Litigation
Litigation Update: April 2019
A monthly publication of the Litigation Section of the California Lawyers Association.
- Senior Editor, Eileen C. Moore, Associate Justice, California Court of Appeal, Fourth District
- Managing Editor, Reuben Ginsburg
- Editors, Dean Bochner, Glenn Danas, Herb Fox, Jessica Riggin, Anne Voigts and Kenneth Wang
Delayed Compensation for Taking of Ancestral Lands.
Around the time of World War II, the United States government took, for little or no compensation, numerous tracts of real property from private Guamanian landowners for military use. Plaintiff is the son of two such landowners. His ancestral land was transferred by the United States to the government of Guam and is presently used as part of an international airport. Plaintiff sued the government of Guam and the airport for violation of his civil rights pursuant to 42 U.S.C. § 1983, and a federal trial court granted summary judgment to the defendants. Affirming, the Ninth Circuit Court of Appeals held that the laws governing compensation for the taking of ancestral property were not sufficiently definite to transform plaintiff’s expectation into a property right under the due process clause, and plaintiff failed to establish an equal protection violation. (Crawford v. Antonio B. Won Pat International Airport Authority (9th Cir., Mar. 1, 2019) 917 F.3d 1081.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/01/17-16942.pdf
When Is a Copyright Actually Registered?
Under 17 U.S.C. § 411(a), no civil action for infringement of a copyright shall be instituted until registration of the copyright. The U.S. Supreme Court was called upon to decide if a copyright is registered as soon as the claimant delivers the application, copies of the work, and the required fee to the Copyright Office, or only after the Copyright Office reviews and registers the copyright. The nation’s high court ruled: “[W]e conclude that ‘registration . . . has been made’ within the meaning of 17 U.S.C. §411(a) not when an application for registration is filed, but when the Register has registered a copyright after examining a properly filed application.” (Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, LLC (U.S., Mar. 4, 2019) 139 S.Ct. 881.)
Permissible Costs in Copyright Litigation.
The Copyright Act (17 U.S.C. § 505) gives federal courts discretion to award “full costs” to a party in copyright litigation, specifying six categories of litigation costs. The U.S. Supreme Court was asked to decide whether courts have discretion to award costs beyond those six specified categories. The nation’s highest court decided: “The Copyright Act authorizes federal district courts to award ‘full costs’ to a party in copyright litigation. That term means the costs specified in the general costs statute, §§ 1821 and 1920.” (Rimini St., Inc. v. Oracle USA, Inc. (U.S., Mar. 4, 2019) 139 S.Ct. 873.)
https://www.supremecourt.gov/opinions/18pdf/17-1625_lkhn.pdf
Personal Injury Award Subject to Taxation.
Plaintiff was injured while working at defendant’s railway yard and sued under the Federal Employers’ Liability Act (45 U.S.C. § 51; FELA). A jury awarded $126,212.78, including $30,000 in lost wages. Defendant moved to offset $3,765 of that amount for taxes. The question before the U.S. Supreme Court was whether a railroad’s payment to an employee for working time lost due to an on-the-job injury is taxable under the Railroad Retirement Tax Act (26 U.S.C. § 3201; RRTA). The high court decided: “FELA damages for lost wages qualify as RRTA-taxable ‘compensation.’ ” (Burlington Northern Santa Fe Ry. v. Loos (U.S., Mar. 4, 2019) 139 S.Ct. 893.)
https://www.supremecourt.gov/opinions/18pdf/17-1042_new_7648.pdf
Public Employees’ Purchase of Additional Retirement Benefits.
In 2012, the California Legislature revised laws government public employee pensions. (Gov. Code, §§ 7222 et seq.) The pension benefit is calculated as a fraction of the employee’s annual compensation at the end of the employee’s career, and that fraction is determined by the employee’s years in public employment. However, beginning in 2003, public employees were granted the opportunity to purchase up to five years of service credit by making appropriate payments into their pension funds for additional retirement service credit (ARS), allowing them to receive pension benefits on the basis of up to five years more public employment than they actually worked. The 2012 reform legislation effectively repealed the opportunity to purchase ARS credit, but it did not alter the rights of employees who had already purchased such credit. The California Supreme Court was asked to decide two issues. The first issue is whether the opportunity to purchase ARS credit was a right protected by the California Constitution’s contract clause (art. I, § 9). California’s highest court decided, “the opportunity to purchase ARS credit was not a right protected by the contract clause.” The second issue was whether the Legislature’s elimination of the ARS benefit constituted an unconstitutional impairment of public employees’ vested rights. The court held that the way it decided the first issue negated the need to decide the second issue. (Cal Fire Local 2881 v. California Public Employees’ Retirement System (Cal., Mar. 4, 2019) 6 Cal.5th 965.)
The Ralph M. Brown Act.
The Ralph M. Brown Act (Gov. Code, § 54950) is California’s open meeting law. A man addressed a meeting of a city’s planning commission, but was denied the opportunity to address the full city council when it held a special meeting the next day to discuss the planning commission’s recommendation. He sent a cease and desist letter to the city but received no response. He filed a petition for writ of mandate to enforce the Brown Act. In response to the petition, the city argued the man had his opportunity to address the issue before the city council took action. The trial court ruled in the city’s favor. Reversing, the Court of Appeal held that the Brown Act does not permit limiting comment at special meetings based on comments at prior, distinct committee meetings. (Preven v. City of Los Angeles (Cal. App. 2nd Dist., Div. 1, Mar. 4, 2019) 32 Cal.App.5th 925.)
Duties of a Trustee in a Nonjudicial Foreclosure.
A commercial developer lost a parcel of real property in a trustee’s sale following a nonjudicial foreclosure. The developer sued the trustee, a title company. The trial court sustained the trustee’s demurrer. Affirming, the Court of Appeal held that a trustee is subject to tort liability only for violation of duties established by the deed of trust and governing statutes, unless the trustee has effectively taken on a different or modified duty by its actions. (Citrus El Dorado, LLC v. Chicago Title Company (Cal. App. 4th Dist., Div. 2 (Mar. 5, 2019) 32 Cal.App.5th 943.)
The Law Is for Thee, but Not for Me.
Plaintiff filed a class action in a matter involving real estate transactions. Relying on an arbitration clause in a residential listing agreement, defendants moved to compel arbitration. Code of Civil Procedure § 1298 is a notice provision applicable to real estate contract arbitration. Subdivision (c) requires the initials of the parties to the arbitration clause. The agreement produced by defendants in support of their motion had plaintiff’s initials, but not defendant’s, next to the required notice. The trial court denied defendant’s motion to compel arbitration. Because defendants neither initialed the arbitration clause nor provided habit and custom evidence in accordance with Evidence Code § 1105 to prove conduct on this occasion in conformity with defendants’ habit or custom, the Court of Appeal affirmed denial of the motion to compel arbitration. (Juen v. Alain Pinel Realtors, Inc. (Cal. App. 6th Dist., Mar. 6, 2019) 32 Cal.App.5th 972.)
Two Unsettled Questions Settled Regarding Default Judgments.
What is settled is that a default judgment cannot exceed the type and amount of relief sought in plaintiff’s operative pleading. (Code Civ. Proc., § 580, subd. (a).) The two unsettled questions presented in this case were: 1) May a default judgment be entered for an amount in excess of the demand in the operative pleading when the plaintiff seeks an accounting or valuation of a business? and 2) Should the comparison of whether a default judgment exceeds the amount of compensatory damages demanded in the operative pleading examine the aggregate amount of nonduplicative damages or instead proceed on a claim-by-claim or item-by-item basis? The Court of Appeal held: “We hold that actions alleging an accounting claim or otherwise involving the valuation of assets are not excused from limitations on default judgments and, in so doing, add our voice to the growing chorus of cases so holding. We also hold that the amounts of damages awarded and demanded are to be compared on an aggregate basis.” (Sass v. Cohen (Cal. App. 2nd Dist., Div. 2, Mar. 7, 2019) 32 Cal.App.5th 1032.)
No Compulsory Buyout of Foreign Entities.
Defendants asserted a cross-claim for dissolution of a general partnership. In response, plaintiff sought to buy out defendant’s interests in several out-of-state limited partnerships and limited liability companies that held title to some of the general partnership’s properties. The trial court concluded that, because there was no pending claim for dissolution of the LP’s and LLC’s, as opposed to the general partnership that owned them, it lacked jurisdiction to order a buyout. Affirming the court’s orders on other grounds, the Court of Appeal held the internal affairs doctrine required the trial court to apply the laws of the states under which the entities were organized, and those laws did not authorize a compulsory buyout. (Boschetti v. Pacific Bay Investments, Inc. (Cal. App. 1st Dist., Div. 4, Mar. 7, 2019) 32 Cal.App.5th 1059.)
Timely Removal to Federal Court.
Plaintiffs sued an insurance company in state court, serving the Insurance Commissioner because the company was out of state. The Insurance Commissioner forwarded the complaint to the insurance company’s designated recipient. The Insurance Commissioner received the complaint on February 9, 2015. The insurance company received the complaint on February 13. A defendant has 30 days after receipt to remove a case to federal court. (28 U.S.C. § 1446(b)(1).) Thirty days from February 13 was March 15, a Sunday. On March 16, the insurance company removed the case to federal court. Plaintiff moved to remand the matter to state court, arguing the removal was untimely because the 30 days began when the designated agent was served. A federal trial court denied plaintiff’s motion. Affirming, the Ninth Circuit Court of Appeals stated, “the thirty-day removal clock under 28 U.S.C. § 1446(b)(1) does not begin upon service on and receipt by a statutorily designated agent, and began in this case only when State Farm actually received the Andersons’ complaint.” (Anderson v. State Farm Mut. Auto. Ins. Co. (9th Cir., Mar. 8, 2019) 2019 U.S. App. LEXIS 6994.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/08/15-35981.pdf
Ministerial Exception.
The California Labor Commissioner alleged a Jewish temple violated various Labor Code provisions by failing to provide its preschool teachers with rest breaks, uninterrupted lunch breaks and overtime pay. The trial court granted the temple’s summary judgment motion, concluding the claims were barred by the ministerial exception, a constitutional doctrine that provides a complete defense to certain employment claims brought against religious institutions by persons classified as ministerial employees. The Court of Appeal reversed because the teachers were not required to have formal Jewish education, to be knowledgeable about Jewish belief and practice, or to adhere to the temple’s theology, concluding the teachers were not ministers for purposes of the ministerial exception. (Su v. Stephen S. Wise Temple (Cal. App. 2nd Dist., Div. 3, Mar. 8, 2019) 32 Cal.App.5th 1159.)
Dismissal for Failure to Timely File a Case Management Statement.
Plaintiff was given a $20,000 citation by the State Department of Public Health for failing to properly care for a resident at its nursing care facility. Plaintiff contested the citation by filing a limited civil action under Health and Safety Code § 1428, subdivision (b). The trial court dismissed the action because for failure to file a case management statement within six months of the department’s answer as required by § 1428, subdivision (b). The appellate division of the superior court affirmed, finding the court must dismiss an action against the department upon failure to timely file a case management statement. (York Healthcare & Wellness Centre LP v. State Dept. of Public Health (L.A. Sup. Ct. App. Div., Mar. 8, 2019) 2019 Cal. App. LEXIS 238.)
Duty to Defend Not a Jury Issue.
Plaintiff was injured after falling into a utility box. He sued, alleging defendants negligently managed, installed, and inspected the box, creating an unstable platform. One of the defendants is a subcontractor hired by the developer to install the utility boxes in a subdivision. The contract between the subcontractor and the developer required the subcontractor to obtain insurance naming the developer as an insured. At trial, the trial court submitted the question of the subcontractor’s duty to defend the developer to the jury, and the jury found plaintiff’s injuries were not caused by the subcontractor. On appeal, the developer contented it was error for the trial court to submit the duty to defend issue to the jury. The Court of Appeal agreed, stating: “Where plaintiff in an underlying tort action alleges that his injuries arose out of the subcontractor’s work, the developer is entitled as a matter of law to a defense under the indemnity clause. It is error to submit the question of the subcontractor’s duty to defend to a jury.” (Centex Homes v. R-Help Construction Co., Inc. (Cal. App. 2nd Dist., Div. 6, Mar. 11, 2019) 2019 Cal. App. LEXIS 1230.)
No Termination of Spousal Support upon Remarriage.
When a couple dissolved their marriage without the assistance of counsel, they agreed husband would keep the house and his retirement fund and wife would receive spousal support for four years. Family Code § 4337 provides that except as agreed in writing by the parties, spousal support terminates upon remarriage. The parties filled out and filed a local county form that contained a box to check if they wanted the spousal support to terminate upon wife’s remarriage. They did not check that box. Before the four years expired, husband filed a request for reimbursement of $27,000 he had paid in spousal support after wife had remarried. The trial court ordered the wife to reimburse that amount and pay $2,700 for husband’s attorney fees. Finding the trial court erred because the parties had agreed in writing that spousal support would not terminate upon remarriage, the Court of Appeal also criticized the wording and format of the county form, which is modeled after Judicial Council Form FL-343, and urged both the county and the Judicial Council to revise their forms. (In re Marriage of Martin (Cal. App. 4th Dist., Div. 2 (Mar. 11, 2019) 32 Cal.App.5th 1195.)
Third Party Records in a Judgment Debtor Examination.
A judgment creditor of a $1,385,601.27 judgment subpoenaed records from a third party bank because the creditor believed the debtor was concealing his assets in certain companies that banked there. The trial court denied the creditor’s motion for an order directing the bank to comply with a subpoena duces tecum. The creditor appealed that order. Code of Civil Procedure § 708.110, subdivision (a) provides that a judgment creditor may apply for a court order requiring the judgment debtor to appear in court to furnish information to aid in enforcement of a money judgment. The Court of Appeal treated the appeal as a petition for a writ of mandate and granted the petition, stating: “We determine that a subpoena duces tecum may be issued to a third party in connection with a judgment debtor examination under section 708.110 . . . .” (Shrewsbury Management, Inc. v. Superior Court (Cal. App. 6th Dist., Mar. 11, 2019) 32 Cal.App.5th 1213.)
Class Certification Ruling Requires a Statement of Reasons.
Plaintiffs, nonexempt maintenance technicians at grocery stores, filed a class action alleging various wage and hour violations. The trial court denied class certification based on conclusory findings without explaining its reasons. Reversing, the Court of Appeal remanded for the trial court to “articulate a statement of reasons for approving or denying class certification.” (Myers v. Raley’s (Cal. App. 3rd Dist., Mar. 12, 2019) 32 Cal.App.5th 1239.)
Ordinance Prohibiting Short-term Rentals.
The proliferation of short-term rentals in a city negatively impacted the quality and character of its neighborhoods, so it passed an ordinance authorizing “home-sharing” (rentals where residents remain on-site with guests) but prohibiting all other short-term home rentals of 30 consecutive days or less. Companies in the business of online facilitation of short-term rentals filed suit, alleging the ordinance is preempted by the Communications Decency Act (47 U.S.C. § 230(c); CDA) and impermissively infringes upon their First Amendment rights. A federal trial court dismissed the complaint for failure to state a claim. Affirming, the Ninth Circuit held there was no preemption by the CDA and that the burden claimed by plaintiffs was incidental and was not a substantial restriction on freedom of speech. (HomeAway.com v. City of Santa Monica (9th Cir., Mar. 13, 2019) 2019 U.S. App. LEXIS 7368.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/13/18-55367.pdf
“We are in a state of disbelief and trying to find whatever answers we can. We, too, are asking why,” Sandy Hook parents.
The mother of a high school junior noted her son wrote in his journal a hit list of 22 students who “must die.” He also wrote “I am God.” The journal contained graphic depictions of violence. The mother made copies and sought guidance from a therapist the next day regarding her feelings. The therapist believed her duty to report was triggered, so the therapist reported the situation to the police. Later that day, the police searched the student’s, and the mother’s, residence and confiscated several weapons, including a rifle and 525 rounds of ammunition belonging to the student. The student told police he used his journal to vent, but would never carry out such thoughts. The school district expelled the student for one year. The student and his parents sued the school district for violation of the student’s civil rights pursuant to 42 U.S.C. § 1983, seeking damages and expungement of any documentation or reference to the student’s expulsion. The complaint alleged violations of the free speech clause of the First Amendment and the equal protection and due process clauses of the Fourteenth Amendment. A federal trial court granted summary judgment in favor of the school district. Affirming, the Ninth Circuit held the school district’s actions did not violate the student’s constitutional rights. (McNeil v. Sherwood School District 88J (9th Cir., Mar. 14, 2019) 2019 U.S. App. LEXIS 7653.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/14/17-35500.pdf
Short-term Loans to Automobile Dealerships.
Plaintiff provides short-term loans to automobile dealers. Whenever plaintiff advanced a specific loan, the dealership signed a separate agreement identifying a particular vehicle as collateral, and plaintiff took possession of that vehicle’s title certificate as security for the loan. The two vehicles in question were sold by the dealerships to consumers under conditional sales contracts, and the conditional sales contracts were then sold and assigned to defendant finance company. The dealerships went out of business without paying back the money plaintiff lent them. Plaintiff, who still held the title certificates for the vehicles, sued defendant for the amounts it should have been paid by the dealerships. The trial court held plaintiff did not have a security interest in the vehicles, and found in favor of defendant. On appeal, plaintiff argued defendant was in the last and best position to prevent loss by simply requiring production of the title certificates from the dealerships or at least verifying who held the title certificates and how much was owed to obtain them. The Court of Appeal agreed with plaintiff, and reversed and remanded the case for the trial court to determine the precise amount of money defendant must pay plaintiff for the title certificates to the vehicles in question. (Ron Miller Enterprises, Inc. v. Lobel Financial Corp., Inc. (Cal. App. 5th Dist., Mar. 14, 2019) 2019 Cal. App. LEXIS 211.)
Copyright Infringement.
Defendant is an online real estate website. Plaintiff is in the business of taking professional photographs for real estate brokers and listing services for marketing purposes. In this action, plaintiff sued defendant for copyright infringement, alleging defendant’s use of its photos exceeded the scope of the licenses plaintiff gave to the brokers and listers that hired it. A jury awarded over $8.27 million in damages to plaintiff. A federal trial court reduced the award to about $4 million after granting various posttrial motions. The Ninth Circuit affirmed in part and reversed and remanded in part, finding that the fair use doctrine did not absolve defendant of liability because defendant had tagged the photographs to be searchable, and that was not a transformative fair use. The appeals court reversed the trial court’s denial of defendant’s JNOV, concluding that there was no substantial evidence of defendant’s willfulness or that it was actually aware of its infringing activity. (VHT, Inc. v. Zillow Group, Inc. (9th Cir., Mar. 15, 2019) 2019 U.S. App. LEXIS 7671.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/15/17-35587.pdf
Tenant Evicted Because the Rent Check Was a Penny Short.
A landlord returned a rent check because the tenant’s rent check was one cent short. The landlord served a three-day notice to quit. After the three days expired, the tenant sent the landlord another check that included not only the penny, but late charges as well. The landlord filed an unlawful detainer action. The jury found defendant tenant did not fail to make a rental payment, and the trial court entered judgment in favor of the tenant. The superior court appellate division found the jury’s finding was not supported by substantial evidence and ordered the matter remanded for a new trial. (Bawa v. Terhune (L.A. Sup. Ct. App. Div., Mar. 15, 2019) 2019 Cal. App. LEXIS 216.)
“Reach for the sky,” Sheriff Woody.
Plaintiff wanted to run for county sheriff, but the Legislature requires that sheriffs have experience and education plaintiff does not have (Elec. Code, § 24004.3). Plaintiff argues that the position of county sheriff is a state office and the Legislature lacks the power to add candidate ballot qualifications for a state office. His argument is largely based on Wallace v. Superior Court of Placer County (1956) 141 Cal.App.2d 771, a case in which a statute required that a candidate for the office of superior court judge be a resident of the county for two years preceding the election. In Wallace, the Court of Appeal concluded that “it was beyond the power of the Legislature to add this qualification in view of the fact that the Constitution has established exclusive qualifications that can be required for the office of superior court judge.” In the current case, the Court of Appeal rejected the notion the Legislature is not empowered to set requirements for a county sheriff because the California Constitution does not prohibit the Legislature from doing so, and, unlike Wallace, “our Constitution directs the state Legislature to provide for the election of the office of county sheriff.” (Boyer v. County of Ventura (Cal. App. 2nd Dist., Div. 6, Mar. 18, 2019) 2019 Cal. App. LEXIS 218.)
The Religious Organization Exemption.
Plaintiff sued the Salvation Army under the Americans with Disabilities Act (42 U.S.C. § 12112), alleging she was subjected to a hostile work environment because she stopped attending religious services and was retaliated against for filing an internal grievance complaining of religion-based mistreatment. A federal trial court granted summary judgment in favor of the Salvation Army, holding that title VII’s religious organization exemption (ROE) protects the Salvation Army from suit. Affirming, the Ninth Circuit Court held that plaintiff’s retaliation and hostile work environment are foreclosed by ROE. (Garcia v. Salvation Army (9th Cir., Mar. 18, 2019) 2019 U.S. App. LEXIS 7993.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/18/16-16827.pdf
Custody and Detention of Aliens Convicted of Dangerous Crimes.
Aliens who have been convicted of certain dangerous crimes may be taken into custody and held by the Department of Homeland Security pending a removal decision (8 U.S.C. § 1226). The Supreme Court of the United States was called upon to decide if the department may take them into custody if they were initially released from custody after serving time for their convictions. The nation’s high court held the aliens may be taken into custody after convictions for certain dangerous crimes whether or not they were arrested by immigration officials as soon as they were released from jail. (Nielsen v. Preap (U.S., Mar. 19, 2019) 2019 U.S. LEXIS 2088.)
https://www.supremecourt.gov/opinions/18pdf/16-1363_a86c.pdf
Scope of a Manufacturer’s Duty to Warn.
Two Navy veterans were exposed to asbestos while working on ships, developed cancer and later died. Equipment on the ships was insulated with asbestos. The decedents’ families sued the equipment manufacturers, contending the manufacturers had a duty to warn when its product required incorporation of a part such as asbestos that it knew was likely to make the integrated product dangerous for its intended users. The defendant manufacturers argued that they had no duty to warn because they did not themselves incorporate the asbestos into their equipment; rather, the Navy added the asbestos after the equipment was on board its ships. The U.S. Supreme Court held in favor of the plaintiffs, stating: “In the maritime tort context, a product manufacturer has a duty to warn when (i) its product requires incorporation of a part, (ii) the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and (iii) the manufacturer has no reason to believe that the product’s users will realize that danger.” (Air & Liquid Systems Corp. v. Devries (U.S., Mar. 19, 2019) 2019 U.S. LEXIS 2087.)
https://www.supremecourt.gov/opinions/18pdf/17-1104_2co3.pdf
Previously we reported:
No Duty Imposed on University to Protect a Fraternity’s Invitees.
An off-campus fraternity held an unauthorized party in the fraternity house’s backyard. When plaintiff and a friend stepped onto a make-shift “stage,” consisting of tables stacked seven feet off the ground, another party goer gave her a sour look and bumped into her, causing her to fall to the ground and sustain serious injuries. Plaintiff sued the university. The trial court denied the university’s motion for summary judgment, and the university petitioned for extraordinary relief. Granting the petition, the appellate court stated that a person generally has no duty to protect another from third party harm, and concluded that the university had no special relationship with either the plaintiff or the fraternity giving rise to a duty of care, the negligent undertaking doctrine was inapplicable, and the Rowland v. Christian (1968) 69 Cal.2d 108 factors, on balance, weighed against imposing a duty on the university to protect a fraternity’s invitees from the risk of harm at an off-campus fraternity party. (University of Southern California v. Superior Court (Cal. App. 2nd Dist., Div. 4, Dec. 19, 2018) 30 Cal.App.5th 429.)
The lastest:
Plaintiff sued the fraternity, a nonprofit corporation operating as a national fraternal organization, because it was in the backyard of its local chapter that she sustained her injury. The trial court granted summary judgment to the fraternity, concluding it owed no duty of care and was not vicariously liable for its local chapter’s actions. The Court of Appeal affirmed, noting that for an agency relationship to exist, the principal must have a sufficient right to control the relevant aspect of the agent’s day-to-day operations. (Barenborg v. Sigma Alpha Epsilon Fraternity (Cal. App. 2nd Dist., Div. 4, Mar. 19, 2019) 2019 Cal. App. LEXIS 222.)
Law Firm Pursuing Nonjudicial Foreclosure Does Not Make it a Debt Collector.
Plaintiff bought a home in Colorado with a $329,940 loan secured by the property and defaulted two years later. The lender bank hired a law firm to act as its agent and conduct a nonjudicial foreclosure. The law firm sent plaintiff a statutory letter stating it was instructed to commence foreclosure. Plaintiff filed an action alleging violation of the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.). Eventually the case reached the U.S. Supreme Court. The high court stated it was called upon to decide if a person principally involved in the enforcement of security interests is a “debt collector” under the act. The Supreme Court held that those whose principal purpose is the enforcement of security interests are outside the scope of the definition of a debt collector under the act, “where the business is engaged in no more than the kind of security-interest enforcement at issue here—nonjudicial foreclosure proceedings.” (Obduskey v. McCarthy & Holthus LLP (U.S., Mar. 20, 2019) 2019 U.S. LEXIS 2090.)
https://www.supremecourt.gov/opinions/18pdf/17-1307_7lho.pdf
Previously we reported:
Alleged Violation of the Fair Credit Reporting Act.
Defendant operates a website that compiles consumer data and builds consumer information profiles. It markets its services to businesses. Plaintiff alleges defendant published an inaccurate report about him falsely stating his age, marital status, wealth, education level, and profession, and included a photo of a different person. Plaintiff sued under the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), alleging that such errors harmed his employment prospects at a time when he was out of work and that he continues to be unemployed and suffers emotional distress as a consequence. The district court dismissed the complaint for lack of standing under article III of the U.S. Constitution, finding plaintiff alleged only a bare violation and did not adequately plead that such violation caused him to suffer an actual injury-in-fact. The Ninth Circuit reversed in Robins v. Spokeo (9th Cir., 2014) 742 F.3d 409. On certiorari, the Supreme Court vacated that opinion, noting the Ninth Circuit’s opinion did not devote appropriate attention to whether the alleged injury is sufficiently concrete as well as particularized as to the plaintiff. On remand, the Ninth Circuit held that plaintiff’s injuries were sufficiently concrete for purposes of article III standing. (Robins v. Spokeo, Inc. (9th Cir., Aug. 15, 2017) 867 F.3d 1108.)
The latest:
In another class action, the parties negotiated a settlement, agreeing that defendant would distribute more than $5 million to cy pres recipients. The U.S. Supreme Court granted a hearing in the case to review whether cy pres settlements satisfy the requirement that class settlements be fair, reasonable, and adequate. The Supreme Court vacated the judgment of the Ninth Circuit affirming the settlement and remanded the matter for the lower courts to consider standing pursuant to Spokeo, Inc. v. Robins (2016) 136 S.Ct. 1540. (Frank v. Gaos (U.S., Mar. 20, 2019) 2019 U.S. LEXIS 2089.)
Special Verdict Form Inadequate.
Residents of a mobilehome park sued the park’s owners and managers for failure to maintain the park. A jury returned a special verdict in favor of the residents, awarding compensatory and punitive damages. The trial court reduced the award of punitive damages. Both plaintiffs and defendants appealed. The Court of Appeal reversed the awards of compensatory and punitive damages, stating: “Although the jury’s award of economic damages may have included unspecified amounts that could be upheld on appeal if the special verdict form had segregated them, it is clear from the record that the vast majority of the economic damages awarded represented reimbursement for overpayment of rent and diminution in value of homes caused by high rent. Because the award of such damages cannot be sustained under any of the theories of liability presented to the jury and it is impossible to sever any properly awarded damages from improperly awarded damages.” (Bevis v. Terrance View Partners, LP (Cal. App. 4th Dist., Div. 1, Mar. 21, 2019) 2019 Cal. App. LEXIS 237.)
Federal Arbitration Act Exemption.
Plaintiff was a delivery driver for a beverage company until his employment was terminated. He filed a class action against his former employer. The employer unsuccessfully moved to compel arbitration. On appeal, the employer argued that the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) required arbitration in accordance with the parties’ arbitration agreement. Both the trial court and the appellate court agreed with plaintiff that the action satisfied a statutory exemption to the FAA for transportation workers engaged in interstate commerce. (Nieto v. Fresno Beverage Co., Inc. (Cal. App. 5th Dist., Mar. 22, 2019) 2019 Cal. App. LEXIS 240.)
Repeated Telephone Calling After Default on Student Loans.
Plaintiff received loans from the Federal Family Education Loan Program to study at a university. After experiencing some financial difficulty, she stopped repaying her loans. Then five different debt collection companies started calling her about the money she owed. She received prerecorded messages many times in short intervals on a phone number she neither provided in connection with her student loans nor consented to be called on. She contended the companies were combining the use of skip tracers and auto dialers. Defendant operated under a government program by which it guaranteed student loans made by private lenders and then took ownership of the loan if a student-borrower defaulted. In its collection efforts, defendant hired other companies to service the loans. Plaintiff sued defendant under the Telephone Consumer Protection Act (47 U.S.C. § 227; TCPA). A federal trial court granted summary judgment to defendant. On appeal, defendant argued it did not have day-to-day contact with the loan servicers. Reversing, the Ninth Circuit held that a reasonable jury could find that defendant ratified the debt collectors’ calling practices that allegedly violated the TCPA. (Henderson v. United Student Aid Funds, Inc. (9th Cir., Mar. 22, 2019) U.S. App. LEXIS 8597.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/22/17-55373.pdf
“The facts in this case are undeniably tragic,” the Ninth Circuit Court of Appeals.
In February 2015, the San Francisco sheriff informed the U.S. Department of Homeland Security that the sheriff would not honor Immigration and Customs Enforcement’s (ICE) detainer requests or notify ICE of the pending release from jail of undocumented aliens absent a judge’s order or a warrant. On March 13, 2015, the sheriff ordered employees not to provide ICE nonpublic information about persons released from jail. A man who had been removed from the United States at least five times previously was released from jail on April 15, 2015, and ICE was not notified of his release. On July 1, 2015, four days after a gun was stolen from a U.S. ranger, the man shot and killed a 32-year-old woman near Pier 14 of the San Francisco Embarcadero. After the shooting, ICE stated: “If the local authorities had merely notified [ICE] that they were about to release this individual into the community, ICE could have taken custody of him and had him removed from the country— thus preventing this terrible tragedy.” The decedent’s family sued the city, county, and federal government for negligence and violation of civil rights. A federal trial judge dismissed the action, except the allegations against the United States because its ranger did not properly secure his handgun. Affirming the partial dismissal, the Ninth Circuit noted the case is “undeniably tragic,” but California law bars plaintiffs’ claims. (Steinle v. City & County of San Francisco (9th Cir., Mar. 25, 2019) 2019 U.S. App. LEXIS 8784.)
http://cdn.ca9.uscourts.gov/datastore/opinions/2019/03/25/17-16283.pdf
Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
Defendant petitioned the Court of Appeal for a writ of mandate directing the trial court to grant its motion to quash service of a summons. Defendant argues that plaintiffs used an agent to serve a summons in Hong Kong without first making a request to the Hong Kong government’s Central Authority, rendering the service ineffective under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters. Denying the requested relief, the appellate court held, “plaintiffs were permitted to use an agent to serve Whyenlee personally in Hong Kong without first making a request to Hong Kong’s Central Authority.” (Whyenlee Industries Ltd. v. Superior Court (Cal. App. 1st Dist., Div. 4, Mar. 22, 2019) 2019 Cal. App. LEXIS 241.)
Service of Process under the Foreign Services Immunities Act of 1976.
Under the Foreign Sovereign Immunities Act of 1976 (28 U.S.C. §1602 et seq.), a foreign state may be served by means of a mailing that is “addressed and dispatched . . . to the head of the ministry of foreign affairs of the foreign state concerned.” The question before the U.S. Supreme Court was whether this provision is satisfied when a service packet that names the foreign minister is mailed to the foreign state’s embassy in the United States. The nation’s highest court held that it is not, and that the statute requires a mailing be sent directly to the foreign minister’s office in the minister’s home country. (Republic of Sudan v. Harrison (U.S., Mar. 26, 2019) 2019 U.S. LEXIS 2293.)
https://www.supremecourt.gov/opinions/18pdf/16-1094_3d94.pdf
“Every creature is better alive than dead, men and moose,” Henry David Thoreau.
Plaintiff traveled by hovercraft on the Nation River in Alaska to reach his favorite moose hunting ground. The part of the river where he landed flows through a national preserve managed by the National Park Service. Park rangers informed him that a Park Service regulation prohibits the use of hovercrafts on rivers within any federal preserve or park. Plaintiff forewent his moose hunt and headed home, where he sued the Park Service seeking an injunction that would allow him to resume using his hovercraft on his accustomed route. The case eventually reached the U.S. Supreme Court, where plaintiff claimed that when Congress enacted the Alaska National Interest Lands Conservation Act (16 U.S.C. § 3101 et seq.), Alaska was an exception to the act. He contended the Nation River is not owned by the federal government, so the Park Service cannot ban hovercrafts on it. The high court decided the Nation River is not public land and the Park Service cannot regulate plaintiff’s activities on the part of the river where plaintiff landed, concluding: “That means Sturgeon can again rev up his hovercraft in search of moose.” (Sturgeon v. Frost (U.S., Mar. 26, 2019) 2019 U.S. LEXIS 2294.)
NOT a Dangerous Condition of Public Property.
Plaintiff was injured on an inflatable slide at a carnival presented by a booster club on the grounds of a public school. He sued the school district, and the trial court granted summary judgment to the district. Noting that plaintiff’s injuries resulted from the alleged negligence of the booster club during its use of school grounds, and not from the school district’s ownership and maintenance of the grounds, the Court of Appeal affirmed, stating: “As a matter of law the inflatable slide was not a dangerous condition of public property within the meaning of Government Code section 835.” (Grossman v. Santa Monica-Malibu Unified School District (Cal. App. 2nd Dist., Div. 7, Mar. 25, 2019) 2019 Cal. App. LEXIS 256.)
Notice of Intent to File Medical Malpractice Action Is Not a Government Claim.
Plaintiff served a notice of intent to file a medical malpractice action (Code Civ. Proc., § 364). Unaware that the medical facility was owned by a governmental entity, plaintiff did not present a government claim. The trial court held that the notice of intent was the functional equivalent of a government claim. Granting the hospital’s petition for writ of mandate, the appellate court held that serving a notice of intent to file a medical malpractice action does not alter the jurisdictional deadlines governing an application for relief from the claims presentation requirement under the Government Claims Act (Gov. Code, § 810 et seq.). (Last Frontier Healthcare District v. Superior Court (Cal. App. 3rd Dist., Mar. 26, 2019) 2019 Cal. App. LEXIS 259.)
State Court, Federal Court, State Court . . . What’s a Plaintiff to Do?
After a professional football game, plaintiff was shot in the stadium parking lot. Plaintiff sued the team in superior court alleging breach of contract, negligence, and liability under the rescue doctrine. A few years later, plaintiff learned the team had converted into a Delaware limited liability company, so he sued the team and its owner in federal district court in California. Thereafter, plaintiff dismissed the state action. The federal court dismissed the action for lack of subject matter jurisdiction, so plaintiff filed another state court action. The superior court sustained the team’s demurrer because the action was time barred. The Court of Appeal affirmed, finding the doctrine of equitable tolling was inapplicable because plaintiff failed to allege facts showing that he dismissed the first action reasonably and in good faith. (Long v. Forty Niners Football Company, LLC (Cal. App. 1st Dist., Div. 4, Mar. 26, 2019) 2019 Cal. App. LEXIS 262.)
Rule 10b-5.
The U.S. Supreme Court was called upon to decide whether those who do not make statements, but who nonetheless disseminate false or misleading statements to potential investors with the intent to defraud, violate rule 10b-5(a) and (c) of the Securities and Exchange Commission rules (17 C.F.R. § 240.10b-5). The nation’s high court held that even if the defendant did not “make” the operative statements, the dissemination of the false statements with the intent to defraud can fall within the scope of the rule. (Lorenzo v. Securities and Exchange Commission (U.S., Mar. 27, 2019) 2019 U.S. LEXIS 2295.)
https://www.supremecourt.gov/opinions/18pdf/17-1077_21o3.pdf
Offer to Correct Under the Consumer Legal Remedies Act.
Plaintiff alleged defendant violated the Consumer Legal Remedies Act (Civ.Code, § 1750 et seq.; CLRA) and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) in connection with the lease of a vehicle. Civil Code § 1782b provides that a consumer may not bring an action for damages for violation of the CLRA if, after giving the business 30 days’ advance notice of the alleged violations, the business provides a timely and appropriate correction, repair, replacement, or other remedy. Here, the business offered to pay off the outstanding loan balance and pay $5,126 to reimburse the down payment and monthly payments and $2,750 for attorney fees and costs within 10 days after return of the vehicle. But the business also required plaintiff to release claims not subject to the CLRA’s prelitigation notice requirement as well as the business’s subjective approval of the vehicle’s condition. The trial court concluded the business made an appropriate offer of correction under the CLRA and granted summary judgment in its favor. Reversing, the Court of Appeal expressed concern that the defendant business’s offer to correct included conditions that would make it difficult or impossible to pursue other claims, such as the UCL claim, and was not an appropriate offer to correct. (Valdez v. Seidner-Miller, Inc. (Cal. App. 2nd Dist., Div. 7, Mar. 27, 2019) 2019 Cal. App. LEXIS 266.)
Injured Independent Contractor.
Plaintiff, an independent contractor working on defendant’s premises, fell from a ladder while performing maintenance work. The ladder he used had been left at a wall close to the problem area by another independent contractor. It turned out that the ladder was not a straight ladder, but the upper half of an extension ladder. Because it was intended to be used only with its bottom half, it did not have the proper footing. In fact, the ladder that plaintiff used had a caution label that read: “CAUTION” and “THIS LADDER SECTION IS NOT DESIGNED FOR SEPARATE USE.” Plaintiff was seriously injured and sued defendant, alleging it was responsible for unsafe conditions in the work place. The trial court granted defendant’s motion for summary judgment. Affirming, the Court of Appeal determined there was no liability pursuant to the holdings in Privette v. Superior Court (1993) 5 Cal.4th 689, Hooker v. Department of Transportation (2002) 27 Cal.4th 198, and Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659. (Johnson v. Raytheon Co. (Cal. App. 2nd Dist., Div. 8, Mar. 27, 2019) 2019 Cal. App. LEXIS 268.)
Pretrial Diversion for Military/Veterans.
A man who has been in the Army for ten years with multiple deployments, enduring stressful and traumatic experiences while serving, is now a binge drinker, but had no prior driving under the influence arrests and no criminal record. In the current case, he was arrested while driving under the influence of alcohol. He asked the court to place him in the court’s pretrial diversion program pursuant to Penal Code § 1001.80. That statute provides that a person who is a current or former member of the military and may be suffering from specified conditions as a result of military service may be placed in a diversion program. If the person successfully completes the program, the criminal charge is dismissed. The prosecution prevailed upon the court to deny diversion because, even though the charged crime was a misdemeanor as required under the statute, it involved driving under the influence, and the court, citing public safety as its reason, denied defendant’s request for military diversion. Defendant sought and was denied extraordinary relief in the appellate division of the superior court. He thereafter filed a petition for writ of mandate in the Court of Appeal. The appellate court applied the abuse of discretion standard of review and granted the petition, stating: “Simply put, the trial court in this case did not have discretion to deny Wade’s request based on the inherently dangerous nature of driving while intoxicated, because the Legislature implicitly considered the commonly occurring features of DUI offenses but nevertheless elected to include them in the statutory program without restriction.” (Wade v. Superior Court (Cal. App. 6th Dist., Mar. 28, 2019) 2019 Cal. App. LEXIS 277.)
Statute of Limitations in Malicious Prosecution Action Against a Lawyer.
The underlying action was for unlawful detainer. The current action is for malicious prosecution against the plaintiff and the plaintiff’s lawyer in the underlying action, filed two years minus two days from the date the unlawful detainer action was voluntarily dismissed. The lawyer filed a motion for judgment on the pleadings, contending the one-year statute of limitations in Code of Civil Procedure § 340.6, subdivision (a) applies. The trial court agreed and entered judgment in favor of the lawyer. Affirming, the Court of Appeal held that because the malicious prosecution action was filed more than one year after the unlawful detainer action’s termination, the current suit is time-barred against the lawyer. (Connelly v. Bornstein (Cal. App. 1st Dist., Div. 5, Mar. 28, 2019) 2019 Cal. App. LEXIS 280.)
https://www.courts.ca.gov/opinions/documents/A152375.DOCX
Litigation Privilege Inapplicable to Fraudulent Transfer Claim.
After obtaining a judgment against a debtor, the creditor sued the debtor and his brother for fraudulent transfer under the Uniform Voidable Transactions Act (Civ. Code, § 3439). The creditor argued that the debtor and his brother attempted to thwart attempts to execute on the judgment by colluding in a sham lawsuit, stipulating to a judgment, and allowing the nondebtor brother to execute on the sham judgment and, thus, hide the debtor brother’s money. The trial court sustained the brothers’ demurrer based on the litigation privilege (Civ. Code, § 47, subd. (b)). The Court of Appeal reversed, stating: “We conclude the litigation privilege of section 47(b) does not bar the fraudulent transfer cause of action as alleged because the gravamen of that cause of action is the noncommunicative act of transferring assets by executing on a judgment.” (Chen v. Berenjian (Cal. App. 4th Dist., Div. 3, Mar. 28, 2019) 2019 Cal. App. LEXIS 275.)
Okay for Husband to Rant About Divorce on Facebook.
In a divorce proceeding, wife successfully sought a domestic violence restraining order against husband. She presented evidence husband showed up uninvited to her house, blocked the driveway with his truck, blocked the front door, sent the police to the house to do a “wellness check,” wrote in detail about the divorce on Facebook, and concluded emails to her and her attorney with F.O.A.D [f*** off and die]. The restraining order included the language, “Neither party is to discuss any aspect of the case with the minor children until further order of the court―including Facebook postings [about the] subject case matter.” The Court of Appeal found that substantial evidence supported the trial court’s findings, but the restraining order was overbroad to the extent it prohibited husband from posting on Facebook. (Molinaro v. Molinaro (Cal. App. 2nd Dist., Div. 3, March 28, 2019) 2019 Cal. App. LEXIS 281.)
A Complicated Case Dismissed Under the Five-year Rule.
The trial court dismissed a case filed as a class action under the five-year rule found in Code of Civil Procedure § 583.310 (“An action shall be brought to trial within five years after the action is commenced against the defendant.”). The Court of Appeal addressed two issues of first impression: 1) A pretrial order dismissing class action claims, while it is immediately appealable under the death knell doctrine, does not constitute a trial under the five-year rule; and 2) An appellate decision reversing a death knell order does not trigger the three-year extension under Code of Civil Procedure § 583.320, subdivision (a)(3) (“If a new trial is granted in the action the action shall again be brought to trial within the following times: [¶] . . . [¶](3) If on appeal an order granting a new trial is affirmed or a judgment is reversed and the action remanded for a new trial, within three years after the remittitur is filed by the clerk of the trial court.”). (Rel v. Pacific Bell Mobile Services (Cal. App. 1st Dist., Div. 5, Mar. 29, 2019) 2019 Cal. App. LEXIS 290.)
No Jurisdiction for Court to Hear 664.6 Motion.
The trial court denied a motion to enforce a settlement agreement pursuant to Code of Civil Procedure § 664.6. The settlement agreement included the statutory language, “the court may retain jurisdiction over the parties to enforce the settlement,” and the same language was added to the request for dismissal (Judicial Council form CIV-110). When the case was on appeal, the appellate court asked for further briefing concerning whether the trial court had retained jurisdiction because there was nothing in the record to indicate the trial court’s actually retaining jurisdiction. The moving parties claimed the language added to the CIV-110 request for dismissal form was a request for the court to retain jurisdiction, but the appellate court noted the form was not signed by the parties. Finding the trial court lacked jurisdiction to hear the 664.6 motion, the Court of Appeal affirmed. (Mesa RHF Partners, L.P. v. City of Los Angeles (Cal. App. 2nd Dist., Div. 1, Mar. 29, 2019) 2019 Cal. App. LEXIS 291.)
Choice-of-law Provision in Arbitration Agreement Did Not Mean the Parties Chose Not to Apply the Federal Arbitration Act.
An employment action involved individual and Private Attorneys General Act (Lab. Code §§ 2698-2699.5) claims. The trial court severed and stayed the PAGA claims, but despite an arbitration agreement, the court ordered arbitration on only a few, but not all, of the individual claims, basing its ruling on a provision in the arbitration agreement that stated: “This Agreement shall be governed by and shall be interpreted in accordance with the laws of the State of California.” The court reasoned that while the Federal Arbitration Act (9 U.S.C. §1 et seq.) applied, the quoted language meant the parties wanted California law to govern their relationship. The Court of Appeal reversed, agreeing with the employer that the choice-of-law provision did not mean the parties wanted to oust arbitration from their arbitration agreement. (Bravo v. RADC Enterprises, Inc. (Cal. App. 2nd Dist., Div. 8, Mar. 29, 2019) 2019 Cal. App. LEXIS 285.)
Homeowners Entitled to Tax Relief.
Homeowners who are older than 55 tried to transfer their tax basis from their original home to a newly constructed replacement home pursuant to Revenue and Taxation Code § 69.5. The county said they were not entitled to do so because they formed a limited liability company to purchase the land on which their new home stands. The trial court agreed with the county, reasoning that the use of an LLC to construct the replacement home precluded the claim for tax relief as a matter of law. Reversing, the Court of Appeal stated: “They are precisely the persons for whom the statute was intended to provide property tax relief. The fact that, to satisfy a bank requirement, they made temporary use of an LLC before taking title to their replacement property provides no justification under the terms of the statute or in logic or fairness for denying them the relief provided by section 69.5.” (Wright v. County of San Mateo (Cal. App. 1st Dist., Div. 4, Mar. 29, 2019) 2019 Cal. App. LEXIS 287.)
Disclosure of Peace Officer Records.
Penal Code § 832.7 was recently amended, expanding public access to certain peace officer records maintained by state and local agencies. A police officer association argued the amended statute only applies to disclosure of records prior to 2019. The Court of Appeal found the argument meritless, stating: “Although the records may have been created prior to 2019, the event necessary to ‘trigger application’ of the new law—a request for records maintained by an agency— necessarily occurs after the law’s effective date.” (Walnut Creek Police Officers’ Assn. v. City of Walnut Creek (Cal. App. 1st, Div. 4, Mar. 29, 2019) 2019 Cal. App. LEXIS 289.)