Stone | Dean California Case Law White Paper
Quarter 4, 2016

569 East County Boulevard, LLC, and others (“plaintiffs”) filed an action against numerous entities and individuals. Plaintiffs’ complaint named Backcountry Against the Dump, Inc. (“BAD”) as a defendant and alleged a single cause of action for unlawful interference with prospective economic advantage. BAD moved to strike the action pursuant to Code of Civil Procedure § 425.16, commonly referred to as the anti-SLAPP statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4^th 53, 57.) After BAD’s anti-SLAPP motion was granted, it sought attorney’s fees and costs in a total amount of $152,529.15 pursuant to § 425.16, subdivision (c)(1). Plaintiffs did not contest defendant’s entitlement to a fees and costs award, but argued that the amount sought was exorbitant. The court found BAD was entitled to attorney’s fees and costs incurred for the successful anti-SLAPP motion, but awarded a reduced amount of $30,752.86. BAD appealed from that order, arguing the reduced award was an abuse of discretion.

The Court of Appeal affirmed the trial court’s order, noting that review was under the deferential abuse of discretion standard, rather than de novo, because the record made clear that the trial court did not misunderstand the applicable legal standards. Because there was evidence that the motion was relatively uncomplicated and could have been handled largely by associates billing lower rates, the trial court did not abuse its discretion in determining a reasonable hourly rate accordingly. The record contained sufficient support for a downward adjustment to the hour component of the lodestar because the trial court reasonably could have concluded that many of the hours represented work unrelated to either the merits motion or the fees motion, involved padded entries, or were unnecessary.

Healthsmart Pacific v. Kabateck
December 19, 2016

(2016) 7 Cal.App.5^th 416

Plaintiffs Michael D. Drobot and Healthsmart Pacific, Inc. sued lawyers Brian Kabateck and Bob McCormick, and their respective law firms for defamation and other causes of action arising from statements that Kabateck and McCormick made on television and radio programs regarding plaintiffs’ involvement in a scheme to use counterfeit screws on spinal surgery patients. Kabateck and McCormick filed a special motion to strike the complaint as a strategic lawsuit against public participation (SLAPP) under Code of Civil Procedure § 425.16. The trial court granted the motion and awarded Kabateck and McCormick their fees and costs. Plaintiffs appealed.

The Court of Appeal affirmed the trial court’s order holding that Kabateck and McCormick’s statements were made in connection with an issue of public interest because they related to allegations that plaintiffs conspired with physicians to insert counterfeit hardware in thousands of people and to defraud insurance companies, that a physician referral kickback scheme involved prostitutes and lavish trips on private jets, and that there was a relationship between the schemes and legislation supported by a state senator who received financial benefits. The Court held that plaintiffs did not have a probability of prevailing because the statements were covered by the fair report privilege under Civil Code § 47. The Court went on to state that when viewed in context, the statements would have been understood as referring to Kabateck and McCormick’s clients’ complaints, not facts, and were therefore fair and true for purposes of the privilege.

Industrial Waste and Debris Box Service, Inc. v. Murphy

October 28, 2016

(2016) 4 Cal.App.5^th 1135

At the center of this dispute are statements about garbage; more specifically, statements about the activities of Industrial Waste and Debris Box Service, Inc. dba Industrial Carting (“Industrial Carting”) which is in the business of hauling solid waste under franchise agreements it has with several cities in Sonoma County. Defendant Bruce Murphy is the owner, president and sole employee of his co-defendant, IntelliWaste, Inc., (collectively, “Defendants”) which provides operational and financial review and analysis of solid waste management systems, including collection, recycling and disposal. IntelliWaste was commissioned by North Bay Corporation (“North Bay”), to review and analyze the Collection and Demolition (“C&D”) diversion rates by local licensed services providers in Petaluma, Rohnert Park, Santa Rosa and Windsor. North Bay, like Industrial Carting, is licensed or franchised to provide C&D hauling services in those jurisdictions. IntelliWaste issued a report to North Bay, entitled “Analysis of C&D Diversion for 2009 and 2010 in select Sonoma County Jurisdictions” (the “Report”). The Report questioned the accuracy of statements in Industrial Carting’s public reports about the percentages of the waste materials it collected that were recycled and thereby diverted from landfills. Industrial Carting’s complaint alleged IntelliWaste’s report was false and defamatory and injured Industrial Carting’s business. Shortly after Industrial Carting served its complaint on defendants, defendants filed an anti-SLAPP motion to dismiss the complaint. The trial court held defendants met their burden of showing Industrial Carting’s claims involve speech concerning a matter of public interest and are therefore covered by the anti-SLAPP statute, Code of Civil Procedure §§ 425.16 to 425.18. However, the court denied defendants’ motion because, in its view, Industrial Carting demonstrated a probability of success on the merits sufficient to survive dismissal. Defendants timely appealed.

The Court of Appeal reversed and remanded. The Court determined that the statements concerned a matter of public interest for purposes of anti-SLAPP protection (§ 425.16, subd. (e)(4)) because limited landfill capacity and the environmental effects of landfills are issues of significant interest. Although prepared for a competitor, the report was not a commercial statement under Code Civil Procedure § 425.17, subd. (c) because the consultant was not a competitor. Because Industrial Carting provided no evidence of its or an affiliate’s actual rates of recycling and diversion from landfills (Public Resources Code §§ 40124, 40180, 40192, subd. (a), 41780, subd. (a)(1), (2)), it did not show a probability of prevailing (§ 425.16, subd. (b)(1)) on its claims.

Lee v. Silveira
December 5, 2016

(2016) 6 Cal.App.5^th 527

Three members of a homeowners association’s board of directors brought an action against six other board members (“director defendants”) and others following a board vote of six-to-three to renew a homeowners association managerial contract, in which plaintiffs voted against such renewal. Director defendants timely moved under Code of Civil Procedure § 425.16, to strike plaintiffs’ complaint, which consisted of a single claim for declaratory relief. The trial court denied the motion. In so doing, the court ruled that the “only relief” sought by plaintiffs was a “determination of what [was] required under the homeowners association governing documents” and, as such, that plaintiffs’ declaratory relief cause of action did not arise out of director defendants’ “speech/petition rights.” The court therefore never reached the issue of whether plaintiffs could satisfy their burden under subdivision (b)(1) of § 425.16 to establish a probability of success on their claim.

The Court of Appeal reversed the order with directions. The homeowners association board necessarily functioned similar to a quasi-governmental body, and the acts of director defendants that were the primary focus of plaintiffs’ complaint occurred in, or were made in connection with, meetings of the board as it was conducting board business. That included director defendants’ alleged failure to obtain at least three bids with respect to a roofing project and the renewal of the management contract at issue and their refusal to allow the board secretary to take verbatim board minutes. The Court thus concluded that the meetings of the board in which director defendants allegedly engaged in such wrongful conduct constituted a public forum within the meaning of § 425.16, subd. (e)(3). Moreover, the Court held that the acts of director defendants that were the principal thrust or gravamen of plaintiffs’ complaint (as more precisely defined by plaintiffs on appeal) concerned matters of public interest within the meaning of § 425.16, subd. (e)(3). Director defendants were each homeowners association members and residents of the townhouse community, and were sued for exercising their First Amendment rights as a result of how they voted on subject matters pending before the board. Plaintiffs’ tactical decision to omit the homeowners association from their action, when clearly the relief they sought involved the homeowners association, its board, and their governance of the community, further supported that conclusion. The Court concluded that plaintiffs could not prevail on their claims regarding the roofing project, the taking of verbatim notes of board meetings by the board secretary, and the management contract because they could not show an actual controversy existed as to those claims.

Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism
November 30, 2016

(2016) 6 Cal.App.5^th 1207

Defendants and appellants Morris Cerullo World Evangelism (“Cerullo”) and Roger Artz filed a special motion under the anti-SLAPP statute to strike the third amended complaint brought by plaintiffs and respondents Newport Harbor Ventures, LLC, and Vertical Media Group, Inc. (collectively, “plaintiffs”). The third amended complaint alleged four causes of action: (1) breach of written contract, (2) breach of the implied covenant of good faith, (3) quantum meruit, and (4) promissory estoppel. The first two causes of action were pleaded in earlier complaints while the latter two causes of action were new to the third amended complaint. The act asserted by Cerullo and Artz to have been “in furtherance of [their] right of petition or free speech” (Code of Civil Procedure § 425.16(b)(1)) was the settlement of an unlawful detainer action. That settlement was alleged in the initial complaint and each succeeding complaint. The trial court denied the anti-SLAPP motion on the ground it was untimely filed because it should have been filed in response to the earlier complaints.

The Court of Appeal affirmed the order. The Court held that the filing of an amended complaint does not automatically reopen the period for bringing an anti-SLAPP motion. Whether the filing of an amended complaint reopens the period for bringing an anti-SLAPP motion depends on the basis and nature of the claims in the amended complaint. Under Code of Civil Procedure § 425.16, subd. (f), an anti-SLAPP motion is untimely if not filed within 60 days of service of the first complaint that pleads a cause of action coming within anti-SLAPP protection unless the trial court, in its discretion and upon terms it deems proper, permits the motion to be filed at a later time. Thus, the anti-SLAPP motion was untimely as to the breach of contract and breach of implied covenant causes of action because defendants could have challenged those causes of action by filing an anti-SLAPP motion to prior complaints. However, the anti-SLAPP motion was timely as to the quantum meruit and promissory estoppel causes of action because they were new causes of action that could not have been challenged by an anti-SLAPP motion to a prior complaint. The quantum meruit and promissory estoppel causes of action were timely filed, and because plaintiffs met their burden of establishing a probability of prevailing on both causes of action, the anti-SLAPP motion was properly denied as to them. Nothing in the anti-SLAPP statute required plaintiffs to make an election between the breach of contract and quantum meruit causes of action in response to the anti-SLAPP motion. Moreover, at this stage, plaintiffs did not have to elect between a promissory estoppel remedy and a breach of contract remedy.

Wilson v. Cable News Network, Inc.
December 13, 2016

(2016) 6 Cal.App.5^th 822

Stanley Wilson, a 51-year-old African- and Latino-American, began working for Cable News Network, Inc. (“CNN”) in 1996 and became a producer in 2000. In 2004, Peter Janos became Wilson’s supervisor. Wilson received no further promotions. The final opening for which Wilson applied was offered to a younger, Caucasian candidate with less experience. Wilson alleges that he repeatedly complained about CNN’s failure to promote African-American men. In 2005, Wilson made a written complaint to Janos. Allegedly in retaliation, Janos issued Wilson a “Written Warning Regarding Performance.” In 2010, Wilson took five weeks of paternity leave. Wilson alleges that upon his return to work, Janos gave high-profile assignments to a younger Caucasian man with less experience than Wilson. In 2014, Wilson submitted a story to an editor, who expressed concern about similarity to another report. The editor informed Janos, who, without talking to Wilson, decided not to publish the story. Janos initiated an audit of Wilson’s work and ultimately fired Wilson. Wilson filed suit, alleging discrimination, retaliation, wrongful termination, and defamation against CNN. CNN filed a special motion to strike all causes of action under Code of Civil Procedure § 425.16, and submitted evidence of plagiarism in Wilson’s story.

The trial court granted the motion.

The Court of Appeal reversed the judgment. The Court concluded that CNN’s conduct and statement did not arise from an act in furtherance of their right of free speech or to petition for redress of grievances, and were not in connection with an issue of public interest, and therefore fell outside the scope of the anti-SLAPP statute. This was a private employment discrimination and retaliation case, not an action designed to prevent CNN from exercising is First Amendment rights. The gravamen of Wilson’s employment-related causes of action was CNN’s allegedly discriminatory and retaliatory conduct against him, not the particular manifestations of the discrimination and retaliation, such as denying promotions, assigning him menial tasks, and firing him. Accordingly, the anti-SLAPP motion was improperly granted with respect to Wilson’s discrimination, retaliation, and wrongful termination causes of action. CNN’s allegedly defamatory statement to the effect that Wilson plagiarized passages in a news article regarding a public official’s retirement in no way contributed to public debate regarding the official’s retirement. CNN’s statement was entirely collateral to the issue of the official’s retirement and was not made to the public. Accordingly, the anti-SLAPP motion was improperly granted with respect to the defamation cause of action as well.

Arbitration

City of Palo Alto v. Public Employment Relations Board (International Association of Firefighters, Local 1319, AFL-CIO)
November 23, 2016

(2016) 5 Cal.App.5^th 1271

Since 1978, article V of the City of Palo Alto’s (hereafter, “City”) charter provided that impasses in negotiations regarding wages, hours, and other terms and conditions of employment for the City’s police and firefighters would be submitted to binding interest arbitration. In 2011, the Palo Alto City Council (“City Council”) voted to place on the ballot for the upcoming election a measure that repealed this binding interest arbitration provision. Real party in interest the International Association of Firefighters, Local 1319, AFL-CIO (“IAFF”) filed an unfair practice charge with the Public Employment Relations Board (“PERB”), alleging the City placed the measure before voters without consulting in good faith with the IAFF, as required by the Meyers-Milias Brown Act (Government Code § 3500, et seq. comma after code section? Ital “et seq.”? ). A PERB administrative law judge found in the City’s favor. This decision was later reversed by PERB. By that time, the measure repealing the binding interest arbitration provision had already been passed by the voters. As part of its remedy, PERB ordered the City to rescind its resolution from 2011 referring the measure to the voters. Pursuant to § 3509.5, the City requested that the Court of Appeal issue a writ of extraordinary relief annulling PERB’s decision and directing PERB to dismiss the unfair practice charge. The Court of Appeal granted a writ of review.

The Court of Appeal annulled PERB’s decision and remanded. The Court held that PERB did not err when it found the binding arbitration charter provision to be a mandatory subject of consultation, even if outside the duty to meet and confer (Government Code §§ 3504, 3505). The duty to consult in good faith is comparable to the duty to meet and confer, requiring at least that the parties meet and discuss the issues, which the City failed to do. Because consultation is a procedural matter, requiring it does not violate charter city home rule (California Constitution, article XI, § 5, subds. (a), (b)). IAFF timely requested consultation. PERB exceeded its remedial authority (Government Code § 3509, subd. (b)) and violated the separation of powers doctrine when it directed the City Council to rescind the resolution.

Flores v. Nature’s Best Distribution
December 2, 2016

(2016) 7 Cal.App.5^th 1

Julie Flores filed a lawsuit against Nature’s Best Distribution, LLC, Nature’s Best, KeHe Distributors, Inc., and KeHe Distributors, LLC (collectively referred to as “defendants”), alleging several claims under the California Fair Employment and Housing Act (Government Code § 12940 et seq.). Defendants filed a petition to compel arbitration based on evidence that Flores signed an agreement for alternative dispute resolution (the “Agreement”). The trial court denied the petition. Defendants appealed contending that the trial court erroneously concluded defendants failed to prove Flores agreed to arbitrate her claims and that the arbitration provision contained in the Agreement was unenforceable because it was unconscionable.

The Court of Appeal affirmed the order. The Court held that defendants failed to prove that Flores agreed to submit her claims to final and binding arbitration. The Agreement was ambiguous regarding whether the arbitration provision (not a grievance and arbitration procedure of a collective bargaining agreement) applied to any or all of Flores’ claims against any or all of defendants in the instant action and regarding the governing rules and procedures for any such arbitration. The Agreement stated it was between “employee and Company.” However, the signature block for the employer was not filled in, dated, or signed under the heading “Authorized Employer Signature.” The trial court therefore did not err by denying the petition.

Business and Corporate Law

Thompson v. Asimos
December 15, 2016

(2016) 6 Cal.App.5^th 970

Jason Everett Thompson founded a consulting firm and operated it as a sole proprietorship under the dba Wired Real Estate Group (“WREG”) with the aim of advising clients in a niche internet infrastructure industry called “colocation,” sometimes, but not always, performing services that required WREG to have a real estate broker’s license. Because Thompson did not have a broker’s license when he founded WREG, he decided to collaborate with someone who did, Dean Asimos. To memorialize the terms of their collaboration, Thompson and Asimos adapted a standard form independent contractor agreement typically used by real estate brokers and agents. The form agreement Thompson and Asimos used turned out to be a poor fit for the unique business context in which WREG operated. A series of disputes arose between the two of them concerning, among other things, alleged underpayment of commissions and alleged failure to comply with regulatory requirements governing real estate brokerage. These disputes led to litigation, with the parties suing each other on various breach of contract and business tort theories. After a bench trial, Thompson prevailed in all respects, obtaining a substantial damages award, plus an award of attorney’s fees. Asimos appealed.

The Court of Appeal vacated the damages award, otherwise affirmed the judgment, and remanded for further proceedings. The Court held that Thompson properly prevailed on liability because substantial evidence supported the trial court’s implied finding that the ambiguous independent contractor agreements, together with the undisputed parol evidence, required Asimos to comply with the statutes and regulations that regulate the activities of licensed real estate brokers and to register the business with the California Department of Real Estate. However, Asimos should not have been found liable for the entire amount of the commission claimed from a client because Thompson settled for far less; it could not be assumed that, had the case been tried, he would have won every penny. Further, prejudgment interest, as reduced to 85% of the net amount of the settlement, had to be recalculated based on an accrual date fixed as of the date of the settlement pursuant to Civil Code § 3287.

Civil Procedure

Beach Break Equities, LLC v. Lowell
November 22, 2016

(2016) 6 Cal.App.5^th 847

Landlord Beach Break Equities, LLC (“Beach Break”) filed an unlawful detainer action against tenant Martin Lowell. The court granted Beach Break’s summary judgment motion on the possession issue, and issued a writ of possession (reserving damage issues). Lowell appealed the possession order to the Appellate Division of the Superior Court (“Appellate Division”). While the appeal was pending, Beach Break evicted Lowell under the authority of the writ of possession. The Appellate Division reversed the possession order, finding triable issues of fact on the possession issue and remanded for a trial. In so doing, the Appellate Division expressly ordered that Lowell was entitled to seek restitution for any damages caused by the premature eviction. After the matter was transferred to an unlimited civil department, the trial court ruled Lowell was not entitled to a restitution hearing because he had not filed an affirmative cross-complaint. Over Lowell’s objection, Beach Break then dismissed its action and the court entered a final judgment. Lowell appealed.

The Court of Appeal reversed and remanded, holding that the tenant was entitled to seek restitution under § 908 and the trial court’s inherent equitable powers. The trial court had an affirmative obligation to provide a restitution hearing in compliance with the remand instructions. Beach Break could not defeat Lowell’s right to a restitution hearing by dismissing the action. The entry of a final judgment after remand was not necessary for restitution. The absence of an affirmative pleading for restitution did not preclude restitutionary relief because the existence of the power to restore benefits flowed from the rule that upon reversal the action was as though it had never been tried.

Gonzales v. CarMax Auto Superstores, LLC

October 20, 2016
(2016) 840 F.3d 644

Travis Z. Gonzales sued CarMax Auto Superstores, LLC (“CarMax”), a used car retailer, after experiencing problems with a vehicle he purchased at one of its lots. Gonzales alleged violations of four California consumer protection laws: (1) the Consumer Legal Remedies Act (“CLRA”); (2) the Song-Beverly Consumer Warranty Act (“Song-Beverly”); (3) common law fraud and deceit; and (4) the Unfair Competition Law (“UCL”). Gonzales’ claims under the CLRA and UCL were both based on CarMax’s alleged violation of California Vehicle Code § 11713.18(a)(6), which requires a car dealer to provide consumers with a “completed inspection report” prior to the sale of any “certified” vehicle. The District Court dismissed Gonzales’ fraud and Song-Beverly claims and granted CarMax summary judgment on the CLRA and UCL claims.

The Court of Appeal reversed the District Court’s summary judgment in favor of CarMax, and remanded with instructions to enter summary judgment for Gonzales on his CLRA and UCL claims, based on CarMax’s alleged violations of § 11713.18(a)(6). The Court held that the District Court properly exercised diversity-based subject matter jurisdiction over the case based on its finding that the jurisdictional amount-in-controversy requirement was satisfied. The potential cost of complying with injunctive relief was considered along with Gonzales’ claims for compensatory damages and punitive damages. Interpreting the requirements of § 11713.18(a)(6), the Court held that a report that fails to indicate the results of an inspection in a manner that conveys the condition of individual car components to a buyer is not a “completed inspection report” under California law, concluding that CarMax’s generic list of car parts inspected failed to inform consumers of the material results of the inspection.

Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc.
December 22, 2016

(2016) 6 Cal.App.5^th 1178

In late 2014 and early 2015, VitaVet hired plaintiff and cross-defendant Integrated Dynamic Solutions, Inc. (“IDS”) to “develop an entirely new and more efficient” software program for VitaVet that would increase the speed and efficiency of its online ordering, billing, payments, shipments and customer support. The parties’ performance did not go as planned. VitaVet made a timely payment of $30,000 in January 2015, but IDS did not deliver a Technical Design Document by February 20, 2015, or by March 15, 2015. VitaVet consequently withheld both the February and March payments. IDS delivered an “incomplete” version of the Technical Design Document that it acknowledged was still a “work in progress” on March 20, 2015; VitaVet thereafter paid the February and March installments and gave IDS feedback on the “rough” draft. IDS eventually delivered a copy of the software itself on August 14, 2015, two and a half months after the June 5, 2015 deadline. The parties disputed whether the software was “finished,” but did not appear to dispute that IDS refused to deliver the source code for the software, refused to return any of the confidential and proprietary information VitaVet let IDS use in developing the software, and never provided a final Technical Design Document. VitaVet did not make the final payment under the contract. As a result, the parties sued each other for breach of contract and other claims. The trial court issued a preliminary injunction that, among other things, ordered IDS to deliver the source code and technical specifications to VitaVet. IDS appealed.

The Court of Appeal affirmed the order. The Court held that an injunction that alters the status quo does not constitute an impermissible final adjudication of the merits of the lawsuit, although such injunctions are reserved for extreme cases where the right to relief is clearly established. The instant case was one of those extreme cases. VitaVet clearly established that it was likely to prevail on the merits of its breach-of-contract claim, and that contract between the parties gave all ownership of IDS’ work product to VitaVet, going so far as to empower VitaVet to obtain copies of that product whenever it wanted. IDS’ refusal to hand over the source code breached those contractual provisions and damaged VitaVet’s business operations. The balance of interim harms also clearly established VitaVet’s entitlement to the preliminary injunction. Denying that injunctive relief would leave VitaVet unable to make use of the software IDS delivered, forcing VitaVet to continue using its outdated and slow software, which was already causing extreme employee inefficiency and significant business losses, and was stymieing VitaVet’s plans to expand its business. At the same time, granting that injunctive relief would cause IDS no harm because it was customized software that IDS developed for a specific customer and for which IDS itself had no use. The Court concluded that the injunction was not a final adjudication on the merits.

Khan v. Shim
December 29, 2016

(2016) 7 Cal.App.5^th 49

In early 2010, Dr. Christine Hoang, a dentist, was terminally ill. She succumbed to her illness in March of that year. The next month, Neeshat Khan began exploring the purchase of Dr. Hoang’s former dental practice in Cupertino, California. Over the course of several months, Khan negotiated with Michael Shim, who was Dr. Hoang’s widower and the executor of her estate. The talks were fruitful, resulting in a purchase agreement for the sale of the practice, signed in July 2010 (“purchase agreement”). The purchase agreement has an attorney’s fee clause, which allows the prevailing party to be awarded fees if “any litigation . . . is commenced between the parties to this Contract of Sale . . . concerning its terms, interpretation or enforcement or the rights and duties of any party in relation thereto . . . .” In September 2012, Khan filed suit against Shim individually and as executor of Dr. Hoang’s estate. Alleging five causes of action: breach of contract, fraud, concealment, negligent misrepresentation, and rescission. Shim responded, filing a cross-complaint against Khan, alleging, among other things, that Khan had failed to collect and remit accounts receivable, failed to provide proper accounting for those receivables, and that Khan herself had violated various warranties and representations in the agreement. On February 10, 2014, before trial, Khan voluntarily dismissed her entire complaint without prejudice. Ten days later, the case proceeded to a bench trial solely on Shim’s cross complaint. The trial court found for Khan on all causes of action stated against her in Shim’s cross-complaint. Thereafter, Shim filed a motion for attorney’s fees. In her opposition, Khan asserted that, because she had dismissed her complaint prior to trial, Civil Code § 1717, subdivision (b)(2), barred the recovery of any attorney’s fees spent by Shim. Khan also argued that Shim’s appeal to the court’s discretion and his arguments about “litigation objectives” did not override the impact of her voluntary dismissal or the language of the fee provision. The trial court ruled in favor of Shim, holding that “Shim is the prevailing party on Khan’s dismissed Complaint, pursuant to Code of Civil Procedure § 1032(a)(4)” which states that “‘[p]revailing party’ includes . . . a defendant where neither plaintiff nor defendant obtains any relief.”

The Court of Appeal reversed the judgment insofar as it declared Shim to be the prevailing party on the complaint as a whole and remanded the matter. Because Civil Code § 1717, subd. (b)(2), generally bars the award of attorney’s fees after a pretrial voluntary dismissal for defense of contract causes of action, Shim was not the prevailing party on those claims. However, the Court interpreted the fee provision in the parties’ purchase agreement to be broad enough to cover fees for Shim’s defense against Shim’s tort actions. While Khan’s torts were not breach of contract claims, nor did they directly seek to enforce the contract, the tort claims easily fell within the reach of the fee provision covering any litigation concerning the contract’s terms because the torts were directly tied to the allegations that certain of the terms (Shim’s warranties) were false. The trial court must determine on remand what fees could be properly awarded to Shim and whether the fees could be allocated between the two types of claims.

Ryan v. Crown Castle NG Networks, Inc.
December 13, 2016

(2016) 6 Cal.App.5^th775

Plaintiff Patrick S. Ryan brought an action against his former employer, NextG Networks, Inc., and its successor Crown Castle NG Networks Inc. (collectively, “NextG”). Ryan alleged that NextG breached a promise to grant him lucrative stock options as a condition of his employment. The case went to the jury with an unclear special verdict form and unhelpful instructions. The jury sustained two contract-based causes of action, but failed to find the value of the promised options, although it was instructed to do so and an expert testified that the value was $326,250. Instead, the jury found that Ryan had lost earnings of $73,522, even though the jury did not sustain a tort claim. Ryan moved for a new trial on the ground of inadequate damages. The trial court denied the motion while disclaiming the power to “substitute its judgment for that of the jury” and suggesting that declarations were necessary to determine “what the jury actually did.”

The Court of Appeal reversed with directions as to a new trial (Code Civil Procedure, § 657, subd. (5)). The Court held that the trial court improperly refused to exercise its power to independently evaluate the sufficiency of the award and incorrectly reasoned that the verdict could not be overturned in the absence of factual declarations showing what the jury actually did. The special verdict clearly established that the jury misunderstood the case, given that it awarded damages on causes of action it rejected, while failing to award damages on causes of action it sustained. The award was without factual or legal basis because there was no evidence that the damages on the contract claims were only $73,522; rather, the undisputed evidence was that if the contract claims were sound, the damages were $326,250. As to remedy, the Court held that if the employee elected to proceed with a new trial, all issues should be retried because the record raised grave doubts as to whether the jury properly understood the issue and suggested that the verdict may have been the product of compromise.

Wolf Metals Inc. v. Rand Pacific Sales, Inc.

October 25, 2016

(2016) 4 Cal.App.5^th 698

Wolf Metals’ complaint asserted claims for open book account, account stated, and breach of contract against Rand Pacific Sales, Inc. (“RPS”). The complaint alleged that Wolf Metals sold sheet metal to RPS pursuant to an oral agreement. The complaint further alleged that RPS owed Wolf Metals the sum of $292,055.93, which RPS had failed to pay despite Wolf Metals’ demand. In February 2010, RPS answered the complaint, and in June 2010, RPS filed a petition for Chapter 7 bankruptcy protection (11 United States Code § 701 et seq.). As a result of the bankruptcy proceeding, the Wolf Metals’ action was stayed. In the course of the bankruptcy proceeding, Wolf Metals asserted a claim for $298,805.91 as an unsecured creditor on the basis of “[g]oods sold.” The bankruptcy court ultimately ordered the case closed without discharge. In September 2011, upon notice by Wolf Metals that the bankruptcy proceeding had closed without a discharge, the trial court authorized Wolf Metals to resume litigation of its claims against RPS. After RPS’ counsel repeatedly failed to attend scheduled hearings, the court ordered RPS’ answer stricken and entered RPS’ default. On July 20, 2012, the trial court entered a default judgment in Wolf Metals’ favor, awarding $292,055.093 in damages, together with $70,400 in pre-judgment interest and $430.00 in costs. RPS did not satisfy the judgment. In December 2012, in an effort to enforce the judgment, Wolf Metals arranged for a judgment debtor examination of Donald Koh, RPS’ president and his wife, who is RPS’ secretary and treasurer. After initially refusing to answer questions, they were examined and excused. Later, when Wolf Metals propounded discovery seeking RPS’ records, and Koh replied that he had none, stating that all such documents had been transferred to the bankruptcy trustee or discarded. In September 2014, Wolf Metals filed motions to compel responses to its post-judgment special interrogatories and request for the production of documents. The trial court granted the motions and issued an award of sanctions against RPS totaling $1,245. In January 2015, Wolf Metals conducted a second judgment debtor examination of Koh. Following that examination, Wolf Metals filed a motion under Code of Civil Procedure § 187, seeking to amend the default judgment to name Koh and another corporation, South Gate Steel (“SGS”), as additional judgment debtors. On March 19, 2015, the trial court issued a written order granting the request, concluding that Koh was RPS’ alter ego and that SGS was a successor corporation of RPS because Koh and his wife were president, secretary and treasurer of SGS as well. Koh and SGS noticed their appeal from that order. On May 4, 2015, the court entered an amended default judgment naming Koh and SGS as additional judgment debtors.

The Court of Appeal reversed the amended judgment insofar as it named Koh as a defendant, but affirmed the amended judgment in all other respects. The Court held that the trial court erred in adding the Koh as a judgment debtor on an alter ego theory. The bankrupt corporation offered no evidence-based defense in the underlying action, and the judgment against it was entered by default. However, the Court held that the trial court properly amended the judgment to add SGS as RPS’ corporate successor. RPS failed to respond to Wolf Metals’ post-judgment discovery prior to the judgment debtor examination, which ultimately alerted Wolf Metals’ to the SGS’ close relationship to RPS. Thus, the trial court reasonably rejected defendants’ contention that plaintiff failed to act with due diligence.

Insurance

Advent, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA
December 6, 2016

(2016) 6 Cal.App.5^th443

Advent, Inc. (“Advent”) was hired as the general contractor for the Aspen Family Village project in Milpitas, California. Advent subcontracted with Pacific Structures, Inc. (“Pacific”). In turn, Pacific subcontracted with Johnson Western Gunite (“Johnson”). Advent was covered by an insurance policy issued by Landmark American Insurance Company (“Landmark”) and an excess insurance policy issued by Topa Insurance Company (“Topa”). Johnson was covered by primary and excess insurance policies issued by National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). While construction on the project was underway, a Johnson employee, Jerry Kielty, fell down an unguarded stairway shaft at the project site and sustained serious injuries. Kielty sued Advent, and Advent tendered its defense to its various insurance companies and to National Union. National Union initially refused the tender but later accepted it under a reservation of its rights. Kielty settled his action for a sum of $10M. Various insurers, including Topa and National Union (under its primary policy), contributed to the settlement. National Union continued to reserve its rights during the settlement process, and it did not provide coverage under its excess policy. Advent initiated an action when it sued National Union, seeking a declaration that it was an “additional insured” under National Union’s excess policy. Topa successfully intervened in the action, seeking declaratory relief, equitable contribution from National Union, and equitable subrogation. Advent moved for summary judgment, which was denied. Advent then dismissed its complaint against National Union with prejudice. Subsequently, Topa and National Union filed cross-motions for summary judgment. The trial court denied Topa’s motion and granted National Union’s motion. Topa appealed.

The Court of Appeal affirmed the judgment. The trial court did not err when it granted summary judgment in favor of National Union because Topa failed to show that Kielty’s injuries were caused by Johnson. Topa’s speculations about unknown facts failed to show that a triable issue of material fact existed regarding actual coverage. Without actual coverage, Topa could not obtain equitable contribution from National Union. Even if National Union’s excess policy provided coverage to Advent as an additional insured, National Union would still be entitled to judgment in its favor, as the Advent’s excess policy was a specific policy that attached prior to Johnson’s excess policy.

Tidwell Enterprises, Inc. v. Financial Pacific Insurance Company, Inc.
November 29, 2016

(2016) 6 Cal.App.5^th100

Financial Pacific issued general liability policies to fireplace contractor Tidwell Enterprises between March 2003 and March 2010. Under the terms set forth in the standard CGL forms in these policies, Financial Pacific agreed to pay sums that Tidwell became legally obligated to pay as damages because of property damage caused by an occurrence if the property damage occurred during the policy period. In 2006 or 2007, Tidwell worked on the construction of a new home by installing the fireplace. On November 11, 2011 the house was damaged by fire. State Farm, the homeowner’s insurance carrier, covered the fire and issued a letter to Tidwell advising that the fire may have been caused by the manufacture, design or installation of the fireplace. Tidwell tendered State Farm’s letter to claims professionals at Financial Pacific who, in turn, were provided with a fire investigation report by State Farm’s forensic expert during their investigation of the fire loss reflecting that the fire was caused by the fireplace. State Farm sued Tidwell for negligence to recover, in subrogation, amounts it paid to the homeowner for the fire loss. State Farm asserted that Tidwell negligently installed the fireplace systems in the subject home and that Tidwell’s negligence was the proximate cause of the fire. Tidwell tendered the suit to Financial Pacific wherein Financial Pacific declined coverage on the grounds that no potential for coverage existed with respect to the State Farm suit. Financial Pacific concluded that the fire occurred long after Financial Pacific’s policies expired and that “for coverage to exist, the property damage must take place during the policy period.” Ultimately, Tidwell initiated a bad faith/declaratory relief action against Financial Pacific seeking a declaration that Tidwell owed a duty to defend due to a continuing occurrences of property damage allegedly caused by Tidwell during the operative policy period more than a year before the fire. The trial court granted summary judgment in favor of Financial Pacific noting that the fire occurred after the expiration of the applicable policies and that Tidwell could not “assert alternative causes State Farm ‘should have’ alleged in order to create coverage issues.”

The Court of Appeal reversed the judgment and remanded the case with instructions. The Court held that even though the fire occurred after the relevant policy periods ended, Financial Pacific could potentially be liable under its policies to pay any sums that Tidwell became legally obligated to pay State Farm as damages because the repeated exposure of the wood framing a chimney chase to the excessive heat in the chimney, for which the contractor was responsible, may have caused physical injury to the wood (by altering its chemical composition and reducing its ignition point) during one or more policy periods, and that physical injury would have caused Tidwell’s legal obligation to pay damages for the fire that resulted (at least in part) from the damaged wood. Thus, Financial Pacific failed to eliminate all possibility of coverage, and the trial court erred in granting summary judgment.

Labor and Employment

Augustus v. ABM Security Services, Inc.
December 22, 2016

2016 Cal. LEXIS 10334

ABM Security Services, Inc. (“ABM)” employs security guards across California. Jennifer Augustus and others sued ABM claiming that ABM failed to provide guards with uninterrupted, 10-minute rest periods as required by California law because ABM required its security guards to keep their radios and pagers on during rest breaks, remain vigilant and respond to emergencies. ABM’s understanding about the scope of such needs, meanwhile, encompassed a variety of circumstances, including situations where a building tenant wished to be escorted to the parking lot, a building manager had to be notified of a mechanical problem, or the occurrence of some kind of “emergency situation.” Plaintiffs sued ABM, alleging the company failed to provide the rest periods that state law entitles employees to receive. The trial court granted summary judgment for plaintiffs, finding ABM liable and awarding approximately $90M but the Court of Appeal reversed. California Supreme Court granted review to address two related issues: whether employers are required to permit their employees to take off-duty rest periods under Labor Code § 226.7 and Industrial Welfare Commission Wage Order No. 4-2001 (California Code of Regulations., tit. 8, § 11040 (“Wage Order 4”)), and whether employers may require their employees to remain “on call” during rest periods.

California Supreme Court reversed the Court of Appeal’s judgement holding that California law requires employers to relieve their employees of all work-related duties and employer control during 10-minute rest periods. The Court found that the trial court’s summary adjudication and summary judgment orders were premised on the understanding that Wage Order 4, subdivision 12(A) and§ 226.7 prohibit on-duty rest periods which require that employers relinquish control over how employees spend their break time, and relieve their employees of all duties, including the obligation that an employee remain on call. The Court went on to state that “a rest period, in short, must be a period of rest.”

Driscoll v. Graniterock Company
November 30, 2016

(2016) 6 Cal.App.5^th 215

Graniterock is a concrete company that manufactures, delivers and pours concrete. Concrete is delivered by Graniterock’s concrete mixer drivers, who assist in loading the concrete into the mixer trucks, delivering the concrete to customers, and pouring the concrete at a construction site. The concrete that Graniterock produces is a perishable product that cannot be stored. In addition, freshly batched concrete must be poured within 60-90 minutes to ensure its structural integrity. Graniterock provided its concrete mixer drivers with the option of signing an on-duty meal period agreement pursuant to Industrial Wage Commission (“IWC”) Wage Order No. 1, which states: “when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to.” Graniterock provided an On-Duty Meal Period Agreement to the concrete drivers and also advised them that if they did not sign an On-Duty Meal Period Agreement and were asked to work through a meal, they would receive one hour of special pay. All concrete drivers acknowledged receiving and reviewing this policy. The concrete drivers were also notified of their right to a 30-minute, off-duty meal period through IWC Wage Order and other mandatory state and federal postings at each Graniterock branch. The concrete drivers testified that they understood that they could revoke the On-Duty Meal Period Agreement at any time. Graniterock Concrete drivers Brian Driscoll, Kenneth Gallardo, Donald Hopf, Chris Nowak and Brad Storm filed an action on behalf of a class of approximately 200 current and former concrete mixer drivers (collectively, “plaintiffs”). Plaintiffs claimed that Graniterock failed to provide concrete mixer drivers with off-duty meal periods and failed to provide them with one additional hour of pay for meal periods during which the drivers opted to continue working. Plaintiffs sought restitution under Business and Professions Code §17200, penalties under the Private Attorneys General Act and damages and penalties under Labor Code §§ 226.7 and 512, subdivision (a). The class action was tried without a jury, and the court returned a verdict in favor of Graniterock. The court found that Graniterock did not violate labor laws in its meal period policies. Plaintiffs appealed.

The Court of Appeal affirmed, holding that the Graniterock satisfied its obligation because it informed the drivers of their right to a meal period and made an off-duty meal period available to drivers who requested one. Although the nature of the concrete mixing and delivering industry precluded scheduling off-duty meal periods in advance because a driver might need to be on duty at various times depending on when the concrete was mixed and the type of construction job, the employer was not required to schedule meal periods.

Riske v. Superior Court (City of Los Angeles)
December 12, 2016

(2016) 6 Cal.App.5^th 647

Robert Riske, a retired Los Angeles police officer, sued the City of Los Angeles (“City”) alleging the Los Angeles Police Department had retaliated against him for protected whistleblower activity by failing to assign or promote him to several positions, selecting instead less qualified candidates. Riske filed a discovery motion pursuant to Evidence Code §§ 1043 and 1045, which establish procedures for the disclosure of confidential personnel records of peace officers, to obtain certain records of the officers selected for the positions to which he had applied. Riske asserted the documents he sought were necessary to show the City’s stated business reason for its promotion decisions, the successful candidates were more qualified than Riske, was pretext for retaliation. The City opposed the motion, claiming the officers’ personnel records were not subject to discovery because the officers were innocent third parties who had not witnessed or caused Riske’s injury. The superior court agreed with the City and denied Riske’s motion. Riske petitioned for a writ of mandate.

The Court of Appeal granted Riske’s petition for a writ of mandate and directed the trial court to vacate its order denying Riske’s discovery motion and to enter a new order requiring the City to produce the

reports sought by Riske for an in camera inspection pursuant to Evidence Code § 1045 and to thereafter order production of all discoverable information. The statutory scheme governing the discovery of peace officer personnel records is not limited to cases involving officers who either witnessed or committed misconduct. If a plaintiff can demonstrate the officer’s personnel records are material to the subject matter of the litigation, the records must be produced by the custodian of records and reviewed by the court at an in camera hearing in accordance with the statutory procedures to assess the discoverability of the information contained in them. The court must then order production of those records that are relevant and not otherwise protected from disclosure.

San Joaquin County Correctional Officers Association v. County of San Joaquin
December 20, 2016

(2016) 6 Cal.App.5^th 1090

In a dispute between the County of San Joaquin (“County”) and San Joaquin County Correctional Officers Association (“Association”) over pension payments, specifically, cost-of-living adjustments (“COLA”), for association members, the trial court granted summary judgment in favor of the County. The trial court reasoned that because Government Code § 31631.5, subd. (b), preserved the County’s right (both explicitly under Government Code § 31581.2, and by implication under Government Code § 31873) to end the County’s payment of the employee portion of COLA payments, which it elected to provide by local ordinance since 1975, the Association’s position that § 36131.5, subd. (a), insulated it from any employee compensation reductions until 2018 was not linguistically tenable.

The Court of Appeal affirmed the judgment. The Court held that the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) (Government Code § 7522 et seq.) was intended to rein in what was perceived by the Legislature to be overly generous retirement packages for public employees, but delayed the effective date of some provisions to ease the transition and allow some changes to be negotiated gradually. PEPRA was not designed to shield compensation packages that were already subject to reduction under prior laws, specifically, the County Employees Retirement Law of 1937 (“CERL”) (Government Code § 31450 et seq.). Under CERL, the County had the power to change the COLA before 2012, subject to external labor laws, and once a bargaining impasse was reached, had the power to impose its last, best offer, which eliminated the COLA “pickup” it had elected to provide by local ordinance, but had not been statutorily compelled to provide, since 1975. Nothing in PEPRA limited the County’s power in that regard.

Soto v. Motel 6 Operating, L.P.

October 20, 2016

(2016) 4 Cal.App.5^th 385

Lidia Soto sued her former employer, Motel 6 Operating, L.P. (“Motel 6”), alleging Motel 6 violated Labor Code § 226, subdivision (a) by failing to include the monetary amount of accrued vacation pay in its employees’ wage statements. Soto filed the action in her individual capacity and on behalf of all aggrieved workers under the Private Attorneys General Act of 2004 (Lab. Code § 2698, et seq.). Motel 6 demurred, asserting that § 226, subdivision (a) does not require employers to itemize the monetary value of vacation balances before the employment relationship is terminated. Motel 6 relied on the plain language of the statute, the language of related statutes (§§ 227.3, 227.5), federal and state case law, and a sample itemized wage statement contained on the Division of Labor Standards Enforcement (“DLSE”) website. In opposing the demurrer, Soto argued that § 226, subdivision (a) requires itemization of earned “wages” and California cases have recognized (in other contexts) that a “wage” includes vacation pay. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4^th 1094, 1103; Suastez v. Plastic Dress-Up. Co. (1982) 31 Cal.3d 774, 784.) Soto emphasized the legal principle that vacation benefits are earned and become vested during the pay period when they accrue. (See Suastez, supra, 31 Cal.3d at pp. 778-784.) Soto additionally argued a vacation wage reporting requirement is supported by the strong public policy favoring timely pay for completed work. After considering the arguments and taking judicial notice of the DLSE sample wage statement, the trial court sustained the demurrer without leave to amend. The court concluded “§ 226(a) does not require a wage statement to include the value of vacation or paid time off wages accrued and earned.”

The Court of Appeal affirmed the trial court judgment, holding that § 226, subdivision (a) does not require employers to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.

Walmart Stores, Inc. v. United Food and Commercial Workers International Union

October 14, 2016

(2016) 4 Cal.App.5^th 194

United Food and Commercial Workers International Union (“UFCW”) and Organization United for Respect at Walmart (OUR Walmart; collectively, the “union”) began organizing and conducting demonstrations at Walmart stores across the United States, including in California. The demonstrations were part of a union campaign designed to induce Walmart to provide its employees better working conditions and pay. The campaign also sought to pressure Walmart to reinstate employees the union alleged Walmart had discharged or disciplined for exercising their rights under the National Labor Relations Act (29 United States Code § 151, et seq.) (“NLRA”). The union publicly indicated it was not seeking to act as the representative or bargaining agent for Walmart employees. During the demonstrations in California, large numbers of people typically assembled outside a store. Groups of demonstrators also entered stores.

The union filed an unfair labor practice charge with the National Labor Relations Board (“NLRB”). In the charge, Walmart alleged defendants violated § 8, subdivision (b)(1)(A) of the NLRA (§ 8(b)(1)(A); 29 United States Code § 158, subd. (b)(1)(A)) by “planning, orchestrating, and conducting a series of unauthorized and blatantly trespassory in-store mass demonstrations, invasive ‘flash mobs’, and other confrontational group activities at numerous facilities nationwide . . . by which the UFCW restrained and coerced employees in the exercise of their § 7 rights (which includes the right to refrain from supporting the UFCW) by attempting to impose its will on local facility management in front of facility employees through the sheer force of a mass of moving bodies despite requests and direction by local management to leave.” The unfair labor practice charge alleged UFCW coerced employees when it blocked ingress and egress from Walmart facilities, filmed employees reacting to the in-store demonstrations, threatened violence, and attempted to make “improper payments to employees to yield to the UFCW’s wishes.” The charge challenged union conduct across the United States. It also complained of conduct outside Walmart stores, including picketing and demonstrations near store entrances and in store parking lots. The union then filed a complaint in the Los Angeles Superior Court for trespass, seeking injunctive and declaratory relief against UFCW. The complaint alleged UFCW trespassed inside Walmart stores to engage in “unauthorized activities.” UFCW argued the action was preempted because the NLRA arguably prohibited the union conduct Walmart was seeking to enjoin. The union did not argue its conduct was arguably protected under the NLRA. The trial court issued a preliminary injunction prohibiting UFCW, and persons acting in concert therewith (excluding Walmart employees), from entering Walmart’s stores to engage in “unlawful activities, such as picketing, patrolling, marching, parading, ‘flash mobs’, demonstrations, handbilling, solicitation, manager confrontations, or customer disruptions. . . .” The injunction did not prohibit union representatives from accompanying a Walmart employee in discussions with a manager to discuss labor conditions. Eventually the parties stipulated to the issuance of a permanent injunction with terms identical to those of the preliminary injunction, to expedite appellate review. Pursuant to the parties’ stipulation, the trial court entered judgment in favor of the union on all causes of action in the complaint. An appeal timely followed.

The Court of Appeal affirmed the judgment, holding that when a dispute involves conduct that is arguably prohibited under the NLRA and also constitutes trespass under state law, the NLRA will not preempt the state trespass claim so long as it concerns the location of union conduct, rather than the objective, purpose, or effect of the conduct.

Torts

Anderson v. Fitness International, LLC

October 27, 2016

(2016) 4 Cal.App.5^th 867

Kirk Anderson, who was in his early 60’s, joined the L.A. Fitness health club in Glendale, California. He signed a membership agreement, which released L.A. Fitness from all liability to for any loss or damage or injury whether caused by the active or passive negligence of L.A. Fitness. Approximately a year later, Anderson finished his exercises at the health club and went to take a shower. The shower room is a single large room with approximately seven shower heads on the walls. It has a tile floor which Anderson alleges has significant and sharply downward slanting slopes towards two drains located in the center of the room and is layered and covered with body oil and soapy residue. There are no handrails, shower mats, or friction strips in the room. Anderson wore shower sandals and was carrying his soap in one hand. As Anderson moved towards one of the shower nozzles, his left foot slipped, and he began to fall. Anderson extended his left arm to brace himself. When he hit the floor, he felt extreme pain in his arm between his elbow and shoulder; his humerus had snapped in two. Anderson filed a complaint against L.A. Fitness a result of the incident. L.A. Fitness moved for summary judgment, asserting “[t]he release and waiver of liability within [Anderson’s] Membership Agreement bars any and all claims against [L.A. Fitness].” In support of its motion, L.A. Fitness also filed a separate statement of undisputed facts, which set forth the language of the Release. The trial court noted that Anderson had conceded the waiver he signed with L.A. Fitness barred any claim against L.A. Fitness for negligence and that both parties agreed that the waiver did not bar a claim for gross negligence. The trial court found that Anderson had “neither pled, in the complaint, nor articulated, in opposition to the motion, any facts that would support a finding that [L.A. Fitness] acted with gross negligence, as opposed to ordinary negligence.” The trial court thus granted the summary judgment motion and entered judgment in favor of L.A. Fitness. Anderson filed a timely notice of appeal.

The Court of Appeal affirmed, holding that Anderson failed to plead sufficient facts to support a theory of gross negligence by alleging that the tile floor in the shower room was routinely covered in oily and soapy residue without alleging any further facts to show that the condition of the floor was an extreme departure from ordinary conditions in such facilities or that L.A. Fitness had taken no measures to reduce the inherent risk. L.A. Fitness’ assertion of a release as a complete defense to an ordinary negligence cause of action (Civil Code § 1714, subd. (a)) shifted the burden to the patron on summary judgment to produce evidence showing a triable issue of material fact. The Court further held that the release was not invalid on public policy grounds (Civil Code § 1668) absent evidence of grossly negligent conduct.

Foxen v. Carpenter
November 3, 2016

(2016) 6 Cal.App.5^th 284

Christine Foxen sued her former attorneys, John Carpenter, Paul Zuckerman, Nicholas Rowley and Carpenter, Zuckerman & Rowley, LLP (“attorneys”), who had represented her in a personal injury action. Foxen alleged 10 causes of action: (1) declaratory relief; (2) breach of fiduciary duty; (3) breach of contract/fee agreement; (4) breach of contract/personal injury lien; (5) unfair and deceptive business practices; (6) fraud; (7) conversion; (8) breach of the implied covenant of good faith and fair dealing; (9) money had and received; and (10) accounting. The attorneys demurred, arguing primarily that Foxen’s claims were time-barred. After oral argument, the court sustained the attorneys’ demurrer with leave to amend. Foxen chose not to amend, and a dismissal of the action was entered. Foxen appealed.

The Court of Appeal affirmed the judgment. The Court disagreed with Foxen’s effort to characterize her contract claims as arising from breaches of ordinary, non-legal duties. The Court held that the contract claims were based on the attorneys’ alleged misconduct in allocating the settlement funds in the personal injury action, either because they incorrectly calculated the litigation costs, or because they breached their fiduciary duties to her by intentionally manipulating those charges in order to recover more monies than that to which they were entitled. Foxen would not be able to establish her contract claims without demonstrating that the attorneys breached the professional duties owed to her, or non-legal services closely associated with the performance of their professional duties as lawyers. Code Civil Procedure § 340.6, subd. (a), therefore applied, and Foxen’s failure to file her action within one year after she discovered the false charges that formed the basis of the contract claims was fatal to the claims. Foxen’s accounting claim was untimely for the same reasons. Even assuming that Foxen’s conversion claim was not governed by § 340.6, subd. (a), the claim was still time-barred under Code Civil Procedure § 338, as was her fraud claim, because she failed to bring the claims within three years of her discovery of the alleged wrongful charges and fraudulent withholding by the attorneys. The Court concluded that Code of Civil Procedure § 340.6, subd. (a), applied to bar Foxen’s unfair business practices claim because it is more specific than Business and Professions Code § 17208.

Gonzales v. City of Atwater
December 15, 2016

(2016) 6 Cal.App.5^th929

In December 2010, Michelle Carrizales was making a left turn at an intersection in the City of Atwater (“City”) when she struck and killed Delia Gonzales, a pedestrian in a crosswalk. Gonzales’ husband and five adult children (collectively, “plaintiffs”) sued Carrizales and the City for wrongful death, alleging Carrizales was negligent and the City was liable under Government Code § 8351 for the dangerous condition of the intersection. A jury trial was held, at which the jury found Carrizales not negligent and

the City solely liable based on the dangerous condition of the intersection; the jury awarded plaintiffs approximately $3.2M in economic and non-economic damages. In its motion for judgment notwithstanding the verdict (“JNOV”), the City renewed an argument it made on its unsuccessful motion for directed verdict that the design immunity defense of Government Code § 830.6 shielded it from liability. The trial court denied the JNOV. The City appealed challenging the jury’s finding that the intersection was in a dangerous condition and asserts it established the design immunity defense as a matter of law. The City also attempted to challenge the jury’s finding that Carrizales was not negligent and contended that the non-economic damages awarded to plaintiffs were excessive.

The Court of Appeal reversed the judgment against the City and remanded the matter with directions. The Court observed that the parties agreed that the first element of design immunity, a causal relationship between the design and the fatality, had been satisfied. The Court held that the evidence demonstrated the discretionary approval element as a matter of law because the City presented undisputed evidence that the 2001 plans for the intersection were designed by a professional engineering firm, reviewed and approved by the city engineer, who had the discretionary authority to approve the plans, and approved by the city council. The 2001 plans consisted of detailed drawings of the intersection where the accident occurred, including the light phasing and signage. Evidence of the deliberative process was not required to show discretionary approval. Instead, the wisdom of approving the 2001 plans with permissive phasing was judged under the reasonableness element of Government Code § 830.6. The record showed that plaintiffs conceded at trial that the 2001 plans were reasonable when they were approved. Specifically, the concession was made by plaintiffs’ counsel in the midst of the City’s case-in-chief, during a break in the direct examination of one of its witnesses, and there was nothing in the record to suggest the concession was inadvertent or spontaneous. Accordingly, plaintiffs were bound by the concession, and the City was therefore not required to prove reasonableness. Because all the elements of design immunity were established, the City was immune from liability for any dangerous condition of the intersection.

Huang v. The Bicycle Casino

October 19, 2016

(2016) 4 Cal.App.5^th 329

Jing Huang was injured boarding a shuttle bus provided by The Bicycle Casino, Inc. (“Bicycle Casino”), which transported passengers from Monterey Park to Bicycle Casino in Bell Gardens. Huang alleged Bicycle Casino was a common carrier and had a duty and responsibility to ensure the safety and security of its patrons who took the shuttle bus. On the day in question, Huang was waiting for the Bicycle Casino shuttle along with a crowd of others. When the shuttle arrived, it stopped approximately 20 to 30 meters from where the group was standing. The waiting crowd ran toward the shuttle, and Huang rushed to the shuttle with everyone else. Huang was on the left side of the shuttle entrance, and with her left hand on the handrail, she put her right foot on the first step. The crowd on the right side surged, and she was pushed and fell. Paramedics took Huang to the hospital, where she had an X-ray. She had a broken bone in her left hip that required surgery the next day. The court granted Bicycle Casino’s motion for summary judgment holding that Bicycle Casino was not a common carrier and owed only a duty of ordinary care to the shuttle passengers, and that the scope of the ordinary duty of care did not extend to protecting Huang from being bumped by other passengers as she boarded the shuttle. Huang timely appealed.

The Court of Appeal reversed the trial court’s ruling, holding that material fact issues as to whether Bicycle Casino indiscriminately offered the shuttle bus to the public for reward precluded summary judgment on common carrier status and the applicable standard of care (Civil Code §§ 2096, 2100, 2168). Even if Bicycle Casino had only a duty of ordinary care (Civil Code § 1714, subd. (a)) as a private carrier, there was no exemption from the duty of ordinary care as a matter of law because it was foreseeable that a large group of passengers might push while boarding even if there had been no prior similar incidents, inexpensive measures could be taken to control such crowds, and questions of proximate cause and whether the conduct of third parties might relieve Bicycle Casino of liability were for the jury.

Khosh v. Staples Construction Company, Inc.

October 26, 2016

(2016) 4 Cal.App.5^th 712

Al Khosh was injured while performing electrical work at California State University Channel Islands (the “University”). He was employed by Myers Power Products, Inc. (“Myers”), a subcontractor on the project. The University hired Staples Construction Company (“Staples”) to install a backup electrical system at the university. Staples hired DK Electrical Systems, Inc. (“DK”) as the high-voltage subcontractor for the project. DK hired Myers to construct and install electrical switchgear for the system. The contract between Staples and the University required Staples to “exercise precaution at all times for the protection of persons and their property,” and to “retain a competent, full-time, on-site superintendent to . . . direct the project at all times,” among other things. It made Staples “exclusively responsible” for the health and safety of its subcontractors, and required Staples to submit “comprehensive written work plans for all activities affecting University operations,” including utility shutdowns. Myers informed Staples it needed three days to accomplish its last task on the project, including a shutdown of the electrical system. The University scheduled a campus-wide electrical shutdown. The shutdown was to be followed by final testing of the system’s operation. Khosh arrived at the University two and a half hours before the scheduled shutdown time. The University’s project manager let Khosh and a helper into a substation containing electrical switchgear. Khosh performed work in the substation, while the switchgear was still energized. An electrical arc flash occurred, severely injuring him. The flash occurred approximately half an hour before the shutdown was scheduled to begin. Staples did not have any personnel at the University at the time. Khosh filed a complaint, asserting a cause of action for general negligence against Staples. Staples moved for summary judgment relying upon the Privette doctrine (Privette v. Superior Court (1993) 5 Cal.4^th 689, 702 (Privette)) which generally prohibits the employee of a contractor from suing the hirer of the contractor for work-related injuries. (Privette, supra, 5 Cal.4^th at p. 702.) Khosh argued Privette did not bar his claim because (1) Staples retained control over the work and affirmatively contributed to his injuries (Hooker v. Department of Transportation (2002) 27 Cal.4^th 198, 202 (Hooker)) and (2) Staples violated non-delegable regulatory duties because it did not have a qualified electrical worker present to supervise Khosh and did not prepare a written procedure for the electrical shutdown. The trial court granted Staples’ motion for summary judgment because Khosh failed to establish that Staples retained control over his work and affirmatively contributed to his injury.

The Court of Appeal affirmed the judgment. The Court held that while Khosh presented sufficient evidence that the Staples retained control over safety, there was no evidence that Staples affirmatively contributed to Khosh’s injury. Staples’ agreement with the University imposed only a general duty to prevent accidents, it did not impose specific measures that Staples was required to undertake in response to an identified safety concern. There was no evidence that Staples refused a request to shut off electrical power or prevented Khosh from waiting until the scheduled shutdown before starting work. There was also no evidence Myers or Khosh relied on a specific promise by the Staples. The Court concluded that safety regulations that Khosh claimed required Staples to have a qualified electrical worker present to supervise Khosh and to prepare a written procedure for the electrical shutdown did not impose non-delegable duties. However, even if they did, the absence of a work plan or a supervisor did not affirmatively contribute to Khosh’s injuries.

Minnegren v. Nozar

October 24, 2016

(2016) 4 Cal.App.5^th 500

Joshua B. Nozar drove a Range Rover to college for a 9:30 a.m. class and could not find parking in a campus parking lot. Sometime between 9:20 a.m. and 9:45 a.m., he exited the parking lot and drove southbound on 10^th Street looking for a place to park. He proceeded to the intersection of 10^thStreet and Broadway. While 10^th Street was controlled by a stop sign going southbound and going northbound, Broadway was not controlled by a stop sign, and he knew motorists on Broadway had the right-of-way. Nozar saw a parking space on the street on the opposite side of the intersection. At the same time, Sassa Minnegren was driving eastbound on Broadway in a small car. When Nozar proceeded into the intersection, Minnegren hit Nozar and was injured in the collision. The jury rendered a special verdict in favor of Nozar. The trial court entered judgment on the special verdict, and Minnegren filed a notice of intention to move for a new trial, and filed motions for a new trial and judgment notwithstanding verdict based on insufficiency of the evidence. The trial court denied both motions.

The Court of Appeal affirmed the judgment and order holding that the evidence was sufficient to support the jury’s finding that Nozar was not negligent because he testified that he looked, saw Minnegren’s car approaching, and thought he could make it through the intersection safely. According to his testimony, Nozar exercised some measure of care, and it was up to the jury to determine whether he exercised due care. Nozar’s failure to take a second look was not per se negligent, and the jury was empowered to decide if it was reasonable.

Moore v. Mercer

October 21, 2016

(2016) 4 Cal.App.5^th 424

Lillie Moore was injured in a collision and sued Richard Mercer, the driver of the other car, who admitted to negligence. During discovery, the trial court denied Mercer’s motion to compel Dr. Orisek, a nonparty to the litigation, to produce billing records, payment records, and records evidencing any agreements for the medical care of Moore related to her treatment. Citing privacy and confidentiality, Dr. Orisek refused to produce his agreement with MedFin, a financial service company that purchases medical bills, and the liens securing them, from health care providers. Moore’s lawyer made repeated efforts to meet and confer with defense counsel and produced all the documents sought by Mercer except the written agreement between Dr. Orisek and MedFin regarding the sale of bills and liens. The documents produced by Dr. Orisek included both the lien agreement between Dr. Orisek and plaintiff, and the notification from Dr. Orisek to plaintiff that her lien had been sold to MedFin and that she was obligated to pay the full amount to MedFin. Defense counsel did not respond to the meet-and-confer efforts by plaintiff’s counsel.

The trial court denied the motion and awarded Moore $2,500 in sanctions. At trial, the jury awarded Moore $522,689 in damages, including $122,689 for past medical expenses, which was $51,582 more than what the defense expert opined was the reasonable value of the services.

The Court of Appeal reversed the order for discovery sanctions and otherwise affirmed the judgment, holding that case law does not cap a plaintiff’s damages to the amount a medical finance company pays health care providers for their accounts receivable and medical liens. Further, case law does not limit the trial court’s discretion pursuant to Evidence Code § 352, to exclude evidence of the amount a medical finance company pays if the court decides that the evidence was minimally probative and would necessitate an undue consumption of time to try collateral issues. In the current case, the trial court carefully weighed the minimal probative value against the cost and distraction of trying why Dr. Orisek would sell and MedFin would buy a substantially discounted account receivable and lien. The Court also held that the terms of the agreement between MedFin and Moore’s providers may be relevant and discoverable. The Court also held that in the current case, no prejudice resulted from denying Mercer’s motion to compel, and sanctions should not have been imposed.

Nava v. Saddleback Memorial Medical Center

September 23, 2016, publication ordered October 18, 2016

(2016) 4 Cal.App.5^th 285

Manuel Nava was injured while a patient at Saddleback Memorial Medical Center (“Saddleback”). His injury occurred while he was being transported in the hospital on a gurney. Nava filed a complaint sounding in negligence against Saddleback and an ambulance service, Herren Enterprises, Inc. (“Herren”). The complaint was filed more than one year, but less than two years, after his injury. Both Saddleback and Herren filed motions for summary judgment, contending that the complaint was time-barred under Code of Civil Procedure § 340.5, which imposes a one-year statute of limitations when an injury is caused by the professional negligence of a health care provider. The trial court granted the motions ruling that the statute of limitations for professional negligence under § 340.5 barred Nava’s claims.

The Court of Appeal affirmed, holding that the alleged negligence was integrally related to Nava’s medical diagnosis or treatment and therefore was subject to the one-year statute of limitations for professional negligence under § 340.5, instead of the two-year statute of limitations for ordinary negligence (Code of Civil Procedure § 335.1), because the patient was being transported pursuant to a medical professional’s directive. The Court also held that there was no merit to Nava’s argument that a premises liability cause of action should be analyzed any differently, and summary judgment was properly granted because there were no disputed issues of material fact as to the date on which the injury occurred or that the complaint was filed more than one year later.

Pierson v. Helmerich & Payne International Drilling Company

October 6, 2016

(2016) 4 Cal.App.5^th 608

Helmerich & Payne International Drilling Co. (“H&P”) operates oil drilling rigs. The rigs operate 24 hours a day with two crews working 12 hours per day for 14 days. H&P provides employees who live more than two hours away from the rig location with free lodging at a local hotel. Employees who stay at the hotel are responsible for arranging and paying for their own transportation between home and the hotel and between the hotel and the job site. Luis Mooney, who lives near the rig provided two out-of-town employees, his supervisor, Ruben Ibarra, and Mark Stewart, with rides to and from the drill site in his Ford pickup. On the date in question, after the end of their shift, Mooney was driving home and giving Stewart and Ibarra a ride to the hotel when his truck collided with a truck driven by Plaintiff Brent Pierson. Both drivers and all of the passengers were transported to the hospital. Pierson and his wife filed a personal injury lawsuit against Mooney. Approximately one year later, they added H&P as a defendant. Pierson’s employer’s worker’s compensation carrier intervened in the lawsuit, alleging that Mooney was the employee of H&P and that he was acting in the scope and course of his employment with H&P. H&P filed a motion for summary judgment against Pierson and the worker’s compensation carrier asserting that the accident occurred when Mooney was driving home from work and did not occur while he was in the course or scope of his employment. The trial court granted H&P’s motion. Pierson appealed.

The Court of Appeal affirmed the judgment holding that H&P was not liable as a matter of law for the traffic accident, because the undisputed facts established that the going and coming rule applied. Thus, it could not be reasonably inferred that H&P impliedly required or requested Mooney to provide transportation to Ibarra between the hotel and the jobsite. Ibarra’s requests for such rides were personal in nature and were not reasonably imputed to H&P.

Wang v. Nibbelink

October 13, 2016

(2016) 4 Cal.App.5^th 1

A horse ran away from a meadow owned by defendants Gregory Nibbelink, Bevlee Nibbelink, Gary D. Nibbelink, Linda A. Nibbelink, Robert G. Goulding, Diane K. Goulding, and Nibbelink Revocable Family Trust (“Meadow Landowners”) onto adjacent property known as Strawberry Lodge (“Lodge”) and trampled plaintiff Yan Wang as she and her husband, plaintiff Tyler Raihala (collectively, “Plaintiffs”), got out of their car to dine at the Lodge. The horse was part of the Wagon Train, an annual historical event simulating Old West travel by stage coach across the Sierras in Northern California. The Meadow Landowners were not involved in the event but allowed the event organizers and participants to use the meadow for overnight camping and horse containment. Plaintiffs had nothing to do with the Wagon Train, not even as spectators. The trial court entered summary judgment in favor of defendants holding that under Civil Code § 846, the Meadow Landowners were shielded from liability “for any injury to person or property caused by any act of the person to whom permission has been granted.”

The Court of Appeal affirmed the judgment. The court concluded that § 846, applies to relieve a landowner of liability for injury caused by a recreational user to an off-premises nonparticipant. The event and the horse rider were using the land as part of their recreational activities. § 846 applied despite plaintiffs’ allegations that the Meadow Landowners’ own negligence contributed to the injuries. Plaintiffs failed to show any potential for liability independent of § 846; accordingly, the trial court properly entered summary judgment in favor of the Meadow Landowners.

Stone | Dean Law

Thursday, August 24, 2017

California Case Law White Paper Q4 2016 by Kori Macksoud

Stone | Dean California Case Law White Paper
Quarter 4, 2016

By Kori Macksoud, Law Clerk

October to december 2016

Table of Authorities

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Thursday, August 24, 2017

California Case Law White Paper Q4 2016 by Kori Macksoud

Stone | Dean California Case Law White PaperQuarter 4, 2016

By Kori Macksoud, Law Clerk

October to december 2016

Table of Authorities

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Stone | Dean California Case Law White Paper
Quarter 4, 2016