Justia California Court of Appeals Opinion Summaries

Defendants contracted to purchase a Lafayette home, waived contingencies, discovered undisclosed matters, terminated the contract, and sought to recover their $116,220 deposit, hiring the MMB law firm. Their claims went to arbitration. MMB informed defendants that they owed $431,141.92 in legal fees, providing a draft settlement agreement for a discounted payment of $331,000 with an affirmative representation that the parties each had received independent counsel. Defendant sent MMB revisions, stating that “Clients further contend that Law Firm failed to adhere to the Clients’ direction on one or more occasions and further question the Law Firm’s handling, strategy and representation.” The arbitrator awarded the seller $116,250 on his breach of contract claim, and $75,000 in attorney fees and costs. Defendants executed the Agreement. agreeing to pay MMB $150,000. The Agreement contains mutual general releases. waiving all claims “whether now known or unknown.” MMB’s assignee, SCJLW, sued. Defendants asserted the agreement was unenforceable for lack of consideration because MMB committed legal malpractice; that their signatures were fraudulently induced; and that MMB failed to disclose its malpractice exposure in violation of their ethical duties. They admitted not making payments under the Agreement. The trial court entered judgment for $150,000, plus $81,460.20 in interest. The court of appeal affirmed. Plaintiff set forth a prima facie case for breach of contract; defendants failed to make even a prima facie case for lack of consideration. View "Property Cal. SCJLW One Corp. v. Leamy" on Justia Law

Lacagnina worked for Comprehend as vice president of business development, 2012-2013, when he was “abruptly” terminated. Lacgnina claims that he was fraudulently induced to enter into an employment agreement with Comprehend by false representations made to him by its founders, Morrison and Gardner. A jury awarded Lacagnina a total of $556,446 in damages, including $226,446 in damages for fraud and $75,000 for emotional distress. The court granted the defendants judgment notwithstanding the verdict on the fraud claim on the ground that Lacagnina was not damaged by the alleged fraud, and entered an amended judgment of $255,000. The court of appeal reversed in part. An employer who induces an employee to enter into an employment contract by intentionally promising compensation terms the employer never intended to honor may not avoid tort liability for fraudulent inducement of contract based on the contract’s inclusion of an “at-will’ provision that allows the employer to fire the employee at any time for any reason. The court rejected Lacagnina’s contention that an employee who recovers a judgment against an employee for lost compensation has suffered a “theft” of “labor” for which he is entitled to recover treble damages and attorneys’ fees under Penal Code Section 496(c). View "Lacagnina v. Comprehend Systems, Inc." on Justia Law

This is the third appeal that comes to us in this case, which arises out of Patrick and Mary Lafferty’s purchase of a defective motor home from Geweke Auto & RV Group (Geweke) with an installment loan funded by Wells Fargo Bank, N.A. In Lafferty v. Wells Fargo Bank, 213 Cal.App.4th 545 (2013: "Lafferty I"), the Court of Appeal affirmed in part and reversed in part the action brought by the Laffertys against Wells Fargo. Lafferty I awarded costs on appeal to the Laffertys. On remand, the Laffertys moved for costs and attorney fees. The trial court granted costs in part but denied the Laffertys’ request for attorney fees as premature because some causes of action remained to be tried. The Laffertys appealed. In "Lafferty II," the Court of Appeal held the award of costs on appeal did not include an award of attorney fees. Lafferty II also held the Laffertys’ request for attorney fees was prematurely filed. After issuance of the remittitur in Lafferty II, the parties stipulated to a judgment that contained two key components: (1) their agreement the Laffertys had paid $68,000 to Wells Fargo under the loan for the motor home; and (2) Wells Fargo repaid $68,000 to the Laffertys. After entry of the stipulated judgment, the trial court awarded the Laffertys $40,596.93 in prejudgment interest and $8,384.33 in costs. The trial court denied the Laffertys’ motion for $1,980,070 in post-trial attorney fees, $464,220 in post-appeal attorney fees, and $16,816.15 in non-statutory costs. Wells Fargo appealed the award of prejudgment interest and costs, and the Laffertys cross-appealed the denial of their requests for attorney fees and nonstatutory costs. The Court of Appeal concluded resolution of this appeal and cross-appeal turned on the meaning of title 16, section 433.2 of the Code of Federal Regulations, or the "Holder Rule." The Court found the Laffertys were limited under the plain meaning of the Holder Rule to recovering no more than the $68,000 they paid under terms of the loan with Wells Fargo. Consequently, the trial court properly denied the Laffertys’ request for attorney fees and nonstatutory costs in excess of their recovery of the amount they actually paid under the loan to Wells Fargo. In holding the Laffertys were limited in their recovery against Wells Fargo, the Court of Appeal rejected the Laffertys’ claims the Holder Rule violated the First Amendment, due process, or equal protection guarantees of the federal Constitution. However, the Court concluded the trial court did not err in awarding costs of suit and prejudgment interest to the Laffertys. View "Lafferty v. Wells Fargo Bank, N.A." on Justia Law

Beginning in December 2006, plaintiffs made several loans to defendant Lee, who is You’s father. Lee defaulted. In July 2013, a judgment was entered against Lee for $1,143,576. No part of the debt has been paid. In October 2016, plaintiffs filed a complaint against Lee and You, seeking to set aside allegedly fraudulent conveyances and an accounting, claiming that in 2013, Lee paid $104,850 to Northeastern University for You’s tuition and other expenses, knowing that he had incurred, or would incur, debts beyond his ability to pay, intending to “hinder, delay, or defraud” his creditors, including plaintiffs. You contended Lee’s transfers were not fraudulent because they did not lack consideration and that You was not a beneficiary of the transfer, having received only the intangible benefits of an education. The court of appeal affirmed the dismissal of the complaint. Noting that there is no authority on whether creditors may attack college tuition payments as fraudulent transfers under the Uniform Voidable Transactions Act (Civ. Code 3439) the court reasoned that a parent can reasonably assume that paying for a child to obtain a degree will enhance the child's financial well-being which will, in turn, confer an economic benefit on the parent. View "Lo v. Lee" on Justia Law

Smythe, a driver for both Uber and Lyft, claimed that Uber directed its drivers and others to use fake Lyft accounts to request rides, sending Lyft drivers on “wild goose chases.” He asserted claims for unfair business practices and intentional interference with prospective economic damage on behalf of a putative class of Lyft drivers. Uber moved to compel arbitration. Smythe signed agreements containing an arbitration provision that “applies to any dispute arising out of or related to this Agreement or termination of the Agreement … without limitation, to disputes arising out of or related to this Agreement and disputes arising out of or related to your relationship with the Company …. to disputes regarding any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement, termination, harassment and claims arising under [several specific laws] and all other similar ... claims. This Agreement is intended to require arbitration of every claim or dispute that lawfully can be arbitrated.” The agreement's delegation clause states that the disputes subject to arbitration include "disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity .... All such matters shall be decided by an arbitrator and not by a court.” The court of appeal affirmed that Smythe’s allegations were beyond the scope of the arbitration agreement and that the delegation provision was unenforceable in this context. View "Smythe v. Uber Technologies, Inc." on Justia Law

Buyer contracted in 2004 to purchase Sellers’ Francisco gas station, to build a condominium project. Buyer had to obtain the necessary “Entitlements” for development. It took eight years to secure the conditional use permit. Sellers alleged the deal had expired. In 2014, Buyer sued, asserting breach of contract (specific performance) and quantum meruit to recover costs for work performed at Sellers’ Mountain View gas station. On the breach of contract claim, the court found the jury deadlocked and declared a mistrial. At Buyer’s request, the court decided that claim and found Buyer failed to perform his contractual obligations and was not entitled to specific performance. On the quantum meruit claim, the jury awarded Buyer $156,000 as the reasonable cost of work at Seller’s Mountain View property. The court vacated that verdict because Buyer had not produced a certificate of licensure to show compliance with Business and Professions Code 7031. The court of appeal affirmed in part. Buyer’s election to have the court decide his specific performance claim waived any claims of error he had and there was substantial evidence that Buyer failed to perform by not timely paying the purchase price after securing the Entitlements; he was properly denied specific performance. The court reversed on the quantum meruit claim. Public policy is not served by vacating the verdict awarded Buyer, an undisputed California-licensed contractor, for work he performed. View "Tierney v. Javaid" on Justia Law

The Court of Appeal affirmed the trial court's judgment in favor of a good faith purchaser at a lien sale that had acquired the contents of a storage unit free and clear of plaintiff's claim that the sale violated the California Self-Service Storage Facility Act. The court held that the conversion action was barred by the good faith purchaser provisions of Bus. & Prof. Code section 21711. The court also held that the action was barred by the doctrine of judicial estoppel which precluded a party from relying upon a theory in a legal proceeding inconsistent with one previously asserted. In the first suit against the storage facility owner, plaintiff claimed the owner did not abide by the requirements of the Act. In this case, plaintiff claimed that the Act did not apply and that defendant was liable for conversion regardless of whether he was a good faith purchaser. View "Nist v. Hall" on Justia Law

CBL Data Recovery Technologies, Inc. (CBL) appealed an order denying its motion to set aside a default judgment entered in favor of Airs Aromatics, LLC (Airs). Airs sued CBL for breach of contract in 2011. The operative complaint alleged that Airs "suffered damages in an amount to be proven at trial, but estimated to exceed $25,000.00." The prayer likewise requested "damages in an amount to be proven." There was no other allegation in the complaint as to the amount of damages sought. CBL filed an answer and engaged in discovery. The parties participated in a settlement conference in which Airs demanded $5 million to settle all claims. In August 2012, the parties stipulated to withdraw CBL's answer and allow Airs to obtain a default. A month later, Airs filed a Request for Court Judgment seeking over $3 million in damages. It also filed a document entitled, "Evidence of Damages" supporting the requested amount. The court held a default prove-up hearing and, in November 2012, entered default judgment against CBL in the amount of $3,016,802.90. Years passed. CBL filed a motion in April 2017 to set aside the default judgment. Citing Code of Civil Procedure sections 580(a) and 585(c), CBL argued the court could not enter a judgment awarding damages greater than that specifically demanded in the complaint. It argued the default judgment was void and requested that it be vacated pursuant to section 473(d). Airs opposed the motion, arguing the default judgment was merely voidable, not void. In addition, Airs argued the court could exercise discretion to deny CBL's motion on equitable grounds. The court held a hearing and denied CBL's motion, finding CBL had adequate notice of the damages sought by Airs. CBL argued to the Court of Appeal the default judgment was void. The Court of Appeal agreed, concluding the default judgment had to be vacated. View "Airs Aromatics v. CBL Data Recovery Technologies" on Justia Law

Government Code 1090, which prohibits conflicts of interest in the making of public contracts, applies to independent contractors. The Court of Appeal reversed the trial court's judgment for an LLC in an action alleging that the district breached a contract with the LLC. The district cross-complained to recover money paid under the alleged void contracts. The jury awarded millions in damages to the LLC. The court held that the trial court misinterpreted section 1090 when it instructed the jury that the LLC's contracts did not violate section 1090 on the theory that the statute did not apply to independent contractors, and erred in not instructing on the competitive bidding statutes. View "Strategic Concepts, LLC v. Beverly Hills Unified School District" on Justia Law

In 2005, plaintiffs Randy and Linda Tindell bought a single family manufactured home from defendant Linda Murphy for $320,000. Defendant Christine Bradley provided the appraisal. In 2009 the Tindells were unable to refinance the mortgage because it was a manufactured home, not a modular home. The Tindells filed an amended complaint alleging Murphy and Bradley failed to disclose defects in the property and acted in concert with others in order to conceal these defects and profit from the sale of the property. The trial court sustained Murphy’s demurrer without leave to amend. Subsequently, the court granted Bradley’s motion for summary judgment. The Tindells appealed, challenging the court’s sustaining of Murphy’s demurrer and the granting of Bradley’s summary judgment. After review, the Court of Appeal found no reversible error in those judgments, and affirmed the trial court. View "Tindell v. Murphy" on Justia Law