Articles Posted in Contracts

by
Beginning in December 2006, plaintiffs made several loans to defendant Lee, who is You’s father. Lee defaulted. In July 2013, a judgment was entered against Lee for $1,143,576. No part of the debt has been paid. In October 2016, plaintiffs filed a complaint against Lee and You, seeking to set aside allegedly fraudulent conveyances and an accounting, claiming that in 2013, Lee paid $104,850 to Northeastern University for You’s tuition and other expenses, knowing that he had incurred, or would incur, debts beyond his ability to pay, intending to “hinder, delay, or defraud” his creditors, including plaintiffs. You contended Lee’s transfers were not fraudulent because they did not lack consideration and that You was not a beneficiary of the transfer, having received only the intangible benefits of an education. The court of appeal affirmed the dismissal of the complaint. Noting that there is no authority on whether creditors may attack college tuition payments as fraudulent transfers under the Uniform Voidable Transactions Act (Civ. Code 3439) the court reasoned that a parent can reasonably assume that paying for a child to obtain a degree will enhance the child's financial well-being which will, in turn, confer an economic benefit on the parent. View "Lo v. Lee" on Justia Law

Posted in: Contracts, Family Law

by
Smythe, a driver for both Uber and Lyft, claimed that Uber directed its drivers and others to use fake Lyft accounts to request rides, sending Lyft drivers on “wild goose chases.” He asserted claims for unfair business practices and intentional interference with prospective economic damage on behalf of a putative class of Lyft drivers. Uber moved to compel arbitration. Smythe signed agreements containing an arbitration provision that “applies to any dispute arising out of or related to this Agreement or termination of the Agreement … without limitation, to disputes arising out of or related to this Agreement and disputes arising out of or related to your relationship with the Company …. to disputes regarding any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement, termination, harassment and claims arising under [several specific laws] and all other similar ... claims. This Agreement is intended to require arbitration of every claim or dispute that lawfully can be arbitrated.” The agreement's delegation clause states that the disputes subject to arbitration include "disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity .... All such matters shall be decided by an arbitrator and not by a court.” The court of appeal affirmed that Smythe’s allegations were beyond the scope of the arbitration agreement and that the delegation provision was unenforceable in this context. View "Smythe v. Uber Technologies, Inc." on Justia Law

by
Buyer contracted in 2004 to purchase Sellers’ Francisco gas station, to build a condominium project. Buyer had to obtain the necessary “Entitlements” for development. It took eight years to secure the conditional use permit. Sellers alleged the deal had expired. In 2014, Buyer sued, asserting breach of contract (specific performance) and quantum meruit to recover costs for work performed at Sellers’ Mountain View gas station. On the breach of contract claim, the court found the jury deadlocked and declared a mistrial. At Buyer’s request, the court decided that claim and found Buyer failed to perform his contractual obligations and was not entitled to specific performance. On the quantum meruit claim, the jury awarded Buyer $156,000 as the reasonable cost of work at Seller’s Mountain View property. The court vacated that verdict because Buyer had not produced a certificate of licensure to show compliance with Business and Professions Code 7031. The court of appeal affirmed in part. Buyer’s election to have the court decide his specific performance claim waived any claims of error he had and there was substantial evidence that Buyer failed to perform by not timely paying the purchase price after securing the Entitlements; he was properly denied specific performance. The court reversed on the quantum meruit claim. Public policy is not served by vacating the verdict awarded Buyer, an undisputed California-licensed contractor, for work he performed. View "Tierney v. Javaid" on Justia Law

by
The Court of Appeal affirmed the trial court's judgment in favor of a good faith purchaser at a lien sale that had acquired the contents of a storage unit free and clear of plaintiff's claim that the sale violated the California Self-Service Storage Facility Act. The court held that the conversion action was barred by the good faith purchaser provisions of Bus. & Prof. Code section 21711. The court also held that the action was barred by the doctrine of judicial estoppel which precluded a party from relying upon a theory in a legal proceeding inconsistent with one previously asserted. In the first suit against the storage facility owner, plaintiff claimed the owner did not abide by the requirements of the Act. In this case, plaintiff claimed that the Act did not apply and that defendant was liable for conversion regardless of whether he was a good faith purchaser. View "Nist v. Hall" on Justia Law

by
CBL Data Recovery Technologies, Inc. (CBL) appealed an order denying its motion to set aside a default judgment entered in favor of Airs Aromatics, LLC (Airs). Airs sued CBL for breach of contract in 2011. The operative complaint alleged that Airs "suffered damages in an amount to be proven at trial, but estimated to exceed $25,000.00." The prayer likewise requested "damages in an amount to be proven." There was no other allegation in the complaint as to the amount of damages sought. CBL filed an answer and engaged in discovery. The parties participated in a settlement conference in which Airs demanded $5 million to settle all claims. In August 2012, the parties stipulated to withdraw CBL's answer and allow Airs to obtain a default. A month later, Airs filed a Request for Court Judgment seeking over $3 million in damages. It also filed a document entitled, "Evidence of Damages" supporting the requested amount. The court held a default prove-up hearing and, in November 2012, entered default judgment against CBL in the amount of $3,016,802.90. Years passed. CBL filed a motion in April 2017 to set aside the default judgment. Citing Code of Civil Procedure sections 580(a) and 585(c), CBL argued the court could not enter a judgment awarding damages greater than that specifically demanded in the complaint. It argued the default judgment was void and requested that it be vacated pursuant to section 473(d). Airs opposed the motion, arguing the default judgment was merely voidable, not void. In addition, Airs argued the court could exercise discretion to deny CBL's motion on equitable grounds. The court held a hearing and denied CBL's motion, finding CBL had adequate notice of the damages sought by Airs. CBL argued to the Court of Appeal the default judgment was void. The Court of Appeal agreed, concluding the default judgment had to be vacated. View "Airs Aromatics v. CBL Data Recovery Technologies" on Justia Law

by
Government Code 1090, which prohibits conflicts of interest in the making of public contracts, applies to independent contractors. The Court of Appeal reversed the trial court's judgment for an LLC in an action alleging that the district breached a contract with the LLC. The district cross-complained to recover money paid under the alleged void contracts. The jury awarded millions in damages to the LLC. The court held that the trial court misinterpreted section 1090 when it instructed the jury that the LLC's contracts did not violate section 1090 on the theory that the statute did not apply to independent contractors, and erred in not instructing on the competitive bidding statutes. View "Strategic Concepts, LLC v. Beverly Hills Unified School District" on Justia Law

by
In 2005, plaintiffs Randy and Linda Tindell bought a single family manufactured home from defendant Linda Murphy for $320,000. Defendant Christine Bradley provided the appraisal. In 2009 the Tindells were unable to refinance the mortgage because it was a manufactured home, not a modular home. The Tindells filed an amended complaint alleging Murphy and Bradley failed to disclose defects in the property and acted in concert with others in order to conceal these defects and profit from the sale of the property. The trial court sustained Murphy’s demurrer without leave to amend. Subsequently, the court granted Bradley’s motion for summary judgment. The Tindells appealed, challenging the court’s sustaining of Murphy’s demurrer and the granting of Bradley’s summary judgment. After review, the Court of Appeal found no reversible error in those judgments, and affirmed the trial court. View "Tindell v. Murphy" on Justia Law

by
Nielsen Contracting, Inc. and T&M Framing, Inc. (collectively Nielsen) sued several entities (defendants) alleging these entities fraudulently provided workers' compensation policies to Nielsen that were illegal and contained unconscionable terms. Defendants moved to compel arbitration and stay the litigation under an arbitration provision in one defendant's contract, titled Reinsurance Participation Agreement (RPA). Nielsen opposed the motion, asserting the arbitration provision and the provision's delegation clause were unlawful and void. After briefing and a hearing, the trial court agreed and denied defendants' motion. Defendants appealed, arguing: (1) the arbitrator, and not the court, should decide the validity of the RPA's arbitration agreement under the agreement's delegation clause; and (2) if the court properly determined it was the appropriate entity to decide the validity of the delegation and arbitration provisions, the court erred in concluding these provisions are not enforceable. The Court of Appeal rejected these contentions and affirmed. View "Nielsen Contracting, Inc. v. Applied Underwriters, Inc." on Justia Law

by
Plaintiff Rae Weiler sought a declaration that defendants Marcus & Millichap Real Estate Investment Services, Inc., et al., had to either: (1) pay plaintiff’s share of the costs in the previously ordered arbitration; or (2) waive their contractual right to arbitrate the underlying claims and allow them to be tried in the superior court. Plaintiff and her husband allegedly lost more than $2 million at the hands of defendants. She sued for breach of fiduciary duty, negligence and elder abuse claims. After being ordered to arbitration and pursuing her claims in that forum for years, plaintiff asserted she could no longer afford to arbitrate. According to plaintiff, if she had to remain in arbitration and pay half of the arbitration costs (upwards of $100,000) she would be unable to pursue her claims at all. Plaintiff initially sought relief from the arbitrators (pursuant to Roldan v. Callahan & Blaine 219 Cal.App.4th 87 (2013)); they ruled it was outside their jurisdiction, and directed her to the superior court. So, plaintiff filed this declaratory relief action in the superior court, again seeking relief under Roldan. The Court of Appeal concluded, based primarily on Roldan, plaintiff may be entitled to the relief she seeks. However, the superior court granted summary judgment to defendants on the grounds the arbitration provisions were valid and enforceable, and that plaintiff’s claimed inability to pay the anticipated arbitration costs was irrelevant. This, the Court found, was error: “Though the law has great respect for the enforcement of valid arbitration provisions, in some situations those interests must cede to an even greater, unwavering interest on which our country was founded - justice for all.” Consistent with Roldan, and federal and California arbitration statutes, a party’s fundamental right to a forum she or he can afford may outweigh another party’s contractual right to arbitrate. In this case, the Court found triable issues of material fact regarding plaintiff’s present ability to pay her agreed share of the anticipated costs to complete the arbitration. The trial court therefore erred in granting defendants’ motion for summary judgment. View "Weiler v. Marcus & Millichap Real Estate Investment Services" on Justia Law

by
The Court of Appeal reversed the trial court's grant of summary judgment in an action seeking to recover funds that plaintiff claimed had been taken by her then-investment advisor. Plaintiff alleged that the funds came from her investment account at her investment advisory firm which the advisor then used to repay a loan which an entity he controlled had obtained several years earlier from the Ryman-Carroll Foundation. The court held that plaintiff made a sufficient prima facie showing to support her claim for recovery. In this case, plaintiff has sufficiently placed material facts—the extent of Ryman's knowledge and of its good faith—in issue. Therefore, the matter required trial rather than summary disposition. View "Welborne v. Ryman-Carroll Foundation" on Justia Law

Posted in: Contracts