Justia California Court of Appeals Opinion Summaries

Festival Fund guaranteed a loan made to an affiliate in connection with the purchase of a retail property. After default on the loan and a nonjudicial foreclosure, Clover sought to enforce the guaranty. The trial court concluded that the guaranty was unenforceable and found that Festival Fund was protected by antideficiency laws. The court concluded, however, that evidence does not support a conclusion that Festival Fund was a principal obligor on the loan. The court concluded, instead, that Festival Fund itself structured the transaction and determined that its affiliate—a separate legal entity—would take out the loan and take title to the property. Therefore, the trial court erred in applying a sham guaranty defense and entering judgment for Festival Fund. View "LSREF2 Clover Property 4 v. Festival Retail Fund 1" on Justia Law

Defendant insurance company denied uninsured motorist coverage to a third party beneficiary injured in an automobile accident because it had cancelled the policy before the accident occurred. The third party sued, and the insurer sought summary judgment. The third party opposed, contending the cancellation was invalid because a written notice seeking information sent by the insurer to the insureds prior to cancellation was unreasonable as a matter of law, and disputed facts existed as to whether the insurer had mailed the notice of cancellation and actually cancelled the policy. The trial court granted summary judgment, and finding no error, the Court of Appeal affirmed. View "Mills v. AAA Northern CA, NV and Utah Ins. Exch." on Justia Law

Schellinger planned commercial development of a large Sebastopol tract that it had agreed to purchase from Cotter. Certification of an environmental impact report (EIR) under the California Environmental Quality Act (Pub. Resources Code, 21000) was stalled for five years. In the first lawsuit, the court of appeal rejected Schellinger’s contention that CEQA section 21151.1 imposed a mandatory deadline of one year for EIR approval of an EIR and noted that a significant portion of the delay was attributable to Schellinger’s changes to its proposal. Cotter then sued Schellinger for breach of the contract, arguing that the prior litigation established that Schellinger took an unreasonably long time to secure approval. The trial court rejected that argument, but fixed a date by which Schellinger must secure final approval. The court of appeal affirmed. Schellinger then sued Cotter for breaching the contract and obtained a $2,855,431.77 judgment, plus costs and attorney fees. The court of appeal affirmed, agreeing that Cotter committed a breach of contract “animated by egregious bad faith” after failing to obtain relief in prior litigation, by undermining Schellinger’s efforts to obtain approval and by Cotter’s management of the property and efforts to transfer the property to others. View "Schellinger Bros. v. Cotter" on Justia Law

Plaintiff filed suit against the Plan to recover payment for health care services provided to Plan policyholders. The trial court dismissed plaintiff's suit because the state law causes of action were preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The court concluded that, notwithstanding procedural irregularies, plaintiff's due process rights were not violated where any error by the trial court was harmless; plaintiff's claims for breach of contract, quantum meruit, and promissory estoppel are not preempted by ERISA where these quasi-contract and contract causes of action do not address an area of exclusive federal concern; and plaintiff's claim for interference with contractual relations is preempted where this cause of action addresses an area of exclusive federal concern. View "Morris B. Silver M.D., Inc. v. Int'l Longshore & Warehouse Union" on Justia Law

Concrete Construction (Contractor) was sued by employees of Nibbi Concrete, who were injured after a shoring system designed by Contractor collapsed. Subsequently, Contractor sued Employer for indemnification based on a specific provision in the parties’ contract. The trial court dismissed, relying on the allegations in the underlying lawsuit that set forth claims only against Contractor and not against Employer. The court of appeal reversed, stating that the allegations in the underlying lawsuit are not determinative of Contractor’s claim for indemnity. View "Aluma Systems Concrete Constr. of Cal. v. Nibbi Bros., Inc." on Justia Law

Plaintiffs filed suit against Mercury for breach of contract and breach of the implied covenant of good faith and fair dealing. Judgment was entered in favor of plaintiffs for $3 million plus interest from the date of judgment in the underlying personal injury action. The court concluded that substantial evidence supports the finding that Mercury unreasonably refused to accept the modified release where the offering of the policy limits was not sufficient in and of itself to defeat a bad faith claim as a matter of law, and substantial evidence supports the referee’s finding that Mercury unreasonably rejected the policy limits settlement proposed by counsel for plaintiffs. Accordingly, the court affirmed the judgment. View "Barickman v. Mercury Cas. Co." on Justia Law

Coles sued to recover an overdue loan that he had extended to a real estate investment company, Cascade. The loan was guaranteed by Glaser and Taylor. That case was settled when Cascade ostensibly paid off the loan, and Coles, in return, executed a release. Shortly after the settlement, Cascade filed for bankruptcy. Coles was forced to surrender most of the settlement proceeds to the bankruptcy trustee as a preferential payment. In a second suit, against Glaser and Taylor, the trial court found that the defendants had breached the settlement agreement and entered judgment in favor of Coles. The court of appeal affirmed, holding that a debt of a contractual co-obligor is not extinguished by another co- obligor's​ pre-bankruptcy payment to a creditor that is later determined to be a bankruptcy preference. View "Coles v. Glaser" on Justia Law

Pulte Homes Corporation sued Williams Mechanical, Inc. for defective performance of a plumbing subcontract. Even before the action was filed, however, Williams was defunct; first, it was suspended by the Secretary of State, and thereafter, it dissolved voluntarily. Pulte served Williams though an attorney whom Williams had designated as its agent for service of process. The attorney, however, did not notify Williams of the action; he also did not identify or notify Williams’s liability insurer. Williams failed to respond to the complaint, and Pulte obtained a default judgment. Pulte then notified Williams’s liability insurer of the default judgment. About four and a half months later, the insurer retained counsel to represent Williams, and Williams’ counsel filed a motion to set aside the default judgment. The trial court granted the motion. Pulte appealed, arguing (1) Williams lacked the capacity to defend this action because it had been suspended; and (2) Williams failed to establish that it was entitled to relief from the default and default judgment. After review, the Court of Appeal held the trial court abused its discretion by ruling that Williams was entitled to relief. Accordingly, the Court did not address whether Williams had the capacity to defend. View "Pulte Homes Corp. v. Williams Mechanical" on Justia Law

RGW entered into a contract with Watson for the delivery of 146 sealed expansion joints for use on the Caltrans project for the construction of Highway 99. Watson filed a breach of contract action, contending it was entitled to an adjustment of the price on RGW’s original purchase order because the items ordered were changed. The trial court concluded that RGW’s purchase order was ambiguous and allowed the jury to decide what the contract meant and what price was appropriate. The jury decided in favor of Watson, finding the amount of the subject agreement was $605,990. The jury awarded Watson damages of $383,032. The court concluded that the trial court correctly (1) determined that RGW’s purchase order was ambiguous and (2) allowed the jury to evaluate the conflicting parol evidence before deciding the meaning of the contract. The court also concluded that the price adjustment owed to Watson for the change in the order was sufficiently certain to meet the statutory requirements for an award of prejudgment interest. Accordingly, the court affirmed the judgment, except for its failure to award prejudgment interest to Watson. View "Watson Bowman Acme Corp. v. RGW Construction" on Justia Law

After plaintiff was injured when he slipped on the stairs in the common area of a commercial building, he filed suit against the building and its managers (the landlords), for negligence and premises liability. The landlords each filed virtually identical cross-complaints against Edward Murachanian (the tenant), a dentist who rents an office suite in the building. The tenant had hired plaintiff’s employer to clean the carpets in his second-floor suite. The trial court granted the tenant’s motion for summary judgment, finding the lease obligated the tenant to indemnify the landlords only against claims for injuries occurring within the tenant’s office suite, not in the common areas. The court held that, under the indemnity clause in this case, the injury to a third party that occurred outside the dental suite, in a common area over which the landlords have exclusive control, did not arise out of the tenant’s use of the dental suite. It does not matter that the accident would not have happened but for the tenant hiring the third party to clean the carpets in the dental suite, and that the third party may have been at fault. Accordingly, the court affirmed the judgments and the order awarding attorney fees. View "Morlin Asset Mgmt. LP v. Murachanian" on Justia Law