Justia California Court of Appeals Opinion Summaries

Plaintiffs sued Defendant for breach of contract in connection with their rental of Defendant’s home. Defendant failed to file an answer, and the trial court entered a default judgment for $59,191. The judgment included $1,000 in attorneys’ fees pursuant to a provision in the parties’ lease agreement authorizing attorneys’ fees to the prevailing party not to exceed $1,000. Defendant appealed, and the Second Appellate District affirmed. While the appeal was pending, the trial court granted in part Plaintiffs’ motion under Code of Civil Procedure section 685.080, subdivision (a), for an order allowing their costs of enforcing the judgment. The trial court awarded $27,721 in attorneys’ fees under section 685.040, which allows as an award of costs attorneys’ fees incurred in enforcing a judgment “if the underlying judgment includes an award of attorney’s fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.” Section 1033.5, subdivision (a)(10)(A), in turn, provides that attorneys’ fees may be awarded as costs where authorized by contract. In this appeal, Defendant contends the trial court erred in awarding over $1,000 in attorneys’ fees for enforcing the judgment because the lease authorized attorneys’ fees “not to exceed $1,000.”   The Second Appellate District affirmed. The court explained that once the judgment was entered, the terms of the lease, including the $1,000 limitation on fees, were merged into and extinguished by the judgment. Because the judgment included an award of attorneys’ fees authorized by contract, section 685.040 allowed an award of reasonable attorneys’ fees incurred in enforcing the judgment. View "Nash v. Aprea" on Justia Law

JRK Property Holdings, Inc. appealed from the order of dismissal entered after the trial court granted a motion for judgment on the pleadings filed by primary insurer Ironshore Specialty Insurance Company (Ironshore) and excess insurers RSUI Indemnity Company (RSUI), Evanston Insurance Company (Evanston), and others (collectively, Insurers). JRK sued Insurers for breach of contract and declaratory judgment after Insurers denied coverage for JRK’s lost business income that resulted from the  COVID-19 pandemic and associated government orders. The trial court entered an order of dismissal in favor of Insurers. JRK appealed.   The Second Appellate District reversed the trial court’s order of dismissal except as to RSUI and Evanston. The court remanded for the trial court to vacate its order granting the motion for judgment on the pleadings and to enter a new order granting the motion without leave to amend as to RSUI and Evanston and denying the motion as to all other defendants. The court explained that under MacKinnon v. Truck Ins. Exchange (2003), the historical background of the pollution exclusion shows its inclusion in insurance policies was intended to address only traditional sources of environmental pollution. The court rejected Insurers’ argument that inclusion of the term “virus” in the definition of a contaminant transforms an exclusion that applies to “pollution” into one that encompasses the spread of a virus due to the normal human activities of breathing and touching surfaces. The court further concluded that the RSUI pathogen exclusion applies because it bars coverage for “losses or damage” caused by the discharge or dispersal of “pathogenic” material. The Evanston pathogen exclusion specifically bars loss or damage caused by the spread of an organic pathogen, defined to include a virus. View "JRK Property Holdings, Inc. v. Colony Ins. Co." on Justia Law

Fitness International, LLC was operating an indoor gym and fitness center when it entered into an amended lease with KB Salt Lake III, LLC, that required Fitness International to renovate the premises. However, the COVID-19 pandemic prompted government orders that closed indoor gyms but allowed commercial construction to continue. Fitness International nevertheless stopped construction at the Chatsworth site, remained in possession of the premises, and stopped paying rent. KB Salt Lake filed an unlawful detainer action, and the trial court granted KB Salt Lake’s motion for summary judgment. Fitness International appealed.   The Second Appellate District affirmed the trial court’s judgment. The court explained that Fitness International argued that the lease is a “monthly installment contract” and that each month it could not operate the premises as a fitness facility, frustrated the purpose of the contract. The court wrote that neither the pandemic nor the COVID-19 closure orders, however, prevented Fitness International from reopening the gym. Thus, even if California law recognized temporary frustration of purpose, and even if the lease was an “installment contract,” Fitness International still had to make rent payments under the lease. Moreover, the court explained that Fitness International argues the purpose of section 1511 “is to excuse performance under circumstances like these,” but Fitness International cites no authority describing the purpose of section 1511, nor does Fitness International explain how the trial court’s ruling was contrary to any such purpose. View "Fitness International v. KB Salt Lake III" on Justia Law

Endeavor Operating Company, LLC (Endeavor) is a “holding company” that owns “various subsidiaries in the entertainment, sports, and fashion business sectors.” Endeavor sued the insurers for (1) declaratory relief and (2) breach of contract related to COVID-19 closures. The insurers demurred to the complaint. The trial court issued a ruling (1) sustaining the demurrer without leave to amend and (2) denying Endeavor’s motion for a new trial. The court modified its initial ruling to find that the “actual” or “threatened presence” of COVID-19 or the SARS-CoV-2 virus “does not constitute a physical loss or damage required to trigger coverage for property insurance coverage” but reaffirmed its initial ruling that the contamination/pollution exclusion applied, which in the court’s view obviated its need to address the argument Endeavor raised for the first time in its new trial motion. Endeavor appealed.   The Second Appellate District affirmed. The court concluded that the insurance policy unambiguously requires “direct physical loss or damage to property” before Endeavor may recover under the business interruption clauses. The court held that Endeavor failed as a matter of law to plead “direct physical loss or damage to property.” The court explained that California courts are in accord that the phrase “direct physical loss or damage to property” means a “‘distinct, demonstrable, physical alteration’” of the insured property. This is the default definition to be applied where a policy does not provide a different definition of “direct physical loss or damage.” The policy here provides no different definition. View "Endeavor Operating Co., LLC v. HDI Global Ins. Co." on Justia Law

Plaintiff Davis Boat Manufacturing-Nordic, Inc. (Davis Boat), which prevailed in a breach-of-contract action against Defendant applied for an order to sell Defendant’s home. The Stanislaus County Superior Court denied the application on the basis of Code of Civil Procedure section 699.730, a recently added statute that prohibits the forced sale of a judgment debtor’s principal place of residence to satisfy a “consumer debt” except under certain circumstances.   The Fifth Appellate affirmed. The court rejected Davis Boat’s assertions on appeal and held that the definition of “consumer debt” in section 669.730 is not latently ambiguous, and that section 669.730 neither violates the contract nor the equal protection clauses of the federal and state Constitutions. The court explained that section 699.730, subdivision (a) defines “consumer debt” as “debt incurred by an individual primarily for personal, family, or household purposes.” Thus, a debt incurred for business or commercial reasons would not be a debt incurred for “personal, family, or household purposes.” The court wrote that notwithstanding the plain meaning of the statute, Davis Boat suggests “consumer debt” is latently ambiguous. The court reasoned that it does not believe that the purpose of Assembly Bill No. 2463 is frustrated simply because the language approved by the Legislature means debt incurred by an individual primarily for personal, family, or household purposes.” Moreover, the court wrote that it cannot deem a statutory exemption that allows financial institutions to force the sale of a judgment debtor’s principal place of residence to satisfy a high-priced debt “so devoid of even minimal rationality that it is unconstitutional as a matter of equal protection. View "Davis Boat Manufacturing-Nordic, Inc. v. Smith" on Justia Law

The insurer, in this case, had notice of the hospital’s lien for treatment provided to the patient and, pursuant to a settlement agreement with the patient, gave him a check for the lien amount made payable to both him and the hospital. The hospital, Long Beach Memorial Medical Center, claims this action did not comply with the Hospital Lien Act (HLA) and sued the insurer who wrote the check, Allstate Insurance Company, for violating the HLA. The trial court granted Allstate’s motion for summary judgment, ruling Allstate’s two-payee check, which was never cashed, satisfied its obligation under the HLA.   The Second Appellate District reversed. The court concluded that merely delivering to the patient (or, in this case, his attorney) a check for the lien amount, made payable to both the patient and the hospital, is not a payment in satisfaction of the hospital’s lien under the HLA. The court explained Allstate maintains that it made this payment to the Medical Center concurrent with payment to the patient and that, therefore, the Medical Center cannot establish Allstate made a settlement payment to the patient without paying the Medical Center the amount of its lien. The court explained that Allstate declined to specify which check made payable to the Medical Center as copayee—the February 2020 check or the March 2021 check— Allstate claims satisfied its payment obligation to the Medical Center. However, neither check was a payment to the Medical Center. Moreover, Allstate does not invoke the exception to the general rule here. View "Long Beach Memorial Medical Center v. Allstate Ins. Co." on Justia Law

Plaintiff sued defendants Jeff Jenkins, Jeff Jenkins Productions, LLC, and Bongo, LLC, for breach of contract and eight other causes of action. Plaintiff’s complaint alleged she conceived the idea for and worked to develop and coproduce a popular television program that came to be known as Bling Empire on Netflix. In the spring of 2018, Plaintiff presented the idea for the program to Defendant Jenkins during a series of discussions, and she gave Jenkins written development material concerning the program. Plaintiff alleged causes of action for breach of the implied covenant of good faith and fair dealing, intentional and negligent misrepresentation, fraudulent inducement, and other claims. Defendants responded with an anti-SLAPP motion.   The Second Appellate District affirmed the trial court’s order denying Defendants’ anti-SLAPP motion to strike Plaintiff’s complaint. The court concluded that adhering to the two-part test announced in FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7 Cal.5th 133 (FilmOn), that while the creation of a television show is an exercise of constitutionally protected expression, in this case, there is no “functional relationship” between the activity challenged in the complaint and the issue of public interest, as required by FilmOn.  Further, the court wrote that the conduct challenged, while it “implicates” a public issue, does not “contribute to public discussion of that issue” Consequently, Defendants’ activity excluding Plaintiff and failing to compensate her was not undertaken “in furtherance of free speech ‘in connection with’ an issue of public interest.” View "Li v. Jenkins" on Justia Law

Westlands Water District (Westlands) appeals from a judgment of dismissal entered in a validation action filed pursuant to, inter alia, Code of Civil Procedure section 860 et seq. The subject matter was an anticipated contract between Westlands and the United States concerning the ongoing delivery of federal reclamation project water and repayment of certain financial obligations. The superior court declined to grant relief and ultimately dismissed Westlands’ validation action for multiple reasons. Most pertinently, the draft was found to be materially deficient in its failure to specify Westlands’ financial obligations under the anticipated contract.   The Fifth Appellate District affirmed the judgment. The court explained that the “Repayment Obligation” cannot be determined without knowing the “Existing Capital Obligation” and/or the contents of exhibit D. The “Existing Capital Obligation” cannot be determined without knowing the contents of exhibit D. In the absence of exhibit D, both terms are useless for purposes of determining Westlands’ financial obligations, i.e., “the scope of the duty and the limits of performance.” Moreover, as Westlands admitted during the motion proceedings, exhibit D was not merely omitted from the draft attached to the complaint. Despite being expressly incorporated into the contract by reference, exhibit D did not exist when the complaint and the December 2019 motion were filed. Even when the motion was heard, there was only meager parol evidence of estimates ranging from $200 million to $362 million. Given the circumstances, the court agreed the contract presented for validation was missing an essential term and, therefore uncertain, i.e., not sufficiently definite to be binding and enforceable. View "Westlands Water Dist. v. All Persons Interested" on Justia Law

Plaintiff Phil Hagey appealed a judgment of dismissal entered following the sustaining of a demurrer to his second amended complaint without leave to amend. Plaintiff owned a home with a solar energy system (the system). At the time he purchased the home, the prior homeowner was party to a contract with a company, Kilowatt Systems, LLC (Kilowatt), which owned the system (the solar agreement). Among other terms, the solar agreement required the prior homeowner to purchase the energy produced by the system through monthly payments to Kilowatt. In the event of a sale of the house, the solar agreement afforded the prior homeowner three options. The prior homeowner and plaintiff agreed to an option which allowed prepayment of all remaining monthly payments and a transfer of all solar agreement rights and obligations to plaintiff, except for the monthly payment responsibility. In conjunction with the sale of the house, prepayment occurred and the parties entered into the requisite transfer agreement. At some later point in time, defendant Solar Service Experts, LLC began sending plaintiff monthly bills on Kilowatt’s behalf, demanding payments pursuant to the solar agreement. After receiving a bill, plaintiff spoke to a representative of defendant who told him he should not have received the bill and the issue would be resolved. Plaintiff received additional bills and at least one late payment notice which identified defendant as a debt collector. Plaintiff communicated with defendant’s representatives about the errors by phone and email, all to no avail. Plaintiff thereafter filed a class action lawsuit against defendant. The trial court concluded plaintiff did not, and could not, allege facts sufficient to constitute a consumer credit transaction, as statutorily defined. Plaintiff argued the court erroneously focused on the undisputed fact he did not owe the debt which defendant sought to collect and, in doing so, failed to recognize the Rosenthal Act applied to debt alleged to be due or owing by reason of a consumer credit transaction. To this the Court of Appeal agreed and reversed the judgment. View "Hagey v. Solar Service Experts" on Justia Law

Defendant owned real property located at 3546 Multiview Drive in Los Angeles, California (the property). That year, he executed two deeds of trust against the property. Defendant obtained a HELOC from National City Bank, memorialized in an Equity Reserve Agreement and secured by a deed of trust against the property (collectively, the HELOC agreement). Piedmont Capital, L.L.C. (Piedmont)—a debt buyer—purchased the HELOC debt. Piedmont sued Defendant. Following a demurrer to the original complaint sustained with leave to amend, Piedmont filed the operative first amended complaint for (1) breach of contract, (2) money lent, (3) money had and received, and (4) declaratory relief. Although Piedmont alleged that the full amount of the HELOC debt Defendant owed totaled $186,587.26, Piedmont conceded that it was “not seeking to collect on any [amounts] that were already barred by the applicable statute of limitations at the time [the] action was filed.”   The Second Appellate District reversed. At issue is whether the borrower’s duty to make a monthly payment under such a HELOC agreement indivisible from the borrower’s duty to pay the full amount such that the statute of limitations to recover the full amount begins to run upon the first missed monthly payment. The court held that the duties are divisible. The court explained that the HELOC agreement in this case—by setting a fixed maturity date for the full amount and leaving it to the discretion of the lender whether to accelerate that date—necessarily contemplates that a breach as to a monthly payment does not constitute a breach as to the full amount. View "Piedmont Capital Management, L.L.C. v. McElfish" on Justia Law