Litigation Update

Litigation Section News: February 2017

 • 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

Attorney Fees After Plaintiff’s Voluntary Dismissal Before Trial.

After plaintiff dismissed her entire complaint alleging both breach of contract and tort causes of action before trial, the trial court awarded fees to defendant for his defense against the complaint as a whole. The Court of Appeal explained that Civil Code § 1717, subdivision (b)(2) generally bars attorney fees after a pretrial voluntary dismissal for defense of contract causes of action. However, the appellate court noted that the parties had entered into a contract that stated the prevailing party was to be awarded attorney fees if “any litigation . . . is commenced between the parties to this Contract of Sale . . . concerning its terms, interpretation or enforcement or the rights and duties of any party in relation thereto.”  Accordingly, the Court of Appeal remanded the matter to the trial court “to determine what fees can be properly awarded to [defendant] and to determine whether the fees can be allocated between the two types of claims [contract and tort].” (Khan v. Shim (Cal. App. 6th Dist., Dec. 29, 2016) 7 Cal.App.5th 49.)                                                                

Are Attorney Fee Bills For Work Done By a Private Firm For a Public Agency Subject to Disclosure Under the Public Records Act?

The American Civil Liberties Union (ACLU) submitted a request under the California Public Records Act (Gov. Code, § 6250 et seq.) for invoices specifying the amounts the county had been billed by any law firm in connection with nine different lawsuits alleging excessive force against jail inmates. The county agreed to produce invoices for three actions that had been concluded but not for six other actions that were still pending, arguing communications in pending actions are protected by the attorney-client privilege. The ACLU sought extraordinary relief. The trial court found the invoices were not privileged, and the Court of Appeal reversed. The California Supreme Court held:  “The imperative of protecting privileged communications between attorney and client –– and thereby promoting full and frank discussion between them –– is a defining feature of our law. This imperative does not require us to conclude — as the Court of Appeal did here — that everything in a public agency’s invoices for legal services is categorically privileged. Instead, the contents of an invoice are privileged only if they either communicate information for the purpose of legal consultation or risk exposing information that was communicated for such a purpose. This latter category includes any invoice that reflects work in active and ongoing litigation. Accordingly, we reverse the judgment of the Court of Appeal and remand for proceedings consistent with our opinion.”  (Los Angeles County Board of Supervisors v. Superior Court (Dec. 29, 2016) 2 Cal.5th 282.)

California State Bar Ethics Opinion About Attorney Blogging.

The issue in this State Bar ethics opinion is: “Under what circumstances is ‘blogging’ by an attorney a ‘communication’ subject to the requirements and restrictions of the Rules of Professional Conduct and related provisions of the State Bar Act regulating attorney advertising?” The blogs of five lawyers are discussed in the opinion in some detail. The opinion has several conclusions, including: “A blog included on an attorney’s or law firm’s professional website is part of a ‘communication’ subject to the rules regulating attorney advertising to the same extent as the website of which it is a part.” (State Bar’s Standing Committee on Professional Responsibility and Conduct in Formal Opinion No. 2016-196)

No Arbitration For PAGA Claim Because No Dispute Between Employer and Employee.

The trial court denied defendant’s motion to compel arbitration in this single-count representative action under the California Private Attorneys General Act (PAGA; Lab. Code, § 2698 et. seq.) alleging defendant had violated numerous provisions of the Labor Code and seeking to recover PAGA civil penalties for the violations. Defendant argued plaintiff must first arbitrate her individual disputes showing she is an aggrieved party under PAGA and then the PAGA action can proceed in court. Relying on Iskanian v. CLS Transportation Los Angeles LLC (2014) 59 Cal.4th 348, the trial court found the PAGA claim is a representative action brought on behalf of the state and does not include individual claims. On appeal, defendant argues that under the Federal Arbitration Act, an employer and an employee have the right to agree to individually arbitrate discrete disputes underlying a PAGA claim, while leaving the PAGA claim and PAGA remedies to be collectively litigated under Iskanian. In affirming the trial court’s denial of defendant’s motion to compel arbitration, the Court of Appeal held that “this dispute does not involve an individual claim by [named plaintiff] regarding the Labor Code violations but rather an action brought for civil penalties under PAGA for violating the Labor Code. There are no ‘disputes’ between the employer and employee as stated in [defendant’s] arbitration policy.” (Hernandez v. Ross Stores, Inc. (Cal. App. 4th Dist., Div. 2, Jan. 3, 2017) 7 Cal.App.5th 171.)

Social Workers Must Go to Trial and Defend Themselves For Allegedly Lying to Have Children Removed From Their Mother.

Social workers are entitled to absolute immunity from lawsuits resulting from performance of their official activities. But under some circumstances, a social worker might lose even the shield of qualified immunity. In the present case, the State of California removed children from the custody of their mother, and the mother brought an action for violation of her constitutional rights in federal court. The mother claims the social workers engaged in malicious activities by continually lying to the superior court about the mother, such as fabricating a scenario where the mother kept the children from visitations with their father. The federal trial judge denied the social workers’ motion for summary judgment, finding they are not entitled to absolute or qualified immunity for their alleged actions. The Ninth Circuit Court of Appeals affirmed the trial court’s ruling, stating there is sufficient evidence that the social workers lied and fabricated evidence to the California court for this federal case to proceed to trial.  (Hardwick v. County of Orange (9th Cir., Jan. 3, 2017) 844 F.3d 1112.)

Attorney Fee Award in a SLAPP Action Upheld, Even Though the Court Might Not Have Had Subject Matter Jurisdiction.

Plaintiff sued defendant. Defendant filed a special motion to strike pursuant to Code of Civil Procedure § 425.16. The trial court granted the anti-SLAPP motion and awarded defendant $2,575.04 in attorney fees. On appeal, plaintiff argued that because the trial court lacked subject matter jurisdiction over her claims, it also lacked jurisdiction to adjudicate defendant’s anti-SLAPP motion or to award attorney fees. The Court of Appeal agreed with plaintiff, and the Supreme Court granted review. The California Supreme Court ruled: “A court that lacks subject matter jurisdiction over a plaintiff’s claims has the power to resolve an anti-SLAPP motion on jurisdictional grounds. Because the court has the power to resolve the anti-SLAPP motion, it also has the power to award attorney fees to the defendant that prevails on such a motion. We therefore reverse the judgment of the Court of Appeal.” (Barry v. State Bar of California (Jan. 5, 2017) 2 Cal. 5th 318.)

Ralph M. Brown is Always Watching.

At a town council meeting, the town council voted to accept a gift from Walmart to pay for a special election. Later, at a special election, the electorate voted to amend the town’s general plan to allow for a 30-acre commercial development, including a Walmart Supercenter. Plaintiff filed suit against both the town and Walmart, asserting violations of the Ralph M. Brown Act (Gov. Code, § 54950) on the grounds that the agenda of the town council meeting failed to provide proper notice of the actions to be taken at the meeting. The trial court agreed with plaintiff, found the Brown Act had been violated, found the initiative was void and invalid, and awarded plaintiff attorney fees of $45,053.75. In affirming, the Court of Appeal stated: “In this case, agenda item No. 16 only listed that the ‘Walmart Initiative Measure’ and the direction to be given to staff would be discussed at the meeting.” (Hernandez v. Town of Apple Valley (Cal. App. 4th Dist., Div. 2, Jan. 5, 2017) 7 Cal.App.5th 194.)

A Man May Work From Sun to Sun, But a Woman’s Work Is Never Done.

A couple married in 2001. They both retired more than ten years ago. Now each is close to 70 years old, and they are divorcing. Her retirement income is less than $600 a month, and his is approximately $10,000 a month. The wife asked for spousal support, and the husband asked the court to give the wife a “Gavron warning” that, as the supported spouse, she is expected to become self-supporting. The Court of Appeal upheld the trial court’s order refusing to issue a Gavron warning, as the court “weighed the goal of the supported party becoming self-supporting against the marital standard of living, and reconciled that the goal of self-support would conflict with maintaining the marital standard of living because the marital standard of living included being retired.”. (In re Marriage of McLain (Cal. App. 4th Dist., Div. 2, Jan. 6, 2017) 7 Cal.App.5th 262.)

“If We Forget That We’re One Nation Under God, Then We Will Be One Nation Gone Under,” Ronald Reagan.

This appeal concerns a dispute over the control of two nonprofit entities associated with the Sikh Dharma religious community. Plaintiffs, the widow and children of the faith’s late spiritual leader, brought an action against various individuals and entities for fraudulent management of funds. A federal trial court concluded the claims are foreclosed by the Free Exercise and Establishment Clauses of the First Amendment. The Ninth Circuit reversed and remanded the matter back to the trial court, concluding the claims are not barred by the ministerial exception and can be decided by neutral principles of law “without encroaching on religious organizations’ right of autonomy in matters of religious doctrine and administration.” (Puri v. Khalsa (9th Cir., Jan. 6, 2017) 844 F.3d 1152.)

These Gender Issues Get Complicated.

A male state prisoner sued government officials for violating his Fourth Amendment right to be free from unreasonable searches. He contends the policy of the prison is to have female guards stand four to five feet away as he and other male prisoners use the bathroom and shower. The federal trial court dismissed the complaint because the policy “is precisely the type of cross-gender supervision that has long been held constitutional.” The Ninth Circuit Court of Appeals reversed, stating: “It may be that the prison’s up close and personal policy of female guards observing male pretrial detainees is necessary to ensure security and provide equal work opportunities in the prison. But such considerations and their legal effect are just conjecture at this point.” (Byrd v. Maricopa County Board of Supervisors (9th Cir., Jan. 6, 2017) 845 F.3d 919.)

No Exceptions to Required Reporting for Sex Therapists.

The Child Abuse and Neglect Reporting Act (CANRA; Pen. Code, § 11164 et seq.) requires therapists and counselors to report to law enforcement or child welfare agencies patients who disclose that they have developed, downloaded, streamed, or accessed child pornography through electronic or digital media. Plaintiffs here are counselors and therapists who work with sex addicts. Plaintiffs brought suit because CANRA creates an exception to the patient-psychotherapist privilege by including licensed psychologists and therapists as “mandated reporters” who are compelled to disclose known or suspected child abuse to law enforcement authorities. A mandated reporter who fails to do so is subject to criminal penalties and license suspension or revocation. Plaintiffs say their patients typically have no criminal history, have never expressed a sexual preference for children, and voluntarily participate in psychotherapy to treat their disorder, which often involves compulsive viewing on the Internet. The trial court dismissed the action. In affirming, the Court of Appeal stated: “CANRA’s purpose in protecting children is furthered by identifying persons who view child pornographic images because each separate viewing of such an image constitutes actual and separate instances of sexual exploitation. California’s enforcement of laws criminalizing the production and possession of child pornography is rationally related to the state’s goal in protecting children.” (Mathews v. Harris (Cal. App. 2nd Dist., Div. 2, Jan. 9, 2017) 7 Cal.App.5th 334.)

“A Man is Angry at a Libel Because it is False, But at a Satire Because it is True.” G.K. Chesterton.

A lawyer representing a plaintiff in a medical device lawsuit was interviewed on television. The lawyer stated: “Basically what was happening here was, the hospitals we alleged in the complaint and the doctors were conspiring together to install effectively counterfeit hardware in people’s backs.” Later in the interview, the lawyer added: “It didn’t work and she went and had to have another surgery and finally ended up with a legitimate, genuine doctor who was trying to help her, and this doctor found out that she had counterfeit hardware installed in her back. . . . [the manufacturer/owner of device] is an individual named Michael Drobot who has already pled guilty to a number of counts of insurance fraud.” At this point, the reporter stated, “you may recognize the name. In February Drobot admitted to bribing California State Senator Ron Calderon.” In addition to such bribes, the reporter discussed Drobot’s admission to “paying kickbacks to doctors who funneled patients to his hospital.” The lawyer then stated: “There’s evidence here that there were lavish trips on private jets, that there were prostitutes, that there were large amounts of kickbacks that were going on all to drive patients in the doors.” In the present action, Drobot and Healthsmart sued certain lawyers and law firms for defamation, whereupon the lawyers filed a special motion to strike pursuant to Code of Civil Procedure § 425.16. The trial court granted the motion as well as attorney fees and costs and struck the complaint. On appeal, the Court of Appeal affirmed, stating that the challenged statements are protected under the fair report privilege, and plaintiffs failed to establish a probability of prevailing on their claims. (Healthsmart Pacific, Inc. v. Kabateck (Cal. App. 2nd Dist., Div. 1, Jan. 10, 2017) 7 Cal.App.5th 416.)

“The Greatest Gifts You Can Give Your Children Are the Roots of Responsibility and the Wings of Independence,” Denis Waitley.

The mother of a child asked the court to order the father of the child to pay child support. The father has an income of $33,000/month, and the court ordered him to pay $2,505/month to support his child. The father appealed, arguing the court failed to take into account that the mother of the child receives money from another man, and that income should be considered. The Court of Appeal affirmed the order of the trial court, stating: “We conclude the evidence was sufficient for the trial court to reasonably conclude the financial support [the other man] provides [the mother of the child] does not represent a regular, recurrent monetary benefit fairly representing income for purposes of calculating the child support award.” (Anna M. v. Jeffrey E. (Cal. App. 2nd Dist., Div. 8, Jan. 11, 2017) 7 Cal.App.5th 439.)

Tax For Doing Business in California.

The Court of Appeal determined when the franchise tax imposed pursuant to Revenue and Taxation Code § 23151 for doing business in California applies. The Franchise Tax Board contended that a foreign business entity is considered to be doing business in California if it is a member of an LLC that is doing business in California and, if so, must file a tax return and pay the annual minimum franchise tax of $800. The court held: “We conclude passively holding a 0.2 percent ownership interest, with no right of control over the business affairs of the LLC, does not constitute ‘doing business’ in California within the meaning of section 23101.” (Swart Enterprises, Inc. v. Franchise Tax Board (Cal. App. 5th Dist., Jan. 12, 2017) 7 Cal.App.5th 497.)

Uh Oh…Public Defender Stopped by CHP. 

A deputy public defender was holding her cell phone to her ear when she looked to her side and saw a CHP officer driving next to her. She was pulled over, and the officer smelled alcohol. She admitted she had been to a bar but had only one cocktail. The officer asked her to step out of her vehicle and she declined, informing the officer she did not wish to perform any field sobriety tests or step out of her car, citing Missouri v. McNeely (2013) 133 S.Ct. 1552 as the reason she was refusing to submit to a blood test. The officer again asked her to step out and she again refused, asking the officer to issue her a citation for the cellular phone violation. She said she would call a friend to pick her up and take her home. When the officer called for backup, the PD got out of her car, and, rather unfortunately for her, she lost her balance and stumbled a bit. Her eyes were watery and bloodshot, and the officer smelled a strong odor of an alcoholic beverage on her breath. The PD was arrested. At the jail, she refused to submit to a chemical test unless there was a warrant issued by a duty judge pursuant to McNeely. In the end, the PD’s license was suspended for a year, and the Court of Appeal affirmed the denial of the PD’s petition for writ of administrative mandate, finding she was lawfully arrested on reasonable cause to believe she had been driving under the influence of alcohol. (Espinoza v. Shiomoto (Cal. App. 4th Dist., Div. 2, Jan. 12, 2017) 7 Cal.App.5th 515.)

“You’re Fired,” Donald Trump.

An administrative assistant at a community college received permission to take medical leave. At the end of the leave period, she did not report to work for five days and was terminated from her employment. The employer termed it a “voluntary resignation” and “an abandonment.” When the employee realized what happened, she explained she had emailed her supervisor medical leave notices to the effect that she needed further medical leave, but the employer wasn’t interested in her explanation. A lawsuit based on the California Family Rights Act (CFRA; Gov. Code, § 12945.2) resulted. The employee alleged the employer retaliated against her for taking medical leave. The trial court granted the employer’s motion for summary judgment. The Court of Appeal reversed, stating: “The evidence, when viewed in the light most favorable to [plaintiff], demonstrates that she did provide sufficient notice of her need for CFRA-protected leave.” (Bareno v. San Diego Community College District (Cal. App. 4th Dist., Div. 1, Jan. 13, 2017) 7 Cal.App.5th 546.)

Beneficiaries Who Challenged Actions of Trustee Are Not Personally Liable For Attorney Fees and Costs.

Beneficiaries of a trust unsuccessfully challenged the sale of trust property by the trustee. When the trial court denied the beneficiaries’ petition, it ordered them to pay the trust’s attorney fees and costs, making the beneficiaries personally liable. The Court of Appeal affirmed the award of attorney fees, but reversed the order insofar as it made the beneficiaries personally liable for them, stating: “We conclude that the attorney fees and costs were properly and lawfully imposed under the trial court’s equitable power over the trust, except to the extent the trial court made [the beneficiaries] personally liable for attorney fees and costs, rather than liable solely from their shares of the trust assets.” (Pizarro v. Reynoso (Cal. App. 3rd Dist., Jan. 18, 2017) 2017 Cal. App. LEXIS 33.)

The Five-Year Rule.

An action tried to a jury is brought to trial within the meaning of the five-year rule set forth in Code of Civil Procedure § 583.310 when the jury is impaneled and sworn. But when is that? Juries are sworn two times. The first time is when the entire venire is brought into the courtroom and sworn to tell the truth during voir dire. (See Code Civ. Proc., § 232, subd. (a).) The second time is when the actual trial jury is sworn to try the cause before the court and render a true verdict. (See Code Civ. Proc., § 232, subd. (b).) In the present case, with just three days remaining before the fifth anniversary of the filing of a civil complaint, a panel of 75 prospective jurors assembled in a courtroom for jury selection (voir dire). The court clerk administered an oath, and the panel swore to give truthful answers. At the end of the third day, while voir dire was still in progress, the judge informed the parties the large courtroom they were using was needed for other purposes the next day, a Thursday, and that the judge had other matters to hear on Friday. All returned the following Monday, and defendants moved to dismiss under the five-year dismissal statute. The trial court granted the motion, finding that the jury had not yet been “impaneled and sworn.” The Court of Appeal reversed, stating: “The jury was ‘impaneled’ when the panel of prospective jurors assembled in the courtroom for voir dire. The panel was ‘sworn’ when the prospective jurors took an oath to respond truthfully. Accordingly, the action was, in fact, ‘brought to trial’ within five years of the filing of the civil complaint. Thus, the trial court should not have granted defendants’ motion to dismiss.” (Stueve v. Nemer (Cal. App. 4th Dist., Div. 3, Jan. 18, 2017) 2017 Cal. App. LEXIS 34.)

Law School Exam Question on Choice of Law.

Chinese nationals were injured and killed in a bus accident during a day trip from a hotel in Nevada to an attraction in Arizona. The tour operator was based in California. The bus was manufactured in Indiana by a manufacturer with dealerships in four western states, including California. Plaintiffs allege strict products liability. Which state’s law applies…after the California tour operator and the Indiana manufacturer settle? Tick tock . . . . Pencils down! The trial court applied Indiana law. The Court of Appeal noted that Indiana law “is substantially less favorable to plaintiffs than is California law,” and reversed, stating: “Before discussing the specific issues in the case, we provide a brief overview of California conflicts of law. Then, we consider whether the trial court should have fully reconsidered the choice of law motion after [the manufacturer’s] settlement with plaintiffs. Concluding that it should have, we do not consider the propriety of the first choice of law ruling and instead consider de novo whether Indiana or California products liability law should apply to the action between the Chinese plaintiffs and the California defendant [the California dealer for the manufacturer]. Considering the governmental interests at stake in this products liability case, we conclude that California has an interest in applying its laws, while Indiana does not. Therefore, the trial court erred in applying Indiana products liability law. Finally, we conclude that the error was prejudicial, in that it is reasonably probable that plaintiffs would have prevailed had California law been applied. We therefore reverse and remand for a new trial.” (Chen v. L.A. Truck Centers, LLC (Cal. App. 2nd Dist., Div. 8, Jan. 18, 2017) 2017 Cal. App. LEXIS 32.)

Jurisdiction to Hear Motion for New Trial.

A man contended medical malpractice caused his quadriplegia, but a jury returned a special verdict finding that, while the hospital was negligent, its negligence did not cause the man’s quadriplegia. Shortly thereafter, the man died and his autopsy revealed evidence that called the jury’s causation determination into question. His widow was substituted as the plaintiff and timely filed notice of intent to move for new trial, but the expert affidavits to support the motion were not timely filed. The trial court considered the declarations and granted the motion for new trial. On appeal, the defense argued the trial court lacked jurisdiction to rely on the affidavits. The Court of Appeal held the trial court did not lack fundamental jurisdiction and further that the defense waived this challenge because it was not raised in the trial court. The California Supreme Court affirmed the decision of the Court of Appeal, stating: “We conclude that Code of Civil Procedure section 659a does not deprive a court of fundamental jurisdiction to consider affidavits submitted after the 30-day deadline set forth in the statute. Because the Hospital did not object to the timeliness of the affidavits in the trial court, it may not raise this issue for the first time on appeal.” (Kabran v. Sharp Memorial Hospital (Cal., Jan. 19, 2017) 386 P.3d 1159.)

Fannie Mae.

The Federal National Mortgage Association (Fannie Mae) is a federally chartered corporation that participates in the secondary mortgage market. By statute, Fannie Mae has the right to sue and be sued. In the present case, plaintiffs filed suit in state court, and Fannie Mae moved the action to federal court, arguing the charter provides for federal jurisdiction over all claims. The federal trial judge and appeals court agreed with Fannie Mae, but the United States Supreme Court held that state judges can hear state law claims involving Fannie Mae. (Lightfoot v. Cendant Mortgage Corp. (Jan. 18, 2017) 137 S.Ct. 553.)

Here’s Your Change and Your Receipt (and Your Arbitration “Agreement”).

A man purchased a phone in a store, paying for it at the cash register. The clerk handed him a receipt entitled “Customer Agreement.” Under the heading “Agreement,” the receipt included three provisions, one of which stated: “. . .I understand that I am agreeing to . . . settlement of disputes by arbitration and other means instead of jury trials, and other important terms in the Customer Agreement.” The man signed the Customer Agreement, and the retailer emailed him a copy. Later, the man filed a class action against the manufacturer, alleging a misrepresentation of the phone’s memory capacity. The manufacturer moved to compel arbitration. A federal district court denied the motion. In affirming, the Ninth Circuit Court of Appeals noted the Federal Arbitration Act embodies a national policy favoring arbitration, but the manufacturer “failed to carry its burden of proving the existence of a contract with [named plaintiff] to arbitrate as a matter of California law.” (Norcia v. Samsung Telecommunications America (9th Cir., Jan. 19, 2017) 845 F.3d 1279.)

Modern Family.

Mother dropped off all five of her children with their maternal grandmother and “took off.” The juvenile court found two men—the man Mother was married to when the oldest child, a boy, was born and the man Mother was dating when the boy was conceived—are both presumed fathers of the boy pursuant to Family Code § 7611. Stating that “presumed father status is based on the familial relationship between the man and the child, rather than any biological connection” and “it would be detrimental to [the boy] if only [the husband of the Mother when the boy was born] were to be recognized as his presumed father,” the Court of Appeal affirmed the order. (In re M.R. (Cal. App. 4th Dist., Div. 2, Jan. 20, 2017) 132 Cal.App.5th 269.)

Insurance Companies Balk at Regulation Prohibiting Misleading Home Rebuilding Costs.

After the 1991 Oakland Hills fire and 2003 Southern California wildfires, legislators discovered through public hearings an additional aspect of the danger wildfires pose to homeowners: underinsurance. The Legislature directed the Insurance Commissioner to "promulgate reasonable rules and regulations . . . as are necessary to administer the Unfair Insurance Practices Act. (Ins. Code, § 790.10.)" One of the regulations enacted (Cal. Code of Regs., tit. 10, § 2695.183) does not require an insurer to set or recommend a policy limit or to provide an estimate of the cost to rebuild a home, but if the insurer does choose to opine on replacement costs, the regulation specifies how that estimate is to be calculated and communicated. In particular, it bars the insurer from providing a replacement cost estimate in connection with an application for or renewal of a homeowner insurance policy unless certain requirements are met. The Association of California Insurance Companies brought an action for declaratory relief, alleging the regulation violated insurers’ rights to free speech and exceeded the Insurance Commissioner’s authority by defining a new unfair or deceptive insurance practice. Both the trial and appellate courts invalidated the regulation. The California Supreme Court reversed, finding the Insurance Commissioner did not exceed statutory authority in enacting the regulation. (Association of California Insurance Companies v. Jones (Cal., Jan. 23, 2017) 2 Cal.5th 376.)

Attorney Accused of Gaming the System.

A homeowner who is an attorney accuses a bank of violating Civil Code § 2923.6, subdivision (c) by proceeding with foreclosure while his loan modification application was pending. Noteworthy is that the attorney did not pay his mortgage payments for eight years. The attorney sued the bank, and the trial court sustained the bank’s demurrer without leave to amend. The Court of Appeal affirmed in rather stinging language:  “A person who borrows money from a bank to purchase or refinance a home has a reasonable expectation that the bank will fund the loan. The bank has a reasonable expectation that monthly mortgage payments will be made. Here, appellant’s reasonable expectations were met. The bank’s were not. Nonpayment of the mortgage for approximately eight years while the borrower remains in possession is an egregious abuse. Respondent argued, and the trial court agreed, that appellant is ‘gaming the system.’ The game is over.” (Gillies v. JPMorgan Chase Bank, N.A. (Cal. App. 2nd Dist., Div. 6, Jan. 24, 2017) 2017 Cal. App. LEXIS 47.)

Voila!! Juvenile Delinquency Case Becomes a Civil Case.

A minor in a juvenile delinquency case satisfied all the terms and conditions of his probation with the exception of full payment of all the ordered restitution. The juvenile court dismissed the wardship and converted the restitution order to a civil judgment. The minor appealed. The Court of Appeal affirmed, stating: “In this case, minor’s income consisted of SSI and food stamps. The disability benefits minor’s father received were also used to pay for the minor’s needs. In addition, the juvenile court could consider minor’s future income in assessing ability to pay. . . . We conclude the juvenile court appropriately considered the minor’s SSI benefits, among other things [], recognizing that the juvenile court could not compel minor to use his SSI benefits to pay restitution. . . . Here, the civil judgment does not compel minor to pay restitution from his SSI benefits.” (In re J.G. (Cal. App. 3rd Dist., Jan. 24, 2017) 2017 Cal. App. LEXIS 45.)

No Liability When Owner of Golf Course Granted Easement to Public Entity.

In 2009, the owner of a golf club granted a county two public easements for a public unpaved recreational hiking and equestrian trail, which runs parallel to the golf course. A chain-link fence approximately six feet high and a line of eucalyptus trees spread eight to 12 feet apart separate the trail from the golf course in the area of the 13th hole. There are no warning signs on the fence along the trail side of the 13th hole indicating golf is being played on the golf course. In 2013, a golf ball struck plaintiff in the eye while he and his wife walked along a public path adjacent to the golf course. Plaintiff sued the owner of the golf club, and the trial court granted summary judgment in favor of the owner. In affirming, the Court of Appeal concluded Government Code § 831.4, which provides in relevant part that a grantor of a public easement is not liable for an injury caused by a condition on an unpaved road that provides access to recreational areas, bars plaintiff’s action. (Leyva v. Crockett & Company, Inc. (Cal. App. 4th Dist., Div. 1, Jan. 25, 2017) 2017 Cal. App. LEXIS 50.)

“I Played a Great Horse Yesterday! It Took Seven Horses to Beat Him,” Henny Youngman.

The California Horse Racing Board suspended the license of a quarter horse trainer after finding he violated the board’s regulations by racing horses medicated with a drug the board had temporarily suspended from authorized use. The trial court denied the trainer’s writ of administrative mandamus. The trainer appealed, and the Court of Appeal reversed, finding the temporary suspension of racing horses being treated with the drug was invalid because the temporary regulation had expired. (De La Torre v. California Horse Racing Board (Cal. App. 2nd Dist., Div. 1, Jan. 25, 2017) 2017 Cal. App. LEXIS 53.)

Summary Adjudication Reversed in Civil Rights Case.

Police officers initiated contact with plaintiff for being in a city park after it closed and for riding a bicycle in the dark without a headlight. Plaintiff fled. The officers pursued, detained, and searched him, finding a plastic baggie containing rock cocaine. Plaintiff was charged with possessing a controlled substance, using a weapon in a fight, and resisting an officer. A jury was unable to reach a verdict on the drug possession charge and acquitted plaintiff on the other charges. Plaintiff, who is African American, then brought a civil suit against the city and the officers under the Tom Bane Civil Rights Act (Civ. Code, § 52.1), which authorizes civil actions by persons whose federal or state rights have been interfered with by “threat, intimidation, or coercion.” He also sued under the Ralph Civil Rights Act of 1974 (Civ. Code, §51.7), which authorizes civil actions by individuals subjected to violence or intimidation because of their membership in a protected class. The trial court granted summary adjudication on both claims, and defendant sought extraordinary relief. The Court of Appeal denied relief on the Ralph Act claim, but issued a writ of mandate on plaintiff’s Bane Act claim, stating: “Even assuming the officers had probable cause to arrest [plaintiff], the complained-of conduct asserted here—multiple consensual, roadside, physical body cavity searches—is necessarily intentional conduct that is separate and independent from a lawful arrest for being in a park after it closed, for riding a bicycle in the dark without a headlight, or for resisting a peace officer.” (Simmons v. Superior Court (Cal. App. 4th Dist., Div. 1, Jan. 25, 2017) 2016 Cal. App. LEXIS 1170.)

Allegations of Violations of Building Standards.

Civil Code § 895 et seq. establishes building standards pertaining to new residential construction. In this case, a homeowners’ association sued a supplier of pipe used in the construction of a condominium development. The complaint alleges the supplier supplied defective cast iron pipe manufactured in China throughout the building. The complaint is not premised on the doctrine of strict liability, but a single cause of action against the supplier for violations of the standards set forth in Civil Code §§ 896 and 936. The Court of Appeal held the Civil Code requires homeowners suing a material supplier under the Act to prove that the material supplier “caused in whole or in part, a violation of a particular standard as a result of a negligent act or omission or a breach of contract.” (Acqua Vista Homeowners Association v. MWI, Inc. (Cal. App. 4th Dist., Div. 1, Jan. 26, 2017) 2017 Cal. App. LEXIS 54.)

Failure to Pay State Income Tax.

In California, it is a crime when a person willfully fails to timely file a state tax return with the intent to evade paying the taxes that are owed. In this case, a criminal defendant asked the court to dismiss the charges of violating Revenue and Taxation Code § 19706 (“Any person . . . who, within the time required by or under the provisions of this part, willfully fails to file any return. . . with intent to evade any tax imposed . . . , is punishable by imprisonment in the county jail not to exceed one year, or in the state prison . . .” ). The criminal defendant says his failure to file tax returns is insufficient evidence to show his intent to evade taxes. A magistrate found there was sufficient cause to hold him to answer on a felony complaint. The superior court denied his motion to dismiss pursuant to Penal Code § 995. The Court of Appeal noted, "the evidence presented at the preliminary hearing showed that [the criminal defendant] failed to timely file tax returns for three consecutive years, and for those three years he owed $21,974 in taxes in the first year, $27,205 in the second year, and $6,505 in the third year." The appellate court stated “it is entirely rational to assume that [the criminal defendant] willfully failed to timely file his tax returns precisely because he intended to evade or avoid paying the substantial taxes that he owed,” and denied his petition for extraordinary relief. Thus, the prosecution’s case against the criminal defendant will proceed to trial. (Hudson v. Superior Court (Cal. App. 4th Dist., Div. 3, Jan. 26, 2017) 2017 Cal. App. LEXIS 55.)

Surrogacy Arrangement.

A woman was the gestational carrier for triplets who were conceived in vitro using Father’s sperm and the ova from an anonymous donor after the woman and Father entered into a surrogacy arrangement pursuant to a written agreement. During the pregnancy, the woman developed reservations about the arrangement. She claimed rights as the children’s mother and sought custody of at least one of them. Father filed a petition under Family Code § 7962, which sets forth what such an agreement must contain. The trial court entered judgment in favor of Father. The Court of Appeal discussed the California Supreme Court’s opinion in Johnson v. Calvert (1993) 5 Cal.4th 84, which rejected constitutional challenges to surrogacy agreements and held they are consistent with the public policy of California. In the present case, the appellate court affirmed, ruling the surrogacy agreement does not violate the constitutional rights of the woman or children and contains all the requirements set forth in Family Code § 7962. (C.M. v. M.C. (Cal. App. 2nd Dist., Div. 1, Jan. 26, 2017) 2017 Cal. App. LEXIS 56.)

Nonseverability Provision Resulted in Denial of Petition to Compel Arbitration.

A retailer moved to compel arbitration of its employee’s wage and hour complaint. The employee opposed, arguing the agreement was both procedurally and substantively unconscionable, pointing out one of the provisions: “The parties also waive their right to join or consolidate claims with others or to make claims with others as a representative or a member of a class or as a private attorney general. The waiver in the preceding sentence is a material or important term of this arbitration agreement. If either party initiates or joins in a lawsuit or arbitration against the other party in violation of this waiver and the waiver is found to be unenforceable for any reason by a court or arbitrator, then this entire arbitration agreement is void and unenforceable by the parties.” The trial court determined the entire arbitration agreement is unenforceable, and stated: “In terms of severing the PAGA waiver provision, the paragraph in which it is contained states that if the waiver is found to be unenforceable for any reason by a court, then the entire arbitration agreement is void and unenforceable by the parties. Thus, the PAGA waiver is not severable.” On appeal, the employer did not challenge the trial court’s application of the nonseverability provision in the agreement, and the Court of Appeal concluded the motion to compel arbitration was properly denied, thus affirming the trial court’s ruling. (Montano v. The Wet Seal Retail, Inc. (Cal. App. 2nd Dist., Div. 4, Jan. 30, 2017) 2015 Cal. App. LEXIS 1199.)

Damages Resulting From Trustee’s Refusal to Distribute Trust Assets.

A man created an irrevocable subtrust, but the beneficiary was not aware of it for four years. When she became aware of the subtrust, she sued the co-trustees for damages, alleging had she been made aware of it earlier, she would have used its assets to prevent the loss of her home. Following a court trial, the court entered judgment in favor of the trustees, and the beneficiary appealed. In affirming, the Court of Appeal noted that Probate Code § 16060 requires a trustee to keep a beneficiary “reasonably informed of the trust and its administration,” but there is a difference between a claim for “opportunities lost” and an actionable claim for losses to a trust resulting from the trustees’ breach of fiduciary duty. (Williamson v. Brooks (Cal. App. 2nd Dist., Div. 6, Jan. 31, 2017) 2017 Cal. App. LEXIS 64.)

Plaintiff Entitled to Have Both Economic and Noneconomic Damages Trebled.

Plaintiff sued neighbor for negligence and trespass for cutting down limbs and branches from six trees on plaintiff’s property. Plaintiff sought enhanced damages pursuant to Civil Code § 3346, which gives a court the discretion to treble damages to compensate for the actual detriment for wrongful injuries to timber and trees on the land of another. The trial court trebled plaintiff’s economic damages, but concluded that the statute did not authorize trebling of noneconomic damages for annoyance and discomfort.  In reversing, the Court of Appeal stated: “We conclude that annoyance and discomfort damages are subject to the statutory damage multiplier for trespass to timber, and accordingly reverse and remand the matter to the trial court.” (Fulle v. Kanani (Cal. App. 2nd Dist., Div. 4, Jan. 31, 2017) 2017 Cal. App. LEXIS 65.)

Plaintiffs Permitted to Pursue Emotional Distress Damages Resulting From Trespass and Nuisance.

After suffering significant property damage from a wild fire, a husband and wife sued a utility company for trespass, nuisance, and violation of California Public Utilities Code § 2106. The trial court bifurcated the trial and ordered the damages phase to take place first. The utility company moved to exclude evidence of emotional distress damages. Plaintiffs argued that the husband had suffered from Crohn’s disease for years, and the damage and relocation exacerbated his symptoms and stress, resulting in loss of work and medical expenses. A doctor verified the increased symptoms and stress in a declaration. The trial court excluded all evidence and argument regarding the husband’s emotional distress. Thereafter, the parties stipulated to a judgment pursuant to a settlement agreement, which permitted the plaintiffs to appeal the trial court’s exclusion of evidence of emotional distress. In reversing, the Court of Appeal stated: “We hold [plaintiffs] are legally entitled to present evidence of [the husband’s] emotional distress on their claims for trespass and nuisance as annoyance and discomfort damages recoverable for such torts. Because the trial court excluded evidence of emotional distress damages in their entirety, we reverse.” (Hensley v. San Diego Gas & Electric Company (Cal. App. 4th Dist., Div. 1, Jan. 31, 2017) 2017 Cal. App. LEXIS 67.)


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