Litigation
Litigation Update: June 2020
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, Division Three
- Managing Editor, Reuben Ginsburg
- Editors, Dean Bochner, Julia Shear Kushner, Jessica Riggin, and David Williams
Truth Can Be Stranger Than Fiction.
Shortly before her husband’s death, plaintiff arranged to extract his sperm in hopes of one day conceiving a child with it. Plaintiff stored the sperm in a tissue bank that was ultimately acquired by defendants. When plaintiff requested the sperm ten years later, defendants disclosed that they could not locate it. Plaintiff brought suit, asserting contract and tort claims based on the loss of her ability to have a child biologically related to her deceased husband. The trial court sustained demurrers to the tort claims, concluding that plaintiff was not legally entitled to use her husband’s sperm for posthumous conception and therefore suffered no injury from its loss. The trial court also ruled that plaintiff could not recover damages for emotional distress or loss of fertility interests under her breach of contract claim. Affirming, the Court of Appeal stated: “Under California law, the donor’s intent controls the disposition of his or her gametic material upon death. The only allegations regarding plaintiff’s husband’s intent were that plaintiff, at the time she requested her husband’s sperm be extracted, represented to his physicians that she and her husband had always wanted to have children together, and provided letters and cards written by her husband similarly indicating a desire to have children with his wife. Although those allegations, if true, would establish that the husband wished to have children with his wife while he was alive, they fail as a matter of law to establish that the husband intended his wife to conceive a child with his sperm posthumously.” (Robertson v. Saadat (Cal. App. 2nd Dist., Div. 1, May 1, 2020) 48 Cal.App.5th 630.)
Visual Depiction of a Minor in Sexual Conduct.
Petitioner is a noncitizen who was convicted in Nevada of possessing the visual depiction of sexual conduct of a person under 16 years old. The Immigration and Nationality Act authorizes removal of a noncitizen who, after admission to the United States, “is convicted of an aggravated felony,” a term defined to include “sexual abuse of a minor.” (8 U.S.C. §§ 1101(a)(43)(A), 1227(a)(2)(A)(iii).) The Board of Immigration Appeals found petitioner removable under the act on the ground that his conviction constituted “sexual abuse of a minor.” The Ninth Circuit Court of Appeals disagreed, concluding that the offense of which he was convicted does not qualify as “sexual abuse of a minor.” The court explained: “The Nevada statute punishes possession of a visual depiction of a minor engaged in sexual conduct, but knowing and willful possession of the image alone renders an offender guilty. The offender himself need not have participated in any form of sexual conduct with the minor who is depicted in the image. . . . [T]he minor depicted in the image is not the direct object of the offender’s conduct, which is a necessary predicate for the offense to qualify as ‘sexual abuse of a minor.’ ” The court remanded the matter to the board for further proceedings. (Mero v. William P. Barr (9th Cir., May 1, 2020) 957 F.3d 1021.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/01/17-70929.pdf
Truancy.
A high school student kept missing school. The school sent truancy notices to her parents and asked the parents to contact the school. Eventually the police issued a citation for habitual truancy, and the district attorney filed a wardship petition against the student. After conducting a trial, the juvenile court sustained the wardship petition. On appeal, the student argued that the juvenile court lacked jurisdiction over her. The Court of Appeal rejected this contention and affirmed. The California Supreme Court granted review to determine whether the statutory scheme that governs juvenile truancy requires (1) the use of a school attendance review board (SARB) or a similar truancy mediation program, or (2) the issuance of a fourth truancy report before the juvenile court may exercise jurisdiction over a minor on the basis of truancy. California’s high court held: “We hold that the juvenile court may exercise jurisdiction in a formal wardship proceeding on the basis of the minor having ‘four or more truancies within one school year’ under Welfare and Institutions Code section 601, subdivision (b) if a fourth truancy report has been issued to the attendance supervisor or the superintendent of the school district, even if the minor has not been previously referred to a SARB or a similar truancy mediation program. Because [the student’s] school had sent at least four truancy reports to the superintendent of the school district before the wardship petition was filed against [her], we affirm the Court of Appeal’s judgment that the juvenile court possessed jurisdiction over [her].” (In re A.N. (Cal., May 4, 2020) 2020 WL 2110980.)
Presidential Proclamation States that No Means to Provide for Own Health Coverage Means No Entry Into the USA.
In October 2019, the President issued Proclamation No. 9945, entitled “Suspension of Entry of Immigrants Who Will Financially Burden the United States Healthcare System, in Order to Protect the Availability of Healthcare Benefits for Americans.” Under the proclamation, Medicaid does not constitute “approved health insurance” for individuals over the age of 18. A district court issued a nationwide preliminary injunction prohibiting implementation of the proclamation. The government appealed and filed an emergency motion to stay the preliminary injunction. Denying the motion, the Ninth Circuit stated: “Staying the injunction would injure both the plaintiff class and third parties, and the public interest weighs against entering a stay. The preliminary injunction preserves the status quo during the pendency of this appeal. The district court did not abuse its discretion in determining the scope of the preliminary injunction.” (Doe #1 v. Trump (9th Cir., May 4, 2020) 957 F.3d 1050.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/04/19-36020.pdf
Adding an Alter Ego Defendant to a Judgment.
The first paragraph of the Court of Appeal’s opinion says it all: “In petitioning the trial court to amend a judgment to add an alter ego defendant, must the plaintiff proceed by a motion in the original action, or may plaintiff proceed by complaint in an independent action on the judgment? Either procedure will do.” (Lopez v. Escamilla (Cal. App. 2nd Dist., Div. 6, May 4, 2020) 48 Cal.App.5th 763.)
Previously we reported:
Who Holds the Attorney Work Product Privilege…the Law Firm or the Individual Lawyer?
After joining a law firm, an attorney signed an employment agreement stating that he “agreed to conform to the rules, regulations and policies of the firm.” He was provided an employee handbook stating that all records and files, emails, and voice mails were the property of the firm. After the attorney left the firm, the firm was served with a subpoena for documents and email communications concerning one of his projects, and the firm produced emails authored by the attorney. When the attorney was subpoenaed for deposition, he demanded that the firm sequester and return his “privileged work product” emails. When the firm did not respond, the attorney sued the firm, alleging various torts. The attorney filed a motion for summary adjudication seeking a determination that the law firm had a legal duty to protect his work product from improper disclosure to third parties under Code of Civil Procedure § 2018.030. The trial court granted the motion, and the law firm sought writ relief. The Court of Appeal issued a preemptory writ of mandate directing the trial court to vacate its order, stating: “We conclude that under the circumstances of this case, the holder of the attorney work product privilege is the employer law firm . . . ” (Tucker Ellis LLP v. Superior Court (Cal. App. 1st Dist., Div. 3, June 21, 2017) 12 Cal.App.5th 1233.) https://www.courts.ca.gov/opinions/archive/A148956.PDF
The latest:
The trial court granted the law firm’s motion for judgment on the pleadings. The attorney appealed, raising three issues: (1) did the Court of Appeal’s 2017 opinion compel the trial court to grant the law firm’s motion for judgment on the pleadings? (2) is the litigation privilege a complete bar to the attorney’s claims? and (3) was the attorney entitled to leave to amend his complaint? Affirming, the Court of Appeal concluded: (1) law of the case bars each of the attorney’s causes of action, (2) the trial court did not err in finding the litigation privilege was a complete bar to the lawsuit, and, (3) the trial court correctly denied the attorney’s request to amend the complaint because amendment would have been futile. (Nelson v. Tucker Ellis, LLP (Cal. App. 1st Dist., Div. 3, May 5, 2020) 48 Cal.App.5th 827.) https://www.courts.ca.gov/opinions/documents/A153661.PDF
Expert Excluded from Testifying.
In an action under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.), the trial court precluded plaintiff’s mechanical expert from testifying that a faulty fuel pump relay was one of the possible causes of a claimed lack of power in plaintiff’s vehicle. After the jury returned a defense verdict, plaintiff appealed. Affirming, the Court of Appeal stated the expert did not provide a rational explanation of how a faulty fuel pump relay could have caused the loss of power since the condition existed both before and after the fuel pump relay was repaired. (Waller v. FCA US LLC (Cal. App. 2nd Dist., Div. 2, May 6, 2020) 48 Cal.App.5th 888.)
Tactics to Gain Possession in Unlawful Detainer Actions.
A landlord filed unlawful detainer actions against its tenants as unlimited civil cases, waived its right to damages, and obtained summary judgment, in order to obtain judgments of possession. After summary judgment was granted, the tenants moved to reclassify the actions, arguing that once damages were waived, the landlords no longer claimed the jurisdictional amount of damages for an unlimited civil case. The trial court denied the motion to reclassify. Denying the tenants’ writ petitions, the Court of Appeal stated: “[I]f the case has reached a stage where there is a ‘judgment to be rendered, as determined at the trial or hearing,’ then the court is no longer required to reclassify it even if the judgment is one that might have been rendered in a limited civil case.” (Hiona v. Superior Court (Cal. App. 1st Dist., Div. 5, May 6, 2020) 48 Cal.App.5th 866.)
https://www.courts.ca.gov/opinions/documents/A158689.PDF
“The Ninth Circuit’s radical transformation of this case goes well beyond the pale,” Justice Ruth Bader Ginsburg.
Defendant’s clients, most of them from the Philippines, worked without authorization in the home health care industry in the United States. Between 2001 and 2008, defendant assisted her clients in applying for a “labor certification” that once allowed certain aliens to adjust their status to that of lawful permanent resident permitted to live and work in the United States. Defendant knew her clients did not meet the application-filing deadline; hence, their applications could not put them on a path to lawful residence. Nevertheless, she charged each client $5,900 to file an application with the Department of Labor and another $900 to file with the U.S. Citizenship and Immigration Services. For her services in this regard, she collected more than $3.3 million from her unwitting clients. In district court, defendant was convicted on two counts under 8 U.S.C. §1324, which makes it a federal felony to “encourag[e] or induc[e] an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of law.” The Ninth Circuit found the statute to be unconstitutionally overbroad. The U.S. Supreme Court granted the government’s petition for review. The high court determined the Ninth Circuit abused its discretion by raising that constitutional issue when it was not raised by the parties. The case was remanded to the Ninth Circuit “for an adjudication of the appeal attuned to the case shaped by the parties rather than the case designed by the appeals panel.” (United States v. Sineneng-Smith (U.S., May 7, 2020) 140 S.Ct. 1575.)
Convictions of Fort Lee Officials Who Closed Bridge for Political Purposes Reversed.
For four days in September 2013, traffic ground to a halt in Fort Lee, New Jersey. The cause was an unannounced realignment of 12 toll lanes leading to the George Washington Bridge, an entryway into Manhattan administered by the Port Authority of New York and New Jersey. For decades, three of those access lanes had been reserved during morning rush hour for commuters coming from the streets of Fort Lee. But on these four days—with predictable consequences—only a single lane was set aside. The public officials who ordered that change claimed they were reducing the number of dedicated lanes to conduct a traffic study. In fact, they did so for a political reason—to punish the mayor of Fort Lee for refusing to support New Jersey Governor Chris Christie’s reelection bid. The government charged defendants—the then-Governor’s Chief of Staff and two Port Authority officials— with wire fraud, fraud on a federally funded program or entity, and conspiracy. (See 18 U.S.C. §§ 1343, 666(a)(1)(A).) Defendants were convicted, and the Third Circuit Court of Appeals affirmed. The U.S. Supreme Court reversed their convictions, holding that defendants’ conduct was not intended to obtain money or property but rather an exercise of their regulatory power and the result “was just the incidental cost of that regulation, rather than itself an object of the officials’ scheme.” (Kelly v. United States (U.S., May 7, 2020) 140 S.Ct. 1565.)
City Council Member with a Strong & Biased Opinion.
A city council was called upon to adjudicate an appeal from a planning commission grant of a conditional use permit for a gas station within a residential development. Prior to sitting as an adjudicator, one of the council members attended a meeting of a neighborhood association to which he belonged to express his opposition to building a gas station. Shortly before the adjudication, the council member emailed the neighborhood association’s representative to discuss the issue; advised the neighborhood association to visit other council members; and kept up continuing correspondence about the upcoming hearing on the appeal. The city council voted seven to two to deny the permit for a gas station. Plaintiff challenged the decision by filing a petition for writ of mandate, which the trial court granted. Affirming, the Court of Appeal stated: “In such matters council members must be neutral and unbiased. The developers sued, asserting in the trial court that one City Council member was neither and entered deliberations on the issue with his mind already made up. The trial court agreed and, upon review of the record, so do we. Accordingly, we affirm the order granting the petition for writ of mandate and ordering the city to rescind the decision on the appeal and hold a new hearing on the appeal at which the councilmember would be recused from participating.” (Petrovich Dev. Co., LLC v. City of Sacramento (Cal. App. 3rd Dist., May 8, 2020) 48 Cal.App.5th 963.)
Diabolical.
This is what the company’s freelance bookkeeper did: First, she added the fictitious business name [dba] “Income Tax Payments” to her checking account at the bank, the same bank used by the company. Then she instructed the company to write its checks for quarterly state and federal income tax payments to “Income Tax Payments” rather than to the Internal Revenue Service or Franchise Tax Board, and to give the checks to the bookkeeper for mailing. After laying that groundwork, the bookkeeper began depositing the company’s tax payment checks directly into her personal bank account. Over a period of nearly five years, the bookkeeper swindled the company out of more than $700,000. Eventually, the bookkeeper pleaded guilty to several federal crimes and is currently in federal prison. The company sued the bank for failing to discover the bookkeeper’s fraudulent banking activities, contending the bank negligently failed to discover and warn of the scam. The trial court granted nonsuit to the bank. Affirming, the Court of Appeal stated: “Banks have no common law duty to monitor deposit accounts,” and, “There is no basis for creating a new duty of inquiry.” (Kurtz-Ahlers, LLC v. Bank of Am., N.A. (Cal. App. 4th Dist., Div. 3, May 8, 2020) 48 Cal.App.5th 952.)
Pre-foreclosure Action Dismissed.
In this case, the court was concerned with whether California law permits borrowers to bring judicial actions to challenge a foreclosing party’s authority to foreclose on a borrower’s property before a foreclosure has taken place. The district court dismissed the two complaints for failure to state plausible claims for relief under California law. Affirming, the Ninth Circuit stated: “Because no foreclosures have taken place, Appellants’ suits are pre-foreclosure judicial actions that preemptively challenge the banks’ authority to foreclose on their properties in the future. Such actions are not viable under California law.” (Perez v. Mortg. Elec. Registration Sys., Inc. (9th Cir., May 11, 2020) 959 F.3d 334.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/11/18-16584.pdf
Financial Elder Abuse.
Plaintiff’s great-aunt was born in 1927. In 2010, defendant’s predecessor purchased the great-aunt’s home for $66,000 with the promise that she would be a lifetime resident in a residential care facility the predecessor owned. In 2014, defendant purchased the residential care facility, and thereafter moved the great-aunt into a private home. The great-aunt’s money had been placed in an employee’s personal bank account. The great-aunt died in 2015. Plaintiff sued for wrongful death. A jury returned a verdict of almost $40,000 in economic damages and zero in noneconomic damages. The court awarded plaintiff a little over $100,000 for costs and fees. On appeal, defendant argued plaintiff was not entitled to the economic damages award because the jury found the great-aunt had not suffered any physical harm, pain, or mental suffering. Affirming, the Court of Appeal stated that neither Welfare and Institutions Code § 15610.57, which defines neglect, nor CACI No. 3103, which was given to the jury, requires an award of damages for physical harm, pain, or mental suffering. (Arace v. Medico Investments, LLC (Cal. App. 4th Dist., Div. 2., May 11, 2020) 48 Cal.App.5th 977.)
No Equitable Tolling for Presenting Claim Against a Public Entity.
A police officer was fired. He presented a governmental claim against the city, but the complaint he filed in court contained several allegations that were not included in the governmental claim. The trial court struck those unclaimed allegations. After a jury held in favor of the city, plaintiff appealed. The Court of Appeal affirmed, noting that the timely presentation of a claim is an element that a plaintiff must prove in order to prevail and that “the doctrine of equitable tolling cannot be invoked to suspend [Government Code] section 911.2’s six-month deadline for filing a prerequisite government claim.” (Willis v. City of Carlsbad (Cal. App. 4th Dist., Div. 1, May 12, 2020) 2020 WL 2394728.)
Insurance Plan Does Not Comport with Plaintiffs’ Religious Beliefs.
The California Department of Managed Health Care (DMHC) determined, under California law, that abortion is a basic health care service. Beginning in 2014, abortion was therefore required to be covered by state health insurance plans. Members of the Skyline Wesleyan Church, though, shared the religious belief that abortion is impermissible unless the life of the pregnant woman is at risk. And while DMHC granted one exemption for an insurance plan available to religious employers, that plan allowed abortions in the case of rape or incest, which Skyline did not support. Skyline therefore sued DMHC, claiming its right to the free exercise of religion required DMHC to approve a health insurance plan compatible with its religious beliefs. However, DMHC had not received a request for approval of an insurance plan consistent with Skyline’s religious beliefs, and Skyline could not show that such a request was likely to be made. The district court therefore dismissed the case, reasoning that any injury suffered by Skyline could not be redressed by a court order directed at DMHC, and any controversy was not ripe. Reversing, the Ninth Circuit held that Skyline’s claim was justiciable because Skyline had suffered an injury when its prior plan was eliminated in 2014. The matter was remanded to the trial court for further proceedings. (Skyline Wesleyan Church v. California Department of Managed Health Care (9th Cir., May 13, 2020) 959 F.3d 341.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/13/18-55451.pdf
Prevailing Party Attorney Fees in Copyright Case.
The district court granted summary judgment on a claim for copyright abandonment, and the prevailing party sought attorney fees pursuant to the Copyright Act (17 U.S.C. § 501 et seq.). The district court denied the fee request, finding that a determination of copyright abandonment did not require construction of the Copyright Act. Reversing, the Ninth Circuit stated: “even when asserted as a claim for declaratory relief, any action that turns on the existence of a valid copyright and whether that copyright has been infringed invokes the Copyright Act, and thus attorney’s fees may be available pursuant to § 505.” (Doc’s Dream, LLC v. Dolores Press, Inc. (9th Cir., May 13, 2020) 959 F.3d 357.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/13/18-56073.pdf
Distribution of Foreclosure Sale Proceeds.
The holder of a first deed of trust had a 100% interest in foreclosed property. The remaining claimants were: (1) a junior creditor with a second deed of trust encumbering an undivided 75 percent interest in the property and (2) the owner of the property, who held an undivided 25 percent interest, which was not encumbered by the junior creditor’s second deed of trust. After the holder of the first deed of trust was satisfied, the trial court awarded the entire surplus to the junior creditor. Reversing, the Court of Appeal relied on Caito v. United California Bank (1978) 20 Cal.3d 694, and stated: “the creditor holding the second deed of trust encumbering an undivided 75 percent interest in the real property was entitled only to a 75 percent share of the surplus funds. The remaining 25 percent must be distributed to the person who owned the interest that was not encumbered by the second deed of trust.” (Zieve, Brodnax & Steele, LLP v. Dhindsa (Cal. App. 5th Dist., May 13, 2020) 2020 WL 2464755.)
Grant of Summary Judgment Reversed.
Lenders generally may not obtain credit reports without consumer consent. However, this rule does not apply when the lender intends to make a “firm offer of credit to the customer.” (Civ. Code, § 1785.11, subd. (b)(2).) Defendants accessed thousands of credit reports and mailed loan offers to consumers. Plaintiff sued for accessing her credit report. In discovery, she posed an interrogatory: of the consumers who were mailed offers, how many were actually given loans? The trial court found the question irrelevant, denied the request to compel an answer, and then granted defendants’ motion for summary judgment. Reversing, the Court of Appeal stated: “There is a triable issue of material fact: whether the lenders intended to honor the proposed loan terms if [plaintiff] accepted the offer. Further, [her] interrogatory was relevant to the lenders’ intent. Indeed, the trial court’s rulings dealt a ‘one-two punch’ to her lawsuit: the court first prohibited [plaintiff] from obtaining relevant evidence; then the court dismissed her case, in part, for lack of relevant evidence.” (Sosa v. CashCall, Inc. (Cal. App. 4th Dist., Div. 3, May 13, 2020) 2020 WL 2464753.) https://www.courts.ca.gov/opinions/documents/G056974.PDF
“Defense Preclusion” Inapplicable.
Both plaintiff and defendant sell jeans, and both use the word “Lucky” as part of their marks on their clothing. For years, the two litigated trademark disputes in three different actions. The Second Circuit Court of Appeals found that “defense preclusion” prohibited one party from raising an unlitigated defense that it should have raised earlier. The U.S. Supreme Court stated that “defense preclusion” was not “a standalone category of res judicata.” Holding that neither issue preclusion nor claim preclusion applied, the high court reversed the judgment. (Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (U.S., May 14, 2020) 140 S.Ct. 1589.)
https://www.supremecourt.gov/opinions/19pdf/18-1086_new_5ifl.pdf
Employer Waived the Right to Arbitration.
Plaintiff worked for defendant as a sales representative for seven years. After leaving the company, he filed a complaint with the Labor Commissioner for unpaid sales commissions. Defendant sent a letter to the Labor Commissioner urging dismissal of the complaint because the parties had signed an arbitration agreement. However, when the Labor Commission did not dismiss the complaint, defendant took part in proceedings. After the Labor Commissioner conducted a full hearing and issued its order, defendant filed a petition to compel arbitration in superior court. The trial court denied the petition. Affirming, the Court of Appeal stated: “the trial court properly determined [defendant] waived its right to arbitration.” (Fleming Distribution Co. v. Younan (Cal. App. 1st Dist., Div. 3, Apr. 23, 2020) 2020 WL 2511680.)
Punitive Damages Are Authorized under the Foreign Sovereign Immunities Act.
In 1998, al Qaeda operatives simultaneously detonated truck bombs outside the United States embassies in Kenya and Tanzania. Hundreds died, and thousands were injured. Victims and their family members later sued the Republic of Sudan in district court, alleging that Sudan had assisted al Qaeda in perpetrating the attacks. After more than a decade of motions, legislative amendments, and a trial, the plaintiffs proved Sudan’s role in the attacks and established their entitlement to compensatory and punitive damages. The district court entered judgment for plaintiffs, including $4.3 billion in punitive damages. On appeal, however, the District of Columbia Court of Appeals found that the Foreign Sovereign Immunities Act (FSIA) barred the punitive damages award. The FSIA authorized punitive damages only after a 2008 amendment, and the D.C. Circuit held that the provision did not apply retroactively. Reversing, the U.S. Supreme Court held that Congress expressly authorized punitive damages in the FSIA “to remedy certain past acts of terrorism,” and the punitive damages provision therefore applied to pre-amendment conduct. (Opati v. Republic of Sudan (U.S., May 18, 2020) 140 S.Ct. 1601.)
https://www.supremecourt.gov/opinions/19pdf/17-1268_c07d.pdf
Injunction Regarding Restraint of Trade by NCAA Upheld.
A federal district court enjoined the National Collegiate Athletic Association from enforcing rules that restrict the education-related benefits that its member institutions may offer students who play Football Bowl Subdivision football and Division I basketball. Affirming the injunction, the Ninth Circuit Court stated: “We conclude that the district court properly applied the Rule of Reason in determining that the enjoined rules are unlawful restraints of trade under section 1 of the Sherman Act, 15 U.S.C. § 1. We further conclude that the record supports the factual findings underlying the injunction and that the district court’s antitrust analysis is faithful to our decision in O’Bannon v. NCAA (O’Bannon II), 802 F.3d 1049 (9th Cir. 2015).” (In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation (9th Cir., May 18, 2020) 958 F.3d 1239.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/18/19-15566.pdf
Power of Appointment.
A property owner may confer a power of appointment upon persons, the powerholders, to whom the owner gives property. The powerholders may then designate who will receive the property at some point in the future. Sometimes a trustor will create a trust conferring a power of appointment on trust beneficiaries, empowering them to designate to whom they want to give their shares of the trust. Sometimes a trustor will also require trust beneficiaries to specifically exercise and refer to the power of appointment in any will they create, in order to designate who should get their trust shares. This appeal posed the following question: Where a trust beneficiary creates a will that gives away his trust shares without also specifically referring to the power of appointment as required by the trust, may the court amend or reform that will to include a “specific reference” phrase so as to preserve the validity of the gift? The trial court answered no. So did the Court of Appeal, stating: “Reforming a will to conform to the testator’s true intent is permissible if extrinsic evidence establishes that true intent. However, we cannot do so in this case because reformation would achieve a work-around of the requirements of Probate Code sections 630, 631, and 632, effectively nullifying them. These sections, taken together, do not excuse noncompliance. We therefore affirm.” (Estate of Eimers (Cal. App. 2nd Dist., Div. 8, May 15, 2020) 2020 WL 2519594.)
Court Excluded Plaintiff’s Expert and then Granted Summary Judgment.
In a wrongful death case against a nursing home, the plaintiff’s expert declaration claimed that the decedent’s stroke was not caused by atrial fibrillation, but he did not identify its cause. He also opined that the failure of the nursing home staff “to immediately transfer [decedent] to an acute care hospital after exhibiting symptoms of an ischemic stroke was grossly negligent and constituted elder abuse.” Defendants objected on the grounds that, as an expert on physical medicine and rehabilitation, he was not qualified to render an expert opinion on the causation of a stroke, and that his opinions were conclusory and speculative. The trial court struck the declaration and granted defendant’s motion for summary judgment. Affirming, the Court of Appeal stated that the expert stated only that “his opinion is based on his experience and documented medical literature,” and that “the vague reliance on ‘documented medical literature’ is insufficient and stands in stark contrast to [defendant’s] declaration which identifies the specific medical literature and the specific contents of that literature on which he relied.” (Lowery v. Kindred Healthcare Operating, Inc. (Cal. App. 1st Dist., Div. 4, May 18, 2020) 2020 WL 2520173.)
Abuse of Discretion to Allow Intervention, but Only if No Statutory Fees Would Be Sought.
Eight police officer associations filed a petition for writ of mandate seeking to prevent their respective agencies from disclosing certain records of police misconduct or use of force. Several media organizations and civil rights groups moved to intervene pursuant to Code of Civil Procedure § 387. The trial court conditioned their participation on the interveners striking their requests to recover statutory attorney fees. On appeal, the interveners challenged the condition placed on their intervention. Reversing, the Court of Appeal stated: “We conclude that although a trial court may place reasonable limits even as to intervention of right, the condition imposed here was unreasonable and amounted to an abuse of discretion.” (Carlsbad Police Officers Association v. City of Carlsbad (Cal. App. 4th Dist., Div. 1, May 18, 2020) 2020 WL 2520142.)
Neither Safe Harbor Period Nor Separate Motion Required for Award of Anti-SLAPP Attorney Fees.
The trial court ordered defendants to pay plaintiff $61,915 for attorney fees incurred in opposing an anti-SLAPP motion. Relying on Code of Civil Procedure § 425.16, subdivision (f), which provides for an award of sanctions in connection with an anti-SLAPP motion, defendants contended the trial court erred because (1) defendants were not given a 21-day safe harbor period, and (2) plaintiff requested fees in its opposition to the anti-SLAPP motion, rather than in a separate motion. The Court of Appeal rejected both arguments, stating that subdivision (c)(1) rather than subdivision (f) governed the procedure for a fee award in this case and did not require either a safe harbor or a separate motion. (Changsha Metro Group Co., Ltd. v. Xuefeng (Cal. App. 4th Dist., Div. 2, May 20, 2020) 2020 WL 2556935.)
Previously we reported:
Personal Injury Jury Verdict Reversed Because Court Abused its Discretion in Permitting Hearsay Evidence.
Plaintiff alleged he developed mesothelioma as a result of exposure to asbestos-containing products allegedly supplied by defendant. Plaintiff’s former supervisor testified that he observed plaintiff cut and bevel asbestos-cement pipe without any respiratory protection, and that the pipe was manufactured by another entity. However, the supervisor thought the pipe was supplied by defendant because he saw defendant’s name on the invoices, but he could not recall how defendant’s name was written on the invoices. Prior to trial, defendant unsuccessfully moved to exclude the supervisor’s testimony, arguing it was based upon inadmissible hearsay. A jury found in plaintiff’s favor and awarded substantial damages. Reversing, the Court of Appeal found the trial court abused its discretion in admitting the supervisor’s testimony, stating: “[The supervisor’s] belief that [defendant] supplied the asbestos-cement pipe was based on his review of invoices or delivery tickets. The wording on these invoices or delivery tickets were out-of-court statements offered to prove the truth of the matter asserted: namely, that [defendant] supplied the pipes. The invoices described by [the supervisor] were hearsay. . . . [¶] Furthermore, [the supervisor’s] testimony, standing alone, was insufficient to prove the pipe [he] saw on the truckers’ loads was asbestos-cement pipe supplied by [defendant]. . . . Critically, he lacked personal knowledge of who the supplier was. His testimony was inadmissible for this reason.” (Hart v. Keenan Properties, Inc. (Cal. App. 1st Dist., Div. 5, Nov. 21, 2018).)
The latest: The California Supreme Court reversed the judgment of the Court of Appeal. California’s high court discussed Evidence Code § 225, which defines the term “statement” as either “oral or written verbal expression” or “nonverbal conduct of a person intended by him as a substitute for oral or written verbal expression.” The Supreme Court went on to state: “As noted, the trial court relied on alternate theories to admit Glamuzina’s testimony about the content of the invoices. First, it concluded that Glamuzina did not convey hearsay, because the name and logo were not offered to prove the truth of any statement contained in the invoice. Instead, his observations were circumstantial evidence of Keenan’s identity as the source of the pipes. Based on the facts here, the court was correct.” (Hart v. Keenan Properties, Inc. (Cal., May 21, 2020) 2020 WL 2563836.)
No Attorney Fees Permitted in Action Against Employer for Failing to Provide Rest Breaks or Meal Periods.
The parties settled an action against an employer for failure to provide rest breaks and meal periods. Their settlement permitted plaintiff to later file a motion for attorney fees. Plaintiff did so, and the trial court awarded $280,000. The Court of Appeal noted that Labor Code § 218.5, subdivision (a) mandates an award of reasonable fees to the prevailing party in any action for nonpayment of wages. Reversing, the appeals court stated that an action for failure to provide rest breaks or meal periods is not an action for nonpayment of wages. (Betancourt v. OS Restaurant Services, LLC (Cal. App. 2nd Dist., Div. 8, May 21, 2020) 2020 WL 2570839.)
Previously we reported:
Time Being.
When a 9.0 earthquake and a massive tsunami struck Japan in 2011 killing 15,000 persons, the USA deployed Navy personnel to assist in the relief effort. Members of the U.S. Navy filed a class action alleging they were exposed to radiation near the Fukushima Daiichi Nuclear Power Plant, which had been damaged and leaked radiation. The district court denied the nuclear power plant’s motion to dismiss on forum non conveniens, political question, and firefighter’s rule grounds. The Ninth Circuit affirmed, stating that further developments in the action might require the district court to revisit some of the issues. (Cooper v. Tokyo Electric Power Co. (9th Cir., June 22, 2017) 860 F.3d 1193.)
The latest:
Once back in the district court, defendants again moved to dismiss. This time, they argued that Japanese law should apply. Under Japanese law, only the plant operator could be liable for injuries resulting from the power plant’s failure. The district court granted the motions to dismiss. Affirming, the Ninth Circuit stated: “Having decided that Japanese law applies to the case and considering Japan’s strong interests in the case being litigated in Japan, the district court did not abuse its discretion when it dismissed the claims against TEPCO on international-comity grounds.” (Cooper v. Tokyo Electric Power Co. (9th Cir., May 22, 2020) 2020 WL 2609871.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/22/19-55295.pdf
Summary Judgment in Favor of Insurance Company Reversed.
Plaintiffs rented out a home they own that defendant insurance company insured under a homeowners’ policy. Their tenants started growing marijuana on the property. To support the marijuana-growing operation, the tenants re-routed the property’s electrical system to steal power from a main utility line. The re-routing caused a fuse to blow, which started a fire that damaged the property. Defendant denied coverage, citing a provision in the owners’ policy that excluded any loss associated with “‘[t]he growing of plants’ or the ‘manufacture, production, operation or processing of . . . plant materials.’” The insured sued defendant for denying coverage. The trial court granted summary judgment in favor of the insurance company, finding that it properly denied coverage because the insureds had control over their tenant’s conduct. Reversing, the Court of Appeal stated: “Because there is no evidence the [property owners/insureds] were aware of their tenant’s marijuana growing operation, and because the record is silent as to what the [property owners/insureds] could or should have done to discover it, we reverse the judgment. . . . but we affirm the trial court’s order granting summary adjudication on the [property owners/insureds] second cause of action for breach of the implied covenant of good faith and fair dealing.” (Mosley v. Pacific Specialty Insurance Company (Cal. App. 4th Dist., Div. 2, May 26, 2020) 2020 WL 2669896.)
Malicious Prosecution Cannot Rest on an Arbitration Under the Mandatory Fee Arbitration Act.
Defendant appealed from the denial of his special motion to strike (Code Civ. Proc., § 425.16) a malicious prosecution claim brought by defendant’s former attorney. Plaintiff’s claim was based on defendant’s initiation of an arbitration of a fee dispute under the mandatory fee arbitration act. (Bus. & Prof. Code, § 6200 et seq.; MFAA.) Defendant contended a malicious prosecution claim cannot be based on an MFAA arbitration, and plaintiff failed to establish the other elements of the tort. Reversing, the Court of Appeal stated: “We agree that a malicious prosecution cause of action cannot rest on an MFAA arbitration and shall reverse the trial court’s order.” (Dorit v. Noe (Cal. App. 1st Dist., Div. 4, May 26, 2020) 2020 WL 2731038.)
Cases Against Energy Companies Alleging Liability for Global Warming Remanded to State Court.
The County of San Mateo, the County of Marin, and the City of Imperial Beach filed three materially similar complaints in California state court against more than 30 energy companies, alleging that the defendants’ “extraction, refining, and/or formulation of fossil fuel products; their introduction of fossil fuel products into the stream of commerce; their wrongful promotion of their fossil fuel products and concealment of known hazards associated with use of those products; and their failure to pursue less hazardous alternatives available to them; is a substantial factor in causing the increase in global mean temperature and consequent increase in global mean sea surface height.” Based on these allegations, the complaints alleged causes of action for public and private nuisance, strict liability for failure to warn, strict liability for design defect, negligence, negligent failure to warn, and trespass. The defendants removed the actions to federal court, asserting seven bases for subject-matter jurisdiction. The district court remanded the cases to California state court. Affirming the order of remand, the Ninth Circuit stated: “Because we conclude that the Energy Companies have not carried their burden of proving by a preponderance of the evidence that they were ‘acting under’ a federal officer, we do not reach the question whether actions pursuant to the fuel supply agreement, unit agreement, or lease agreement had a causal nexus with the Counties’ complaints, or whether the Energy Companies can assert a colorable federal defense.” (County of San Mateo v. Chevron Corp. (9th Cir. May 26, 2020) 2020 WL 2703701.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/26/18-15499.pdf
Homeowner’s Cross-complaint Against Association Not a SLAPP Suit.
Strategic Lawsuits Against Public Participation (SLAPP suits) are meritless lawsuits designed to punish parties for protected activities (the right to petition or free speech). A party can move to strike a SLAPP suit by filing an anti-SLAPP motion. (Code Civ. Proc., § 425.16.) There is a two-prong test: the moving party must show the lawsuit arises from its protected activities; the responding party can defeat the motion by showing the lawsuit has merit. A homeowners association filed a complaint alleging a homeowner violated its covenants. The homeowner filed a cross-complaint alleging the HOA unlawfully prevented him from renting out his home. The HOA filed an anti-SLAPP motion to strike the cross-complaint. The trial court denied the motion. Affirming, the Court of Appeal stated: “Here, [the homeowner’s] cross-complaint arises from the HOA’s alleged tortious acts, but not from the HOA’s protected act of filing a complaint. Thus, we affirm the trial court’s denial of the HOA’s anti-SLAPP motion.” (Third Laguna Hills Mutual v. Joslin (Cal. App. 4th Dist., Div. 3, May 26, 2020) 2020 WL 2731921.)
Summary Adjudication Reversed in Products Liability Action Against a Theme Park.
Plaintiff was injured at a waterslide theme park. He fractured his hip riding a waterslide. While going down the slide, he slipped from a seated position on an inner tube onto his stomach. When he entered the splash pool below, his feet hit the bottom with enough force to cause his injuries. He sued the park on theories of negligence, negligent misrepresentation, and products liability. The trial court summarily adjudicated all but the negligent misrepresentation cause of action in defendant’s favor. Affirming in part and reversing in part, the Court of Appeal stated: “As to Sharufa’s negligence cause of action, we conclude the waterslide park owes a heightened duty of care as a common carrier; but given the absence of any evidence of breach, summary adjudication of the negligence claim was appropriate. As to Sharufa’s products liability causes of action, we conclude the record is insufficient to show the park provided primarily a service rather than use of a product; for that reason, we will reverse the judgment as to those causes of action.” (Sharufa v. Festival Fun Parks, LLC (Cal. App. 6th Dist., May 27, 2020) 2020 WL 2739859.)
Trial Court Abused its Discretion in Denying Request to Continue Hearing on Summary Judgment Motion.
This case involves a landslide after a heavy rainy season. The defendant moved for summary judgment. The plaintiffs requested a continuance of the motion pursuant to Code of Civil Procedure § 437c, subdivision (h) in order to obtain a site inspection and perform water testing. The defendant had only one argument in opposition to the request for continuance, that the plaintiffs had been dilatory. The trial court denied the request for a continuance and granted the motion for summary judgment. Reversing, the Court of Appeal stated, “when a party submits an affidavit demonstrating that facts essential to justify opposition may exist but have not been presented to the court because the party has not been diligent in searching for the facts through discovery, the court’s discretion to deny a continuance is strictly limited,” and, “we conclude that the continuance was virtually mandated and thus that the trial court exceeded the bounds of its discretion in denying the Insalacos’ request for a continuance.” (Insalaco v. Hope Lutheran Church (Cal. App. 1st Dist., Div. 2, May 27, 2020) 2020 WL 2744095.)
Disability Award Affirmed by Workers’ Compensation Appeals Board Should Have Been Apportioned.
The Workers’ Compensation Appeals Board affirmed an unapportioned permanent disability award. The Court of Appeal reversed, concluding the permanent disability award should have been apportioned between industrial and nonindustrial causes. (County of Santa Clara v. Workers’ Compensation Appeals Board (Cal. App. 6th Dist., May 27, 2020) 2020 WL 2745252.)
Costs Under the Public Records Act.
As a general rule, a person who requests a copy of a government record under the Public Records Act (Gov. Code, § 6250 et seq.) must pay only the costs of duplicating the record and not other ancillary costs, such as the costs of redacting material that is statutorily exempt from public disclosure. But a special costs provision specific to electronic records (Gov. Code, § 6253.9, subd. (b)(2)) says that in addition to paying for duplication costs, requesters must pay for the costs of producing copies of electronic records if producing the copies “would require data compilation, extraction, or programming.” A city sought to charge a records requester for approximately 40 hours its employees spent editing out exempt material from digital police body camera footage. The city claimed that these costs were chargeable as costs of data extraction. The California Supreme Court disagreed, stating: “We conclude the term ‘data extraction’ does not cover the process of redacting exempt material from otherwise disclosable electronic records. The usual rule therefore applies, and the City must bear its own redaction costs.” (National Lawyers Guild v. City of Hayward (Cal., May 28, 2020) 2020 WL 2761057.)
Statute of Limitations on Unpaid Invoices.
Plaintiff sued defendants for breach of contract and open book account for failure to pay invoices pursuant to an assignment agreement. The invoices were due in May 2010. Plaintiff filed the complaint in 2017. Plaintiff contended the four-year limitations period began when plaintiff terminated the contract in 2016. Defendant contended under the continuous accrual doctrine, the statute of limitations began running when the invoices came due. The trial court granted defendants’ motion for summary judgment on statute of limitations grounds. The Court of Appeal affirmed. With regard to the breach of contract cause of action, the Court of Appeal stated the agreement did not contemplate a date for any final or complete performance, but expressly required payment of each invoice within a specific time frame. As to the open book cause of action, the court noted that an express contract is not an open book account. (Eloquence Corporation v. Home Consignment Center (Cal. App. 1st Dist., Div. 3, May 28, 2020) 2020 WL 2764748.)
Storage War.
Plaintiff made the winning bid and purchased the contents of a self-storage unit at an auction held by defendant. Defendant learned it had mistakenly sold the goods about half an hour after the sale was complete. The unit’s occupant had paid his past due rent weeks before the auction, but defendant’s computer system incorrectly marked the unit for sale. Due to this error, defendant immediately rescinded the deal based on two documents plaintiff had signed that contained clauses allowing defendant to void the sale for any reason. Plaintiff claimed defendant’s rescission was invalid and sued for breach of contract and conversion, among other claims. Defendant successfully moved for summary adjudication of the contract and conversion claims on grounds it had properly voided the sale under the “null and void” clauses. Following entry of a stipulated judgment, plaintiff appealed arguing the “null and void” clauses were invalid because (1) they were precluded by various statutes governing self-storage auction sales, and (2) he agreed to the clauses under duress. The Court of Appeal affirmed for several reasons, including that under Commercial Code § 1302, the parties agreed to the clauses and therefore waived the statutory protections claimed by plaintiff. (Hester v. Public Storage (Cal. App. 4th Dist., Div. 3, May 28, 2020) 2020 WL 2764626.)
The Defense of Lack of Capacity to Sue is Waived if Not Raised at the Earliest Opportunity.
Plaintiff sued defendant for nonpayment of a loan. Defendant did not dispute receiving the money, but contended it was plaintiff’s entities, not plaintiff himself, who made the loan. Although those entities had assigned their interests in the loan to plaintiff, the entities’ corporate powers were suspended at the time of the assignments. Therefore, defendant claimed plaintiff lacked standing to sue. The trial court found defendant waived that defense because he did not raise it until the time of trial. Affirming a judgment for plaintiff, the Court of Appeal stated: “But the issue is one of capacity to sue, rather than standing or jurisdiction. The defense of lack of capacity is waived if not asserted at the earliest opportunity. Fakheri failed to do so here.” (Rubinstein v. Fakheri (Cal. App. 2nd Dist., Div. 2, May 29, 2020) 2020 WL 2781613.)
Copyright Registration.
Plaintiff sued defendant for copyright infringement. A jury found the design used on defendant’s garments was at least substantially similar to plaintiff’s designs and awarded plaintiff $817,920 in profit disgorgement damages and $28,800 in lost profits. Plaintiff accepted a remittitur to $266,209. The district court awarded plaintiff $514,566 in attorney fees and costs. The Ninth Circuit noted evidence that when plaintiff registered its copyright, it saved money by registering a collection of fabrics, rather than a single fabric. The appeals court reversed and remanded with instructions for the district court to submit an inquiry to the Register of Copyrights asking whether the registration was valid. (Unicolors, Inc. v, H&M Hennes & Mauritz, L.P. (9th Cir., May 29, 2020) 2020 WL 2781317.)
https://cdn.ca9.uscourts.gov/datastore/opinions/2020/05/29/18-56253.pdf