June 16, 2008, plaintiff’s security clearance was reinstated. Although plaintiff did not return to work, in 2009, he submitted an application for disability retirement based on injuries he sustained during his years of employment. An administrative law judge denied his application. The Court of Appeal affirmed, concluding plaintiff failed to show he was continuously disabled within the meaning of Government Code §§ 31722 and 31641. (Cameron v. Sacramento County Employees’ Retirement System (Cal. App. 3rd Dist., Nov. 2, 2016) 4 Cal.App. 5th.)

Combat Disability Benefits For Veteran, Which Benefits Negate Former Spouse’s Community Property Interest in Vet’s Military Pension.

A couple married in 1964 and divorced in 1986. They stipulated that the wife had a community property interest in the husband’s military retirement. But 26 years later, in 2012, it was discovered that the husband had a combat-related disability rendering him eligible for combat-related special compensation (CRSC).  That eligibility for CRSC, however, required him to waive his military retirement pay. Before the waiver, the husband received $791 a month and the wife received $541 in taxable retirement pay. After the waiver, the husband received $1,743 a month in veteran’s disability benefits and $1,389 a month in CRSC, for a total of $3,132 (tax-free); the wife received zero. As a result, the trial court ordered the husband to start paying the wife $541 a month in permanent and nonmodifiable spousal support. The Court of Appeal agreed with the trial court that the husband could be ordered to reimburse the wife for the loss of her community property interest, but held the trial court erred by using spousal support as a remedy for the wife’s loss and remanded for the trial court to enter an award in the same amount on a different theory “as long as the trial court does not order [the husband] to pay [the wife] out of his disability benefits.” (In re Marriage of Cassinelli (Cal. App. 4th Dist., Div. 2, Nov. 2, 2016) 4 Cal.App.5th 1285.)

Stolen Innocence.

Californians Against Sexual Exploitation Act (CASE Act; Evid. Code, § 1161) declares that evidence that a victim of human trafficking “has engaged in any commercial sexual act as a result of being a victim of human trafficking is inadmissible to prove the victim’s criminal liability for the commercial sexual act.” In the present case, a 17-year-old victim of human trafficking, was charged with prostitution under Penal Code § 647, subdivision (b), which provides that every person who solicits or who agrees to engage in or who engages in any act of prostitution is guilty of disorderly conduct. She moved under Evidence Code § 1161 to exclude all evidence sought to be introduced by the district attorney to show that she solicited acts of prostitution. The trial court denied the motion, believing Evidence Code § 1161 does not apply to juvenile cases and accepting the prosecutor’s argument that defendant need not have received anything of value to be convicted under Penal Code § 647, subdivision (b). The Court of Appeal concluded the denial of defendant’s motion to exclude evidence was error, and stated: “Finding that section 1161 does apply in juvenile proceedings, and that the trial court’s acceptance of the prosecutor’s interpretation of that statute would virtually wipe out a significant protection afforded victims of human trafficking by the CASE Act, we shall reverse the judgment.” (In re N.C. (Cal. App. 1st Dist., Div. 2, Nov. 2, 2016) 4 Cal.App.5th 1235.)

Previously We Reported:

$19 Million In Punitive Damages Reduced to $350,000.

Plaintiff served in the U.S. Marines and is entitled to medical care at Veterans Administration hospitals at no cost. He was involved in an accident in 1997 and was paralyzed from the waist down and relies on a wheelchair. In 2008, he was involved in a wheelchair accident and suffered a broken leg, but had numerous internal complications and remained hospitalized for 109 days. He sent a claim to his insurance company. His policy contained an insuring clause which states: ‘“Accidental Daily Hospital Confinement Benefit’: ―We will pay the Daily Hospital Confinement Benefit stated on the Schedule Page for each day of Confinement due to a covered injury, beginning with the first day of Confinement. A Covered Person must be under the professional care of a Physician, and such Confinement must begin within 90 days of the accident causing the injury.” The insurance company concluded hospitalization was necessary for only 18 days, and paid for those days only. Plaintiff’s doctor sent a letter to the insurer which stated: “The fracture was complicated by extensive swelling, infection, blistering, and muscle damage that required acute hospitalization, intravenous fluids and antibiotics, and full staff support including consultation with an orthopedic surgeon. The infection and blistering subsided as [plaintiff] completed his antibiotics on March 1, 2008. During this time, the right leg was placed in a Long Beach Splint, kept elevated and fully extended. [Plaintiff] was living alone and could not have been discharged safely at that time. The orthopedic consultants recommended that he remain supine in bed or gurney and did not clear him for wheelchair use until March 24, 2008. He did not have an available caregiver that could provide bedside care at home during this period. They also recommended that his fractured leg be kept fully extended in the splint (no flexion permitted) to allow healing. They did not lift this restriction until May 5, 2008. His home has narrow doorways and corners he could not have managed in his wheelchair if his leg was fully extended.” Eventually the matter ended up in trial where a jury awarded $19 million in punitive damages against the insurer. The trial judge ordered a remittitur of that award to $350,000 based on a ratio of punitive to compensatory damages of 10:1.  In affirming, the appellate court stated: “After weighing all of the relevant factors and circumstances pursuant to State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408 (State Farm) and Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159 (Simon), we hold the trial court’s remittitur of punitive damages was proper.” (Nickerson v. Stonebridge Life Insurance Company, August 29, 2013.)

The Latest After the Supreme Court Granted Review.

This case is against an insurance company that denied the plaintiff’s claim for hospitalization benefits. The trial court ruled that a policy provision limiting coverage was not conspicuous, plain, and clear and was therefore unenforceable, entitling plaintiff to $31,500 in additional benefits under the policy.  The jury also awarded $35,000 for breach of the implied covenant of good faith and fair dealing. Thereafter, the jury found the insurance company acted with fraud and awarded $19 million in punitive damages, which the trial court reduced to $350,000. When the plaintiff did not accept the reduction, the trial court granted the insurance company’s motion for new trial. The Court of Appeal affirmed, and the California Supreme Court granted review limited to the question whether, when assessing the constitutionality of the punitive damages award, the award of attorney fees under Brandt v. Superior Court (1985) 37 Cal.3d 813, should be included. The Supreme Court held only that the Brandt fees should be included as compensatory damages in the ratio calculation irrespective of whether such fees were awarded by the trial court or the jury. Back in the Court of Appeal once more, that court included the $12,500 in Brandt fees when it conducted its constitutional analysis vis-à-vis the reduction of the jury’s punitive damages award. This time around, the Court of Appeal vacated the order granting a motion for new trial and ordered the trial court to reduce the punitive damages award to $475,000, using a 10:1 ratio under the standard set forth in State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408. (Nickerson v. Stonebridge Life Insurance Company (Cal. App. 2nd Dist., Div. 3, Nov. 3, 2016) 5 Cal.App.5th 1.)

Tolling Provision for Cross-Complaints.

Under California’s compulsory cross-complaint statute, a party is prohibited from asserting a claim if, at the time the party answered a complaint in a prior suit, it failed to allege in a cross-complaint any related cause of action against the plaintiff. (Code Civ. Proc., § 426.30, subd. (a)). The Court of Appeal concluded the tolling doctrine applies to both permissive and compulsory cross-complaints, stating: “Although more recent intermediate appellate court decisions have suggested the tolling doctrine applies only to related (compulsory) cross-complaints, there is controlling Supreme Court authority from 1922 and 1946 that the tolling doctrine applies to the defendant’s related and unrelated cross-claims against the plaintiff.” (ZFMicro Devices, Inc. v. TAT Capital Partners, Ltd. (Cal. App. 6th Dist., Nov. 3, 2016) 5 Cal.App.5th 69.)

Lack of Minimum Contacts.

Plaintiff purchased a mobile phone in California and returned it in New York. Although an employee at the store claimed to have erased all of plaintiff’s personal information on the phone, at least some information remained. The store sent the phone to a repair facility for refurbishing, at which point an employee of the refurbishing facility uploaded a private photograph of plaintiff to plaintiff’s Facebook page. Several people notified plaintiff of the photograph, and she immediately removed it. Plaintiff brought suit against the seller for negligence, invasion of privacy, and other causes of action. The trial court granted defendant’s motion to quash for lack of personal jurisdiction. The Court of Appeal affirmed because plaintiff failed to satisfy her burden of showing sufficient contacts by defendant to be subject to general jurisdiction and failed to establish minimum contacts by defendant sufficient to allow for the exercise of specific jurisdiction. (Strasner v. Touchstone Wireless Repair & Logistics, LP (Cal. App. 4th Dist., Div. 1, Nov. 4, 2016) 5 Cal.App.5th 215.)

Arbitrator Lied About His Credentials.

A proposed arbitrator in a securities matter said he received a law degree from Southwestern University in 1975 and was licensed to practice law in California, New York, and Florida.  He subsequently served as the chairperson of the arbitration panel. After conducting six pre-hearing conferences and twenty hearing sessions, the panel issued a unanimous award denying plaintiff’s claims. Over four years later, plaintiff learned from a legal publication that the arbitrator had lied about being a licensed attorney. A federal trial judge denied plaintiff’s motion to vacate the arbitration award. The Ninth Circuit reversed, stating: “We hold that [plaintiff’s] motion was not untimely because the FAA is subject to equitable tolling. We also hold that [plaintiff’s] right to a fundamentally fair hearing was prejudiced by the fraudulent representations of the arbitration panel’s chairperson.” (Move, Inc. v. Citigroup Global Markets, Inc. (9th Cir., Nov. 4, 2016) 840 F.3d 1152.)

Peremptory Challenge of a Judge in Habeas Corpus Proceedings.

Code of Civil Procedure § 170.6 affords litigants the right to peremptorily challenge a superior court judge based on a good faith belief that the judge is prejudiced. In this proceeding, involving the initial assessment of a petition for writ of habeas corpus to determine whether the petitioner has stated a prima facie case for relief, the Supreme Court held: “[W]e hold that a petitioner who requests the name of the judge assigned to examine his or her habeas corpus petition is entitled to notice of that assignment, and also is entitled to peremptorily challenge the assigned judge, so long as all of the procedural requirements of section 170.6 have been satisfied, including the requirement that the assigned judge not have participated in the petitioner’s underlying criminal action.” (Maas v. Superior Court (Nov. 7, 2016) 1 Cal.5th 962.)

Public Safety Officers Procedural Bill of Rights.

A police officer was given notice of intent to terminate his employment based on alleged lack of honesty and cooperation in the investigation of a claim of police brutality. The police chief, however, concluded the allegations could not be sustained, so the officer was not terminated and remained a field training officer but was not assigned any trainees and was removed from the SWAT team and honor guard. Pursuant to the Public Safety Officers Procedural Bill of Rights (Gov. Code, § 3300 et seq.), the officer sued for being removed from the SWAT team and honor guard. The trial court concluded the officer’s rights were not violated. The Court of Appeal reviewed under the substantial evidence standard, and noted: “The SWAT team and honor guard were collateral assignments, not formal, full-time assignments. Removal from those collateral assignments was not considered discipline, but was part of the chief of police’s ‘normal management of the department.’” The reviewing court also noted that no indication of those actions was placed in the officer’s personnel file and further concluded that substantial evidence supported the trial court’s conclusion that the city did not violate the Act. (Perez v. City of Westminster (Cal. App. 4th Dist., Div. 3, Nov. 9, 2016) 5 Cal.App.5th 358.)

Alleged Wrongful Termination Due to a Disability; Summary Judgment Reversed.

For nine years preceding her termination, plaintiff hosted the mid-day radio show. She was scheduled to be in the radio booth from 10 a.m. to 3 p.m. during which time she spoke on the air between songs and commercials, took calls from listeners, and announced promotions and giveaway winners. Plaintiff was expected to arrive at the station approximately 30 minutes in advance of going on the air in order to review the “audio log,” which indicated how many times per hour she would speak that day and for how long each time. Plaintiff was also expected to use this pre-air time to research relevant topics and prepare what she would discuss on the air. In 2007, a benign tumor was found at the junction of her esophagus and stomach. In 2010, doctors told her it should either be removed or she should return every 3 to 6 months for monitoring. She opted for monitoring rather than surgery. By 2011, some of her doctors were concerned it might be malignant, and all of her doctors recommended surgery. It is undisputed that between May 2011 and November 2011 plaintiff missed work or arrived late nine times due to doctor appointments related to her tumor. On each occasion plaintiff notified her supervisor(s) in advance and requested permission for the time off. Each request was granted. In November 2011, she was terminated, after which she brought suit for disability discrimination. The trial court granted the employer’s motion for summary judgment. The Court of Appeal found the trial court erred in granting summary judgment on plaintiff’s FEHA (Fair Employment and Housing Act; Gov. Code, § 12940, subd. (a)) claim, stating “there is no requirement that a medical condition limit a major life activity in order to be protected.” The Court of Appeal also concluded the trial court erred in granting summary judgment on plaintiff’s CFRA (California Family Rights Act; Gov. Code, § 12945.1) claim and claim for common law wrongful termination. (Soria v. Univision Radio Los Angeles, Inc. (Cal. App. 2nd Dist., Div. 7, Nov. 15, 2016) 2016 Cal. App. LEXIS 982.)

Failure to Personally Appear at Administrative Hearing in Wrongful Termination Matter.

Plaintiff was terminated from his position as a corrections officer with the California Department of Corrections and Rehabilitation (CDCR). At a hearing before an administrative law judge (ALJ) for the State Personnel Board, plaintiff did not appear. A process server informed the ALJ that plaintiff said he was avoiding service of a subpoena to appear. Plaintiff’s lawyer did appear and refused to accept service. The ALJ ordered that plaintiff appear, but he did not. The ALJ dismissed plaintiff’s administrative appeal because a regulation requires personal appearance. The State Personnel Board adopted the ALJ’s decision. The superior court granted the plaintiff’s petition for writ of mandate and, in effect, ordered that he be placed back in his previous position with CDCR. On appeal, CDCR argued the ALJ properly concluded plaintiff’s appeal should be deemed waived since he failed to personally appear. The Court of Appeal agreed with CDCR and reversed the trial court’s grant of a writ of mandate. (Thaxton v. State Personnel Board (Cal. App. 4th App. Dist., Div. 1, Nov. 16, 2016) 2016 Cal.App. LEXIS 988.)

No Appeal From Workers’ Compensation Judge’s Order Admitting Medical Report.

In a workers’ compensation hearing a workers’ compensation judge (WCJ) denied the employer’s motion to exclude a medical report, and the employer appealed the ruling to the Workers’ Compensation Appeals Board, which denied the petition. The employer then sought writ review in the Court of Appeal.  In denying the employer’s petition, the Court of Appeal stated:  “It is well-established that a petition for writ of review may be sought only from a final order or decision of the appeals board. (Lab. Code, §§ 5900, 5901; Maranian v. Workers’ Comp. Appeals Bd. (2000) 81 Cal.App.4th 1068, 1074 (Maranian).) Here, the appeals board’s order is not final. To the extent Alvarez v. Workers’ Comp. Appeals Bd. (2010) 187 Cal.App.4th 575 (Alvarez) suggests that either the WCJ’s order or the appeals board’s order is reviewable by writ of review, we disagree.” (Capital Builders Hardware, Inc. v. Workers’ Compensation Appeals Board (Cal. App. 2nd Dist., Div. 2, Nov. 16, 2016) 2016 Cal.App. LEXIS 983.)

PAGA Claim Cannot Be Ordered to Arbitration Without State’s Consent.

Pursuant to the Labor Code Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.), an employee of a department store alleged several Labor Code violations by the company. The department store moved to compel arbitration of plaintiff’s “individual PAGA claim” and stay or dismiss the remainder of the complaint. The trial court denied the motion. In affirming, the Court of Appeal stated: “Under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian) and consistent with the Federal Arbitration Act (FAA) (9 U.S.C. et seq.), a PAGA representative claim is nonwaivable by a plaintiff-employee via a predispute arbitration agreement with an employer, and a PAGA claim (whether individual or representative) cannot be ordered to arbitration without the state’s consent.” (Tanguilig v. Bloomingdale’s, Inc. (Cal. App. 1st Dist., Div. 5, Nov. 16, 2016) 2016 Cal.App. LEXIS 992.)

The Interaction of Two Entirely Different Statutory Schemes Vis-à-vis Physicians.

Hospital peer review proceedings against doctors are governed by Business & Professions Code §§ 805 to 809.7. Hospital whistleblower matters come under Health & Safety Code § 1278.5. In Fahlen v. Sutter Central Valley Hospitals (2014) 58 Cal.4th 655, the California Supreme Court squarely held that a physician could prosecute a § 1278.5 action without first having to prevail in an administrative mandate proceeding attacking a peer review determination. But the Fahlen opinion does not address whether or not a physician is excused from completing an internal peer review process before filing a § 1278.5 action. In the present action, the Court of Appeal held:  “Based on the analysis in Fahlen and the text and legislative history of section 1278.5, we hold that a physician need not complete the internal peer review process prior to filing a section 1278.5 action.” (Armin v. Riverside Community Hospital (Cal. App. 4th Dist., Div. 3, Nov. 17, 2016) 2016 Cal.App. LEXIS 996.)

California Supreme Court Speaks About Duties of Associate Licensees in Real Estate Transactions.

Under California law, a real estate broker may act as a dual agent for both the seller and the buyer in a real property transaction, provided both parties consent to the arrangement after full disclosure. (Civ. Code, §§ 2079.14, 2079.16.) To that end, the law requires brokers to disclose whether they are acting as dual agents and to inform the parties that a broker acting as a dual agent owes fiduciary duties to both buyer and seller. In carrying out its duties, the broker may act either directly or through one or more associate licensees, who are typically salespeople operating under the broker’s license and functioning under the broker’s supervision. The governing statute provides that when an associate licensee owes a duty to any party in a real property transaction that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions. In this case, the buyer discovered the square footage of the property was far less than represented and filed suit. The trial court instructed the jury the associate licensee had no fiduciary duty to the buyer and that it could only find against the brokerage firm if it also found another agent of the brokerage firm had breached a fiduciary duty to the buyer. The jury found in favor of the brokerage firm. The California Supreme Court found the trial court erred, stating: “We now conclude that the associate licensee, who functioned on [the brokerage firm’s] behalf in the real property transaction, owed to the buyer an ‘equivalent’ duty of disclosure under Civil Code section 2079.13, subdivision (b).” (Horiike v. Coldwell Banker Residential Brokerage Company (Nov. 21, 2016) 2016 Cal. LEXIS 9428.)

No Requirement That Plaintiff First File Motion For Reconsideration Prior to Filing Motion For CCP § 473 Relief.

Plaintiff filed suit alleging she suffered personal injuries while a passenger in a bus that had an accident. The court granted the bus company’s motion to change venue, ordering plaintiff to pay the transfer fee. She did not pay the fee, and the bus company moved to dismiss the complaint pursuant to Code of Civil Procedure § 399, subdivision (a), which states if the transfer fee is not paid within 30 days, the court may dismiss an action. The trial court dismissed the action but later granted plaintiff’s motion to set aside the dismissal under Code of Civil Procedure § 473, subdivision (b). On appeal, the bus company contends the trial court erred in setting aside the dismissal because plaintiff was required to—but did not—first move for reconsideration, and because she failed to provide a sufficient showing for § 473 relief. In affirming the trial court’s decision, the Court of Appeal stated: “We conclude that section 473, subdivision (b), can provide relief when an action is dismissed due to plaintiff’s counsel’s mistake or inexcusable neglect related to the failure to pay change of venue fees. As this was plaintiff’s initial application for relief under section 473, subdivision (b), and not a request to reconsider a denial of relief under that section, there was no requirement that she file a motion for reconsideration under section 1008. We further conclude that there was sufficient evidence to justify relief under section 473, subdivision (b).” (Gee v. Greyhound Lines, Inc. (Cal. App. 3rd Dist., Nov. 21, 2016) 2016 Cal.App. LEXIS 1015.)

Trial Court Erred in Decertifying Wage & Hour Class Action.

Plaintiffs allege defendants violated California labor laws by failing to provide meal and rest breaks and adequate wage statements. The trial court granted plaintiffs’ motion for class certification. Thereafter, the U. S. Supreme Court issued its opinion in Wal-Mart Stores, Inc. v. Dukes (2011) 564 U.S. 338, and, based upon that holding, and after receiving briefing on the California Supreme Court’s opinion in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, the trial court granted defendants’ motion to decertify the class. In reversing, the Court of Appeal found the trial court overextended the holding in Wal-Mart, as the instant case involves only the proposed use of statistical evidence for the limited purpose of determining how many employees had signed on-duty meal agreements lacking revocation during the class period. The Court of Appeal noted that in Brinker, the court instructed that, the focus for class certification purposes must be on the policy the plaintiffs are challenging and whether the legality of that policy can be resolved on a classwide basis, but in the instant case, the trial court did not focus on plaintiffs’ theory of liability as described in the complaint. (Lubin v. The Wackenhut Corporation (Cal. App. 2nd Dist., Div. 4, Nov. 21, 2016) 2016 Cal.App. LEXIS 1016.)

Determining Fair Value of Shareholder Interest Under Corporations Code § 2000.

Plaintiffs owned 36.7 percent of a software company. They were terminated from the company in 2013 and, thereafter, sued for involuntary dissolution of the company and sought an accounting, injunctive relief, and damages. To avoid dissolution, defendants brought a motion to appraise the fair value of the company and buy out plaintiffs’ shareholder interest pursuant to Corporations Code § 2000. On appeal, plaintiffs contend that the trial court undervalued their shares when it “confirmed” three disparate court-ordered appraisals and averaged the appraisals to determine the fair value of the company. The Court of Appeal reversed the trial court order, stating: “On remand, the trial court is ordered to obtain a majority fair value appraisal that takes into account the derivative claims and does not use a lack-of-control discount. In the alternative, the trial court may take evidence on the derivative claims and make a de novo determination of the fair value of appellants’ shareholder interest, consistent with section 2000.” (Goles v. Sawhney, (Cal. App. 2nd Dist., Div. 6, Nov. 22, 2016) 2016 Cal.App. LEXIS 1010.)

Universities Have Huge Overhead Expenses These Days.

John Doe and Jane Doe were students at the University of California, San Diego (UCSD) when they began a romantic relationship. A few months after their relationship ended, Jane made a complaint to UCSD’s Office of Student Conduct that John had sexually assaulted her. An investigation was conducted, and the report stated John had digitally penetrated Jane’s vagina without consent. A student conduct review panel heard testimony and found that John violated UCSD’s Student Conduct Code, recommending John be suspended from UCSD for one quarter. The dean of student affairs suspended John for an entire year and ordered other sanctions. John unsuccessfully appealed to the council of provosts, so John brought a petition for writ of mandate in the superior court. The superior court agreed with John’s contentions and entered judgment requiring the Regents of the University of California to set aside the findings and sanctions against John. On appeal, the Regents argued that substantial evidence (in the form of Jane’s testimony) supported the decision of the review panel, dean, and provost at UCSD, and further argued that the presence of John’s purported conflicting evidence did not change the fact there was sufficient evidence to support the decision. The Court of Appeal agreed with the Regents and UCSD and reversed the superior court order, reinstating the findings and sanctions against John. (John Doe v. Regents of the University of California (Cal. App. 4th Dist., Div. 1, Nov. 22, 2016) 2016 Cal.App. LEXIS 1013.)

Protecting Public Safety is Not Always Easy For Doctors.

A doctor who treated plaintiff for diabetes and cognitive deficits for several years refused to certify him for a commercial driver’s license with the Department of Motor Vehicles (DMV) due to his cognitive disorder and uncontrolled diabetes. At some later point, plaintiff asked for a doctor’s note to be sent to the DMV explaining his absence from a DMV hearing dealing with his application to drive a school bus. The doctor called plaintiff and told him he should not be driving children on a bus due to his poor health. At that point, plaintiff told the doctor not to communicate with the DMV. Nevertheless, the doctor wrote and informed the DMV about plaintiff’s cognitive disorder. Plaintiff’s commercial driver’s license was revoked, and plaintiff brought suit against the doctor, the clinic, and the public entities that run the Department of Public Health. Plaintiff had signed consents for treatment, but each one stated that his medical records would not be released without his written authorization. For various reasons—the primary one being the litigation privilege—the trial court dismissed the suit. In affirming, the Court of Appeal stated the doctor is one of a class of persons authorized by law to communicate with the DMV. (McNair v. City and County of San Francisco (Cal. App. 1st Dist., Div. 4, Nov. 22, 2016) 2016 Cal.App. LEXIS 1018.)

Officers Shot Mentally Ill Woman With Knife.

After receiving a report of a person hacking at a tree with a knife, three police officers responded to the scene. Police yelled at the woman to drop the knife as the woman started walking toward another woman. The woman carrying the knife, who was on medication for a bipolar disorder, did not comply, and an officer shot her four times. The injured woman sued the police for excessive force. A witness said she did not think the woman understood what was happening when the police yelled at her. The trial judge granted summary judgment for the police. The Ninth Circuit Court of Appeals reversed the grant of summary judgment, stating: “The application of qualified immunity in this case will depend upon the facts as determined by a jury. The facts, viewed in Mrs. Hughes’ favor, present the police shooting a woman who was committing no crime and holding a kitchen knife. . . . a rational jury. . .could find that she had a constitutional right to walk down her driveway holding a knife without being shot.” (Hughes v. Kisela (9th Cir., Nov. 28, 2016) 2016 U.S. App. LEXIS 21186.)

Alternative Sentencing.

As part of a previous felony conviction, a defendant agreed to comply with a GPS monitoring agreement that he had to be in his mother’s house between 8:00 p.m. and 6:00 a.m. On an occasion, his mother argued with him about leaving dirty dishes in the sink and not cleaning up after himself. She told him that if he did not like her rules, he should leave. So, he left. He did not return and did not contact authorities about his situation. He was found guilty of escape. On appeal, he argued that his failure to return to his mother’s house was not willful, so he should not have been convicted. The Court of Appeal affirmed his conviction, stating: “[A] reasonable jury could have found that when defendant voluntarily left his mother’s house at 2:36 a.m., he unlawfully departed from the limits of his lawful custody and thereby committed an escape.” (People v. James David Allen (Cal. App. 3rd Dist., Nov. 28, 2016) 2016 Cal.App. LEXIS 1031.)

Judgment Against a Local Public Entity.

A healthcare facility obtained a sizeable judgment against a healthcare district. More than a year after the judgment was entered, the District filed a motion under Government Code § 970.6, which permits a local public entity to pay a judgment in up to 10 annual installments upon a showing that prompt payment would impose an “unreasonable hardship.” In addition, the District sought to change the rate of postjudgment interest established by the judgment to the interest rate specified by § 984, subdivision (e)(2), which applies to judgments paid by “periodic payment.” In support of its claim of hardship, the District’s motion demonstrated that it lacked sufficient funds to pay the judgment, was unable to borrow additional money against its already encumbered assets, and might be forced into bankruptcy if required to sell assets to raise the funds necessary for a lump sum payment. The trial court granted the motion. The Court of Appeal affirmed in part, but added: “While we conclude that the postjudgment interest rate established by section 984 is appropriate prospectively, we find no statutory basis for reducing the interest accrued prior to the trial court’s grant of relief under section 970.6. We therefore reverse the retroactive portion of the trial court’s order and remand for entry of an amended judgment consistent with our decision.” (Sutter Health v. Eden Township Healthcare District (Cal. App. 1st Dist., Div. 1, Nov. 29, 2016) 2016 Cal.App. LEXIS 1036.)

Arbitrations Are Quick and Easy . . . Sure They Are.

An arbitration provision provided that an arbitration award would be final, unless “the arbitrator’s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief against a party.” In such case, “that party may request a new arbitration under the rules of the arbitration organization by a three-arbitrator panel. The appealing party requesting new arbitration shall be responsible for the filing fee and other arbitration costs subject to” further consideration by the panel. In the instant case, plaintiff prevailed and was awarded $180,175.34. Defendants sought a new arbitration. When plaintiff objected to doing it all over again, the arbitral forum would not proceed without a court order. The trial court refused to order a new arbitration because the arbitration organization did not have any appellate rules. The Court of Appeal reversed, stating: “We therefore conclude the trial court’s orders cannot stand. The lack of ‘appellate rules’ is no impediment to ADR providing a new arbitration. And defendants did not insist on a new arbitral forum. [Plaintiff’s] motion to confirm the award should have been denied, and defendants’ request for an order requiring a new arbitration should have been granted, specifying arbitration before ADR.” (Condon v. Daland Nissan, Inc. (Cal. App. 1st Dist., Div. 1, Nov. 29, 2016) 2016 Cal.App. LEXIS 1046.)

Don’t Fool Around With Your Homeowner’s Association.

A man purchased a single-family residence at an execution sale conducted to satisfy a judgment against the owner of the house obtained by the homeowners association (HOA) where the house is located. After the sale, the trial court granted the homeowner’s motion to vacate the judgment on the ground it had been obtained by the HOA through fraud. Soon thereafter, the court granted homeowner’s motion for restitution and cancelled the sheriff’s deed to the man who purchased the house at the execution sale. The Court of Appeal reversed the order granting the homeowner’s motion for restitution and cancellation of the sheriff’s deed of sales, stating: “Code of Civil Procedure section 701.680, subdivision (a) (section 701.680(a)) unequivocally states that an execution sale is ‘absolute and shall not be set aside for any reason.’ Because [the man who purchased the house at the execution sale] was not the judgment creditor, the remedies available for [the homeowner], the judgment debtor, are recovery of the proceeds of the sale under Code of Civil Procedure section 701.680, subdivision (b) (section 701.680(b)), or to seek equitable redemption. [The homeowner] is not, however, entitled to equitable redemption because [the man who purchased the house at the execution sale] was not guilty of unfairness, and did not manipulate the system or take undue advantage, and the record shows the property was not sold for a grossly inadequate price.” (Lee v. Rich (Cal. App. 4th Dist., Div. 3, Nov. 30, 2016) 2016 Cal.App. LEXIS 1044.)


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