Justia Contracts Opinion Summaries

A pedestrian was fatally struck by a vehicle on a public roadway in Riverside, California. The decedent’s family sued the City of Riverside and others for wrongful death and dangerous condition of public property. In response, the City filed a cross-complaint against various contractors and their insurers, including Design Services, Inc. (DSI) and RLI Insurance Company (RLI). The City alleged that DSI had contracted to perform street lighting evaluations and upgrades, and that the contract required DSI to obtain insurance from RLI naming the City as an additional insured. The City contended RLI refused to defend and indemnify the City against the wrongful death lawsuit, despite its obligations under the policy.The Superior Court of Riverside County sustained RLI’s demurrer without leave to amend, finding that under Royal Globe Ins. Co. v. Superior Court, a plaintiff may not sue both the insurer and the insured in the same action. The court held that joining RLI in the same lawsuit as its insured, DSI, would risk prejudice by alerting the jury to the existence of insurance, in violation of California Evidence Code section 1155. The court dismissed the City’s cross-complaint as to RLI but allowed the City to pursue its claims in a separate action.The California Court of Appeal, Fourth Appellate District, Division One, reversed the judgment of dismissal. The appellate court held that the prohibition on joining an insurer and its insured in the same action does not apply when the City, as an additional insured, asserts its own contractual rights against RLI. The court found the City’s contractual privity with RLI distinguishable from the situation in Royal Globe and noted that any risk of prejudice could be addressed through severance or bifurcation. The case was remanded for further proceedings on the City’s claims against RLI. View "City of Riverside v. RLI Insurance Co." on Justia Law

A woman with dementia was admitted to a memory care facility, where her family warned staff about her tendency to wander and need for supervision. Three days after admission, she was found unattended in a courtyard on a 102-degree day, suffering from severe burns and heatstroke, ultimately dying days later. Her family, acting as successors in interest and individually, sued the facility for elder neglect, negligence, fraud, wrongful death, and negligent infliction of emotional distress. Upon admission, her niece had signed an arbitration agreement on her behalf, which the family argued should not bind their individual claims or override their right to a jury trial.The Superior Court of Sacramento County considered the facility’s motion to compel arbitration and stay the proceedings. The court found a valid arbitration agreement existed for the decedent’s survivor claims but ruled that the agreement did not bind the family members' individual claims, as they were not parties to the agreement. The court also declined to compel arbitration of the survivor claims under California Code of Civil Procedure section 1281.2, subdivision (c), citing the risk of conflicting rulings if the family’s claims proceeded in court while survivor claims were arbitrated. The court further held that the agreement’s reference to the Federal Arbitration Act (FAA) did not expressly incorporate the FAA’s procedural provisions to preempt California law.On appeal, the California Court of Appeal, Third Appellate District, affirmed the trial court’s judgment. It held that the arbitration agreement did not clearly and unmistakably delegate threshold issues of arbitrability to the arbitrator, and that the FAA’s procedural provisions were not expressly adopted by the agreement. Therefore, California law applied, and the trial court properly exercised its discretion to deny arbitration to avoid inconsistent rulings. The judgment was affirmed, and costs were awarded to the plaintiffs. View "Wright v. WellQuest Elk Grove" on Justia Law

A venture capitalist and two scientists, who had previously collaborated on successful biotechnology companies, engaged in discussions and took steps toward forming a new enterprise to develop and commercialize carbon-hydrogen bond activation technology. As these discussions progressed, disagreements arose regarding the scale of initial funding needed. The scientists believed more substantial investment was required than the amount offered by the venture capitalist. Ultimately, the scientists pursued alternative sources of funding, and the parties’ collaboration did not materialize into a finalized business.After this breakdown, the venture capitalist and his company filed a lawsuit in the Superior Court of San Diego County against the two scientists, alleging breach of oral and implied joint venture agreements, breach of fiduciary duty, promissory estoppel, and quantum meruit. The scientists moved for summary judgment. The Superior Court granted summary judgment in favor of the scientists on all claims. The court found that any oral or implied joint venture agreement was barred by the statute of frauds, there was no enforceable agreement, and the plaintiffs had not expected compensation directly from the defendants.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, reviewed the case de novo. The appellate court affirmed the trial court’s judgment, holding that the statute of frauds applies to oral or implied joint venture agreements that, by their terms, cannot be performed within one year. The court found no genuine dispute that developing the technology would necessarily take more than one year, rendering the alleged joint venture unenforceable. The breach of fiduciary duty claim failed because it depended on a valid joint venture. The promissory estoppel and quantum meruit claims failed due to the absence of clear and unambiguous promises and because compensation was expected from the venture, not the defendants directly. The judgment was affirmed. View "Clarke v. Yu" on Justia Law

Kaiser Foundation Health Plan, Inc. operated a health plan primarily using its own facilities, but its members sometimes sought emergency medical care at non-Kaiser hospitals, including Pomona Valley Hospital Medical Center. From 2004 until late 2017, Kaiser reimbursed Pomona Valley Hospital for emergency services at contractual rates under a written agreement. After Kaiser terminated this contract in 2017, it began paying Pomona Valley Hospital at a lower, unilaterally determined rate. Dissatisfied with these payments for services rendered from October 2017 through March 2020, Pomona Valley Hospital sued Kaiser in quantum meruit, seeking the asserted reasonable value of its emergency services, which it claimed was approximately $66 million more than what Kaiser had paid.The Superior Court of Los Angeles County held a jury trial in which Pomona Valley Hospital prevailed, and the jury awarded the full amount sought. Kaiser moved for a new trial, arguing, among other things, that the trial court erred by admitting the parties’ prior contract into evidence. The trial court agreed that admitting the contract was legal error but found the error only affected damages, not liability, and conditionally granted a new trial unless Pomona Valley Hospital accepted a remittitur, reducing the award by about $8 million. Pomona Valley Hospital accepted the remittitur, and judgment was entered. Kaiser appealed, and Pomona Valley Hospital cross-appealed, claiming the new trial should not have been granted.The California Court of Appeal, Second Appellate District, Division Two, held that the trial court erred in granting Kaiser’s new trial motion. The appellate court concluded the contract was properly admitted because its exclusionary clause only applied to regulatory valuations, not to common law quantum meruit actions like this one. The court also rejected Kaiser’s other arguments except for the prejudgment interest rate, holding that interest should be awarded at 7 percent, not 10 percent. The appellate court reversed the new trial order, vacated the amended judgment, and remanded for entry of judgment on the jury’s original verdict, subject to the corrected interest rate. View "Pomona Valley Hospital v. Kaiser Foundation Health etc." on Justia Law

Four brothers who had previously formed a diamond partnership later entered into an oral agreement in 1995 with a fifth brother to create a separate real estate partnership. The agreement was never reduced to writing, consistent with family custom. Over several years, the brothers jointly acquired and managed a large portfolio of California real estate. Tensions arose after the original real estate owner repaid a loan that was a condition for his partnership interest. One brother, who controlled the partnership’s entities, began excluding the others and denied the existence of any partnership, asserting sole ownership over the assets.The litigation began in 2003 when the excluded brother sued his siblings and related entities for his partnership share and damages. Two other brothers, who initially disclaimed the partnership under alleged economic coercion, later filed cross-complaints for their shares in both the diamond and real estate partnerships. The case saw multiple prior appeals and writ proceedings. After the trial court initially granted summary adjudication against the main plaintiff on most claims, the California Court of Appeal reversed, allowing contract, fiduciary duty, and fraud claims to proceed. Further cross-complaints were filed by the brothers, which survived demurrer on statute of limitations grounds.In 2024, after a lengthy jury trial, the Superior Court of Los Angeles County entered judgment in favor of the three plaintiff brothers, awarding declaratory relief, partnership shares, compensatory and punitive damages, and prejudgment interest totaling about $6.85 billion against the controlling brother and the partnership entities. On appeal, the California Court of Appeal, Second Appellate District, Division One, rejected most challenges to the trial court’s evidentiary rulings and instructions, but held the court erred in admitting an undisclosed expert opinion concerning lost investment profits. The appellate court conditionally affirmed the judgment, ordering a reduction of the economic damages awards relating to the real estate partnership by amounts attributable to this opinion, unless the plaintiffs opt for a new trial on those damages and related punitive damages. The judgments were otherwise affirmed. View "Jogani v. Jogani" on Justia Law

Edward and Linda Diaz purchased a motorhome from a California dealer, receiving warranties from the manufacturer that included a clause requiring any legal disputes related to the warranties to be litigated exclusively in Indiana, where the motorhome was manufactured. The warranties also contained a choice-of-law provision favoring Indiana law and a waiver of jury trial. After experiencing issues with the vehicle that were not remedied under warranty, the Diazes sued the manufacturer, dealer, and lender in California under the Song-Beverly Consumer Warranty Act, alleging failure to repair defects and refusal to replace or refund the vehicle.The Superior Court of Los Angeles County granted the defendants’ motion to stay the California action, enforcing the forum selection clause. The manufacturer had offered to stipulate that it would not oppose application of California’s Song-Beverly Act or a jury trial if the Diazes pursued their claims in Indiana. The court ordered the manufacturer to sign such a stipulation, holding that the Diazes could seek to lift the stay if Indiana courts declined to apply California law.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, concluded that the forum selection clause was unenforceable. The court held that the warranty’s terms, including the forum selection and choice-of-law provisions, violated California public policy by purporting to waive unwaivable statutory rights under the Song-Beverly Act. The court determined that the manufacturer’s post hoc offer to stipulate to California law did not cure the unconscionability present at contract formation and that severance of the unlawful terms would not further the interests of justice. As a result, the Court of Appeal reversed the trial court’s order staying the California action and directed entry of a new order denying the stay. View "Diaz v. Thor Motor Coach, Inc." on Justia Law

Two students enrolled at a private university in California during early 2020, when the COVID-19 pandemic prompted widespread campus closures. In accordance with local lockdown orders, the university transitioned from in-person to online instruction in March 2020. Prior to the Fall 2020 semester, the university communicated with students about its intention to return to in-person education but made clear that such plans depended on approval from local authorities. Ultimately, the university continued remote instruction. The students remained enrolled and later graduated.The students filed suit in the Superior Court of Orange County, alleging breach of contract, unjust enrichment, and unfair business practices. They argued that the university had made an enforceable promise to provide in-person education, citing various university publications, course listings, policies, and statements about on-campus experiences. They sought a partial tuition refund and raised alternative claims regarding unfair or unlawful representations. The university moved for summary judgment, asserting that it had not made any specific promise to provide in-person instruction and that its statements reflected only general expectations. The Superior Court granted summary judgment for the university, relying on Berlanga v. University of San Francisco and finding no triable issue of material fact regarding any misrepresentation.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and affirmed the judgment. The court held that the university’s statements and practices did not constitute sufficiently specific enforceable promises of in-person education under California law. The court found that only specific, explicit promises are enforceable in the student-university relationship, and none were present here. The court also rejected the students’ unjust enrichment and unfair business practices claims. The judgment in favor of the university was affirmed, and the university was awarded costs on appeal. View "Grant v. Chapman University" on Justia Law

Plaintiffs, who provided subadvisory investment services and loaned $1.5 million to FolioMetrix (personally guaranteed by two individuals), later engaged with defendants involved in a proposed merger of investment firms. Plaintiffs alleged that during merger negotiations, defendant Putnam promised to relieve the original borrowers of their obligations and personally assume the debt. Subsequent communications referenced intentions to transfer the loan liability to the new entity, but when plaintiffs sought a formal promissory note, defendants refused. Ultimately, defendants did not repay any portion of the loan.Plaintiffs filed suit in the Superior Court of the City and County of San Francisco in March 2019, alleging breach of contract, fraud, negligent misrepresentation, and breach of the covenant of good faith and fair dealing. At trial, the central dispute was whether defendants had agreed to assume the loan obligations under the promissory note. Plaintiffs argued that the agreement was formed through emails and conduct, while defendants denied any assumption of liability. The jury found in favor of defendants, determining no contract was formed and no promise was made to repay the loans. Following trial, the court awarded defendants attorney fees under Civil Code section 1717, based on a fee provision in the original promissory note, after reducing the requested amount.On appeal, the California Court of Appeal, First Appellate District, Division Five, addressed several issues. It ruled that the automatic bankruptcy stay did not preclude resolution of the appeal because the debtor (NAI) was the plaintiff rather than a defendant. The court rejected plaintiffs’ claims of error regarding jury instructions on contract formation, finding insufficient argument and no prejudice. It affirmed the attorney fee award, concluding the action was “on the contract” containing the fee provision, and held the fee amount was within the trial court’s discretion. The judgment and fee order were affirmed. View "Navellier v. Putnam" on Justia Law

Daevieon Towns purchased a new Hyundai Elantra in 2016, and over the next 19 months, the car required multiple repairs for alleged electrical and engine defects. In March 2018, either Towns or his wife, Lashona Johnson, requested that Hyundai buy back the defective vehicle. Before Hyundai acted, the car was involved in a collision, declared a total loss, and Johnson’s insurance paid her $14,710.91.Towns initially sued Hyundai Motor America in the Superior Court of Los Angeles County for breach of express warranty under the Song-Beverly Consumer Warranty Act. As trial approached, Towns amended his complaint to add Johnson as a plaintiff, arguing she was the primary driver and responsible for the vehicle. The trial court allowed the amendment, finding Johnson was not a buyer but permitted her to proceed based on its interpretation of Patel v. Mercedes-Benz USA, LLC. At trial, the jury found for Towns and Johnson, awarding damages and civil penalties. However, the court reduced the damages by the insurance payout and adjusted the prejudgment interest accordingly. Both parties challenged the judgment and costs in post-trial motions.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. It held that only a buyer has standing under the Act, so Johnson could not be a plaintiff. The court also held that third-party insurance payments do not reduce statutory damages under the Act, following the Supreme Court’s reasoning in Niedermeier v. FCA US LLC. Furthermore, prejudgment interest is available under Civil Code section 3288 because Hyundai’s statutory obligations do not arise from contract. The court affirmed in part, reversed in part, and remanded for the trial court to enter a modified judgment and reconsider costs. View "Towns v. Hyundai Motor America" on Justia Law

Several individuals who were employed by the City and County of San Francisco and were at least 40 years old when hired brought a class action lawsuit alleging that the City’s method for calculating disability retirement benefits under its retirement system discriminated against employees based on age. The system employs two formulas; Formula 1 is used if it yields a benefit exceeding a percentage threshold, while Formula 2 is used if the threshold is not met. Plaintiffs argued that Formula 2, which imputes years of service until age 60, resulted in lower benefits for those who entered the retirement system at age 40 or older, in violation of the California Fair Employment and Housing Act (FEHA).After initial proceedings in the San Francisco City and County Superior Court—including a demurrer sustained on statute of limitations grounds and subsequent reversal by the Court of Appeal—the plaintiffs filed an amended complaint asserting FEHA claims for disparate treatment and disparate impact, as well as claims for declaratory relief, breach of contract, and equal protection violations. The trial court certified a class and denied summary judgment due to triable issues of fact. A bench trial followed, where both parties presented expert testimony on whether Formula 2 disparately impacted older employees.The Court of Appeal of the State of California, First Appellate District, Division Four, reviewed the trial court’s findings. It affirmed the judgment, holding that plaintiffs failed to prove intentional age discrimination or disparate impact under FEHA. The court found that Formula 2 was motivated by pension status and credited years of service, not by age, and that plaintiffs’ evidence was insufficient as it was based on hypothetical calculations rather than actual data. The trial court’s denial of plaintiffs’ request to amend their complaint after trial was also upheld, as any alleged error was not reversible on the record. The judgment in favor of the City was affirmed. View "Carroll v. City and County of San Francisco" on Justia Law