Justia Business Law Opinion SummariesArticles Posted in California Courts of Appeal
Luxury Asset Lending v. Philadelphia Television Network
Two powerful friends decided to take out significant loans in order to invest in a purported business opportunity overseas. The business opportunity was in reality, a scam. The friends offered as collateral assets which were not theirs to encumber. The third party to whom the assets belonged had no idea the assets were being so encumbered. And the "lender" was another investor in the scam intent on recouping its investment. The opportunity was "a complete bust," and the friends were unable to pay the loans back. The lender sued to collect what was owed and foreclose on its secured interest in the offered collateral. The friends failed to answer the lawsuit, and a default judgment was obtained. The lender then began to execute on its judgment. The issues presented for the Court of Appeal's review centered on two main issues: (1) whether the default judgment was void; and (2) assuming it was valid, whether the trial court should have vacated the default and default judgment under its statutory and equitable powers. The Court determined the order denying the motion to vacate default judgment should have been reversed, and the matter remanded for the trial court to vacate the default, default judgment and an assignment order (entered April 30, 2018). View "Luxury Asset Lending v. Philadelphia Television Network" on Justia Law
RGC Gaslamp v. Ehmcke Sheet Metal Co.
Subcontractor Ehmcke Sheet Metal Company (Ehmcke) recorded a mechanic’s lien to recoup payment due for sheet metal fabrication and installation work done on a luxury hotel project in downtown San Diego. Project owner RGC Gaslamp, LLC (RGC) secured a bond to release the lien. Thereafter Ehmcke filed three successive mechanic’s liens, each identical to the first, prompting RGC to sue it for quiet title, slander of title, and declaratory and injunctive relief. The trial court granted Ehmke’s special motion to strike under the anti-SLAPP statute. The trial court found that Ehmcke met its moving burden because the filing of even an invalid lien was protected petitioning activity. Thereafter, the court found that RGC failed to make a prima facie showing that its sole remaining cause of action for slander of title could withstand application of the litigation privilege. RGC appeals both findings, arguing that the duplicative filing of mechanic’s liens after the posting of a bond was not protected activity. The Court of Appeal concluded after review that RGC erroneously imported substantive requirements of the litigation privilege into the first step of the anti-SLAPP inquiry. Ehmcke met that moving burden once its erroneously excluded reply declarations were considered. With the burden shifted on prong two, RGC failed to make a prima facie showing that the litigation privilege did not bar its slander-of-title cause of action. The anti-SLAPP motion was thus properly granted, and Court likewise affirmed the subsequent attorney’s fees and costs award. View "RGC Gaslamp v. Ehmcke Sheet Metal Co." on Justia Law
People v. Uber Technologies, Inc.
The state brought a civil enforcement action against Uber and Lyft, alleging that the companies improperly misclassify drivers using their ride-hailing platforms as independent contractors rather than employees, depriving them of benefits to which employees are entitled. This misclassification, the state alleged, also gives the defendants an unfair advantage against competitors, while costing the public significant sums in lost tax revenues and increased social-safety-net expenditures.The court of appeal affirmed the entry of a preliminary injunction that restrains the companies from classifying their drivers as independent contractors. Based on the breadth of the term “hiring entity” and the absence of an exemption for ride-sharing companies in Labor Code section 2775, there is little doubt the Legislature contemplated that rideshare drivers would be treated as employees. While the defendants’ business models are different from traditional employment, particularly with regard to drivers’ freedom to work as many hours as they wish, when and where they choose, and their ability to work on multiple apps at the same time, the mode in which the drivers are used met the elements of employment. The companies solicit riders, screen drivers, set standards for drivers' vehicles, track information on drivers using the apps, and may use negative ratings to deactivate drivers. Riders request rides and pay for them through defendants’ apps. The remuneration may be seen as flowing from riders to the defendants, then from defendants to drivers, less any fee associated with the ride. View "People v. Uber Technologies, Inc." on Justia Law
Gruber v. Yelp Inc.
Yelp publishes crowdsourced business reviews and allows businesses to advertise on its Website and mobile app. Yelp employs over 2,000 sales representatives to solicit advertising sales. Gruber, a solo attorney practitioner, was contacted by phone several times by Yelp sales representatives. During these calls, in which the sales representatives’ voices were recorded, Gruber discussed confidential and financial information regarding his law firm. When conversing with one representative, who happened to be his friend, Gruber sometimes joked, discussed private topics, and used profanity. Gruber did not recall that any Yelp sales representative notified him that the conversations were being recorded. Gruber sued under the California Invasion of Privacy Act (CIPA) Pen. Code 630, alleging unlawful recording and intercepting of communications; unlawful recording of and eavesdropping upon confidential communications; and unlawful wiretapping.The trial court granted Yelp summary judgment. The court of appeal reversed. While Gruber was not recorded during any calls (only Yelp’s representatives were recorded), CIPA is violated if a defendant records any portion of a conversation between two or more individuals. When the Yelp salespeople spoke during the one-sided recordings of their conversations with Gruber, the recordings revealed firsthand and in real-time their understanding of or reaction to Gruber’s words. Yelp failed to meet its burden of production regarding whether its use of VoIP technology precludes CIPA's application. View "Gruber v. Yelp Inc." on Justia Law
Reales Investment, LLC v. Johnson
Two months before trial, appellant Reales Investment, LLC’s attorney moved to withdraw from the case. Reales did not retain counsel until a few days before trial began, and it did not participate in any of the pretrial proceedings mandated by Riverside County Superior Court Local Rule 3401. On the morning of the first day of trial, Reales’ new attorney orally requested a continuance. The trial court denied the request, and also excluded all documents and witnesses Reales did not disclose in pretrial exchanges between the parties as required by Rule 3401. Because Reales did not disclose anything under Rule 3401, it was precluded from offering any evidence or testimony at trial, so the trial court granted a nonsuit for respondent Thomas Johnson. On appeal, Reales argued the trial court’s pretrial rulings were an abuse of discretion. After review, the Court of Appeal found no abuse of discretion and affirmed the judgment. View "Reales Investment, LLC v. Johnson" on Justia Law
Hooked Media Group, Inc. v. Apple Inc.
Hooked developed an app for mobile devices. Hooked’s CEO and investors later wanted to sell the business. Apple showed interest. After two meetings, it was clear that Apple was not interested in buying Hooked for its technology or market share but might want to acquire Hooked so certain engineers would become Apple employees. Hooked declined but, short on cash, suggested to Apple that it “sell” three engineers to Apple and continue operating the less technical advertising aspect of its business, and provided the engineers’ resumes. Apple responded that it might consider paying a “finder’s fee” but instead contacted the engineers directly and hired them. Hooked demanded that its chief technical officer (CTO) return all Hooked confidential technical information. Hooked emailed Apple’s general counsel. Apple responded that it had no desire to use another company’s trade secrets and would facilitate the return of all confidential information.Hooked sued, alleging fraud, misappropriation of trade secrets, interference with contract and prospective economic advantage, aiding and abetting breach of fiduciary duty, unfair business practices, and unjust enrichment. The court of appeal affirmed summary judgment for Apple. No legal wrong is committed when a company solicits and hires away its competitor’s employees; absent some independent illegal act, the interests of the employee in his own mobility and betterment are paramount to the competitive business interests of the employers. Hooked cannot show Apple did something that transformed ordinary free-market competition into an actionable legal wrong. View "Hooked Media Group, Inc. v. Apple Inc." on Justia Law
Alborzi v. University of Southern California
Plaintiffs filed suit alleging that defendants entered into an illegal referral and kickback scheme in which USC paid below-market rates for hospitalist services from Concord, and Concord self-referred patients to Elevate, which shared ownership with Concord. Plaintiffs further alleged that when Plaintiff Alborzi complained to management at Verdugo Hills Hospital about the illegal scheme, the hospital stopped referring patients to him and eventually dissolved the on-call panel in retaliation.The Court of Appeal held that the trial court erred by sustaining the demurrer because plaintiffs were not required to exhaust judicial remedies before asserting the causes of action they have alleged here. The court also found that plaintiffs' complaint alleged sufficient facts to support causes of action for violations of Health and Safety Code section 1278.5 and Business and Professions Code section 17200, et seq., and therefore the demurrer should have been overruled as to those claims. The court further found that plaintiffs' cause of action for violation of Government Code section 12653 failed to allege sufficient facts to state a cause of action, but leave to amend was warranted. Finally, the court found that plaintiffs have abandoned the three causes of action they did not address on appeal. Accordingly, the court reversed the judgment and remanded the action with directions. View "Alborzi v. University of Southern California" on Justia Law
Butler America v. Aviation Assurance Co., LLC
The Court of Appeal affirmed the trial court's order amending the judgment to add alter egos as judgment debtors. In this case, the trial court ordered that Craig Garrick individually and the Garrick entities be added to a judgment Butler America has against AFS.The court held that the release clause in the settlement agreement does not release Garrick and the Garrick entities because the express terms of the release clause excludes the release of any action to enforce the settlement agreement; AFS's breach of the settlement agreement terminated the agreement, including the releases; when the stipulated judgment was entered on the settlement agreement, it terminated all of AFS's and its third party beneficiaries' rights in the agreement, including the releases; and the trial court's finding of fraud are supported by substantial evidence. The court also held that the trial court did not err in finding that Garrick and the Garrick entities are alter egos of AFS. In this case, AFS was nothing but a shell; it had no substantial business activity and no income with which to pay its debts; and its only function was to act as a screen for Garrick and the Garrick entities. Finally, Butler is not equitably estopped from denying the separate existence of AFS and the Garrick entities, and the authority of the trial court to add alter egos as judgment debtors has long been recognized. View "Butler America v. Aviation Assurance Co., LLC" on Justia Law
Murray v. Tran
Dr. My Tran and Dr. Ian Murray were dentists who owned a dental practice known as Bird Rock Dental. Dr. Murray worked at the practice and Dr. Tran handled the business operations through his own separate entity. About two years after they formed the practice, they had financial disputes. In the midst of these disputes, Dr. Tran accused Dr. Murray of substandard work and published his claims to several individuals and groups, mainly to people working for Dr. Tran, but also to Dr. Murray’s new employer and to one retired dentist. Both parties sued the other, and the lawsuits were consolidated. Dr. Murray’s second amended complaint asserted 22 causes of action, two of which were at issue in this appeal: defamation per se and defamation. Dr. Tran moved to dismiss the causes of action under the anti-SLAPP statute. The trial court found the defamation claims were governed by this statute, and Dr. Murray did not meet his burden to show a probability of prevailing. The court thus struck the two causes of action from the complaint. Dr. Murray appealed. After review, the Court of Appeal reversed in part. The Court found Dr. Murray alleged five separate defamation claims for purposes of anti-SLAPP analysis, and Dr. Tran met his burden to show only one of those claims alleged speech protected under the anti-SLAPP statute: the alleged defamatory statements to Dr. Murray’s new employer. As to that claim, Dr. Murray did not meet his burden to show a probability of prevailing because he did not present evidence that Dr. Tran in fact made these statements. The Court determined the alleged statements in four of the five asserted categories of defamatory statements were not made in connection with a public conversation or discussion of issues, and thus not protected by the anti-SLAPP statute. The trial court was instructed to vacate its order granting the anti-SLAPP motion and to issue another order denying the motion on all defamatory claims, except for claims listed in paragraphs 319 and 335 of Dr. Murray's second amended complaint. View "Murray v. Tran" on Justia Law
Heshejin v. Rostami
Plaintiffs' second amended complaint alleged derivative causes of action on behalf of ALI against AIG for conspiracy to commit fraud, fraud by concealment, breach of fiduciary duty, declaratory relief, conversion, and accounting.The Court of Appeal affirmed the trial court's order of dismissal entered as to the AIG defendants after the trial court sustained without leave to amend the AIG defendants' demurrer to plaintiffs' second amended complaint. The court held that, although plaintiffs' appeal is timely, their derivative claims are barred by the compulsory cross-complaint rule under Code of Civil Procedure section 426.30, subdivision (a). In this case, ALI may not assert against AIG the related causes of action not pleaded in the AIG v. Mahdavi action. Because ALI is barred from asserting the related causes of action against AIG, so are plaintiffs. The court explained that, because plaintiffs stand in the shoes of ALI in seeking redress for ALI's injuries, they are generally subject to the procedural rules that would apply to ALI as plaintiff in a direct action. The court stated that it would be inequitable to AIG to allow plaintiffs to assert claims ALI failed to assert by compulsory cross-complaint in the earlier-filed action, subjecting AIG to the precise piecemeal litigation section 426.30 was designed to prevent. View "Heshejin v. Rostami" on Justia Law