Justia California Court of Appeals Opinion Summaries

The Court of Appeal affirmed the unanimous jury's finding in favor of Underwood Ranches in an action for breach of contract and fraud, as well as the award of $13.3 million in compensatory damages and $10 million in punitive damages. Huy Fong, a business that produces Sriracha hot sauce, contracted with Underwood Ranches, a pepper farmer, to purchase peppers, which resulted in a 28 year relationship for the parties. For the first 10 years, the parties executed written agreements specifying the price per pound and volume to be supplied. Thereafter, the parties dealt with each other informally with oral agreements.The court concluded that there is more than ample evidence to support a finding of fraud based on fraudulent concealment and affirmative misrepresentation; the jury's findings are consistent and easily reconciled where, read together, the jury found that the parties had an ongoing contractual relationship that included the 2017 jalapeño growing season; the court rejected Huy Fong's contention that the trial court abdicated its responsibility to sit as a 13th juror in ruling on its motion for a new trial; the court upheld the $10 million punitive damage award; and, because the court affirmed the judgment against Huy Fong, it is unnecessary for it to consider Underwood Ranch's appeal. View "Huy Fong Foods, Inc. v. Underwood Ranches, LP" on Justia Law

The Sellers bought an Oakland property to “flip.” After Vega renovated the property, they sold it to Vera, providing required disclosures, stating they were not aware of any water intrusion, leaks from the sewer system or any pipes, work, or repairs that had been done without permits or not in compliance with building codes, or any material facts or defects that had not otherwise been disclosed. Vera’s own inspectors revealed several problems. The Sellers agreed to several repairs Escrow closed in December 2011, but the sewer line had not been corrected. In January 2012, water flooded the basement. The Sellers admitted that earlier sewer work had been completed without a permit and that Vega was unlicensed. In 2014, the exterior stairs began collapsing. Three years and three days after the close of escrow, Vera filed suit, alleging negligence, breach of warranty, breach of contract, fraud, and negligent misrepresentation. Based on the three-year limitations period for actions based on fraud or mistake, the court dismissed and, based on a clause in the purchase contract, granted SNL attorney’s fees, including fees related to a cross-complaint against Vera’s broker and real estate agent.The court of appeal affirmed. Vera’s breach of contract claim was based on fraud and the undisputed facts demonstrated Vera’s claims based on fraud accrued more than three years before she filed suit. Vera has not shown the court abused its discretion in awarding fees related to the cross-complaint. View "Vera v. REL-BC, LLC" on Justia Law

JP-Richardson, LLC (JP) appealed a court a judgment confirming an arbitration award in favor of Pacific Oak SOR Richardson Portfolio JV, LLC F/K/A KBS SOR Richardson Portfolio JV, LLC (Pacific Oak) in a business dispute. Pacific Oak removed JP as the managing member of a joint venture real estate company. JP initiated arbitration, seeking to be reinstated as the managing member. The arbitrator determined Pacific Oak’s decision to remove JP was justified, and JP owed over $1 million (the cost of arbitration). On appeal, JP argued the trial court erred by denying its petition to vacate the award and by granting Pacific Oak’s motion to confirm the award. Concluding JP’s contentions lacked merit, the Court of Appeal affirmed the judgment. View "JP-Richardson v. Pacific Oaks etc." on Justia Law

The recipients received unsolicited emails that advertised products sold by DMS. The emails were not sent by DMS itself, but by third-party “marketing partners” of DMS. The recipients sued DMS under Business and Professions Code section 17529.5, which makes it unlawful to advertise in commercial emails under specified circumstances. The subject line of the emails typically states: Username “please confirm your extended warranty plan” and allegedly falsely referenced a preexisting business relationship for the purpose of inducing the recipient to open the spam. The trial court dismissed the suit.The court of appeal affirmed in part. The court correctly dismissed the challenge to the emails’ subject lines, which are not covered by cited sections of the Act. The court erred by dismissing the challenge to the emails’ domain names. A recipient of a commercial email advertisement sent by a third party is not precluded as a matter of law from stating a cause of action under section 17529.5 against the advertiser for the third party’s failure to provide sufficient information disclosing or making traceable the third party’s own identity. Such a cause is not precluded simply because such an email sufficiently identifies the advertiser. View "Greenberg v. Digital Media Solutions, LLC" on Justia Law

The Court of Appeal affirmed the trial court's grant of plaintiff's motion to further amend the judgment entered against Raleigh Souther and Get Flipped, Inc. by adding defendant as a judgment debtor.The court concluded that adding defendant as a judgment debtor is neither unnecessary nor unfair; the order was not barred by claim or issue preclusion; and the record adequately supports the trial court's order. In this case, the Estate presented evidence that Moofly Productions was inadequately capitalized since all of its assets were being controlled by defendant and, as a corollary, that the entity and defendant had commingled funds. Furthermore, other facts considered in alter ego cases, an arguable lack of adherence to corporate formalities and business registration laws, also supported the trial court's determination. Most importantly, as established by the fraudulent conveyance judgment when considered together with the additional information concerning defendant's control of the Moofly Productions' bank accounts, failing to formally recognize defendant as a judgment debtor would produce an inequitable result, effectively preventing the Estate from enforcing the judgment it had obtained against Get Flipped, precisely the corrupt goal defendant sought to achieve. The court noted that the issue of control is not significant under the circumstances here. In any event, a judgment debtor may be added if the equities overwhelmingly favor the amendment and it is necessary to prevent an injustice, even if all the formal elements generally necessary to establish alter ego liability are not present. Finally, the court concluded that the amendment is not barred by laches. View "Corrales Favila v. Pasquarella" on Justia Law

In an appeal related to a California insurance insolvency proceeding, the New York Plaintiffs requested clarification from the San Francisco Superior Court as to whether its orders "prohibit or stay" their New York claims. In the insolvency case, the trial court appointed the California Insurance Commissioner (Commissioner) as conservator, and later as liquidator, of CastlePoint. The trial court, as part of the process, issued injunctions and approved releases pertaining to claims filed against or on behalf of CastlePoint or its assets.The Court of Appeal concluded that some of the causes of action in the New York lawsuit are not barred. These causes of action relate to: (i) the alleged breach of so-called "successor obligor provisions"; and (ii) an alleged $143 million payment from ACP to shareholders of TGIL. The court explained that these causes of action are not asserted against CastlePoint or the insurance companies that were merged into it, and there is no indication the Commissioner could have asserted these causes of action on behalf of the insolvent insurance companies. Therefore, the court reasoned that permitting them to proceed in New York will not interfere in any meaningful way with the plan for CastlePoint's liquidation, especially given the New York Plaintiffs' agreement not to assert any judgment against the insolvent insurance companies' estate or assets.However, prior to entering into releases, the Commissioner could have asserted fraudulent conveyance causes of action and a cause of action for unjust enrichment because they are based on alleged improper transfers of assets of the insolvent insurance companies. Accordingly, the court concluded that these causes of action are barred by the injunctions and releases in the liquidation proceeding. The court affirmed in part and reversed in part. View "Lara v. Castlepoint National Insurance Co." on Justia Law

In 2010, after decades of cooperation in selling their hardware and software, HP and Oracle had a disagreement over Oracle’s decision to hire HP’s former CEO. The companies negotiated a confidential settlement agreement, including a “reaffirmation clause,” stating each company’s commitment to their strategic relationship and support of their shared customer base. Six months later, Oracle announced it would discontinue software development on one of HP’s server platforms.The trial judge held that the reaffirmation clause requires Oracle to continue to offer its product suite on certain HP server platforms until HP discontinues their sale. A jury subsequently found that Oracle had breached both the express terms of the settlement agreement and the implied covenant of good faith and fair dealing; it awarded HP $3.014 billion in damages. The court denied HP’s request for prejudgment interest. The court of appeal affirmed. The reaffirmation clause requires Oracle to continue to offer its product suite on certain HP server platforms. The trial court did not err in submitting to the jury the breach of contract and implied covenant claims. The court rejected Oracle’s argument that the judgment must be reversed based on violations of its constitutional right to petition and because HP’s expert’s testimony on damages was impermissibly speculative under California law and should have been excluded. View "Hewlett-Packard Co. v. Oracle Corp." on Justia Law

Over the course of a few years, an employee of Severin Mobile Towing Inc. (Severin) took about $157,000 in checks made payable to Severin’s d/b/a, endorsed them with what appears to be his own name or initials, and deposited them into his personal account at JPMorgan Chase Bank N.A. (Chase). Because the employee deposited all the checks at automated teller machines (ATM’s), and because each check was under $1,500, Chase accepted each check without “human review.” When Severin eventually discovered the embezzlement, it sued Chase for negligence and conversion under California’s version of the Uniform Commercial Code (UCC), and for violating the unfair competition law. Severin moved for summary judgment on its conversion cause of action, and Chase moved for summary judgment of all of Severin’s claims, asserting affirmative defenses under the UCC, and that claims as to 34 of the 211 stolen checks were time- barred. The trial court granted Chase’s motion on statute of limitations and California Uniform Commercial Law section 3405 grounds; the court did not reach UCL section 3406. The court denied Severin’s motion as moot, and entered judgment for Chase. On appeal, Severin argued only that the court erred in granting summary judgment to Chase on Severin’s conversion cause of action (and, by extension, the derivative UCL cause of action). Specifically, Severin argued the court erroneously granted summary judgment under section 3405 because Chase failed to meet its burden of establishing that Severin’s employee fraudulently indorsed the stolen checks in a manner “purporting to be that of [his] employer.” Severin further argued factual disputes about its reasonableness in supervising its employee precluded summary judgment under section 3406. The Court of Appeal agreed with Severin in both respects, and therefore did not reach the merits of Chase’s claim that its automated deposit procedures satisfied the applicable ordinary care standard. Accordingly, judgment was reversed and the matter remanded for further proceedings. View "Severin Mobile Towing, Inc. v. JPMorgan Chase etc." on Justia Law

D.C. was employed by Applied, 1996-2008, and claimed three industrial injuries: a specific injury to her neck and right upper extremity in 2001, a specific injury to her neck and both upper extremities in 2005, and a cumulative trauma injury to her neck, both upper extremities, and psyche ending on her last day working. D.C. claimed her injuries were due to the constant use of a computer keyboard. In 2006, she developed a pain disorder, anxiety, and depression, which she claimed were compensable consequences of her physical injuries. She later claimed that she was sexually exploited by Dr. Massey, the physician primarily responsible for the treatment of her industrial injuries. D.C. was diagnosed with PTSD. Applied's workers’ compensation carriers disputed liability for her psychiatric injuries.A workers’ compensation judge found that all of D.C.’s injury claims were industrial; awarded D.C. 100 percent permanent disability (PD) based on her PTSD alone; found no apportionment; and concluded that the insurers were jointly and severally liable for that award since Dr. Massey treated all three of her industrial injuries. The Workers’ Compensation Appeals Board generally affirmed.The court of appeal concluded there was substantial evidence of repeated exposure to injury-causing events and new injuries after 2005 that supported the finding of cumulative trauma ending in 2008. D.C. met her burden of proving that her PTSD was a compensable consequence injury that resulted from the treatment for her industrial injuries and that her employment was a contributing cause; as a matter of law, a patient cannot consent to sexual contact with her physician. The court rejected several challenges to the sufficiency of the evidence. The 100 percent PD award must be annulled as based on an incorrect legal theory, the alternative path theory. View "Applied Materials v. Workers' Compensation Appeals Board" on Justia Law

Pillar hired Epiphyte to convert its cryptocurrency into Euros. Epiphyte informed Pillar that it used Payward’s online exchange to convert its clients’ cryptocurrencies. Pillar transferred its cryptocurrency into Epiphyte’s account on Payward’s platform. After Epiphyte converted the currency but before the exchanged funds were transferred to Pillar’s bank account, four million Euros belonging to Pillar were stolen from Epiphyte’s account.Pillar sued Payward, alleging Payward knew or should have known that Epiphyte was using its Payward account on Pillar's behalf, failed to use standard security measures that would have prevented the theft, and falsely advertised that it provided the best security in the business. Payward moved to compel arbitration, claiming that Epiphyte agreed to Payward’s “Terms of Service” when it created an account, as required for all users, that those Terms included an arbitration agreement, and that Pillar was bound by that agreement.The court of appeal affirmed the denial of Payward’s motion. There is no evidence Epiphyte was acting as Pillar’s agent when it agreed to the Terms two years before Pillar hired it or that the agency relationship automatically bound the principal to the agent’s prior acts. There is no evidence Pillar knew the arbitration agreements existed or had a right to rescind them. No ratification occurred. There was no intent to benefit Pillar or similar parties. Pillar’s claims are not inextricably intertwined with the Terms. View "Pillar Project AG v. Payward Ventures, Inc." on Justia Law