California Appellate Lawyer Blog

During these times of "underwater" home mortgages, many homeowners have enlisted in the federal Home Affordable Mortgage Program (HAMP). In Nungaray v. Litton Loan Servicing, LP (filed November 22, 2011) 2011 DJDAR 16868, plaintiffs executed a "loan work-out plan" for the lender's review. Under HAMP, the lender accepts reduced mortgage payments as provided for in the plan during the time the lender reviews the plan to determine long-term acceptability. Here, plaintiffs had been delinquent in their normal mortgage payments to lender Bank of America for approximately 6 months and the notice of trustee's sale had been set prior to the execution by plaintiffs of the loan workout plan. The lender suspended foreclosure proceedings as it reviewed the plan. Two of the four reduced mortgage payments made by plaintiffs were accepted. The lender eventually decided to reject the plan and its agent notified the plaintiffs it would move forward with the foreclosure, which it did.

Plaintiffs sued for breach of contract and quiet title, and defendants (Litton and Bank) moved for summary judgment. The Ventura County Superior Court granted summary judgment, determining the plan was not an enforceable agreement requiring defendants to enter into a loan modification because such modification was expressly contingent upon factors which never came to fruition. On plaintiffs' appeal, the California Court of Appeal, Second Appellate District, Division Six, affirmed.

The appellate court rejected plaintiffs' argument that they were lulled into believing their loan had been modified: that based either on contractual principles or on estoppel created by defendant's acceptance of trial payments, they have stated facts that should go to trial. The court found that, as a matter of law, the plan expressly does not require defendants to provide plaintiffs with a permanent loan modification. Here the plan was only executed by plaintiffs and the defendants never tendered plaintiffs a permanent modification agreement because plaintiffs failed to submit complete financial information establishing that they qualified under HAMP. While, the defendants did accept two of the reduced mortgage payments, that was essentially consideration for defendant's suspending foreclosure temporarily.

Continue reading "Homeowners' payment alone under HAMP loan work-out plan does not save home from foreclosure " »

El Cajon Motors Inc. was sued by one of its customers, Yaube Roberts, acting for herself and the class of other customers, for El Cajon's allegedly backdating installment purchase contracts, failing to properly disclose finance charges, and charging illegal interest. El Cajon answered the complaint in mid-August 2009 with a general denial and 24 affirmative defenses, but made no mention of the existence of an arbitration provision.

The parties exchanged written discovery requests in mid-October 2009. In late January 2010, El Cajon responded to discovery and filed its motion to compel arbitration. Roberts opposed arbitration, claiming unconscionability.
Also during late January, El Cajon sent letters to putative class members: one offering individual settlements of $50, and a second letter enclosing a small refund check and admitting an oversight in the computation of interest. In Mid-February 2010, upon learning of these mailings, Roberts conducted discovery regarding the communications and briefed its additional claim that El Cajon had forfeited it s right to arbitrate. The motion to compel arbitration was denied. El Cajon appealed.

The California Court of Appeal, Fourth Appellate District, Division One, affirmed the order denying the motion to compel arbitration in Roberts v. El Cajon Motors, Inc. (filed November 8, 2011) 2011 DJDAR 16358. The court rejected El Cajon's arguments that it engaged in no conduct inconsistent with its right to arbitrate, and that a 5-month delay without prejudice to Roberts was insufficient delay to show waiver or forfeiture. The court found it need not decide whether a 5-month delay is insufficient as a matter of law because there was ample proof that the conduct was inconsistent with the intent to arbitrate and such conduct prejudiced Roberts.

Continue reading "Parties wishing to enforce arbitration clause must take care not to forfeit right" »

As discussed in the August 23, 2011 blog, the California Supreme Court in Howell v. Hamilton Meats & Provisions, Inc. 92011) 52 Cal.4th 541, held that a plaintiff may not recover for reasonably incurred medical billings to the extent they are discounted under a plaintiff's private insurer's contract with the medical provider. In dicta, the court commented it recognized the gratuitous-services exception to the rule limiting recovery to plaintiff's economic loss; that the exception's policy is to provide an incentive to charitable aid. (Id. at p. 559.)

In Sanchez v. Strickland (filed November 4, 2011) 2011 DJDAR 16230, the Court of Appeal, Fifth Appellate District, was presented with the precise issue of recoverability of medical charges gratuitously written off by the medical provider. Plaintiff Hueso had $7,020 of his medical bills written off by Vibra Healthcare. Vibra had charged $113,989 for treatment, billed Medicare as primary payor from whom it received $66,704 in payment with a $40,265 contract allowance. The balance of $7,020 was billed to Medi-Cal, but denied payment because Vibra had no contract with Medi-Cal.

Relying upon the previously stated dicta from Howell, an appellate court case cited in Howell, Arambula v. Wells (1999) 72 Cal.App.4th 1006, and the Restatement of Second of Torts, the Sanchez court ruled that the amount written off gratuitously by the medical provider constitutes a benefit that may be recovered by the plaintiff under the collateral source rule.

Continue reading "Gratuitously written off medical bills are recoverable as special damages under collateral source rule" »

In Duncan v. The McCaffrey Group, Inc. (filed October 28, 2011) 2011 DJDAR 15875, plaintiffs bought from defendants residential lots in a tract marketed as Treviso Custom Home Development. Plaintiffs claim they bought in the development, paying premium prices, because of its marketing as an exclusively custom home development; instead, defendants, unbeknownst to plaintiffs, intended to build smaller tract homes on some of the lots .The matter came before the Fresno County Superior Court on defendants' demurrers and motion for summary adjudication. On the issues that are the subject of this appeal, the trial court sustained the demurrers and granted summary adjudication on the basis that the parol evidence rule precluded plaintiffs from establishing facts supportive of their claims. The Court of Appeal, Fifth Appellate District, reversed.

Defendants took the position that plaintiffs' allegations in question could not be considered because they contradicted the terms of the lot sales agreements and the CC&R's that included giving the developer the right to build different types of residences. Under the parole evidence rule, argued defendants, the integrated agreement on each lot was the final expression of the terms of the agreement.

On their causes of actions for unfair competition and false advertising, the plaintiffs successfully argued to the appellate court that these claims did not contain allegations that required proof that would vary, alter or add to the terms of a written agreement. Rather than argue the terms of the agreement, each plaintiff alleged he or she was mislead by and reasonably relied upon false advertising.

Continue reading "Evidence extrinsic to the parties' contract is admissible to prove false advertising" »

California Labor Code section 2802, subdivision (a), requires that an employer "indemnify" an employee for all necessary costs incurred as a direct consequence of the employee's discharge of employment duties. Does the employer's duty to indemnify include attorney fees incurred in defending an action brought by the employer, or only in an action instituted by a third party? In a case of first impression, the California Court of Appeal, Fourth Appellate District, Division Three, held this statute does not require an employer to pay the attorney fees incurred in the employee's successful defense of employer's action. [Nicholas Laboratories, LLC v. Chen (filed October 12, 2011) 2011 DJDAR 15153.]

Christopher Chen was employed as director of information technology for Nicholas Labs. Nicholas sued Chen primarily for competing against it and misusing its funds. Chen cross-complained for compensatory damages and indemnity, as well as attorney fees. After a bench trial, the Orange County Superior Court entered judgment for Chen on Nicholas's complaint, and for Nicholas on Chen's cross-complaint. Chen appealed.

The appellate court found that Chen's interpretation of section 2802 (that because he was being sued by his employer for his actions as an employee, the statute required that he be indemnified for his attorney fees in successfully defending the lawsuit) conflicts with the common understanding of the word "indemnify": applying to an obligation to pay the costs incurred in a lawsuit brought by a third party. The court acknowledged that this general rule does not apply if the parties to a contract use the term "indemnity" to include direct liability as well as third party liability or a statute expressly so provides.

Continue reading "Employee's attorney fees in successfully defending action brought by employer not recoverable under statutory indemnity" »

In Yuin University v. Korean Broadcast System (filed October 5, 2011) 2011 DJDAR 15039, the defendant had broadcast in its Sunday news program a segment called "Degree Factory Confers Doctoral Degrees Even to Persons who Plagiarize." Reporters had visited the university and found the school to be vacant, a professor/graduate had commented that he only spent two separate one-week visits at the Los Angeles campus in obtaining his degree, and reporters interviewed other graduates who suggested they had copied the work of others in their successful doctoral dissertations. The segment concluded that the school is a "ghost school" that is not found on any reliable websites including that of the State of California.

Yuin sued and its claim of libel went to bench trial. Yuin asserted that the defendant failed to contact Yuin or further investigate before describing the university as "vacant," which had a defamatory meaning, while the condition that was observed may have only been temporary; the use of the term "ghost school" was also libelous for the same reason; and the contention that two of its graduates had "perfectly identical" dissertations was false. The Los Angeles Superior Court rendered judgment in favor of defendant. The trial court found the statements of defendant were not reasonably susceptible to a defamatory interpretation as a matter of law: the reporter's observations of the vacancy of the campus were reported in "hyperbolic speech" entitled to constitutional protection, and Yuin failed to prove utter falsehood concerning the allegation of granting of degrees to students who plagiarized their dissertations.

The California Court of Appeal, Second Appellate District, Division Eight, affirmed. The court found that, based on the totality of the circumstances, the characterization of Yuin as a "suspected degree factory" is an expression of opinion, which cannot support a defamation action, rather than a statement of fact, which may be demonstrably false.

Continue reading "Even if broadcast news program presents slanted reporting lacking in research, libel is not proven" »

There are few consumer warnings that strike more fear in the public's mind than the announcement of an E. coli outbreak. The potential consequence of eating a seemingly wholesome yet contaminated food item is deadly. No less fearful of such an announcement are marketers of the produce in question. Even if an investigation into the source of the contamination later absolves a particular party of placing any of the contaminated items into the marketplace, the damage may already have been done to the innocent company. So how does such a company protect itself against such a situation? The common answer is to seek insurance. As the below discussion explains, Fresh Express insured itself, but to no avail.

The FDA issued an alert in 2006 warning consumers to not eat bagged fresh spinach because of an outbreak of E. coli 0157: H7. Two weeks later, this advisory notice was withdrawn, as the source of the outbreak was identified. Fresh Express, the world's largest bagged spinach producer (Dole being the only other producer with a large market share), suffered significant business losses even though it was not the source of the outbreak. Fresh Express had insured itself (at an annual cost of $300,000) under an "Accidental Contamination" policy that provided business loss coverage for "[e]rror by [Fresh Express]" in the preparation or distribution of its products while in its care which "causes Fresh Express to have reasonable cause to believe that the use or consumption of the products" would lead to bodily injury or death. The insurer denied coverage and Fresh Express sued for the policy limit of $12 million.

In Fresh Express, Inc v. Beazley Syndicate (filed Sept. 8, 2011, certified for publication October 4, 2011) 2011 DJDAR 14972, the California Court of Appeal, Sixth Appellate District reversed the Monterey Superior Court court-trial judgment for $12 million in favor Fresh Express. The appellate court disagreed with Fresh Express's claim (accepted by the trial court) that all the policy required was that Fresh Express committed an error that was sufficiently serious to link it to the E. coli outbreak. Rather, stated the court, the policy restricts recoverable losses to those arising out of and because of an error by Fresh Express, causing it to believe use of the product would cause injury to consumers.

The appellate court does not question that there was substantial evidence that Fresh Express had made errors within the meaning of the policy: evidence that it had made spot purchase during the relevant time period from suppliers not food-safety-audit certified by Fresh Express. For example, Fresh Express's certification policy was to not permit produce grown within 1 mile of a cattle yard because cattle are a primary source of E. coli. Two days after the FDA advisory was issued E. coli infected individuals implicated Fresh Express as a possible source of spinach they had eaten. Fresh Express only learned its product was not the source of the outbreak 15 days after the advisory was issued.

Continue reading "E.coli outbreak not an insured event for faultless marketer who sustains consequential losses " »

"If at first you don't succeed, try try again." This familiar saying first appeared in the 19th century writings of American educator Thomas H. Palmer to encourage school children to do their homework. In Johnson v. Chiu (filed September 29, 2011) 2011 DJDAR 14825, both sides take this maxim literally.

Plaintiff Johnson went to defendant Chiu for a laser treatment, during which she claimed she was injured when the laser machine emitted a loud booming sound causing lost hearing and vertigo. Her complaint initially named Chiu in the first cause of action only for negligent examination, care and treatment. Another cause of action named Doe defendants as the parties responsible for negligent maintenance of the laser equipment. Chiu sought summary judgment. Johnson amended her negligent maintenance claim the day before she filed her opposition to the summary judgment motion to name Chiu as a Doe defendant. In her opposition, she argued that Chiu should not prevail because all theories of liability brought against him had not been negated. The Orange County Superior Court granted summary adjudication in Chiu's favor on the malpractice claim, but denied summary judgment because of the remaining negligent maintenance claim. A later motion for summary judgment by Chiu on the remaining claim was denied.

The case was then sent to a second judge for trial. Chiu brought another motion to dismiss, via a motion in limine. Denied. Undeterred, Chiu sought extraordinary relief. Again denied. The case got reassigned to a third trial judge, before whom Chiu brought yet another motion in limine to foreclose Johnson from proceeding on her negligent maintenance claim because of the summary adjudication of the malpractice claim. Bingo! The motion was granted and case dismissed.

Continue reading "Claims of medical malpractice and negligent equipment maintenance involve separate acts making latter actionable even where former dismissed " »

In Hennigan v. White (California Court of Appeal, Third Appellate District, filed September 20, 2011) 2011 DJDAR 14269, plaintiff went to defendant's business, a day spa, to have permanent cosmetics injected into her eyelids and eyebrows. After the initial injections of pigment, plaintiff received a touch-up performed about 2 months later. One month after the touch up, plaintiff started experiencing adverse reactions and was eventually diagnosed with a bacterial infection in her eyebrows and eyelids; included in the side-effects, she suffered eyelid droop which she surgically repaired. Although the label on the pigment bottle stated "spot testing is required," defendant did not perform a patch test prior to the injections because plaintiff did not advise her that she had sensitive skin or was vulnerable to allergic reactions.

Plaintiff sued for damages caused by her injuries claiming negligence and product liability. Defendant moved for summary judgment. The Sacramento Superior Court granted the motion finding plaintiff failed to submit sufficient facts to establish either cause action. There was no evidence, the court ruled, that the pigments were defective; nor was defendant negligent in failing to perform a patch test. Plaintiff appealed.

The Court of Appeal affirmed the judgment. Regarding the claim of negligence for failure to perform the patch test, the court stated that, even assuming that defendant breached her duty of care (and plaintiff stated that defendant "had done nothing wrong"), there was no evidence that such breach proximately caused plaintiff's injuries. Interestingly, plaintiff's own medical expert stated that it may take up to a year before an allergic reaction manifests itself. Assuming that to be true, a patch test likely would show no immediate reaction, but still a reaction might develop months later. The fact here were that plaintiff had no adverse effects until three months after the initial application, so a patch test here would have shown nothing.

Continue reading "Allergic reaction to product does not establish triable issue of liability" »

"It's the bad economy" has become the all-too-frequent, yet mostly accurate, cry heard when a party is called upon to explain the decrease, or even total loss, in value of a disputed asset. In litigation over community assets in a marital dissolution, this explanation may not suffice, as is emphasized in the recent California Court of Appeal, Fourth Appellate District (Division 3) case of Marriage of Margulis (modification filed Sept. 9, 2011) 2011 DJDAR 13821.

The evidence at trial showed that Elaine Margulis, as the non-managing spouse, had no personal knowledge of the extent of the community property at the time of her separation from Alan Margulis. Evidently, Alan as the spouse who managed the community assets, had at one time prepared a list of assets and their approximate values (investment funds purportedly totaling $787,000). Elaine offered this document into evidence to show that substantial community assets under Allen's control had disappeared between separation and trial. While the trial court admitted this document into evidence, it gave this evidence little or no weight. The court thus found that Elaine had failed to carry her burden of proving the values of these investment account assets.

The Court of Appeal disagreed. It found that the evidence introduced by Elaine satisfied her initial burden of showing that Alan controlled community assets of a certain value. The statutory fiduciary duties of disclosure and accounting effectively shifted the burden to Alan to rebut the presumption charging him with the assets listed in this evidence which constituted prima facie evidence of the values stated. (See California Family Code section 721, subdivision (b).) This statute requires the managing spouse to furnish information to the other spouse concerning the disposition of community assets. The trial court here failed to require Alan to trace the missing money to proper expenditures to determine whether he had taken unfair advantaged of her.

While the trial court did find that Alan neglected to maintain proper records, it failed to consider whether Alan had breached additional fiduciary duties that would have allowed Elaine to recover damages under Family Code section 1101, subdivisions (g) and (h) for assets undisclosed or transferred in breach of fiduciary duty.

So it is not enough for a managing spouse to simply say I lost all of that money on bad investments or the investments were victims of the bad economy. The spouse must keep good records of changes in values and details of disposition or else be charged with their prima facie value.

Vacationing on a cruise ship is a favorite activity for many Californians. But traveling to unfamiliar locales can present dangers. A recent United States Court of Appeals, Ninth Circuit case discusses what a passenger should or should not expect to be warned about by the cruise line.

In Samuels v. Holland American Line-USA Inc. (filed September 2, 2011), 2011 DJDAR 13563, plaintiff and his two teenage children took a 7-day, Baja California coastal cruise that stopped in Cabo San Lucas, Mexico. When they arrived in Cabo, being unfamiliar with the area, plaintiff asked defendant's cruise staff about shore activities, and he was assured he could take a skiff to a popular public beach, Lover's Beach. Once there, plaintiff waded into the Pacific Ocean and was buffeted by a strong wave that caused him severe neurological damage as a result of hitting his head on the ocean floor.

Plaintiff sued the defendant cruise line for personal injury. Defendant filed a summary judgment motion in the district court, which was granted dismissing the case. On appeal, the Ninth Circuit affirmed, finding there were no triable issues of fact because wading on the Pacific Ocean side of Lover's Beach was not uniquely associated with maritime travel; nor was defendant aware of any accidents at all that had occurred at this wading location.

One particular case relied upon by the appellate court was Rainey v. Paquet Cruises, Inc., 709 F.2d 169 (2d. Cir. 1983), where a passenger's tripping over a stool while on the ship's dance floor was not actionable as this accident was not peculiar to maritime travel and the cruise line had no notice of any danger. As that court said, the degree of care owed depends on circumstances surrounding maritime travel being different from encounters in daily life.

If most people are like me, they place heavy reliance on others when traveling to places unfamiliar to them. These cases suggest that such reliance might be misplaced. And with regard to maritime travel, my guess is it is hard to prove that the risk of a particular activity is unique to maritime travel or specifically known by cruise personnel. Bon Voyage.

Most lawyers remember from their law school course in evidence the cardinal notion that a plaintiff or prosecutor should not be allowed to present evidence to show defendant is a bad person. But if this propensity evidence is offered for some other relevant purpose, it may be admissible. A recent opinion from California's Court of Appeal, Fifth Appellate District, gives employment law plaintiffs a weapon in asserting admissibility of evidence of workplace harassment or hostile environment, even if the bad act occurred outside the plaintiff's presence or knowledge; and even if it occurred at a time when plaintiff was not even employed by this employer.

In Pantoja v. Anton (filed August 9, 2011) 2011 DJDAR 11962, plaintiff alleged former employer Anton, a lawyer, committed various harassing acts against her including slapping her on the buttocks, offering her money for a massage right after he touched her leg, calling her a "stupid bitch," and referring to various employees as "my Mexicans." At trial, defendant was granted motions in limine including one excluding all evidence of acts of discrimination or harassment unless plaintiff personally observed the acts. The trial court granted the motions. The trial proceeded and, at its conclusion, the jury found for the defense; in its special verdict, the jury found plaintiff was not subjected to unwanted harassing conduct because she was a woman and that her gender was not a motivating reason for her discharge.

The Court of Appeal reversed the judgment. It found that the trial court abused its discretion in excluding what it called "me-too" evidence. The context here includes that defendant admitted he was not shy about using profanity and vulgarity, but that none of that was done in a discriminatory way. The appellate court notes anti-discrimination legislation is not a "civility code and is 'not designed to rid the workplace of vulgarity.'" (Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 295.) And the court recognizes it would be improper to show defendant had a propensity of harassing women. But in this case, the me-too evidence would show instead that he harbored a discriminatory intent or bias against women or an ethnic group, a matter of proof made relevant by defendant's defense of the case. It also went to the credibility of defendant's testimony that he did not discriminate.

Continue reading "Harassing activity committed by employer-defendant outside plaintiff's presence admissible to show intent" »

A California Court of Appeal just came down with an interesting case regarding mootness.

In Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa, ___ Cal.App.4th ___ (4th Dist. No. E047624, 8/25/11), plaintiff sued the city, Target, and the developer to enjoin its approval of a new shopping center. Plaintiff claimed that the project violated state requirements on affordable housing and on environmental requirements.

The trial court ruled for the City, and plaintiff appealed. During the appeal, however, the project was abandoned - because of litigation between Target and the developer. The City then moved to dismiss the appeal, claiming mootness.

On its face, dismissing for mootness makes sense. No more project to stop, so why bother with plaintiff's appeal, right?

Not so fast, held the Court of Appeal. A dismissal of the appeal constitutes an affirmance of the trial court's ruling. We don't want to do that, because we've never looked at the merits of the appeal. And maybe - just maybe, as the law is not settled on this - "the less-than-fully-litigated judgment might have a preclusive effect on subsequent litigation."

The solution? Reverse because of mootness, with directions to the trial court to dismiss the complaint. That should make everyone happy - or minimally unhappy - given the circumstances.

Pretty clever. Nice to see our appellate courts taking such care on procedural matters.

By: Myron Moskovitz

Since the United States Supreme Court decided State Farm Mutual Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, legal scholars have debated the use of the corporate defendant's wealth and prior conduct in assessing punitive damages, and the stringency/flexibility of the high court's stated constitutional limitations ("few awards exceeding a single digit ratio between punitive and compensatory awards, to a significant degree, will satisfy due process. . ." [at p. 425]). One might think that once the Supreme Court speaks, these matters become clear cut. Not so. Rather, the debate seems to have intensified. In Bullock v. Philip Morris USA, Inc. (filed August 17, 2011) 2011DJDAR 12485, the California Court of Appeal, Second Appellate District, Division Three, gives the reader both sides of these issues at their persuasive best (majority opinion by Croskey, J., joined by Klein, P.J.; dissenting opinion by Kitching, J.)

Philip Morris appealed the jury's punitive award of $13.8 million in the retrial of the matter upon remand. The compensatory award of $850,000 (including $100,000 in noneconomic "pain and suffering") remained from the previous jury trial; the first jury had awarded $28 billion in punitive damages, reduced by the trial judge to $28 million.
In the previous appeal, the appellate court found error in the trial court's refusal to instruct the jury that Philip Morris could not be punished for harm caused to others. In this appeal, the Court of Appeal found that in light of the defendant's strong financial condition and extreme reprehensibility (vast scale and profitability resulting from defendant intentionally deceiving smokers such as plaintiff for decades concerning the adverse effects of smoking, while it formulated cigarettes to be more addictive), the punitive damage award of approximately 16 times the compensatory award was not unconstitutionally excessive.

The Bullock majority methodically and thoroughly analyzed two of the three guideposts for appellate review prescribed by the U.S. Supreme Court and restated by the California Supreme Court: reprehensibility, and disparity between harm to plaintiff and the punitive damages award. Allow me to focus on what I view as determinative in this case.

The majority found off-the-charts reprehensibility in reviewing the extensive history of the defendant's behavior. Yet its analysis depended on the effect this conduct had not only on plaintiff, but also on the massive number of smokers over the years, causing the need for some explanation reconciling this analysis with the principle that defendant should not be punished because of harm to other injured parties. As the majority explains, a defendant should not be punished for being an "unsavory" business, but similar wrongful conduct toward others may be considered in determining the amount of punitive damages as a matter of recidivist reprehensibleness. (See Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1206-1208.) This provides the "scale" of the wrongful conduct.

Continue reading "Another chapter on punitive damages: California's Bullock v. Philip Morris" »

The California Supreme has filed its opinion after months of speculation in the legal community about the reach of the collateral source rule. In Howell v. Hamilton Meats (filed August 18, 2010), the court held an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more that the amounts paid by the plaintiff or his insured for the medical services. It concluded the negotiated rate differential (the difference between the medical provider's customary charges and the charge it agrees to receive as payment-in-full from plaintiff's insurance) is not a collateral benefit recoverable by plaintiff under the collateral source rule.

While, the 6-1 majority opinion written by Associate Justice Werdegar goes into 30-page detail to explain its ruling, the critical turning point is found in the following language: "[W]e do not alter the collateral source rule as articulated in Helfend [Helfend v. Southern California Rapid Transit (1970) 2 Cal.3d 1] and the Restatement. Rather we conclude that because the plaintiff does not incur liability in the amount of the negotiated rate differential, which also is not paid to or on behalf of the plaintiff to cover expenses of the plaintiff's injuries, it simply does not come within the rule." (Slip opinion at pp. 26-27.)

Presiding Justice Cantil-Sakauye voted with the six justice majority. Just one year ago, she authored the opinion of the Court of Appeal, Third Appellate District in King v. Willmett (one of three opinions granted review along with Howell) and wrote, "We see no basis in the record from which we could conclude plaintiff did not incur $169, 499.94 [of which $93, 213.62 was the negotiated rate differential not paid by medical insurance] in past medical expense." (Slip opinion at p. 25.) In holding exactly the opposite as the holding in the state high court ruling in Howell, the King court found persuasive the Helfend view that "a person who has invested years of insurance premiums to assure his medical care should receive the benefits of his thrift. The tortfeasor should not garner the benefits of the victim's providence." (Id. at p.26)

Continue reading "Collateral source rule in California: injured plaintiffs barred recovery of value of medical services in excess of bargained rate paid by insurance " »