Justia Contracts Opinion Summaries

Reliant Life Shares, LLC (Reliant or LLC) was a profitable limited liability company owned in equal parts by three members. Two of them, SM and DC, were longtime friends and business partners. After DC stopped working out of the offices of Reliant because of a medical condition, no one at Reliant expected him to return to work, but SM assured CDC he remained a loyal business partner. Before long, however, SM and the third member of Reliant, SG, tried to force out DC, splitting the company’s profits and other revenues 50/50 and paying DC nothing. The LLC sued DC, seeking a declaratory judgment that he was properly removed as a member of the LLC. DC cross-complained against the parties and the LLC, alleging breach of contract, fraud, breach of the duty of loyalty and several other causes of action, seeking damages, an accounting and imposition of a constructive trust over funds obtained through violation of fiduciary duties. The jury awarded DC damages and valued his equity interest. The LLC, SM, SG, and several of their entities appealed. They assert a multitude of arguments for reversal of the judgment.   The Second Appellate District found no merit in any of the claims and affirmed the judgment in full. The court found that the trial court acted well within its discretion when it decided alter ego claims in phase one. Further, the court found no merit in the election of remedies argument, either as it relates to prejudgment interest or anything else. View "Reliant Life Shares, LLC v. Cooper" on Justia Law

Plaintiffs filed claims against the Ford Motor Company (FMC) for alleged defects in vehicles the company manufactured. FMC filed a motion to compel arbitration of plaintiffs’ claims based on the arbitration provision in the sale contracts. Plaintiffs opposed FMC’s motion, including on the grounds that FMC had waived its right to compel arbitration through its litigation conduct. The trial court denied FMC’s motion on its merits.   The Second Appellate District affirmed. The court explained that it agreed with the trial court that FMC could not compel arbitration based on Plaintiffs’ agreements with the dealers that sold them the vehicles. Equitable estoppel does not apply because, contrary to FMC’s arguments, Plaintiffs’ claims against it in no way rely on the agreements. FMC was not a third-party beneficiary of those agreements, as there is no basis to conclude Plaintiffs and their dealers entered into them with the intention of benefitting FMC. And FMC is not entitled to enforce the agreements as an undisclosed principal because there is no nexus between Plaintiffs’ claims, any alleged agency between FMC and the dealers, and the agreements. View "Ford Motor Warranty Cases" on Justia Law

Santa Clara Valley Water District was insured by Century. In 2000, the District notified Century that it had been advised by the federal government of potential claims for natural resource damages resulting from mercury contamination in the Guadalupe River Watershed (NRD Claim). Century requested additional information, including the status of negotiations. Century made several similar requests to the District between 2000-2002. In 2001, Century indicated that it had no duties under the primary policies because there was no lawsuit pending, had no duty to indemnify the District under the excess policies until the underlying limits of the policies had been exhausted, and was reserving its rights under the policies. The District subsequently signed a tolling agreement, was sued in federal court, and entered a Consent Decree without notifying Century.In 2008, the District notified Century of the existence of the lawsuit and the Consent Decree and stated that it had incurred $4 million in costs to comply with the Consent Decree. Century cited a No Voluntary Payment (NVP) provision. The District did not contact Century until 2014, when it completed its required Consent Decree work. In 2015, the District sued Century.The court of appeal affirmed summary judgment for Century. The NVP provisions barred the District from seeking indemnification for the expenses it incurred under the Consent Decree, without notifying Century or obtaining its consent. Those provisions apply to the settlement even though it was achieved through a consent decree rather than a traditional settlement agreement. Because the NRD Claim was disposed of by that settlement, there was no “adjudication” that gave rise to an “ultimate net loss” that gave the District the right to pay and seek indemnification. View "Santa Clara Valley Water District v. Century Indemnity Co." on Justia Law

Vivera Pharmaceuticals, Inc. (Vivera) was developing a medical test kit, but had received “negative publicity” from its litigation with a rival company. Vivera hired Sitrick Group, LLC (Sitrick) to manage a public relations campaign. Vivera did not make any payments and Sitrick filed demands for arbitration with Judicial Arbitration and Mediation Services (JAMS). Judge Swart was selected to serve as an arbitrator in a separate matter between Sitrick and Legacy Development (the Legacy matter). In that matter, Sitrick was employing the same law firm (but a different lawyer) as was representing it in the arbitration with Vivera. Sitrick filed petitions to confirm the arbitration award. Vivera asked the trial court to vacate the arbitrator’s award due to Judge Swart’s inadequate disclosure of the Legacy matter. The trial court issued an order confirming the arbitrator’s award.   The Second Appellate District affirmed. The court explained that the California Arbitration Act (the Act) requires arbitrators to disclose, among other things, matters that the Ethics Standards for Neutral Arbitrators in Contractual Arbitration (Ethics Standards) dictate must be disclosed. At issue here is whether the Ethics Standards require a retained arbitrator in a noncommercial case to disclose in one matter that he has been subsequently hired in a second matter by the same party and the same law firm. The court held “no,” at least where the arbitrator has previously informed the parties—without any objection thereto—that no disclosure will be forthcoming in this scenario. Because the arbitrator’s disclosures were proper here, the trial court properly overruled an objection based on inadequate disclosure. View "Sitrick Group v. Vivera Pharmaceuticals" on Justia Law

Plaintiff sued Uber under the Private Attorneys General Act of 2004 (PAGA), claiming Uber willfully misclassified him as an independent contractor rather than an employee, which led to numerous other Labor Code violations. In response, Uber moved to compel arbitration under the “Arbitration Provision” in the “Technology Services Agreement” (TSA).The trial court denied Uber's motion and the Second Appellate District affirmed. However, in June 2022, the U.S. Supreme Court vacated the decision when it granted Uber's petition for certiorari in light of Viking River Cruises, Inc. v. Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River).Following this posture, the Second Appellate District held 1.) the TSA’s PAGA Waiver is invalid and must be severed from the Arbitration Provision; 2.) under the Arbitration Provision’s remaining terms, Plaintiff must resolve his claim for civil penalties based on Labor Code violations he allegedly suffered in arbitration, and his claims for penalties based on violations allegedly suffered by other current and former employees must be litigated in court; and 3.) under California law, Plaintiff is not stripped of standing to pursue his non-individual claims in court simply because his individual claim must be arbitrated. View "Gregg v. Uber Technologies, Inc." on Justia Law

SM, AA and RM are the co-owners of Cannaco Research Corporation (CRC), a licensed manufacturer and distributor of cannabis products. All three individuals served as officers of CRC until February 2021, when AA and RM voted to remove SM from her position. SM sued AA, RM and others, including JA, AA’s husband, in a multicount complaint alleging causes of action for breach of contract, breach of fiduciary duty, fraud and other torts.   AA moved to disqualify SM counsel, Spencer Hosie and Hosie Rice LLP, on the ground SM had impermissibly downloaded from AA’s CRC email account private communications between AA and JA, protected by the spousal communication privilege and provided them to her attorneys, who then used them in an attempt to obtain a receivership for CRC in a parallel proceeding. The trial court granted the motion, finding that SM had not carried her burden of establishing AA had no reasonable expectation her communications with her husband would be private, and ordered the disqualification of Hosie and Hosie Rice.   The Second Appellate District affirmed. The court held that the evidence before the trial court supported its finding that AA reasonably expected her communications were, and would remain, confidential. And while the court acknowledged disqualification may not be an appropriate remedy when a client simply discusses with his or her lawyer improperly acquired privileged information, counsel’s knowing use of the opposing side’s privileged documents, however obtained, is a ground for disqualification. View "Militello v. VFARM 1509" on Justia Law

“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