Wednesday, March 31, 2021

Strong Medicine, Short Clock

S.F. CDC LLC v. Webcor Cosntr. LP, No. A156669 (D1d1 Mar. 19, 2021)

This is a claim under Business & Professions Code § 7031(b) for disgorgement of more than $100 million compensation paid to an allegedly unlicensed construction contractor. The trial court granted a demurrer, finding that the claim was barred by the one-year statute of limitations in Code of Civil Procedure § 340(a), which applies to claims for statutory penalties. 

Plaintiff tries to argue that § 338’s three-year statute for restitution claims should apply instead. But a § 7031 claim isn’t really restitution. It is a super harsh penalty, meant to coerce contractors to keep licensed, that applies regardless of any harm to the plaintiff. That the amount to be disgorged equals what was paid does not make it a form of restitution. 

Similarly, because § 7031 doesn’t require any harm, the discovery rule won’t apply to the accrual of disgorgement claim. A contractor is either licensed or not and its licensure status is a matter of public record. If a customer doesn’t figure out the issue within a year of the completion of the work, they just forego a claim for disgorgement.

The court also affirms an award of contractual attorneys’ fees to the contractor. Whether fees are recoverable depends on the language of the contract—some contracts permit recovery on only contract claims. Others permit recovery for torts too. This isn’t a claim for breach of contract. But the fee provision says that a prevailing party can get fees if an action is commenced “because of the breach by either party.” The court reads “because of” to extend beyond just breach claims to claims with some causal relationship to a breach. Here, the contract included Contractor’s representations that it was properly licensed and the property owner’s complaint repeatedly invoked that provision. That being the case, the Court of Appeal finds an adequate connection between the claim to the contract, and thus affirms the fee award in the contractor’s favor.

Affirmed.

Friday, March 26, 2021

Wiggle Room in the Rog Rules

Plascencia v. Deese, No. B299142 (D2d6 Jan 20, 2021)

A jury in this wrongful death auto case awarded the plaintiff $30 million in non-economic damages apportioned at 40 to the Defendants and 60 percent to a driver who played a role in the accident by making an illegal U-Turn. But they weren’t the only defendants involved. Plaintiff also sued, and settled with, the State and the owner of a Roadside Business, whom Plaintiff alleged created unreasonably dangerous conditions in the roadway at the accident site.
Under Proposition 51, non-economic damages are not joint and several—they are to be apportioned between all potential defendants based on proportionate fault. 

That means that a jury is generally instructed to determine the proportionate fault of even absent (settled, dismissed, never sued) co-tortfeasors. Here, however, Defendant provided some contention rog responses that pinned 100 percent of the fault on the U-Turn Driver. Based on those responses, the trial court granted a motion in limine that excluded evidence of the fault of the State or the Roadside Business and declined to instruct the jury to find their comparative fault. 

That was error. The Court’s in limine ruling was effectively an evidentiary sanction for a discovery violation. But under the provision in the Discovery Act that addresses interrogatory sanctions, the trial court is only authorized to issue evidentiary sanctions for a failure to “obey an order compelling answers.” Code Civ. Proc. § 2030.290(c). The court shouldn’t and can’t make evidentiary sanctions just based on the inadequacy of the response, even in the guise of an in limine motion. Indeed, the ruling was particularly problematic in this case because the court and the parties were aware throughout the course of the litigation that the setting defendants likely bore a good chunk of the fault.

So if Plaintiff wanted to set up preclusion, it would have needed to move to compel a response that addressed the liability of the settling parties, and then sought sanctions for the non-compliance with that order. Absent that, the best Plaintiff could have done would have been to have used the rog responses against the Defendant as an admission if or when the Defendant sought to shift blame at trial.

The Courts analysis is a correct read of the law here, but it does highlight a limit on the utility of interrogatories as a discovery device in state court. Had this case been tried in federal court, Defendant would have been obligated to supplement the responses under Rule 26(e)(1)(A). Then, under Rule 37(e)(1), his failure to do so without substantial justification could have resulted in the kind of preclusion ordered by the court here. That effectively lets you use interrogatories to lock down your opponents theories of the case before trial. 

On the other hand, it is very difficult to do that under the state court rules. Theres no duty to supplement. And even if you serve a well-timed demand to supplement, theres no meaningful enforcement measure even if responses served right before trial are incomplete. To say Plaintiff could have moved to compel doesn’t really offer a solution either. Presumably, the rogs asked who was at fault and the responses said that Defendant’s contention was that U-Turn driver was 100% responsible. That seems like a complete response to me. What exactly should Plaintiff have asked the court to compel Defendant to add?

In any event, the apportionment thing wasn’t the only error. Plaintiff’s lawyer also committed misconduct during closing argument. He baselessly accused Defense counsel of fraud just for defending the case, suggesting that “you can’t stone him to death,” but that the jury could “make him pay.” He also violated an in limine ruling ordering not to make a so-called Golden Rule argument—a play to the sympathy of the jury by asking the jurors to imagine that one of their own children were killed. The Court of Appeal holds that this was misconduct, and—given that the “$30 million verdict is so large that it shocks the conscience and suggests passion or prejudice on the part of the jury”—that it was so prejudicial as to require reversal.

Reversed.

Monday, March 22, 2021

Some Interesting Ones I Missed.

So a year ago when the world shut down, I briefly thought that the one upside of the whole mess was that I could catch up on some reading, work through my backlog of civil procedure cases to blog on, and finish up some other professional writing projects unrelated to my day to day practice. None of that happened. As seems to be the share experience of many of my colleagues, I’ve been busier with billable work than almost ever. And with that on top of suddenly being the vice-principal of a very tiny elementary school, I am deeply, deeply behind.

With the one year of the lockdown hitting last week, I am coming to grips with the fact that I am never going to catch up. So in the interest of clearing the decks of a bunch of half written stuff I didn’t post on time, here are some interesting cases that I missed in the past year.

Vazquez v. Jan-Pro Franchising Int’l, No. S258171 (Cal. Jan 14, 2021). The Supreme Court found that its groundbreaking Dynamex ruling, which significantly altered the landscape of misclassification in employment cases, was retroactive to all cases not final as to the date of that decision. The Chief Justice, writing for the full court, primarily reasoned that although Dynamex resolved a first impression issue, it did not reverse or alter some already existing standard that would upset reasonable expectations.  

Reyes v. Kruger, No. H044661 (D6 Sept. 25, 2020). As some other cases decided over the last year have made clear, the time to appeal the grant or denial of an anti-SLAPP motion runs from the date of the order. You can’t and shouldn’t wait for a judgment, which does not restart the clock. And although filing a new trial motion challenging an anti-SLAPP dismissal could tool the time to appeal under Rule of Court 8.108, that only applies if the new trial motion itself was timely, which requires a notice of intention to move to be filed within 15 days of notice of the entry of the order. Because none of that happened here, the appeal gets dismissed.

 
Aerotek v. Johnson Grp. Staffing Co, Inc., No. C078435 (D3 Sept. 15, 2020). The Court of Appeal holds that when attorneys’ fees are awarded under the California Uniform Trade Secrets Act, the attorney, not the client, owns the fees, unless the parties’ fee agreement specifically provides otherwise.

Mejia v. DACM, Inc., No. G058112 (D4d3 Sept. 15, 2020) In 2017’s McGill decision, the California Supreme Court held that an arbitration clause that prohibited the plaintiff from seeking public injunctive relief—a form of relief available under the UCL and FAL, where a court can bar a practice beyond its effect on an individual plaintiff—is unenforceable. This case involves the inevitable next step—an arbitration clause that tries to get around that limit by selecting the law of some other state. Here, it’s Utah. But that doesn’t fly under California’s choice of law rules applicable to contractual choices of law, commonly called the Nedlloyd test. The first step of the test was met. There were rational bases for the parties to pick Utah law. But upholding the selection would be an end-around the limits provided by McGill. And since, as the Court sees it, McGill sets out a fundamental policy of the state, the selection won’t stand up under the second element of the Nedlloyd test. 

Marshall v. Webster, No. C088240 (D3 Sept. 4, 2020)  As I just mentioned, this is one of the cases holding that, because an order granting or denying an anti-SLAPP motion is directly appealable, the date to file a notice of appeal runs from the date on which the court serves the order or from when a party serves notice of entry of the order. Even if, in the case of an anti-SLAPP motion that kills a whole case, a final judgment is later entered.

Rowan v. Kirkpatrick, A160568 (D1d3 Sept. 4, 2020) When the state, including the state courts, shut down in March 2020, various courts across the state entered orders extending time. Some just afforded tolling. Others deemed that periods of time were “holidays” for purposes of computing deadlines to undertake various acts. Here, plaintiff got hit with a vexatious litigant order in pre COVID time. His clock to appeal started on the mailing of the notice of that order. It then got tolled under a Judicial Council order. But the tolling ran out while the superior court was still on deemed-holiday. Which restarted the clock, which proceeded to run during Napa County Superiors “deemed holiday” period. Which, pursuant Code of Civil Procedure § 12, meant that his Notice of Appeal was due the next non-holiday day. And since he filed after that, his appeal was untimely.

Simmons v. Bauer Med. Grp., No. B296220 (D4d4 Jun. 19, 2020) Back when the world had time to think about frivolous things, there were a number of conspiracy theories circulating about the disappearance of 80s-era exercise guru Richard Simmons. Simmons wound up suing a tabloid and a PI it hired to investigate his whereabouts for invasion of his privacy after they put a tracking device on his caretaker’s car. The Court of Appeal affirmed the denial of an anti-SLAPP motion, finding that using an illegal tracking device is not “conduct in furtherance of” of protected activity under § 425.16(e)(4). This case was calling out for an application of the (e)(4) analysis in Wilson but the Court never really gets there. Instead, it seems to have relied on a Flatley-lite argument that allegedly illegal acts can’t be in forbearance of free speech, which is very pre-Wilson way to analyze the issue. But the Court of Appeal granted a publication request and the defendants never sought review.

Insalaco v. Hope Lutheran Church of W. Contra Costa Cnty, No. A156562 (D1d2 May 27, 2020) Under Code of Civil Procedure § 437c(h), a party opposing summary judgment can get more time to do so if it files a declaration setting out what additional discovery is needed to oppose the motion. This case discusses how the practicalities of how that rule works. In particular, it addresses the nature of the showing that must be made, and blesses the idea that it can be made in an ex parte application seeking a continuance of the SJ hearing.

Nat’l Biweekly Admin., Inc. v. Superior Court, No. S250047 (Cal. Apr. 30, 2020). Back in 2018, the Court of Appeal decided that a UCL or FAL claim in which a prosecutor seeks civil monetary penalties was subject to a jury trial right under the state constitution. The opinion was, admittedly, an outlier. But as I mentioned back then, the logic of it was pretty solid. The Supreme Court, however, ultimately didn’t agree with me. The rub of the Court’s analysis seems to be that because, like the standard for violations, UCL and FAL penalties are assessed in an flexible and one-case-at-a-time—some would say arbitrary—way, they need to be meted out by a judge, not a jury. Of course, California state courts’ decades-long reluctance to provide any meaningful non-ad hoc guidance on what counts as each “violation” under these provisions gives rise to serious notice problems that are deeply problematic from a due process perspective. But two wrongs don’t make a right. To me, fines are fines, even when the standards applied to impose them are shrouded in mystery.

Rall v. Tribune 365, LLC, No. B284566 (D2d8 Dec. 18, 2019) As I predicted in 2019, this appeal of an anti-SLAPP motion in a media defendant wrongful termination case got granted and held in light of the Supreme Court’s decision in Wilson. It got remanded back to the 2/8 for reconsideration. The Court reconsiders in light of Wilson and gets to the same result. Then in April 2020, the Supreme Court subsequently granted a depulbication request.

Friday, March 19, 2021

Section 998 Is Not the Only Settlement Show

Alvarez v. Altamont Health Servs. Corp., No. B305155 (D2d8 Mar. 4, 2020)

For an offer of judgment under Code of Civil Procedure § 998 to be valid, it must include a “provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.” § 998(b). There are some cases that say because an offer without such a provision is invalid, the consequences that apply for a failure to respond—potential shifting of costs—don’t apply.

This case deals with the reverse. Defendant served a § 998 offer. It did not have an acceptance provision. But Plaintiff took the deal anyway and hand wrote an acceptance on the offer document. The trial court entered judgment on the settlement. But Defendant then got cold feet about the offer and moved to vacate the judgment based on the defect. The trial court agreed, and the Court of Appeal here affirms.

The Court reviews various grounds for finding the offer nonetheless valid—statutory, contractual, and equitable—finding them all lacking.

The § 998 analysis basically seems consistent with the statute and the cases interpreting it, even if its a little counter-intuitive. There are, however, two not well developed points here that give me some pause.

First, as a matter of contract law—not specific to § 998—it seems pretty clear that the defendant made an offer—settle the case on these terms—that the plaintiff accepted. So even if there’s no right just to enter judgment under § 998, isn’t the defendant likely entitled to summary judgment on settlement and accord? Not every settlement needs to be a § 998 settlement. That’s not really contemplated here. 

Second, and similarly, there’s an estoppel issue. Defendant made a representation that Plaintiff relied on in changing its legal position. As the Evidence Code puts it: “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it. Evid. Code § 623.

Here, Defendant made a statement that led Plaintiff believe it was offering to settle the case on certain terms and Plaintiff acted on that statement. Generally, that should estop Defendant from a later denial. This one did get raised—albeit only on appeal—but the Court of Appeal rejects it because, under one test that can apply for equitable estoppel—what we call the four-element testthere was no false statement, so equitable estoppel can’t apply. 

But as I wrote, at some length, almost eight years ago, and addressed again just last year, the four-element test, and its cousin, the five-element test, don’t fully encompass all the varieties of equitable estoppel that exist out in the wilderness of California procedure. And in particular, they do not address the core elements of the type of estoppel at issue here—a detrimental reliance on an offer or promise that is not necessarily false when made. Under the case law that applies in that context—see, e.g., Indus. Indem. Co. v. Indus. Acc. Comm., 115 Cal. App. 2d 684, 690 (1953)—there would seem to be enough to work an estoppel here. Or at least for a more thorough analysis.

So while the statutory quirks of § 998 might preclude entry of automatic judgment under its terms, it seems like either contractual rules or an estoppel should be enough to crate a binding agreement that resolves the case.

Affirmed.

Thursday, March 18, 2021

Post-Judgment Fees Don't Require a Number in the Judgment

Guo v. Moorpark Recovery Svc., LLC, No. A159195 (D1d5 Feb. 8, 2021)  

When a judgment includes an award of attorneys’ fees under a contractual fee provision, Code of Civil Procedure § 685.040 authorizes the creditor to also recover fees incurred in enforcing the judgment. Here, the creditor got a default judgment, which included a statement that it was entitled to a fee award. But the creditor never filed a cost bill to actually recover those fees so no ultimate judgment ever specified an amount. The Court of Appeal here holds that doesn’t matter. So long as the underlying judgment stated that the creditor was entitled to fees, that was adequate for the creditor to obtain fees for collection under § 685.040.

Reversed.

Tuesday, March 2, 2021

Play that Song Again

Contreras v. Superior Court, No. B307025 (D2d5 Mar. 1, 2021) 

This case raises the same issue as last year’s Court of Appeal decision in Olabi, and its previous decisions in Perez, and Williams. And it comes out the same way.

Plaintiff brings a PAGA claim based, in part, on her misclassification as an independent contractor. Her contract contains an arbitration clause that delegates arbitrability to an arbitrator. Of course, PAGA claims aren’t arbitrable. But there’s a threshold question as to whether PAGA even applies, because if Plaintiff was properly designated as a contractor, she’s not an “aggrieved employee.” So the trial court sent the case to arbitration for the arbitrator to at least make that finding. 

But as Olabi, Perez, and Williams all explain, a court can’t split up a PAGA claim into different issues and farm some of them out to an arbitrator, even if those issues are gating to the application of the statute itself. So it was error for the trial court to order the issue to arbitration.

Writ granted.

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 Cod...