Some Deep Procedure

Paul Blanco’s Good Car Co. Auto Grp. v. Superior Court, No. A159623 (D1d5 Oct. 20, 2020)

This is a writ taken from civil enforcement action brought by the AG against some corporations for false advertising. There’s two clusters of issues, one that deals with trial court procedure, the other which deals with appellate procedure. Both are kind of interesting, if you are into that sort of thing....

The AG filed an unverified FAL complaint against Defendants. Under Code of Civil Procedure § 446(a), Defendants were nonetheless required to answer in a verified pleading. Defendants, however, filed an unverified general denial, citing an exception in § 446(a) for when “an admission of the truth of the complaint might subject the party to a criminal prosecution.” Because defendants were corporations without any Fifth Amendment right to remain silent, the trial court struck the answer. Defendants took a writ.

The Court of Appeal issued an order to show cause on the writ. A few weeks later, the trial court issued an order noting that the case had been reassigned to a new judge. It further set a hearing for the AG to explain why the court shouldn’t vacate the first judge’s order, given the OSC. The new judge subsequently vacated the first judge’s order and un-struck the answer.

So the gating appellate issue is, was the second judge’s order—issued after the OSC—valid? This brings to bear one of the more obscure aspects of writ practice in California—the difference between an OSC and an alternative writ. An alternative writ gives the trial court a choice between showing cause (which is actually shown by the real party) and changing its order. But an OSC “does not invite the trial court to change the ruling under review.”

Although a writ petition followed by an OSC does not deprive a trial court of jurisdiction to change its mind on interlocutory decisions, the Court here explains that it is a bad idea for a trial court to do so while an OSC is pending. The point of an OSC often is for the Court of Appeal to take briefing and reach a decision on an unresolved point of law. If the trial court’s reverses course while an OSC is pending, that raises mootness issues. And indeed, if the Court of Appeal’s first priority is to merely compel the trial court to change its mind, it has the alternative writ in its quiver to do so.

The court next addresses whether the new judge had the authority to reverse the first judge’s order. (Didn’t this just come up?) A trial court may, of course, revisit interim orders. But the authority to do so generally rests with the judge that made the order in the first instance. So appellate courts have developed the rule that a reassigned trial judge can’t revisit a prior judge’s order unless the first judge is no longer available. That’s not the case when a matter is merely reassigned. (The first judge here is still on the court—he didn’t die or retire.) So, the Court of Appeal finds that the second judge lacked authority to revisit the first judge’s order.

And since the revisited order was invalid, the Court of Appeal can reach the merits of the trial court procedure issue raised by the writ. (Which it seems like it really wants to do, FWIW). 

So far as § 446 goes, the question is whether the exception in § 446 for admissions that might lead to criminal liability applies to a corporate entity that does not have a right to remain silent. Although the AG draws the equation, the statute does not itself actually reference the Fifth Amendment or any of its state law equivalents. Nor is there any doubt that a corporation can be subject to criminal liability. So Court of Appeal goes with the plain language of § 446, which permits a corporate defendant to decline to verify its answer when doing so might subject it to criminal liability. That is backed up by the case law and legislative history.

Finally, there’s the issue of whether the defendant could file a general denial. Section 431.30 says you can’t make a general denial to a verified complaint. But the complaint here was not verified, even if a verified answer is required unless the exception in § 446 applies. As the court explains, § 446 gave the AG the option of verifying the complaint. But it did not elect to do so. And given that option, it does not make sense to treat any AG complaint automatically like it has been verified, such that a general denial cannot be made to an unverified AG complaint.

Writ granted.

Botched Expedition Leads to Five Years of Jurisdictional Limbo

Kurwa v. Kislinger, No. S23461 (Cal., as amended Jan. 31, 2018)

Back in 2013, the Supreme Court nixed an earlier appeal in this case. But now it’s back.

Defense Judgment + Contingent Side Payment ≠ Moot

Hensley v. San Diego Elec. Co., No. D070259 (D4d1 Jan. 31, 2017)

Plaintiffs in this case lost an in limine motion on whether they could recover emotional distress-related damages on their claims, which made it not worth it to try the case. The parties tried to enter some kind of a stipulated arrangement that permitted an appeal. But the first time it went up, the Court of Appeal found that the arrangement was too ambiguous to count as a final judgment so no appeal would lie.

On remand, the parties agreed privately that Defendant would pay Plaintiffs a dollar amount on their non-emotional distress claims. Defendant also agreed to make an additional liquidated payment, but only if the Court of Appeal were to reverse the in limine ruling and remand for trial. They then stipulated to enter a final judgment in favor of Defendants that Plaintiffs “take nothing” on all claims, but which specifically stated that it was without prejudice to Plaintiffs’ right to appeal the damages.

The Court of Appeal finds that this time around, the parties did enough to create an appealable final judgment.There's no doubt that, on its face, the judgment finally disposed of all of the claims in the litigation. Nothing ambiguous or contingent about it. The fact that it was taken for the purposes of facilitating an appeal didn’t change that fact.

But what about the side deal? Under the parties’ agreement, there won’t ever be a trial even after a remand, because they agreed to resolve that contingency with a payment. That creates a tricky situation. On one hand, there’s no question that the parties could have struck the same deal ten minutes after the reversal. The judgment is still a judgment and the appeal has meaningful consequences for the parties. So, according to the court, the side deal doesn’t make the case moot.

That said, the court is clearly concerned with the potential that these kind of side bets could be used to manipulate appellate jurisdiction and avoid mootness. Clever parties could use these kinds of agreements to trick courts into issuing advisory opinions. The court finds that these concerns don’t control here, however, because the amount of the side-payment “essentially represents a liquidation of [Plainiffs’] emotional distress damages for their causes of action for trespass and nuisance, and is a matter still at stake between them.” But the court makes clear that if the payment were more arbitrary or manipulative, it could well be sufficiently divorced from the true merits as to render a case moot. 

The court goes on to reverse on the damages question. So Plaintiffs get their emotional distress covered without going to trial.


Reversed.

What Can You Say When the Stay Gets Stayed?

Gastelum v. ReMax Int'l, No. B263213 (D2d5 Feb. 11, 2016)

An employment dispute gets compelled to arbitration, but the employer fails to front the costs, as required under Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83 (2000). So the arbitrator’s outfit refuses to proceed. Given that, the trial court lifts the stay pending arb. Defendant appeals.

But the order isn’t appealable. It is not the functional equivalent of the denial of a motion to compel arbitration, which is appealable by statute. Contrary to earlier cases, this wasn’t an order that affirmatively stayed an arbitration., but the converse: an order that found a continued stay of ligation to be inappropriate. That kind of order doesn’t fall within the scope of any category of statutorily appealable orders whether under the Arbitration Act or Code of Civil Procedure § 904.1, which lists the various authorized appeals. So this appeal gets dismissed.

Dismissed for lack of jurisdiction.

The One True Judgment

Baker v. Castaldi, No F067687 (D5 Mar. 16, 2015)
This appeal follows from a really confusing multi-stage trial that resulted in series of “judgments” being entered. Apparently, the judgment being appealed foresees the trial court holding a further trial on punitive damages.

That isn’t appealable even if the trial court erroneously called it a judgment.

Appeal dismissed.

Arbitration Appeals Fail for Lack of Jurisdiction

Judge v. Nijjar Realty, No. B248533 (D2d7 Dec. 17, 2014)

When an arbitration has not yet proceeded to an award on the merits, a superior court’s order vacating an interim ruling construing the scope of the arbitration clause is not an order vacating a final arbitration award appealable under Code of Civil Procedure 1294(c). This appeal was thus premature and merited dismissal. That’s the case even though the interim award might have been appealable under the FAA, because the procedural rules under the federal act don’t preempt state procedures that govern arbitration and because state procedure applies absent an express agreement otherwise. Nor did the fact that the interim award was made under the AAA’s rules make the order appealable. The right to appeal is governed by statute, not the rules of an arbitral body or the parties’ agreement.

Appeal dismissed.

Wells Fargo Bank, N.A. v. The Best Service Co., Inc., No B253861 (D2d5 Dec. 17, 2014)

The defendant unsuccessfully moved to stay this case in connection with an arbitration that it demanded. But—for some tactical reason not apparent from the opinion—it did affirmatively not move to compel the arbitration, which throws a wrench in the appeal. That’s because Code of Civil Procedure § 1294(a) affords appellate jurisdiction over the denial of a petition to compel arbitration, but not from an order denying a stay in favor of an uncommenced arbitration.  No jurisdiction, no appeal.

Appeal dismissed.

Not Exactly an Intuitive Rule on Appellate Jurisidiction

Pacific Corporate Group Holdings, LLC v. Keck, No. D062277 (D4d1 Dec. 12, 2014)

Under Code of Civil Procedure § 904.1(a)(4), orders granting new trial motions or denying JNOVs are appealable, independent of an appeal of the underlying judgment. This rule, which is different than most jurisdictions, creates some tricky issues of appellate jurisdiction, this case shows.

A former employee won a $170k jury verdict for an unpaid comp. Both parties moved for new trial, and the employer also moved for JNOV.  The court denied the employer’s motions. But it granted the employee’s new trial motion on inadequate damages because it believed that the jury’s verdict did not reflect certain bonus money to which the employee was entitled under his contract with the employ. The court issued an additur, giving the employer the option of between a $330k judgment and a new trial on damages. The court further denied both parties motions for attorneys’ fees. The employer rejected the additur and appealed the denial of its post-trial motions, the granting of a new trial, and several other orders that were subsumed into the judgment. Both parties appealed the denial of their fee motions.

On the merits, the court here affirms both the orders denying the employer’s JNOV and granting the employee’s new trial. This has the effect of wiping out the judgment entered by the trial court, which means that there is no remaining judgment for the employer to appeal. The court thus would not reach the merits of the employer’s appeal of the judgment, which would have to await an appeal of a final judgment entered after the new trial on damages is held. Similarly, the court lacked jurisdiction to address the fee appeals because with the judgment vacated by the affirmed new trial order, the orders could not be considered as postjudgment orders, subject to appeal under § 901(a)(2).

Affirmed in part and otherwise dismissed.