Articles Posted in California Court of Appeal

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Plaintiff, a member of the HOA, requested inspection of the HOA's membership list and other records. After the HOA largely denied the request, plaintiff filed a petition for writ of mandate seeking to compel the HOA to allow him to inspect and copy the requested records. The court concluded that substantial evidence supported the trial court's finding that plaintiff sought the information for an improper purpose; and the HOA's challenge to disclosing the membership list was not barred by statute. Accordingly, the court reversed the trial court's judgment requiring disclosure of the membership list, and otherwise affirmed the judgment. View "Tract No. 7260 Assn. v. Parker" on Justia Law

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Plaintiff Muhammad Iqbal appealed the grant of summary judgment entered against his complaint for personal injuries. In 2011, plaintiff sued Yosemite Auto Sales, Inc. (Yosemite Auto), its owner Eyad Kaid, and Alla Abuziadeh, individually and doing business as Jimmy’s Tow (collectively, the former defendants), for personal injuries. He alleged Yosemite Auto retained him to determine why a vehicle it owned would not start. Unknown to plaintiff, Abuziadeh earlier towed the vehicle to Yosemite Auto and disconnected the transmission shift linkage to do so. He allegedly did not reconnect the shift linkage after towing the car. The trial court ruled the complaint was barred by a general release plaintiff had previously executed that immunized “affiliates” of the defendants in the former case, and defendant Imran Ziadeh was such an affiliate. The Court of Appeal concluded as a matter of law defendant was not a protected “affiliate,” as that term was commonly understood, and reversed. View "Iqbal v. Ziadeh" on Justia Law

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Richard Sheley (decedent) formed and operated a corporation, George's Pest Control, Inc. Cross-complainant/respondent Nancy Sheley, the decedent's wife at the time of his death, owned a 25 percent share in the corporation. After the decedent's death in 2011, cross-defendants/appellants Linda Harrop and Valerie Richard, decedent's daughters from a prior marriage, owned a 75 percent share in the corporation. After appellants assumed control, the corporation commenced an action against respondent. An amended complaint added appellants as plaintiffs. Respondent filed a cross-complaint against appellants. Appellants filed an anti-SLAPP special motion to strike the cross-complaint. The trial court granted the motion as to respondent's fourth cause of action, sounding in intentional infliction of emotional distress, but otherwise denied the motion. On appeal, appellants argued that the trial court erred in denying their special motion to strike the first, second, and third causes of action in respondent's cross-complaint because the alleged conduct arose out of their constitutional right to petition, and respondent could not establish a probability of prevailing on the merits. Alternatively, appellants contended the trial court should have granted their motion as to the specific allegations involving protected activity in the first, second, and third causes of action. After review, the Court of Appeal concluded that some of respondent's allegations in the remaining three causes of action arose out of protected activity. Furthermore, the Court concluded that, as to those particular allegations which were based on protected activity, respondent failed to establish that the claims were legally sufficient and factually substantiated. Therefore, the Court modified the trial court's order by granting appellants' motion to strike the specific claims founded on allegations of protected activity in each remaining cause of action in the cross-complaint. View "Sheley v. Harrop" on Justia Law

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Stephen Kaplan appeals from a judgment confirming a $30 million arbitration award against him. This matter arose when several investors (plaintiffs1) sued Kaplan and a limited liability company (referred to as Houston LLC2) alleging defendants breached fiduciary duties pertaining to plaintiffs' investment in a self-storage facility located in Texas. Plaintiffs sought compensatory damages and declaratory relief, but did not seek punitive damages. After the court granted defendants' unopposed motion to compel the matter to private arbitration, the arbitration hearing was stayed while Kaplan was criminally prosecuted for his conduct in soliciting and handling investments in self-storage facilities, including the property at issue in plaintiffs' lawsuit. After Kaplan pled guilty to a wire fraud charge in the criminal action but before his sentencing hearing, a telephonic arbitration hearing was scheduled. The arbitrator awarded plaintiffs $30,835,152.57 without specifying the grounds or nature of the award. Kaplan then requested that the arbitrator vacate or modify the award, but the assigned arbitrator recused himself from all further arbitration proceedings and the arbitration administrator declined to reassign the case. Although the award did not specify the nature of the damages, the parties agreed a substantial portion of the award consists of punitive damages. After review, the Court of Appeal concluded the judgment had to be reversed: the arbitrator exceeded his authority by awarding punitive damages without adequate prior notice to Kaplan, in violation of the parties' arbitration agreement and fundamental procedural fairness principles. View "Emerald Aero, LLC v. Kaplan" on Justia Law

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In the seventh appeal arising from a 20-year multi-phase litigation, the issue presented for the Court of Appeal’s review centered on whether the trial court had authority to award approximately $281,000 in receivership fees to one of the prevailing parties under Code of Civil Procedure section 1033.5, subdivision (c). The trial court denied the cost request on the grounds the matter was previously decided when the court terminated the receivership and approved the receiver’s final accounting. The Court of Appeal concluded the trial court retained authority to exercise its discretion and consider whether the receivership fee should be paid by one party or shared between the parties. Therefore, the Court reversed the order granting the motion to tax costs and remanded the matter to permit the court to exercise its discretion on this limited issue. In all other respects, the trial court’s postjudgment order was affirmed. View "Southern Cal. Sunbelt v. Banyan, Ltd." on Justia Law

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Plaintiff filed suit alleging nine causes of action as to seven limited partnership transactions. The gravamen of the suit was that a private placement memoranda’s description of a real estate commission to be paid by the seller of the property at closing was false. Defendants filed or joined motions for a general reference, and the trial court granted the motions, appointing a referee. The referee found all causes of action barred by the governing statutes of limitations because, when plaintiff received and reviewed the private placement memoranda, he was either aware or, as a reasonable person, should have conducted the due diligence required to inform himself that the purchase price recited in the private placement memoranda had been increased over that for which the property otherwise could have been purchased to facilitate payment of the fee labeled "real estate commission." The trial court then granted defendants' motion for entry of judgment. The court concluded that the private placement memoranda attached as exhibits to plaintiff's first amended complaint, rather than the conclusory allegations in the pleading itself, establish that plaintiff had inquiry notice, if not actual notice, of the alleged wrongdoing at the time the transactions closed. Therefore, all of plaintiff's causes of action are time-barred, the delayed discovery rule does not apply, and the demurrers of all defendants were properly sustained without leave to amend. The court also concluded that any error in ordering a general reference was harmless. Accordingly, the court affirmed the judgment. View "Stella v. Asset Management Consultants" on Justia Law

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Western filed suit against La Cumbre for breach of an indemnity agreement where Mark J. Melchiori signed the agreement on La Cumbre's behalf as a managing member. In actuality, he was the managing member of La Cumbre's manager, MIC. MIC did not have actual authority to execute the indemnity agreement on La Cumbre's behalf. The trial court granted summary judgment for Western. The court concluded that Melchiori's signature binds La Cumbre pursuant to former Corporations Code section 17157, subdivision (d) (now section 17703.01, subdivision (d)), provided that the other party to the agreement does not have actual knowledge of the person's lack of authority to execute the agreement on behalf of La Cumbre. Accordingly, the court affirmed the judgment. View "Western Surety Co. v. La Cumbre Office Partners" on Justia Law

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The Department of Alcoholic Beverage Control (Department) issued a 15-day suspension of an off-sale general license held by the Garfield Beach CVS LLC Longs Drug Stores California LLC, doing business as CVS Pharmacy Store 9174 (CVS) after an administrative law judge found the store clerk sold alcohol to a minor decoy. The Alcohol Beverage Control Appeals Board (Appeals Board) reversed the suspension based on California Code of Regulations, title 4, section 141 (Rule 141) that allowed a law enforcement agency to use an underage decoy only "in a 'fashion that promotes fairness.'" In the Appeals Board's view, the suspension was unfair because the minor decoy did not respond about his age when the store clerk looked at his driver license and remarked, "I would never have guessed it, you must get asked a lot." The Department challenged the reversal of the license suspension, contending it correctly interpreted Rule 141 to require minor decoys to answer only questions about their ages. Based on the administrative law judge's finding in this case that the store clerk's remark constituted a statement rather than a question, the Department argued its decision was legally correct and supported by substantial evidence. The Appeals Board countered Rule 141 was ambiguous and resulted "in confusion and manifest unfairness." And CVS argued the Department's interpretation of Rule 141 unfairly allowed decoys to remain silent in the face of mistaken statements about age. According to CVS, affirming the license suspension would allow deceptive and misleading silence in the face of a store clerk's explicit mistake about the minor decoy's age. The Court of Appeal concluded Rule 141 was not ambiguous in requiring minor decoys to answer truthfully only questions about their ages. Because substantial evidence supported the administrative law judge's factual finding the decoy in this case was not questioned about his age, the Court determined as a matter of law that Rule 141 did not provide CVS with a defense to the accusation it sold an alcoholic beverage to an underage buyer. Accordingly, the Court reversed the Appeals Board's decision. View "Dept. of Alcoholic Bev. Control v. Alcoholic Bev. Control App. Bd." on Justia Law

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Swart is a small family-owned corporation, incorporated in Iowa, with its place of business and headquarters in Iowa. At issue is whether the franchise tax applies to Swart, whose sole connection with California is a 0.2 percent ownership interest in a manager-managed California limited liability company investment fund (Cypress LLC). The court concluded that passively holding a 0.2 percent ownership interest, with no right of control over the business affairs of the LLC, does not constitute “doing business” in California within the meaning of section 23101. In this case, Swart was not doing business in California based solely on its minority ownership interest in Cypress LLC. The court explained that the Attorney General’s conclusion that a taxation election could transmute Swart into a general partner for purposes of the franchise tax, and that the business activities of Cypress can therefore be imputed to Swart, is not supported by citation to appropriate legal authority and defies a commonsense understanding of what it means to be “doing business.” Accordingly, the court affirmed the judgment. View "Swart Enterprises v. Franchise Tax Bd." on Justia Law

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Dr. Hoang, a dentist, died in 2010. Dr. Khan agreed to buy Hoang’s practice. The contract allows the prevailing party to be awarded fees if “any litigation . . . is commenced . . . concerning its terms, interpretation or enforcement or the rights and duties of any party.” Two years later, Khan filed suit for breach of contract, fraud, concealment, negligent misrepresentation, and rescission. Khan alleged failure to comply with warranties, including that none of the practice records contained any untrue statement or material omission; that the practice was in compliance with laws and regulations; that patients and insurance companies had been properly billed; that the practice had not billed for services for which the practice was not entitled to compensation; that the practice had not, as a usual practice, waived co-payments or deductibles; and the practice had not increased any employee’s salary after April 2010. The estate counter claimed that Khan had failed to remit accounts receivable and to provide proper accounting. Before trial, Khan voluntarily dismissed her entire complaint without prejudice. The court found for Khan on all causes of action in the counter-complaint. The estate obtained an award of attorney fees as the prevailing party under Code of Civil Procedure section 1032(a)(4). The court of appeal remanded. Section 1717(b)(2), generally bars the award of fees after a pretrial voluntary dismissal for defense of contract claims, but the agreement's fee provision was broad enough to cover fees for defense against tort actions. View "Khan v. Shim" on Justia Law