Justia California Court of Appeals Opinion Summaries

Plaintiffs sued Nissan, alleging the transmission in a 2013 Nissan Sentra they purchased was defective, bringing statutory claims under the Song-Beverly Consumer Warranty Act (Civ. Code 1790) and a common law fraud claim alleging that Nissan, by fraudulently concealing the defects, induced them to purchase the car. The trial court dismissed the fraudulent inducement claim as barred by the “economic loss rule.” The court also struck the plaintiffs’ request for punitive damages.The court of appeal reversed. Under California law, the economic loss rule does not bar the fraudulent inducement claim. The fraudulent inducement exception to the economic loss rule applies; fraudulent inducement is a viable tort claim under California law. The plaintiffs adequately pleaded that the transmissions installed in numerous Nissan vehicles (including the one they purchased) were defective; Nissan knew of the defects and the hazards they posed; Nissan had exclusive knowledge of the defects but intentionally concealed and failed to disclose that information; Nissan intended to deceive plaintiffs by concealing known transmission problems; plaintiffs would not have purchased the car if they had known of the defects; and plaintiffs suffered damages in the form of money paid to purchase the car. View "Dhital v. Nissan North America, Inc." on Justia Law

Vought sued for the balance due on his contract for the renovation of Stock’s house, additional compensation under a disputed change order, and penalties for the violation of a prompt-payment statute, Civil Code section 8800. Stock did not dispute the unpaid amount Vought had earned for finished work, including approved change orders, but disputed the claim for additional compensation and sought liquidated damages for delay. The court held that Vought was entitled to the undisputed balance due plus approximately half the disputed amount of additional compensation; that Stock was entitled to approximately half the amount he claimed as liquidated damages; and that Stock had not violated section 8800 by withholding final payment. The court held that neither side was entitled to attorney fees under section 8800 or to costs under Code of Civil Procedure section 1032.The court of appeal affirmed in part. Stock was not prohibited from withholding the $79,000 otherwise due based on his good faith claim for liquidated damages. Vought was not relieved of the obligation to pay liquidated damages for the delay that it caused although it was not responsible for the entire delay. Neither party was the prevailing party under section 8800 but Vought was the prevailing party for purposes of recovering costs under section 1032; it secured a “net monetary recovery.” View "Vought Construction Inc. v. Stock" on Justia Law

The City of Los Angeles (City) entered into a contract with defendant and respondent PricewaterhouseCoopers, LLC (PWC) to modernize the billing system for the Los Angeles Department of Water and Power (LADWP). PWC filed a motion for sanctions under Code of Civil Procedure sections 2023.010 and 2023.030 of the Civil Discovery Act nine months after the case was dismissed with prejudice, seeking monetary sanctions for egregious misuse of the discovery process while the litigation was pending. The trial court awarded $2.5 million in sanctions. On appeal from the postjudgment order, in response to a letter from this court inviting additional briefing pursuant to Government Code section 68081, the sanctioned party contends the Discovery Act does not authorize the trial court to award monetary sanctions under section 2023.030 alone or together with section 2023.010.   The Second Appellate District reversed the postjudgment order and remanded the matter for the trial court to enter a new and different order on the issue of monetary sanctions based on discovery provisions authorizing the imposition of sanctions in this case. The court explained that although the trial court had jurisdiction to entertain PWC’s motion for sanctions and discretion to find it was timely filed, the order awarding sanctions must be reversed and remanded to allow the trial court to award PWC’s reasonable expenses incurred as a result of sanctionable conduct under provisions of the Discovery Act other than sections 2023.010 and 2023.030. View "City of L.A. v. PricewaterhouseCoopers, LLC" on Justia Law

Michael O’Connor signed up for a loyalty program when he bought a pair of shoes and socks from Road Runner Sports, Inc. and Road Runner Sports Retail, Inc. (collectively, “Road Runner”). He alleged Road Runner did not tell him the loyalty program was an automatic renewal subscription and that his credit card would be charged an annual subscription fee. After discovering he had been charged for four years of subscription fees, he joined as the named plaintiff in a class action lawsuit alleging Road Runner had violated California’s Automatic Renewal Law and consumer protection statutes. Road Runner asserted O’Connor was bound by an arbitration provision it added to the online terms and conditions of the loyalty program, some three years after he enrolled. Although Road Runner conceded O’Connor did not have actual or constructive notice of the arbitration provision, it contended O’Connor created an implied-in-fact agreement to arbitrate when he obtained imputed knowledge of the arbitration provision through his counsel in the course of litigation and failed to cancel his membership. The Court of Appeal disagreed this was sufficient under California law to prove consent to or acceptance of an agreement to arbitrate. Accordingly, the Court affirmed the trial court’s order denying Road Runner’s motion to compel arbitration. View "Costa v. Road Runner Sports" on Justia Law

Appellant Today’s IV filed a civil complaint against respondents Los Angeles County Metropolitan Transportation Authority and Regional Connector Constructors for their “unreasonable” construction of an underground subway line in downtown Los Angeles, which affected the Westin Bonaventure Hotel and Suites (the Bonaventure), owned by Today’s IV.   Today’s IV alleged claims for nuisance and inverse condemnation due to 1) respondents’ use of the cut-and-cover construction method instead of the tunnel boring machine method; 2) construction work during nights and weekends, which was particularly harmful to the Bonaventure’s operation as a hotel; 3) violation of certain noise limits; and 4) interference with access to the Bonaventure. Today’s IV alleged lost contracts, including a $3.3 million airline contract, and loss of business. It requested compensatory and punitive damages from Respondents.   The trial court found no liability and entered judgment in favor of Respondents. The Second Appellate District affirmed. The court explained that the first two circumstances that justify an inverse condemnation claim are not applicable here, as Appellant does not contend that its property has been physically invaded or physically damaged. Thus, Appellant necessarily relies upon the intangible intrusion theory. To recover under this theory, Appellant must be able to establish its property suffered from an intangible intrusion burdening the property in a way that is direct, substantial, and peculiar to the property itself. View "Today's IV, Inc. v. L.A. County Metropolitan Transportation Auth." on Justia Law

Defendant Jeffrey Mayhew and Plaintiffs David Starr and Thomas Hunt formed a limited liability company to operate a shopping center. They agreed Mayhew would manage the company and Starr and Hunt would provide startup capital. In exchange, Mayhew was entitled to 50 percent of the company’s profits and Starr and Hunt were entitled to the remaining 50 percent. After the shopping center’s business declined in 2008, Mayhew asked Starr and Hunt for additional capital. They agreed to do so only if Mayhew also contributed capital. Mayhew reported a $100,000 contribution, which caused Starr and Hunt to contribute roughly the same amount. The shopping center was later sold for a substantial profit. Mayhew claimed he was entitled to about 56.3 percent ownership interest in the company based on his additional capital contribution. Starr and Hunt disagreed and submitted the dispute to arbitration along with several other claims for damages. The arbitrator ruled in favor of Starr and Hunt, finding Mayhew only held a 50 percent interest in the company. A superior court later confirmed the award over Mayhew’s petition to vacate and entered judgment against him. On appeal, Mayhew claimed the trial court erred by failing to vacate the award, contending the arbitrator lacked authority to clarify the award, that the award was procured by undue means, and that the arbitrator’s award exceeded her powers. After its review, the Court of Appeal disagreed. Since Mayhew failed to identify any basis for vacating the award, the Court affirmed the judgment. View "Starr v. Mayhew" on Justia Law

Appellants are patients at medical facilities operated by respondent Centrelake Medical Group. In reliance on Centrelake’s allegedly false representations that it employed reasonable safeguards for patients’ personal identifying information (PII), Appellants entered into contracts with Centrelake. Appellants brought an action against Centrelake on behalf of themselves and a putative class of patients affected by a data breach. The complaint contained causes of action for breach of contract, negligence, and violations of the Unfair Competition Law (UCL). Centrelake demurred, arguing that Appellants had failed to adequately plead any cognizable injury and that their negligence claim was barred by the economic loss rule. Appellants opposed the demurrer. On appeal, Appellants contend the court erred in sustaining the demurrer with respect to each of their claims and abused its discretion in denying their request for leave to amend.   The Second Appellate District affirmed the judgment with respect to the dismissal of Appellants’ negligence claim without leave to amend, but reverse with respect to Appellants’ UCL and contract claims. The court concluded that Appellants adequately alleged UCL standing and contract damages under their benefit-of-the-bargain theory, and the Appellant who purchased monitoring services, did the same under Appellants’ monitoring-costs theory. However, Appellants have not shown the court erred in dismissing their negligence claim under the economic loss rule; nor have they shown the court abused its discretion in denying their request for leave to amend. View "Moore v. Centrelake Medical Group, Inc." on Justia Law

The City of Oakland filed a lawsuit against the National Football League (the League or the NFL) and its 32 member clubs (collectively, Defendants) after one member club, the Raiders, relocated from Oakland to Las Vegas. The City alleged Defendants did not comply with the process for approving club relocations set forth in the NFL Constitution and related documents. The City asserted causes of action for breach of contract as a third-party beneficiary, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. The trial court sustained Defendants’ demurrer to all three causes of action without leave to amend and entered judgment for Defendants.The City argues the trial court erred in ruling it was not a third-party beneficiary of the NFL Constitution and related documents and therefore did not have standing to enforce those documents. The City also argues the court applied an incorrect legal standard in ruling on the demurrer to its cause of action for unjust enrichment.The Second Appellate District affirmed. The court concluded that, because the City did not and cannot allege it is a third-party beneficiary of the alleged contracts, its causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing fail. The court further concluded that the City has not and cannot allege facts sufficient to state a cause of action based on a theory of unjust enrichment. View "City of Oakland v. The Oakland Raiders" on Justia Law

Apple Annie operated restaurants in Marin, San Francisco, and Santa Barbara counties and had comprehensive commercial liability and property insurance through Oregon Mutual for “for direct physical loss of or damage to Covered Property at the [insured] premises,” and to “pay for the actual loss of Business Income you sustain due to the necessary suspension of your ‘operations’ during the ‘period of restoration. The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.” The policy did not define “direct physical loss of or damage.”Apple Annie filed claims for losses resulting from the COVID pandemic and ensuing lockdown. The court of appeal affirmed summary judgment in favor of Oregon Mutual. The policy language,“direct physical loss or damage to,” despite its disjunctive phrasing, is unambiguous. A loss of use simply is not the same as a physical loss. Although the COVID virus has a physical presence, and thus Apple Annie may have suffered economic loss from the physical presence of the COVID virus, it has not suffered “direct physical loss of or damage to [its] property.” View "Apple Annie, LLC v. Oregon Mutual Insurance Co." on Justia Law

Jones established a trust, naming his daughter (Spencer) as successor trustee. The property was the trust’s principal asset. Jones later married Grays-Jones, but did not amend the trust. Jones contracted to sell the property to CDI for $13.6 million. Jones died shortly thereafter. Months later, Grays-Jones petitioned for an interest in Jones’s estate as an omitted spouse. While the property was still in escrow, Grays-Jones and Spencer, as trustee, agreed the trust “shall pay to [Grays-Jones] a total of $3,000,000 . . . as her full and final settlement of [Grays-Jones’s] interest in the Estate. Payment of said amount shall be paid ... out of the escrow from the sale of the [property].” Grays-Jones would move out of Jones’s residence in exchange for $150,000, which would constitute “an advance against the total settlement.” A stipulated judgment incorporated the settlement. Spencer, as trustee, paid Grays-Jones $150,000; Grays-Jones moved out of Jones’s residence. The sale of the property fell through. Spencer did not pay Grays-Jones the outstanding $2.85 million.Grays-Jones sought to enforce the stipulated judgment, alleging Spencer frustrated the sale of the property. She requested the appointment of a temporary trustee to sell the residence and property. The trial court denied the petition, finding the settlement agreement unenforceable because the sale was a condition precedent. The court of appeal reversed. The settlement agreement contained a condition precedent as to the method of payment, but Spencer’s independent promise to pay $3 million is enforceable and remains payable upon the property’s sale. View "Estate of Jones" on Justia Law