Articles Posted in Contracts

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Montecito neighbors had a dispute over an easement created by recording in 1994, which contained an unpaved road. The owner of the burdened property wanted the easement limited to historical use; a new owner of the other property wanted to use the road for construction traffic and asserted that he might pave the road. The trial court “interpreted” the easement, ruled that the easement was ambiguous, decided the case based upon extrinsic evidence of historic use, and added language limiting the easement. The court of appeal reversed and remanded with directions, noting that the use of the easement for construction traffic has become a moot issue. An ambiguity is not apparent from the “failure” to specify how frequently the road can be used or the type of vehicle allowed on the road, but ambiguity is not the test for admission of extrinsic evidence. A bona fide purchaser could reasonably rely on the language of the grant of the easement, which gave him “a use limited only by the requirement that it be reasonably necessary and consistent with the purpose[] for which the easement was granted,” i.e., “access, ingress, and egress to vehicles and pedestrians.” View "Zissler v. Saville" on Justia Law

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JRI contracted with the City of Los Angeles Department of Airports (LAWA), to provide LAWA specialized airport firefighting trucks. Each sued the other for breach of the contract. LAWA further alleged JRI violated the California False Claims Act (CFCA), Government Code section 12650, asserting that when JRI submitted it[s] invoices for progress payments and final payments, JRI knew that it was not in compliance with the contract and sought to defraud the government entity LAWA into making payments and that JRI fraudulently induced LAWA to enter into the contract. LAWA was awarded $1 in contract damages. LAWA’s CFCA claim was rejected by the jury, as were JRI’s claims against LAWA. The court awarded LAWA costs as a prevailing party on the contract claims but awarded JRI attorney fees on the CFCA claim, finding the claim frivolous and harassing. The court of appeal affirmed JRI “prevail[ed] in the action” under the relevant CFCA fee provision (section 12652(g)(9)(B);) regardless of its failure to prevail in the action as a whole. View "John Russo Industrial Sheetmetal, Inc. v. City of Los Angeles Department of Airports" on Justia Law

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SI 59 appealed from a judgment of dismissal following a demurrer to its second amended complaint against defendants, as well as the post judgment award of attorney fees. The Court of Appeal affirmed, holding that Civil Code section 1668 negates a contractual clause exempting a party from responsibility for fraud or a statutory violation only when all or some of the elements of the tort are concurrent or future events at the time the contract is signed. The court also held that section 1668 does not negate such a clause when all the elements are past events. The court explained that, regarding the element of damages, which is necessary for tort liability, this means that at least some form of economic or physical damage has occurred. In this case, the negligence claim was barred by the general release and the negligent misrepresentation claim was not pleaded with the requisite specificity. The court rejected the remaining arguments and held that the issue of attorney fees was moot. View "SI 59 LLC v. Variel Warner Ventures, LLC" on Justia Law

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Lloyd Copenbarger, as Trustee of the Hazel I. Maag Trust (the Maag Trust), sued Morris Cerullo World Evangelism, Inc. (MCWE) for declaratory relief and breach of a settlement agreement made to resolve various disputes, including an unlawful detainer action. MCWE was the lessee of a 50-year ground lease (the Ground Lease) of real property (the Property) in Newport Beach. The Property was improved with an office building and marina (the Improvements). The Ground Lease was set to terminate on December 1, 2018. In 2004, MCWE subleased the Property and sold all of the Improvements to NHOM (the Sublease). Starting in 2009, NHOM experienced cash flow problems due to “a shortage of rents.” In June 2011, MCWE commenced an unlawful detainer action against NHOM based on allegations NHOM failed to maintain and undertake required repairs to the Improvements. Six months later, the Maag Trust intervened in the UD Action as a party defendant under the theory that if NHOM were evicted and the Sublease terminated, then the Maag Trust’s security interest created by the Maag Deed of Trust would be destroyed. In August 2012, MCWE, Plaza del Sol, and the Maag Trust entered into a settlement agreement (the Settlement Agreement). The Maag Trust alleged MCWE breached the settlement agreement by failing to dismiss with prejudice the unlawful detainer action and sought, as damages, attorney fees incurred in that action from the date of the settlement agreement to the date on which MCWE did dismiss the action. Following a bench trial, the trial court found MCWE had breached the settlement agreement by not timely dismissing with prejudice the unlawful detainer action. As damages, the court awarded the Maag Trust attorney fees it claimed to have incurred during the relevant time period. On appeal, MCWE did not challenge the finding that its failure to dismiss the unlawful detainer action constituted a breach of the settlement agreement. Instead, MCWE made a number of arguments challenging the damages awarded. After review, the Court of Appeal reversed the judgment against MCWE because there was a wholesale failure of proof of the amount of damages on the part of the Maag Trust. Therefore, the Court reversed with directions to enter judgment in favor of MCWE on the Maag Trust’s complaint. View "Copenbarger v. Morris Cerullo World Evangelism, Inc." on Justia Law

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Plaintiff AMN Healthcare, Inc. (AMN) appealed a judgment in favor of defendants Kylie Stein, Robin Wallace, Katherine Hernandez, Alexis Ogilvie and Aya Healthcare, Inc. (Aya) and an injunction preventing AMN from enforcing its nonsolicitation of employee provision against individual defendants and its other former employees. AMN and Aya are competitors in the business of providing on a temporary basis healthcare professionals, in particular "travel nurses," to medical care facilities throughout the country. Individual defendants were former "travel nurse recruiters" of AMN who, for different reasons and at different times, left AMN and joined Aya, where they also worked as travel nurse recruiters. AMN sued defendants, asserting various causes of action including breach of contract and misappropriation of confidential information, including trade secrets as set forth in the Uniform Trade Secrets Act, Civil Code sections 3426 et seq. (UTSA). Defendants filed a cross-complaint for declaratory relief and unfair business competition. The trial court agreed with defendants, granted summary judgment against AMN, and granted summary adjudication of defendants' declaratory relief cause of action in their cross-complaint. After granting such relief, the court subsequently enjoined AMN from enforcing the nonsolicitation of employee provision in their Confidentiality and Non-Disclosure Agreement (CNDA) as to any former (California) AMN employee and awarded defendants attorney fees. Finding no reversible error in the trial court's judgment, the Court of Appeal affirmed. View "AMN Healthcare, Inc. v. Aya Healthcare Services, Inc." on Justia Law

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In August 2013, the trial court entered a judgment against respondents Janet and Richard Buhler following a traffic accident in which appellant Mark Jones was seriously injured. By stipulation, the judgment awarded Mark $1,350,000 and his wife Melanie Jones $150,000 for loss of consortium. The Buhlers had an automobile insurance policy with IDS that provided coverage of $250,000 for bodily injury for each person and $500,000 for each occurrence. The issue this case presented for the Court of Appeal's consideration implicated the consortium claim: when a wife sues for loss of consortium after her husband is seriously injured in an automobile accident that is the defendant’s fault, was her claim subject to the same per person limit of the defendant’s insurance policy as her husband’s claim for bodily injury? The Court determined the language of the policy at issue here made clear that the damages for bodily injury include loss of consortium. Further, the policy language provided that so long as only one person suffered bodily injury, the per person limit applied. Although the plaintiffs here argued the language “to one person” modified “the maximum we will pay” rather than “bodily injury,” the Court disagreed. The Court affirmed the judgment in favor of defendant IDS Property Casualty Insurance Company (IDS). View "Jones v. IDS Property Casualty Ins. Co." on Justia Law

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Plaintiff Alfredo Fuentes entered into a written agreement with defendant TMCSF, Inc., doing business as Riverside Harley-Davidson (Riverside), to buy a motorcycle. At the same time, he entered into a written agreement with Eaglemark Savings Bank (Eaglemark) to finance the purchase. The loan agreement included an arbitration clause; the purchase agreement did not. Fuentes then filed suit against Riverside, alleging that Riverside made various misrepresentations and violated various statutes in connection with the sale of the motorcycle. Riverside petitioned to compel arbitration. The trial court denied the petition. The Court of Appeal held Riverside was not entitled to compel arbitration because it was not a party to the arbitration clause, it was not acting in the capacity of an agent of a party to the arbitration clause, and it was not a third party beneficiary of the arbitration clause. Moreover, Fuentes was not equitably estopped to deny Riverside’s claimed right to compel arbitration. View "Fuentes v. TMCSF, Inc." on Justia Law

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Richard Fournier and Wendy Crossland (collectively, the Fourniers) filed an action (the Fournier case) against Monster Energy Company (Monster) and a related defendant. The Fourniers were represented by the R. Rex Parris Law Firm (Parris) and Bruce Schechter (collectively the Attorneys). In 2015, the Fourniers and Monster entered into an agreement to settle the Fournier case. The parties agreed to keep the terms of the settlement confidential. Brenda Craig was a reporter for Lawyersandsettlements.com. Lawyersandsettlements.com “provide[s] a source of information about [readers’] legal rights” and also “help[s] lawyers reach out to the clients they seek.” Shortly after the Fournier case settled, Craig interviewed Schechter about cases his office was handling that involved energy drinks. In general, Schechter discussed other cases against Monster, as well as what he viewed as the negative health effects of Monster’s products. Lawyersandsettlements.com published an online article that included statements Schechter told Craig. Lawyersandsettlements.com sent the leads that it generated to attorneys who had signed up to be “advertisers.” It had “forwarded hundreds of thousands of requests for legal representation directly to lawyers.” One employee of Lawyersandsettlements.com was also a non-lawyer employee of Parris. Monster filed this action against the Attorneys, asserting causes of action for: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) promissory estoppel. The Attorneys filed a special motion to strike under Code of Civil Procedure section 425.16 (SLAPP motion), arguing, among other things, that Monster could not show a probability of prevailing on its breach of contract claim because they were not parties to the settlement agreement. In opposition, Monster argued, among other things: (1) Schechter’s statements were commercial speech and therefore unprotected, and (2) the Attorneys were “[c]learly” bound by the settlement agreement. The trial court denied the motion with respect to the breach of contact cause of action but granted it with respect to the other causes of action. When a settlement agreement provides that plaintiffs and their counsel agree to keep the terms of the agreement confidential, and plaintiffs' counsel signs the agreement under the words "approved as to form and content," the Court of Appeal held plaintiffs' counsel could not be liable to defendant for breach of the confidentiality provision. View "Monster Energy Co. v. Schechter" on Justia Law

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Appellants Inet Airport Systems, Inc., Inet Airport Systems, LLC, Michael Colaco, and April Barry appealed a judgment entered against them in this action arising from Inet’s sale of its assets to respondents Cavotec SA and Cavotec Inet US, Inc. (collectively Cavotec). Colaco was Inet’s sole shareholder and its chief executive officer and Barry was Inet’s director of administration. After the transaction, Colaco became Cavotec Inet US, Inc.’s president and a member of its board of directors, and Barry became the company’s chief financial officer. Following a lengthy trial, the jury awarded Cavotec $1.313 million against Inet, Colaco, and Barry, jointly and severally, based on the jury’s findings that: (1) Inet breached its asset purchase agreement with Cavotec by failing to forward all postclosing customer payments Inet received on Cavotec’s behalf; (2) Colaco and Barry breached the fiduciary duties they owed as Cavotec officers by causing Inet to withhold customer payments and creating false and backdated invoices to conceal Inet’s failure to pay; (3) Colaco’s conduct breached the employment contract he entered into as Cavotec Inet US Inc.’s president; and (4) Colaco and Barry converted Cavotec’s funds for their personal use. The jury also awarded Cavotec punitive damages against Colaco only. The Court of Appeal agreed the trial court erred in denying Inet’s motion: the jury’s verdict excused Cavotec from its obligation based on Inet’s breach and awarded Cavotec damages for the same breach, which was an impermissible windfall that allowed Cavotec to retain the assets it purchased from Inet without paying the full purchase price. The Court found Colaco and Cavotec Inet US, Inc. agreed California law would govern all their rights and liabilities; Colaco failed to explain how Delaware had a materially greater interest in applying its law on the fiduciary duty claims raised in this case. The Court also rejected Colaco’s contention the asset purchase agreement barred Cavotec’s claims for breach of his employment contract and punitive damages. The Court concluded Cavotec’s $1.313 award against Inet had to be offset against its failure to make a second $2 million payment owed under the APA. The Court did not disturb Cavotec’s $2 million punitive damage award against Colaco. The Court concluded Barry could not establish any error was prejudicial to her. View "Colaco v. Cavotec SA" on Justia Law

Posted in: Business Law, Contracts

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Defendants contracted to purchase a Lafayette home, waived contingencies, discovered undisclosed matters, terminated the contract, and sought to recover their $116,220 deposit, hiring the MMB law firm. Their claims went to arbitration. MMB informed defendants that they owed $431,141.92 in legal fees, providing a draft settlement agreement for a discounted payment of $331,000 with an affirmative representation that the parties each had received independent counsel. Defendant sent MMB revisions, stating that “Clients further contend that Law Firm failed to adhere to the Clients’ direction on one or more occasions and further question the Law Firm’s handling, strategy and representation.” The arbitrator awarded the seller $116,250 on his breach of contract claim, and $75,000 in attorney fees and costs. Defendants executed the Agreement. agreeing to pay MMB $150,000. The Agreement contains mutual general releases. waiving all claims “whether now known or unknown.” MMB’s assignee, SCJLW, sued. Defendants asserted the agreement was unenforceable for lack of consideration because MMB committed legal malpractice; that their signatures were fraudulently induced; and that MMB failed to disclose its malpractice exposure in violation of their ethical duties. They admitted not making payments under the Agreement. The trial court entered judgment for $150,000, plus $81,460.20 in interest. The court of appeal affirmed. Plaintiff set forth a prima facie case for breach of contract; defendants failed to make even a prima facie case for lack of consideration. View "Property Cal. SCJLW One Corp. v. Leamy" on Justia Law

Posted in: Contracts, Legal Ethics