Thursday, January 30, 2014

FCA's Not Always a Federal Case

Driscoll v. Superior Court, No. F066550 (D5 Jan. 30, 2014)

Generally, when a claim arises under a federal law, state and federal courts have concurrent subject matter jurisdiction over it,
unless a federal statute expressly vests exclusive jurisdiction in federal court. Plaintiff here is allegedly a whistle-blower; he sued his employer in Madera County Superior Court for retaliation under the federal False Claims Act, 31 U.S.C. § 3729. The superior court granted the employer’s demurrer on the ground that it lacked jurisdiction. But the FCA retaliation statute’s jurisdiction provision, 31 U.S.C. § 3730(h)(2), says only that FCA cases “may be brought the appropriate district court of the United States[.]” It does not say that they must be brought in federal court exclusively. Cf. 28 U.S.C. 1338(a) (exclusive federal patent and copyright jurisdiction); 29 U.S.C. § 1132(e)(1) (exclusive federal ERISA jurisdiction). So the trial court erred, and a writ would issue ordering it to vacate its demurrer order.

When up Against a Pro Se, the Record Is Your Co-Defendant

Petrosyan v. Prince Corp., No. B244274 (D2d8 Jan. 29, 2014)

This case involves a jury trial in a wage and hour case litigated by a non-English-speaking pro se through an interpreter. The case was a trial de novo after the Labor Board awarded plaintiff only $12,000 on his claim. Before the trial, defendant won a motion in limine, precluding plaintiff from mentioning other plaintiffs’ cases or settlements involving defendants
in front of the jury. Plaintiff nevertheless mentioned those cases in his opening statement. The court declared a mistrial. For trial #2, defendant made the same motion, which the court again granted, telling plaintiff: Don’t do what you did last time. In the second trial, during plaintiff’s direct exam of himself, he mentioned the Labor Board award he was appealing. The defendant’s lawyer objected about the reference to the prior case, but admitted that he supposed he should have specifically put that in his motion in limine. The court ruled that it was there in spirit, granted another mistrial and dismissed the case with prejudice for plaintiff’s misconduct. Plaintiff—now represented by a partner at Steptoe & Johnson—appealed. Defendant failed to file a respondent’s brief. The court of appeal reverses, holding that the trial court needed to be clearer with the pro se plaintiff. The in limine ruling re other cases did not necessarily apply to Labor Board proceeding in the same case. Defendant tacitly admitted as much when its attorney said he should have put that in his motion. Since the order wasn’t clear, plaintiff didnt commit misconduct meriting terminating sanctions by failing to comply with it. And in any event, plaintiff’s reference to the Labor Board case was not so prejudicial that it could not have been cured with a jury admonition. So there was no reason to order a second mistrial in the first place.

Reversed and remanded.

Wednesday, January 29, 2014

Terminating Sanctions, Affirmed.

Los Defensores v. Gomez, No. B240725 (D2d4 Jan. 24, 2014)

The court of appeal upholds terminating sanctions issued by the trial court for defendants
persistent failures to comply with their discovery obligations.

So Much for the Routine Protective Order

Nativi v. Deutsche Bank National Trust Company, No. H037715 (D6 Jan 23, 2014)

This meat of case deals with a significant issue in mortgage foreclosure law: when is a foreclosing bank required to honor a tenant
s lease to the foreclosed property. (Youll have to read the opinion if you want the answer to that question.) But it also addresses an interesting issue about protective orders. It holds that the trial court abused its discretion by granting a contested motion for protective order. Notably, the order the court gets reversed for entering contained many of the stock provisions that are common fare in the routine protective orders to which parties regularly stipulate.

Tuesday, January 28, 2014

Long Live D'Amico?

Ahn v. Kumho Tire U.S.A., Inc., No. E054322 (D4d2 Jan 22, 2014)

The court of appeal reverses a trial court’s grant of summary judgment in an oral contract case where the plaintiffs’ interrogatory responses were contradicted by a declaration they submitted in opposition to summary judgment. The court ultimately holds that the so-called D’Amico rule—which says a plaintiff cannot avoid summary judgment by contradicting his deposition in a declaration—is inapplicable. In doing so, it sets a new standard regarding the extent of the evidence the non-moving needs to come forward with to establish an explanation for the discrepancy, and thus avoid the rule.

Thursday, January 23, 2014

Even with a Dismissal, No SLAPP, No Fee.

Tourgeman v. Nelson & Kennard, No. D063473 (D4d1 Jan. 16, 2014)

Plaintiff filed a class action to enjoin some allegedly unlawful debt collection practices under the Unfair Competition Law. Defendant responded by filing an anti-SLAPP motion. After plaintiff dismissed before the motion could be ruled on, defendant sought and obtained an award of attorneys’ fees. On appeal, noting a split of authority on the issue, the court holds that in deciding whether to award fees to a defendant whose anti-SLAPP motion is met with a dismissal, the court must determine whether the defendant would have prevailed on its motion before fees can be awarded. (Other courts have held that the dismissal is essentially a concession that the case is a SLAPP and thus that the court has the discretion to award fees without analyzing the underlying merits of the motion.) Here, even though he dismissed, plaintiff could show that his lawsuit was subject to the public interest exception to the anti-SLAPP statute provided in Code of Civil Procedure § 425.17. Because the motion could not have prevailed even if plaintiff hadn
t dismissed, the fee award was in error.


Fraudlent Transfers Are Not Protected Actity, Even if Accomplished Through a Collusive Settlement

Optional Capital v. Das Corporation, No. B241244 (D2d1 Jan 15, 2014)

The effort it would take to explain the convoluted facts in this case significantly outweighs any procedural interest, so I’ll try to be brief. Generally speaking, defendants are individuals and companies that are alleged to have raided plaintiff’s assets to the tune of $35 million. As part of what the court describes as “an extremely tangled thicket of legal proceedings in both state and federal court, as well as in Switzerland,” plaintiff got a judgment against some of defendants. In this case, plaintiff is trying to collect on its judgment by suing other defendants as the beneficiaries of fraudulent transfers. Somewhere in the thicket of legal proceedings there was a settlement between the judgment debtor defendants and one of the fraudulent transferee defendants. Plaintiff says that it was collusive—part a conspiracy to divert some funds out of a recently unfrozen Swiss bank account so that plaintiff couldn’t execute against it. As seems to happen any time a complaint references some other litigation, defendants filed an anti-SLAPP motion and a demurrer on the Civil Code § 47(c) litigation privilege, both of which the trial court granted.

Not so, said the court of appeal. This case does not arise from protected activity. No doubt, settlement-related activity can sometimes be “protected activity,” as defined in Code of Civil Procedure § 425.16(e). Just because a collusive settlement was alleged to have been a means by which the debtor defendants accomplished their fraudulent transfers does not mean that plaintiff is suing them and the fraudulent transferee defendants for the act of entering a settlement. They are instead being sued engaging in a scheme to shuffle money around avoid the debtor defendants’ obligations on the judgment. That claim does not
arise from protected activity. In any event, plaintiff showed a likelihood of success on its fraudulent transfer theory. And similarly, as to the demurrer, although the litigation privilege might apply to statements made in settlement negotiations, it does not apply when a lawsuit is based on a separate, non-communicative, wrongful act, like a conspiracy to transfer funds out of the clutches of one’s creditors for lack of reasonably equivalent value.


Wednesday, January 22, 2014

It's Harmless Error Week

Taylor v. Nabors Drilling USA, LP, No. B241916 (D2d6 Jan. 13, 2013)

Amongst a number of other substantive issues about employment law, the court holds that: (1) absent prejudicial error, an erroneous special verdict form does not merit reversal; and (2) that an award of attorneys’ fees to plaintiff’s lawyer was reasonable.

You Have a Right to Dish Without Malice ...

Hui v. Sturbaum, No. A135597 (D1d5 Jan.9, 2013)

The court affirms an anti-SLAPP dismissal because the statements at issue were subject to the qualified common interest privilege in Civil Code §47(c).

Error Per Se? No Way!

F.B. v. Monier, No. C063239 (D3 Jan. 9, 2014)

The court of appeal—departing from a consistent line of cases going back thirty years—holds that although it is error for a trial court not to enter a statement of decision, it is not reversible error per se. Because the failure to enter a statement of decision in this case did not prejudice the defendant, no reversal was merited. The court further holds that the plaintiff was entitled to a setoff against a prior settlement with a different defendant who allegedly caused the same injury, and on that ground substantially reduces the verdict.

Friday, January 10, 2014

The Discovery Act Is Not a Suicide Pact.

Certainteed Corp. v. Superior Court, No. B253308 (D2d3 Jan 8, 2014)

In a case that spanned barely two weeks from writ petition to writ granted, the court of appeal grants a peremptory writ ruling that the trial court has the discretion to permit a terminally ill plaintiff
’s deposition to extend beyond the newly-imposed fourteen hour limit in Code of Civil Procedure § 2025.290(b)(3).

Successor Can't Play Fast and Loose with Civil Code § 1717

Apex LLC v., No. G047737 (D4d3 Jan. 8, 2014)

This is an appeal of an order awarding attorneys’ fees incurred on appeal after the case was reversed and remanded. The court first finds that a post-reversal/remand fee award is immediately appealable under the collateral order doctrine. In doing so, it sidesteps a split in authority over the very similar question of whether a post-reversal order on a motion to tax appellate costs is immediately appealable under Code of Civil Procedure § 904.1(a)(2), as an order made after an appealable judgment. Compare Barnes v. Litton Sys., Inc., 28 Cal. App. 4th 681 (1994) (no,
because after a reversal and remand, there is no judgment in place to be “made after”) with Krikorian Premiere Theatres, LLC v. Westminster Cent., LLC, 193 Cal. App. 4th 1075, 1077 (2011) (yes, because in a post-reversal cost award the relevant “judgment” that the order is “made after” is that of the court of appeal reversing the case). On the merits, the court affirms the award and rejects the appellants argument that fees could not be awarded against it under Civil Code § 1717 because it did not sign the contract that contained the attorneys’ fee provision. The record made clear that the appellant effectively stood in the shoes of the contracting party. Indeed, before the case was reversed on appeal, the appellant had been awarded its own fees under the same contract. Chutzpah!


Who Needs Privity? This Is Collections!

Cardinale v. Miller, No. A132611 (D1d3 Jan. 8, 2014)

This case is an appeal of a fraudulent transfer action that arises from the long-ago implosion of a Ponzi scheme. The published part of this case deals with the right of a judgment creditor to obtain attorneys’ fees against a fraudulent transferee. A provision in the Enforcement of Judgments Law—Code of Civil Procedure § 685.040—entitles a judgment creditor to its fees in the collection action, but only if fees were also awarded as a cost in the underlying action under Code of Civil Procedure § 1033.5(a)(10)(A). Here, they were, because the contract between the plaintiff and the original judgment debtor had an attorneys’ fee provision subject to Civil Code § 1717. But the defendant in this case—who was found to have accepted fraudulent transfers from the original judgment debtor—argued that § 685.040 did not warrant a fee award against him because he was a party to neither the underlying judgment nor the contract from which it arose. But according to the court, that’s not necessary. Parsing the statute, the court finds that there are only two requirements for a judgment creditor to get fees: (1) a collections action; (2) to collect on a judgment where fees were awarded as a cost. The contractual privity that applies to § 1717 issues does not control because the entry of judgment in a contract case—including an award of fees—extinguishes the underlying contract. Thus the rights arise from the judgment itself. The court further rejected the argument that a fraudulent transfer case was not a collections action subject to the EJL’s fee provision. Practically speaking, the point of this case was plaintiff's effort to collect on his unpaid judgment. That’s all that was needed.

Affirmed in relevant part.

Wednesday, January 8, 2014

Review Granted

The California Supreme Court granted review in two more previously covered cases, on the issues as described in the court's pending issues summary:

Barry v. State Bar (Rev. Granted Nov. 26, 2013): This case presents the following issue: If the trial court grants a special motion to strike under Code of Civil Procedure section 425.16 on the ground that the plaintiff has no probability of prevailing on the merits because the court lacks subject matter jurisdiction over the underlying dispute, does the court have the authority to award the prevailing party the attorney fees mandated by section 425.16, subdivision (c)?

Nickerson v. Stonebridge Life Ins. Co. (Rev. Granted Dec. 11, 2013): This case includes the following issue: Is an award of attorney fees under Brandt v. Superior Court (1985) 37 Cal.3d 813 properly included as compensatory damages for purposes of calculating the ratio between punitive and compensatory damages where the fees are awarded by the jury, but excluded from compensatory damages when they are awarded by the trial court after the jury has rendered its verdict?


Market Lofts Community Association v. 9th Street Market Lofts, LLC, No. B245558 (D2d2 Jan. 7, 2013)

In a dispute between a developer and a homeowners’ association over parking spaces at some lofts across the street from Staples Center, the court of appeal reverses an order sustaining the developer’s demurrer for lack of standing. Because the HOA was a party to the parking contract with the developer, and an actual dispute about the HOA’s rights had arisen, it had standing to sue on its own behalf for declaratory relief. As to the HOA’s other claims—for breach of a contract between the developer and the homeowners, breach of fiduciary duty, fraud, rescission, and violations of the Unfair Competition Law—the court held that the HOA had representative standing to bring claims on behalf of its members under Code of Civil Procedure § 382. Although most people think of § 382 as the statute that authorizes class actions
(albeit kind of vaguely), it also covers representative actions of other sorts. While “[i]t may also be true that while all class suits are representative in nature, all representative suits are not necessarily class actions.” (quoting Raven’s Cove Townhomes, Inc. v. Knuppe Dev. Co., 114 Cal. App. 3d 783, 794 (1981)). Standing to bring a representative action is appropriate when there is “an ascertainable class and a well-defined community of interest in the questions of law and fact involved affecting the parties to be represented.” Here, the issues raised by the HOA’s complaint were common amongst its members, who would all be affected in the same manner by the their resolution, and in the absence of standing for the HOA, the homeowners would need to litigate 267 separate claims. Under the circumstances it was appropriate to afford representative standing to the HOA under § 382. That the developer might have individualized defenses against the homeowners did not merit otherwise.


Monday, January 6, 2014

We're All Alter Egos Now

Relentless Air Racing, LLC v. Airborne Turbine, LP, No. B244612 (D2d6 Dec. 31, 2013)

This last case of 2013 is a doozy. On a motion to amend a judgment to add additional judgment debtors, the court of appeal reverses the trial court to hold that the owners of a defendant limited partnership hit with a significant judgment are the alter egos of the LP as a matter of law. In doing so, it potentially significantly expands the scope of alter ego liability in California.