Justia California Court of Appeals Opinion Summaries

Northfield issued a policy to insure an apartment complex. The coverage excludes liability for violations of the insured’s duty to maintain habitable premises; this exclusion also encompasses coverage for “any claim or ‘suit’ ” that also alleges habitability claims. Tenants sued the insured, alleging multiple habitability claims and other causes of action that were arguably not based on habitability. Northfield declined to defend the tenants’ lawsuit. After settling the underlying action, the insured sued Northfield for breach of its duty to defend. The trial court concluded the case presented a “mixed” action containing both potentially covered and uncovered claims, and that Northfield was obliged to provide a defense.The court of appeal reversed. The policy exclusion is plain and clear. The court rejected arguments that claims for retaliation, conversion, and trespass to chattels did not arise from the duty to provide habitable premises. The retaliation concerned complaints about habitable conditions and the claims are alleged in a suit that also alleges habitability claims. View "24th & Hoffman Investors, LLC v. Northfield Insurance Co." on Justia Law

Siri sued her former employer, Trinchero, for wrongful termination. Trinchero served an offer to compromise by paying Siri $500,000 in exchange for dismissal, Code of Civil Procedure section 998. During the 30-day period in which Trinchero’s offer remained in effect, the parties communicated about whether Siri’s acceptance would trigger a right to prejudgment interest of approximately $379,000. After Trinchero declined to modify the offer, Siri served “objections” to the offer, contending it was defective because it did not address the availability of interest. Days later, Siri served a “Notice of Conditional Acceptance,” then filed the objections to Trinchero’s offer and requested that the court enter a judgment, “consistent with [her] conditional acceptance” and including prejudgment interest. Trinchero filed a “Notice of Plaintiff’s Acceptance of 998 Offer,” stating that “Although [Trinchero] does not waive any right" to "separately respond to the substantive issues” and characterizing the conditions as “simply requests that the court clarify post-resolution questions.”Trinchero moved to enforce the purported settlement agreement. The court found that Siri’s service of her conditional acceptance created a binding settlement and did not condition acceptance on particular findings by the court. Siri then filed an unsuccessful motion seeking interest. The court of appeal reversed. Siri’s “conditional acceptance” included additional terms and did not create a binding settlement enforceable under section 998. View "Siri v. Sutter Home Winery, Inc." on Justia Law

Plaintiff CAM-Carson, LLC sued the City of Carson (City), the Carson Reclamation Authority (CRA) and others for breach of contract and breach of the covenant of good faith and fair dealing. Plaintiff is a commercial real estate developer. Plaintiff entered contracts with the City and CRA to develop a 40-acre site after the City and CRA remediated soil and groundwater contamination, installed infrastructure, and built roads. Plaintiff alleged the City and CRA engaged in gross mismanagement and malfeasance that created a massive funding deficit that derailed the project, causing damages to Plaintiff of over $80 million. Plaintiff sought to hold the City liable in equity under alter ego principles for the CRA’s breach of a contract between Plaintiff and the CRA.   The Second Appellate District reversed the trial court’s judgment of dismissal and remanded the cause to the trial court to vacate its order sustaining the City’s demurrer and to enter a new order overruling the demurrer. The court held the alter ego doctrine may be applied to government entities where the facts justify an equitable finding of liability. Here, the allegations in Plaintiff’s second amended complaint are sufficient to survive the City’s demurrer. The court wrote, as a matter of law, the City cannot be held the alter ego of the CRA if Plaintiff is able to prove the facts alleged. Accordingly, the trial court erred in sustaining the City’s demurrer to Plaintiff’s breach of contract claim. For the same reason, the trial court erred in sustaining the City’s demurrer to Plaintiff’s breach of implied covenant claim. View "Cam-Carson, LLC v. Carson Reclamation Authority" on Justia Law

Plaintiff designated his nephew as his health care agent and attorney-in-fact using an advance health care directive and power of attorney for health care decisions form developed by the California Medical Association (the Advance Directive). After the execution of the Advance Directive, Plaintiff was admitted to a skilled nursing facility. Nineteen days later, his nephew executed an admission agreement and a separate arbitration agreement purportedly on Plaintiff’s behalf as his “Legal Representative/Agent”. The sole issue on appeal is whether the nephew was authorized to sign the arbitration agreement on Plaintiff’s behalf.   In answering the relevant question on appeal, the Second Appellate District held that an agent’s authority to make “health care decisions” on a principal’s behalf does not include the authority to execute optional arbitration agreements. Accordingly, the court affirmed the trial court’s order denying the motion to compel arbitration. The court explained that its conclusion that the execution of an arbitration agreement is not a “health care decision” finds support in the regulatory history of the recently enacted federal regulatory scheme prohibiting nursing facilities participating in Medicare or Medicaid programs from requiring a resident (or his representative) to sign an arbitration agreement as a condition of admission. Specifically, in the Centers for Medicare & Medicaid Services’ (i.e., the agency’s) responses to public comments published in the Federal Register. These comments and responses demonstrate that practically speaking, arbitration agreements are not executed as part of the health care decision-making process, but rather are entered into only after the agent chooses a nursing facility based on the limited options available and other factors unrelated to arbitration. View "Logan v. Country Oaks Partners" on Justia Law

Appellant appealed the order denying his motion to vacate the judgment entered against him for $251,200.13 after he failed to pay $30,000 as required pursuant to a stipulation for entry of judgment. Appellant contends the trial court erred because the judgment is an unenforceable penalty and is therefore void.   The Second Appellate disagreed with Appellant and affirmed the order denying the motion to vacate the $251,200.13 judgment. Here, the $251,200.13 damage provision in the stipulation for entry of judgment is not arbitrarily drawn from thin air. It is the actual and stipulated amount of damages. This is not a penalty or a liquidated damage provision. The court explained it cannot delete the terms of the stipulated judgment calling for monthly payments and it cannot add a provision to the terms of the stipulated judgment allowing a seven-year moratorium on monthly payments. Money has value over time. Appellant has had the use of the money for seven years. Respondent has been deprived of the use of the money for seven years. Respondent’s “more than reasonable” settlement terms should not be used against it to show “liquidated damages” or a “penalty.” View "Creditors Adjustment Bureau v. Imani" on Justia Law

Shao Yan Chen, Han Lin Liu, Zhi Hua Mo, Yuk Yee Cheng, Hui Zhen Hu, Ruizhao Wu, and Qi Di Wu (collectively, tenants) had a dispute with Valstock Ventures, LLC and 371 Broadway Street, LLC (together, Valstock) over which of two documents was the operative lease governing the tenants’ tenancies in two of Valstock’s apartment buildings. The tenants filed suit against Valstock seeking a declaratory judgment on this question, alleging a civil conspiracy, and stating claims for violations of the Fair Employment and Housing Act (FEHA), Unfair Competition Law (UCL), and section 37.10B of the San Francisco Rent Ordinance. The trial court awarded the tenants approximately $1.1 million in attorney’s fees under Civil Code section 1717 after granting their motion for summary adjudication of the sole cause of action on the contract in this case, before trial or disposition of the remaining non-contract causes of action. The defendants appealed, arguing the award of attorney’s fees was premature because the litigation as a whole had not yet ended. To this the Court of Appeal agreed and therefore reversed. View "Chen v. Valstock Ventures, LLC" on Justia Law

Luis Munoz and LR Munoz Real Estate Holdings, LLC (together, Munoz) bought a hotel from a company owned and managed by Rajesh Patel and his son, Shivam. Before escrow closed, the parties negotiated a leaseback arrangement requiring Munoz to lease the hotel back to the Patels’ company after the sale. Escrow closed and the parties thereafter executed the previously-negotiated lease. However, Munoz contended the Patels secretly swapped out the agreed-upon lease for a lease substantially more beneficial to the Patels and worse for Munoz, and then tricked him into signing it. Munoz filed suit against the Patels, an alleged alter ego entity of the Patels called Inn Lending, LLC, and other defendants involved in the sale, asserting causes of action for breach of contract, breach of the covenant of good faith and fair dealing, promissory fraud, and elder financial abuse, among other causes of action. Rajesh and Inn Lending demurred to the operative second amended complaint, the trial court sustained the demurrer without leave to amend. In a prior opinion, the Court of Appeal reversed the judgment and determined, among other things, that Munoz alleged a viable fraud cause of action based on a theory of fraud in the execution. The California Supreme Court granted review and remanded the case back to the appellate court, ordering a rehearing of the parties arguments for fraud. After reconsideration, the Court of Appeal concluded operative complaint alleged facts sufficient to state a viable cause of action for fraud in the execution against Rajesh, but not against Inn Lending. Additionally, the Court concluded the complaint plead facts sufficient to state an elder financial abuse cause of action against both Rajesh and Inn Lending. The Court concluded Munoz failed to establish that the trial court erred in dismissing his breach of contract and bad faith causes of action. In light of these determinations, the appeals court reversed the trial court judgment and remand the matter with instructions that the trial court vacate its order sustaining the demurrer to the entire complaint, and enter a new order. View "Munoz v. Patel" on Justia Law

At issue in this appeal was whether a cross-complaint filed by Connor Callanan against Charles Menken, Steven Menken, and Grizzly Designs, LLC, dba Brotherly Love (collectively “the Menkens”) was a SLAPP suit subject to a special motion to strike under Code of Civil Procedure section 425.16 (known as the anti-SLAPP statute). The Menkens were “engaged in the research and development of various cannabis based products intended for marketing in the burgeoning cannabis market space.” Marino and Callanan owned and operated a business called UHSE Media LLC that provided media, marketing, and consulting services to the cannabis industry. In May 2019, the Menkens entered into an “oral agreement” with Marino and Callanan for such consulting services and agreed to pay them $30,000 each. The Menkens claimed that Marino and Callanan were independent contractors rather than employees. Marino and Callanan were “permitted” to live at the Menkens’ “business location” “as they deemed necessary” in order to do their consulting work, but they “were at all times free to come and go as they determined necessary and for their own purposes.” They began living and working at the Menkens’ business location in late May 2019. The Menkens contended “the substantial majority” of the work Marino and Callanan did on the farm was related to their independent media and consulting business, but that by November 2019, Marino and Callanan were failing to perform media and consulting services and were instead spending most of their time harvesting and processing cannabis. Marino and Callanan also began demanding sums of money “they believed they were entitled to under California’s wage and hour laws.” At this point, the parties’ relationship “became openly hostile” and Marino and Callanan (allegedly) set fire to a building that was used as an office and sleeping quarters, causing over $100,000 in damages. The Menkens contended Callanan’s cross-complaint was a SLAPP suit because it was filed in retaliation for a cross-complaint they filed against Callanan, and they filed a motion under section 425.16 seeking to strike it. The trial court granted the motion, and Callanan appealed. After review, the Court of Appeal concluded Callanan’s cross-complaint was not a SLAPP suit because none of his claims arose from the filing of the Menkens’ cross-complaint. View "Callanan v. Grizzly Designs, LLC" on Justia Law

M & L Financial, Inc. (M&L) took 45 vivid yellow diamonds worth $4 million to Sotheby’s for auction on consignment. M&L told Sotheby’s it was the exclusive owner of the diamonds, but Sotheby’s later released them to a stranger without telling M&L. The diamonds vanished. M&L sued Sotheby’s, which escaped on demurrer.   The Second Appellate District reversed the breach of contract ruling and affirmed the tort ruling, and remanded. The court explained that there was no agreement yet that Sotheby’s definitely would auction the diamonds for M&L, but a potential auction was the point of Sotheby’s involvement. Sotheby’s breached this agreement by giving the diamonds to a stranger without M&L’s permission. This breach cost M&L the value of the lost diamonds.   The court further wrote that as for M&L’s negligence claim, however, the trial court’s ruling was right. The court explained that the economic loss rule governs. “In general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922 (Sheen).) By deferring to the contract between parties, the economic loss rule prevents the law of contract and the law of tort from dissolving one into the other. M&L offers no good reason for departing from the fundamental economic loss rule, which bars its tort claim. View "M & L Financial v. Sotheby's" on Justia Law

This was the second time plaintiff-appellant Petrolink, Inc. returned to the Court of Appeal in its suit against Lantel Enterprises. Petrolink filed an action against defendant Lantel Enterprises (Lantel), seeking specific performance of a lease agreement that gave Petrolink the option to purchase a commercial property owned by Lantel at fair market value; Lantel cross-complained against Petrolink, contending that Petrolink was refusing to purchase the property for its fair market value. The parties disagreed as to the valuation of the property and were effectively seeking a judicial determination as to the fair market value of the property so that they could complete the transaction. After years of litigation in the trial court, an appeal, a partial reversal of the judgment, remand, and further litigation, the trial court ultimately concluded that the fair market value of the property was $889,854. The court then calculated a net purchase price of $948,404 by subtracting from the fair market value a credit to Petrolink for the rents that it had paid from the date the purchase should have been completed, and adding a credit to Lantel for the loss of use of the sale proceeds. In its amended judgment, the court ordered the parties to complete the transaction; Petrolink was to deposit $948,404 in escrow and Lantel was to deliver title to the property “by grant deed free and clear of all encumbrances.” Petrolink appealed the amended judgment, arguing that it was entitled to certain additional financial reductions and offsets to the purchase price. The Court of Appeal rejected Petrolink’s contentions and affirmed the amended judgment in Petrolink II. Eleven days after Petrolink II was issued, and four days after Petrolink deposited the purchase funds in escrow, the State of California Department of Transportation (Caltrans) filed an eminent domain action pertaining to the property. The filing of the Caltrans action prevented Lantel from being able to convey unencumbered title, as required by the amended judgment. Petrolink then refused to close escrow. Lantel moved to compel performance under the trial court's order, despite the encumbrance on title resulting from the Caltrans eminent domain action. The Court of Appeal concluded the trial court did not abuse its discretion in ordering Petrolink to accept title encumbered by the Caltrans eminent domain action. "[T]he trial court weighed the equities and concluded that it would be more equitable for Petrolink to bear any burden of the encumbrance created by the filing of the Caltrans action." View "Petrolink, Inc. v. Lantel Enterprises" on Justia Law