Justia Contracts Opinion Summaries

“Breathe” was previously known as the American Lung Association of Los Angeles County, affiliated with the national organization, ALA, and the American Lung Association in California (ALAC). Breathe’s predecessor entered into annual agreements with ALAC and the ALA that provided for “income sharing” between Breathe and ALAC, except for “funds restricted in writing by the donor, not later than the date of donation, to exclude or limit sharing, such restriction not having been invited by the donee association.” ALA sued ALAC and its affiliates, including Breathe, for trademark infringement and related causes of action. Under a 2006 Consent Judgment, Breathe disaffiliated from the ALA and ALAC and was renamed. The parties agreed to a process for settling their outstanding accounts.In 2015, ALAC moved to enforce the Consent Judgment by compelling Breathe to share three bequests that were created but not distributed before the Consent Judgment. The trial court ruled in favor of the ALA, concluding the restricted funds exception of the Affiliate Agreement was ambiguous and that the bequests were shareable. The court of appeal reversed. The plain language of the bequests indicates the testators' intentions to benefit only the organization now known as Breathe. Sharing the bequests with the ALA is incompatible with those intentions and is not required under the Affiliate Agreement. View "Breathe Southern California v. American Lung Association" on Justia Law

Plaintiff suffered a stroke on August 18, 2009. He was hospitalized at St. John’s Regional Medical Center for two weeks, followed by a month in St. John’s inpatient rehabilitation facility. He entered Oxnard Manor, a skilled nursing facility, on October 3. Four days later, on October 7, Plaintiff signed an arbitration agreement. It stated that he gave up his right to a jury or court trial, and required arbitration of claims arising from services provided by Oxnard Manor, including claims of medical malpractice, elder abuse, and other torts. Plaintiff remained a resident at Oxnard Manor until his death nine years later, individually and as Plaintiff’s successors in interest, sued Oxnard Manor for elder abuse/neglect, wrongful death, statutory violations/breach of resident rights, and negligent infliction of emotional distress. Oxnard Manor filed a petition to compel arbitration. Both sides relied on medical records to demonstrate whether Plaintiff had the mental capacity to consent to the arbitration agreement.   The Second Appellate District affirmed. The court explained that evidence here that Plaintiff scored below the level necessary to “solve complex problems such as managing a checking account” supports the conclusion that he was unable to manage his financial affairs. But regardless of whether the presumption of Civil Code section 39, subdivision (b) applied, substantial evidence established that Plaintiff lacked the capacity to enter an arbitration agreement. View "Algo-Heyres v. Oxnard Manor" on Justia Law

Skillz provides a mobile platform that hosts games in which players compete for cash prizes. To participate in paid-entry competitions, a user must save the player account; after entering a date of birth, the user must tap a box with the word “Next.” Below the “Next” box is the advisory statement: “By tapping ‘Next,’ I agree to the Terms of Service and the Privacy Policy.” A hyperlink, if tapped, takes the user to Skillz’s terms of service. Gostev saved a Skillz player account in 2019. The Terms of Service then had 15 pages.Gostev sued Skillz, alleging that its games constituted illegal gambling, predatory and unlawful practices, and violated the Unfair Competition Law and the Consumers Legal Remedies Act, Gostev alleged the arbitration agreement was unenforceable. Skillz argued that Gostev’s challenges to the enforceability of the arbitration provision had to be submitted to an arbitrator.The court of appeal affirmed a finding that the arbitration agreement was procedurally and substantively unconscionable. The court noted provisions that a plaintiff’s damages are limited, the arbitration must occur in San Francisco, a plaintiff only has one year to bring his claim, the parties must split the arbitration fees and costs, and the defendant can obtain equitable relief without posting a bond or security. Unconscionability ”permeates the agreement such that severance is unavailable,” View "Gostev v. Skillz Platform, Inc." on Justia Law

A judgment creditor seeks delivery of her debtor’s Academy Award statuette, commonly known as the Oscar, under the Enforcement of Judgments Law (EJL). Respondent Academy of Motion Picture Arts and Sciences (AMPAS) intervened in the litigation. The EJL allowed the trial court to determine if AMPAS has a right to property (the Oscar) that came to light in a debtor’s examination.   The Second Appellate District affirmed. The court held that the trial court did not abuse its discretion by denying the creditor’s request for delivery of the Oscar. It correctly found that AMPAS has the right to purchase the Oscar for $10 pursuant to a written agreement with the Oscar winner and AMPAS’s bylaws. The court explained that a judgment creditor’s interest is derivative of the judgment debtor’s interest: The creditor acquires only the interest a judgment debtor has in personal property at the time of the levy. View "Juarez v. Ward" on Justia Law

G Companies Management, LLC, a California limited liability company, appealed an order staying its cross-complaint against LREP Arizona, LLC, based on the forum selection clause in a loan agreement between the parties. The cross-complaint alleged multiple causes of action, all based on the assertion that the interest rates charged in the loan agreement were usurious under California law, and G Companies contended the trial court erred because a forum selection clause was not enforceable if doing so would deprive a California resident of the protections of the state's fundamental public policy. The trial court held enforcement of the selection clause was appropriate because: (1) the loan transaction was substantially related to the chosen forum (Arizona); and (2) California had a complicated relationship with usury and allowed unlimited interest rates to be charged in numerous circumstances. LREP contended the court’s decision was correct because the “many exceptions” to California’s interest rate limits demonstrate that the prohibition of usury “is not a fundamental policy” in California. To this, the Court of Appeal disagreed and therefore reversed. "By virtue of its inclusion in article XV, section 1, of our Constitution, and because it cannot be waived, we find that California’s usury law does reflect a significant public policy. It prohibits money lending at rates higher than specified, even while recognizing numerous exceptions to those rate limitations. The complexity of the law does not imply a lack of commitment to the policy. To the contrary, such a fine-tuned approach suggests that significant effort has gone into determining the circumstances under which interest rate limitations are necessary for the protection of Californians." View "G Companies Management, LLC v. LREP Arizona LLC" on Justia Law

Plaintiff signed an arbitration contract with an employer called Intelex Enterprises, LLC. While working for Intelex, Plaintiff also worked for other firms (Other Firms). These Other Firms were legally separate from Intelex but functionally related to it. The Other Firms did not contract for arbitration with Plaintiff. After termination, Plaintiff sued the Other Firms but not Intelex: Intelex has never been a party to the case. The Other Firms moved to compel arbitration based on Plaintiff’s agreement with Intelex. The trial court denied the Other Firms’ motion to enforce a contract they had not signed.   The Second Appellate District affirmed. The court held that the Other Firms cannot equitably estop Defendant because they do not show she is trying to profit from some unfair action. They have no proof of agency. And they are not third-party beneficiaries of Intelex’s contract. The court explained that the Other Firms point to six places in the record they say show agency, but these materials do not measure up. The citation to Plaintiff’s complaint spotlights text that omits Intelex and cannot show agency. A different citation is to their attorney’s declaration recounting irrelevant procedural history. Other citations refer to Plaintiff’s admission that she worked for both Intelex and the Other Firms. This admission does not establish agency. View "Hernandez v. Meridian Management Services, LLC" on Justia Law

Plaintiff sued Sisyphian for (1) failure to pay minimum wage, (2) failure to pay overtime wages, (3) failure to pay wages for missed meal periods, (4) failure to pay wages for missed rest breaks, (5) waiting time penalties (6) failure to provide accurate wage statements and (7) unfair competition. In reliance on the arbitration clause in the Entertainment Agreement, the trial court granted Sisyphian’s motion to compel arbitration of Plaintiff’s claims. The arbitrator concluded that Plaintiff’s complaint contained a viable prayer for attorney fees for the claims on which she prevailed. Plaintiff filed a petition to confirm the final arbitration award. Following the entry of judgment for Plaintiff in the amount of $105,109.75, Sisyphian appealed. Sisyphian argued that the trial court erred in confirming the final arbitration award because, in reconsidering its initial attorney fees order, the arbitrator exceeded his powers   The Second Appellate District affirmed. The court explained that because Plaintiff’s petition to confirm was procedurally proper because no party sought dismissal of Plaintiff’s petition, and because Sisyphian’s filings seeking to vacate or correct the arbitration award were not timely filed, the trial court, in this case, was obligated to confirm the final arbitration award. Further, because Sisyphian forfeited its right to seek to vacate or correct the final arbitration award before the trial court, the court may not consider its arguments to do so on appeal. View "Darby v. Sisyphian, LLC" on Justia Law

A building owner operates a building in Los Angeles with retail space on the ground floor and office space, storage units, and parking on the roof. In 2012, the owner contracted with Western Waterproofing Company, Inc. to remove the roof parking surface and recoat it. The owner filed the first suit on theories of breach of an express warranty against product failure and breaches of implied warranties. The owner alleged the entire coating was beginning to fail and demanded the company remove and replace it all rather than merely undertake a leak-by-leak repair. After a jury found the company that coated the roof was not at fault, the building owner sued a second time when more leaks appeared. The trial court rightly found claim preclusion barred the new lawsuit and granted summary judgment for the company.   The Second Appellate District affirmed. The court held that the owner should have brought all claims about the company’s installation in its first suit. The owner neither alleged nor presented evidence of a new or latent way the company’s work could have harmed the owner. The court explained that the second suit simply tried to relitigate a resolution the owner disliked and would prefer to escape. Claim preclusion bars this repetitive attack on finality. View "5th AND LA v. Western Waterproofing Co., Inc." on Justia Law

Amazon fulfills orders for products sold by third-party merchants through a program it calls “Fulfillment by Amazon” (FBA). According to the First Amended Complaint (FAC), the state agency responsible for collecting sales and use tax is the California Department of Tax and Fee Administration (DTFA) has historically not collected from Amazon sales and use taxes for products sold through the FBA program.   Plaintiff filed a taxpayer action under section 526a seeking a declaration that the DTFA “has a mandatory duty to assess and collect” sales and use tax specifically from Amazon for products sold through the FBA program. The DTFA and its Director and the Amazon entities that Plaintiff named in his FAC as Real Parties in Interest all demurred to the FAC. The trial court sustained Respondents’ demurrers without leave to amend.   The Second Appellate District affirmed the trial court’s order sustaining Respondents’ demurrers. The court explained that no statute or regulation conclusively establishes that the DTFA must pursue Amazon for sales and use taxes related to FBA transactions. The language of Revenue and Taxation Code section 6015, subdivision (a) makes it clear that there may be multiple “persons” who the DTFA may regard as “retailers” for the purposes of a single transaction. The statutory framework of the Sales and Use Tax Law and the statutes vesting the DTFA with authority to administer that statutory framework led the court to conclude that whether a taxpayer is a retailer for purposes of the Sales and Use Tax Law is a discretionary determination and not a ministerial task. View "Grosz v. Cal. Dept. of Tax & Fee Administration" on Justia Law

Shusha, Inc., dba La Cava (La Cava) appeals from the judgment of dismissal entered after the trial court sustained without leave to amend the demurrer filed by Century-National Insurance Company (Century-National) to La Cava’s first amended complaint. La Cava sued Century-National for breach of an insurance contract and related claims after Century-National denied coverage for La Cava’s lost business income as a result of its suspension of restaurant operations in March 2020 due to the COVID-191 pandemic and associated government shutdowns.   On appeal, La Cava contended the trial court erred in concluding the alleged presence of the COVID-19 virus in its restaurant did not constitute “direct physical loss of or damage to” the restaurant necessary for coverage under the terms of the policy at issue. La Cava also argued Century-National acted in bad faith by summarily denying coverage without investigating La Cava’s claim.   The Second Appellate District reversed the trial court’s order and remanded for the trial court to vacate its order sustaining the demurrer without leave to amend and to enter a new order overruling the demurrer. The court held that La Cava’s allegations that contamination by the COVID-19 virus physically altered its restaurant premises were sufficient to withstand demurrer. The court explained that Century-National’s denial of coverage just three weeks after La Cava tendered its claim and in the earliest days of our understanding of the novel COVID-19 virus, cannot be deemed as a matter of law to have been made in good faith with reasonable grounds. View "Shusha, Inc. v. Century-National Ins. Co." on Justia Law