Justia Contracts Opinion Summaries

To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law

Plaintiff Vitatech International, Inc. (Vitatech) filed a breach of contract lawsuit against defendants National Marketing, Inc., CortiSlim International, formerly known as National Marketing, Inc., CortiSlim International, LLC, and Alan Sporn (collectively, Defendants). On the eve of trial, the parties settled for a one-time payment of $75,000. As part of the settlement, Defendants stipulated to entry of judgment against them “in the full prayer of the Complaint,” but Vitatech agreed to “forbear” from filing the stipulation and to accept the $75,000 “as full Settlement of its claims against Defendants” if they paid by the designated date. When Defendants failed to pay, Vitatech filed the stipulation and the trial court entered judgment against Defendants for more than $300,000, which included compensatory damages, prejudgment interest, attorney fees, and costs. Sporn and appellant CortiSlim International, Inc. (collectively, Appellants) moved to vacate the judgment, arguing it was an unenforceable penalty and liquidated damages provision under Civil Code section 1671(b). The trial court denied the motion because it found the judgment’s higher amount was not a penalty or liquidated damages provision subject to section 1671(b). Rather, the court concluded the reduced amount Vitatech agreed to accept was merely a discount if Defendants paid their debt as agreed. The Court of Appeal reversed and remanded for the trial court to grant the motion and enter a new judgment for the $75,000 settlement amount, plus trial court costs. Under well-established precedent, including this court’s decision in Greentree Financial Group, Inc. v. Execute Sports, Inc., 163 Cal.App.4th 495 (2008), the stipulated judgment for more than four times the amount Vitatech agreed to accept as full settlement of its claims was an unenforceable penalty because it bore no reasonable relationship to the range of damages the parties could have anticipated would result from Defendants’ failure timely to pay the settlement amount. “Although Defendants stipulated to entry of judgment if they did not timely pay, they never admitted liability on the underlying claims or the amount of damages allegedly caused by the breach of the underlying contract.” View "Viatech International, Inc. v. Sporn" on Justia Law

Baxter sued her former employer, Genworth, for wrongful termination and related causes of action, based on discrimination and retaliation, arising out of her employment. Genworth moved to compel arbitration as part of Genworth’s Resolve Employee Issue Resolution Program, which consists four stages, The trial court concluded, and the court of appeal affirmed, that the arbitration agreement Baxter signed in 2006, as a condition of continued employment, is unconscionable, refusing to sever any provisions. Agreement as a condition of continued employment amounted to “modest procedural unconscionability.” The court concluded that several features of the agreement were substantively unconscionable: default discovery limitations, a prohibition against contacting witnesses, procedural deadlines that effectively shorten the statute of limitations and preclude a meaningful opportunity for a pre-litigation Fair Employment and Housing Act investigation, and accelerated hearing procedures that infringe upon an employee’s ability to adequately present his or her case. The severance of the offending provisions was not an option because the arbitration agreement is permeated by unconscionability. View "Baxter v. Genworth North America Corp." on Justia Law

Plaintiff YDM Management Company, Inc. (YDM) appeals from a judgment of the trial court in favor of defendant Sharp Community Medical Group, Inc. (Sharp), after Sharp successfully moved for summary judgment of YDM's operative complaint. YDM purchased accounts receivable from Doctors Express, a company that operated urgent care facilities in San Diego, for services rendered to Sharp managed care members. In its role as an Independent Practice Association (IPA), Sharp provided health insurance to its managed care members, and paid claims for services provided to its members. At the time that it provided the services at issue to Sharp members, Doctors Express did not have a preferred provider contract with Sharp. Providers without a contract with an IPA were reimbursed for nonemergency medical services provided to the IPA's members at amounts significantly less than the "reasonable and customary value for the health care services rendered." However, an IPA such as Sharp was required by regulation to reimburse out of network providers for the full "reasonable and customary value" for any emergency medical services provided to its members. As the assignee of Doctors Express, YDM filed this lawsuit seeking additional reimbursement from Sharp for services provided by Doctors Express to members of Sharp's health plan, beyond the amount that Sharp had already reimbursed Doctors Express for those services. The trial court granted summary judgment in favor of Sharp. On appeal, YDM contended the trial court erred in granting summary judgment in Sharp's favor based on the declaration of a Sharp employee, and that the court erred in failing to give adequate consideration to the declaration of YDM's expert in concluding that there was no triable issue of material fact. The Court of Appeal concluded the trial court did not err in granting summary judgment in favor of Sharp. View "YDM Management Co., Inc. v. Sharp Community Med. etc." on Justia Law

Wiseman filed suit seeking to recover "carrying charges" it paid Southern on the theory that those charges were not permitted by the Alcoholic Beverage Control Act. The trial court ruled that the California Department of Alcoholic Beverage Control (Department) has exclusive jurisdiction over Wiseman's claims because its allegations directly implicate the sale of alcohol. The Court of Appeal held that, although the Department does have exclusive jurisdiction to issue, deny, suspend and revoke alcoholic beverage licenses according to terms of the ABC Act and regulations adopted pursuant to it, the consequences of committing a violation of the ABC Act by imposing charges of the type collected by Southern from Wiseman in this case were not limited to those which the Department may impose on its licensees and did not bar the contract, unfair competition and declaratory relief claims alleged in Wiseman's complaint. Accordingly, the court reversed the trial court's order sustaining Southern's demurrer and remanded for further proceedings. View "Wiseman Park v. Southern Glazer's Wine and Spirits" on Justia Law

Linton drove DeSoto taxicabs, 2008-2012, after submitting his social security number, proof that he was eligible to work in the U.S., his driver’s license, and a DMV printout. Linton signed DeSoto’s 15-page Lease without negotiating any terms. The Agreement disclaims any employment relationship. Either party could cancel with 30 days’ notice, or without notice in the event of a breach. Linton provided a $500 security deposit and attended an orientation. Drivers keep the fares and tips that they receive and pay DeSoto a gate fee of about $100 per day. DeSoto does not require drivers to check in during their shifts but the cabs are equipped with GPS tracking and have recording devices. Linton received a notice of termination after he was accused of obtaining a passenger’s credit card information and making repeated charges on her account. Linton filed a claim with the Labor Commissioner, contending that he had been misclassified as an independent contractor instead of as an employee. The Labor Commissioner concluded that Linton was an employee and assessed wages, interest, and penalties Labor Code 221, 98.1(c), and 203. A trial court concluded Linton was an independent contractor. The court of appeal reversed. The trial court failed to apply a presumption in favor of employment, misapplied precedent, and made “questionable” distinctions in analyzing the facts. View "Linton v. DeSoto Cab Co." on Justia Law

RSB purchased a vineyard jointly owned by the defendants, including a residence that defendants had renovated and converted into a wine tasting room. RSB later learned that the renovated residence was structurally unsound for commercial use and was forced to demolish it. In response to RSB’s lawsuit claiming misrepresentations and omissions in connection with the sale of the residence, defendants moved for summary judgment, offering evidence they had no knowledge of the buildings' deficiencies. While RSB provided no evidence to suggest defendants had actual knowledge of the problems, it did demonstrate that the deficiencies were so severe that defendants’ construction professionals should have been aware of them and argued that this knowledge was imputed to defendants. The trial court granted summary judgment, reasoning that defendants could not be held liable for nondisclosure in the absence of evidence they had actual knowledge. The court of appeal affirmed. That a property is being used for a particular activity does not necessarily imply that the property satisfies all regulatory requirements for the activity. In any event, a cause of action for misrepresentation requires an affirmative statement, not an implied assertion. View "RSB Vineyards, LLC v. Orsi" on Justia Law

In 2013, plaintiff-respondent Gerardo Medina purchased a used car from defendant-appellant South Coast Car Company, Inc. The sales contract was eventually assigned to Veros Credit, LLC, and plaintiff sued on nine causes of action stemming from that contract. The parties settled the suit on the eve of trial. Relevant to this appeal, defendants also agreed that they would not "dispute [Medina's] underlying entitlement to attorneys' fees based upon the claims brought in the [underlying a]ction"; that Medina "shall be deemed the prevailing party on all causes of action for purposes of the motion" for attorney fees; that defendants "reserve the right to dispute the reasonableness of the attorneys' fees, costs, and prejudgment interest claimed to have been incurred" by Medina; and that defendants "maintain all defenses as to the limitations on the amount of attorneys' fees, costs, and prejudgment interest." On appeal (and despite the Settlement), defendants contend the court erred when it awarded Medina attorney fees, costs and prejudgment interest. Specifically, defendants contended that, although Medina was the prevailing party as provided under the settlement, Veros was not liable to pay any portion of his fees and costs because it was merely the "holder" of the sales contract and thus, its liability was limited to the amounts paid by Medina, or about $8,600, and that Medina, in any event, was not entitled to any such award because he previously had rejected SCCC's offer to rescind the sales contract. The Court of Appeal disagreed with defendants’ contentions, finding the record showed defendants recognized in connection with their summary judgment/adjudication motion that their settlement offer went to the " 'determination of the legal basis' " for an award of attorney fees: it would have made little sense for the parties to enter into the Settlement and not resolve what was and the overarching issue in the case, in light of the parties' extensive litigation of this issue up to the time of the settlement. View "Medina v. South Coast Car Company" on Justia Law

A brewer's cancellation of a contract, when that cancellation will be followed by negotiation and possibly arbitration under Business and Professions Code 25000.2, does not qualify as "protected activity" within the meaning of the anti-SLAPP statute. In this case, Mission Beverage filed suit against Pabst for breach of contract and for declaratory relief. Pabst responded with a motion to strike the entire complaint under the anti-SLAPP statute. The Court of Appeal held that the suit did not lack minimal merit on the ground that section 25000.2 immunized successor brewers from liability for breach of contract because it affirmatively granted those brewers a right to terminate distribution contracts and provided full compensation for the ousted distributor. Accordingly, the court affirmed the trial court's denial of Pabst's anti-SLAPP motion. View "Mission Beverage Co. v. Pabst Brewing Co." on Justia Law

Vallejo filed a petition for bankruptcy relief in 2008. Under its existing labor agreement with the Vallejo Police Officers Association (VPOA), the city paid the full premium cost for retirees and employees of any medical plan offered through the California Public Employees’ Retirement System (CalPERS or PERS) and paid the full premium for other city retirees, so it was subject to the Public Employees’ Medical and Hospital Care Act, Gov. Code, 22750. PEMHCA establishes a minimum level of employer contribution toward medical premiums. The city sought approval from the bankruptcy court to reject its labor agreements. While the motion was pending, VPOA and the city reached an agreement and the city voluntarily dismissed its motion to reject as to the VPOA. Under the 2009 Agreement, health insurance benefits were reduced. After months of negotiations toward a superseding agreement, the city declared an impasse in 2013. VPOA filed suit, alleging that the city was not bargaining in good faith, in violation of the Meyers-Milias-Brown Act, Gov. Code, 3500. The court of appeal affirmed the denial of the petition. VPOA did not show its members had a vested right to a full premium; substantial evidence supported findings that the city did not engage in surface bargaining or rush to declare an impasse. View "Vallejo Police Officers Association v. City of Vallejo" on Justia Law