Recently in Appellate Practice Category

Does owner of business premises owe duty to protect family members of persons who work there from secondary exposure to asbestos incurred by worker on premises, but exposed to family members away from premises?

business.jpgIn Haver v. BNSF Railway Co. (filed 6/3/14) B246527, Lynn Haver contracted mesothelioma and died as a result of secondary exposure to asbestos. Her former husband was exposed to products and equipment containing asbestos while working for defendant's predecessor railway company in the 1970's. Asbestos evidently adhered to his clothing, and then was transferred to the family home where Lynn was exposed. Survivors of Lynn Haver sued defendant for wrongful death based upon premises liability negligence.

Relying on Campbell v. Ford Motor Co. (2012) 206 Cal.App.4th 15, the trial court sustained defendant's demurrer without leave to amend, finding no duty. Survivors appealed arguing (1) Campbell is distinguishable on its facts, or, alternatively, incorrectly decided; and (2) a finding of error is compelled by the recent opinion in Kesner v. Superior Court (filed 5/15/14) A136378. The Court of Appeal, Second Appellate District, Division Five, disagreed, affirming the judgment of dismissal.

The appellate court initially focused on the applicability of Campbell. There, the plaintiff brought a premises liability action against Ford based on her father and brother working for a contractor at a Ford plant construction site where asbestos was present. She was exposed to asbestos while laundering their clothing. While Ford argued there was no duty on the part of the property owner for injuries caused relatives of an employee of an independent contractor for that contractor's negligence, the Court of Appeal there reversed the overruling of the demurrer on broader grounds. It found strong policy considerations dictated, as a matter of law, that the premises owner had no duty of care for such secondary exposure. The Haver court agreed with this assessment and found the factual difference of direct employment by the premises owner here made no difference in light of the broad holding of Campbell.

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Is NBC entitled to a peremptory grant of mandate directing summary judgment where television program aired more than two years prior to filing of purported creators' complaint for breach of implied contract?

file5461249349189.jpgWhenever I lecture on writ practice, the question inevitably arises whether the appellate courts ever grant writ relief compelling the grant of a summary judgment motion denied in the trial court. My answer: rarely, mostly because, if the moving party is correct, it will prevail at trial; and, if it doesn't, it still has the remedy of an appeal from the final judgment.

NBCUniversal Media, LLC v. Superior Court (ordered published 4/28/14) B250892 is one of those rare exceptions. There, real parties (Montz) presented ideas and concepts for a television program entitled Ghost Expeditions: Haunted to NBC from 1996 to 2001. The proposed show was to be a reality series about common people investigating haunted houses. NBC rejected the idea. But on October 6, 2004, the Ghost Hunters hit series, produced by NBC, premiered on the Syfy Channel. NBC had, on July 22, 2004, e-mailed real parties to advise them about the show, described as a "docu-soap about a group of plumbers-by-day/ghost-hunters-by-night that set out on a mission to disprove ghosts or paranormal activity." Montz sued NBC initially in Federal Court on November 8, 2006. NBC's motion for summary judgment was denied by the trial court.

NBC sought a writ of mandate from the Court of Appeal, Second Appellate District, Division Four, compelling the grant of the motion for judgment on the ground the statute of limitations had expired. The court issued a peremptory writ of mandate commanding the trial court to enter summary judgment in NBC's favor. In doing so, the court determined that, as a matter of law, Montz could not prevail.

The appellate court did note that normally resolution of statute of limitation issues is a question of fact not properly disposed of on summary judgment. However, here it determined that uncontradicted facts were established in discovery. One uncontradicted fact was that NBC's show was released to the general public on October 6, 2004, more than two years ( the statutory period applicable here) before Montz filed suit. Montz argued below and on the writ that the accrual of the causes of action should be delayed in accordance when his company actually discovering the show had been released and that it may have been based upon that company's creative idea.

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May employee sue for whistleblower retaliation under the federal False Claims Act in state court, and have that right decided in a petition for extraordinary relief?

February 17, 2014

file000127834430.jpgIn Driscoll v. Superior Court (filed 1/30/14) 2014 DJDAR 11270, the Court of Appeal, Fifth Appellate District, answered yes on both counts, issuing a writ of mandate instructing the state trial court to overrule the demurrer it had previously sustained without leave to amend.

Driscoll had been employed as a medical doctor with real party Spencer's medical group. Spencer initiated the state action by suing Driscoll, alleging various causes of actions including breach of contract, disparagement, fraud and defamation. Driscoll proceeded to file a federal court action alleging retaliation under the FCA; he additionally cross-complained in the state action claiming whistleblower retaliation under the federal FCA and wrongful termination. The gist of his claims was that Spencer refused to pay him for excess hours worked and he was terminated in retaliation for requesting such pay and for complaining about Spencer's billing practices which he believed were fraudulent concerning Medicare and Medi-Cal patients.

In the state court action, Spencer demurred to the federal FCA causes of action alleging the trial court lacked subject matter jurisdiction. The trial court agreed, finding that the federal FCA statute's reference to the filing of such action in an "appropriate [federal] district court" implies that the state courts would not have concurrent jurisdiction. Driscoll then petitioned the state appellate court for a writ of mandate to reinstate the federal FCA causes of action.

Because Driscoll still had other causes of action he could pursue in his state action cross-complaint and still had to defend against Spencer's complaint, Driscoll did not have an order from which he could appeal; his resort for relief here thus was for extraordinary writ relief, which is a method of review dependent on the appellate court's exercise of discretion. Here, the court exercised that discretion because: (1) it appeared the trial court deprived Driscoll of the opportunity to plead his cause of action and immediate review may prevent a needless trial and reversal (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894); and (2) the demurrer raised an important question of subject matter jurisdiction (San Diego Gas & Electric v. Superior Court (1996) 13 Cal.3d4th 893, 913).

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May law firm that represented now-deceased spouses in preparing their wills and trusts represent trustees against wife's personal representative?

Law Firm.jpgRulings on motions to disqualify opposing counsel have in recent months and years regularly found their way into the appellate courts. Some of these reviews have been by way of appeal as appealable injunctive orders. Others have taken the petition for writ of mandate route. The latter route was taken in Fiduciary Trust International of California v. Superior Court (filed 7/31/13) 2013 DJDAR 10119. And again, as was the case in the last disqualification case that appeared in this blog (June 26, 2013), the appellate court disagreed with the trial court. But this time it determined that disqualification should have been granted, rather than not.

Sandler & Rosen (S&R) drafted wills and trusts for Willet and Betty Brown concerning a joint estate worth more than $200 million. In short, the trusts generated substantial income and Betty became the marital trust income beneficiary for life upon Willet's death; upon Betty's death, the principal of the trust went into an Exemption Equivalent Trust that benefitted the parties' four adult children. But after Willet died, Betty revoked her will that had previously benefitted all four of the children, and transferred the large majority of her assets to a trust that benefitted her daughter, the only of the four children that was hers by blood.

After Betty's death, her personal representative, Fiduciary, and the marital trust trustees disputed who was required to pay the $27 million in estate and inheritance taxes due on Betty's assets. The Brown's estate plan indicated that upon the latter of the couple's death the Marital Trust would pay the estate and inheritance taxes. After Willet's death, Betty established a new trust that would, upon her death, distribute a significant majority of the trust assets to the one daughter mostly to the exclusion of the other children. Yet taxes due on her estate still were directed to be paid by the Marital Trust. In light of Betty's changes, the Marital Trust trustees argued that it would be unfair to pay the full amount of taxes owed on the assets of Betty's trust as the other 3 children would pay death taxes on funds they will never receive.

S&R represented the Marital Trust in this tax dispute. Fiduciary moved the court to disqualify S&R. The trial court determined that any communication that occurred at the time S&R prepared the estate plan (about 20 years earlier) were unlikely to be used in the current dispute and denied the motion to disqualify. The Court of Appeal, Second Appellate District, Division Seven, disagreed, finding that based upon the undisputed substantial relationship of the subject matter involved in both representations, and because the previous representation was "direct and personal" rather than "peripheral or attenuated," disqualification was virtually automatic not allowing the trial court to inquire into any actual breach of confidentiality that would affect the present dispute.

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May a trial court award defendant expert witness fees under CCP section 998 after plaintiff declined offer and then dismissed action?

attorney.jpgCalifornia Code of Civil Procedure section 998, subdivision (c) (1) states, "If an offer made by a defendant is not accepted, and the plaintiff fails to obtain a more favorable judgment or award . . . the court or arbitrator . . . in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses. . ." On its face, this provision is clear, and one that carries an important policy (as do reciprocal provisions favoring a prevailing plaintiff) to encourage parties to settle cases pretrial when reasonable offers of settlement are made by the opponent. But this provision does not specify whether a judgment is necessary to trigger recovery. Mon Chong Loong Trading Corp v. Superior Court (filed 7/23/2013) 2013 DJDAR 9593 seeks to resolve this ambiguity.

Plaintiff Cui had been offered $10,000 by defendant in exchange for a release from liability and dismissal of suit. In this personal injury lawsuit, plaintiff had been served with a demand to exchange witnesses and a notice for an independent medical examination (IME). Plaintiff did not respond to the offer, which expired; nor did she participate in the witness exchange or appear for the IME. Facing a motion in limine to exclude any expert testimony on plaintiff's part, plaintiff requested a voluntary dismissal of her complaint without prejudice, which was entered. Defendant, in turn, sought its expert witness fees. The trial court granted plaintiff's motion to tax the expert fees. The Court of Appeal, Second Appellate District, Division Three, disagreed and granted defendants request that the trial court reconsider under section 998.

On the merits of the above question, the appellate court found that section 998's "more favorable judgment award" language dictates that the appropriate moment for a court to assess whether a more favorable judgment or award has been obtained is at the conclusion of the lawsuit, regardless of whether that conclusion is in the form of a judgment. Here, the action ended, in the appellate court's view, with the voluntary dismissal. That is so, even if the dismissal is without prejudice and the potential exists for refiling. By comparison, the price of such a dismissal is the payment of other costs under CCP section 1032. In each instance, the possibility exists for a resumption of the lawsuit, but both" justice and judicial economy" require a swift cost award. The trial court must exercise its discretion in deciding whether to award costs in these situations, not simply say it has no power to do so, as the trial court did here.

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Must on-call, 24-hour, live-in employees be compensated by their employer for hourly wages for the full 24-hour shift including sleep time?

allcenter.jpgIn Mendiola v. CPS Security Solutions, Inc. (filed 7/3/13) B240519, the Court of Appeal, Second Appellate District, Division Four, gives a Solomon-like answer. In this class action, the plaintiffs are trailer guards employed by defendant to provide around-the-clock security at construction sites. During the nighttime periods, defendant considered the trailer guards "on call" and generally compensated them only for the time spent actively conducting investigations. Individual employment contracts provided that employees working 24-hour weekend shifts would not be paid for the time period of 9 p.m. to 5 a.m. with exceptions The trial court granted a preliminary injunction requiring defendant to compensate plaintiffs for all on-call time spent in live-in trailers.

The appellate court's disposition lays out the split-the-baby response, partially reversing the injunctive order: "On those days (24-hour weekend shifts), the guards must be compensated for 16 hours; eight hours may be excluded for sleep time, provided the guards are afforded a comfortable place to sleep, the time is not interrupted, the guards are compensated for any period of interruption, and on any day they do not receive at least five consecutive hours of uninterrupted sleep time, they are compensated for the entire eight hours."

The primary focus of the appellate court's discussion is California Industrial Welfare Commission (IWC) Wage Order No.4, which defines hours worked as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." First, the defendant-employer claimed that plaintiffs were free to engage in personal activities while "on call," thus not actively engaged in work unless prompted otherwise. Second, defendant argued the time period from 9 p.m. to 5 a.m. constituted excludable "sleep time," whether or not the employee actually slept during all or part of this time period.

The first issue (on-call time) caused the court to recite seven factors in determining degree to which employees are free to pursue private matters: (1) on-premise living requirements, (2) geographic restrictions, (3) frequency of calls, (4) time limits to respond, (5) ability of employee to trade on-call times with others, (6) whether use of paging could ease restrictions, and (7) actual engagement in personal activities. (Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 523.) Applying these factors to this case, the court found the employer exercised a high degree of control: employees were required to live at the jobsite and respond immediately in uniform to suspicious activity, they were very limited in being relieved of duties or being any distance from the worksite, and they were forbidden from normal freedoms (children, pets, alcohol and entertaining others). Thus on-call time, except for weekend around-the -clock "sleep time," fell within "hours worked."

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What are the risks of filing an appeal as a tool to force settlement?

filing an appeal.jpgIn 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.

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What are the limits to an appellate court excusing failure to appeal from an appealable order?

CourtGavel.jpgThe 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.

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"Shall" is not always mandatory language; LA County not required to capture pit bulls because whether "hazard" is discretionary decision under immunity statute

Beware.pngCalifornia Government Code section 815.6 exempts a public entity from immunity if it has failed to discharge a statutory "mandatory duty" designed to protect from injury. Los Angeles County Code (LACC section 10.12.090C states that the county animal care and control department "shall capture and take into custody . . . [a]ny animal being kept or maintained contrary to [LACC sect. 10.40.010W]." That section states, "No animal shall be allowed to constitute a hazard or be a menace to the health, peace or safety of the community."

In County of Los Angeles v. Superior Court (Faten) (filed September 5, 2012, certified for publication on Sept. 20) 2012 DJDAR 13264, minor Kameron Faten and his two bothers were walking home from school when two pit bulls jumped over the fence of John Boles' residence and viciously attacked Kameron. The boys' parents sued on their behalf for personal injury and emotional distress, naming Bowles, his landlord and the County of Los Angeles.

The County moved for summary judgment in the Superior Court, claiming the above-cited portions of the county ordinance were merely discretionary or permissive, thus it was immune and owed no duty.

The evidence reflected that on one occasion, a pit bull running loose in the neighborhood was seized and eventually euthanized, but not identified with any residence or owner. The County had received 9 previous telephone calls about the many pit bulls that had been at the Bowles' residence during the past two-and-a-half years before the attack on Cameron. Pit bulls at the residence were reported to have jumped the fence, to have run loose and chase people. However, County animal control officer were unable to find any dogs of the Boles to be running loose. Officers had gone to the residence and posted notices, finding no responsible person home except on one occasion. The one time contact was made with a member of the Boles family occurred three months before the Faten incident when an identified neighbor reported that two pit bulls had jumped the Boles' fence and killed two of her goats in her yard. Officers gave written notice at that time that the Boles could keep no more than 3 dogs.

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Writ granted: producers of Desperate Housewives granted directed verdict on actress's wrongful termination claim.

In Touchstone Television Productions v. Superior Court (B241137, filed August 16, 2012), petitioner Touchstone had an agreement with actress Nicollette Sheridan for the first season of the television series Desperate Housewives in which Touchstone had the exclusive option to renew Sheridan's services on an annual basis for an additional six seasons. During Season 5, Touchstone informed Sheridan it would not renew her contract for Season 6, while paying her for the entirety of Season 5. Sheridan sued for wrongful termination in violation of public policy, alleging that she was "fired" because she had complained about a battery committed against her by the series' creator Mark Cherry. A jury deadlocked on this claim resulting in a mistrial. Touchstone's motion for a directed verdict was denied by the trial court, and Touchstone petitioned the Court of Appeal for extraordinary relief.

The Court of Appeal, Second Appellate District, Division Four, stayed the pending retrial, issue an alternative writ of mandate, and, after receiving briefing and oral argument, concluded the trial court erred in denying Touchstone's motion for directed verdict. The court was convinced there was clear legal precedent on the merits: "A cause of action for wrongful termination in violation of public policy does not lie if an employer decides simply not to exercise an option to renew a contract. In that instance, there is no termination of employment, but, instead, an expiration of a fixed term contract. (Daly v. Exxon Corp. (1997) 55 Cal.App.4th 39.)"

The appellate court, however, rather than ordering the entire action dismissed, sent the matter to the trial court to allow Sheridan to file an amended complaint alleging a cause of action under California Labor Code section 6310 that Touchstone retaliated against her for complaining about unsafe working conditions (in the form of Cherry's conduct) by deciding not to exercise its option to renew her contract. The court noted that, after this petition was filed, Sheridan had moved the trial court to allow her to amend her complaint to add the Section 6310 claim; the trial court had denied that motion.

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Purported appeal of order compelling arbitration treated as extraordinary petition; order compelling individual arbitration affirmed

Thumbnail image for Court House.jpgIn Nelsen v. Legacy Partners Residential, Inc. (filed July 18, 2012) 2012 DJDAR 9956, plaintiff Lorena Nelson worked for defendant as a property manager from 2006 to 2009. Early in her employment she received a 43-page pre-printed form employee handbook that included a small-print arbitration clause at page 42 headed "TEAM MEMBER ACKNOWLEDGMENT AND AGREEMENT." The handbook gave no option to arbitration as a means of resolving employment disputes. She signed the agreement. In 2010, she filed a class-action lawsuit against defendant primarily alleging violations of wage and hour laws.

Defendant moved the trial court to compel plaintiff to arbitrate the matter as an individual party pursuant to the arbitration clause. Plaintiff opposed the motion, claiming the arbitration clause was unconscionable and in violation of California public policy favoring class actions in this type of lawsuit; if arbitration was to be compelled, argued plaintiff, the court would have to allow class arbitration. The trial court granted the motion to compel individual arbitration, and plaintiff appealed.

To start, the California Court of Appeal, First Appellate District, Division One, questioned whether plaintiff is allowed to appeal this order because it is not a final judgment. (Civil Code section 906.) Nelson argued the "death knell" doctrine, citing Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277: that the order is effectively the death of the class litigation. However, the appellate court pointed to the applicability of this doctrine only where it is unlikely that any individual action will proceed. But the court stops short of deciding this issue of appealability, and instead exercised its discretion to treat the appeal as a petition for writ of mandate.

On the merits, the Court of Appeal determined that plaintiff failed to meet her burden of showing (1) the arbitration clause was both procedurally and substantively unconscionable, and/or (2) that the clause required class-wide arbitration.

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Loss of consortium may lie for pre-marriage acts causing latent injury: a lesson that appellate authority may not carry the day

marriage.jpgJohn Leonard was first diagnosed with mesothelioma after his marriage to Sandra Leonard in 2001. This progressive and fatal disease allegedly resulted from John's exposure to asbestos between 1958 and 1995 caused by John Crane, Inc. In Leonard v. John Crane, Inc. (filed June 13, 2012) 2012 DJDAR 7862, Sandra's lawsuit for loss of consortium was dismissed by the San Francisco Superior Court when it sustained Crane's demurrer without leave to amend. The trial court relied upon Zwicker v. Altamont Emergency Room Physicians Medical Group (2002) 98 Cal.App.4th 26, which held that a loss of consortium claim is cognizable only if the plaintiff was married to the injured spouse at the time of defendant's wrongful conduct. The Court of Appeal, First Appellate District, Division Five, reversed on appeal, after having denied an earlier petition for writ review.

On appeal, defendant argued that the Zwicker holding was "binding" on the trial court. Plaintiff disagreed, arguing not only that Zwicker was bad law, but also that the case was distinguishable and the purported holding was dicta. Both parties agreed that the focus should be the date of the "injury" to the spouse. Defendant insisted the injury occurred at the time John was exposed to asbestos; plaintiff urged that her claim arose only once John had appreciable and actionable injury.

The appellate court declined to apply Zwicker. First, it agreed with plaintiff that a valid loss of consortium arises when a latent and unappreciated injury initially becomes manifest, which in this case was during marriage. Zwicker involved a medical malpractice claim that became manifest prior to the marriage; the ruling was correct on that point, but is factually distinguishable. Second, the Zwicker court went beyond the facts of its case to state a broader principle: that a loss of consortium necessarily arises at the time the wrongful conduct occurred; the Leonard court found this broadly stated principle to be incorrect.

In reaching its decision, the court discussed the split of authority on this question in other jurisdictions. Now California too has a split of appellate authorities. The court noted that another appellate district, the Second District Court of Appeal recently reached the same conclusion as it had. (See Vanhooser v. Superior Court (Hennessy Industries) (June 1, 2012) ___ Cal.App.4th ___.) Thus the Third District Court of Appeal holding in Zwicker is now at odds with these holdings in two other districts.

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Evidence extrinsic to the parties' contract is admissible to prove false advertising

November 16, 2011

Police_Line.jpgIn 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.

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If value of community assets is shown, managing spouse must prove proper disposition or lesser value

September 29, 2011

divorce-money.jpg"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.

What to Do With A "Moot" Appeal

September 2, 2011

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