Articles Posted in Business 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

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Phoenix Pipeline filed a second amended complaint (SAC) alleging breach of contract claims related to SpaceX's failure to pay for its services from 2010 to October 2013. The trial court subsequently granted SpaceX's demurrer, which argued that the license issued to Phoenix Plumbing was not sufficient to satisfy the requirements of Business Code section 7031. The Court of Appeal held that Phoenix Pipeline's SAC failed to state a claim for construction related services because it did not allege that Phoenix Pipeline was a licensed contractor. The court explained that Phoenix Pipeline may not rely upon a license issued to another and that section 7031 was not limited to contracts with unsophisticated persons or homeowners. The court held, however, that Phoenix Pipeline adequately alleged that it provided some services for which no contractor license was necessary. Finally, the trial court acted within its discretion in declining to permit an amendment alleging that Phoenix Pipeline was an employee. Accordingly, the court reversed and remanded. View "Phoenix Mechanical Pipeline, Inc. v. Space Exploration Technologies Corp." on Justia Law

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Casiopea Bovet, LLC appealed a judgment on the pleadings granted in favor of the California State Controller (Controller) on grounds that Casiopea could not claim escheated property under the Unclaimed Property Law as an assignee of Financial Title Company (Financial Title) because Financial Title was a suspended corporation, which lacked legal capacity to prosecute an action. Casiopea argued on appeal: (1) the penalty provisions of Revenue and Taxation Code section 23301 should not apply to a claim made pursuant to an assignment ordered under the Enforcement of Judgments Law as distinguished from a voluntary assignment under Civil Code section 954; (2) Casiopea, as an assignee, was an "innocent third party" and should be able to claim the property under equitable principles; and (3) the court abused its discretion in denying Casiopea's request for continuance or leave to amend its complaint. The Court of Appeal disagreed with each of these contentions and affirmed the judgment. View "Casiopea Bovet, LLC v. Chiang" on Justia Law

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Overstock, an online retailer, compared the price at which it offered an item to an advertised reference price. Until 2007, it showed a “List Price” for the product, with the number stricken through; it then showed the price at which Overstock was offering the product. Overstock eventually changed the “List Price” label to “Compare.” A commercial from 2013 claimed: “We compare prices so you don’t have to." Overstock’s policies allowed the list price to be set by finding the highest price for which an item was sold in the marketplace. Overstock did not determine whether other Internet retailers had made any substantial sales at the comparison price. After the state began investigating potential claims against Overstock, the parties entered into an agreement tolling the statute of limitations as of March 2010. The trial court found Overstock had engaged in unfair business practices (Bus. & Prof. Code, 17200) and false advertising (section 17500), granted injunctive relief, and imposed $6,828,000 in civil penalties. The court of appeals affirmed, holding that the trial court properly applied the four-year limitations period of section 17208 and that there was sufficient evidence that Overstock made false and misleading statements, violating laws against unfair business practices and false advertising. View "People v. Overstock.Com, Inc." on Justia Law

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Capacity manufactures “Trailer Jockey” semi-tractors. GFL became an authorized Capacity dealer under a 1995 franchise agreement. In 2013, Capacity notified GFL of its intent to terminate GFL’s franchise, alleging GFL had misrepresented the employment status of a former GFL employee who went to work for Capacity’s chief competitor and allowed the employee to continue accessing Capacity’s online parts ordering system while working for the competitor. GFL filed a protest with the state New Motor Vehicle Board, alleging there was no good cause for the termination, as required by the Vehicle Code. An ALJ concluded Capacity had not established good cause because GFL had not violated the express terms of its franchise agreement. The Board agreed. The Sacramento County Superior Court directed the Board to set aside its decision. While that case was pending GFL filed this suit in the Alameda County Superior Court, which concluded that GFL did not have standing because section 11726 only authorizes actions by “licensees” of the DMV and GFL did not possess such a license. The court of appeal reversed. GFL is a member of the class protected by the subdivision of section 11713.3 on which its cause of action is based; its claim is not defeated by its status as non-licensee. View "Guarantee Fork Lift, Inc. v. Capacity of Texas, Inc." on Justia Law

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From 1999-2010, Wilcox made loans to Hardwick. In 2013, Hardwick filed suit to recover usurious interest and prevent Wilcox from foreclosing on the property securing his loans. Wilcox countersued for breach of contract and judicial foreclosure. The trial court entered judgment in favor of Hardwick, finding that usurious interest payments made over the course of the relationship offset the principal debt and that Hardwick could recover $227,235.83 in interest payments he made during the two years before the filing of the lawsuit. Under California law, when a loan is usurious, the creditor is entitled to repayment of the principal sum only. He is entitled to no interest whatsoever. The court of appeal affirmed, rejecting Wilcox’s arguments that, in a forbearance agreement, Hardwick waived his usury claim with respect to any loan payment he made before April 2012 and that the statute of limitations barred Hardwick’s claim with respect to any loan that was paid off more than two years before the lawsuit was filed.The court reasoned that the payments made before the two-year limitations period were applied to offset principal, so only the later payments were subject to recovery. View "Hardwick v. Wilcox" on Justia Law

Posted in: Banking, Business Law

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The Warrens owned and operated a Harley-Davidson motorcycle dealership in Salinas for approximately 38 years. Intending to retire, the Warrens contacted a potential buyer, Dabney, who owned a Harley-Davidson dealership in Riverside. The Warrens’ corporation and Dabney executed various agreements, including a master “Asset Purchase Agreement” that incorporated a Guaranty signed by Dabney, under which he “agree[d] . . . to guarantee . . . the collection and receipt of all amounts” required under section 2 of the Agreement, under the promissory note(s), and under the lease. The Agreement allowed Dabney to assign his rights and obligations as buyer to a corporation that he controlled, with the assignment to relieve Dabney of all obligations under the Agreement. Dabney assigned his rights under the Agreement to Monterey Motorcycles, Inc., which defaulted on its obligations under the Agreement. The dealership was sold to a third party. The Warrens sued and won a judgment of $2,746,318 against Dabney. The court of appeal reversed, agreeing that the Guaranty did not apply to a covenant not to compete agreement and two consulting agreements. View "G & W Warren's, Inc. v. Dabney" on Justia Law

Posted in: Business Law, Contracts

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A construction company paid its employee only for the hours he worked at a jobsite. But rather than driving his vehicle directly from his home to the jobsite, the company expected the employee to first commute to the company’s “yard,” then drive a company truck from the yard to the jobsite, transporting coworkers and materials. One day, while driving from his home to the yard, the employee collided with a motorcyclist, who sued the construction company. The trial court granted the defendant-company summary judgment, finding that the employee was commuting to his “work,” and therefore he was not acting within the scope of his employment. However, the Court of Appeal found a material, triable issue: the location of the “workplace.” If the yard was the employee’s “workplace,” then he apparently was on an ordinary commute and he was not acting within the scope of his employment. In this lawsuit, defendant inferred from the undisputed facts that its yard was the employee’s “workplace,” even though it paid its employee only from the time he arrived at the jobsite. But if the employee’s jobsite was his “workplace,” as plaintiff inferred, then the employee was arguably on a business errand to the yard for the employer’s benefit, and that business errand would have started when the employee left his home. The Court could not state as a matter of law that the employee was not on a business errand while commuting from his home to the employer’s yard. Thus, it reversed the trial court’s granting of defendant’s summary judgment motion. View "Sumrall v. Modern Alloys, Inc." on Justia Law

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After Thomas, a member of the Board of Directors of Applied Medical Corporation, was removed from the Board in January 2012, Applied exercised its right to repurchase shares of its stock issued to Thomas as part of stock incentive plans. Thomas objected to the repurchase price, and in August 2012 Applied filed suit. In June, 2015, the trial court granted summary judgment against Applied. The court of appeal affirmed as to Applied’s fraud-based claims, but reversed as to Applied’s claims based on breach of contract and conversion. A conversion claim may be based on either ownership or the right to possession at the time of conversion. Applied’s fraud claims were barred by the applicable statute of limitations; the court rejected Applied’s argument that those claims, first alleged in 2014, were timely under either the discovery rule or the relation back doctrine. View "Applied Medical Corp. v. Thomas" on Justia Law

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In 2007 a fire spread from defendant Lambirth Trucking Company’s storage site to plaintiff Vincent Scholes’ property. Scholes’ sued alleging negligent trespass, intentional trespass, and strict liability against Lambirth. Lambirth demurred to the third amended complaint, arguing it was barred by the statute of limitations and failed to state a viable claim for intentional trespass or strict liability. The trial court sustained the demurrer without leave to amend. Proceeding in pro per, Scholes appealed, arguing the trial court erred in finding his claims barred by the statute of limitations and by failing to grant Scholes leave to amend. Finding no reversible error, the Court of Appeal affirmed the judgment. View "Scholes v. Lambirth Trucking Co." on Justia Law