Justia California Court of Appeals Opinion Summaries

Teed promoted himself online as a real estate agent with “over 25 years of experience as a building contractor” with “an extensive background in historic restorations.” Moore believed that Teed was a general contractor. Moore toured homes that Teed had renovated and retained Teed as his agent. Moore bought a large San Francisco fixer-upper house for $4.8 million. The home was built in 1912 and was last updated in the 1950s. Moore borrowed significantly. Teed received a commission from the sale. Teed was not a licensed contractor; his team of contractors gutted large parts of the house and excavated the lot but the foundation was defective. After Moore became aware of the defects, he halted all work and engaged consultants, who concluded, despite Teed's strong resistance, that the foundation had to be torn out and replaced. Teed’s structural engineer agreed and privately apologized to Moore. Moore had paid about $265,000 of the $900,000 promised cost for Teed’s renovations. A jury awarded Moore his out-of-pocket expenses for replacing the foundation and benefit-of-the-bargain damages for the additional cost he incurred in obtaining the promised renovations. Conceding liability, Teed challenged the award. The court of appeal affirmed that benefit-of-the-bargain damages are available to fully compensate a plaintiff for all the detriment proximately caused by a fraudulent fiduciary’s actions and the award of statutory attorney fees and costs based on the jury’s special verdict finding that Teed violated the Contractors’ State License Law. View "Moore v. Teed" on Justia Law

In 2003, jury found E*Trade liable for trade secret misappropriation and for breach of a mutual nondisclosure agreement with Ajaxo. The jury awarded damages only for the breach of contract after the court granted a nonsuit on the issue of damages for trade secret misappropriation. On remand, in 2008, a jury found no net damages for unjust enrichment and awarded nothing. The court denied Ajaxo’s request to seek a reasonable royalty under the California Uniform Trade Secret Act (Civ. Code 3426-3426.11). On second remand, the court held a bench trial, declined to award any royalty, and awarded E*Trade its costs as the prevailing party.The court of appeal affirmed. The trial court did not abuse its discretion by declining to award any reasonable royalty despite the available evidence from which a reasonable royalty theoretically might have been derived, considering its findings on the evidence, application of apportionment principles from patent law, exclusion of expert testimony and analysis of Ajaxo’s royalty model, and treatment of the “Georgia-Pacific factors” for determining a royalty rate in intellectual property disputes. The trial court did not err in its prevailing party determination and costs award despite the practical effect of Ajaxo having already obtained full satisfaction of what became a separate, final judgment in its favor following the 2006 remittitur from the first appeal, including costs. View "Ajaxo, Inc. v. E*Trade Financial Corp." on Justia Law

North Edwards Water District (the District) selected Clark Bros., Inc. (Clark) as its general or direct contractor on a public works project to build an arsenic removal water treatment plant. Clark hired subcontractor Crosno Construction (Crosno) to build and coat two steel reservoir tanks. The subcontract contained a "pay-when-paid" provision that stated Clark would pay Crosno within a reasonable time of receiving payments from the District, but that this reasonable time "in no event shall be less than the time Contractor and Subcontractor require to pursue to conclusion their legal remedies against Owner or other responsible party to obtain payment . . . ." After Crosno completed most of its work, a dispute arose between the District and Clark halting the project. As Clark sued the District, Crosno sought to recover payments owed under the public works payment bond that Clark had obtained for the project. The issue this case presented for the Court of Appeal's review involved Crosno's claim against the bond surety, Travelers Casualty and Surety Company of America (Travelers). At issue was whether the pay-when-paid provision in Crosno's subcontract precluded Crosno from recovering under the payment bond while Clark's lawsuit against the District was pending. Relying on Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal.4th 882 (1997), the trial court found the pay-when-paid provision here unenforceable because it affected or impaired Crosno's payment bond rights in violation of Civil Code section 8122. With the facts largely undisputed, the court granted Crosno's motion for summary judgment and entered judgment in its favor for principal due plus prejudgment interest. Travelers argued the trial court misconstrued Wm. R. Clarke and erred in failing to enforce the pay-when-paid provision against the bond claim. After carefully considering the parties' arguments, the Court of Appeal agreed with the trial court's analysis and affirmed. View "Crosno Construction, Inc. v. Travelers Casualty etc." on Justia Law

House owns an organic farm, adjacent to the Property, formerly owned by Moller. In 2002, House entered into a six-year lease with Moller for 35 farmable acres, containing a renewal option and a right of first refusal. House converted the Property to certified organic status. In 2007, Moller, with no notice to House, agreed to sell the Property to Foss. Foss, a licensed real estate agent, prepared the agreement, which did not contain a fixed closing date. House became aware of the agreement, notified Foss about the right of first refusal, and sued Moller. While the lease remained in effect, Foss entered the Property and sprayed nonorganic herbicides, cut down trees, and altered the fencing. House sued Foss. Moller filed for bankruptcy. The Property was foreclosed on and sold to a third party in 2015.The trial court found Foss liable for inducing a breach of contract, intentionally interfering with House’s prospective economic advantage, conversion, trespass, and negligence and awarded compensatory damages of $1,669,705 and $1,000 in punitive damages. House sought attorney fees and costs. The court denied the motion. The court of appeal remanded for a determination of reasonable attorney fees under Code of Civil Procedure 1021.9, which refers to “any action to recover damages to personal or real property resulting from trespassing on lands either under cultivation or intended or used for the raising of livestock.” The damages award is supported by substantial evidence. View "Kelly v. House" on Justia Law

After plaintiff made four purchases of precious metals from defendants, he filed suit alleging that defendants misled him. Plaintiff, as trustee for the Dennison Family Trust, purchased the precious metals after seeing television commercials promoting such investments.The Court of Appeal held that the arbitration agreement does not clearly and unmistakably delegate authority to the arbitrator to decide unconscionability; the arbitration agreement is unconscionable based on lack of mutuality, limitations on defendants' liability, and the statute of limitations; and the court could not save the arbitration agreement by severing a single offending clause because the agreement is permeated with unconscionable terms. Accordingly, the court affirmed the trial court's judgment. View "Dennison v. Rosland Capital LLC" on Justia Law

In January 2017, plaintiffs Lori Dougherty and Julie Lee's 89-year-old father passed away while living in Somerford Place, an elder residential care facility owned and operated by defendants Roseville Heritage Partners, Somerford Place, LLC, Five Star Quality Care, Inc., and Five Star Quality Care-Somerford, LLC. In July 2017, plaintiffs sued defendants, alleging elder abuse and wrongful death based upon the reckless and negligent care their father received while residing in defendants’ facility. Defendants appealed the trial court’s denial of their motion to compel arbitration and stay the action, contending the arbitration agreement did not contain any unconscionable or unlawful provisions. Alternatively, defendants argued the court abused its discretion by invalidating the agreement as a whole, rather than severing the offending provisions. The Court of Appeal found the arbitration agreement at issue here was "buried within the packet at pages 43 through 45," and "[b]ased on the adhesiveness of the agreement, and the oppression and surprise present," the Court concluded the trial court properly found the Agreement was imposed on a “take it or leave it” basis and evinced a high degree of procedural unconscionability. Under the sliding scale approach, only a low level of substantive unconscionability was required to render the arbitration agreement unenforceable. Likewise, the Court concurred that the arbitration agreement was substantively unconscionable, "particularly given the accompanying evidence of procedural unconscionability." The Court found no abuse of discretion in the trial court's declination to sever the offending provisions of the agreement, rather than invalidate the entire agreement. View "Dougherty v. Roseville Heritage Partners" on Justia Law

Attorney Robert Reeve sued attorney Kenneth Meleyco to enforce a referral fee agreement after Reeve referred a client to Meleyco but Meleyco did not pay the referral fee. A jury found that Reeve was entitled to recover for breach of contract and also under a quantum meruit theory, and the trial court awarded Reeve prejudgment interest. Meleyco appealed, arguing among other things that Reeve could not recover for breach of contract because the client did not provide written consent to the arrangement, the quantum meruit claim was barred by the applicable statute of limitations, and Reeve was not entitled to prejudgment interest. The Court of Appeal determined Meleyco wrote a letter to the client explaining that the referral fee would not come from the client’s percentage of any settlement, and the client signed an acknowledgement at the bottom of the letter indicating that he received the letter and understood its contents. The client subsequently testified that his acknowledgement expressed his agreement that the referral fee could be paid to Reeve. The Court found the client’s written acknowledgement that he received and understood the letter did not constitute written consent to the referral fee agreement under former California Bar Rule of Professional Conduct 2-200, and the client’s subsequent testimony did not remedy the deficiency. The referral fee agreement was unenforceable as against public policy and Reeve could not recover for breach of contract. Furthermore, the Court agreed with Meleyco that Reeve’s quantum meruit claim was barred by the two-year limitations period. View "Reeve v. Meleyco" on Justia Law

Plaintiffs Matthew Matson and Matson SDRE Group, LLC purchased a deed of trust at a nonjudicial foreclosure sale. S.B.S. Trust Deed Network (SBS) was the trustee and Bank of Southern California, N.A. (BSC) was the beneficiary of the deed of trust. Matson, relying on a software application called PropertyRadar, believed that the deed of trust was in first position on the property. He purchased the deed of trust for $502,000 at the foreclosure auction, then learned that the lien was in second position, with a much lower fair market value than the price paid. Plaintiffs filed a first amended complaint against defendants for rescission of the sale and declaratory relief, relying on Matson's unilateral mistake of fact and the unconscionable price he paid for the deed of trust. The parties filed cross-motions for summary judgment. The court granted summary judgment for defendants. Plaintiffs appealed, but finding no reversible error, the Court of Appeal affirmed the judgment. View "Matson v. S.B.S. Trust Deed Network" on Justia Law

The Court of Appeal reversed the district court's grant of summary judgment in favor of Aetna. In plaintiff's first cause of action, plaintiff alleged that Aetna violated Health & Safety Code section 1371.4. In plaintiff's second cause of action, plaintiff alleged that Aetna breached an implied contract based on its prior dealing with Aetna by not paying for the emergency medical services it rendered to a patient covered by Aetna's health care service plan. The court held that there were triable issues of fact as to whether plaintiff provided and billed for emergency services and was entitled to reimbursement from Aetna. Accordingly, the court remanded for further proceedings. View "San Jose Neurospine v. Aetna Health of California, Inc." on Justia Law

Wanke, Industrial, Commercial, Residential, Inc. (Wanke) was a company that installed waterproofing systems. It sued Scott Keck and another of its former employees in 2008 for trade secret misappropriation after they left Wanke to form a competing business, WP Solutions. The parties entered into a stipulated settlement and later litigated Keck's alleged breach of that settlement agreement. To collect, Wanke filed a creditor's suit against third party AV Builder Corp. (AVB) to recover $109,327 that AVB owed WP Solutions in relation to five construction subcontracts. Following a bench trial, the court entered judgment in Wanke's favor for $83,418.94 after largely rejecting AVB's setoff claims. Invoking assignment principles, AVB contended: (1) Wanke lacked the ability to sue given judgment debtor WP Solutions's corporate suspension; (2) Wanke's suit was untimely under section 708.230 of the Code of Civil Procedure; and (3) the trial court erred in denying its request for warranty setoffs under section 431.70. Rejecting each of these contentions, the Court of Appeal affirmed the judgment View "Wanke, Industrial, Commercial, etc. v. AV Builder Corp." on Justia Law