Justia California Court of Appeals Opinion Summaries

Articles Posted in Contracts

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George Zakk filed suit against Vin Diesel, One Race Films, Inc., and Revolution Studios for breach of an oral contract, breach of an implied-in-fact contract, intentional interference with contractual relations, quantum meruit, promissory estoppel, and declaratory relief. Plaintiff alleged that he was entitled to be paid and receive an executive producer credit for a film that was a sequel to a film he had worked on and developed. The trial court sustained defendants' demurrers and dismissed the third amended complaint. With regard to oral contracts that fall within the statute of frauds category of contracts not to be performed within a year, the Court of Appeal held that the promisee's full performance of all of his or her obligations under the contract takes the contract out of the statute of frauds, and no further showing of estoppel is required. The court distinguished cases involving other categories of contracts within the statute of frauds, such as contracts to make a will or contracts not to be performed within the promisor's lifetime, because those categories of contracts historically have been treated differently than contracts not to be performed within a year. The court held that, to the extent those cases hold that avoidance of the statute of frauds requires the promisee to satisfy the elements of estoppel--showing extraordinary services by the promisee or unjust enrichment by the promisor--they do not apply to the category of contracts not to be performed within a year. In this case, the court affirmed in part and reversed in part, holding that Zakk's allegation that he fully performed his obligations under the alleged oral contract at issue is enough to avoid the statute of frauds. The trial court erred in finding that Zakk's breach of contract and related claims were barred by the statute of frauds absent alleged facts showing defendants were estopped to assert the statute. Furthermore, the trial court erred by finding that the third amended complaint was a sham pleading and that the quantum meruit claim was time-barred. However, the trial court did not abuse its discretion in dismissing the promissory estoppel claim. View "Zakk v. Diesel" on Justia Law

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The Subletting and Subcontracting Fair Practices Act governs public works projects, requires a prime contractor to obtain the awarding authority's consent before replacing a subcontractor listed in the original bid (Pub. Contract Code 4107(a)), and limits the awarding authority’s ability to consent. If the original subcontractor objects to being replaced, the awarding authority must hold a hearing. San Francisco entered a contract with prime contractor Ghilotti for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy for excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the city invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors. Synergy objected. A hearing officer determined that Synergy’s poor performance established a statutory ground for substitution. Synergy and Ghilotti argued that the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution. The trial court agreed. The court of appeal reversed. Although the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” View "Synergy Project Management, Inc. v. City and County of San Francisco" on Justia Law

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Plaintiff, a provider of short term loans to automobile dealers, who still retained the title certificates for the vehicles and believed it had a perfected security interest, filed suit against defendant for the amounts that plaintiff should have been paid by the dealerships (i.e., the loan amounts due) upon the sale of the subject vehicles. The Court of Appeal held that the trial court prejudicially erred by finding in defendant's favor, because the circumstances of this case were sufficiently close and/or analogous to those in Quartz of Southern California, Inc. v. Mullen Bros., Inc. (2007) 151 Cal.App.4th 901, to warrant its application here. The court explained that, here, as in Quartz, plaintiff was in rightful possession of the title certificates to the vehicles that were sold by the dealerships to consumers under conditional sales contracts; the dealerships went out of business without paying what was owed to plaintiff concerning said vehicles; and defendant as finance lender took assignment of the conditional sales contracts without requiring production of the title certificates or ascertaining who held title and how much was owed to obtain it. The court reversed and remanded to the trial court to determine the precise amount of money defendant must pay plaintiff for the title certificates to the vehicles in question, after which a new judgment shall be entered in favor of plaintiff. View "Ron Miller Enterprises, Inc. v. Lobel Financial Corp." on Justia Law

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In the underlying action, a plaintiff filed a tort action against the subcontractor and developer for injuries allegedly arising from the subcontractor's work. The subcontractor did not defend the developer, and the jury found that plaintiff's injuries were not caused by the subcontractor's work. The court held that, where plaintiff in an underlying tort action alleges that his injuries arose out of the subcontractor's work, the developer is entitled as a matter of law to a defense under the indemnity clause. In this case, the trial court erred by submitting the question of the subcontractor's duty to defend to a jury. The court also held that the developer was entitled to a jury trial in its action for damages alleging breach of the covenant to provide insurance. Accordingly, the court reversed the trial court's judgment and remanded. View "Centex Homes v. R-Help Construction Co., Inc." on Justia Law

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Plaintiff engaged Pinel to sell his Danville home in 2008. In 2015 he filed a putative class action lawsuit on behalf of California residents who, in 2004-2011, used Pinel to buy or sell a home in California and had utilized TransactionPoint, Fidelity's real estate software program, alleging Pinel had entered into unlawful sublicensing agreements with Fidelity subsidiaries, allowing those entities to contract their settlement services to Pinel clients using TransactionPoint, and the Fidelity defendants paid unlawful sublicensing fees to Pinel for the TransactionPoint-generated business. The defendants cited the arbitration clause in plaintiff’s listing agreement, which contained a notice provision required by Code of Civil Procedure 1298(c) with spaces for the client’s and broker’s initials. Pinel produced a copy of plaintiff's listing agreement. The 1298(c) notice on the copy showed plaintiff’s initials; the space for Pinel’s initials was blank. Pinel submitted a declaration that the original listing agreement was destroyed in accordance with Pinel’s normal document retention policy; that the copy was obtained from the listing agent; that it was Pinel’s policy to allow a client to elect whether to assent to the arbitration provision by initialing paragraph 19B; that Pinel “would as a matter of policy and custom and practice adopt the election of the client and initial Paragraph 19B.” The court of appeal affirmed the denial of Pinel’s motion. Pinel failed to establish that it had initialed the arbitration provision. The language of that provision contemplated mutual agreement and that each would indicate assent by initialing the provision. View "Juen v. Alain Pinel Realtors, Inc." on Justia Law

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A commercial developer lost a parcel of real property in a trustee’s sale following a nonjudicial foreclosure. It sued the title company that conducted the sale as a trustee. The Court of Appeal concluded upon review of this matter that a trustee in such a sale is subject to tort liability only for the violation of duties established by the deed of trust and governing statutes, unless the trustee has effectively taken on a different or modified duty by its actions. Here, the developer, plaintiff-appellant Citrus El Dorado, LLC, sued in part for failure to verify certain matters that the trustee, defendant-respondent Chicago Title Company, had no contractual or statutory duty to verify. The Court determined neither the deed of trust nor the governing statutes expressly created a duty on the part of Chicago Title to verify that the beneficiary received a valid assignment of the loan or to verify the authority of the person who signed the substitution of trustee. "Citrus has not cited, and we have not discovered, any authority holding a trustee liable for wrongful foreclosure or any other cause of action based on similar purported failures to investigate. To the contrary, the trustee generally 'has no duty to take any action except on the express instruction of the parties or as expressly provided in the deed of trust and the applicable statutes.'" The Court therefore affirmed the trial court's order sustaining without leave to amend Chicago Title's demurrer to Citrus' second amended complaint. View "Citrus El Dorado v. Chicago Title Co." on Justia Law

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The four plaintiffs in this interpleader action (MDQ entities) are limited liability companies that hold production rights or are producers in different territories of a Tony-award winning Broadway musical, "Million Dollar Quartet." MDQ entities filed a complaint in interpleader, alleging conflicting claims by Cleopatra and Gilbert Kelly for those portions of distributions owed to Mutrux that had not otherwise been assigned to Katell Productions. MDQ entities deposited the distributions and undertook to add any future distributions not owed and remitted to Katell Productions to the interpleaded funds. At issue on appeal was which adverse claimant was entitled to the interpleaded funds: a judgment creditor with a properly recorded judgment lien, or an assignee who did not file a financing statement with respect to distributions irrevocably assigned to it by the judgment debtor before the judgment lien was recorded. The court held that, although the assignment created a security interest, the judgment creditor was entitled to the interpleaded funds because its recorded judgment lien had priority over the unperfected security interest. In this case, there was no error in the trial court's judgment releasing the interpleaded funds to Cleopatra and ordering the MDQ entities to pay all subsequent monies otherwise payable to Mutrux, except those allocated to Katell Productions, to Cleopatra, until the judgment was satisfied. The court also held that the trial court did not abuse its discretion in ordering Gilbert Kelly to pay attorney fees and costs. View "MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP" on Justia Law

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Appellants, Sorokine and Koudriavtseva, are husband and wife. DBS and Kornach are California licensed contractors; DBS worked on their San Rafael house, while Kornach did not. Kornach, a longtime friend of Sorokine’s, had purchased materials for DIY projects at the property because of the discounts afforded to licensed general contractors. Sorokine does not speak English; Kornach often interpreted for Sorokine. After Koudriavtseva fired DBS, she hired unlicensed builders to complete the work and remedy alleged defects. DBS sued, alleging breach of contract and foreclosure of mechanic’s lien. Appellants’ response named as cross-defendants DBS, Komach, and ACIC, which had issued a surety bond to Kornach. The court of appeal reversed a directed verdict against appellants on a claim they violated an Internal Revenue Code provision and awarding $20,000 in sanctions and $122,995 in attorney fees against them. There was no evidence that appellants knew that 1099s issued to Komach were incorrect. The court also reversed directed verdicts against appellants on claims they had asserted against others; appellants were unable to prove damage because the trial court had granted a motion in limine preventing appellants from introducing evidence of payments made to an unlicensed contractor. The court also reversed an award of cost of proof damages to Kornach based on requests for admissions propounded by a different party. View "Design Built Systems v. Sorokine" on Justia Law

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The City brought an action against homeowners and their mortgage lender, SunTrust, and sought the appointment of a receiver to undertake the remediation of a public nuisance created by the homeowners on their residential property. Determining that the appeal was not moot, the Court of Appeal held that the trial court did not abuse its discretion in authorizing a super-priority lien to secure the loan taken by the receiver to fund remediation of the homeowners' property. In this case, because neither the homeowners nor SunTrust was willing to fund the costly remediation and the property did not produce any income, the receiver had to borrow money in order to proceed with the remediation. Because no lender would loan money to the receiver unless the loan was secured with a super-priority lien on the property, the only way to effect the remediation was to authorize the receiver's request to issue such a receiver's certificate. The court held that SunTrust's contention that it should remain the senior lienholder—and benefit from the increased property value provided by the remediation while bearing none of the cost—was simply untenable. View "City of Sierra Madre v. SunTrust Mortgage" on Justia Law

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Real Estate of the Pacific, Inc., doing business as Pacific Sotheby's International Realty (Sotheby's), David Schroedl, and David Schroedl & Associates (DSA) (collectively, Defendants) successfully moved for summary judgment against Daniel Ryan and Patricia Ryan, individually and as trustees of the Ryan Family Trust Dated August 25, 2006 (the Ryans). This matter arose over the sale of the Ryans' house in La Jolla. During an open house hosted by Schroedl, the Ryans' next door neighbor, Hany Girgis, informed Schroedl that he intended to remodel his home, which would permanently obstruct the Property's westerly ocean view. Ney and Luciana Marinho (the Marinhos) purchased the Property for $3.86 million. Defendants received $96,5000 at the close of escrow as their commission for the sale. At no time prior or during escrow, in the real estate disclosures, or in conversation, did Defendants disclose Girgis's extensive remodeling plans or their impact on the westerly ocean view and privacy of the Property. After learning this information, the Marinhos immediately attempted to rescind the real estate sales contract for several reasons, including the magnitude and scope of the Girgis remodel, the proximity of the new structure to the property line, the loss of privacy, the elimination of any possibility of a westerly ocean view, and a potential two-year construction project. The Ryans, based in part on Defendants' advice, refused to rescind the purchase real estate sales contract. The Marinhos then demanded arbitration per the terms of the real estate sales contract and sought rescission of the contract or, in the alternative, damages. The Marinhos alleged Defendants knew about Girgis's construction plans and failed to disclose this information. The Ryans sued Defendants for negligence. The crux of Defendants' argument was that the Ryans could not establish the existence of any cause of action without an expert witness. Because the Ryans did not designate an expert witness, Defendants argued summary judgment was warranted. The superior court agreed, granting Defendants' motion. The Ryans appealed the judgment following Defendants' successful motion, contending they did not need an expert witness to establish the elements of their causes of action against Defendants. The Court of Appeal agreed and reversed the judgment. View "Ryan v. Real Estate of the Pacific" on Justia Law