Articles Posted in Business Law

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At 3:35 a.m. on the San Mateo Bridge, Ong’s vehicle collided with the Gonzalez vehicle. Gonzalez's passenger, Morales, was killed. At the accident scene, Ong said that he worked the night shift at Genentech was driving his personal vehicle to Genentech on his night off to collect resumes for “upcoming interviews.” Before the accident, Ong told a friend that he was going to Genentech to do something important for work. During his deposition, Ong gave various reasons for his trip, including picking up personal items from work, visiting his grandmother, and picking up the resume of his unemployed friend, Alvarez. Ong’s testimony with respect to Alvarez’s resume was impeached. Genentech presented evidence that all of Ong’s technician duties were performed at Genentech during work hours. Genentech did not require Ong to drive or own a vehicle and did not compensate Ong for travel time or expenses. The Morales family sued, asserting negligence. The court of appeal affirmed the dismissal of "respondeat superior" claims against Genentech. The“going and coming” rule precludes Genentech’s liability because Ong was driving for his own convenience and not at Genentech’s request or as part of his regular duties. Plaintiffs failed to establish a triable issue that Genentech was liable under the “special errand” exception to that rule. View "Morales-Simental v. Genentech" on Justia Law

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Wiseman filed suit seeking to recover "carrying charges" it paid Southern on the theory that those charges were not permitted by the Alcoholic Beverage Control Act. The trial court ruled that the California Department of Alcoholic Beverage Control (Department) has exclusive jurisdiction over Wiseman's claims because its allegations directly implicate the sale of alcohol. The Court of Appeal held that, although the Department does have exclusive jurisdiction to issue, deny, suspend and revoke alcoholic beverage licenses according to terms of the ABC Act and regulations adopted pursuant to it, the consequences of committing a violation of the ABC Act by imposing charges of the type collected by Southern from Wiseman in this case were not limited to those which the Department may impose on its licensees and did not bar the contract, unfair competition and declaratory relief claims alleged in Wiseman's complaint. Accordingly, the court reversed the trial court's order sustaining Southern's demurrer and remanded for further proceedings. View "Wiseman Park v. Southern Glazer's Wine and Spirits" on Justia Law

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Defendants Steve George and Real Estate Portfolio Management, LLC (REPM) appealed a trial court’s order granting the motion of plaintiffs Angelica Lynn and Angel Lynn Realty, Inc. (ALR) to disqualify counsel. George and REPM were represented by attorney Kevin Spainhour and his law firm, Spainhour Law Group (SLG), who were the subjects of the motion to disqualify. Spainhour represented George for over 15 years and REPM for several years. Lynn and ALR alleged in their complaint that they had formed a partnership with George and REPM for buying and selling real property. Lynn and ALR moved to disqualify Spainhour and SLG on the ground they had represented the alleged partnership and had provided Lynn legal advice relating to a proposed sale transaction. Alternatively, Lynn and ALR asserted they had a confidential non-client relationship with Spainhour and SLG. The trial court expressly found that neither Spainhour nor SLG had represented Lynn or ALR in their individual capacities, nevertheless, the court found there had been a confidential non-client relationship between Lynn and ALR, on the one hand, and Spainhour and SLG, on the other, and a “potential attorney-client relationship with the alleged partnership.” Based on those findings, the court granted the motion to disqualify. The Court of Appeal reversed, finding the evidence did not support the trial court’s finding of a confidential non-client relationship. View "Lynn v. George" on Justia Law

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Defendant Shingle Springs Band of Miwok Indians (the Tribe) appealed a judgment after trial in favor of plaintiff Sharp Image Gaming, Inc. (Sharp Image), in plaintiff’s breach of contract action stemming from a deal to develop a casino on the Tribe’s land. On appeal, the Tribe argued: (1) the trial court lacked subject matter jurisdiction because Sharp Image’s action in state court was preempted by the Indian Gaming Regulatory Act (IGRA); (2) the trial court erred in failing to defer to the National Indian Gaming Commission’s (NIGC) determination that the disputed Equipment Lease Agreement (ELA) and a promissory note (the Note) were management contracts requiring the NIGC’s approval; (3) Sharp Image’s claims were barred by the Tribe’s sovereign immunity; (4) the trial court erred in denying the Tribe’s motion for summary judgment; (5) the jury’s finding that the ELA was an enforceable contract was inconsistent with its finding that the ELA left essential terms for future determination; and (6) substantial evidence does not support the jury’s verdict on the Note. After the parties completed briefing in this case, the United States was granted permission to submit an amicus curiae brief in partial support of the Tribe on the questions of preemption and lack of subject matter jurisdiction. The Court of Appeal concluded IGRA preempted state contract actions based on unapproved “management contracts” and “collateral agreements to management contracts” as such agreements are defined in the IGRA regulatory scheme. Thus, the trial court erred by failing to determine whether the ELA and the Note were agreements subject to IGRA regulation, a necessary determination related to the question of preemption and the court’s subject matter jurisdiction. Furthermore, the Court concluded the ELA was a management contract and the Note was a collateral agreement to a management contract subject to IGRA regulation. Because these agreements were never approved by the NIGC Chairman as required by the IGRA and were thus void, Sharp Image’s action was preempted by IGRA. Consequently, the trial court did not have subject matter jurisdiction. View "Sharp Image Gaming v. Shingle Springs Band of Miwok Indians" on Justia Law

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If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

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If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

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This appeal concerned a limited liability company, JPB Investments LLC (JPBI), created and operated by respondent James Baldwin, a real estate developer. Appellant Curci Investments, LLC (Curci) sought to add JPBI as a judgment debtor on a multi-million dollar judgment it had against Baldwin personally. Curci asserted Baldwin held virtually all the interest in JPBI and controlled its actions, and Baldwin appeared to be using JPBI as a personal bank account. Curci argued, under these circumstances, it would be in the interest of justice to disregard the separate nature of JPBI and allow Curci to access JPBI’s assets to satisfy the judgment against Baldwin. Citing Postal Instant Press, Inc. v. Kaswa Corp. 162 Cal.App.4th 1510 (2008), the court denied Curci’s motion based on its belief the “reverse veil piercing,” was not available in California. On appeal, Curci asserted Postal Instant Press was distinguishable, and urged the Court of Appeal to conclude reverse veil piercing was available in California and appropriate in this case. The Court agreed Postal Instant Press was distinguishable, and concluded reverse veil piercing is possible under these circumstances. The Court reversed and remanded for the court to make a factual determination as to whether JPBI’s veil should be pierced. View "Curci Investments v. Baldwin" on Justia Law

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Defendants Beachcomber Management Crystal Cove, LLC (Management) and Douglas Cavanaugh (collectively, Defendants) challenged a trial court’s order disqualifying the law firm of Kohut & Kohut LLP (Kohut) from continuing to represent Defendants in the underlying matter. In March 2016, Plaintiffs filed this lawsuit on behalf of Beachcomber at Crystal Cove, LLC as a shareholder derivative action against Defendants. The complaint named the Company as a nominal defendant and alleged claims for fraud, breach of fiduciary duty, abuse of control, gross negligence and mismanagement, breach of duty of honest services, unjust enrichment, declaratory relief, and accounting. Plaintiffs alleged Defendants abused their position as the Company’s managers by diverting Company funds to other Cavanaugh entities, paying themselves unauthorized management fees, misallocating expenses the Company shares with other entities, and refusing to provide Plaintiffs complete access to the Company’s books and records. Defendants hired Kohut to represent them in this lawsuit, and the Company hired independent counsel, the law firm of Corbin, Steelman & Specter, to represent it in this lawsuit. In May 2016, Plaintiffs filed a motion to disqualify Kohut “from any further participation in this case” based on conflicts of interests arising from its past and present representation of the Company and Defendants. Specifically, Plaintiffs argued disqualification was required based on the conflicts of interest arising from: (1) Kohut’s concurrent representation of the Company and Defendants; (2) Kohut’s successive representation of the Company and Defendants concerning the disputes over the Company’s operations; and (3) the need for Kohut to testify in this lawsuit about the services it provided to the Company and Defendants. Here, the trial court concluded disqualification was mandatory because: (1) Defendants and the Company had conflicting interests because the Company is the true plaintiff in this derivative suit that Plaintiffs brought against Defendants on the Company’s behalf; and (2) Kohut previously represented the Company concerning some of the issues raised in this suit, and a substantial relationship therefore existed between that representation and Kohut’s representation of Defendants in this lawsuit. The Court of Appeal concluded the trial court erred because it failed to apply a more specific line of cases that governed an attorney’s successive representation of clients in a derivative lawsuit brought on a small or closely held company’s behalf against the insiders who run the company. View "Beachcomber Management Crystal Cove v. Super. Ct." on Justia Law

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FilmOn filed suit against DoubleVerify for trade libel, slander, and other business-related torts, alleging DoubleVerify falsely classified FilmOn's websites under the categories "Copyright Infringement-File Sharing" and "Adult Content" in confidential reports to certain clients that subsequently cancelled advertising agreements with FilmOn. The Court of Appeal affirmed the trial court's grant of DoubleVerify's motion to strike pursuant to the anti-SLAPP statute. The court held that the trial court properly found DoubleVerify engaged in conduct in furtherance of its constitutional right of free speech in connection with an issue of public interest. View "FilmOn.com v. DoubleVerify, Inc." on Justia Law

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Hilliard owned a controlling interest in companies that owned radio stations. In 2003, the companies entered into a loan agreement with Wells Fargo, borrowing $18.9 million, secured by assets that exceeded $50 million. The loan was continuously in default after March 31, 2004. Although the agreement was amended several times, Wells Fargo never foreclosed. Hilliard sold his ranch and was attempting to sell radio stations when, without notice to Hilliard, Wells Fargo sold the loan to Atalaya. Atalay filed suit and was awarded judgments that resulted in Atalaya’s purchase of Hilliard’s companies in bankruptcies. Hilliard, now 78 years old, alleged that Wells Fargo took or assisted in taking his property for wrongful use, with intent to defraud, or by undue influence, violating Welfare and Institutions Code section 15610.30(a)(1)(2), a provision of the Elder Abuse and Dependent Adult Civil Protection Act. The court dismissed, finding that Hilliard lacked standing. The court of appeals affirmed. Hilliard’s circular argument—that the duty breached by Wells Fargo was owed to him personally, and not just as a shareholder, because he is an elder and elder abuse is by definition a personal claim—ignores the fact that his claim does not originate in circumstances independent of his status as a shareholder in the companies. View "Hilliard v. Harbour" on Justia Law