Justia Business Law Opinion Summaries

Articles Posted in California Courts of Appeal

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R&W appealed a judgment entered after R&W allegedly defaulted in making payments to Osteroid Parties under a settlement agreement. The Court of Appeal held that the trial court erred in entering the stipulated judgment because the additional $700,000 was an unenforceable penalty under Civil Code section 1671. However, the court held that the trial court's factual determinations regarding R&W's breach of the agreement were supported by substantial evidence. Accordingly, the court reversed in part and remanded with directions to reduce the judgment, with further adjustments, plus interest. The court noted that its decision to publish was to remind practitioners whose clients settle a dispute involving payments over time how to incentivize prompt payment properly, and what may happen if done incorrectly. View "Red & White Distribution v. Osteroid Enterprises" on Justia Law

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In 2004, Hernandez, age 11, was a passenger in a 1992 Oldsmobile Cutlass that was involved in a head-on collision; she was seriously injured. Hernandez alleged that the Cutlass was not designed to be crashworthy and did not provide adequate protection to children riding in the back seat when the vehicle was involved in a frontal collision. Hernandez did not attempt to hold the manufacturer liable but sued Enterprise. Hernandez argued that a rental car company, NCRS, was strictly liable because NCRS placed the Oldsmobile “into the stream of commerce.” NCRS has sold its business in 1995 and, after a series of transactions, Enterprise became a successor in 2003. The case was stayed while Hernandez litigated an unsuccessful identical legal claim against other alleged NCRS affiliates. The trial court granted Enterprise summary judgment. The court of appeal affirmed. Enterprise did not succeed to any liability NCRS would have had for Hernandez’s injuries. After the sale of NCRS’s assets plaintiffs such as Hernandez could have sought recourse against General Motors. In addition, one of the successor owners entered bankruptcy through no fault of the acquiring entities, so the subsequent owners do not come within an exception to the general rule against successor liability in an asset sale. View "Hernandez v. Enterprise Rent-A-Car Co. of S.F." on Justia Law

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The defendants are Fair, an attorney, and limited liability companies Fair formed in 2007, which own Arizona apartment units. Plaintiffs are a California limited partnership and a nonattorney individual investor, who invested $150,000 and $100,000, respectively, in those LLCs. Plaintiffs asserted that defendants made fraudulent representations. The following years involved an attempt to negotiate a settlement; a lawsuit and amended complaints; two motions to stay the action and compel arbitration, pursuant to the arbitration provision contained in each LLC’s operating agreement; two appeals; a special motion to strike (anti-SLAPP motion); an award to plaintiffs of $12,609 in attorney fees and costs; refusal to comply with an alleged settlement; summary adjudications; and an additional award of $4,918.00 in attorney fees for the SLAPP proceedings. The court of appeal affirmed summary adjudication regarding the breach of the settlement agreement, rejecting an argument that there were triable issues of material fact regarding whether the parties entered into a binding settlement agreement. The court also affirmed the award of fees, rejecting an argument that the court should have awarded attorney fees for the entire dispute, consistent with Civil Code section 1717’s mutuality requirement and public policy or, at least, should have awarded fees as prevailing parties on defendants’ failed motions to compel arbitration and a related appeal. The court imposed monetary sanctions on defendants and their attorneys for bringing a frivolous appeal. View "J.B.B. Investment Partners v. Fair" on Justia Law

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The case arose from a landlord’s repeated refusal to consent to the proposed assignment of a ground lease for the anchor space in a shopping center. The plaintiffs were the entities that wished to assign the leasehold interest and the entities that agreed to take the assignment; the defendants were the landlord and its parent company. In their original and first amended complaints, plaintiffs alleged the landlord unreasonably withheld consent to the plaintiffs’ lease assignment request. While the litigation was pending, plaintiffs made an amended lease assignment request, which the landlord similarly rejected. In their second amended complaint, plaintiffs asserted the same five causes of action as before, but added allegations about the landlord’s refusal to consent to their amended assignment request. The landlord filed an anti-SLAPP motion to strike the second amended complaint, contending plaintiffs’ amended assignment request and the landlord’s response to that request were settlement communications and statements made in litigation, and therefore constituted protected activity. The trial court denied the motion, finding the landlord’s rejection of the amended assignment request was not a settlement communication or litigation-related conduct, but rather an ordinary business decision. The Court of Appeal agreed and affirmed the order denying the anti-SLAPP motion. View "ValueRock TN Prop. v. PK II Larwin Square" on Justia Law

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Pneuma sued a former employee, a competitor that employee went to work for, and a Pneuma investor, alleging several business torts including claims under the Comprehensive Computer Data Access and Fraud Act (Pen. Code section 502); for conversion; and for trespass to chattel relating to an internet domain. The investor filed a cross-complaint against Pneuma and its owner alleging they breached their investor agreement. The trial court ruled against Pneuma except on a single cause of action for trespass to chattel and ruled in favor of the investor on his cross-complaint. The court of appeal affirmed. A determination that a party engaged in trespass to chattel in a business context does not, without more, establish that the party engaged in an unlawful business practice under California’s Unfair Competition Law. (Bus. & Prof. Code section 17200). View "Pneuma International, Inc. v. Cho" on Justia Law

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Catambay’s husband was sued in Santa Clara County for embezzlement. Longview International won a judgment for more than one million dollars and recorded an abstract of judgment in San Mateo County, creating a judgment lien on a house owned by Catambay’s husband in Redwood City. Two days later, Catambay’s husband conveyed the Redwood City house to her as part of a marital settlement agreement in their then-pending dissolution proceeding. Catambay discovered that at the time Longview recorded the abstract of judgment its corporate powers had been suspended. The Delaware corporation had failed to provide an annual statement of information and pay a $25 fee. She sought to intervene in the Santa Clara County embezzlement case and moved to expunge the judgment lien from the Redwood City property. Longview argued that its corporate powers had been reinstated, which retroactively validated any actions it took while suspended. The court of appeal affirmed the denial of Catambay’s motion. Recording an abstract of judgment is a procedural act that is retroactively validated once a suspended corporation’s powers are reinstated. View "Longview International, Inc. v. Stirling" on Justia Law

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Almost twenty years after four dentists formed a partnership to acquire and maintain a dental office building, the then-partners amended their agreement to allow one of the partners, Dr. Richard Hallberg, to assign his partnership interest to his living trust, and to substitute the trustee (then Dr. Hallberg) as a general partner in place of Dr. Hallberg individually. Litigation ensued 15 years later after Dr. Hallberg's death over whether, despite the substitution, Dr. Hallberg was still a partner at the time of his death, which would trigger buyout provisions that applied in the event of a partner's death. While a trust cannot act in its own name and must always act through its trustee, a trust is a "person" that may associate in a partnership under the Uniform Partnership Act of 1994 (UPA), based on the plain language of the UPA's definition of "person." The clear statutory language is reinforced by other provisions of the statute, as well as by its legislative history. The Court of Appeal held that Dr. Hallberg was not a partner when he died. Rather, his trust, or the trustee of his trust, was the partner. The court saw no contradiction between the terms of the UPA and California trust law. To the extent Presta v. Tepper, (2009) 179 Cal.App.4th 909, 918, suggested otherwise, the court disagreed. Accordingly, the court reversed the trial court's judgment holding that the trust was not a separate legal entity. View "Han v. Hallberg" on Justia Law

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Appellant prevailed against respondents on causes of action that included fraud, conversion of property, and treble damages under Penal Code section 496. At issue on appeal, was the section 496 causes of action. In this case, even though the jury returned a special verdict that found respondents violated section 496(a), the trial court declined to award treble damages to plaintiff under the statute. The Court of Appeal held that section 496 is clear and unambiguous, and its remedial provisions should be applied where, as here, a clear violation of section 496(a) has been found. Therefore, the court reversed in part and remanded for the trial court to enter a modified judgment that includes treble damages on the section 496 causes of action. The court also reversed the trial court's denial of plaintiff's motion for attorney fees premised on section 496(c) and remanded. The court affirmed in all other respects. View "Switzer v. Wood" on Justia Law

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In 2008, Lucinda Cox and Hollis Griffin, who had been friends for over 20 years, opened a cosmetology school together. Cox was one of the school's teachers and Griffin handled administration. The relationship deteriorated over time: Cox alleged Griffin intentionally filed a false police report accusing Cox of forgery and embezzlement, leading to Cox's arrest and seven-day incarceration. Cox's attorney asked the court to instruct the jury on false arrest (false imprisonment) and intentional infliction of emotional distress. Cox's complaint did not allege a cause of action for malicious prosecution, and the court did not instruct on malicious prosecution. After the jury awarded Cox $450,000 in a general verdict, the trial court granted Griffin's motion for judgment notwithstanding the verdict (JNOV) because under Hagberg v. California Federal Bank, 32 Cal.4th 350 (2004), citizen reports of suspected criminal activity can only be the basis for tort liability on a malicious prosecution theory. When a citizen contacts law enforcement to report a suspected crime, the privilege in Civil Code section 47(b) barred causes of action for false imprisonment and intentional infliction of emotional distress, even if the police report was made maliciously. Cox's only argument on appeal was the JNOV should have been reversed because "the elements of malicious prosecution were supported by substantial evidence in the record." The Court of Appeal rejected Cox's argument because an appellant "cannot challenge a judgment on the basis of a new cause of action [she] did not advance below." The Court found an exception to that rule allowing a change in theory on appeal if the new theory involves a question of law on undisputed facts. But that exception did not apply here because the record did not contain undisputed evidence establishing all elements of malicious prosecution. Accordingly, although the jury found that Griffin intentionally filed a false police report causing Cox emotional distress, the Court of Appeal was compelled to affirm the defense judgment. View "Cox v. Griffin" on Justia Law

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In the underlying actions, the People asserted claims under Business and Professions Code section 17501 against real parties in interest and alleged that real parties sold products online by means of misleading, deceptive or untrue statements regarding the former prices of those products. The trial court sustained real parties' demurrer without leave to amend on the ground that the statute was void for vagueness as applied to real parties. The Court of Appeal granted the petition for writ of mandate seeking relief from the ruling regarding the section 17501 claims, and held that real parties failed to demonstrate any constitutional defect on demurrer. Regarding real parties' challenge to section 17501 as an unconstitutional regulation of free speech, as a preliminary matter, the court rejected petitioner's contention that the statute targets only false, misleading or deceptive commercial speech; the plain language of the statute restricts protected commercial speech and thus, the statute was subject to the test for constitutional validity set forth in Central Hudson Gas & Elec. v. Public Serv. Comm'n (1980) 447 U.S. 557, 566; and, because the undeveloped record was inadequate to apply the test, real parties' "free speech" challenge necessarily failed on demurrer. The court also rejected real parties' contention that section 17501 was void for vagueness, and rejected the facial and as-applied challenges. View "People v. Superior Court" on Justia Law