Tuesday, April 29, 2014

A Successful Evasion of the Usury Laws ...

Bisno v. Kahn, No. A133537 (D1d3 Apr, 25, 2014)

The court holds that it doesn’t violate California's usury laws for a creditor to enter into a contract with a debtor to forebear on collecting on a judgment, even if the forbearance contract includes interest well over and above the statutory 10 percent that applies to unpaid judgments. That said, the court holds that the forbearance contract is not part of the judgment. So the debtor can satisfy the judgment without paying off the contract, which would have to be enforced in a separate action where the debtor would get a chance to raise defenses like unconscionability and economic duress.


The Difference Between New Trial and JNOV

Grail Semiconductor, Inc. v. Mitsubishi Electric & Electronics, Inc., No. H038714 (D6 Apr. 22, 2014)

This is some heavy-duty litigation over Mitsubishi’s alleged disclosure of memory chip technology in violation of an NDA with plaintiff, the technology’s inventor. A jury awarded plaintiff almost $124 million. The trial court, however, ordered a new trial on damages, ruling that the jury had used an erroneous measure that assumed plaintiff lost the entire value of the technology due to the disclosure, even though the evidence showed that plaintiff still had the ability to profit from the technology after the breach. In this appeal, Mitsubishi argues that on damages, the trial court should have granted it a JNOV—not just a new trial—and that the court should also have granted a new trial on liability due to improperly admitted evidence.

Tuesday, April 22, 2014

Workers' Comp Appeal Tolls the Statute in a Negligence Case Arising from the Same Facts

Hopkins v. Kedzierski, No. D063392 (D4d1 Apr. 16, 2014)

I’ve previously discussed the confusing set of doctrines that fall under the rubric of “equitable estoppel” in California. This case deals with the different—although similarly named—doctrine of equitable tolling. Like some kinds of equitable estoppel, equitable tolling can affect the running of the statute of limitations, but it comes up under different circumstances and has less to do with the acts of the defendant than the lack of prejudice to it. 

Suit Against Developer for Alleged HOA Swinde Is Not a SLAPP

Talega Maintenance Corp. v. Standard Pac. Corp., No. G048282 (D4d3 Apr. 15, 2014)

The court considers an anti-SLAPP motion filed in a dispute between a homeowners’ association and a developer, and three of the developer’s employees who sat on the HOA board at the developer’s behest. When rain caused half a million dollars in damage to some trails on the development property, the employees—who controlled the board at the time—caused the HOA to take responsibility for their repair, even though legal responsibility allegedly remained firmly with the developer. When the HOA found out the true facts, it sued for fraud, constructive fraud, breach of fiduciary duty, and negligence. The developer filed a motion to strike under Code of Civil Procedure § 425.16, which the trial court denied.

The court holds that the non-fraud claims are not protected activity under the anti-SLAPP statute because they dealt primarily with decisions to expend the HOA’s funds. As spending decisions are not written or oral communications or otherwise communicative acts, they weren’t protected activity. The fraud claim was a closer call, as it involved allegedly false statements made at board meetings to the effect that the HOA was, in fact responsible for the trail repair. But homeowner’s association meetings are not “official proceedings,” or matters under consideration by a government body so they don’t fall within § 425.16(e)(1) or (e)(2). Nor do the statements fall within the broader categories of protected activity under § 425.16(e)(3)
—statements in public foraor (e)(4)—"other conduct in furtherance"because the trail conditions, while clearly important to the private interests of the homeowners, did not rise to the level of public issues or issues of public interest concern. Absent that, they are not protected activity under § 425.16(e)(3) and (e)(4). Thus, no cause of action arose from protected activity. The anti-SLAPP motion was properly denied.


Monday, April 21, 2014

Deep Dicta on the Statute of Limitations on Claims Against Lawyers

Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC, No. B23724 (D2d3 Apr. 14, 2014)

A sporting goods company filed a malicious prosecution case against a competitor and the law firm that represented the competitor in an earlier unsuccessful case stemming from a trademark and licensing dispute. As would be expected, the law firm filed an anti-SLAPP motion, which the trial court granted because plaintiff could establish that its case was not barred by the statute of limitations. After an extensive discussion of the appropriate statute of limitations for a malicious prosecution action against an attorney, the court of appeal affirms, albeit for a different reason.

Thursday, April 17, 2014

Collections III: Enforcing the Collar

Horvath v. Hess, No. D063124 (D4d1 April 10, 2014)

The parties here stipulated to a collared arbitration where the plaintiff wouldn’t recover less than a floor and the defendant wouldn’t pay more than a ceiling. But the arbitrator—who was not informed about the collar under the terms of the parties’ agreement—awarded almost four times the ceiling to the plaintiff. Plaintiff filed a motion
with the superior court to confirm the full award. Defendant filed its own motion to correct the award based on the stipulation. But defendant's motion was filed beyond the 100-day limit for motions to correct under Code of Civil Procedure §§ 1288 and 1288.2. The trial court granted the motion to confirm and denied the defendant’s motion to correct as untimely.

Unwilling to be so easily rebuffed, defendant paid off the ceiling amount and demanded that plaintiff acknowledge full satisfaction of the judgment. When plaintiff declined, defendant filed a motion under § 725.050 for acknowledgement, which was denied. The issue presented is whether the defendant was able to raise the issue of the stipulated collar in the context of its motion for acknowledgement of satisfaction of judgment.

The court holds it could. It treats the issue as a matter of contract interpretation. The parties agreed that the plaintiff would accept the the cap or the arbitrator’s award, whichever was less, so long as the award exceeded the floor. Under that language, and particularly given that the parties agreed not to tell the arbitrator about the collar, it didn’t matter what award was ultimately confirmed. Plaintiff had agreed that she would accept the cap as full satisfaction even if the confirmed award was higher.

Further, because plaintiff refused to accept the cap amount and file an acknowledgement of satisfaction, defendant was forced to file a motion under § 724.050 to have the court recognize the judgment as having been fully satisfied. The court holds that was procedurally proper, because § “724.050 provides the method for a judgment debtor to enforce a judgment creditor’s agreement to accept less than the full amount of the judgment and obtain an acknowledgment of satisfaction of judgment after tendering or paying that agreed-on lesser amount.” The court thus reverses and orders the trial court to grant the § 724.050 motion on remand. And because § 724.080 permits the prevailing party on a motion for acknowledgment
to recover its attorneys’ fees, the trial court was also order to also award the defendants their fees incurred for bringing the motion.

Reversed and remanded.

Attorneys' Fees in Collections Cases, the Sequel: Cashier's Check Rochambeau

Gray1 CPB v. SCC Acquisitions, No. G047429 (D4d3, April 9, 2014)

As we just discussed, a judgment creditor is entitled to recover its attorneys’ fees incurred in collecting if (among other reasons) the underlying judgment contained a contractual fee award. But to obtain those fees, Code of Civil Procedure §§ 685.070(b) and 685.080(a) require the creditor must apply or move for them within two years of their being incurred, and in any event, before the judgment is satisfied. The issue here is: When precisely does satisfaction occur? In this case, getting the answer wrong cost the creditor $3 million dollars.

Tuesday, April 15, 2014

Attorneys' Fees in Collections Cases, Part I.

Rosen v. LegacyQuest, No. A136985 (D1d1 April 8, 2014)

The question is: When can a judgment creditor recover post-judgment attorneys’ fees incurred in enforcing a judgment? The relevant statute, § 685.040 of the Code of Civil Procedure, consists of three sentences, providing that: (1) a judgment creditor can recover its costs in enforcing a judgment; (2) attorney’s fees do not count as costs unless provided by law; and (3) attorneys’ fees are included as costs if the underlying judgment contained a fee award under § 1033.5(a)(10)(A), which permits a fee award as costs when authorized by contract. This case did not involve an award of fees under a contract—they were awarded under § 996.480, which permits a fee award for obtaining a judgment against a surety. The debtor’s surety argued that sentence #3 did not apply, so a fee award was inappropriate.

But the court rejects the argument. If awarding attorneys’ fees as costs is authorized by a statute, it is irrelevant whether the underlying judgment contained a fee award under § 1033.5(a)(10)(A). Sentence #2 deals with any statutorily authorized award of fees. Sentence #3, which is specific to contract cases, does not limit sentence #2. Indeed, sentence #3 was added to § 685.040 years after the original passage of the Enforcement of Judgments Act. The clear legislative purpose in adding sentence #3 was to reverse Chelios v. Kaye, 219 Cal. App. 3d 75 (1990). Chelios involved a judgment obtained on a contract claim where the contract included a fee provision under Civil Code § 1717—and thus treated the creditor's attorneys’ fees as a cost under § 1033.5(a)(10)(A). It held that counting the creditors fees incurred on collection as costs was nonethless inappropriate, because the contractual fee provision supposedly merged into the judgment and ceased to have any effect.  Sentence #3 does away with that.

As I said, the facts here have nothing to do with a contractual fee award. The creditor is trying to make good against the debtor’s surety—which had posted an appellate bond at some point in the ten-plus year history of this litigation but was trying to weasel out of paying it. Section 996.480 specifically authorizes a creditor to recover attorneys’ fees it incurs in holding a surety to up its obligations. Consequently, an attorneys’ fee award for the collections efforts was clearly authorized by statute and thus recoverable under sentence #2 of § 685.040.


Friday, April 4, 2014

Soon to Be an Episode of CSI ...

Arroyo v. Plosay, No. B245659 (D2d4 Apr. 2, 2014)

The court of appeal holds that the statute of limitations does not bar claims based on a factual theory that the plaintiff did not uncover until he hired an expert witness. This was the case even though plaintiff was aware of the factual basis for claims on an entirely different theory, for which the statute had run.

Tuesday, April 1, 2014

Curing the Court's Error with a Peremptory Dooms Appeal for Cause

People v. Black, No. S206928 (Cal. Mar. 27, 2014)

Ok, it’s a criminal case. But it deals with jury selection, an issue common to both civil and criminal cases, and which is governed in both by the Code of Civil Procedure. A unanimous California Supreme Court holds that an erroneous denial of a challenge to a juror for cause is not reversible error, so long as no incompetent juror was actually empaneled. That’s the case even though the court’s error was cured when the defendant used a peremptory strike that he would have preferred to save for someone else.

When Is an Attorney also in Pro Per?

Soni v. Wellmike Enterprise Co., No. B242288 (D2d3 Mar. 26, 2014)

A law firm that prevailed in an action to recover unpaid fees from a former client sought to recover its fees in the collection action under an attorney fee provision in its retainer agreement. The firm claimed that its fees were recoverable because the firm was a solo practice and had retained outside attorneys to litigate the fee dispute, as opposed representing itself in pro per. But there was evidence that the attorneys who litigated the collection action were actually the firm’s own associates. Since pro per parties—attorneys included
can’t recover fees for work done on their own behalf, the court denied the motion.
The court helpfully reviews the state of the law on the pro per attorney issue. To wit:

  • Pro per litigants who happen to be licensed attorneys cannot recover fees for work done on their own behalf. Trope v. Katz, 11 Cal. 4th 274 (1995).
  • Corporate litigants, however, can recover their fees for the work done by in-house counsel who are employed by the firm. PLCM Group, Inc. v. Drexler, 22 Cal. 4th 1084 (2000).
  • And an attorney-litigant who is sued in his or her personal capacity can recover fees for work done by other members of his or her firm, so long as the work involves the attorney’s personal interests and not those of the firm. Gilbert v. Master Washer & Stamping Co., 87 Cal. App. 4th 212 (2001); Gorman v. Tassajara Dev. Corp., 178 Cal. App. 4th 44 (2009).
  • But a law firm cant recover fees for work done by its members on behalf of the firm. Witte v. Kaufman, 141 Cal. App. 4th 1201 (2006).
  • And a law firm and its partners cant recover fees for work done by associates of the firm, where the matter involves the interests of the firm itself. Carpenter & Zuckerman, LLP v. Cohen, 195 Cal. App. 4th 373 (2011)
The rule essentially comes down to whether the attorney is representing interests that are independent of his or her own. Here, there was substantial evidence supporting a finding that the attorneys who litigated the case were employees of the firm. The attorneys listed the firm’s address with the state bar, the captions on the papers in the collections case identified the attorneys as working for the firm, and one attorney had filed a declaration wherein he identified himself as a member of the firm. Thus, because this case entailed firm employees advocating on the firm’s behalf, it was like Carpenter or Witte. That makes the firm a pro per attorney litigant that may not recover fees for work done on its own behalf.


Yes, Forthwith. But to Whom?

Lewis v. City of Benecia, No. A134078 (D1d1 Mar. 26, 2014)

This is a post-trial appeal in a sexual harassment and retaliation case with the kind of a fact pattern that HR is always warning you about. Two individual defendants won summary judgment and a third, the city, prevailed at trial. The jury’s special verdict found that plaintiff had established three of the elements on his retaliation claim against the city, but that he had not established that the city was the proximate cause of his injury. In the course of reversing and remanding as to the city and one individual and affirming as to the other, the court of appeal deals with an evidentiary sanctions issue and an interesting issue about partial trials on remand.