JCCP Coordination Submission Tolls Three- and Five-Year Rules

Fid. Nat’l Home Warranty Co. Cases, No. D074161 (D4d1 Mar. 20, 2020)

This is an appeal of a pair of cases that were dismissed under the five- and three-year rules in Code of Civil Procedure §§ 583.310 and 583.320. 

There’s a threshold issue regarding the timeliness of the notice of appeal. The trial court entered an order dismissing the cases on December 15, 2017. But it did not enter judgments until March 7 and April 2, 2018. Plaintiffs filed a consolidated notice of appeal on May 1. There’s no question that the appeal is timely if the March 7 and April 2 judgments are the only final appealable judgments in the case. See Cal. R. Ct. 8.104(a)(1)(can file notice of appeal, at minimum, 60 days from entry of judgment). But if the December 15 dismissal order is itself a judgment, then the appeals are too late.

It all comes down to the interplay between Code of Civil Procedure §§ 581d and 581(k). Section 581d says an order dismissing a case needs to be signed by the court and filed in the action. When the order takes that form, it constitutes a final judgment. But § 581(k) says a certified class action can’t be dismissed unless and until notice approved by the court has been given to the class and the court orders a dismissal. Here, that issue wasn’t raised until after the entry of the December 15 order. The Court ultimately approved the form of notice in one case and found that notice was unnecessary in the second case because no class had been certified. 

Until the notice issues were resolved, § 581(k) prohibited the cases from being dismissed. Thus, the Court of Appeal holds that the December 15 order cannot be treated as a final judgment under the authority of § 581d. Only an order issued after the § 581(k) prerequisite had been satisfied, and which conformed to formalities in § 581d could count as a final judgment. That being the case, the judgments entered on March 7 and April 2 were the real judgments in the cases, and thus the appeals were timely taken.

On the merits, the cases were put on ice for 135 days while a coordination judge decided whether cases should be rolled into a coordinated JCCP action. A plaintiff is entitled to tolling of the 3 and 5 year limits when it is impossible, impracticable, or futile” to bring a case to trial. § 583.340(c). And the Rules of Court pertaining to JCCP proceedings specifically say that a trial can’t be commenced with the coordination motion is pending. Cal. R. Ct. 3.515(i). Thus, notwithstanding a split of authority on the question, the court finds that plaintiffs were entitled to another 135 days of tolling and that the trial court abused its discretion in failing to count it. 

That helps one case but not the other. One case was subject § 583.310’s five-year rule. The 135 days of tolling was enough to take that case out of the statute. So that’s reversed. 

But in the other case, there had been a prior reversal on appeal. So that case was subject to § 583.320’s three-years post remand rule. The 135 days of tolling was not enough to get that case within the three years. And the trial court didn’t abuse its discretion in declining to permit tolling based on other impracticalities in getting to trial claimed by plaintiffs, such as budgetary constraints, plaintiff’s claims of diligent prosecution, or defendant’s purported delays in complying with discovery. So that’s affirmed.

Reversed in part.

This Is Your Random Law History Tip of the Day

Newsom v. Superior Court, No. C092070 (D3 Jan. 10, 2020)

Some yahoo members of the State Assembly want to enjoin an executive order from Governor Newsom regarding mail-in balloting for November’s election. They say it exceeds his authority. So they filed a (pro per*) complaint and gave some lawyers in the AG’s office email notice** a few minutes before 10am that they were going in ex parte in Sutter County Superior for a TRO the following day. 

The AGs, however, explained that they aren’t the proper service party for the Governor—that’s his legal affairs office—even when the AG ultimately winds up representing him. But the Assemblybros didn’t care—they give notice to the legal affairs office late in the afternoon and went in the next morning anyway. The Governor doesn’t show at the hearing—so it’s real ex parte, not just a California ex parte—and the trial court signs their proposed order.

Which earns them a peremptory writ from the Third District for abusing the ex parte rules. Even if their service and notice were proper under Rule of Court 3.1203—they weren’t—there was no basis at all for them to proceed ex parte. 

As the Court explains, ex partes are for emergencies, and the application needs to lay out what specific facts, on the declarant’s personal knowledge, constitute “irreparable harm, immediate danger, or any other statutory basis for granting relief ex parte.” All the Assemblymen here said is, essentially, “we’ve heard some rumors from election officials that they are confused about the procedures that will apply to the election.” In June. When the election is in November. And there was already a bill pending in the Legislature that would (and eventually did) make most of the issues in the lawsuit moot. That doesn’t cut it.

Writ granted.

*They appear to be lawyers, or at least law school graduates. Given the performance here, they should probably leave the litigating to someone else.

**One of the weird things about California is how we use the term “ex parte” to mean something it doesn’t mean elsewhere. “Ex parte” traditionally means, “without notice to the other side.” But in California, it also means “outside of the normal schedule for hearing motions.”

The evolution is curious. For a long time, California courts used the term in its literal sense. It is used that way, for instance, in Ex parte The Queen of the Bay, 1 Cal. 157, 157 (1850), a very early habeas case about San Franciscan pirates kidnapping underage Polynesian girls from the Marquesas Islands. In habeas practice, the petitioner would file the petition and then, if it seemed to state a claim, the writ would issue to make the custodian come to answer by demurrer or return. The filing was ex parte because the court would issue the writ before hearing from the custodian. Early decisions also refer to ex parte applications in other contexts that are truly ex parte, such as no-notice TROs and certain filings in connection with defaults. See Oliphant v. Whitney, 34 Cal. 25, 26 (1867) (court clerk improperly entered default on ex parte application); Dupuy v. Shear, 29 Cal. 238, 241 (1865) (plaintiff filed ex parte application to have summons issue).

But at some point “one-sided” started to morph into “emergency,” which became “on a shortened schedule.” So what in other jurisdictions is more accurately called a “motion for expedited consideration,” see, e.g., Alaska R. Civ. P. 77(g); or for an order on “shortened time,” see, e.g., Rules of Practice for the Eighth Judicial District Court for the State of Nevada 2.26, is called an “ex parte application” in California 

The development of that appears to be somewhat of an accident. It’s a little hard to track it back without a trip to the law library, because Westlaw doesn’t give access to the text of repealed laws and rules, which is frustrating. And I haven’t been downtown for coming on five months. 

But anyway, it looks like what happened is that “ex parte” meant “ex parte” in California up through the 1970’s. Then, courts in both California and federally began to hold that the vast majority of procedures that permitted true ex parte relief ran afoul of constitutional guarantees of procedural due process. See, e.g., Fuentes v. Shevin, 407 U.S. 67 (1972); Blair v. Pitchess, 5 Cal. 3d 258 (1971). Exceptions were only available in “extraordinary circumstances.”

Presumably in response to this case law, in 1976, the Judicial Council adopted § 15 of the Standards of Judicial Administration. I can’t find the text that standard, but it appears to have been devoted to setting standards for when true, no-notice, ex parte relief was appropriate—a key aspect of which is to provide an explanation of either efforts made to give an opponent notice and opportunity to be heard and why that is infeasible under the circumstances. 

Section 15 was replaced by Rule of Court 379 in 1984. That rule, since re-codified in 2007 as Rules of Court 3.1200–3.1207, looks like the first appearance of the “ex parte, but with notice” concept—including the now-familiar requirement to give notice by 10 a.m. on the court day before the hearing unless you can show a compelling reason not to. Since then an ex parte application could be heard with notice, but the name still stuck even if no longer literally true.
 
At the same time, the Code of Civil Procedure did not contain any provision for hearing most motions on an expedited basis. In the mid-80s era of overcrowded dockets, this noticed ex parte procedure provided a convenient procedural avenue for that relief. So now, California lawyers, even in some federal courts, refer to a motion to be heard on shortened time as an “ex parte,” even though it’s nothing of the sort.

Law Clerk, Fire Up that Malaysian Westlaw!

Kong-Beng Saw v. Avago Techs. Ltd., No. A153824 (D1d1 Jul. 10, 2020)

This is a contract interpretation case that doesn’t have much to do with procedure. But the Court of Appeal decides that Singapore applies law due to a choice of law provision in a stock option grant agreement agreement. And then it throws in a bunch of cites to Singaporean, Malaysian, and English case law on various issues related to the merits. Pretty cool. 

Affirmed.

Scriven Away

Altizer v. Highsmith, No. A157921 (D1d2 Jul 16, 2020)

In California, a judgement lasts for ten years, but it can be renewed. The renewals are summary. You just file a form with the clerk before the ten years expires. Each renewal lasts another ten years. Here, 17 plaintiffs got a joint judgment in 1995. In 2005, their lawyer renewed it. But the lawyer died in 2008. When time came to renew the judgment again in 2015, one of the plaintiffs renewed it on behalf of all the others.

Now, some of the creditors are trying to collect. But the debtor argues that the 2015 renewal was void because the one plaintiff’s filing it for the others constituted the unauthorized practice of law. The trial court bought the argument, but the Court of Appeal disagrees.

Although there are cases where legal form filling has been considered the practice of law, in those cases, the defendants were a for-profit business that went beyond merely providing access to forms and giving clerical assistance in filling them out. See People v. Landlords Professional Services, Inc., 178 Cal. App. 3d 68 (1986). In contrast, filling out the form here didn’t take any particularized legal skill or knowledge. Indeed, the Plaintiff essentially copied the form the attorney had filed ten years earlier and updated the calculation of interest. Filing the form was purely ministerial. Nor did Plaintiff ever hold himself out as anyone’s attorney or offer anyone advice. Under the facts of the case, the Plaintiff was more of a scrivener than a lawyer. Indeed, in a similar case, a corporate officer’s filing a form to domesticate a sister state judgment was not found to have been acting as an attorney on the corporation’s behalf. Tom Thumb Glove Co. v. Han, 78 Cal. App. 3d 1 (1978).

Reversed.

No More Third Party Discovery in Arbitrations

Aixtron, Inc. v. Veeco Inst. Inc., H045126 (D6 Jul. 16, 2020)

Clarifying an issue that has long been unsettled, the Court of Appeal holds that, except under narrow circumstances, arbitrators are not authorized to issue or enforce third-party subpoenas for pre-hearing discovery.

It’s an employment arbitration. Old Employer says employee took its confidential information and gave it to his New Employer. Old Employer serves New Employer with a pretty invasive subpoena, demanding inspection of all sorts of computers and other stuff like that. New Employer objects, but the arbitrator ultimately says the subpoena is enforceable.

New Employer petitioned the court and sought de novo review under Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P., 44 Cal. 4th 528 (2008), which provides a non-partie to arbitration, who hasn’t contractually consented to the jurisdiction of an arbitrator, a right to “full judicial review” of arbitrator’s discovery order. The trial court denied the petition. Old Employer then petitioned to enforce the award, which was granted. NE appeals from both orders.

There’s two threshold questions. First, a question about the record. OE’s appendix contains some declarations from forensic experts that weren’t in the trial court record. That’s not proper. Nor can the court take judicial notice of them because they are contested. Same goes for a request by NE to take judicial notice of a similar declaration.

There’s also an issue about appealability. An order denying a petition to vacate an arbitrator’s discovery order against a third party or granting a petition to enforce such an order isn’t an enumerated in Code of Civil Procedure § 904.1 as appealable order. But the decisions on the petition did effectively resolve all controversy between NE and OE. Thus they are the functional equivalent of final judgments and appealable under § 904.1(a).* A third party’s right to litigate through a final appeal is also consistent with the “full judicial review” afforded by Berglund.

Moving on to the merits, there’s some dispute about whether the case is governed by the FAA or the CAA. But it doesn’t matter in the end. In 2017, the Ninth Circuit held that § 7 of the FAA doesn’t authorize arbitrators to compel the production of non-parties' testimony or documents prior to the commencement of an arbitration hearing. CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. 2017). And since the Court finds that same rule applies in California, albeit for different reasons, the choice of law is irrelevant.

The CAA includes a provision that permits discovery mirroring that available in state court. See Code Civ. Proc. § 1283.05(a). But that provision only applies to PI cases. § 1283.1(a). Or when the parties specifically agree that state-court-scoped discovery applies. § 1283.1(b).

In a cogent statutory analysis, the court explains that the CAA’s subpoena provision, § 1282.6, says that arbitration parties can served third party discovery subpoenas only in cases where § 1283.05 applies. The parties can also issue trial testimony preservation subpoenas under § 1283, and both the parties and the arbitrator can sign subpoenas for the attendance of witnesses or the production of documents at the arbitration hearing. Id. But unless § 1283.05 is in play, discovery subpoenas—whether deposition or duces tecum—are off the table.

Here, the parties here did not specifically agree to the application of § 1283.05. Nor did the fact that they agreed to arbitrate under the JAMS rules constitute such an agreement. The JAMS rules addressed to subpoenas do not provide for third party discovery. Instead, they—consistent with the FAA and § 1282.6—permit the arbitrator to issue subpoenas for attendance or production of documents at the arbitration hearing.

And even if the JAMS rules did permit discovery subpoenas, NE never agreed to litigate under the JAMS rules. In the absence of consent, NE could only be forced to participate in arbitration discovery to the extent authorized by a statute, such as § 1283.05. Which authority was lacking in this case.

Reversed.

*The court cites Brun v. Bailey, 27 Cal. App. 4th 641 (1994) as stating that an order resolving a nonparty discovery dispute is an appealable order, since it’s the equivalent of a final judgment between the party and the nonparty. But Brun—which dealt with the payment of witness fees—doesn’t clearly state that point, which has been unclear in the case law for a long time. The logic of appealability analysis in this case, however, should apply equally to a superior court order compelling a nonparty to produce discovery, since that is a final resolution of the dispute.

Formally Deficient ≠ Factually Devoid

Bayramoglu v. Nationstar Mortgage LLC, No. C084299 (D3 Jul. 1, 2020)

Almost 20 years ago, in Aguilar v. Atlantic Richfield Co., the California Supreme Court aligned state summary judgment procedure with federal procedure that he been clarified in a trio of 1986 opinions by the federal supreme court. But Aguilar kept one distinction, grounded in the statutory text of Code of Civil Procedure § 437c(b). While the U.S. Supremes’ Celotex decision permits a moving defendant to meet its burden by simply “pointing out” that there’s no evidence on an element of plaintiff’s claim, under Aguilar, the moving party needs evidence of the absence of evidence to substantiate that assertion. 

Of course, evidence of lack of evidence is kind of a tricky thing to come up with. But, relying on a few earlier cases, Aguilar explained one key kind of evidence moving party could use to sustain its burden: the “factually devoid interrogatory answers.” So, those in the know on state court procedure generally serve an early set of requests for admission on each of the ultimate facts that plaintiff needs to prove, accompanied by an official form interrogatory 17.1 (which requires the respondent to state all facts and identify all evidence that support the denial of an RFA), and then later serve a supplemental rog demand whose response is due a couple weeks before a summary judgment motion will be filed. Junky responses to those ensure you can meet your burden under Agulilar. 

Defendant here basically ran that playbook. It served interrogatories asking the plaintiff to explain what evidence supported its contentions. The responses it got back from Plaintiffs just listed the Bates numbers of a bunch of documents, citing to § 2030.230. The trial court found this inadequate, which, in its view made the responses “factually devoid” so as to meet the moving Defendants’ burden.

The Court of Appeal disagrees, and reverses. Plaintiffs’ responses might well have been deficient under § 2030.230, which only permits a reference to documents when the response “would necessitate the preparation or the making of a compilation, abstract, audit, or summary of or from the documents of the party to whom the interrogatory is directed, and if the burden or expense of preparing or making it would be substantially the same for the party propounding the interrogatory as for the responding party[.]” But that doesn’t necessarily mean they were “factually devoid.”

As an example, the court posits a contention interrogatory that demands all facts supporting plaintiff’s assertion that they own a house. (This is a foreclosure case.) In their response, Plaintiffs cite the Bates numbers to the deed, the sale contract, and the mortgage docs. That response is clearly inappropriate under § 2030.230. Nonetheless, however, the response does, in fact, identify evidence to support the contention. The propounding party there would clearly have a remedy in moving to compel a compliant response. But that wouldn’t make the non-compliant responses citing docs “factually devoid.”

Reversed.

New Trial Blues

Estes v. Eaton Corp., No. A152847 (D1d2 Jun. 29, 2020)

Following a defense verdict in an asbestos case, Plaintiff moved for new trial and, in the alternative, judgment notwithstanding the verdict. The trial court granted a new trial but denied JNOV. Both sides appeal. 

The trial court’s new trial order somewhat generically explained that it was drawing inferences and resolving conflicts in evidence contrary to jury’s decision. Without a doubt, that is a permissible grounds for new trial in California, based on insufficiency of the evidence under Code of Civil Procedure § 657(6). It’s often referred to as the court’s power to act as a “thirteenth juror.”

But, in granting a new trial based on insufficiency of the evidence, § 657 requires the trial court to both identify that as the grounds for its decision and to state its reasons for doing so in a written order drafted by the court, not the parties. Case law interpreting that provision requires the court to explain, with at least some specificity, why it is overturning the verdict and what evidence supports that decision. Just saying that the court thought that, contrary to the jury, the losing party had the better of the evidence isn’t enough. The point of the rule is to ensure that the trial court, in exercising the extremely broad discretion afforded to it, makes a record to support that reasoning on appeal. If the cited evidence would permit a reasonable juror to find in favor of the court's theory, the new trial ruling is affirmed. But the absence of an adequate explanation requires a reversal.

I have, on several occasions, wrote at some length about how California’s complicated new trial procedures create all kinds of traps for litigants, who can get burned when trial court judges, through no fault of the litigants, fail to follow the procedures. But this case seems to be a good example of the procedures actually serving their purposes. The trial court basically just said it thought Defendant’s evidence was insufficient to rebut Plaintiff’s. That might be a statement of a grounds but it is not a statement of reasons. The Court of Appeal is thus left with no basis to understand how the trial court exercised its discretion to disagree with the jury. So it reverses for that reason.*

JNOV, on the other hand, is a different animal. As an initial matter, the Court notes that Plaintiffs’ summary of the evidence is inadequate to meet the requirement that, in an opening brief challenging the sufficiency of the evidence, the appellant needs to give a fair summary of all the evidence, not just “an argumentative and one-sided presentation of the evidence favoring the plaintiff’s position.” It is not sufficient to expect the respondent to round out the summary in its own brief. So the Court was in its rights to consider the JNOV appeal forfeited.

But even reaching the merits, Plaintiffs’ cross-appeal fails. As the Court explains, when a party who bears the burden of proof appeals based on inadequacy of the evidence to sustain the verdict—the issue presented by a JNOV here—it faces an “extremely high burden.” That is because the jury is always free to disregard the burden-bearing party’s evidence as incredible. So in those circumstances, the appellant needs to show that the evidence in its favor was so overwhelming that it compelled a result in its favor as a matter of law. And, unlike in an appeal of a new trial motion, all inferences are drawn in favor of the verdict and any reasons supporting it are presumed to exist. 

Suffice it to say, the Court of Appeal finds that there was enough dispute in the evidence that there was no basis to overturn the denial of the JNOV.

Reversed in part.

*It might seem reasonable to think that the Court of Appeal could just reverse to make the trial court give a better statement of reasons that might actually support a new trial. The problem with that, however, is that § 904.1(a)(4) makes the grant of a new trial motion an appealable order. So the trial court’s effort on remand to correct its omission would immediately engender another appeal, leading to two more years of litigation. That being the case, it seems fair to give a trial court a single bite at the apple when it intends to exercise its somewhat extraordinary 13th juror power.

Plaintiff Forfeits Bad Arguments by Failing to Make them to the Trial Court

Wittenberg v. Bornstein, No. A154994 (D1d3 Jun. 29, 2020)

This seems to be a contentious litigation over a partnership breakup. On the verge of trial in a case with numerous claims and cross claims, Plaintiff here filed a separate complaint that basically re-alleged some of the cross-claims that were about to be tried. The trial court granted a demurrer on because the claims in the second case were compulsory cross-claims in the first case under § 426.30, and thus couldn’t be brought in a separate action.

The Court of Appeal affirms on the merits in an unpublished part of the opinion. But it publishes on whether Plaintiff forfeited three of her many grounds for appeal by failing to present them to the trial court. In particular, Plaintiff’s appeal argues that: (1) the claims in the second suit were not compulsory because the first suit plaintiff’s complaint did not state valid clams; (2) the partnership dissolution proceedings in the first suit were “special proceedings,” to which 426.30 did not apply; and (3) her claims weren’t compulsory because, in the first action, personal jurisdiction against her was lacking. She didn’t make any of these arguments to the trial court.

Plaintiff argues, however, that a demurrer cannot be sustained if the complaint states a cause of action under any legal theory, even one raised for the first time on appeal. But that rule applies to general demurrers for failure to state a claim. The demurrer here was a special demurrer based on the fact that an action where the claims could be brought was already pending. That doesn’t implicate the “any legal theory” rule, the purpose of which is to favor a resolution on the merits. To the contrary, it implicates the policy of preventing piecemeal litigation and a multiplicity of lawsuits. So although the Court of Appeal might have discretion to reach legal theories not raised in the trail court, it had no obligation to do so. And it declines to do so here.

Affirmed.

Witkin All the Way Down

Barriga v. 99 Cents Only Stores LLC, No. E069288 (D4d3 Jun. 26, 2020)

Wage and hour class action brought on behalf of Dollar Store Employees. In opposition to class cert, Store puts in 52 declarations from putative class members. Employees deposed some of the declarants. Some of them described signing the declarations under various coercive circumstances, which included being taken by HR to a room during work hours, presented with a fully drafted declaration, instructed to sign it, not being provided with an adequate Spanish translation, being enforced to sign without reading, etc. Others described signing under more mundane circumstances.

Employees moved to strike the declarations. The trial court declined. Relying, in part, on the declarations, it declined to certify a class. Employees appealed.

There’s a threshold issue on appealability. Employees’ notice of appeal didn’t identify the denied motion to strike. But it did flag the denied class cert motion. The Court decides that, given that the appeal of the class cert denial is appropriate under the death knell doctrine, it is fair to consider the motion to strike denial as subsumed into that appeal. After all, Rule of Court 8.100(a)(2) requires liberal construction of notices of appeal.

On the merits, under Gulf Oil Co.v. Bernard, 452 U.S. 89 (1981), and state decisions interpreting it, courts have a duty to police precertification communications between the parties and the class members. Generally, orders limiting communication need to be based on a specific record of particular abuses. One significant risk is the risk of coercive communications between a defendant and its current employees who are class members. Courts can view such communications with caution, and if declarations were given under coercive circumstances, courts have the authority to strike them or severely discount their weight.

The Court of Appeal holds that the trial court failed to appreciate and properly exercise its discretion in evaluating the motion to strike. Both the trial court’s tentative and final ruling indicated its belief that it lacked the statutory authority to strike the declarations. Nor did the record reflect that the trial court appreciated the potential coerciveness when a defendant collects declarations from its own class member employees. As such, the manner in which the trial court addressed the declaration was an abuse of discretion.

The Court goes on to explain that class cert orders are subject to a special standard of review. Unlike most appellate matters, the court will not affirm if the trial court’s reasoning was erroneous, but the record nonetheless contains a basis to affirm. A class cert ruling is reviewed entirely on its own basis. Which means that if the trial court applies an erroneous legal standard, a reversal would follow, even if, the trial court’s result could be justified were the the correct standard applied. The upshot of which is that the error in the manner in which the declarations were treated requires reversal, without an analysis of whether the declarations made any difference to the ultimate class cert decision. 

Justice Slough dissents, pretty stridently for state court, where dissents are uncommon. See Slip Op. at 4 (“I cannot overstate how deeply I disagree with their treatment of this case.”) Her principal point is on the prejudice issue. As she sees it, the Court isn’t actually reviewing a class cert order, it’s reviewing an evidentiary ruling. And like any evidentiary ruling, a reversal isn’t merited unless the error was prejudicial. See Cal. Cost. Art. VI, § 13, Code Civ. Proc. § 475. That analysis would require looking to the merits of the class cert ruling, which the majority didn’t reach. (And which Justice Slough believes was correct.) And since Justice Slough would find that the declarations didn’t have a meaningful effect on the ultimate result, an affirmance was merited, even if the trial court could have done a better job of scrutinizing the declarations. 

Reversed and remanded.

I must say, I’ve always found the California standard of review for class cert—which scrutinizes the logic of the trial court and refuses to consider alternative bases to affirm—to be kind of weird. What if, for instance, the trial court denied cert based on a slightly erroneous view of some complicated issue of superiority when (in the record but unmentioned in the trial court decision) the putative class contained three people? Why does that require a remand? 

I traced the rule back to its origins. It doesn’t seem to have a particularly thoughtful genesis. Back in 1981, the Supreme Court said:
“in the absence of other error, this court will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used; or (2) erroneous legal assumptions were made.” Richmond v. Dart Indus., Inc., 29 Cal. 3d 462, 470 (1981) (cites and quotes omitted). That itself seems reasonable and would not necessarily preclude an affirmance for some other ground supported by the record.

But by 2000, the Supreme Court was adding an additional sentence to the standard of review, explaining, that “[u]nder this standard, an order based upon improper criteria or incorrect assumptions calls for reversal even though there may be substantial evidence to support the court’s order.” Linder v. Thrifty Oil Co., 23 Cal. 4th 429, 436 (2000) (quotes omitted). For that point, the Court cited a Court of Appeal case that says “we must determine whether the trial court engaged in correct legal analysis.” See Caro v. Procter & Gamble Co., 18 Cal. App. 4th 644, 655 (1993). And Caro cites Nat'l Solar Equip. Owners' Assn. v. Grumman Corp., 235 Cal. App. 3d 1273, 1281 (1991) which in turn cites Clothesrigger, Inc. v. GTE Corp., 191 Cal. App. 3d 605, 612 (1987), which appears to be the first iteration of the rule, explaining that “[o]ur focus on correct process requires us to reverse even though there may be substantial evidence to support the court’s order.”

As Justice Lewis’s dissent in Clothesrigger cogently explains, however, the Clothesrigger majority just made up that standard out of whole cloth by taking out of context a snippet of text from Witkin California Procedure. There, the treatise said: “There are several situations in which the reasons for the trial court's decision are either required by statute or, though not required, may have a significant effect on the determination of the appeal.”  It then listed seven specific categories of rulings, none of which were a ruling on a class cert motion.

So there you have it.

ot

Richmond v. Dart Indus., Inc., 29 Cal. 3d 462, 470 (1981)

Fees, Form, and Substance

MSY Trading Inc. v. Seleen Automotive, Inc. No G057093 (D4d3 Jun 26, 2020)
 
Oversimplifying a little here, but the salient facts basically are: Plaintiffs won a breach of contract claim, which included an award of contractual attorneys’ fees. Original Defendant failed to pay. Plaintiffs then filed a separate collections suit against CEO, claiming that he was the alter ego of Original Defendant and thus liable on the judgment.

CEO prevailed on the alter ego issue. He then sought fees under the underlying contract and Civil Code § 1717. There’s no question he would have been entitled to those fees on an estoppel theory were he a prevailing defendant in the underlying contract action. Viz., if you sue a non-signatory enforce a contract, you are bound to the fee clause in that contract if you lose. But Plaintiffs argue that since this is a collections case, not an action on the contract, CEO can’t get fees, because Code of Civil Procedure § 685.040 makes fee recovery in a collections case a one-way right inuring only to the creditor. 

The Court of Appeal rejects that proposition. As the Court explains, there are three different ways to pop an alter ego with a judgment: Sue him in the original suit, add him to the judgement after the fact with a motion for leave to amend under Code of Civil Procedure § 187, or file a new lawsuit. These have procedural differences, but substantively, they are all the same. That being the case, the same logic that binds a plaintiff who tries to make an alter ego liable under a contract to the fee provision in it, applies when the other two procedures are used. So CEO was entitled to recover his fees in the alter ego case.

Affirmed.