Monday, March 31, 2014

Learn Something New Every Day ...

Legendary Investors Group No. 1 v. Niemann, No. B245620 (D2d4 Mar. 25, 2014)

This is a short—albeit dense—opinion reversing a nonsuit under Code of Civil Procedure
§ 581c that the trial court granted at the close of plaintiff’s evidence. In discussing the standard, the court mentions that in addressing a nonsuit motion, courts cannot consider defendant-favorable testimony elicited from a hostile witness called by the plaintiff under § 776 of the Evidence Code. (§ 776 permits a party to call on direct and cross-examine a witness affiliated with the opposing party.) Apparently, that testimony is not considered part of plaintiff’s case-in-chief for nonsuit purposes. Did not know that.


Saturday, March 29, 2014

A Hearing Delayed Is a Hearing Nonetheless.

Pielstick v. Midfirst Bank, No. B247106 (D2d2 Mar. 26, 2014)

Defendants demurred the second amended complaint brought by plaintiff, who is a pro per. At the hearing on the demurrer, the case was called, but defendants explained that they not received plaintiff’s opposition. The court twice continued the hearing to later in the day so that the court and the defendants could read plaintiff’s papers. At the continued hearing plaintiff asked to dismiss his case without prejudice under Code of Civil Procedure § 581, which permits a plaintiff to voluntarily to dismiss with or without prejudice “any time before the actual commencement of trial[.]” The court denied the request and granted the demurrer.

Read literally, § 581 would permit plaintiffs to perpetually delay the inevitable by dismissing a case without prejudice in order to avoid an impending adverse decisions on a dispositive motion. To prevent this result, courts have put a gloss on
commencement of trial as it appears in § 581 to encompass any hearing on a dispositive motion, including a demurer. Thus, plaintiff could have dismissed his case without prejudice at any time before the demurrer hearing. But he didn’t do that. He asked to dismiss after the hearing was underway. Indeed, his request came after it had been continued twice. Reviewing the relevant precedent, the court holds that trial had begun for the purposes of § 581: “Where a trial court has allowed a brief continuance of a dispositive hearing for a limited purpose, a plaintiff is not entitled to utilize that time to file a voluntary dismissal of the action with the intention of reasserting the same allegations at a later date.” Plaintiff’s request was thus untimely.


Friday, March 28, 2014

Court Orders Specific Performance of Pre-litigation ADR

The McCaffrey Group, Inc. v. Superior Court, No. F066080 (D5 Mar. 24, 2014)

Much of this appeal deals with the validity of certain contractual provisions under the Right to Repair Act, a statute particular to construction defect litigation. Since there are other outlets that specialize in that issue and I know virtually nothing about it, I'll leave that to them. But this opinion does have one interesting procedural angle that comes up in general commercial litigation quite often. The provisions at issue impose a pre-litigation alternative dispute resolution regime. Before a party can sue over a dispute, it must (1) give written notice; (2) meet and confer to attempt to negotiate a resolution; and (3) attend a non-binding mediation. The plaintiff here jumped the gun and sued without following the procedures, claiming they were unenforceable. 

These kinds of notice/negotiate/mediate provisions are not unique to construction defect litigation; they often appear in all kinds of commercial and corporate agreements. What can make them frustrating is the lack of clarity about how they are to be enforced if one side or the other is unenthusiastic about engaging in the agreed pre-litigation ADR process or if they become an excuse for interminable delay. Are they conditions precedent, such that failing to follow them could preclude a claim altogether? If so, if, when, and how can a party waive the right to enforce the condition through non-cooperation, bad faith, or delay? And can they be specifically enforced like an arbitration agreement? Although the court doesn’t really delve deeply into the remedies issue, the decision stands factually for the proposition that specific enforcement akin to a motion to compel arbitration is a viable procedural option. After finding the provisions enforceable under the Right to Repair Act, the court grants a writ and orders the parties to complete agreed notice, negotiation and mediation procedures before any further litigation of their claims proceeds. 

Writ granted.

Bad Lab Work Held Privileged Under § 47(b)

Falcon v. Long Beach Genetics, No. D062807 (Mar. 21, 2014)

The court holds that the Civil Code § 47(b) litigation privilege applies to claims against a genetic testing lab for negligently conducting a DNA test in connection with a paternity proceeding. 

Tuesday, March 25, 2014

Too Fast for DFEH, Too Short for FEHA

Ellis v. U.S. Security Associates, No. A136028 (D1d2 Mar. 20, 2014)

The court holds that a contractual shortening of a statute of limitations contained in an employment application to six months is unreasonable and thus unenforceable. Particularly given that the statutorily mandated pre-litigation Fair Employment and Housing Act administrative process can be expected to last up to two years, six months is just too short to be reasonable. Which makes sense. The opinion is mostly notable for taking the defendant’s attorney to task for fast and loose case citations in his brief.


Big Blue Pencil Saves Carmax's Day

Casas v. Carmax Auto Superstores California LLC, No. B246392 (D2d1 Mar. 20, 2014)

This is an appeal of a denial of a motion to compel arbitration over the same Carmax employment arbitration agreement that was at issue in a case decided a few weeks ago. Unsurprisingly, the court reaches the same result and reverses, although the issues addressed in this appeal are somewhat different. Here, the crux of the plaintiff’s argument is that the agreement—contained in Carmax’s employee handbook—is illusory and thus unenforceable because it permits Carmax to unilaterally modify it. He relies on Sparks v. Vista Del Mar Child & Family Services, 207 Cal. App. 4th 1511, 1522 (2012), which in a single sentence without further elaboration states that “[a]n agreement to arbitrate [contained in an employee handbook] is illusory if, as here, the employer can unilaterally modify the handbook.”

But the court distinguishes Sparks, because unlike the handbook in Sparks, the Carmax handbook could only be modified on thirty days written notice, so the agreement is not illusory. And even were the handbook silent as to notice, under Peleg v. Neiman Marcus Group, Inc., 204 Cal. App. 4th 1425, 1463–64 (2012)—a case decided by this same division a three months before Sparks— the implied covenant of good faith and fair dealing would read in a notice requirement, which would prevent the agreement from being illusory. (This seems like more a rejection of Sparks than a way to distinguish it, since presumably the Sparks handbook was also subject to the implied covenant.) 

Finally, the court notes that the handbook does expressly permit Carmax to make unilateral rule changes applying to already-accrued claims. Generally, that would make the agreement illusory under Peleg, as it would let Carmax pierce the veil of procedural ignorance and write rules to its advantage on particular known claims. That flaw can’t be fixed by the implied convent because it would rewrite the express terms of the agreement. The agreement, however, contains a savings clause that authorizes the modification of any unlawful rule in it to conform with the law until a formal amendment is made. Because that clause would prevent enforcement of retroactive rule changes, the agreement would stand under Peleg.


Friday, March 21, 2014

Doin' the Right Thing ...

Nocetti v. Whorton, No. C071317 (D3 Mar. 18, 2014)

Plaintiffs failed to show up at trial because their
attorney, dying of cancer, apparently miscalendared the trial date. Defendant moved for judgment, and after “reviewing the entire file,” (whatever that means) the trial court entered a defense judgment on the merits. Plaintiffs moved to vacate the judgment under Code of Civil Procedure § 473(b), which affords relief—sometimes mandatory, sometimes at the discretion of the court—from orders that entered due to the mistake, inadvertence, or neglect of a party or its attorney. At a hearing plaintiff’s lawyer was too sick to attend, the trial court denied the motion. The lawyer died soon thereafter, plaintiffs got new counsel, and they appealed. 

In the published part of the opinion, the court holds that plaintiffs weren’t entitled to mandatory relief under § 473(b) because it applies only to “defaults” and “dismissals.” To avoid rendering the discretionary relief as surplusage, established case law reads the mandatory relief narrowly to apply only to default judgments due to failure to respond to a complaint and the plaintiff-side equivalent—dismissals entered after a plaintiff fails to respond to a demurrer or other dismissal-type motion. Because entry of a defense judgment based on a nonappearance after “reviewing the entire file,” is not a dismissal, so defined, plaintiffs don’t get mandatory relief. 

But the court goes on, in an unpublished part of the opinion,* to show plaintiffs a little mercy. It reverses and remands to the trial court to reconsider providing relief under the discretionary provisions of § 473(b), which are not limited to defaults and dismissals, but require any neglect to be excusable. Which having an attorney who appears to have made a mistake while dying of cancer would seem to be.


*I’m on the record as not being a fan of the partial publication rule, which often seems like an excuse to avoid making reasoned decisions about hard or fact-intense issues that bind future cases, when appellate judges think it isn’t worth making precedent. Like decisions about evidence, discovery, and other seemingly mundane procedural issues, for instance. 

But I’ll admit that the rule does occasionally provide a safety valve when what we’ll broadly call “the equities” are offended. In this case, at the § 473(b) motion hearing that plaintiffs’ attorney didn’t attend because he was too busy dying, one of the effectively pro se plaintiffs apparently agreed with the defendant that the court should just “get the matter over with” and he would sue the attorney for malpractice. Some might see that as invited error or waiver. And defendant here made the argument, which the court rejects in a footnote because “[t]his was a voice, though, of frustration, of venting; not a voice knowledgeably inviting error.” Query if that’s a really a call—inferring frustrated sarcasm from a cold transcript—that an appellate court is in a position to make. But it’s the right thing to do. And in the end, I suppose its forgivable that this part of the opinion isn’t published, implicit categorical imperative at the heart of the common law appellate process be damned.

Dukes Proves Hazardous to Mandatory Class Settlements

Carter v. City of LA, No. B241060 (D2d1 Mar. 13, 2014)

California law has long been unclear about the conditions under which a mandatory settlement class—that is, a class where class members have a right to object, but not to opt out—can be certified for settlement. It’s an issue that probably doesn’t come up all that much, but it will be pretty significant for practitioners who litigate certain kinds of cases—disability discrimination, consumer UCL, and certain kinds of securities cases—where damages are nominally sought but the relief ultimately provided in a class settlement is often purely injunctive. The court here holds that if the named plaintiff demands monetary relief, and the settlement releases such claims on the class’s behalf, federal procedural due process requires affording class members an opportunity to opt out. Even if their realistic chances of obtaining a monetary recovery are slim to none.

Friday, March 14, 2014

Statutory Consent Requirement for HOA Gives Rise to Common Interest with Homeowners

Sehaus La Jolla Owners Association v. Superior Court, D064567 (D4d1 Mar. 12, 2014)

A homeowners’ association sued a developer over construction defects in common areas of a common interest development. While the board of the HOA was contemplating bringing the litigation, its attorneys met with the homeowners—some of whom would later bring claims arising from defects in their own units. It did so to inform them about it and obtain their majoritys consent to the litigation, as is required under Civil Code § 6150 and some regs governing HOAs. Over the HOA’s privilege objections, the developer sought discovery over what was said in these meetings. In a series of not-too-clear rulings, the trial court overruled the objections. The HOA sought mandamus. Unsurprisingly, the court of appeal grants the writ. Although prior cases establish that the attorney’s client is the HOA and its board and not the individual homeowners, given the requirement to inform and obtain consent from the homeowners, any discussions between the attorney and the homeowners were subject to attorney-client privilege, which was not waived due to the common interest doctrine.

Writ granted.

Unsurprisingy, Cooperating with the Man is Protected Activity

D’Arrigio Bros. of California v. United Farmworkers of America, No. H038213 (D6 Mar. 12, 2013)

The United Farm Workers brought a bunch of complaints against a company with the California Agricultural Labor Relations Board—a state agency that regulates the collective bargaining rights of farmworkers—alleging that the defendant enagaged in a coercive campaign to decertify UFW as the union for the company’s employees. UFW and the company ultimately entered a settlement, whereby UFW agreed to withdraw its complaints with the ALRB. But the ALRB—which can pursue enforcement actions on its own behalf—nonetheless pursed an administrative case against the employer. Because the UFW cooperated in the enforcement case, the employer sued UFW for breach of the settlement agreement. UFW responded with a anti-SLAPP motion, which the trial court denied. UFW appealed. Given that the employer’s cause of action arose from UFW’s cooperation with a regulatory agency, the court had little difficulty in finding that the suit arose from protected activity. And, for labor-law-related reasons outside the scope of this blog’s coverage, the employer did not show a probability of prevailing.


Hail Mary, Fail

Brown v. American Bicycle Group, No. D063268 (D4d1 Mar. 11, 2014)

In the published part of this opinion, the court holds that a trial judge is not required to disclose his ownership of stock in non-party insurance companies just because the defendant is insured. Plaintiff—who first raised the issue in a new trial motion after losing on the merits at trial—waived the objection by failing to seek writ relief after a timely recusal motion. And in any event, the information did not need to be disclosed because it did not suggest any basis for a recusal for cause. The fact that plaintiff claimed that the information might have been material to a decision on whether to file a peremptory strike under Code of Civil Procedure § 170.6 did not merit disclosure. The relevant ethical canons address disclosure of information that might give rise to a cause challenge, not a § 170.6 strike. The court then goes on—as has been happening all week—to resolve some interesting evidence issues in an unpublished part of the opinion.


Thursday, March 13, 2014

Don't Forget Your Interstate Commerce Evidence

Lane v. Francis Capital Management, No. B245661 (D2d4 Mar. 11, 2014)

Plaintiff’s employment agreement contains an arbitration clause. When he brings a wage and hour suit, his employer moves to compel. Plaintiff successfully opposes the motion, arguing that the agreement doesn’t cover the claims, that it is unconscionable, and that arbitration is precluded by Labor Code § 229. The court of appeal affirms as to one claim and reverses on the rest. The agreement is neither procedurally nor unconscionable. Plaintiff’s only argument is that it did not attach the AAA rules it incorporated by reference. But particularly given that plaintiff was a well-paid professional employee and that the rules were readily available on the Internet, that doesn’t hold water. And the agreement’s reference to wage and hour claims was sufficient to encompass plaintiff’s lawsuit, even if it did not spell out the exact statutes on which the suit was brought. Finally, Labor Code § 229—which says that an employee doesn’t need to arbitrate claims for unpaid wages—applies, but only to the cause of action actually demanding payment of unpaid wages. The other causes of action—for meal and break violations, waiting time penalties, and non-Labor code contract and wrongful termination theories—were not subject to § 229, so they were arbitrable. And although the Federal Arbitration Act preempts § 229 where it applies, defendant did not present any actual evidence to establish that. Viz., that the subject matter of agreement involved interstate commerce. Nor was an interstate nexus manifest from the face of the complaint. So even though one would think that plaintiff’s job as an account executive at a securities brokerage would tend to involve interstate commerce, there was no FAA preemption because defendant did not meet its burden to prove it.

Reversed in part.     

A Family Affair Stays in Open Court

McArthur v. McArthur, No. A137133 (D1d5 Mar. 11, 2014)

A beneficiary of a trust sued her sister, the trustee, for breach of fiduciary duty. The beneficiary claimed that the sister/trustee (who was also a beneficiary), engaged in self-dealing and undue influence when she convinced the settlor—their mother—to amend the trust agreement by affording more benefits, and naming the sister as a co-trustee. At the same time, the trust was amended to include a requirement that any disputes be arbitrated before some Christian dispute resolution outfit. Sister-trustee moved to compel arbitration, but the court denied the motion. The court of appeal affirms. 

Beneficiaries are not signatories to trust agreements, so they generally can’t be compelled to arbitrate. And—after noting a dearth of California authority on the issue and surveying out-of-state cases—the court holds that none of the doctrines that are used to compel non-signatories to arbitrate apply. The most closely applicable one is—perhaps erroneously called—equitable estoppel, which applies when the non-party accepts the benefits from or tries to enforce the agreement containing the arbitration clause. That doesn’t work here, because the whole point of the beneficiary’s case is that the amendment that contained the arbitration clause is entirely invalid because of the sister/trustee’s wrongdoing. So there’s no “fast and loose” issue, where the beneficiary is standing on part of an agreement, while disavowing an arbitration obligation contained in the same deal. Nor do other doctrines, such as those based on delegated consent or third party beneficiary theories, apply.


Can't Publish, Might Be Useful ...

Mark Tanner Construction, Inc. v. Hub International Insurance Services, Inc., No. C071176 (D3 Mar. 10, 2014)

So on the eve of its opposition to summary judgment being due, plaintiff claims to have obtained a smoking gun document that had been heretofore suppressed due to an alleged (but never litigated) discovery violation by the defendant. Based on that it sought leave to amend its complaint and continue the summary judgment hearing under Code of Civil Procedure § 437c(h). The trial court denied both requests and ultimately granted summary judgment for defendant. In the course of affirming, the Third District makes a number of strong statements to the effect that an alleged discovery violation by the moving party does not itself warrant leave to amend or a § 437c(h) continuance if it the dispute has never been properly litigated by the non-moving party. This discussion would be pretty useful for a moving defendant whenever a plaintiff files an amendment motion or § 437c(h) request in which it argues that it should get to escape summary judgment because it got stiffed in discovery, even though it never bothered to file a motion to compel to protest or remedy the stiff-age. (Happens all the time.) But alas, the court declines to publish these parts of the decision, reserving publication solely for a discussion regarding the nature of insurance brokers’ duties to their clients.


On the same day, the Fifth District issued this sixty-four page decision, as modified on rehearing, which similarly declines to publish parts of an opinion dealing with various interesting procedural issues, such as inconsistent special verdicts, invited error in the context of jury instructions, proof of prejudice from instructional error, evidentiary sanctions for undisclosed documents, and the scope of reversal in a case involving the joint and several liability of appealing and non-appealing parties. 

Friday, March 7, 2014

Nothing to See Here. Move Along (to Arbitration).

Sanchez v. Carmax Auto Superstores, No. B244772 (D2d1 Mar. 4, 2014)

This is an employment dispute that the defendant moved to compel into arbitration based on an arbitration agreement with its employee. The trial court denied the motion because it found that the agreement was “permeated with unconscionabililty. But Justice Johnson and two of his colleagues in Division One disagree. Because entering the agreement was a take-it-or-leave-it condition of employment, the court agrees that it is mildly procedurally unconscionable. When it comes to substantive unconscionabilty, however, none of the issues raised by the plaintiff or the trial court meet the mark. Mild limitations on discovery, a requirement that plaintiff fill out a claim form, the fact that arbitrated claims would be preclusive on future lawsuits, a requirement that the arbitrator apply the law of at-will employment to the at-will employed plaintiff’s claim, the arbitrator’s discretion to make factual findings, a confidentiality provision, and a prohibition on consolidation of different plaintiffs’ claims were all run-of-the-mill arbitration provisions that did not render the agreement substantively unconscionable. So the agreement should have been enforced by the trial court.


By the Power Vested in Me by the State of California, I Pronouce You Not Disqualified

Wechsler v. Superior Court, No. D064919 (D4d1 Mar. 3, 2014)

A court commissioner presiding over post-judgment proceedings in a divorce case agreed to preside at the wedding of the wife’s lawyer while the matter was pending. Husband moved to disqualify the commissioner under Code of Civil Procedure § 170.1(a)(6)(A)(iii), which requires disqualification of a judicial officer when “a person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.” Under the court’s procedures, the motion was referred to a superior court judge, who denied the motion. Husband took a writ. 

Relying on a death penalty case addressing a similar judge/wedding issue People v. Carter, 36 Cal. 4th 1215, 1240–1244 (2005)the court holds that a judge’s officiating at the wedding of a lawyer does not, in itself, merit recusal under the appearance of bias standard. Judges perform a public function in presiding over weddings, and an objective lay observer would not necessarily conclude that the judge was biased based on the judge’s role in solemnizing the ceremony, particularly when, as here, there was record evidence that the judge and the attorney did not otherwise have a close personal or social relationship. Although there could be facts that would merit a different result—such as evidence of actual close personal ties between lawyer and judge, the judge’s acceptance a gratuity, or his or her attending the wedding reception—these were not present in this case. So a reasonable observer would not find an appearance of bias based on the officiating alone. The court goes on to note, however, (in dicta) that presiding at an appearing attorney’s wedding presents enough potential for an appearance of impropriety that the judicial canons require the judge to disclose the fact. But that did not merit recusal in this case because it was clear that husband’s attorney knew.

Writ denied.

Thursday, March 6, 2014

No Privilege or Privacy for the Anonymous Patient

Snibbe v. Superior Court, No. B252210 (D2d4 Feb. 27, 2014)

In a wrongful death case, the court of appeal partially grants a writ somewhat narrowing the scope of permissible discovery of an allegedly negligent surgeon’s files concerning his treatment of other patients. But it largely sides in plaintiff's favor by declining to reverse the whole order. In doing so, the court suggests that third party privacy and physical-patient privilege concerns can be completely obviated so long as the discovery requests permit the information to be effectively anonymized.

Wednesday, March 5, 2014

More Judicial Dissatisfaction with CCP § 425.16(i)

Moriarty v. Larmar Management, No. A137608 (D1d2 Feb. 26, 2014)

The court’s intro on this one pretty much sums it up:

Another appeal in an anti-SLAPP case. Another appeal by a defendant whose Anti-SLAPP motion failed below. Another appeal that, assuming it has no merit, will result in an inordinate delay of the plaintiff’s case and cause him to incur more unnecessary attorney fees. [cite] And no merit it has.
So to be brief, plaintiff sued his landlord for damages on a number of theories related to the landlord’s failure to repair his apartment. The landlord had previously won by default in a unlawful detainer case against the plaintiff, and argued in a SLAPP motion that this case “arose from” the filing of the UD action. But a clearly peeved Justice Richman agrees with the trial court that that’s not the case. While this case might have been motivated by the plaintiff’s eviction, it is based on (and thus arises from) the defendant’s alleged failure to maintain the apartment, not the unlawful detainer filing. Consequently, as dictated by well-settled law that is explained in detail as the court completely dismantles defendant’s arguments, plaintiff’s suit is not a SLAPP and the motion was properly denied.  


Defendant Entitled to Jury Findings on its Empty Chair Theory

Vollaro v. Lispi, No. B242544 (D2d4 Feb. 26, 2014)

The court of appeal reverses a plaintiff verdict in a car accident case because the trial court erroneously refused to include interrogatories on comparative negligence in the special verdict form. Questions on comparative fault could have provided a basis for apportioning of non-economic damages to an allegedly negligent third party who was not joined in the suit. By failing to join or sue that party, plaintiff bore the risk that the apportioned damages would not be recovered. Further, although the defendant’s testimony was the only evidence that supported the negligence of the third party, that was a sufficient to provide a factual basis to require querying the jury on the issue. And defendant’s submission of a special verdict form to the court, which was rejected, was sufficient to preserve the issue for appeal. Finally, as is all too typical, the court then goes on to address a number of interesting evidentiary issues in a part of the opinion it declines to publish.

Reversed and remanded.