Justia Contracts Opinion Summaries

Articles Posted in California Courts of Appeal
by
The issue this case presented for the Court of Appeal's review centered on whether a binding arbitration clause in an insurance policy issued by plaintiff Philadelphia Indemnity Ins. Co., applied to a third party, defendant SMG Holdings, Inc. The policy had been issued to Future Farmers of America, which was holding an event inside the Fresno Convention Center. Future Farmers had licensed the use of the convention center from its property manager, SMG. As part of the license, Future Farmers agreed to obtain coverage for itself and to name SMG as an additional insured. Thereafter, Future Farmers obtained a policy from Philadelphia Indemnity, which provided coverage for “managers, landlords, or lessors of premises” as well as for any organization “as required by contract.” The policy also contained an arbitration clause for coverage disputes. During the Future Farmers event, an attendee was injured in the convention center parking lot. When the injured man sued SMG, which also managed the parking lot, SMG tendered its defense to Philadelphia under the policy. Philadelphia refused, believing SMG was not covered under the policy for an injury occurring in the parking lot. After two years, Philadelphia petitioned the trial court to compel arbitration against SMG. The trial court denied the petition, concluding no evidence was presented that the parties to the policy intended to benefit SMG, and Philadelphia was equitably estopped from claiming SMG was required to arbitrate the dispute. Philadelphia contended: (1) the trial court erred in determining SMG was neither a third party beneficiary of the policy, nor equitably estopped from avoiding the policy’s arbitration clause; (2) alternatively, the court erred in finding Philadelphia estopped from compelling SMG to arbitrate; and (3) the coverage dispute was encompassed by the arbitration clause and arbitration should be ordered. The Court of Appeal agreed SMG could be compelled to arbitrate. Judgment was reversed, the trial court's order vacated, and the trial court directed to order arbitration of the coverage dispute. View "Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc." on Justia Law

by
Plaintiff alleges she bought her Richmond home in 1973, refinanced her mortgage in 2005, and unsuccessfully applied for a loan modification in 2015. Plaintiff was not allowed to make payments in the interim and owed $20,000 in arrears. Plaintiff sought Chapter 13 bankruptcy relief. She was required to make monthly payments to cover her pre-petition mortgage arrears plus her regular monthly mortgage payments. Plaintiff failed to make her regular October 2016 mortgage payment. Defendant sought relief from the automatic bankruptcy stay. The bankruptcy court approved an agreement that she would pay the October and November payments over a period beginning in January 2017. Plaintiff claims defendant violated that agreement, that her attempts to make those payments failed, and that she was unable to contact the defendant’s “single point of contact” for foreclosure avoidance (Civil Code 2923.7) Defendant obtained relief from the bankruptcy stay and would not accept the January 2017 payment. At the time of the bankruptcy sale, plaintiff’s home was worth approximately $550,000; defendant sold the home for $403,000. The court of appeal reversed the dismissal of plaintiff’s claim that she should have been able to avoid foreclosure by tendering the amount in default (Civ. Code 2924c) and that it was unlawful for defendant also to demand payment on amounts subject to a confirmed bankruptcy plan and reversed the dismissal of the section 2923.7 claim but upheld the dismissal of breach of contract, negligence, and elder abuse claims. View "Williams v. 21st Mortgage Corp." on Justia Law

by
Petitioner Hensel Phelps Construction Co. (Hensel Phelps) was a defendant in construction defect litigation filed by plaintiff and real party in interest Smart Corner Owners Association (Smart Corner). Hensel Phelps moved for summary judgment contending, among other things, that Smart Corner's claims were barred by a 10-year limitations period under Civil Code section 941. Smart Corner was not a party to the contract between Hensel Phelps and the developer of a mixed-use project, to which Smart Corner was a lessee. In its motion for summary judgment, Hensel Phelps asserted that "substantial completion" under the statute had the same meaning as "substantial completion" in its construction contract with the developer. Because the parties to the construction contract agreed that "substantial completion" occurred on a certain date at the time of construction, Hensel Phelps argued that the limitations period began to run on that date. Because Smart Corner asserted its claims more than 10 years later, Hensel Phelps contended they were untimely. The trial court denied the motion, finding that the definition of substantial completion in the contract did not trigger the running of the statute. And, even if it did, Smart Corner had raised a triable issue of fact whether the definition of substantial completion under the contract had been satisfied on the date asserted by Hensel Phelps. Hensel Phelps petitioned the Court of Appeal for mandamus relief, arguing again that the date of substantial completion adopted by the parties to the contract "conclusively establishe[d]" the date of substantial completion under the statute. After review, the Court of Appeal concluded the trial court did not err by denying Hensel Phelps's motion for summary judgment. "Hensel Phelps offers no authority for the novel proposition that certain parties may, by contract, conclusively establish the date when a limitations period begins to run on another party's cause of action. ... it is clear that the statute does not simply adopt the date determined by private parties to a contract for their own purposes as the date of substantial completion." The Court therefore denied the petition. View "Hensel Phelps Construction Co. v. Super. Ct." on Justia Law

by
Defendants solicited and obtained $180,000 from plaintiff produce a documentary on the Syrian refugee crisis. Plaintiff sued, alleging that no “significant” work on the documentary has occurred, that defendants never intended to make the documentary, and that a cinematographer has not been paid and claims the right to any footage he has shot, putting the project in jeopardy. Defendants filed an unsuccessful anti-SLAPP (strategic lawsuit against public participation (Code Civ. Proc. 425.16)) motion to strike, arguing the complaint arises out of acts in furtherance of their right of free speech in connection with an issue of public interest--their newsgathering related to the Syrian refugee crisis, and that plaintiff could not demonstrate minimal merit on his claims because the action is subject to an arbitration provision; plaintiff’s allegations are contradicted by the investor agreement; and the evidence establishes that substantial progress was made. The court found that plaintiff’s claims did not arise out of acts in furtherance of defendants’ protected speech but were “based on the failure to do acts in furtherance of the right of free speech." The court of appeal reversed. Defendants made a prima facie showing that the complaint targets conduct falling within the “catchall” provision of the anti-SLAPP law. Defendants’ solicitation of investments and their performance of allegedly unsatisfactory work on the documentary constituted activity in furtherance of their right of free speech in connection with an issue of public interest. The court erred in denying the motion at the first stage of the anti-SLAPP analysis. View "Ojjeh v. Brown" on Justia Law

by
Hong, the president of ENA, sought to open a restaurant with a license to serve beer and wine in a building owned by 524 Union, which had housed restaurants for many years. After leasing the premises, ENA was unable to open because the San Francisco Planning Department determined that an existing conditional use authorization for the property was no longer effective and a new one could not be granted. ENA sued the lessors, claiming false representations and failure to disclose material facts regarding the problems with the conditional use authorization. A jury awarded ENA compensatory and punitive damages. The court of appeal held that the jury’s verdict on liability, including liability for punitive damages, is supported by substantial evidence. Hong’s testimony was substantial evidence supporting the jury’s verdict. Additional support was provided by evidence of email correspondence around the time Hong entered the lease. The trial court employed an improper procedural mechanism in reducing the amount of the punitive damages award but the jury award was unsupported and Hong effectively stipulated to the reduced amount. View "ENA North Beach, Inc. v. 524 Union Street" on Justia Law

by
The Court of Appeal affirmed the trial court's dismissal of the school district's cross-complaint under the anti-SLAPP statute. In the underlying action, Margaret Williams and her LLC filed suit against the school district, alleging that her termination was retaliatory. Williams also alleged that the school district unlawfully caused her arsenic poisoning. The court explained that, if the court were to enforce the school district's request, the indemnity provision would require Williams LLC to fund the school district's defense against the very litigation the LLC and Williams brought against the school district. Therefore, the school district's cross-complaint arose from that litigation or the LLC's refusal to sabotage it -- each of which was protected by the anti-SLAPP statute. Furthermore, the school district sought to require the LLC not only to fund the school district's defense, but also to reimburse the school district for any award secured by Williams or the LLC. The court explained that such a bar to meaningful recovery embodied a high degree of substantive unconscionability, sufficient -- when combined with the procedural unconscionability shown through Williams LLC's unrebutted evidence of adhesion, oppression, and surprise -- to establish that the indemnity provision was unconscionable. The court limited the provision to avoid an unconscionable result, and held that the school district failed to show error in the dismissal of the breach of contract and declaratory relief claims, as well as the dismissal of the school district's other cross-claims. View "Long Beach Unified School District v. Margaret Williams, LLC" on Justia Law

by
Renovate America, Inc. (Renovate) appealed an order denying its petition to compel arbitration of Rosa Fabian's claims related to the financing and installation of a solar energy system in her home. Fabian filed a complaint against Renovate alleging that solar panels she purchased for her home were improperly installed. Fabian alleged that, in early 2017, Renovate made an unsolicited telephone call to her home about financing the solar panels and "signed" her name on a financial agreement. All communications between Fabian and Renovate's representative occurred telephonically and she was never presented with any documents to sign. Fabian claims she did not sign a financial agreement with Renovate; nevertheless, Renovate incorporated the solar panel payments set forth in the financial agreement into her mortgage loan payments. Fabian thus alleged that Renovate violated: (1) the Consumers Legal Remedies Act; (2) the Unfair Competition Law; and (3) the California Contract Translation Act. Renovate petitioned to compel arbitration of Fabian's claims and stay judicial proceedings pending arbitration, supported by an Assessment Contract (Contract) that Renovate claimed Fabian had signed electronically. Renovate contended the trial court erred in ruling that the company failed to prove by a preponderance of the evidence that Fabian electronically signed the subject contract. The Court of Appeal found that by not providing any specific details about the circumstances surrounding the Contract's execution, Renovate offered little more than a bare statement that Fabian "entered into" the Contract without offering any facts to support that assertion. "This left a critical gap in the evidence supporting Renovate's petition." The Court therefore affirmed denial of the petition to compel arbitration. View "Fabian v. Renovate America, Inc." on Justia Law

by
After Mount Diablo School District hired Taber to modernize eight school campuses, the plaintiffs challenged the District’s use of a lease-leaseback agreement for the construction project. The court of appeal affirmed the dismissal of most of plaintiff’s claims, except a claim against Taber of conflict of interest. Plaintiff alleged Taber provided preconstruction services regarding the project, so a conflict of interest arose when the District subsequently awarded Taber the contract. The court of appeal affirmed summary judgment in Taber’s favor, finding no violation of Government Code section 1090(a). Section 1090 only prohibits a contract made by a financially-interested party when that party makes the contract in an “official capacity.” Where the financially-interested party is an independent contractor, section 1090 applies only if the independent contractor can be said to have been entrusted with “transact[ing] on behalf of the Government.” In this case, it cannot reasonably be said that Taber was hired to engage in or advise on public contracting on behalf of the District. The District contracted with Taber for Taber to provide preconstruction services in anticipation of Taber completing the project. Taber provided those services (planning and setting specifications) in its capacity as the intended provider of services, not as a de facto official of the District. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

by
Plaintiffs filed suit against the storage company, demanding to be paid for their losses after water damaged their property. In this case, the contract the customers signed specified that the company was not responsible for water damage, and that customers storing property with it did so at their own risk. The contract offered insurance options to the customers, but the customers declined insurance. The Court of Appeal affirmed the trial court's judgment in favor of the company on the customers' breach of contract claim, holding that one may not contract to accept risk, decide to be self-insured, and then retroactively demand to be paid by the other side after there is a loss. Finally, the court held that the customers forfeited their claim under the Consumer Legal Remedies Act. View "Kanovsky v. At Your Door Self Storage" on Justia Law

by
A general contractor and subcontractor filed suit against each other, and at issue was the "retention" clause in the parties' contract. The Court of Appeal held that the trial court properly granted summary judgment for the general contractor and dismissed the subcontractor's cross-claims. The court held that the purpose of the retention clause was, as the subcontractor put it in oral argument, to "ensure proper performance." In this case, the subcontractor did not finish the job swiftly and must suffer the consequences of its contractual failing. Finally, the court held that the trial court properly awarded attorney fees to the general contractor, as the prevailing party. View "Regency Midland Construction, Inc. v. Legendary Structures Inc." on Justia Law