California Case Summaries New California Civil Cases

by Monty A. McIntyre, Esq.

Monty A. McIntyre, Esq. is the publisher of California Case Summaries™, which provides monthly, quarterly and annual summaries, organized by legal topic, of every new published CA civil case—helping lawyers save time, win more, and make more money. Monty has been a California civil trial lawyer since 1980, a member of ABOTA since 1995, and is a mediator, arbitrator and referee at ADR Services, Inc., conducting Zoom hearings throughout California. To schedule a matter, contact Monty’s case manager Haward Cho, haward@adrservices.com or hawardSDteam@adrservices.com, (213) 683-1600. California Case Summaries™ (https://cacasesummaries.com).

E-Commerce Lighting, Inc. v. E-Commerce Trade LLC

(2022) _ Cal.App.5th _ , 2022 WL 17547124:1 The Court of Appeal reversed the trial court’s order denying plaintiff’s motion to confirm an arbitration award, and granting defendant’s petition (supported by intervenor Banc of California, National Association’s (the bank)) to correct the arbitration award to eliminate the setoff awarded by the arbitrator. In 2015, defendant purchased plaintiff’s assets for $11.5 million. As part of the purchase defendant gave plaintiff a promissory note for $2.5 million. Defendant also obtained two loans from the bank, one for $5 million and the other for approximately $1.25 million. Plaintiff, defendant and the bank agreed that the promissory note to plaintiff would be subordinated to the bank loans. Plaintiff later sued defendant, defendant moved to compel arbitration, and the parties stipulated to arbitrate. The bank was not a party to the arbitration. Plaintiff claimed breach of the promissory note and defendant claimed breach of the asset purchase agreement. The arbitrator found in favor of both parties, concluding that defendant owed plaintiff $2,756,635.66 and plaintiff owed defendant $2,611,463.58. The arbitrator concluded that an offset was allowable, and issued a single final award of the difference of $145,172.08 to plaintiff. The trial court granted the motion to correct the award, and denied the petition to confirm it, because it concluded that the arbitrator’s setoff effectively allowed plaintiff to circumvent the subordination agreement with the bank. The Court of Appeal reversed. Per Code of Civil Procedure section 1286.6(b), the trial court could correct the award only without affecting the merits of the decision upon the controversy submitted. A party cannot use a petition to correct an arbitration award as an appeal of an arbitrator’s considered decision. Based on the facts presented, including that the arbitration parties had disputed whether a setoff was available, the Court of Appeal concluded that the correction affected the merits of the arbitrator’s decision and was therefore improper. (C.A. 4th, December 9, 2022.)

WL 314122: The Court of Appeal reversed the trial court’s order denying defendant’s motion to compel arbitration of plaintiffs’ complaint alleging numerous employment claims including discrimination, harassment, retaliation and wrongful termination. The trial court denied the motion, concluding that defendant had failed to prove the authenticity of plaintiffs’ signatures on the arbitration agreement, and also concluding the arbitration agreement was procedurally and substantively unconscionable. The Court of Appeal disagreed. It concluded that plaintiffs did not offer any admissible evidence creating a dispute as to the authenticity of their signatures. Plaintiffs did not say in their declarations that they did not sign the arbitration agreement or that their signature was forged. Instead, they declared that they were given a lot of documents, asked to quickly sign them, and did not recall reading or signing any arbitration agreement. The Court of Appeal also concluded that while plaintiffs had shown procedural unconscionability, they did not show any element of substantive unconscionability. The arbitration agreement stating that it was governed by the Federal Arbitration Act was not unconscionable, neither was the provision that allowed the defendant to choose between two arbitration providers. (C.A. 1st, January 19, 2023.)

Chen v. BMW of North America (2023) _ Cal.App.5th _ , 2022 WL 18407504: The Court of Appeal affirmed the trial court’s post-verdict order awarding plaintiff $53,509.51 in attorney fees and costs in his action alleging breach of warranty and violation of the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790, et seq.) and the Consumers Legal Remedies Act (Civ. Code, § 1750, et seq.). During the litigation defendant sent a Code of Civil Procedure section 998 offer, agreeing to pay plaintiff $160,000 (exclusive of recoverable costs and attorney fees accrued to the date of the offer), and attorney fees and costs as awarded by the trial court. Plaintiff rejected the 998 offer, the litigation continued for two more years, and the parties settled on the day of trial with the settlement terms being essentially identical to the section 998 offer. The trial court properly concluded the 998 offer was valid, plaintiff did not do better than the offer, and properly limited the award of plaintiff’s fees and costs to $53,509.51, the fees and costs plaintiff accrued through July 2017, 45 days after the section 998 offer was made. (C.A. 6th, filed December 29, 2022, published January 23, 2023.)

City of Rocklin v. Legacy Family Adventures etc. (2022) _ Cal.App.5th _ , 2022 WL 17827565: The Court of Appeal affirmed the trial court’s order denying defendants’ antiSLAPP motion to strike (Code of Civil Procedure, section 425. 16) and its order awarding plaintiff attorney fees of $72,798.65 and costs of $1,053.31 because the anti-SLAPP motion was frivolous. The anti-SLAPP motion was filed against 4 of 12 causes of action in plaintiff’s complaint regarding a joint undertaking involving the construction and operation of a theme park called Quarry Park Adventures. The parties did not actively dispute that the speech at issue in those causes of action was commercial speech, to which section 425.16 does not apply. Instead, the parties debated whether the speech concerning the theme park qualified under the “artistic work” exception (section

425.17(d)(2)) to the commercial speech exemption (section 425.17(c)). The trial court was not bound by an expert opinion offered by defendants and it properly carried out its duty to interpret the statute and made its determination as a matter of law as to whether a theme park would qualify as an artistic work under section 425.17(d)(2). The trial court correctly sustained plaintiff’s objection to paragraphs in the expert declaration as relayed case-specific hearsay. (People v. Sanchez (2016) 63 Cal.4th 665, 676.) Finally, the trial court did not abuse its discretion in awarding attorney fees to plaintiff pursuant to section 128.5 as incorporated in section 425.16(c), because any reasonable attorney would agree that defendants’ special motion to strike on the ground that the proposed theme park was an artistic work was totally devoid of merit. (C.A. 3rd, December 21, 2022.)

Adanna Car Wash Corp. v. Gomez (2023) _ Cal.App.5th _ , 2023 WL 225122: The Court of Appeal affirmed the trial court’s order dismissing plaintiff’s trial de novo appeal from the Labor Commissioner’s award of back wages and other damages in favor of plaintiff’s former employee, Jesus Gomez. The trial court properly dismissed the appeal for lack of jurisdiction because plaintiff failed to post with the trial court an appeal bond required by Labor Code section 98.2. It also properly concluded that plaintiff’s earlier filing of a surety bond under Labor Code section 2055, a bond required of all car wash owners as a condition of operating a car wash business, did not satisfy the appeal bond requirement under section 98.2. (C.A. 2nd, January 18, 2023.)

LAOSD Asbestos Cases (2023) _ Cal.App.5th _ , 2023 WL 354915: The Court of Appeal reversed the trial court’s order granting defendant Avon Products, Inc.’s (defendant) motion for summary judgment against plaintiffs Alicia Ramirez (Alicia)2 and her husband Fermin Ramirez (collectively plaintiffs) in their complaint for damages against several defendants due to Alicia’s development of mesothelioma. Defendant’s motion for summary judgment relied on a declaration from Lisa Gallo (Gallo Declaration), an employee who did not begin work at Avon until 1994, halfway through Alicia’s alleged exposure period. Plaintiffs objected to the Gallo Declaration and attached exhibits on the grounds they lacked foundation, lacked personal knowledge, and contained hearsay. The trial overruled the objections and granted the motion for summary judgment, finding the declaration was the sole evidence which shifted the burden to the plaintiffs to produce evidence sufficient to create a triable issue of material fact. The Court of Appeal disagreed, concluding that the trial court erred in overruling plaintiffs’ objections based on lack of foundation, lack of personal knowledge and the hearsay nature of the documents. Because Lisa Gallo was a lay witness, not an expert witness, she was limited to testimony reflecting her personal knowledge and could not testify to hearsay. There is no special category of “corporate representative” witness. Moreover, a person deposed as a corporate person most qualified (PMQ deponent) may only testify at trial according to the rules of evidence which apply to ordinary lay witnesses. The rules relating to witness testimony at a trial or hearing apply equally to defendants and plaintiffs. The trial court abused its discretion in admitting the declaration and hearsay documents. Without the Gallo Declaration, defendant did not offer evidence which shifted the burden to plaintiffs. The Court of Appeal rejected defendant’s argument that the summary judgment should still have been granted because plaintiffs’ discovery responses were factually devoid, because defendant failed to adequately develop this theory in the trial court and on appeal and it was therefore forfeited. (C.A. 2nd, January 23, 2023.)

John’s Grill v. Hartford Financial Services Group (2022) _ Cal.App.5th _ , 2022 WL 17959561: The Court of Appeal affirmed the trial court’s order granting defendant Hartford Financial Services Group (HFSG’s) motion to quash service of summons, but it reversed the trial court’s order sustaining defendant Sentinel Insurance Company, Ltd. (Sentinel)’s demurer, without leave to amend, to restaurant plaintiff’s complaint alleging wrongful denial of its claim for business interruption coverage for losses caused by the COVID-19 pandemic. After full briefing, argument and submission of the appeal, the parties settled the case and asked for the appeal to be dismissed. Court of Appeal declined to dismiss because the appeal raised issues of continuing public interest which were likely to recur, and filed its opinion. The Court of Appeal held the trial court properly granted HFSG’s motion to quash, because plaintiff failed to present sufficient evidence to show jurisdiction over HFSG because HFSG was not a party to the insurance policy and was only a holding company that indirectly owned Sentinel. However, the trial court erred in sustaining Sentinel’s demurrer without leave to amend. Unlike many other policies discussed in recent published opinions, the Sentinel policy had language providing coverage for loss due to a virus, if the virus was caused by one of a number of listed causes (the Specified Causes Clause). Any other damage caused by a virus was excluded from coverage. The Court of Appeal concluded that the insuring agreement providing virus coverage, construed according to the reasonable expectations of an insured, was broad enough to encompass forms of property loss not involving physical alteration of property. Plaintiff alleged enough that it should have been granted leave to amend to plead that its claim fell within the scope of the virus coverage. The Court of Appeal ruled that the Specified Causes Clause, if construed and applied expansively as requested by Sentinel, would leave plaintiff with no virus coverage at all and was therefore unenforceable under the illusory coverage doctrine. Finally, the Court of Appeal concluded it was premature to determine whether the virus exclusion applied until the cause of the virus was determined. (C.A. 1st, December 27, 2022.)

Tufeld Corp. v. Beverly Hills Gateway, L.P. (2022) _ Cal. App.5th _ , 2022 WL 17482205: The Court of Appeal affirmed in part, and reversed in part, the trial court’s judgment, following a bench trial, concluding that an amended commercial real property lease executed in 1960 and now ending in 2123 was void under Civil Code section 718 to the extent its term exceeded 99 years. Because the lease was void, the trial court concluded that defendant tenant could not maintain its estoppel, laches, and waiver defenses. However, to avoid an unnecessary retrial in the event of an appellate reversal, the trial court addressed the merits of defendant’s equitable defenses and held that if estoppel, laches, and waiver were available, then the facts of the case would compel their application, requiring full enforcement of the ground lease term through 2123. Ruling on an issue of first impression, the Court of Appeal stated that the main issue on appeal was whether a lease that violates section 718 is void or voidable. It would make a difference in this case because if the lease was voidable, defendant could assert equitable defenses against plaintiff landlord’s claims for declaratory relief. The Court of Appeal concluded the part of the lease exceeding 99 years was void. (C.A. 2nd, December 7, 2022.) n

According to most economists, we’re not in a recession, at least right now. However, the only certainty appears to be uncertainty. How will law firms achieve growth in an unstable environment? We’ve reviewed two leading annual research reports, the 2023 Citi Hildebrandt Client Advisory and the 2023 Thomson Reuters Report on the State of the Legal Market. These reports provide data and insights that can help inform critical decisions this year and beyond.

This is our reaction to those reports curated here along with our highlights and a few recommended areas of focus for the coming year.

These are certainly challenging times for the legal community. Dare we say exciting? In addition to ongoing market segmentation, law firms are faced with rising operational costs in a slow-growth market. Moreover, fierce talent competition persists alongside continuing issues of lawyer retention. Perhaps ‘exciting’ is a bit of a stretch.

But none of this has to mean your law firm won’t prosper.

As lawyers return to the office post-pandemic, firms will look for growth opportunities. It will come from some combination of practice mix, geographic footprint, and probably both. Firms that have the capacity will increase profits by focusing on practices that perform well in a downturn—such as litigation, financial restructuring and bankruptcy. Others will look for viable complements to existing businesses given the firm’s capabilities. Still another possibility for growth comes from expanding existing client relationships, both domestically and abroad.

Of course, in addition to a solid growth strategy, the reports show efficiency is more important than ever to the bottom line. The clarion call from clients for greater efficiencies will be loud and clear this year. According to the 2023 Citi Hildebrandt Client Advisory, law firms are listening. There has been a significant acceleration in efficiency initiatives since 2020. It’s one way to address the continued growth of alternative legal service providers and Big Four legal businesses that have cropped up.