Justia Business Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Plaintiff-appellant Cheryl Thurston was blind and used screen reader software to access the Internet and read website content. Defendant-respondent Omni Hotels Management Corporation (Omni) operated hotels and resorts. In November 2016, Thurston initiated this action against Omni, alleging that its website was not fully accessible by the blind and the visually impaired, in violation of the Unruh Civil Rights Act. By way of a special verdict, the jury rejected Thurston’s claim and found that she never intended to make a hotel reservation or ascertain Omni’s prices and accommodations for the purpose of making a hotel reservation. On appeal, Thurston contended the trial court erred as a matter of law: (1) by instructing the jury that her claim required a finding that she intended to make a hotel reservation; and (2) by including the word “purpose” in the special verdict form, which caused the jury to make a “factual finding as to [her] motivation for using or attempting to use [Omni’s] Website.” Finding no reversible error, the Court of Appeal affirmed the trial court. View "Thurston v. Omni Hotels Management Corporation" on Justia Law

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Leonard sought the involuntary dissolution of the family business. After his brothers, Michael and Joseph, invoked their statutory right to buy Leonard’s interests in the business pursuant to a court-ordered appraisal, the parties stipulated to add five LLCs to the 14 entities that were already subject to the appraisal and buyout proceeding. The court confirmed a valuation of Leonard’s interests and issued an alternative decree ordering that Michael and Joseph had to pay the appraised amount by a certain date and that, if they did not, the entities would be wound up and dissolved. Michael and Joseph did not pay the buyout amount. The court proceeded to wind up and dissolve the business, including the five additional LLCs. Meanwhile, Leonard proceeded on a claim for breach of fiduciary duty; the court awarded Leonard compensatory and punitive damages.Michael and Joseph argued the alternative decree to wind up and dissolve the business and the “follow-up" orders were void because the trial court lacked jurisdiction to dissolve the five LLCs. The court of appeal affirmed the order of dissolution but reversed the award of damages for breach of fiduciary duty. The trial court had fundamental jurisdiction; Michael and Joseph are estopped from collaterally attacking the alternative decree. Leonard lacked standing to assert breach of fiduciary duty; that cause of action was derivative, not individual. View "Schrage v. Schrage" on Justia Law

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Bernice filed an action for the involuntary dissolution of an LLC. Her sisters, Arlene, Caroline, and Diana owned equal shares. Caroline and Diana elected to purchase Bernice’s and Arlene’s interests pursuant to Corporations Code section 17707.03. They stipulated to staying the dissolution action and appointing three appraisers. The LLC’s sole asset was a single-story industrial warehouse in San Gabriel, which had been appraised at $3 million in March 2018. Its tenant's five-year lease term was set to expire in 2021. The appraisers worked separately and reached different valuations. The court instructed the appraisers to review their respective reports and confer.The appraisers submitted a joint final report, establishing a net asset value of $831,973 for a 25 percent interest in the LLC, and stating “the value should be $623,979 after the application of a 27% discount applicable to a minority interest. The court ordered an additional deduction of $2,025 for reimbursement of appraisal fees and set a final buyout price of $621,954. The court of appeal affirmed, rejecting arguments that instructing the appraisers to review each other’s reports and confer did not comply with the statutory procedures; that the court improperly discounted the fair market value; and that the court improperly failed to account for mismanagement allegations. View "Cheng v. Coastal L.B. Associates, LLC" on Justia Law

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Swenberg sued Dmarcian, Draegen, and Groeneweg, alleging claims related to his ownership interest in and employment with the company. Dmarcian was incorporated in Delaware and, in 2017, registered with the California Secretary of State as a foreign corporation with its “principal executive office” in Burlingame. Groeneweg, who resides in the Netherlands, is alleged to be a chief executive of, and have an ownership interest in, “a company whose true name is unknown to Swenberg, but which was a European affiliate entity of” Dmarcian (Dmarcian EU). The complaint alleges on information and belief that Groeneweg is presently a shareholder or beneficial owner of Dmarcian.The trial court granted Groeneweg’s motion to quash service for lack of personal jurisdiction. The court of appeal reversed. By publicly presenting himself as a leader of Dmarcian, having Dmarcian EU’s web address automatically route to Dmarcian’s Web site, administered in California, and receiving prospective customers directed to Dmarcian EU by a Dmarcian employee in California, Groeneweg “purposely availed himself " of forum benefits and purposefully derived benefit from his activities in the forum. There is no unfairness in requiring him to subject himself to the jurisdiction of California courts in litigation involving his relationship with that California company and its employees. View "Swenberg v. Dmarcian" on Justia Law

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Plaintiff Family Health Centers of San Diego operated a federally qualified health center (FQHC) that provided various medical services to its patients, some of whom are Medi-Cal beneficiaries. Section 330 of the Public Health Service Act authorized grants to be made to FQHC’s. In addition, FQHC’s could seek reimbursement under Medi-Cal for certain expenses, including reasonable costs directly or indirectly related to patient care. Plaintiff appealed a trial court’s order denying its petition for writ of mandate seeking to compel the State Department of Health Care Services (DHCS) to reimburse plaintiff for money it expended for outreach services. The Court of Appeal rejected plaintiff’s contention that the trial court and the DHCS improperly construed and applied applicable guidelines in the Centers for Medicare & Medicaid Services Publication 15-1, The Provider Reimbursement Manual (PRM). The Court concluded that the monies spent by plaintiff were not an allowable cost because they were akin to advertising to increase patient utilization of plaintiff’s services. View "Family Health Centers of S.D. v. State Dept. of Health Care Services" on Justia Law

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The Court of Appeal affirmed the unanimous jury's finding in favor of Underwood Ranches in an action for breach of contract and fraud, as well as the award of $13.3 million in compensatory damages and $10 million in punitive damages. Huy Fong, a business that produces Sriracha hot sauce, contracted with Underwood Ranches, a pepper farmer, to purchase peppers, which resulted in a 28 year relationship for the parties. For the first 10 years, the parties executed written agreements specifying the price per pound and volume to be supplied. Thereafter, the parties dealt with each other informally with oral agreements.The court concluded that there is more than ample evidence to support a finding of fraud based on fraudulent concealment and affirmative misrepresentation; the jury's findings are consistent and easily reconciled where, read together, the jury found that the parties had an ongoing contractual relationship that included the 2017 jalapeño growing season; the court rejected Huy Fong's contention that the trial court abdicated its responsibility to sit as a 13th juror in ruling on its motion for a new trial; the court upheld the $10 million punitive damage award; and, because the court affirmed the judgment against Huy Fong, it is unnecessary for it to consider Underwood Ranch's appeal. View "Huy Fong Foods, Inc. v. Underwood Ranches, LP" on Justia Law

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The Sellers bought an Oakland property to “flip.” After Vega renovated the property, they sold it to Vera, providing required disclosures, stating they were not aware of any water intrusion, leaks from the sewer system or any pipes, work, or repairs that had been done without permits or not in compliance with building codes, or any material facts or defects that had not otherwise been disclosed. Vera’s own inspectors revealed several problems. The Sellers agreed to several repairs Escrow closed in December 2011, but the sewer line had not been corrected. In January 2012, water flooded the basement. The Sellers admitted that earlier sewer work had been completed without a permit and that Vega was unlicensed. In 2014, the exterior stairs began collapsing. Three years and three days after the close of escrow, Vera filed suit, alleging negligence, breach of warranty, breach of contract, fraud, and negligent misrepresentation. Based on the three-year limitations period for actions based on fraud or mistake, the court dismissed and, based on a clause in the purchase contract, granted SNL attorney’s fees, including fees related to a cross-complaint against Vera’s broker and real estate agent.The court of appeal affirmed. Vera’s breach of contract claim was based on fraud and the undisputed facts demonstrated Vera’s claims based on fraud accrued more than three years before she filed suit. Vera has not shown the court abused its discretion in awarding fees related to the cross-complaint. View "Vera v. REL-BC, LLC" on Justia Law

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JP-Richardson, LLC (JP) appealed a court a judgment confirming an arbitration award in favor of Pacific Oak SOR Richardson Portfolio JV, LLC F/K/A KBS SOR Richardson Portfolio JV, LLC (Pacific Oak) in a business dispute. Pacific Oak removed JP as the managing member of a joint venture real estate company. JP initiated arbitration, seeking to be reinstated as the managing member. The arbitrator determined Pacific Oak’s decision to remove JP was justified, and JP owed over $1 million (the cost of arbitration). On appeal, JP argued the trial court erred by denying its petition to vacate the award and by granting Pacific Oak’s motion to confirm the award. Concluding JP’s contentions lacked merit, the Court of Appeal affirmed the judgment. View "JP-Richardson v. Pacific Oaks etc." on Justia Law

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The recipients received unsolicited emails that advertised products sold by DMS. The emails were not sent by DMS itself, but by third-party “marketing partners” of DMS. The recipients sued DMS under Business and Professions Code section 17529.5, which makes it unlawful to advertise in commercial emails under specified circumstances. The subject line of the emails typically states: Username “please confirm your extended warranty plan” and allegedly falsely referenced a preexisting business relationship for the purpose of inducing the recipient to open the spam. The trial court dismissed the suit.The court of appeal affirmed in part. The court correctly dismissed the challenge to the emails’ subject lines, which are not covered by cited sections of the Act. The court erred by dismissing the challenge to the emails’ domain names. A recipient of a commercial email advertisement sent by a third party is not precluded as a matter of law from stating a cause of action under section 17529.5 against the advertiser for the third party’s failure to provide sufficient information disclosing or making traceable the third party’s own identity. Such a cause is not precluded simply because such an email sufficiently identifies the advertiser. View "Greenberg v. Digital Media Solutions, LLC" on Justia Law

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The Court of Appeal affirmed the trial court's grant of plaintiff's motion to further amend the judgment entered against Raleigh Souther and Get Flipped, Inc. by adding defendant as a judgment debtor.The court concluded that adding defendant as a judgment debtor is neither unnecessary nor unfair; the order was not barred by claim or issue preclusion; and the record adequately supports the trial court's order. In this case, the Estate presented evidence that Moofly Productions was inadequately capitalized since all of its assets were being controlled by defendant and, as a corollary, that the entity and defendant had commingled funds. Furthermore, other facts considered in alter ego cases, an arguable lack of adherence to corporate formalities and business registration laws, also supported the trial court's determination. Most importantly, as established by the fraudulent conveyance judgment when considered together with the additional information concerning defendant's control of the Moofly Productions' bank accounts, failing to formally recognize defendant as a judgment debtor would produce an inequitable result, effectively preventing the Estate from enforcing the judgment it had obtained against Get Flipped, precisely the corrupt goal defendant sought to achieve. The court noted that the issue of control is not significant under the circumstances here. In any event, a judgment debtor may be added if the equities overwhelmingly favor the amendment and it is necessary to prevent an injustice, even if all the formal elements generally necessary to establish alter ego liability are not present. Finally, the court concluded that the amendment is not barred by laches. View "Corrales Favila v. Pasquarella" on Justia Law