Justia Contracts Opinion Summaries

Articles Posted in California Courts of Appeal
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In this case, Damien T. Davis and Johnetta H. Lane ("the plaintiffs") filed suit against Nissan North America, Inc. and Nissan of San Bernardino ("Nissan") after they allegedly bought a faulty Nissan vehicle with a defective transmission. Nissan attempted to compel arbitration as per the arbitration clause in the sale contract between plaintiffs and the dealership. However, the trial court denied the motion, ruling that Nissan, not being a party to the contract, could not invoke the clause based on the doctrine of equitable estoppel.Nissan appealed the decision, arguing that the trial court erred by refusing to compel arbitration based on equitable estoppel. However, the Court of Appeal, Fourth Appellate District Division One, State of California, agreed with the trial court's ruling reasoning that Nissan's reliance on the doctrine of equitable estoppel was misplaced. It explained that equitable estoppel applies when a party's claims against a non-signatory are dependent upon the underlying contractual obligations. Here, the plaintiffs' claims were not founded on the sale contract's terms, but rather on Nissan's statutory obligations under the Song-Beverly Act relating to manufacturer warranties. The court concluded that the plaintiffs are pursuing their statutory and tort claims in court, and there was no inequity in allowing them to do so.Therefore, Nissan's motion to compel arbitration was denied, and the trial court's order was affirmed. View "Davis v. Nissan North America, Inc." on Justia Law

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The case involves Applied Medical Distribution Corporation (Applied) suing its former employee, Stephen Jarrells, for misappropriation of trade secrets, breach of a contract governing Applied’s proprietary information, and breach of fiduciary duty. The trial court granted Applied’s posttrial motion for a permanent injunction and awarded Applied partial attorney fees, costs, and expenses.On appeal, the Court of Appeal of the State of California affirmed in part, reversed in part, and remanded for further proceedings. The court concluded that Applied was the prevailing party on the misappropriation cause of action and was entitled to a permanent injunction to recover its trade secrets and prevent further misappropriation. The court also found that Applied was entitled to an award of the reasonable attorney fees, costs, and expenses it incurred to obtain injunctive relief.However, the court disagreed with the trial court's decision to mechanically award only 25 percent of the incurred attorney fees and costs because Applied prevailed on only one of four claims it asserted. The court found that the trial court erred in how it determined the amount awarded by failing to address the extent to which the facts underlying the other claims were inextricably intertwined with or dependent upon the allegations that formed the basis of the one claim on which Applied prevailed. The court also found that the trial court erred in excluding certain expert witness fees from the damages calculation presented to the jury.Finally, the court concluded that the trial court erred by granting a nonsuit on whether Jarrells’s misappropriation was willful and malicious, and remanded for a jury trial on this issue. If the jury finds the misappropriation was willful and malicious, the court shall decide whether attorney fees and costs should be awarded to Applied and, if so, in what amount. View "Applied Medical Distribution Corp. v. Jarrells" on Justia Law

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In California, VFLA Eventco, LLC (VFLA), a music festival organizer, sued Starry US Touring, Inc., Kali Uchis Touring, Inc., Big Grrrl Big Touring, Inc., and William Morris Endeavor Entertainment, LLC (WME) over the return of deposits paid to secure the performances of Ellie Goulding, Kali Uchis, and Lizzo at VFLA’s music festival scheduled for June 2020. Due to the COVID-19 pandemic and government restrictions, VFLA cancelled the festival and demanded the return of the deposits from WME, who negotiated the performance contracts and held the deposits as the artists’ agent. VFLA claimed its right to the deposits under the force majeure provision in the parties’ performance contracts. The artists refused VFLA’s demand, claiming VFLA bore the risk of a cancellation due to the pandemic. The trial court granted summary judgment in favor of the artists and WME.The Court of Appeal of the State of California Second Appellate District affirmed the judgment, holding that the trial court properly granted summary judgment in favor of the artists and WME. The court interpreted the force majeure provision as not reasonably susceptible to VFLA’s interpretation, and favoring the artists. The court also held that the artists’ interpretation did not work an invalid forfeiture or make the performance contracts unlawful. View "VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC" on Justia Law

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In the case, a group of students from the University of San Francisco (USF) sued the university for breach of contract, alleging that the university did not deliver on its promise to provide in-person instruction and should refund a portion of their tuition fees due to the transition to remote learning during the COVID-19 pandemic. The Court of Appeal of the State of California, First Appellate District, Division Three affirmed the trial court's decision, which granted USF's motion for summary adjudication, concluding that the students failed to raise a triable issue of fact regarding whether USF promised to provide exclusively in-person instruction.The court determined that there was an implied-in-fact contract between USF and the student appellants, established through matriculation and the payment of tuition. However, the court found that the contract did not explicitly promise exclusively in-person instruction. The court also distinguished between general expectations of in-person classes and enforceable contractual promises for exclusively in-person instruction. The court held that the students failed to establish a breach of contract based on the transition to remote learning during the COVID-19 pandemic.The court further held that the students could not pursue quasi-contract claims, as a valid and enforceable contract existed between the students and USF. The students' promissory estoppel claim also failed, as they did not establish any clear and unequivocal promises from USF for in-person instruction. The court stated that the record did not reflect any such promise.The court dismissed the students' claims relating to the Fall 2020 and Spring 2021 semesters, as they were aware these semesters would be conducted either entirely remotely or in a hybrid format prior to enrolling or paying tuition for those semesters. Thus, the students could not reasonably have believed USF contractually promised to provide in-person education for these semesters. View "Berlanga v. University of San Francisco" on Justia Law

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In the case of Maryann Jones v. Solgen Construction, LLC and GoodLeap, LLC, the Court of Appeal of the State of California Fifth Appellate District affirmed the trial court's decision not to compel arbitration. The case concerned a business relationship involving the installation of home solar panels. The appellants, Solgen Construction and GoodLeap, had appealed the trial court's denial of their separate motions to compel arbitration, arguing that the court had erred in several ways, including by concluding that no valid agreement to arbitrate existed.Jones, the respondent, had filed a lawsuit alleging fraudulent misrepresentation, fraudulent concealment, negligence, and violations of various consumer protection laws. She contended that she had been misled into believing she was signing up for a free government program to lower her energy costs, not entering into a 25-year loan agreement for solar panels. The appellants argued that Jones had signed contracts containing arbitration clauses, but the court found that the appellants had failed to meet their burden of demonstrating the existence of a valid arbitration agreement. The court also held that the contract was unenforceable due to being unconscionable.The appellate court affirmed the trial court's decision, rejecting the appellants' arguments that an evidentiary hearing should have been held and that the court had erred in its interpretation of the evidence and the law. It found that the trial court had not abused its discretion and that its finding that the appellants failed to meet their burden of proof was not erroneous as a matter of law. View "Jones v. Solgen Construction" on Justia Law

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The plaintiff, SanJuana Andrade, filed a lawsuit against the Western Riverside Council of Governments (Council) on the basis that she had been fraudulently enrolled in a Property Assessed Clean Energy (PACE) program. She claimed that her signature was forged on the PACE loan agreements, resulting in a lien on her home and increased property tax assessments that she had not agreed to. Following an investigation by the state Department of Financial Protection and Innovation, which confirmed the contractors’ fraud, the Council released its assessment and the lien on Andrade’s home. In January 2022, Andrade filed a motion for attorney’s fees and costs under Civil Code section 1717, which provides for attorney’s fees in any action on a contract where the contract specifically provides for such fees. The trial court denied Andrade’s motion, concluding that the contractual fee provisions were limited in scope and did not entitle Andrade to attorney’s fees because they concerned fees for “a judicial foreclosure action.”On appeal, the California Court of Appeal, Fourth Appellate District, Division One, reversed the trial court's decision. It held that under section 1717, a fee provision must be construed as applying to the entire contract unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract. The Court found that limiting the fee provisions to foreclosure proceedings would be the precise kind of lopsided arrangement that section 1717 prohibits. The Court remanded the case back to the trial court to determine whether Andrade is “the party prevailing on the contract” and therefore entitled to attorney's fees. View "Andrade v. Western Riverside Council of Governments" on Justia Law

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In this case, BioCorRx, Inc., a publicly traded company engaged in providing addiction treatment services and related medication, was involved in a dispute with VDM Biochemicals, Inc., a company specializing in chemical synthesis and distribution. The dispute arose from a business relationship in which BioCorRx intended to partner with VDM to develop and commercialize a compound for treating opioid overdose, known as VDM-001. BioCorRx issued several press releases, allegedly making misrepresentations and improperly disclosing confidential information about the development of VDM-001. VDM filed a cross-complaint against BioCorRx and its president, Brady Granier, for breach of contract, fraud, and violation of trade secrets among other claims. In response, BioCorRx and Granier filed a motion to strike the allegations based on the anti-SLAPP statute, arguing that the press releases were protected speech under the statute.The Court of Appeal of the State of California, Fourth Appellate District, Division Three, ruled that the press releases fell within the commercial speech exemption of the anti-SLAPP statute, as they were representations about BioCorRx’s business operations made to promote its goods and services to investors. As such, these statements were not protected by the anti-SLAPP statute. Consequently, the court reversed the portion of the trial court’s order granting the anti-SLAPP motion as to the press releases. However, the court affirmed the portion of the order granting the anti-SLAPP motion as to Brady Granier, BioCorRx’s president, due to insufficient argument presented against this part of the ruling. View "BioCorRx, Inc. v. VDM Biochemicals, Inc." on Justia Law

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In this case, Epochal Enterprises, Inc., also known as Divine Orchids, entered into a commercial lease agreement with LF Encinitas Properties, LLC and Leichtag Foundation. The lease included a limitation of liability clause which stated that the defendants were not personally liable for any provisions of the lease or the premises, and the plaintiff waived all claims for consequential damages or loss of business profits. After the plaintiff sued the defendants, a jury found the defendants liable for premises liability and negligence.The jury awarded the plaintiff damages for lost profits and other past economic loss. However, the trial court granted the defendants’ motion for judgment notwithstanding the verdict (JNOV), reasoning that the lease agreement’s limitation of liability clause prevented the plaintiff from recovering the economic damages the jury awarded.The Court of Appeal, Fourth Appellate District Division One State of California, reversed the order granting JNOV in the defendants' favor, finding that the limitation of liability clause did not bar plaintiff’s recovery of damages. The court reasoned that the jury's award of damages necessarily implied a finding of gross negligence on the part of the defendants, which would be outside the scope of the indemnification clause. Further, the court held that the limitation of liability clause was void to the extent that it sought to shield the defendants from liability for their violations of the Health and Safety Code, as it violated public policy under Civil Code section 1668.On the defendants' cross-appeal regarding the damages award, the court affirmed the denial of the defendants' motion for partial JNOV, finding that substantial evidence supported the damages award. The court concluded that the jury could reasonably interpret the term "other past economic loss" on the verdict form as a different form of lost profits, and that the evidence presented to the jury provided a reasonable basis for calculating the amount of the plaintiff's lost profits. View "Epochal Enterprises, Inc. v. LF Encinitas Properties, LLC" on Justia Law

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The case in question involved a dispute between Epochal Enterprises, Inc., doing business as Divine Orchids, and LF Encinitas Properties, LLC and Leichtag Foundation, over a commercial lease agreement for a property containing dilapidated commercial greenhouses known to contain asbestos and lead paint. Epochal Enterprises claimed that the defendants failed to disclose the presence of these hazardous substances, which resulted in economic damage when the County of San Diego quarantined the leased premises. A jury found the defendants liable for premises liability and negligence, and awarded Epochal Enterprises damages for lost profits and other past economic loss.However, the trial court granted the defendants' motion for judgment notwithstanding the verdict (JNOV), based on a limitation of liability clause in the lease agreement that purported to prevent Epochal Enterprises from recovering the economic damages awarded by the jury.The Court of Appeal, Fourth Appellate District Division One State of California, reversed the trial court's judgment. It found that the jury necessarily concluded that the defendants had violated the Health and Safety Code by failing to disclose the existence of asbestos, and that this violation of law rendered the limitation of liability clause invalid under Civil Code section 1668. The court concluded that the limitation of liability clause could not bar Epochal Enterprises from recovering damages for the defendants' statutory violations.The court also affirmed the trial court's denial of the defendants' motion for partial JNOV on the issue of damages, finding that the jury had a reasonable basis for calculating the amount of lost profits. The court remanded the case for further proceedings. View "Epochal Enterprises, Inc. v. LF Encinitas Properties, LLC" on Justia Law

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In a dispute between K&S Staffing Solutions, Inc. (K&S) and The Western Surety Company (Western) and VSS International, Inc. (VSSI), the Court of Appeal of the State of California Third Appellate District upheld the Superior Court of San Joaquin County's decision that K&S was not a “laborer” within the meaning of the mechanics’ lien law and that payment bonds issued for the projects in question were subject to the mechanics' lien law’s requirements.K&S, a staffing company, sued VSSI and Western to recover unpaid amounts for services provided on state projects, arguing it was a “laborer” under the mechanics' lien law and thus entitled to assert a claim against payment bonds for the projects. The court disagreed, interpreting the term “laborer” in the law as a person "acting as an employee" performing labor or bestowing necessary services on a work of improvement, and concluded K&S, as an employer, did not qualify.Furthermore, K&S argued that the payment bonds issued for these state projects were not subject to the mechanics' lien law’s requirements because they were not "payment bonds" within the meaning of the law. However, the court disagreed, ruling that the bond requirements of the mechanics' lien law apply to state projects that require a bond under Public Contract Code section 7103 and other public entity projects that require a bond under section 9550. Consequently, the court affirmed the lower court's attorney fee award to the defendants under section 9564, which mandates attorney fees be awarded to the prevailing party in any action to enforce the liability on a payment bond. View "K & S Staffing Solutions v. The Western Surety Co." on Justia Law