Justia Contracts Opinion Summaries

Westlands Water District (Westlands) appeals from a judgment of dismissal entered in a validation action filed pursuant to, inter alia, Code of Civil Procedure section 860 et seq. The subject matter was an anticipated contract between Westlands and the United States concerning the ongoing delivery of federal reclamation project water and repayment of certain financial obligations. The superior court declined to grant relief and ultimately dismissed Westlands’ validation action for multiple reasons. Most pertinently, the draft was found to be materially deficient in its failure to specify Westlands’ financial obligations under the anticipated contract.   The Fifth Appellate District affirmed the judgment. The court explained that the “Repayment Obligation” cannot be determined without knowing the “Existing Capital Obligation” and/or the contents of exhibit D. The “Existing Capital Obligation” cannot be determined without knowing the contents of exhibit D. In the absence of exhibit D, both terms are useless for purposes of determining Westlands’ financial obligations, i.e., “the scope of the duty and the limits of performance.” Moreover, as Westlands admitted during the motion proceedings, exhibit D was not merely omitted from the draft attached to the complaint. Despite being expressly incorporated into the contract by reference, exhibit D did not exist when the complaint and the December 2019 motion were filed. Even when the motion was heard, there was only meager parol evidence of estimates ranging from $200 million to $362 million. Given the circumstances, the court agreed the contract presented for validation was missing an essential term and, therefore uncertain, i.e., not sufficiently definite to be binding and enforceable. View "Westlands Water Dist. v. All Persons Interested" on Justia Law

Plaintiff Phil Hagey appealed a judgment of dismissal entered following the sustaining of a demurrer to his second amended complaint without leave to amend. Plaintiff owned a home with a solar energy system (the system). At the time he purchased the home, the prior homeowner was party to a contract with a company, Kilowatt Systems, LLC (Kilowatt), which owned the system (the solar agreement). Among other terms, the solar agreement required the prior homeowner to purchase the energy produced by the system through monthly payments to Kilowatt. In the event of a sale of the house, the solar agreement afforded the prior homeowner three options. The prior homeowner and plaintiff agreed to an option which allowed prepayment of all remaining monthly payments and a transfer of all solar agreement rights and obligations to plaintiff, except for the monthly payment responsibility. In conjunction with the sale of the house, prepayment occurred and the parties entered into the requisite transfer agreement. At some later point in time, defendant Solar Service Experts, LLC began sending plaintiff monthly bills on Kilowatt’s behalf, demanding payments pursuant to the solar agreement. After receiving a bill, plaintiff spoke to a representative of defendant who told him he should not have received the bill and the issue would be resolved. Plaintiff received additional bills and at least one late payment notice which identified defendant as a debt collector. Plaintiff communicated with defendant’s representatives about the errors by phone and email, all to no avail. Plaintiff thereafter filed a class action lawsuit against defendant. The trial court concluded plaintiff did not, and could not, allege facts sufficient to constitute a consumer credit transaction, as statutorily defined. Plaintiff argued the court erroneously focused on the undisputed fact he did not owe the debt which defendant sought to collect and, in doing so, failed to recognize the Rosenthal Act applied to debt alleged to be due or owing by reason of a consumer credit transaction. To this the Court of Appeal agreed and reversed the judgment. View "Hagey v. Solar Service Experts" on Justia Law

Defendant owned real property located at 3546 Multiview Drive in Los Angeles, California (the property). That year, he executed two deeds of trust against the property. Defendant obtained a HELOC from National City Bank, memorialized in an Equity Reserve Agreement and secured by a deed of trust against the property (collectively, the HELOC agreement). Piedmont Capital, L.L.C. (Piedmont)—a debt buyer—purchased the HELOC debt. Piedmont sued Defendant. Following a demurrer to the original complaint sustained with leave to amend, Piedmont filed the operative first amended complaint for (1) breach of contract, (2) money lent, (3) money had and received, and (4) declaratory relief. Although Piedmont alleged that the full amount of the HELOC debt Defendant owed totaled $186,587.26, Piedmont conceded that it was “not seeking to collect on any [amounts] that were already barred by the applicable statute of limitations at the time [the] action was filed.”   The Second Appellate District reversed. At issue is whether the borrower’s duty to make a monthly payment under such a HELOC agreement indivisible from the borrower’s duty to pay the full amount such that the statute of limitations to recover the full amount begins to run upon the first missed monthly payment. The court held that the duties are divisible. The court explained that the HELOC agreement in this case—by setting a fixed maturity date for the full amount and leaving it to the discretion of the lender whether to accelerate that date—necessarily contemplates that a breach as to a monthly payment does not constitute a breach as to the full amount. View "Piedmont Capital Management, L.L.C. v. McElfish" on Justia Law

Geringer Capital, Inc., Roger Geringer and Tricycle Entertainment, LLC (collectively Geringer parties) moved to preclude Jeffrey Konvitz, Blue Rider Finance, Inc.’s counsel of record, from testifying at trial in support of Blue Rider’s claim that the Geringer parties fraudulently induced Blue Rider to enter into a settlement agreement that did not accurately reflect the terms negotiated by the parties. The Geringer parties subsequently clarified that their motion should be considered, in the alternative, a motion to disqualify Konvitz. The court granted the motion and disqualified Konvitz, finding the integrity of the judicial process would be impaired if Konvitz served in dual roles. On appeal Blue Rider contends the court should have denied the motion due to the Geringer parties’ excessive delay in raising the issue.   The Second Appellate District reversed. The court concluded that Konvitz’s representation of Blue Rider at trial while also testifying on its behalf would “detract from the proper administration of justice,” the trial court quoted this general description of the basis for the advocate-witness rule, as well as comments explaining the parallel rule in the ABA Model Rules of Professional Conduct (ABA Model Rule 3.7) and in the ABA’s former Model Code of Professional Responsibility, all pointing to the conclusion that the roles of advocate and witness are inconsistent. The court then added its own observation that these dual roles create the risk of error and confusion, and “the trier of fact will constantly keep wondering whether the advocate-witness is acting under the appropriate role such that it will distract from the arguments and evidence presented.” View "Geringer v. Blue Rider Finance" on Justia Law

Allstate Insurance Company and several of its affiliates (collectively, Allstate) brought qui tam actions on behalf of the State of California alleging insurance fraud under the California Insurance Frauds Prevention Act (IFPA) (and the Unfair Competition Law (UCL) against three medical corporations, a medical management company and its parent company, four physicians, and Sattar Mir, an individual. The trial court found the complaints failed to state causes of action under the IFPA and the UCL because they were not pled with requisite specificity, the business models alleged were lawful, and one of the actions was time-barred.   The Second Appellate District reversed the orders sustaining the demurrers and judgments of dismissal. The court explained that the trial court found the complaints failed to state causes of action under the IFPA and the UCL because they were not pled with requisite specificity, the business models alleged were lawful, and one of the actions was time-barred. The court concluded that the operative complaints adequately plead causes of action under both statutes. View "P. ex rel. Allstate Ins. Co. v. Discovery Radiology etc." on Justia Law

Petitioners Infinity Select Insurance Company and Infinity Property and Casualty Corporation (collectively, Infinity) are named Defendants in a pending action (the instant lawsuit). The instant lawsuit stems from an earlier 2013 case (the prior action) in which plaintiffs sued Infinity’s insured for negligence and wrongful death in connection with a three-vehicle collision (the collision). In August 2022, the court issued its ruling. The primary effect of the ruling was to reform the Infinity policy to provide greater bodily injury policy limits of $750,000. Per its terms, the ruling “establishes the policy limits for the jury’s consideration in the upcoming jury trial on the remaining causes of action” including plaintiffs’ cause of action against Infinity for bad faith breach of the implied covenant of good faith and fair dealing due to Infinity’s rejection of plaintiffs’ Code of Civil Procedure section 998 demand of $750,000. Infinity filed a petition for a writ of mandate challenging the subject ruling.   The Fifth Appellate District concluded that the trial court erred in reforming the Infinity policy. The court held that the motor carrier of property—not the insurer—bears ultimate responsibility for meeting the requirements necessary to obtain a motor carrier permit. Moreover, even where an insurer intends to issue and certify a policy under section 34631.5, it is not obligated to issue the policy in the full amount of $750,000. Additionally, the court wrote evidence of insurance is not the only means of complying with the MCPPA financial responsibility requirements and infinity was under no duty to determine whether the insured had otherwise complied with MCPPA requirements. View "Infinity Select Ins. Co. v. Super. Ct." on Justia Law

Plaintiff is a thoracic surgeon. After the stock market crash now known as the “Great Recession” of 2008, Plaintiff’s sister recommended Gregory Acosta and Diamond Bar Executive Benefit Programs & Insurance Services, Inc. (the Acosta entities) as a potential financial planning service. In 2008, the Acosta entities and Securities America had contracts with Pacific Life Insurance Company (Pacific Life) that authorized them to act as a broker (or “producer”) for Pacific Life. Plaintiff later sued Acosta, the Acosta entities, Kestra, Securities America, and Pacific Life. Plaintiff asserted claims for fraud, negligent misrepresentation, breach of fiduciary duty, negligence, financial elder abuse, and violation of California’s Unfair Competition Law (UCL). He alleged his damages were $495,254.78. Plaintiff argued that the trial court inappropriately entered summary judgment for Pacific Life on his negligence and UCL claims because Pacific Life remains liable to Plaintiff.   The Second Appellate District affirmed the trial court’s decision granting summary judgment for Pacific Life. The court explained that the law and the undisputed evidence, in this case, indicate that it is the broker who typically conducts this suitability analysis. Variable life insurance policies are a “variable product,” and a different Insurance Commissioner regulation requires “brokers and agents selling variable products [to] comply with suitability standards.” The court further explained that section 2534.2(c) does not obligate an insurance company to conduct its own independent suitability analysis, regardless of whether the broker has also conducted one. Moreover, Pacific Life’s conduct—whether labeled “direct” or “vicarious” in the eyes of the law—falls completely within the terms of the release. View "Fischl v. Pacific Life Ins. Co." on Justia Law

Before Peter and Debra Last were married in June 2002, they entered into a premarital agreement which included a provision by which Debra purported to waive any right to receive spousal support in the event the marriage ended in dissolution. When the marriage did end in dissolution, Debra sought, and the trial court awarded her, temporary spousal support. The court did not adjudicate the issue whether the premarital agreement was enforceable but granted Peter’s request to bifurcate that issue. Peter argued the trial court erred by awarding Debra temporary spousal support because the premarital agreement was presumed to be valid and, absent a determination the agreement was unenforceable, it barred an award of temporary spousal support. While the Court of Appeal agreed that premarital agreements were no longer disfavored and are not per se unenforceable, the Court found Peter was incorrect in asserting the premarital agreement was presumed valid simply because it facially appeared to satisfy the requirements of Family Code section 1615(c)(1) and (2). "To the contrary, a premarital agreement is presumed to have not been executed voluntarily, and is therefore unenforceable, unless the trial court finds in writing or on the record that the agreement satisfies the requirements of section 1615(c)(1) and (2)." When the court ordered temporary spousal support, the premarital agreement was deemed not to have been voluntarily executed, and, therefore, the spousal support waiver did not prevent the court from awarding Debra temporary spousal support. The appeals court also concluded the trial court had the ability to modify the support order retroactively to the first support payment if it ultimately determined the premarital agreement was enforceable. Although the appeals court believed this reservation of jurisdiction did not make the temporary spousal support order nonappealable, it resolved any doubts about appellate jurisdiction by treating the appeal as a petition for writ of mandate, which was thus denied. View "Last v. Super. Ct." on Justia Law

The trial court entered a default judgment against Defendant Wanu Water Inc. on June 16, 2020, and on December 7, 2020, Defendant filed a motion to set aside its default and vacate the default judgment under the mandatory attorney-fault provision of Code of Civil Procedure section 473, subdivision (b) (section 473(b)). The trial court denied Defendant’s motion and gave no reason for its ruling.   The Second Appellate District vacated the default judgment. The court explained that the mandatory provision requires the court to vacate the default judgment if the application is filed “no more than six months after entry of judgment,” is “in proper form,” and is accompanied by an attorney’s affidavit of fault unless the court finds the default “was not in fact caused by” the attorney’s mistake, inadvertence, surprise or neglect. Here, the trial court denied Defendant’s motion and gave no reason for its ruling. The record shows the filing was timely and was accompanied by an attorney’s affidavit of fault. Thus, the only bases for denying the motion to vacate the default judgment were that the application was not “in proper form” or that the default “was not in fact caused by” the attorney’s neglect. View "Dollase v. Wanu Water Inc." on Justia Law

A healthcare provider contended it was underpaid for substance abuse treatment that it rendered to 29 patients. Seeking to recover the difference directly from the insurance company, the provider filed suit alleging the insurer entered into binding payment agreements during verification of benefits and authorization calls with the provider and otherwise misrepresented or concealed the amounts it would pay for treatment. The trial court entered summary judgment against the provider. After review, the Court of Appeal concluded the court did not err in determining one or more elements of the provider’s causes of action could not be established. View "Aton Center v. United Healthcare Ins. Co." on Justia Law