California Appellate Lawyer Blog

The recent appellate opinion in Corenbaum v. Lampkin (filed 4/30/13) 2013 DJDAR 5591 answers "no" on all counts. The California Court of Appeal, Second Appellate District, Division Three, determined that only the actual amount paid for past medical care (here, as is typical, the discount rate paid by the medical insurer) is relevant and admissible. The court acknowledges that in ruling this full-billing evidence inadmissible for all of these purposes, it plows new ground, beyond the holding of the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal. 4th 541. There, the state high court took the minority view among U.S. jurisdictions in holding that an injured plaintiff may not recover as past economic damages more than the amount paid by medical insurance--the full amount of medical billing was not recoverable as past medical expense damages; the court "expressed no opinion as to its relevance or admissibility on other issues, such as noneconomic damages or future medical expenses."( Id., at p. 567.) Allow me to discuss briefly the underpinnings from Howell, how the Corenbaum court navigated its conclusion, and what might lie ahead.

In Howell, the Supreme Court had before it the following: the trial court had admitted evidence of the full medical billings, but granted the defense motion to reduce the medical damage award to reflect the amount actually accepted by medical providers as full payment (per Hanif v. Housing Authority (1988) 200 Cal.App.3d 625); the Court of Appeal reversed, holding the reduction violated the collateral source rule. The Supreme Court held: [W]e merely conclude the negotiated rate differential--the discount medical providers offer the insurer--is not a benefit provided to the plaintiff in compensation for his injuries and therefore does not come within the rule." (Howell, at p. 566.) Thus the trial court in Howell had properly reduced the past medical award post-verdict.

The Corenbaum court recognized the Howell court did not hold that full amount billed was inadmissible to prove past medical expenses, let alone that it was not at all relevant to prove future medicals and/or pain and suffering. It however theorized that because plaintiff can recover as past special damages no more than the amount incurred for past medical services, the value of those services exceeding what was paid is irrelevant and inadmissible to prove the past specials. As to future medical expenses, it reasoned that the billing rate not paid would be an improper foundation for an expert to use to project future medical expenses. Finally, because pain and suffering is so difficult to assess, any attempt to use the otherwise irrelevant "full amount billed" to gauge pain and suffering would be improper.

Continue reading "Is the full amount billed for medical care admissible at personal injury trial to prove past medical, future medical or general damages? " »

The short answer is the attorney may represent the new client against his old client when the new case does not involve matters substantially related to the prior representations. A "substantial relationship" exists where " the attorney had a direct professional relationship with the former client in which the attorney provided legal advice and services on a legal issue closely related to the legal issue in the present representation. " (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 710, 711.) More specifically, the focus is on "the legal and factual similarities of the two representations." (Farris v. Fireman's Fund Ins. Co. (2004) 119 Cal.App.4th 671, 679.) In Farris, the attorney had worked as coverage counsel for Fireman's Fund for over 10 years handling coverage claims and assisting the client in shaping the company's practices and procedures. Six months after his last representation of that client, counsel filed a bad faith claim against it in representing Farris. The appellate court reversed the trial court's denial of Farris' disqualification motion, finding disqualification was required. (Id. at pp. 685, 688.)

Against this backdrop, the Court of Appeal, Second District, Division Four, reviewed the disqualification of attorney Shahian in the recent case of Khani v. Ford Motor Company (publication ordered 4/25/13) 2013 DJDAR 5399. The motion to disqualify Shahian from representing Khani in Khani's lemon law action against Ford came in an action filed about 4 years after Shahian's last representation of Ford. A partner in Shahian's former law firm declared that Ford was a client of the law firm, Shahian had worked on 150 cases of this client, and Shahian was privy to confidential communications with Ford and information with respect to defense, prelitigation strategies and tactics in the handling of lemon law cases brought against client Ford. The trial court granted the disqualification motion.

The appellate court in Khani reversed the disqualification order. The court cited the above Jessen and Farris opinions approvingly for their legal analysis; but the court saw differences in their facts from the Khani case. For example, the attorney in Farris had "shaped the company's practices and procedures in handling California coverage case." These practices and procedures in Farris were said to likely be at issue in the bad faith case the attorney was now bringing against his former client some six months after he had stopped working for it.

Continue reading "When may an attorney represent in a new action a party adverse to former client he represented in previous actions? " »

In Kleveland v. Siegel & Wolensky, LLP (filed 4/17/13) 2013 DJDAR 4961, the appellate court answered this question with a stinging rebuke: where there was no arguable merit to the initial probate petition and appeal, the court awarded attorney fees and sanctions totaling more than $60,000 against the appellant's attorneys in the later appeal of a malicious prosecution action against the attorneys ("Siegel").

This case had a long and torturous history including this third appeal by appellant concerning the proceedings in the lower court. It all started with appellant Siegel's client's superior court challenge of respondent Kleveland's handling of a trust as trustee. In the first appeal, the Court of Appeal, Fourth Appellate District, Division One, affirmed the trial court's determination that Siegel's client pursued the probate petition in bad faith and for improper purpose, let alone that the challenge was meritless. The second appeal challenged the trial court sanctions imposed against Siegel; again affirmed. Kleveland then filed this malicious prosecution action against Siegel, which resulted in the favorable award for Kleveland including attorney fees. This appeal by Siegel challenged that award, arguing that probable cause existed to bring the probate petition, there was no malice, and the award of attorney fees was an abuse of discretion.

In its published opinion, the appellate court minces no words in affirming. It rejected all of the contentions and stated it was "troubled" by appellant's "utter failure" to provide a summary of significant facts taken for the record. The court was further "perturbed" by the use of asserted facts not contained in the record. Then, the court, on its own motion, found appellant's tactics "patently frivolous" and awarded, in addition to attorney fees, sanctions payable to the appellate court for the court's costs of the proceedings.

The Court of Appeal goes into the details of the lower court proceedings that led to this action and appellant's failures along the way. No need to elaborate here. I must say though that this opinion amounts to the strongest tongue-lashing against counsel that I can recall reading in a published case. In particular, the appellate court found that there was substantial evidence that the initial use of an appeal for the sole purpose of trying to force settlement was malicious. Here, the attorneys' initial malice was exacerbated by failure to follow the basic appellate requirement of stating facts from the record of the proceeding. The result: not only are attorney fees recovered by respondent both below and on appeal, but the attorneys are required to pay sanctions to the court in the sum of $8,500. Not good for either the law firm's finances or its reputation.

In short, a frivolous appeal risks a whole lot more than simply losing the appeal.

There is a popular notion that if a party has violated a statute, legal liability necessarily flows from that violation. Not always so. Spriesterbach v. Holland (filed 4/9/13) 2013 DJDAR 4567 discusses some of important nuances concerning this subject.

Plaintiff rode his bicycle on a sidewalk in the direction opposite the direction of vehicular traffic on the adjoining roadway. He approached a supermarket parking lot to his left where he saw defendant's automobile stopped at the threshold of the sidewalk and parking lot. A hedge and wall separated the sidewalk from the parking lot with an opening at the driveway. Defendant did not see the bicycle as she edged over the sidewalk/driveway and onto the roadway, resulting in a collision that injured plaintiff. Plaintiff sued and the case was tried to a jury. At trial, each side claimed that the other was in violation of the California Vehicle Code.

Vehicle Code section 21804, on which plaintiff proposed a negligence per se instruction be given to the jury, provides that one exiting property to enter or cross a highway shall yield the right-of-way to traffic close enough to constitute a hazard; however once that driver has yielded until it is reasonably safe, other drivers shall yield. The trial court refused to give plaintiff's proposed instruction.

Vehicle Code sections 21605 and 21650.1, on which an instruction was given by the court over plaintiff's objection concerning the question of plaintiff's contributory negligence, provide that bicycles may be ridden on sidewalks; when bicycles are ridden on a roadway or shoulder of a highway, the bicycle shall be operated in the same direction as vehicles are required to be driven.

Continue reading "When should a "negligence per se" jury instruction be given and what is the impact of the giving or not giving? " »

In Collins v. Navistar, Inc. (filed March 29, 2013) 2013 DJDAR 4169, a juvenile was throwing chunks of concrete from a freeway overpass onto the freeway, hitting a number of vehicles. One such vehicle was that of plaintiff's deceased spouse, William Collins; a two and a half pound chunk penetrated the windshield and hit William in the forehead, causing severe brain injuries and causing his Navistar truck to crash into a wall. Among those sued was Navistar for product liability on the theory the windshield was defective. Navistar contended it need not anticipate third party criminality when it designed its product. The trial court agreed to the extent that it instructed the jury that, based on a heightened standard of foreseeability, Navistar could be liable only if it foresaw or should have foreseen that a third party would act in this particular manner.

Based on such instruction, the jury reached a verdict on the preclusive issue of duty: the signed verdict form read that Navistar could not "have known or reasonably foreseen that a person would likely take advantage of the situation created by Navistar's conduct to commit" an act like the juvenile's rock throwing. Plaintiff appealed the judgment in favor of Navistar. The Court of Appeal, Third Appellate District reversed.

The appellate court found that language of the instructions and verdict forms given over the objection of plaintiff, even though taken from standard instructions, did not properly adapt from premises negligence law to products liability. As the California Supreme Court stated in Soule v. General Motors ( 1994) 8 Cal.4th 548, 560, in strict products liability cases, truck manufacturers must anticipate that their vehicles will be involved in traffic accidents generally. The foreseeability is of the risk of harm, not of the particular intervening act, even though the manufacturer could not have foreseen the extent of harm or manner in which it occurred. (Torres v. Xomox Corp. (1996) 49 Cal.App.4th 1, 18-19.)

Continue reading "Does a third party's criminal conduct of throwing concrete down onto a freeway relieve truck manufacturer's duty to design windshield to protect against such flying objects? " »

The situation: wage and hour class action brought by automotive technicians against their employer who compensates repair work employees on a piece-rate basis; while total compensation would not drop below the "minimum wage floor" (total compensation for total number of hours), employees were not otherwise compensated anything for those specific hours they were required to be at the workplace either performing non-repair tasks or simply waiting for customers to show up. In Gonzalez v. Downtown LA Motors LP (filed 3/6/13; pub. order 4/2/13) B235292, the Los Angeles County trial court had found the above method of compensation violated the minimum wage law in that the law does not allow an employer to average total compensation over total hours worked in a pay period. Defendant-employer appealed. The Court of Appeal, Second Appellate District, Division Two, affirmed.

At issue in this case were California's minimum wage requirements promulgated by the Industrial Welfare Commission (IWC). Wage Order No. 4 requires an employer to pay to each employee for each pay period not less than the applicable minimum wage for all hours worked, defined as the time during which the employee is subject to the control of the employer. Plaintiffs' contention, adopted by both the trial and appellate court, was that the plain meaning of "all hours worked" is "each and every hour" worked.

Defendant argued that there should be no distinction between waiting and productive time when employees are paid as here on a piece-rate basis; that payment to employee for the productive time for which employee receives a premium flag rate for expected hours to complete task (but does not necessarily require that much time if employee is efficient) is blended with uncompensated hours during a pay period to determine satisfaction of minimum wage requirements. If there is then a shortfall, argues defendant, to be in compliance with the law, it need only supplement the technician's piece-rate wages to meet the minimum wage floor for the entire pay period.

While not specifically a case on piece-rate compensation, Armenta v. Osmose Inc. (2005) 135 Cal.App.4th 314 was found to be persuasive on this issue. The plaintiffs there were employed by a company that maintained utility poles in remote areas. Employees were paid only for "productive" time, time actually spent doing pole maintenance work. So-called "non-productive" time (travel and vehicle maintenance time, and time attending safety meetings) was not included. The employees there made the same "each and every hour" argument concerning minimum wage and prevailed.

Continue reading "Does California law require employers to compensate piece-rate employees a separate hourly minimum wage for non-piece-rate-producing required hours?" »

In McDaniel v. Asuncion (filed March 27, 2013) 2013 DJDAR 4038, the plaintiffs, wife and daughter of decedent who lost his life in an automobile accident, sued numerous defendants for wrongful death. Before trial, defendant Asuncion served a joint offer to the two plaintiffs to settle against this defendant alone in the amount of $100,000, which went unaccepted. (California Code of Civil Procedure section 998.) Plaintiffs proceeded to trial against Asuncion and another defendant. While plaintiffs were awarded $3.3 million against the other defendant, Asuncion prevailed with a defense verdict. The Kern County trial court awarded Asuncion his costs, which included $41,000 in expert witness fees. Plaintiffs appealed.

Plaintiffs argued on appeal that a single section 998 offer addressed to multiple plaintiffs is invalid on its face. The problem with this kind of offer, the argument goes, is that one plaintiff cannot control the decision of the other plaintiff; where the defendant is setting forth a lump sum offer for both (or all) of the plaintiffs, the case will only settle when there is joint acceptance. Because the policy purpose of section 998 is to penalize a party who rejects a reasonable offer to settle and thus encourage settlements, the policy is not served by punishing a party who is thwarted in agreeing to settle because of an unwilling co-party. The Court of Appeal, Fifth Appellate District, disagreed, finding there is little, if any, justification for invalidating a joint offer made in a wrongful death case, where a single joint cause of action is brought and any award is given to all heirs in a lump sum. Because it was clear in this case that this defendant received a more favorable judgment, his award of expert witness fees was affirmed.

The Court of Appeal, in finding a wrongful death action to be an exception to the typical unenforceability against a rejected joint offer of settlement, does note a split of authority. The Sixth District case of Gilman v. Beverly California Corp. (1991) 231 Cal.App.3d 121 determined that the joint 998 offer of four wrongful-death plaintiffs did not allow the defendant there the opportunity to evaluate the distinct loss of each plaintiff and reversed an award of expert costs as it was impossible to say which of the plaintiffs' shares of the gross judgment were in excess of that plaintiff's share of the joint offer. So Gilman appears to be contrary to McDaniel.

Continue reading "When is a rejected joint offer to settle enforceable to award expert witness fees (CCP sect. 998)? " »

The short answer is: do not try to ignore the problem, or even worse, mislead the court. This is exactly what appellant Good did in Good v. Miller (published opinion filed 3/13/13) C068802.

Good sued Miller in an insurance policy dispute. The Placer County trial court found that Good acted in willful noncompliance with the court's order compelling discovery, and awarded Miller both monetary and terminating sanctions. On the 60th day after that order, Good filed his notice of appeal from that order. One problem: a terminating sanction order is not an appealable order. (Code of Civil Procedure section 904.1.) 15 days after Good filed his notice of appeal, a judgment in favor of Miller was filed. Good failed to appeal the judgment (which is appealable under 904.1); nor did he make any other effort to correct his mistake.

The Court of Appeal, Third Appellate District, dismissed the appeal. In its opinion, the court noted that there are circumstances in which the court may save premature appeals: (1) the notice of appeal is entered after judgment is rendered but before it is entered, and (2) the notice of appeal is filed after announcement of intended ruling but before the judgment is either rendered or filed. California Rules of Court, rule 8.104(d) recites the above as subparts (1) and (2) respectively. (1) is mandatory; (2) is discretionary. Because the order granting terminating sanctions is not an appealable order (an appealable order is included in the meaning of "judgment"), the appellate court here acted discretionarily under subpart (2).

The court declined to exercise its discretion for three reasons: (1) appellant did not ask the court to do so; (2) respondent repeatedly raised the issue and appellant repeatedly ignored it; and (3) appellant misstated in his brief that his appeal was timely filed. The court essentially said: ignore the problem and we will ignore your purported appeal--case dismissed.

Continue reading "What are the limits to an appellate court excusing failure to appeal from an appealable order? " »

The above two questions are presented in Garrett v. Howmedica Osteonics Corp. (filed 3/6/2013) B238304. Plaintiff Garrett was treated for cancer in his left femur by an orthopedic surgeon who implanted a prosthetic device, designed and manufactured by defendants, the surgeon had selected to replace the middle portion of the femur. When plaintiff complained about the pain in his thigh approximately 1½ years after the surgery, the surgeon discovered a fatigue fracture in the prosthesis, which had to be replaced in a second surgery.

Plaintiff sued the device-providing defendants for strict product liability (manufacturing defect, design defect, and failure to warn), breach of express warranty, and negligence. These defendants filed a motion for summary judgment claiming no defect factually, and no duty to warn as a mater of law. The motion was accompanied by a declaration of their expert mechanical engineer who said the prosthesis was not defective and the fracture was caused by an excessive load that the product could not bear over time.

Conceding the failure-to-warn claim could not be established, plaintiff otherwise opposed the motion with its own expert metallurgist's declaration which stated that he tested the prosthesis material and found it failed to meet certain minimum requirements for hardness, making the product defective in manufacture and design in his opinion. Defendants objected to most of the substantive portions of this declaration. The trial court sustained the objections and granted the motion, which caused judgment to be entered in favor of these defendants.

Plaintiff appealed, contending exclusion of major portions of its expert's declaration was error, and that triable issues of fact remained. The Court of Appeal, Second Appellate District, Division Three, reversed, vacating that portion of the summary adjudication concerning manufacturing defect and negligence, but directing summary adjudication of the remaining causes of action. In particular, it held that the trial court failed to liberally construe the plaintiff's expert's declaration, causing the sustaining of the objections to be an abuse of discretion.

Continue reading "Can product-design-defect strict liability apply to implanted medical devices? When can expert declaration be excluded on MSJ?" »

California Government Code section 12945, subdivision (a) (1), requires an employer to permit a pregnancy-disabled employee to take leave "not to exceed four months and thereafter return to work . . . ." In Sanchez v. Swissport, Inc. (filed February 21, 2013) 2013 DJDAR 2400, employer Swissport claimed that the specificity of this language found in the Pregnancy Disability Leave Law (PDLL) necessarily defines the limits of an employer's obligation. The trial court (Los Angeles Superior Court) agreed, dismissing plaintiff Sanchez's action for wrongful termination upon sustaining defendant's demurrer without leave. The Court of Appeal, Second Appellate District, Division Four, reversed.

Sanchez initiated her leave request nearly eight months before her due date upon her diagnosis of a high risk pregnancy that required bed rest. While she was still disabled, and still three months shy of her due date, she was terminated by Swissport from her position of cleaning agent. She claimed she would have been willing to return to work soon after the birth of her child with need of only minimal accommodations. She further alleged that she was fired because of her pregnancy-related disability and/or her requests for accommodations, and that Swissport failed to engage her in a timely, good faith interactive process.

The appellate court disagreed with defendant and the trial court, finding that the PDLL merely defines the employer's obligations under that statute; the PDLL provisions are in addition to those provided elsewhere in the FEHA law, and may not be construed "in any way to diminish" coverage of a pregnancy-related medical condition "under any other provision" of FEHA. (Quoted portion comes from subdivision (b) of section 12945.) Thus contrary to defendant's contention, the PDLL is not the employee's sole remedy; it is augmented by broader provisions of FEHA that require an employer to provide reasonable accommodations for an employee's known disability, unless the employer shows that such accommodation would cause it undue hardship.

A potentially reasonable accommodation here would have been to give plaintiff an extended leave time. The findings of the trial court do not preclude this: the finding that at the time of her termination plaintiff was unable to perform her job is merely a finding of disability. The trial court did not find that she was unable to perform her essential duties even with reasonable accommodations.

Continue reading "May an employer fire a pregnancy-disabled employee after she has exhausted maximum leave provided by Pregnancy Disability Leave Law?" »

In Greyhound Lines, Inc. v. Department of the California Highway Patrol (filed 1/23/13, pub. ordered 2/14/13) 2013 DJDAR 2169, during the early a.m. hours, an SUV on State Route 99 had crashed, coming to rest on its side blocking at least one lane. A passing motorist called to report the accident and road blockage to the CHP 911 operator, who responded "We'll go ahead and put this out," but failed to enter the code for lane blockage, delaying the CHP response to the scene. Due to this input error, a more distant CHP unit was summoned to the scene, rather than a nearby unit. Within about three minutes of the call, before the more distant unit could arrive, a Greyhound bus collided with the unlit, disabled SUV causing multiple deaths.

Greyhound was sued; its cross-complaint included a cause of action against the CHP alleging negligence based on unnecessary delay after being alerted of the SUV crash and failure to enter the proper code to get a timely response to the scene, thus substantially contributing to the fatal collision that followed. CHP demurred based in part on lack of duty. Greyhound responded that a duty of care arose when the CHP operator responded to the 911 caller that CHP was on the way, thus dissuading the caller from rendering assistance at the scene. Trial court granted demurrer without leave to amend, dismissing CHP from the action. Greyhound appealed.

The Court of Appeal, Fifth Appellate District, affirmed finding that law enforcement officials have no duty to come to the aid of another unless a special relationship exists; such a relationship arises if the agency's act created the peril, or contributes to, increases, or changes the risk that otherwise exists. The court determined that no such relationship existed here between the CHP and the injured bus passengers because there was no express promise inducing reliance or increasing person's risks of harm. The appellate court cited California Supreme Court authority in support of this analysis: Williams v. State of California (1983) 34 Cal.3d 18, and Clemente v. State of California (1985) 40 Cal.3d 202.

The reviewing court found Greyhound's argument fail for several reasons: (1) Greyhound's theory expands the narrow special relationship exception; (2) CHP did not induce the bus passengers to rely on CHP to their detriment or to increase their risk of harm; and (3) Greyhound's claim is replete with speculation and conjecture as a 911 caller would have had no duty to control the SUV accident scene to prevent a further collision, and the three-minute interval between the call and the bus accident was too short to expect that a closer CHP unit would have made a difference. As a final policy caveat, the court notes that to accept Greyhound's argument would make the CHP an "insurer" rather than an "enforcer."

Continue reading "Does the CHP owe any duty of care to the public in promptly responding to highway lane blockage once its 911 operator responds affirmatively to caller? " »

This question, along with several other related questions, is answered by the California Supreme Court in Harris v. City of Santa Monica (filed February 7, 2013) S181004. The state high court answers that, while there is no causation proven by the fired plaintiff in the above instance thus no awardable damages or reinstatement, plaintiff may nonetheless be awarded declaratory or injunctive relief and attorney fees and costs. Allow me to summarize the issues the high court had to resolve in getting to this conclusion, and the impact that may have on employment litigation.

Plaintiff was a probationary bus driver employed by City. She suffered two preventable accidents and was twice late to work without notification during her 7-month tenure. Six days before her termination, she had a chance encounter with her supervisor who noticed her shirt was not tucked in. When advised to tuck in her shirt, she confided she was pregnant. The same day she submitted her doctor's note listing limiting restrictions under which she could continue to work, City issued a list of probationary employees who failed to meet employment standards thus were terminated; she was on the list based upon her previously stated deficiencies. Plaintiff sued.

At trial, the court refused City's request for a jury instruction on its mixed-motive defense (BAJI No. 12.26): that where there was a non-discriminatory motive as well as a discriminatory one, if the legitimate one standing alone would have induced the decision to terminate, defendant is not liable. Instead the jury was instructed in CACI No. 2500 that if her pregnancy was proved by plaintiff to have been a motivating factor in her discharge, causation was established. The jury awarded her approximately $178,000 in damages; the court awarded attorney fees and costs of about $400,000. The Court of Appeal found that, while there was substantial evidence that plaintiff had been fired because of discrimination, the trial court prejudicially erred in failing to give the "mixed motive" instruction. The Supreme Court granted review on the question of the correctness of that instruction.

The Supreme Court went through an extensive discussion of the purpose of California's FEHA provisions and analyses of how both state and Federal courts viewed causation in the various types of discrimination cases. It concluded that to ensure that liability will not be imposed based on evidence of mere thoughts or passing statements unrelated to the disputed termination, plaintiff is required to show discrimination was a substantial motivating factor, not just, a motivating factor, thus disapproving of CACI No. 2500. Even where a substantial motivating factor is shown to be discriminatory, the employer still has the opportunity to show that it would have made the decision in any event--that the legitimate reason, standing alone, would have induced the same decision. Does a same-decision showing provide a complete defense to liability when plaintiff has shown that the termination was motivated at least in part by discrimination?

Continue reading "Where unlawful discrimination is a substantial factor motivating employee's termination, but employer proves it would have made decision for other valid reasons, what are employee's remedies?" »

On January 14, 2013, California's Public Works Board authorized the California High Speed Rail Authority ("CHSRA") to begin negotiating with property owners in Madera and Merced counties for the purchase of their property needed for the first construction segment of high speed rail ("HSR") route. This action initiates a process, known as eminent domain, which is one of the most controversial powers afforded to the State by Article I, section 19 of the California Constitution. These constitutionally based powers allow public agencies, like CHSRA, to take private property for a public use. Many farms, ranches, businesses and individuals in the Central Valley will be affected by this process over the coming months. The purpose of this article is to provide a broad overview of the eminent domain process and to generally describe the rights which property owners have to ensure that they are justly compensated for their land, buildings, improvements and businesses which are located within the planned rights of way needed for the HSR project.

The CHSRA is allowed to use eminent domain powers to acquire the right of way for the HSR project because the trains will serve a public use. The definition of "public use" is extremely broad and applies to anything that confers a public benefit. Because this definition has been applied by the courts to projects of far less public significance, legal challenges by property owners located within the planned HSR right of way, on the basis of a lack of public benefit, are not going to succeed. For this reason it is likely more beneficial for owners to turn their attention and resources away from challenging the CHSRA's right to take their property, and focus instead on how much the CHSRA should pay to justly and fully compensate the owners for their property.

The California Legislature has codified the procedures to be followed for the eminent domain process beginning at Code of Civil Procedure. The procedures are strictly applied by the courts. While the statutory process includes all of the steps to follow leading to a court trial, if necessary, public agencies typically attempt to negotiate privately with the property owner and avoid court action. This is because going to court is expensive for the public agency and for the property owner. The negotiating process can often be lengthy. Like other public agencies, the CHSRA is required to first obtain a formal appraisal of the property to determine the "fair market value" of what is being taken. The initial offer from the CHSRA may not be less than the value stated in the formal appraisal. The property owner is entitled to a copy of the appraisal summary indicating the value determined by the CHSRA appraiser. In addition, the property owner is allowed to obtain his own appraisal, paid for by the CHSRA, at a cost not to exceed $5,000. Our advice to property owners is to always obtain the second appraisal.

Continue reading "In the Path of the High Speed Rail: An Overview of the Eminent Domain Process" »

The short answer appears to be anytime a plaintiff pleads and proves such a theft under California Penal Code section 496 (a) and (c). Under section 496 (c), receiving or buying property obtained by theft is not only a criminal offense, but is also civilly punishable by allowing a person injured by a violation of 496(a) to be awarded treble damages plus attorney fees and costs.

In Bell v. Feibush ( filed January 15, 2013) 2013 DJDAR 627, plaintiff received a default judgment against defendant based on her complaint that defendant had induced her under false pretenses to loan him $202,500. She was awarded the unpaid $202,500 for breach of contract and fraud, and $607,500 as treble damages under her cause of action pled under 496(a); the trial court later reduced the total principal amount of judgment to $607,500. The appellate opinion does not say anything about whether attorney fees were awarded additionally, but those are awardable under 496(c) along with treble damages.

Defendant appealed the default judgment claiming that the statute requires a criminal conviction to trigger its civil provisions, and it also "opens the door to any collecting creditor to claim that a breach of contract constitutes a fraud, and in turn constitutes a theft," making all such cases vulnerable to treble damages and attorney fees. To paraphrase, the justices of the Court of Appeal, Fourth Appellate District, Division Three, answer that their hands are tied concerning the potential consequences of interpreting section 496 (c) to allow these enhanced awards. This is what the Legislature said, and it is not up to the courts to determine policy.

First, the Legislature knows how to use the word "conviction" and instead used the word "violation." The court cites a cable theft case (Heritage Cablevision of Ca., Inc v. Pusateri (1995) 38 Cal.App.4th 517) supporting its interpretation of "violation," which is used in Penal Code section 593d to invoke civil liability for $5,000 plus treble damages plus attorney fees. The Heritage court pointed out the statutory objective of allowing a mere "violation" to trigger 496 (c): the deterrent effect of the criminal sanction is illusory because people presume cable theft is a low priority crime for law enforcement.

Continue reading "When does theft by false pretenses constitute violation of receiving stolen property statute causing civil award of treble damages and attorney fees? " »

Bank of America N.A. v. Superior Court (Pacific City Bank) - 4th District Court of Appeal, Jan. 15, 2013.

Fidelity National Title Insurance Co. ("Fidelity") was insurer for Bank of America N.A. ("BOA") under a lender's title policy, which insured a deed of trust on residential real property. BOA made a clam under the policy, which prompted Fidelity to hire a law firm to prosecute an underlying lawsuit for equitable subrogation, injunctive relief, declaratory relief, and fraud against Pacific City Bank ("PCB"). In turn, PCB served a Subpoena Duces Tecum on Fidelity seeking, among other things, communications between the law firm and Fidelity related to the litigation. BOA moved to quash the subpoena arguing the communications were attorney-client privileged. Trial court denied the motion to quash, prompting BOA to petition for a writ of mandate.

Petition was granted. The appellate court overturned the ruling holding that in California an attorney who is hired by an insurance company to defend its insured, or in this case prosecute an action, under the insurer's contractual obligation, represents and owes a duty to both the insurer and the insured, creating a "tripartite attorney-client relationship". This result seems obvious, right? Or at least consistent with the practice of the majority of California attorneys representing insurance companies and their insureds. So, what was the basis of the trial court's ruling?

It appears the crux of the trial court's denial was that the court drew a distinction between an insurer hiring a law firm to prosecute an action rather than defend an action. The trial court opined that because the law firm was retained to prosecute the action, Fidelity was did not have a "favored position" or "sacred role" in the litigation and the communications were not privileged. The appellate court called the distinction an error as matter of law.

The appellate court cited Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264-1265, holding that the language of the policy, which allowed Fidelity to prosecute such actions in the name of the insured (the court noted this provision is present in both ALTA and CLTA policies) controls; and that "To distinguish between defending an action and prosecuting one would deny a tripartite attorney-client relationship from ever forming in many situations in which a title insurer takes action to protect its insured's title."

By G. Andrew Slater

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