California Appellate Lawyer Blog

For more than 20 years, homeowners at Sumner Hill, an isolated subdivision on the bluffs overlooking the San Joaquin River, enjoyed the privacy of living in a remote, rural location behind a locked security gate. They also enjoyed unrestricted access to the river on a dirt road within the subdivision known as Killkelly Road. Because Killkelly Road was inside the gated subdivision, river access by that route was available to Sumner Hill homeowners but not the general public. These amenities - a private gated community and unrestricted river access - were part of what they purchased when they bought their lots in the subdivision.

A developer, Rio Mesa Holdings, LLC, purchased the surrounding land and announced plans to develop a massive residential and commercial development that would include opening the Sumner Hill subdivision to the general public and allowing public access to the San Joaquin River directly through the subdivision using Killkelly Road. The developer installed a locked gate restricting the homeowners' access to Killkelly Road. The developer also recorded a document entitled "Notice of Permission to Use Land" in the County recorder's office, which stated that Rio Mesa Holdings, LLC was the owner of Killkelly Road, the general public had a right to use the road for recreational purposes during daylight hours, and no vehicles were allowed on the road. The developer also hired private security guards to patrol the subdivision and prevent vehicular access to the river. Some of the homeowners were accosted by the security guard when they attempted to use Killkelly Road.

These events caused the homeowners to file suit against the developer, seeking a judicial determination of their right to maintain Sumner Hill as a private, gated subdivision and to have unrestricted use of Killkelly Road for access to the San Joaquin River. They also sought damages for slander of title, and related tort causes of action. The developer cross-complained, claiming that the public had a right of access to the river from Killkelly Road.

In a bifurcated trial, the trial court, sitting in equity, resolved the main issues in the homeowners' favor, by determining the private (nonpublic) character of the gated subdivision, confirming the homeowners' easement rights to use Killkelly Road and denying the developer's claim of public access to the river. A jury then heard the tort causes of action and awarded $803,951 in compensatory damages to the homeowners for slander of title and nuisance and $2,419,800 in punitive damages.

Continue reading "Slander of title cause of action may be maintained where the only pecuniary loss consists of attorney fees and costs incurred to clear the slandered title" »

Between 2006 and 2010, ArvinMeritor, Inc., attained $3 billion in sales revenue each year and had an annual cash-flow profit of $111 million, a primary business being manufacturing brake shoes. Its lowest annual profit during this period was $95 million. However, as of 2010, it reported a negative "net worth" of $1.023 billion; the company's losses resulted primarily from significant capital expenditures and development expenses.

Gordon Bankhead contracted mesothelioma as a result of 30 years of exposure to asbestos dust while working in automobile maintenance facilities. Brake shoes for which ArvinMeritor is in part responsible caused the deleterious asbestos dust. Bankhead sued a number of defendants including ArvinMeritor. After trial in Alameda Superior Court, a jury awarded a verdict in favor of Bankhead including a 15% share of the fault against ArvinMeritor which resulted in joint and several liability in the sum of $1.47 million in economic damages, and several liability of $375,000 in noneconomic damages. In addition to this total compensatory award of $1.845 million, the jury later awarded punitive damages against this defendant in the sum of $4.5 million.

In Bankhead v. ArvinMeritor, Inc. (filed April 19, 2012) 2012 DJDAR 5011), ArvinMeritor disputed the punitive damage award on two grounds: 1) the award is excessive because ArvinMeritor proved its negative net worth, and 2) the 2.4 to 1 ratio of punitive damages to compensatory damages is constitutionally excessive. The Court of Appeal, First Appellate District, Division Four, disagreed and affirmed the judgment. In particular, the appellate court held there is no legal requirement that punitive damages must be measured against a defendant's net worth.

Continue reading "Defendant's negative net worth does not render punitive damage award reversible" »

In Epitech, Inc., v. Kann (filed April 16, 2012) 2012 DJDAR 4768), defendant Kann filed a petition to compel arbitration after a corporation's short term creditors brought suit against defendant, a financial advisor the corporation had retained to assist it in getting long-term financing to pay its short-term debts. Suit followed the corporation going bankrupt. Kann claimed the creditors were third-party beneficiaries of his financial advice contract with the corporation, which contained an arbitration clause. The Los Angeles Superior Court denied the petition; that order was affirmed by the Court of Appeal, Second Appellate District, Division Three.

Kann and the corporation signed an engagement letter that included an arbitration clause for any dispute arising out of the letter agreement or any issue concerning breach, termination, enforcement, interpretation or validity of it. The creditors allege that when the financing that Kann was to assist the corporation with failed to materialize, Kann induced the creditors to forbear on foreclosing upon their interests by assuring that financing was forthcoming. Their lawsuit does not allege breach of contract, rather that Kann committed fraud, negligent misrepresentation and concealment.

In his petition, Kann claimed he was being sued because of the way he performed his contract with the corporation and that plaintiffs were third-party creditor beneficiaries to the services Kann was to perform under the contract. The appellate court held the creditors were not, as a matter of law, third-party beneficiaries of Kann's agreement with the corporation, thus the denial of the petition was affirmed.

Continue reading "Insufficient showing of third-party beneficiary status to compel arbitration of claim of nonsignatory to arbitration agreement " »

Dissents appear in published opinions of the California Court of Appeal, Fifth Appellate District about as frequently as meteors crash to Earth. King v. Lynch (filed April 10. 2012) 2012 DJDAR 4516) is such a cosmic event. The court majority affirmed the trial court's invalidating amendments to a trust, even though those amendments comply with the revocation method established in Probate Code section 15401, subdivision (a) (2). The majority found the trust specified a modification method, and thus, under section 15402 the trust could only be amended in that manner.

The trust in question provided that, during the joint life of the two settlors, who were also the initial trustees, the trust "may be amended" by a writing signed by both settlors and delivered to the trustee. Nowhere does the instrument explicitly state this is the exclusive method of amendment.

After one of the settlors, Edna, suffered a severe brain injury, leaving her incompetent, an amendment to the trust was executed by her co-settlor, Zoel. That amendment stated that because Edna could no longer serve, Zoel was appointed as sole trustee. Two further amendments were executed by Zoel changing monetary bequests to the settlors' beneficiaries. These three amendments are the subject of the challenge in this case. The trial court found all three of these amendments invalid, and was affirmed on appeal.

Continue reading "Amendments to revocable trust must follow procedure specified in trust instrument to exclusion of statutory method" »

The California Supreme Court gave readers a "two-fer" when it issued its long-awaited opinion in Brinker Restaurant Corp. v. Superior Court (filed April 12, 2012) 2012 DJDAR 4615. As the court noted in its unanimous opinion, it granted review "to consider issues of significance to class actions generally and to meal and rest break class actions in particular."

Concerning class certifications, the court found that trial courts are not required in determining the issue of certification to resolve threshold disputes over the elements of a plaintiff's claims, unless necessarily dispositive of the certification question. Having said that, the state high court went on to address the "hot button" threshold disputes because the parties requested such, and impliedly because of the public interest involved. On the most debated of these disputes, the court ruled that an employer, while required to relieve its employees of all duties during a meal period, need not ensure that no work is done during this time. It also prescribed the proper interpretation concerning requirements of rate at which rest time must be permitted, and the timing of both rest and meal periods.

On the separate issue of off-the-clock certification, the high court saw no substantial evidence pointing to a uniform, companywide proof of employees performing work while clocked out during meal periods; the trial court's ruling that common questions predominate justifying class treatment was not supported by substantial evidence.

The Supreme Court took a more generous view than the Court of Appeal in interpreting the applicable rest time rate provisions. While the lower appellate court saw employees as entitled to 10 minutes of rest for shifts of 3 ½ hours or more and 20 minutes total for 7 ½ hours, the high court ruled the requirements as being 10 minutes for 3 ½ to 6 hour shifts and 20 minutes for 6 to 10 hour shifts. On the matter of timing of rest periods, the high court disagreed with the claim of the employees that a rest period must occur before any meal period.

Continue reading "Brinker: Clearing up some uncertainty in rest & meal period/ wage & hour class actions" »

In Rehmani v. Superior Court (Real Party: Ericsson, Inc)(filed March 29, 2012) 2012 DJDAR 4177, the Court of Appeal, Sixth Appellate District granted Rehmani's petition for writ of mandate and overturned the Santa Clara Country Superior Court's summary adjudication of Rehmani's claims of workplace harassment based on national origin and religion.

At issue in the appeal was Rehmani's allegation against employer Ericsson that it failed to ameliorate the hostile work environment that existed as a result of abuse he suffered from 3 fellow employees. Rehmani is a Muslim of Pakistani origin; the fellow employees are of Indian origin. He claimed that, because of his national origin and religion, the others were rude, dismissive and hostile; they were unwilling to help him with his projects and made comments concerning the hostile relationship between Pakistan and India. Specific comments included one about the need for India to bomb Pakistani terrorists; a comment that if the fellow worker did not assist him, would he "blow me up?" and a prank birthday party for Rehmani while he was away from the office "celebrating 9/11 and planning terrorist attacks."

To prove entitlement to a summary adjudication of dismissal of these harassment claims, Ericsson needed to establish that Rehmani could not show not only a hostile work environment, but also its failure as his employer to respond with appropriate corrective action. Ericcson asserted in the trial court that the incidents were isolated and not caused by Rehmani's religion or national origin, and not so severe or pervasive as to constitute a hostile environment. Concerning corrective actions, Ericsson set forth evidence that none of the fellow employees were managers, and that Rehmani's complaints to his superiors never asserted (1) "harassment" or "discrimination", and (2) he never said his alleged mistreatment was due to his being Pakistani of Muslim. In any event, Ericsson conducted an investigation and concluded there was no discrimination or harassment, and warned employees against conduct like the 9-11 prank.

Continue reading "Summary adjudication of employment harassment claims reversed because aggregate of evidence may factually support a claim" »

In the morass of paperwork accompanying the start of employment, an employer may ask the employee to sign multiple documents discussing arbitration: an employee handbook, an employer alternative resolution policy statement, and/or the contract of employment may be among the many documents. Which executed document concerning arbitration controls if their content differs?

This question is presented in Grey v. American Management Services (filed March 28, 2012) 2012 DJDAR 4075. When plaintiff applied for employment, defendant provided him with an application packet that contained an Issue Resolution Agreement (IRA) which he signed. The IRA required arbitration of any claim "arising out of or [in] relation to [the] application or candidacy of employment." After he accepted employment, plaintiff signed an employment contract that required arbitration of "a dispute arising out of the alleged breach of any provision of this Agreement." Plaintiff was terminated from his employment and filed a lawsuit primarily alleging employment discrimination and wrongful termination (no claim of "breach of contract"). Defendant successfully moved to compel arbitration, and the arbitrator found in its favor.

On appeal, the Court of Appeal, Second Appellate District, Division Four, reversed, finding that Grey was not required to submit his claims to arbitration under the terms of the employment contract.

The appellate court delineated the critical issue as whether the parties intended their writing (the employment agreement) to serve as the exclusive embodiment of their agreement. The employment agreement included an integration clause providing it was "the entire agreement of the parties and supersedes all prior and contemporaneous discussions and understandings."

Continue reading "Arbitration clause in employment contract superseded that in earlier agreement and made wrongful termination claim not subject to arbitration " »

Since the California Legislature amended Business & Professions Code section 7031, subdivision (e), to narrow the doctrine of substantial compliance with contractor licensing requirements, a contractor attempting to recover for construction work performed may no longer avoid the harshness of the bar against recovery by claiming lack of licensure was merely a matter of form. On this subject, I authored the case of Opp v. St Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71. Opp involved an individual who was barred from utilizing his personal license because he was a different entity than the corporate entity that contracted to perform the work in question.

In this blog's June 27, 2011 edition, I discussed the contrasting facts of Ball v. Steadfast-BLK (2011) 196 Cal.App.4th 694. There, the trial court's judgment barring recovery was reversed because the business name listed in the contract was deemed one and the same as the individual sole proprietor operating the business, although the owners name appeared nowhere in the business name; the business was not a legal entity licensable separate from its owner who was licensed.

Montgomery Sansome LP v. Rezai (filed March 28, 2012) 2012 DJDAR 4042 presents yet another variant on this issue. Defendants hired "Montgomery Sansome Ltd. Lp, 305 Adrian Road, Millbrae" to perform repairs at an apartment building they owned; the work orders had the quoted information printed on the work orders along with contractor's license # 741713. Defendants paid $65,000 on the contract prior to terminating it. Plaintiff claims a balance of about $203,000 is owed it.

Continue reading "Contractor Licensing Law revisited: triable issue whether contracting entity and licensed entity are one and the same" »

We all too frequently read about public school teachers developing sexual relationships with their young, impressionable students. Are the schools themselves vulnerable to lawsuits brought by students and their parents when such conduct occurs away from the school environment? In the discussion that follows, a path of relationships, as determined by the California Supreme Court, presents the answer to this question.

To start, California Government Code section 815 sets forth that public-entity liability is strictly statutory; one such basis of liability is found in section 815.2: vicarious liability for the act or omission of an employee acting within the scope of employment if that conduct would give rise to liability outside of the pubic-entity realm, except where the employee is immune. Can a public school district be liable for a school counselor's molestation of a student outside of the scope of employment based on an allegation of vicarious liability for the negligence of school administrators in hiring and supervising the counselor who the administrators knew (or should have known) had propensities for such misconduct?

In C.A. v. William S. Hart Union High School District (filed March 8, 2012) 2012 DJDAR 3131, the state high court unanimously answers yes, reviving plaintiff's case after the trial court had sustained the school district's demurrer to plaintiff's complaint, and the Court of Appeal had affirmed. This reversal by the Supreme Court does not mean that the plaintiff immediately wins his case. It means, as the court states, plaintiff's theory is legally viable and should not be summarily dismissed at the pleading stage. He still will need to prove his case: if supervisory school employees are proven to have breached their "protective duty of ordinary care" by negligently exposing plaintiff to a foreseeable danger of molestation by his counselor, resulting in injury, and assuming no immunity applies, the school district is liable.

Continue reading "Off-campus molestation: vicarious liability of school district for supervisory employees' negligence in hiring and supervising offending school counselor" »

Erica Howard suffered severe injuries as a result of a car accident when she was being driven home from a New Year's Eve party by Paul Peterson, who had become intoxicated at the party put on by Donald DeWitt. The location of the party was an apartment complex, where DeWitt served as the on-site manager. Lisa Capelletti owned the apartment complex; she insured herself for $1 million per occurrence under a policy provided by Monterey Insurance Company.

Howard settled her claim against Peterson for $250,000 (policy limit) and her claim against Cappelletti for $50,000 (under the Monterey policy). Prior to these settlements, DeWitt was denied coverage by Monterey, which declined to provide him with a defense. Howard got a default judgment against DeWitt in the amount of $4.7 million. Monterey unsuccessfully tried to get this default judgment set aside, and eventually negotiated a settlement with Howard for $3.5 million in satisfaction of the judgment.

In DeWitt v. Monterey Insurance Co. (filed March 13, 2012) 2012 DJDAR 3311, DeWitt's claim of bad faith against Monterey resulted in a defense jury verdict. DeWitt appealed claiming the trial court erred in denying his request that the jury be instructed in CACI No. 2334, which sets forth the elements of bad faith when an insurer assumes the duty to defend but fails to accept a reasonable settlement offer. The Court of Appeal, Fourth Appellate District, Division One, affirmed.

Continue reading "Where party fails to prove insurance coverage or that alleged insurer waived right to contest coverage, party is not entitled to jury instruction on bad faith " »

Labor Code section 3208.3, subdivision (h), states that an employer is not required to compensate an employee for a psychiatric injury substantially caused by a lawful, nondiscriminatory, good faith personnel action. What about such a claim of injury in the form of migraine headaches?

In County of San Bernardino v. Workers' Comp. Appeals Bd. (filed March 2, 2012) 2012 DJDAR 2833, County employee John McCoy claimed he suffered migraine headaches as a result of on-the-job stress caused by friction with his supervisor. The WCJ found the injury not compensable, agreeing with County's argument that his psychiatric injuries were caused by lawful, nondiscriminatory, good faith personnel action. The WCAB granted reconsideration to McCoy and concluded section 3208 (h) did not bar compensation for migraines. Then in its denying the further reconsideration request of County, the board noted migraine headaches are not classified by the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders as a "psychiatric injury."

County petitioned for Writ of Review. The petition was granted by the Court of Appeal, Fourth Appellate District, Division Two, which annulled the board's order.

The appellate court felt guided by legislative intent rather than the non-inclusion of migraine headaches in the cited psychiatric manual category. It viewed the intent of 3208.3 (h) to exclude from compensability claimed injuries directly and solely resulting from psychological suffering due to good-faith actions because the subjectivity of such injury claims bears a great potential for fraud and abuse. Telling in this case was the fact that McCoy added his claim of migraine headaches on the first day of his trial.

There are times when real estate brokers will claim entitlement to a commission, even though the sale of the real property in question has not been completed. One such case is presented in RealPro, Inc. v. Smith Residual Company LLC (filed February 28, 201) 2012 DJDAR 2655.

Defendant listed its vacant land for sale with its listing broker on the following terms: $17 million cash or such other price and terms acceptable to defendant and additional standard terms; a cooperative broker may enforce the listing agreement as a third party beneficiary (4% total commission). Within the listing period, plaintiff broker submitted to the listing broker a written offer to purchase the property for the full price of $17 million, all cash. About one month later, defendant responded with a counteroffer of an increased listing price of $19.5 million. The counteroffer was not accepted. Plaintiff eventually demanded its 2 percent brokerage fee and sued defendant for refusing to pay.

In Riverside Superior Court proceedings, defendant demurred on numerous grounds including condition precedent: that the listing price was alternatively such other price and terms acceptable to owner and escrow must close prior to payment of any commission. The trial court sustained the demurrer without leave to amend. The Court of Appeal, 4th Appellate District, Division Two, affirmed, concluding that the allegations of plaintiff's action established as a matter of law that there was no enforceable written contract entitling plaintiff to a commission.

Continue reading "Full price offer does not invoke offering real estate broker's contractual right to commission" »

Plaintiff Cang Wang suffered critical injuries when struck by the vehicle driven by Amr Sarieh, who had lost consciousness at the wheel as a result of an epileptic seizure. Sarieh recently had his driving privileges restored based on an evaluation filed with the DMV by his treating neurologist defendant Christianne Heck, M.D., clearing him to drive. In Wang v. Heck (filed January 24, 2012, certified for publication February 12, 2012) 2012 DJDAR 2131, the Court of Appeal, Second Appellate District, Division Four, affirmed the trial court's grant of summary judgment dismissing the lawsuit against Dr. Heck.

The litigation privilege is found in California Civil Code section 47, subdivision (b), and affords litigants and witnesses in judicial and quasi-judicial proceedings freedom of access to these processes without fear of being harassed by later lawsuits against them for testimony they give or steps they take in connection with those proceedings. (See Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241.) The appellate court in Wang agreed with the trial court that defendant's form evaluation presented to the DMV fell within this privilege and barred plaintiffs action.

The Court of Appeal rejected plaintiff's argument that defendant's negligent conduct was her failure to warn Sarieh not to drive, which was independent of her completion of the DMV evaluation form; failure to warn her patient was not a communication within the litigation privilege according to plaintiff.

The court cited Gootee v. Lightner (1990) 224 Cal.App3d 587, where the defendant psychologist had performed testing on plaintiff's family in order to testify in child custody proceedings; claims against this court expert acting in a testimonial capacity are barred. Similar reliance is placed on Block v. Sacramento Clinical Labs, Inc. (1982) 131 Cal.App.3d 386 concerning the claim that a toxicologist was negligent in reaching findings as to cause of death. Because the gravamen of plaintiff's claim in the instant case was Dr. Heck's completion of the DMV evaluation form, the litigation privilege likewise extended to her conduct.

Continue reading "Neurologist's DMV seizure evaluation of patient privileged in barring patient-caused accident claim of injured party" »

Municipal governments in California face many challenges. Two of these are to improve traffic safety and to raise revenues. The advent of red-light-camera enforcement proposed to assist these divergent objectives. But a simple problem of meeting evidentiary requirements may be derailing this campaign.

In People v. Borzakian (filed January 23, 2012, certified for publication February 10, 2012) 2012 DJDAR 1923, defendant contested the mailed citation she received for failing to stop at a red light based on automated photographic evidence. At trial, she objected to the People's evidence that consisted of a police officer testifying en masse in traffic court that the photographic equipment provided by a private company was properly calibrated and maintained, causing the photographic depiction to be accurate. She objected for lack of foundation, hearsay, and violation of the right of confrontation stated in Melendez-Diaz v. Massachusetts (2009) 129 S.Ct. 2527. The trial court overruled the objection and convicted her. Defendant appealed via transfer to the Court of Appeal, Second Appellate District, Division Seven. That court reversed the judgment.

The appellate court noted a split of previous opinions on the subject. In People v. Khaled (2010) 186 Cal.App. 4th Supp. 1, the Orange County Superior Court Appellate Division found that unless a testifying officer had personal knowledge of the foundation for introducing into evidence photographs, the underlying workings of the automated camera and the business records in connection therewith, the photograph was inadmissible. The Los Angeles Superior Court Appellate Division disagreed in People v. Goldsmith (2011) 193 Cal.App.4th Supp.1. Goldsmith found the photographs were not statements from a human declarant, and they were entitled to a presumption of accuracy that had to be rebutted by a challenging defendant.

Continue reading "Foundational proof in red-light-camera cases must be based on personal knowledge" »

In Howard v. Omni Hotels Management Corp. (filed January 11, 2012, certified for publication February 8, 2012) 2012 DJDAR 1786, plaintiff injured himself as a result of a slip and fall in the bathtub while staying at one of defendant Omni's rooms in San Diego. He sued Omni for premises liability and negligence; he also sued the bathtub manufacturer, Kohler, for negligence and strict liability. Both defendants succeeded on summary judgment; however, the trial court set aside the judgment in favor of Omni when it granted a motion for new trial on the grounds that there were triable issues of fact regarding the existence of constructive notice of an unreasonably dangerous condition concerning two previous bathtub accidents in another Omni hotel.

The Court of Appeal, Fourth Appellate District, Division One, affirmed as to Kohler and reversed as to Omni with directions to enter a defense summary judgment. Concerning the claims against Kohler, the court found that plaintiff failed to present a sufficient factual basis supporting the application of a higher safety standard for the bathtub than the industry safety standards as proven to have been exceeded by defendants. As to Omni, plaintiff failed to show that the asserted prior incidents were substantially similar.

The ruling in favor of Kohler illustrates that a plaintiff does not necessarily get past a summary judgment by presenting the declaration of a "dueling" expert. Here plaintiff presented its expert's opinion that a greater standard than the industry standard would be better. However, the appellate court agreed with the trial court that merely contraverting what was a better standard did not create a triable issue. Kohler's exceeding the industry standard creates a presumption of non-defect/due care unless plaintiff could show Kohler had knowledge of greater than the expected dangers that should have been addressed by a higher standard of design.

Another common misconception is that a prior accident of the same general nature puts a defendant on notice of the danger that caused a present accident. Here, Omni had experienced two prior bathtub accidents in one of its hotels across the country, in New Haven, Connecticut. But the evidence presented by plaintiff did not give any detail about the condition of the other bathtubs or the medical condition of the hotel guests who fell. Plaintiff had the burden to show sufficient similarity and the court here failed to find sufficient evidence that the plaintiff had done so. (See Buehler v. Alpha Beta Co. (1990) 224 Cal.App.3d 729, 734.)