That's Not a Debate

Taylor v. Tesla, No. A168333 (D1d4 Aug. 8, 2024)

Plaintiffs in this case are also members of a class in a race discrimination class action brought against Tesla. There is a lot of discovery fighting in the class action, including over how much Tesla needs to produce regarding prior employee complaints of race discrimination. 

Outside of the litigation, Plaintiffs demanded their employment records from Tesla under some provisions of the Labor Code. Tesla stiffed them. So Plaintiffs sued Tesla under the PAGA for violating the Labor Code provisions.

Tesla responded with an anti-SLAPP motion, which was denied because the trial court found that the PAGA case—which was premised on Tesla’s failure to produce the employment records—did not arise from any protected activity.

The Court of Appeal agrees. Although there is some overlap between the class action litigation and the documents requested here, Tesla’s refusal to produce the documents is not a “written or oral statement,” so neither Code of Civil Procedure § 425.16(e)(1) or (2) apply. 

Tesla thus turns to (e)(4), which has been construed to encompass conduct. But that provision requires the conduct to be in connection with a public issue. The class action might address a significant public issue—allegations of racism at an enormous public company. But under the test in FilmOn, the conduct from which the claim arises must contribute, further, or participate in the debate on the public issue. Withholding employees’ personnel files in violation of statutory obligations to produce them does not meaningfully contribute to the public debate about racism at Tesla, so it does not satisfy that test.

Affirmed.

State Law Stare Decisis in the Ninth Circuit Court of Appeals

AGK Sierra de Montserrat, L.P. v. Comerica Bank, No. 23-15290 (9th Cir. Jul. 19, 2024)

We don’t usually do federal cases, but this one has an interesting take on state law.

Forty years ago, the 9th Circuit held that, under California state law, a prevailing party in a first-party breach of contract claim could recover its attorneys’ fees under an indemnity provision in the contract. See DeWitt v. W. Pac. R.R. Co., 719 F.2d 1448 (9th Cir. 1983). It later reaffirmed that decision, noting that there was little indication from California appellate courts that the rule was otherwise. Jones-Hamilton Co. v. Beazer Materials & Servs., 973 F.2d 688, 696 n.4 (9th Cir. 1992). 

But in the time since DeWitt, the California Court of Appeal repeatedly rejected its rule—including by expressly declining to follow DeWitt by name—finding that indemnity provisions justify an award of attorneys’ fees only for third-party claims. See Hillman v. Leland E. Burns, Inc., 209 Cal. App. 3d 860, 869 (1989); Otis Elevator Co. v. Toda, 27 Cal. App. 4th 559, 566 (1994); Jacobus v. Krambo Corp., 78 Cal. App. 4th 1096 (2000).

So the question is, how should the 9th Circuit handle that? Generally, the 9th Circuit’s rule on intra-circuit stare decisis says that the decision of a three-judge panel on a question of law binds all future panels until it is reversed or its logic has been completely undercut by the court sitting en banc or a court of last resort (typically the U.S. Supreme Court). See Miller v. Gammie, 335 F.3d 889, 899 (9th Cir. 2003) (en banc). But here, the first panel opinion is rejected only by intermediate state courts—the California Supreme Court has never weighed in on the issue. That puts the Miller rule crosswise with the rule that federal courts should generally defer to state intermediate courts on issues of state law in the absence of compelling evidence that the state supreme court would rule differently. See Ryman v. Sears, Roebuck & Co., 505 F.3d 993, 995 (9th Cir. 2007).

The Court finds that, on questions of state law, the Miller rule should yield to the rule of deference to state intermediate courts. Judge Miller (no relation to Miller) writes an interesting concurrence explaining why that is the case. In particular, he notes that persisting in an approach that intermediate state courts have rejected would undermine the purpose of the Erie doctrine, in ensuring that federal courts sitting in diversity apply state law in the same manner as state courts would. He notes that while there are other ways to correct panel error on state court issues—going en banc, referring issues to the California Supreme Court—they aren’t a good use of resources to correct a prior panel’s error in accurately predicting state law.

Reversed.

Getting All Meta

Cohen v. Superior Court, No. B330202 (D2d4 Jun. 6, 2024).

This one is pretty interesting, in a kind of meta way. 

The underlying litigation is a fight between neighbors over landscaping. Plaintiffs say Defendants’ shrubbery violates the LA Municipal Code. The purport to get their cause of action from a Government Code provision that states:

Violation of a city ordinance is a misdemeanor unless by ordinance it is made an infraction. The violation of a city ordinance may be prosecuted by city authorities in the name of the people of the State of California, or redressed by civil action. action.

 Gov’t Code § 36900(a).

That seems to me, at least, to say that a city attorney can bring either a misdemeanor case or a civil action to redress the violation of a city ordinance. But Plaintiffs say that “redressed by civil action” means that anyone can bring a civil action alleging an ordinance violation. That reading isn’t totally nuts or anything, but it’s awkward.

Plaintiffs, however, have a 20-year old Court of Appeal case that agrees with them on their side. Riley v. Hilton Hotels Corp., 100 Cal. App. 4th 599 (2002). Because, in the absence of other authority, that bound the trial court, it overruled the Defendants demurrer. Defendants took a writ.

Plaintiffs moved to dismiss the writ, claiming, among other things, that the Court of Appeal doesn’t have jurisdiction to order the superior court to ignore Riley, based on the lack of horizontal stare decisis in the Court of Appeal. 

That’s pretty obviously wrong. Nothing about Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450, 456 (1962) or the other cases interpreting California’s somewhat unusual stare decisis rules says that the Court of Appeal can’t grant a writ that orders the trial court to comply with a rule that is sideways with some existing Court of Appeal precedent. That’s a pretty basic upshot from not having horizontal stare decisis.

But the Court of Appeal goes on to say that because Riley was a decision of the 2/4 (albeit with a completely different panel), it doesn’t just get to disagree with Riley. It can overrule it.

I didn’t know that was a thing. I had always thought that one of the features of the whole Auto Equity setup was that the division of the Court of Appeal into geographic districts, and subdivision of some districts into divisions, had no significance from the perspective of stare decisis. See Tourgeman v. Nelson & Kennard, 222 Cal. App. 4th 1447, 1456 n.7 (2014). So, for instance, the 2/4 isn’t even technically bound by prior opinions of the 2/4, even if it’s unlikely to disagree with itself. (Although it happens, sometimes seemingly by accident.) And if you can’t bind or be bound, it’s difficult to understand how you could overrule. 

The Court here does cite a couple of cases where panels on Court of Appeal purport to overrule prior decisions out of the same division. See Est. of Sapp, 36 Cal. App. 5th 86, 109 (2019); Saucedo v. Mercury Sav. & Loan Assn., 111 Cal. App. 3d 309, 315 (1980); People v. Yeats, 66 Cal. App. 3d 874, 879 (1977). But none of them explains why a panel of the Court of Appeal actually has the power to overrule a prior decision, as opposed to merely disagree with it. It also cites some Supreme Court cases that explain when stare decisis should not preclude departing from prior precedent. See Moradi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal. 3d 287, 296 (1988); Cianci v. Superior Court, 40 Cal. 3d 903, 923 (1985). But the “no horizontal stare decisis” rubric does not apply to the Supreme Court. As the cited cases show, it typically views itself bound by its prior decisions under principles of stare decisis, but also able to overrule them.

I’m not saying this is bad, really. Just under-theorized. I have been of the view for long time, including in some of the earliest posts on this blog, that California should consider some way to create greater consistency in the Court of Appeal. This could take the form of some kind of formal en banc procedure or an expansion of the workload of the Supreme Court. Both of those, however, are bureaucratically difficult. It seems like the rules could also be amended to permit the Supreme Court to grant and transfer, and provide the transferee court to act as a quasi en banc, with the authority to disapprove of inconsistent prior decisions of Court of Appeal, which would then be subject to further discretionary review by the Supreme Court. I believe, given the power afforded to the Judicial Council under Article VI, § 12(c) of the state constitution, this could be accomplished by a minor amendment to the Rules of Court.

But given the way Auto Equity works at the superior court level, permitting divisions of the Court of Appeal to “overrule” prior decisions of the same divisions, and only the same divisions, is arbitrary and likely to be ineffective. The one place it might work is when, like here, there’s an isolated outlier that is the only thing that speaks on an issue, incorrectly. The other overruling cases cited in the opinion seem to be similarly situated.

In any event, the Court, having decided it has the power to overrule Riley, overrules Riley. For all sorts of reasons, even if the statute is ambiguous, it seems clear that Government Code § 36900(a) does not create a private right of action for anyone to enforce a city ordinance in a civil suit.

Writ granted.

Pretend Master Calendar Is Even Worse than Real Master Calendar

Lorch v. Superior Court, No. D083609 (D4d1 May 16, 2024)

This writ case concerns the timeliness of a challenge to the assignment of a trial judge under Code of Civil Procedure § 170.6. 

In the event there are any non-lawyers who read this blog—which I guess is possible*—§ 170.6 lets a party file a declaration, once in a case, that says “the judge is prejudiced against me.” And that has the effect, whether the claim is true or not, of automatically reassigning the case to a new judge. It is an important procedure in California state court litigation. But since it is the kind of thing that can be abused, it has pretty strict limitations about both how often and when it can be used.

The timing of a § 170.6 depends on the way the court assigns its judges.** Some courts (mostly courts in NorCal, including SF Superior) use a master calendar system. In that system, you are never assigned a judge until trial. There are various judges who do specific pre-trial stuff—discovery, law and motion, etc. But then when you are ready for trial you go to the “master calendar” department—typically Department 1—and there’s a messy cattle call as cases are sent out to trial departments for trials, usually to begin almost immediately. In a master calendar system, you need to paper the judge as soon as you get the assignment. Like, on the spot, to the master calendar judge, live in Department 1. In the master calendar setup, a delay of a few hours will doom your challenge.

Other courts—including most civil cases in SoCal***—use an independent calendar system, where you get assigned a judge to do your case from the very beginning. In an IC system, you have 15 days to strike the judge after being informed of the assignment. In that system, if you get a late transfer to a new judge for trial, so long as the transfer is at least 10 days before trial, you need to strike at least 5 days  before the trial date. 

But in all events, and under any system, you need to take your strike before the onset of trial.

This case comes out of San Diego Superior, which is mostly an IC court. But SD Superior has a weird local rule that gives individual departments the authority to transfer cases, and it says in doing so, they are acting in a master calendar capacity. Which is an odd hybrid that makes the § 170.6 timing issues very confusing.

So here, the parties are in front of Judge #1, who doesn’t have time to try their case. (Based on the parties, it appears to be a Lemon law case, but the opinion isn’t super clear on that point.) On a Friday morning, Judge #1 tells the parties that they need to come back for a trial call on Monday at 1:30, when he would tell them where they were being transferred to for trial. But later that day, the court clerk calls Plaintiff’s attorney and tells her they are going to be transferred for trial to Judge #2. An hour later, Judge #1 entered a minute order to that effect, but it wasn’t served**** on the parties. 

Over the weekend, Plaintiff’s counsel e-files a strike, but she mistakenly checks the box that the client, instead of the attorney, is filing the required affidavit. About an hour beforehand, the parties learn they need to appear before Judge #2, not Judge #1, at 1:30 on Monday. Just before the hearing, Judge #2 issues an order rejecting Plaintiff’s challenge as untimely and “not in proper form.” 

The parties appear at 1:30 and Plaintiff raises the strike. Judge #2 informs them about the checkbox error and that the challenge was also denied as untimely under the master calendar rule. On Monday night Plaintiff’s counsel files a corrected form. The parties come back Tuesday and the judge informs them that the corrected form is nonetheless untimely under the master calendar rule. He denies a stay for plaintiff to take writ.

Trial begins later that day. The court’s action was so surprising that nobody has a court reporter. The following day—apparently during trial—Judge #2 signe an order denying the corrected challenge as untimely. The jury renderes a defense verdict the next day, and Judge #2 entered judgment for the Defendant.

Plaintiff takes a writ within the ten-day window to challenge the denial of a judicial disqualification under § 170.3(d). The Court of Appeal issues an OSC.

The only real fight Defendant puts up is to the timing of the writ. Although it was timely under § 170.3(d), Defendant says waiting till after trial gives rise to laches. But the Court of Appeal doesn’t buy it. There’s no unreasonable delay. The idea that Plaintiff’s counsel was going to draft and file a writ petition in a day, on a completely unexpected issue, while trying a case to a jury, is not something to fairly expect of a litigant. So even if laches could apply to a filing within the ten-day window, it wouldn’t apply here. 

As to timing issue, the Court notes that, subject to the specific day-based limits in the code, the only time limit in § 170.6 requires the challenge to be filed before a trial or contested hearing begins. The only exception relevant here is the master calendar rule. But the master calendar rule is premised on the parties being live in court, in front of the master calendar judge, when the assignment is made. Under established precedent, see Stevens v. Superior Court, 52 Cal.App.4th 55, 57 (1997), an assignment delivered on a call from court staff is inadequate to give rise to the very time delimited rule applicable to master calendar assignments.

The Court also notes in a footnote that a party should be permitted to correct a technical error in a § 170.6 affidavit, such as the checkbox error made by counsel here.

So far as the local rule that effectively deems every reassignment in San Diego as a master calendar assignment, that runs headlong into Supreme Court precedent that says a “court may not subject every case assignment to the master calendar rule of section 170.6 simply by labeling the assigning court a ‘master calendar department.’” See People v. Superior Court, 4 Cal.4th 1164, 1171 (1993). If you are going to do master calendar, do master calendar. But a “local court rule may not alter the true meaning of the statute by effectively deputizing every judge of the court to act as a master calendar judge.” So the rule is invalid.

 And because the strike should have been permitted, everything Judge #2 did afterwards was null and void. So Plaintiff gets a new trial, in front of a new judge. 

Writ granted.

 *Google has basically bailed on blogging support. So I have no idea who reads this. At this point, I might be writing a public diary about civil procedure. Which, I must admit, is a pretty weird thing to do. Are you there Bernie Witkin? It's me, Mike!

**In typical California fashion, there’s no statutory scheme that actually lays out these options. They just appear to have developed over time in different courts locally, and then § 170.6 was amended to conform to the various options.

***Some courts have master calendar for certain kinds of cases only. For instance, for the past several years, non-complex personal injury cases have used a master calendar system in LA Superior. 

****The fact that there isn’t any uniform system where superior courts serve the parties with orders electronically, is, in all candor, a f*cking disgrace. I don’t think there is anywhere else in the world where courts don’t serve orders by some electronic means. But in California, while some departments manage to do it sort of ad hoc, others stick to the slowest mail in the universe. (I get birthday cards from my mom in Pennsylvania in two days, so I am completely baffled how an order sent by first class mail takes two weeks to travel the five blocks from Stanley Mosk to my office. But that happens all the time.) And some courts—looking at you Alameda!—don’t bother to serve orders at all.

Trashing your Neighbors Is Not Speech in the Public Interest

Dubac v. Itkoff, No. B317061 (D2d8 Apr. 19, 2024)

This is an ugly beef between neighbors who dislike each other. A lot. Over a several month period in 2020, two of the neighbors (a husband and wife couple) sent a number of emails impugning the character of the other neighbor. They called him racist, accused him of accosting various women, called him a liar, and accused him of various and sundry misconduct connected to his role as a member of the board of the HOA of a six-unit condo building they all live in. 

Neighbor B sued Neighbors A for defamation and other torts along that line. Neighbors A respond with an anti-SLAPP motion, which the trial court mostly denied. Neighbors A appeal. The rub of the appeal is that, for the statements at issue to be “protected activity” under the anti-SLAPP statute, Code of Civil Procedure § 425.16, they need to have been made in connection with a “public issue” or an “issue of public interest.”

Here, they weren’t. They were made on small fora, where the general audience was the other homeowners in the condo. Even the statements that weren’t just personal attacks—like the claims about mismanaging the condo board—were not matters of public interest such that large numbers of people would care about them. 

The Court does a useful canvass of “name-calling” cases in the anti-SLAPP contexts, confirming that essentially private disputes are not the stuff of anti-SLAPP protection. As the court puts it:

The general public did not and could not know about this intra-building tiff. The audience was always tiny. It was never the ‘public.’

Affirmed.

The Jurisprudence of Signification

Wood v. Superior Court, No. A168463 (D1d2 Mar. 14, 2024).

Yes. You can change your legal name to Candi Bimbo Doll if you want to. See Code Civ. Proc. § 1275 et seq.

Just the Facts, Appellant

People v. Ashford University, No. D080671 (D4d1 Mar. 8, 2024).

This is a UCL/FAL case that the Cal. AG brought against an online university for deceptive marketing practices. By the Court’s description, it was a high pressure boiler-room type operation where the University’s marketing employees were encouraged to make a hard sell to perspective students. As part of that, the school’s admissions people made a bunch of false statements on telephone solicitations regarding myriad aspects of the costs and benefits of enrollment and the credential to be obtained. The trial court found that the University made nine different kinds of misrepresentations. Based on a statistical sample taken by the AG’s expert, it determined that that there were 1,243,099 violations of the UCL and FAL and assessed civil penalties of about $22.4 million.

University doesn’t appeal liability, but it challenges the penalty calculation in a bunch of ways. It succeeds in an argument that some of the calls were outside of the UCL or FAL statutes of limitations (4 and 3 years, respectively) and manages to get about $900k of the fine tossed. But it fails on several other challenges to the penalty. Chief among them is the fact that what counts as the unit of a UCL or FAL “violation”—each of which is subject to a $2,500 penalty—is essentially governed by a rudderless gestalt rule of “whatever the trial court thinks it is.” Defendants never win on that (although sooner or later there has to be a 14th amendment issue) and the University doesn’t improve the defense bar’s batting average here.

But the noteworthy procedural point in this case is the six pages the Court spends detailing “Defendants’ Briefing Violations.” In particular, the Court says that the Defendants’ statement of facts in the AOB presented a slanted and unduly argumentative version of the facts, particularly in context of a standard of review that does not view the facts in a light most favorably to an appellant. Rule of Court 8.204(a)(2)(C) requires an AOB to contain summary of significant facts. That has been interpreted to require the appellant to be accurate and fair in dealing with the record. California courts take the requirement seriously.

The Court further dings the University for making factual statements with no support in the record, for citing materials that were not appropriately part of the appellate record, and for seeking judicial notice in a procedurally improper manner.

Reversed in part.

Arguably Unauthorized Settlement Is Voidable, Not Void, under Code of Civil Procedure § 437(d).

W. Bradley Electric, Inc. v. Mitchell Engineering, No. A167137 (D1d5 Feb. 28, 2024)

Fatal traffic accident case where the Decedent’s family sued three Defendants—driver, the rideshare company she was working for, and a Contractor who had done some work on the sidewalk where she was walking. Contractor proceeded to cross-claim against two other companies (who appear to be other contractors) for equitable indemnification. As is the usual course in these kinds of things. everybody eventually sued everyone. Plaintiffs eventually settled with the new contractors for $10k a pop.

Contractor’s lawyers propose to their client that they make a similar $10k offer, and then that the settle the remaining contractor cross-claims for and agreement that the settlements are reasonable under Code of Civil Procedure § 877.6, and dismissals and fee waivers. That gets papered and the dismissals filed. Then the rest of the case settles.

Six months later, Contractor moves to vacate the dismissals of the other contractors as, among other reasons*, void under § 473(d), based on an assertion that the client never consented to its attorneys’ agreement to dismiss. The evidence of permission (Contractor appears to have waived privilege) was not entirely clear. But the trial court denied the motion. Contractor appeals.

The Court of Appeal finds that Contractor probably forfeited the § 473(d) by failing to squarely raise it in the trial court. But nonetheless, it reaches the merits. 

Canvassing the authority, the Court finds that a settlement entered without clear permission from a client is probably voidable but not void and thus not subject to vacation under § 473(d). The latter mostly deals with situations where the court never had jurisdiction to act. There’s an outlier case where the Court found that an attorney’s dismissal with prejudice, when the client only authorized a without prejudice dismissal was void under § 473(d). Romadka v. Hoge, 232 Cal. App. 3d 1231 (1991). But subsequent cases have recognized that Romadka really was faced with a case of attorney mistake that could be remedied under § 473(b), and not with an actually void judgment that could be vacated under § 473(d).

And in any event, the Court of Appeal finds that there was adequate evidence that Contractor had actually ratified the dismissal, and also that denying relief under § 473(d) was not an abuse of discretion.

Affirmed.

*Contractor also moved to vacate the dismissal as a result of attorney mistake, surprise, neglect, etc., under § 473(b). The court deals with that in an unpublished part of the opinion, so I’m not going to get into it.

Is Code of Civil Procedure § 1281.98 Prempted by the FAA?

Hohenshelt v. Superior Court, No. B327524 (D2d8 Feb. 27, 2024)

This is another case where an employer in an arbitration was late in paying the arbitrator’s fee so the employee moved to go back to litigating her case in court under Code of Civil Procedure § 1281.98. The employer here was clearly late under the relevant standard, and a bunch of recent cases are good authority that the upshot of that is that the employee does not need to arbitrate any more.

Employer argues, after a prompting for supplemental briefing, that the FAA preempts § 1281.98. The Court rejects that argument, based on the idea that § 1281.98 is an arbitration procedure statute that furthers, not dissuades against, arbitration by incentivizing parties to pay up and participate in full. So the Court of Appeal grants a writ ordering the litigation to proceed.

Justice Wiley dissents. He notes that California state courts don’t have the greatest record predicting how the US Supreme Court will rule on the preemption of anti-arbitration state laws under the FAA. Following a federal case district court case, Belyea v. GreenSky, Inc., 637 F. Supp. 3d 745, 759 (N. D. Cal. 2022), he notes that § 1281.98 can’t really encourage arbitration when its chosen enforcement method is to effectively invalidate an agreement to arbitrate. 

Setting aside whether SCOTUS’s manic desire to force arbitration on every employee and consumer is the right take on the law, Justice Wiley is clearly onto the the trend. Would not be surprised to see a cert grant on this in the next year or two.

Writ granted.

CCP § 998 Shifts Fees for Worse-Off Settlements

Ayers v. FCA US, LLC, No. B315884 (D2d8 Feb. 27, 2024).

This is a Lemon Law case involving dueling offers under Code of Civil Procedure § 998. Manufacturer made one offer. Then it made a second higher offer. And then a third that was even higher. Years go by. Then the Court of Appeal decided a case that said that if the Consumer subsequently trades the car in, the trade in value gets deducted from the cost basis that (trebled) sets the maximum damages amount. If good law,* that would lower Plaintiff’s damages by about $40k. Plaintiff then made an offer of his own, which was higher than Manufacturer’s second offer but lower than its third. Manufacturer took the deal.

Plaintiff subsequently moved for attorneys fees, which in Lemon Law cases can significantly exceed the Consumer’s recovery. Manufacturer argued, however, that the fees should be cut of at the point of its third § 998 offer, because that offer was for more money than the Consumer actually got when his own offer was accepted. The trial court ruled that § 998’s cost-shifting rule does not apply to a case that is concluded by a settlement, as opposed to a trial, and declined to tax the fees. Manufacturer appealed.

There’s a case on this point from last year. See Madrigal v. Hyundai Motor America, 90 Cal. App. 5th 385 (2023). Over a dissent, it held that § 998(c)(1)’s imposition of fee shifting if the plaintiff “fails to obtain a more favorable judgment or award” applies when the “award” is obtained by plaintiff under a settlement, instead of a judgment. A concurring and dissenting opinion disagreed, reasoning that when parties resolve a case pursuant to a settlement nobody succeeds or fails at anything. A deal is just struck. The Supreme Court granted review of Madrigal last August.** The Court, as it now often does, ruled that pending review, Madrigal could be cited for both its persuasive value and for the existence of a conflict in the Court of Appeal under the Auto Equity Sales rule.

The Court here agrees with the Madrigal majority, finding that “a plain reading of section 998, subdivision (c)(1) compels the conclusion that it applies to any litigation that terminates with the plaintiff getting less than he would have if he had accepted the defendant’s earlier section 998 offer.” The Court goes through a number of policy rationales and rejects the Consumer’s assertion that applying § 998 to a case that ends in a settlement itself discourages settlement. Perhaps the most convincing point the court makes is that a settling party that doesn’t want to be subject to fee shifting based on a prior § 998 offer is always free to demand that fee shifting be excluded from the terms of any settlement.

Justice Viramontes concurs and dissents.

He largely agrees with the concurrence and dissent in Madrigal. He thinks, at minimum, that the majority’s “plain reading” of § 998(c)(1) is not dispositive because it is susceptible to a construction based on the idea that a settlement can’t be a failure. “[A]t the very least, the statute’s use of those words calls into question whether a settlement for less than the unaccepted offer equates to a failure to obtain a more favorable judgment under section 998(c)(1).” Looking into the purpose and legislative history animating § 998, he finds that the available evidence, albeit slim, suggests that the statute is intended to apply only when a settlement offer isn’t bested by a subsequent adjudication, not just a later settlement.

Affirmed.

*, ** A week after this case was decided, the Supreme Court issued an opinion in Niedermeier v. FCA, holding that trade in value does not merit a deduction from Lemon Law damages. Entering a settlement based on assumptions about the law that subsequently change, however, does not generally invalidate the settlement. Of course, review has also been granted in Madrigal. Plaintiff here can likely get a grant-and-hold based on that and if Madrigal is reversed, Plaintiff can likely get a reversal of the ruling on § 998 fee shifting. But it is still really doubtful that he could blow up the whole settlement based on incorrect assumptions of pre-Niedermeier law. 

Paper Record Still Merits Deference on Appeal of Factual Findings

Jones v. Solgen Construction, LLC, No. F085918 (D5 Feb. 26, 2024).

A shady Solar Seller claims to have sold a rooftop solar setup to an 81-year-old Lady in Fresno. Lady lives on $1,000 per month in social security, but apparently agreed to take out a $52k, 25-year loan from Lender, Solar Seller’s financing partner. Lady sued, claiming fraud and other related stuff. The loan documents included an arbitration clause. Lender and Solar Seller moved to compel arbitration.

The parties’ versions of the relevant events are, to say the least, hotly in dispute. Lady says she thought she was entering a government program that was supposed to cap her electric bills in exchange for putting some solar panels on her roof. She never would have agreed to a long term loan that would not be paid off till she was 106. Lady didn’t recall signing a contract, and certainly not a contract containing those terms. Solar Seller and Lender say that Lady DocuSigned a loan agreement and have a video where she (somewhat hesitantly and with a confused affect) acknowledges that. The details of that aren’t really super important, but it should suffice to say that there was evidence upon which the court could probably have gone either way.

One piece of that evidence is the DocuSigned contract. Solar Seller made a somewhat inscrutable hearsay objection to it. Not for the contract itself. After all, if not admitted, the lack of a contract pretty much precludes an arbitration argument. But for a stamp on the DocuSign certificate that showed Lady reviewed the 21-page contract for a whopping 38 seconds before she allegedly e-signed it. 

But Lender had put in a declaration establishing business records foundation under Evidence Code § 1271. The declaration did a good job of establishing why the DocuSign process was a reliable and trustworthy way to generate business records. That being the case, there was no error in considering the time stamps.

Solar Seller also says that the trial court erroneously refused to consider a customer service recording between Lady and a customer service rep, which it submitted in connection with its reply brief. But the record doesn’t actually substantiate that is what happened. The trial judge asked why the recording was submitted on reply. Solar Seller gave an answer. Then the discussion moved on. Nowhere does the record reflect that the court refused to consider the recording. And the fact that the court didn’t expressly refer to it in its written ruling doesn’t change that fact. The appellant bears the burden of coming forward with a record of error. Silence merits a presumption that the trial court was correct.

Finally, the big issue is whether the court correctly found by a preponderance of the evidence that there was no binding agreement to arbitrate. Again, the substance of this debate is too fact-specific to be interesting. But there is an interesting debate about the standard of review. 

A finding of fact is typically reviewed for substantial evidence. But specific to this context, the weight of the authority treats an appeal of a finding that a party failed to meet its burden of proof like an appeal of a denial of a plaintiff’s JNOV. That is, was the plaintiff’s evidence so overwhelming that any reasonable trier of fact would find in its favor, and thus that the court was required to find that it met its burden as a matter of law? If that’s the standard, the question here isn’t too hard, because the Solar Seller and Lender’s evidence isn’t that good.

But there are some cases that suggest that when the record before the trial court was entirely written—as it was here—an appellate court can re-weigh the evidence de novo. See Patterson v. ITT Consumer Financial Corp., 14 Cal. App. 4th 1659, 1663 (1993); Milazo v. Gulf Ins. Co., 224 Cal. App. 3d 1528, 1534 (1990). The theory is that, on a paper record, an appellate court is equally well situated to find the facts. 

But the Court here does a good job of unspooling that those cases are not reasoned and authority they rely upon does not actually support the stated proposition. They instead stand for the much less sweeping point that an appellate court is equally well situated to interpret the language of a contract when no parol evidence is at play. That is the kind of mistake that appellate courts sometimes make, and I have complained about it previously. So kudos to the Court here for digging in. And in any event, the Supreme Court has repeatedly held that a deferential standard of review applies to a trial court’s fact-finding, regardless of whether it is based on oral testimony or a written record.

That being the case, the evidence was no so overpowering that the existence of an agreement was established as a matter of law.

Affirmed.