Justia Business Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Saide Lugo, a former employee of Pixior, LLC, filed a lawsuit against the company and some of its employees for malicious prosecution. Lugo alleged that Pixior falsely reported her to the police, leading to a criminal prosecution against her, which she ultimately defeated. The parties disagreed on the circumstances leading to the police report. Pixior claimed that Lugo, a disgruntled employee, deleted valuable computer files upon her resignation. Lugo, on the other hand, argued that Pixior fabricated charges against her to tarnish her reputation as she was about to assist Pixior's adversary in an impending dispute. Both parties agreed that Pixior reported Lugo to the police, leading to her arrest and subsequent charges, which were eventually dismissed after it was discovered that a Pixior employee had lied under oath.The Superior Court of Los Angeles County initially reviewed the case. Pixior filed a special motion to strike in response to Lugo's lawsuit, which the trial court denied. The court found that Pixior's motion satisfied the first step of anti-SLAPP analysis, determining that Lugo's lawsuit concerned protected activity. However, the court ruled against Pixior on the second step, which required Lugo to demonstrate a probability of success.The case was then reviewed by the Court of Appeal of the State of California, Second Appellate District. The appellate court disagreed with the lower court's decision on the second step of the anti-SLAPP analysis. The court found that Lugo failed to defeat Pixior's defense that the police conducted an independent investigation before the district attorney filed charges. The court ruled that this independent investigation was a superseding cause that insulated Pixior from liability. Therefore, the court reversed the lower court's decision, ruling in favor of Pixior and awarding costs to the appellants. View "Lugo v. Pixior, LLC, et al." on Justia Law

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Apex Solutions, Inc., a cannabis business, filed a lawsuit against Falls Lake Insurance Management Company, Inc., after the insurance company refused to pay the full amount of a claim Apex filed following a burglary at its facility. The burglars stole a large portion of Apex's cannabis inventory from two separate vaults. Apex claimed that the thefts constituted two separate occurrences, each subject to a $600,000 per occurrence limit under its insurance policy. Falls Lake, however, contended that the thefts constituted a single occurrence, subject to a single $600,000 limit.The Superior Court of California, County of Alameda, granted summary judgment in favor of Falls Lake, ruling that a single per occurrence limit applied. The court also rejected Apex's claim for additional payments under its business interruption coverage.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Four, affirmed the lower court's ruling on the per occurrence limit, agreeing that the thefts constituted a single occurrence. However, the appellate court found that Apex had raised a triable issue of fact regarding the calculation of its lost business income. The court therefore reversed the judgment in part and remanded the case for further proceedings on that issue. View "Apex Solutions v. Falls Lake Insurance Management Co., Inc." on Justia Law

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In this case, the plaintiff, Joseph Gazal, donated over $1 million to purchase a car and a home for a destitute family. He was inspired to make this donation after hearing a homily delivered by defendant Carlos Echeverry, a deacon at his church. Gazal brought a lawsuit against Echeverry and his wife, Jessica Echeverry, as well as SOFESA, Inc., a nonprofit founded and led by Jessica Echeverry. Gazal claimed he was deceived into believing the car and house would be purchased for and titled to the destitute family, when in fact they were bought and titled to SOFESA.The defendants filed a special motion to strike the complaint under the anti-SLAPP (strategic lawsuit against public participation) statute, asserting that the homily and following conversations were protected speech. The trial court denied the motion, finding that the complaint did not rest on protected speech, but rather on private conduct and speech not directed at a wide public audience. Additionally, the court found that the causes of action arose from further communications that took place weeks after the homily.On appeal, the Court of Appeal of the State of California Second Appellate District Division Eight affirmed the trial court's decision. The court held that while the homily could be considered protected speech, the plaintiff's claims did not arise from the homily but rather from the alleged misconduct that occurred after its delivery. The court also found that the private discussions following the homily did not qualify for anti-SLAPP protection as they did not contribute to a public conversation on the issue of homelessness. Furthermore, the court denied a motion for sanctions filed by the plaintiff. View "Gazal v. Echeverry" on Justia Law

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In this case, the Court of Appeal of the State of California was asked to determine a dispute over an insurance claim between Apex Solutions, Inc. (Apex), a cannabis business, and Falls Lake National Insurance Company (Falls Lake). In June 2020, burglars broke into Apex's facility and stole the contents of two vaults containing cannabis inventory, leading to property and business income losses. Apex claimed over $2.5 million for the loss from Falls Lake. The disagreement between the parties centered on whether the theft constituted one or two occurrences under the insurance policy, which would determine the payout limit.The court held that the theft was a single occurrence, based on the evidence that it was a coordinated raid. However, it also concluded that there was a disputed issue concerning the proper calculation of Apex’s claim of lost business income. This issue was remanded for further proceedings in the lower court.In reaching its decision, the court applied existing principles of contractual and insurance law, with a focus on the interpretation of the term "occurrence" in the insurance policy. The court emphasized the importance of considering the cause of the loss and the coordination of the activities leading to the loss in determining whether it was a single occurrence.In conclusion, the court partially reversed the judgment, affirming the single occurrence ruling but remanding the case for further proceedings on the lost business income claim. View "Apex Solutions, Inc. v. Falls Lake Ins. Management Co., Inc." on Justia Law

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In this case, the People of the State of California filed a lawsuit against Holiday Liquor (owned by Abdul Jamal Sheriff and operated under Freetown Holdings Company) for public nuisance. The People claimed that the store had become a hub for illegal drug transactions, with customers and dealers using the store as a meeting point. The store was accused of tolerating loitering and drug dealing, lacking security, operating until 2 a.m., and selling alcohol in cheap single-serving containers.The trial court granted summary judgment for the People, ordering the store to hire guards, stop selling single-serving containers of alcohol, and take other measures to address the issue. The Court of Appeal of the State of California, Second Appellate District affirmed the trial court's decision.The court held that Holiday Liquor had indeed facilitated a public nuisance by failing to take reasonable measures to prevent the sale of illegal drugs on its property. The court ruled that the proprietor was aware of the illegal activities as he had been informed multiple times by the police. Despite this knowledge, he failed to implement recommended measures to mitigate the issue, such as hiring security guards, limiting operating hours, and ceasing the sale of single-serving alcohol containers. The ruling was based on the violation of sections 11570 et seq. of the Health and Safety Code (the drug house law), sections 3479 et seq. of the Civil Code (the public nuisance law), and sections 17200 et seq. of the Business and Professions Code (the unfair competition law). View "P. v. Freetown Holdings Co." on Justia Law

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In 2014, plaintiffs Medallion Film LLC and Pelican Point Capital Partners entered into a consulting fee agreement with Clarius Capital Group, managed by William Sadleir. The agreement stipulated that Medallion Film and Pelican Point would assist Clarius in obtaining funding for film projects, and Clarius would pay them a portion of any funding obtained. However, it is alleged that Sadleir dissolved Clarius and its affiliate and subsidiary entities in 2015 and formed a new set of corporate entities under the name Aviron with the assistance of the law firm Loeb & Loeb.The plaintiffs allege that Sadleir controlled both the Clarius and Aviron entities and transferred Clarius’s assets to the Aviron entities. Aviron later obtained a loan for its film projects from BlackRock, which Medallion Film and Pelican Point claim they were entitled to a portion of under their agreement with Clarius. However, Sadleir denied any affiliation between Aviron and Clarius and said he was solely an employee of Aviron.The plaintiffs sued Loeb & Loeb in December 2021, alleging causes of action for fraudulent misrepresentation, deceit by concealment, negligent misrepresentation, aiding and abetting fraud, and violating California Business and Professions Code section 17200. Loeb & Loeb filed a special motion to strike the first amended complaint as a strategic lawsuit against public participation under section 425.16. The trial court granted the special motion to strike.However, the Court of Appeal of the State of California Second Appellate District Division Eight vacated the judgment, reversed the order granting the special motion to strike, and remanded with directions to enter a new order denying the motion. View "Medallion Film LLC v. Loeb & Loeb LLP" on Justia Law

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This case involves a dispute between Dr. R. Michael Williams, a board-certified oncologist, and several defendants, including Doctors Medical Center of Modesto (DMCM) and various associated individuals. After a deterioration in their professional relationship, Williams alleged that the defendants acted to limit his medical practice and restrict his hospital privileges, affecting his ability to treat patients. Williams filed multiple lawsuits against the defendants, the second of which is the subject of this appeal.The trial court granted two anti-SLAPP motions in favor of the defendants, finding that Williams' claims arose from their protected activity and that Williams failed to establish a probability of prevailing on his claims. The court also awarded the defendants their attorney fees. Williams appealed both the granting of the anti-SLAPP motions and the awards of attorney fees.The court of appeal reversed both the granting of the anti-SLAPP motions and the award of attorney fees, finding that the trial court erred in its application of the anti-SLAPP statute. The court distinguished between the factual allegations that form the basis of Williams' claims and the defendants' protected activities, concluding that not all of the claims in the complaint arose from protected activity. As such, not all of Williams' claims were subject to the anti-SLAPP statute and the defendants were not entitled to attorney fees. The court remanded the case for further proceedings consistent with its decision. View "Williams v. Doctors Medical Center of Modesto" on Justia Law

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This appeal originates from a dispute between Alameda Health System (AHS) and Alameda County Employees’ Retirement Association (ACERA), concerning the method employed by ACERA to calculate the annual contributions that participating employers must make towards unfunded liabilities. This system was intended to ensure the ability to finance the pensions promised to employees. AHS is one of seven public entities that are part of ACERA's retirement system.Since 1948, ACERA has used the “Percentage of Payroll” method to calculate annual contributions for unfunded liabilities among its participating employers. This common approach pools actuarial risk to reduce volatility in contribution rates, simplify contribution calculations, and ensure timely funding for the retirement system. AHS raised concerns about this method in 2015, suggesting an alternative approach, the “Percentage of Liability” method, could result in AHS paying $12 million less in contributions each year.AHS requested that ACERA change its methodology and retrospectively reallocate contributions made of “approximately $65 million.” ACERA's Board unanimously voted to deny AHS's requests after consideration and consultation. AHS subsequently filed a petition for writ of mandate and complaint for declaratory relief challenging ACERA’s decisions. In 2022, the court granted ACERA's motion for summary judgment and AHS appealed. The appeals court affirmed the judgment, finding no abuse of discretion by ACERA or the lower court. View "Alameda Health System v. Alameda County Employees' Retirement Association" on Justia Law

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The case concerns Brooklyn Restaurants, Inc., a company that operates a local diner in California. The company filed a lawsuit against its insurer, Sentinel Insurance Company, Limited, after the insurer declined a claim under a commercial property insurance policy following a partial shutdown of the diner during the COVID-19 pandemic. The lower court granted Sentinel’s motion for judgment on the pleadings, ruling there was no coverage under the policy for Brooklyn’s claimed business loss. However, Brooklyn appealed, asserting that its case was unique from other COVID-19 related insurance cases filed in the state, as it had alleged a direct physical loss which should trigger coverage under the policy.Brooklyn also pointed out that their insurance policy contained a unique provision specifically covering losses attributable to a virus. Therefore, they argued, physical loss should include the cleaning of an area infected by the coronavirus. The Court of Appeal, Fourth Appellate District Division One State of California, agreed that the policy was reasonably susceptible to that interpretation. They also determined that Brooklyn had adequately alleged a direct physical loss or damage under the policy, which raised the possibility of coverage.However, the policy also included certain exclusions and conditions applicable to coverage for a loss or damage resulting from a virus. Brooklyn argued that these exclusions and conditions rendered the policy illusory. The court agreed that at the pleading stage, Brooklyn had done enough to raise the issue that its policy might be illusory, which in turn raised factual questions that required further discovery and evidence collection. Therefore, the court reversed the judgment and remanded the case back to the lower court with instructions to enter an order denying Sentinel’s motion for judgment on the pleadings. View "Brooklyn Restaurants, Inc. v. Sentinel Insurance Co., Ltd." on Justia Law

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The Fourth Appellate District Division One of the California Court of Appeal affirmed, with a minor modification, a lower court's decision that Ashford University, LLC and Zovio, Inc. violated California's unfair competition law and false advertising law. Over a decade, the defendants made false and misleading statements to prospective students, committing 1,243,099 violations. The trial court imposed a penalty of $22,375,782, which the defendants challenged as excessive. The appeal court agreed with the defendants that the lower court inadvertently included violations outside the false advertising law's statute of limitations in the penalty calculation. The court reduced the penalty by $933,453. However, the court rejected the defendants' other arguments, including that the penalty should be further reduced because it did not bear a reasonable relationship to the harm proven at trial, violated extraterritoriality principles, and was excessive given the defendants' financial status. The court found the penalty was reasonably related to the harm caused, the defendants could pay the penalty, and the defendants' misconduct emanated from California, so principles of extraterritoriality were not violated. View "People v. Ashford University, LLC" on Justia Law