California Appellate Lawyer Blog

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

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.

In Gray v. Chiu (filed January 22, 2013) 2013 DJDAR 944, Judge Haber (Retired), a member of ADR Services, Inc., the dispute provider resolution organization in this case, was selected as the third member of an arbitration panel to preside as a neutral arbitrator in this medical malpractice matter. He sent disclosure statements to the parties in January and April of 2010 stating that he had no significant personal or business relationship with any party or lawyer in the matter. During the arbitration that ensued starting January 31, 2011, George Peterson, a partner in Peterson & Bradford represented the respondent, John Chiu, M.D. as lead counsel. Dr. Chiu retained William Ginsburg as his personal counsel, although his name was not listed as a participant on the disclosure statement. The arbitrators rendered a binding arbitration award in favor of Dr. Chiu.

A bit of history on attorney Ginsburg: for many years he represented Dr. Chiu as of counsel at Peterson & Bradford. In September 2009, Ginsburg left that firm to start his own arbitration/mediation business. On October 6, 2009, he became a member of ADR Services, where he was an independent contractor, with no financial interest in ADR. He additionally declared that he did not "actively participate" in the Gray trial, although he attended some depositions and was present during the entire arbitration hearing on the merits. He also stated that in 2010 he had given his ADR business card to petitioner Gray's counsel, Eugene Locken. Locken recalled receiving a business card from Ginsburg, but denied it showed he was a member of ADR; that was something he had no actual knowledge of through the time of the hearing on the merits. Judge Haber was aware that Ginsburg worked through the ADR Services offices, but they never discussed the Gray matter.

After the arbitration panel's issuance of the award in favor of Chiu, Gray filed a petition in Santa Barbara Superior Court to vacate the arbitration award because of Judge Haber's failure to disclose that Ginsburg too was an ADR Services member. The trial court denied the petition stating that the Ginsburg relationship "may not have been disclosed at the arbitration hearing, but it wasn't hidden." The California Court of Appeal, Second Appellate District, Division Six, reversed directing the trial court to vacate the arbitration award, finding arbitrator Haber failed to disclose a ground upon which he could have been disqualified. It was unconvinced that this ground was waived; only the arbitrator was in a position to effectively disclose under the present circumstances.

Continue reading "Does arbitrator's failure to disclose membership in same ADR organization as defense counsel void award even if information of conflict available to plaintiff?" »

For more than 75 years, the California fraud exception to the parol evidence rule in written contract cases has been limited to evidence which tends "to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing." (Bank of America v. Pendergrass (1935) 4 Cal.2d 258, 263.) Although often criticized and occasionally limited in application, the Courts of Appeal have applied the Pendergrass rule to exclude extrinsic evidence of promises that are not consistent with the terms of an integrated written contract. Pendergrass has been relied on heavily by financial institutions as a defense against claims by borrowers that bank representatives made promises that were contrary to the terms set forth in the loan documents to forbear exercise of remedies, and have been able to avoid liability on fraud claims through demurrer or summary judgment.

However, on January 14, 2013, the California Supreme Court filed its opinion in Riverisland Cold Storage, Inc. v. Fresno Madera Production Credit Association, case S190581, reversing Pendergrass' limitations on the fraud exception to the parol evidence rule. The Court found that Pendergrass was a "poorly reasoned opinion" which "departed from an established general rule" without discussing the "contrary authority." Reviewing the California law on the scope of the fraud exception when Pendergrass was decided, the Court found that Pendergrass itself was inconsistent with the state of the law at the time it was decided and was, in fact, "an aberration." On that basis, the Riverisland court overruled Pendergrass and its progeny and their limitations on introduction of intrinsic evidence under the fraud exception to the parol evidence rule.

By expanding the types of extrinsic evidence admissible in actions arising out of written contracts, the Supreme Court has given borrowers and other plaintiffs substantial leverage, in that they no longer have to show that oral promises be "consistent" with the written agreement terms in order to be admissible in evidence. However, such evidence still will have to overcome the presumption that an integrated written agreement sets forth the true intent of the parties at the time the agreement was signed. Nevertheless, Riverisland has altered the playing field and is likely to result in increased lender liability and other contract litigation.

By Christopher E. Seymour

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.

Even in cases not involving an award of attorney fees, this question concerns significant financial consequences, in addition to awarded damages, to a non-prevailing party--not uncommonly to the tune of half a million dollars. Such was the case in Whatley-Miller v. Cooper (published opinion filed January 15, 2013, No. B237335).

Plaintiffs, the survivors of Thomas Miller, were awarded a medical malpractice verdict against defendant, a medical doctor, in the total sum of approximately 1.2 million dollars. The history of this litigation included the filing of the complaint on February 28, 2008; defendant's receipt of discovery responses, including verification of decedent's income and other financial impacts to the survivors, from plaintiffs on June 11, 2008; and plaintiffs' offer to compromise for $950,000 (each side to pay its own costs) made pursuant to Code of Civil Procedure section 998, dated June 20, 2008 (only nine days after defendant received plaintiffs' discovery response). The offer was acceptable for 30 days, after which it would be withdrawn; should plaintiffs receive a more favorable award than the offer, in addition to costs awardable under section 998, plaintiffs would be entitled to interest at the rate of 10% per annum calculated from the date of the offer (Code of Civil Procedure section 3291). Defendant neither responded nor requested more time to respond to this offer. A first trial in Los Angeles Superior Court resulted in a hung jury with respect to the claims against Dr. Cooper, followed by a plaintiffs' verdict against him.in the second trial.

After post-trial motions, the judgment was amended to reflect a principal award of $1,198,907. Plaintiffs' filed a memorandum of costs totaling $530,316, including $108,191 for expert fees and $411,100 as prejudgment interest from the date of the compromise offer. Defendant moved to strike and tax these items, in part arguing the 998 offer was extinguished after the first trial and the offer was neither made in good faith nor in compliance with procedural requirements. The trial court found the mistrial at the first trial did not affect the applicability of the offer of compromise, that the offer was reasonable and discovery produced prior to the offer gave defendant an adequate basis to respond, and the offer was not procedurally infirm. The Court of Appeal, Second Appellate District, Division Eight, affirmed.

Concerning whether the offer was reasonably made in good faith, the court observed, "depends upon the information available to the parties as of the date the offer was served." (See Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109, 130.) Was the offer a reasonable prediction within the range of possible results after trial? If so, were reasons known by plaintiff to predict such a result known or reasonably should have been known to defendant?

Continue reading "What constitutes a reasonable offer to compromise under California CCP section 998? " »

When a person stops breathing, a typical reaction by one in that person's company is to think the person has had a heart attack. Of course that may not always be a correct assumption. In Fortman v. Forvaltningsbolaget Insulan AB, B23718 (Court of Appeal, Second Appellate District, Division 3, filed January 10, 2013), the emotionally devastated plaintiff thought her brother had suffered a heart attack as they were at the bottom of the ocean scuba diving together and he was unresponsive. After his death was investigated, she learned that her brother's scuba diving equipment had malfunctioned, depriving him of oxygen.

Plaintiff sued the defendant manufacturer for negligent infliction of emotional distress (NIED). The trial court granted defendants summary judgment finding that the NIED plaintiff must at least have a general sense of what is causing the injury; here, she did not contemporaneously perceive her brother's injuries were caused by the defendant's defective product. On plaintiff's appeal, the appellate court affirmed the summary judgment dismissing the case.

The Court of Appeal essentially states its hands are tied by the following language of the California Supreme Court in Thing v. La Chusa (1989) 48 Cal.3d 644667-668: that the plaintiff must be "present at the scene of the injury-producing event at the time it occurs and is then aware that it is causing injury to the victim." It concludes that recovery is barred as a matter of law because plaintiff here could not experience a contemporary sensory awareness that the company's defective product caused the brother's injuries.

Continue reading "Bystander recovery for emotional distress barred because sister unaware that defendant's defective scuba-diving product caused brother's death, even though while diving with him she observed him to stop breathing." »

The California Supreme Court has determined that, as a matter of law, the primary assumption of risk doctrine (PAR) relieved the operators of the Great America amusement park from their duty of ordinary care to protect a rider of its Rue le Dodge bumper car ride from injury resulting from cars colliding. The high court concluded PAR applies not only to "sports," but to other recreational activities as well.

In Nalwa v. Cedar Fair, L.P., S195031 (filed December 31, 2012), plaintiff, a ride passenger in a car driven by her son, put her hand on the front dashboard to brace herself as the car was bumped by other cars to its front and back. In doing so, she fractured her wrist. She sued for her injuries, claiming common carrier liability and willful misconduct of the park owners. The trial court granted defendant summary judgment because the injury resulted from bumping, a risk inherent in the activity, one it found covered by neither a duty of ordinary care nor the heightened duty of a common carrier. The Court of Appeal reversed, finding the matter not covered by PAR due to public policy and because the activity was too benign to be considered a "sport." (See blog of July 5, 2011.) Now the Supreme Court has reversed the Court of Appeal decision, and applied PAR ordering the reinstatement of the summary judgment dismissing the matter.

The Supreme Court finds the notion that only "active sports" involve the kind of inherent dangerousness mandating the application of PAR to be misguided. While in Knight v. Jewett (1992) 3Cal.4th 296, the activity in question, touch football, was a sport, PAR as introduced there was aimed at avoiding a chilling effect upon people vigorously participating in the broader grouping of recreational activities that have inherent dangers in their nature, that make them desirable. Under PAR, an operator, instructor or participant in the activity owes other participants only the duty not to act to increase the risk of injury over that inherent in the activity. In other words, the low-speed bumping of bumper cars is the both the inherent risk and thrill of riding the bumper cars; without the "bump," the activity would be fundamentally different.

Continue reading "Bumper car amusement ride is subject to primary assumption of risk doctrine." »

Can a business sued for denial of disabled person access mandatorily recover its attorney fees upon successful defense of an action that includes both claims of violation of Cal. Civil Code section 55 and federal ADA? The California Supreme Court has answered yes in Jankey v. Lee (filed December 17, 2012) 2012 DJDAR 16809, disagreeing with the federal Ninth Circuit opinion of Hubbard v. So Breck, LLC (2009) 554 F.3d 742.

Defendant Lee owns and operates a small grocery store in San Francisco, but does not own the real property. Plaintiff Jankey, who needs a wheelchair, sued Lee claiming a four-inch step at the entry of the store prevented his potential access. The trial judge granted Lee summary judgment based on Lee's conclusive establishment that the barrier was not readily removable. Lee's request for attorney fees in defending the action was awarded for the most part, in the sum of $118,458. Jankey appealed the attorney fee award. The state Court of Appeal affirmed. The Supreme Court granted review to resolve the conflict between this appellate decision and the federal Hubbard opinion. The California high court affirmed, and remanded the matter to allow Lee to further request his attorney fees on appeal.

Section 55 is a part of the state's Disabled Persons Act. While it includes many of the provisions and complements other state statutes as well as the federal ADA, it adds a significant component that these other provisions lack: persons "potentially aggrieved" are granted standing to sue, not just those who have actually attempted access unsuccessfully. Those plaintiffs who choose to allege violation of section 55 are subject to the further express provisions of the statute which state that the prevailing party in the action "shall be entitled to recovery reasonable attorney fees." The legislative history demonstrates that an earlier draft of the law stated entitlement to the prevailing plaintiff, but that language was intentionally altered prior to passage. So the legislative intent is clear that a prevailing party, which includes a successful defendant, as was the case here, shall be awarded attorney fees.

Continue reading "California's Disabled Persons Act mandatorily grants attorney fees to prevailing defendant. " »

In Lui v. City and County of San Francisco (filed December 11, 2012) 2012 DJDAR 16496, plaintiff, a sworn police officer with defendant since 1981, suffered a heart attack and took 11 months of disability leave. He then returned to work to take a 1-year temporary modified duty (TMD) position in the police records room. At that point, he was advised that his permanent medical limitations stated by his physician could not be accommodated in the permanent sworn-officer administrative position he sought because strenuous duties beyond his capability were essential: the department may need to deploy officers in those positions in the event of emergencies. Plaintiff was offered unsworn positions, but plaintiff demanded a sworn officer position rejecting the unsworn ones. After retiring, he sued defendant employer on claims including disability discrimination and failure to accommodate under the Fair Employment and Housing Act (FEHA).

At court trial, the judge ruled in favor of defendant finding that under FEHA the essential functions of the sworn adminstrative officer positions sought included making forcible arrests and chasing fleeing suspects; that defendant had a legitimate need to deploy such officers in the event of emergencies. Because plaintiff's physician required that he "avoid physically strenuous work and minimize physical contact" indefinitely in his return to full duty, defendant reasonably could not accommodate plaintiff in a sworn position.

The Court of Appeal, First Appellate District, Division Five, affirmed. In order for plaintiff to prevail on his claim he bore the burden of proving he was able to perform the essential duties of the positions he sought, with or without reasonable accommodation. While plaintiff pointed to the lack of any studies supporting defendant's claim that it needed these sworn administrative officers to be ready for emergency street work, the reviewing court felt that such proof was not necessary; it declined to "second-guess" the police department's judgment in this regard. And defendant did present some evidence that the administrative officers periodically have been expected to perform street officer duties in a pinch.

Continue reading "Police officer disabled from performing strenuous street duties not eligible for administrative job accommodation due to that job's essential strenuous duties. " »

Is an "insured" not an "insured" excluded by a policy clause that excludes coverage for a claim of one insured against another insured? As oxymoronic as this question may sound, such are the type of contractual interpretation inquiries that frequently occur when it comes to insurance coverage and exclusion issues. In Gemini Insurance Co. v. Delos Insurance Co., B239533 (filed December 5, 2012), the Court of Appeal, Second Appellate District, Division Five, determined in its published opinion that the interinsured exclusion did not bar coverage for a landlord's claim against its tenant.

The tenant restaurant's insurance policy included an additional insured endorsement which made the restaurant's landlord an additional insured for coverage of potential vicarious liability for the tenant's conduct. Tenant's negligence caused a fire that damaged the landlord's property, and landlord sought recovery of its damages from the tenant. Landlord made a claim on its own property insurance. That insurance (through instant plaintiff Gemini) paid the claim. Gemini then sued the tenant in this subrogation action to recover what it had paid. Tenant thought it was covered by its Delos policy. Delos denied coverage relying on the interinsured exclusion clause. The trial court found that the landlord was never an "insured" under the Delos policy, and Gemini was awarded judgment against Delos. The Court of Appeal affirmed.

The appellate court pointed to the express provisions of the Delos policy. Delos was correct that the "Additional Insured" endorsement included the landlord. Under the policy's "Who is an Insured" section, had the landlord been sued for its vicarious liability arising out of the tenant's acts in operating the leased premises, landlord would be an insured for this purpose. Here, no one sought to hold the landlord liable for the fire. Accordingly, the interinsured exclusion did not apply.

Continue reading "Landlord's claim against its restaurant tenant's insurance policy is not barred by the policy's interinsured exclusion" »

When I read this opinion, my first thought was "Oh, oh, there goes my AAA membership fee." An increase in my annual fee may not necessarily occur. But the California Court of Appeal, Second Appellate District (Division Two) opinion in Monarrez v. Automobile Club of Southern California (filed November 20, 2012) 2012 DJDAR 15745, will likely cause some changes in how Auto Club and similar roadside service agencies operate.

Plaintiff, an Auto Club member, suffered catastrophic injuries when he was struck by a hit-and-run driver while receiving roadside assistance for a flat tire. Auto Club had dispatched a road assistance technician employed by one of its contracting companies who agreed to respond to road service calls made to Auto Club from its members. Auto Club vetted these companies before contracting with them, and this particular company had been an Auto Club contractor for more than 20 years; 85 to 90 percent of the company's business was with the Club. Auto Club provided service guidelines, a training manual and seminars, and monitored performance. The Club visited provider companies two to three times a month. This company's agreement, like others, promised to act in a "safe" manner in guaranteeing the provision of proficient service.

In particular, technicians are instructed in the training manual to minimize a member's time standing on the traffic side of the disabled vehicle and, on a tow, to promptly get the member into the tow truck. This technician understood the member's safety was the top priority, but admitted he failed to explain to plaintiff the danger of standing on the freeway. In this instance, the technician advised plaintiff the technician needed to move the disabled vehicle by towing it to a safer location in order to change the tire. He asked him to get into the tow truck, but proceeded first to load the vehicle onto the tow truck realizing plaintiff had not yet gotten into the truck. When he completed loading the vehicle, he observed plaintiff, who had been out of his view during this process, had been struck be a motorist.

The trial court granted the Auto Club's motion for summary judgment finding the agreement between Auto Club and the provider company expressly defined the service provider as an independent contractor with Auto Club, which had no control over the manner of performance by the roadside service. On plaintiff's appeal, the appellate court reversed, determining that the issue of actual or ostensible agency cannot be decided as a matter of law from the submitted evidence. From this evidence, stated the court, it could not conclude that Auto Club had no right of control over the manner and means by which its technicians accomplish their work. In addition to the control the Club exercised in this relationship, there were practical facts that could lead a jury to find ostensible agency, such as the technician's uniform and vehicle bearing the Auto Club logo. (See Civil Code section 2300.) Because there were triable issues of fact regarding agency, the summary judgment was reversed.

This opinion should cause some concern to parties who might feel they are insulated from potential liability for the acts of a party expressly labeled as an "independent contractor." They must always be concerned as to whether their conduct infers the relationship is more that of ostensible agency.

The California Supreme Court in Sargon Enterprises, Inc. v. University of Southern California (filed November 26, 2012, S191550) starts its reasoning concerning a trial court's discretion in excluding expert testimony with the following advice of Federal Judge Friendly written 50 years ago: "[A court] must be exceeding careful not to set the threshold too high. Yet it is the jury system itself that requires the common law judge in his efforts to prevent the jury from being satisfied by matters of slight value, capable of being exaggerated by prejudice and hasty reasoning . . . to exclude matter which does not rise to a clearly sufficient degree of value; something more than a minimum probative value is required."

The case before the state high court involved plaintiff, a small dental implant company which sued defendant for breach of contract; the plaintiff succeeded at jury trial in proving that defendant had breached its promise to conduct and report on a five-year clinical study of plaintiff's patented and government-approved one-step dental implant. The critical question, presented in an earlier motion in limine, was damages. Plaintiff proffered the testimony of an accountant expert that plaintiff's lost profits over a five-year period ranged from $200 million to over $1 billion. At the initial trial, the court excluded this testimony, and based upon other evidence, the jury awarded $433,000. Plaintiff appealed and the Court of Appeal, Second District, court ruled the trial court improperly focused on forseeability.

On remand, defendant again moved to exclude the expert testimony. After an extensive evidentiary hearing, the trial court again granted the motion to exclude, finding no factual basis for the expert's assumption that, had defendant studied and reported on plaintiff's innovative product, plaintiff would have had the marketing success and profits in the range of the top six dental implant manufacturers worldwide, which each at minimum did approximately 50 times the business that plaintiff did. The Court of Appeal again reversed; this time the Supreme Court granted review.

Continue reading ""Lost profits" expert evidence concerning projected upstart dental implant manufacturer too speculative." »

"[A]nimals are special, sentient beings, because unlike other forms of property, animals feel pain, suffer and die." With words like these, the California Court of Appeal, Second Appellate District, Division One, rejected defendants argument, an argument accepted by the trial courts, that the measure of damages are limited to the market value of the injured dogs in Martinez v. Robledo (filed October 23, 2012) 2012 DJDAR 14708.

This opinion involved consolidated matters: (1) In Martinez v. Robledo, defendant shot his next door neighbor's (Plaintiff's) dog (Gunner, a two-year-old German Shepherd), causing the amputation of Gunner's right leg; plaintiff seeks recovery of the vertinary bills of $20,789.81 plus punitive damages. (2) In Workman v. Klause, plaintiff's 9-year-old Golden Retriever, Katie, received surgery from defendant veterinarian at a cost of $4,836.16; Katie's intestine was nicked during the surgery and a piece of surgical gauze was left in her body causing an infection; plaintiff's incurred emergency bills elsewhere in the sum of $37,766.06 in order to save Katie's life; plaintiff sued for this later sum, defendant having already refunded to plaintiff monies for his professional charges.

In both cases, defendants were granted motions in limine, limiting the matters that would be admissible to prove damages, and the trial courts ruled that the measure of damages would be limited to the fair market value of the dogs. Plaintiffs appealed each of their cases (in which their damage recovery was $1,000 fair market value) claiming pets are and should be treated fundamentally more significant than mere personal property, relying upon the First Appellate District case of Kimes v. Grosser (2011) 195 Cal.App.4th 1556. (A discussion of that appellate ruling concerning injuries to pet cat "Pumpkin," including potential punitive damages, appears in the June 16, 2011 blog.) As alluded to above, the Second Appellate District panel here agreed with both plaintiffs and the Kimes opinion.

Two things seem apparent from these opinions. First, veterinarians may find their malpractice premiums rising significantly. Second, appellate justices appear to be more attached to their household critters than the trial judges who rendered the trial court rulings.

One of the earlier blog articles that I wrote on this site commented on the trend of California appellate cases questioning the fairness of arbitration clauses that often left the non-drafting party without any bargaining power. While many of these situations arise in the context of disadvantaged consumers and employees directly contracting with the drafting party, the circumstance stated in my February 7, 2011 blog concerned homeowners and homeowners associations. As was stated in the opinion which was the subject of that blog, Villa Vicenza Homeowners Association v. Nobel Court Development LLC 185 Cal.App.4th 23 (2011), in spite of the provisions of California Civil Code section 1354 generally providing that recorded covenants in deeds are enforceable as equitable servitudes binding future property owners, that court resorted to the exception: "unless unreasonable." I questioned whether there was a substantial enough basis establishing unreasonableness in that homeowners had record notice of these covenants; they could simply choose not to buy these homes realizing that claims against the developer would require arbitration, waiving the right to a public trial.

The Villa Vicenza published opinion and others like it had a short "shelf-life." They were granted review by the California Supreme Court. And just this past month that case name appeared again in the published body of law, this time in a minute order of the Supreme Court stating the grant of review was vacated and the matter was remanded to the Court of Appeal to decide the matter in light of the Supreme Court's recent opinion in Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US) LLC (2012) 55 Cal.4th 223.

In Pinnacle, a homeowners association sued a condominium developer for construction defect, seeking damage to its property and damage to the separate interests of the condominium owners who compose its membership. The developer filed a motion to compel arbitration, based on a clause in the recorded declaration of covenants, conditions, and restrictions providing that the association and the individual owners agree to resolve any construction dispute with the developer through binding arbitration in accordance with the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.).

The Supreme Court granted review to determine whether the arbitration clause is binding on the association, and if so, whether it must be invalidated as unconscionable. The high court determined that, even though the association did not exist as an entity independent of the developer when the declaration was drafted and recorded, it is settled under the statutory and decisional law pertaining to common interest developments that the covenants and terms in the recorded declaration reflect written promises and agreements that are subject to enforcement against the association. The court concluded that the arbitration clause binds the association and is not unconscionable

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.