CALIFORNIA COURTS OF APPEAL 

Arbitration

Domestic Linen Supply Co., Inc. v. L J T Flowers, Inc. (2020) _ Cal.App.5th _ , 2020 WL 7090196: The Court of Appeal affirmed the trial court’s order denying petitioner’s petition to compel arbitration and its order awarding respondent attorney fees of $32,757.04. The trial court reasonably concluded there was no agreement to arbitrate for the following reasons. The form of the rental agreement was deceptive. The arbitration clause was not above the purchaser’s signature, where one would expect to find it. Instead, it was after the purchaser’s signature, on the back of the agreement. The back was filled from top to bottom with closely spaced lines of small type. The arbitration clause was number 15 of 21 paragraphs. There was nothing to distinguish paragraph 15 from any other paragraph. There was no heading, boldface, italics, or capitalization that would draw attention to the paragraph, and it was hidden in a thicket of fine print. The attorney fee award was proper because petitioner brought an independent petition to compel arbitration, and the denial of the petition terminated the action leaving respondent as the prevailing party entitled to an award of fees. While the arbitration agreement only allowed petitioner to recover fees, respondent was properly awarded attorney fees under Civil Code section 1717. (C.A. 2nd, December 4, 2020.)

Garcia v. Haralambos Beverage Co. (2021) _ Cal.App.5th _ , 2021 WL 22015: The Court of Appeal affirmed the trial court’s order denying defendant’s motion to compel arbitration in a putative wage and hour class action. Defendant’s 24-month delay in filing its motion to compel arbitration was unreasonably long. Because defendant engaged in substantial discovery and other litigation activity during this delay, substantial evidence supported the trial court’s conclusion that defendant had acted in a manner inconsistent with arbitration. Finally, substantial evidence supported the trial court’s finding that defendant’s delay impaired plaintiffs’ ability to realize the benefits and efficiencies of arbitration. (C.A. 2nd, January 4, 2021.)

Attorney Fees

347 Group, Inc. v. Philip Hawkins Architect, Inc. (2020) _ Cal.App.5th _ , 2020 WL 7136870: The Court of Appeal reversed the trial court’s order denying defendants’ motion for attorney fees as the prevailing parties on plaintiff’s causes of action for fraudulent conveyance and conspiracy. Plaintiff originally sued defendants, including Philip Hawkins Architect, Inc. (Architect) for breach of contract and breach of the duty of good faith and fair dealing. Architect defaulted, and later filed bankruptcy. Plaintiff filed an amended complaint alleging breach of contract, common counts, fraudulent conveyance, and conspiracy. During a pretrial hearing, plaintiff requested a default judgment on the contract claim against Architect and, per an agreement with the other defendants, dismissed the contract claim against them. Plaintiff maintained its causes of action for fraudulent conveyance and conspiracy against the other defendants, seeking to establish they were alter egos of Architect and liable under the contract with Architect. Only the individual defendant appealed. The Court of Appeal reversed the trial court, concluding defendant was entitled to attorney fees under Civil Code section 1717 because the action, although consisting of only tort claims, was on the contract, and plaintiff would have been able to collect attorney fees from defendant in the event it had prevailed. (C.A. 3rd, December 7, 2020.) 

Civil Code

Aghaian v. Minassian (2020) _ Cal.App.5th _ , 2020 WL 7777923: The Court of Appeal reversed the trial court’s order sustaining demurrers, without leave to amend, to two causes of action alleging fraudulent transfer against defendants Shahen and Alice Minassian under Civil Code section 3439.04(a)(1) and aiding and abetting fraudulent transfer against defendant Arthur Minassian. The Court of Appeal reversed, concluding that plaintiffs pleaded facts sufficient to constitute a cause of action for fraudulent transfer of two pieces of real property in Sherman Oaks under section 3439.04 (a)(1) and also alleged facts sufficient to state a cause of action against Arthur for aiding and abetting a fraudulent transfer. (C.A. 2nd, December 31, 2020.)

Nagel v. Westen (2021) _ Cal.App.5th _ , 2021 WL 58119: The Court of Appeal reversed in part the trial court’s order granting defendants’ motion for judgment on the pleadings and dispositive motion in limine on the basis that defendants could not be liable for plaintiffs’ claims under the Uniform Voidable Transactions Act (UVTA; Civil Code, section 3439 et seq.) without identifying a third party transferee who benefitted from the transfer of assets by judgment debtors/defendants Tracy Westen and Linda Lawson. Westen and Lawson sold their house and were later found liable in an arbitration for failing to disclose, as the sellers, material facts regarding water damage to the house. The arbitrator concluded the house was worthless and its only value was the land and awarded plaintiffs over $4.5 million for the loss of the home, the futile efforts to repair it, plus attorney fees and costs. By the time plaintiffs pursued collection, Westen and Lawson had sent the bulk of their assets out of California including applying the proceeds of the sale to an expensive home in Texas to take advantage of that state’s unlimited homestead exemption; and, with aid and counsel of Westen’s siblings, masking additional assets in a variety of funds, annuities and investments in Nevada and Minnesota. The trial court reasoned that no transfer had occurred when Westen and Lawson simply converted their assets from non-exempt to exempt but did not relinquish ownership or control. Ruling on an issue of first impression, the Court of Appeal disagreed and held that, under the UVTA, physically relocating personal property and transmitting or transporting sale proceeds out of state, then transmuting them into a different legal form, may constitute a direct or indirect mode of parting with assets or one’s interest in those assets. As a result, plaintiffs adequately alleged a “transfer” under the UVTA. (C.A. 2nd, January 7, 2021.)

Torts

Ko v. Maxim Healthcare Services, Inc. (2020) _ Cal.App.5th _ , 2020 WL 7639590: The Court of Appeal reversed the trial court’s order sustaining defendants’ demurrer, without leave to amend, to plaintiffs’ third amended complaint. Plaintiffs alleged negligent infliction of emotional distress (NIED) from watching defendant vocational nurse Thelma Manalastas abuse their disabled son while they were out of the house. Plaintiffs alleged they witnessed the abuse in real time as they watched the livestream of video and audio on plaintiff Dyana Ko’s smartphone from a “nanny cam” in the home. The trial court sustained the demurrer because plaintiffs were not physically present when Landon was abused, and thus they could not satisfy the requirement established by the Supreme Court in Thing v. La Chusa (1989) 48 Cal.3d 644, 668 (Thing) that plaintiffs must be present at the scene of the injury-producing event at the time it occurs and be aware that it is causing injury to the victim. The Court of Appeal disagreed, concluding that plaintiffs’ “virtual presence” during Landon’s abuse through a real-time audiovisual connection satisfied the contemporaneous presence requirement of Thing. Recognition of a NIED claim where a person uses modern technology to contemporaneously perceive an event causing injury to a close family member is consistent with the Supreme Court’s requirements for NIED liability and the court’s desire to establish a bright-line test for bystander recovery. (C.A. 2nd, December 23, 2020.) 

CALIFORNIA SUPREME COURT

Civil Procedure

Sass v. Cohen (2020) _ Cal.5th _ , 2020 WL 7653773: The California Supreme Court affirmed the Court of Appeal’s decision that reversed the trial court’s order granting a default judgment against defendant in an accounting action. The California Supreme Court held that a plaintiff seeking an accounting must comply with Code of Civil Procedure section 580’s requirement to state a specific dollar amount to support a default judgment granting monetary relief. It is not enough for the complaint to identify the assets in a defendant’s possession and request a fraction of their value. The Supreme Court, however, declined to decide a subsidiary issue regarding the proper method by which a court should determine whether the amount awarded in a default judgment exceeds the amount demanded. (December 24, 2020.)

Employment

Vazquez v. Jan-Pro Franchising International, Inc. (2021) _ Cal.5th _ , 2021 WL 127201: Answering a question posed by the United States Court of Appeals for the Ninth Circuit, the California Supreme Court ruled that its decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) applies retroactively to all cases not yet final as of the date its decision in Dynamex became final. (January 14, 2021.)