Justia Contracts Opinion Summaries

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

Defendant Shingle Springs Band of Miwok Indians (the Tribe) appealed a judgment after trial in favor of plaintiff Sharp Image Gaming, Inc. (Sharp Image), in plaintiff’s breach of contract action stemming from a deal to develop a casino on the Tribe’s land. On appeal, the Tribe argued: (1) the trial court lacked subject matter jurisdiction because Sharp Image’s action in state court was preempted by the Indian Gaming Regulatory Act (IGRA); (2) the trial court erred in failing to defer to the National Indian Gaming Commission’s (NIGC) determination that the disputed Equipment Lease Agreement (ELA) and a promissory note (the Note) were management contracts requiring the NIGC’s approval; (3) Sharp Image’s claims were barred by the Tribe’s sovereign immunity; (4) the trial court erred in denying the Tribe’s motion for summary judgment; (5) the jury’s finding that the ELA was an enforceable contract was inconsistent with its finding that the ELA left essential terms for future determination; and (6) substantial evidence does not support the jury’s verdict on the Note. After the parties completed briefing in this case, the United States was granted permission to submit an amicus curiae brief in partial support of the Tribe on the questions of preemption and lack of subject matter jurisdiction. The Court of Appeal concluded IGRA preempted state contract actions based on unapproved “management contracts” and “collateral agreements to management contracts” as such agreements are defined in the IGRA regulatory scheme. Thus, the trial court erred by failing to determine whether the ELA and the Note were agreements subject to IGRA regulation, a necessary determination related to the question of preemption and the court’s subject matter jurisdiction. Furthermore, the Court concluded the ELA was a management contract and the Note was a collateral agreement to a management contract subject to IGRA regulation. Because these agreements were never approved by the NIGC Chairman as required by the IGRA and were thus void, Sharp Image’s action was preempted by IGRA. Consequently, the trial court did not have subject matter jurisdiction. View "Sharp Image Gaming v. Shingle Springs Band of Miwok Indians" on Justia Law

Defendant Anice Plikaytis appealed an order awarding her attorneys' fees in a breach of contract action brought by plaintiff Debra Roth. In the published portion of its opinion, the Court of Appeal agreed with Plikaytis's contention that the trial court erred when it declined to consider previously filed documents she incorporated by reference as part of her motion. In the unpublished portions of the opinion, the Court discussed Plikaytis's arguments that: (1) the court failed to apply the lodestar method; (2) erroneously denied fees for equitable and cross-claims and for obtaining relief from bankruptcy stays; and (3) substantially reduced her award without explanation. The Court of Appeal concluded the trial court erred by denying fees for obtaining bankruptcy stay relief that related to the breach claim and failing to provide an adequate justification for significantly reducing the number of hours allowed. Accordingly, the trial court was affirmed in part, reversed in part, and the matter remanded with directions. View "Roth v. Plikaytis" on Justia Law

This case arose out of an insurance dispute between a general contractor, its subcontractor, and the subcontractor’s general liability carrier over water damage to a construction site caused by heavy rains. The United States Department of Veterans Affairs (VA) hired Kadena Pacific, Inc. as the general contractor to oversee construction of a building in Menlo Park. Kadena hired Global Modular, Inc. to build, deliver, and install the 53 modular units that would comprise the building. Because Kadena had hired a different subcontractor to install the roofing, Global agreed to deliver the units covered only by a roof deck substrate. Kadena originally scheduled delivery in the summer months, but delivery was delayed until October and November. Despite Global’s efforts to protect the units by covering them with plastic tarps, the interiors suffered water damage from October through January. In February, Kadena and Global mutually agreed to terminate their contract and Kadena oversaw the remediation of the water-damaged interiors and completion of the project. Global sued Kadena for failure to pay and Kadena countersued, alleging Global had breached the contract in various ways, including by failing to repair the water-damaged interiors. Before trial, the parties entered a partial settlement. Global paid Kadena $321,975 to release all of Kadena’s claims arising from the VA project except for claims covered by Global’s insurance policy with North American Capacity Insurance Company (NAC), and Global received $153,025 to dismiss its failure-to-pay claims. At trial, Kadena presented evidence on the scope and cost of its water remediation and argued Global was contractually responsible for the damage. The jury agreed and awarded Kadena slightly over $1 million. In a separate suit brought by NAC, Kadena and NAC filed competing motions for summary judgment on the issue of whether NAC’s policy required it to indemnify Global for the jury’s damage award. The trial court ruled in favor of Kadena, finding the damage award covered under NAC’s policy as a matter of law. The court also ruled that the award must be offset by the $321,975 Global paid in settlement and that Global was liable to Kadena for $360,000 in attorney fees. The Court of Appeal concluded the trial court properly determined NAC’s policy covered the water damages and Kadena was entitled to fees. However, the Court reversed the offset order because Global’s settlement payment did not compensate Kadena for the costs of its water remediation; the parties agreed to reserve that issue for litigation. View "Global Modular v. Kadena Pacific, Inc." on Justia Law

Defendant-appellant American Safety Indemnity Company (“ASIC”) challenged a judgment awarding over $1.4 million in compensatory and punitive damages to plaintiff-respondent Pulte Home Corporation (Pulte), who was the general contractor and developer of two residential projects in the San Marcos area. ASIC issued several sequential comprehensive general liability (CGL) insurance policies to three of Pulte's subcontractors, and during 2003 to 2006, it added endorsements to those policies that named Pulte as an additional insured. The projects were completed by 2006. In 2011 and 2013, two groups of residents of the developments sued Pulte for damages in separate construction defect lawsuits. After American Safety declined to provide Pulte with a defense, Pulte filed this action, asserting that the additional insured endorsements afforded it coverage and therefore required ASIC to provide it with defenses on the construction defect issues. After review, the Court of Appeal concluded the trial court was correct in ruling that the language of ASIC’s additional insured endorsements on the underlying insurance policies created ambiguities on the potential for coverage in the construction defect lawsuits, thus requiring it to provide Pulte with a defense to them. Additionally, the Court upheld the court's decision that Pulte was entitled to an award of punitive damages that was proportional, on a one-to-one basis, to the award of compensatory damages in tort. Although the Court affirmed the judgment as to its substantive rulings, the Court of Appeal was required to reverse in part as to the award of $471,313.52 attorney fees: the trial court abused its discretion in implementing an hourly attorney fee arrangement that Pulte did not arrive at until after trial, to replace the previous contingency fee agreement in a manner that Pulte intended would operate to increase its demand. Since the trial court calculated its $500,000 award of punitive damages by appropriately utilizing a one-to-one ratio to the compensatory, the trial court had to recalculate not only the fees award but also to adjust the amount of punitive damages accordingly. View "Pulte Home Corp. v. American Safety Indemnity Co." on Justia Law

This case arose from competing claims to a portion of the Yuba Goldfields, a 10,000-acre valley on both sides of the Yuba River near Marysville. At issue was whether an arbitration award resolving a dispute between plaintiff Cal Sierra Development, Inc. (Cal Sierra), and Western Aggregates, Inc., served as res judicata to bar Cal Sierra’s lawsuit against Western Aggregates’ licensee George Reed, Inc., and the licensee’s parent Basic Resources, Inc. The Court of Appeal concluded yes. View "Cal Sierra Development v. George Reed, Inc." on Justia Law

Plaintiff Dennis Ponte demanded defendant County of Calaveras (County) to pay him over $150,000 to reimburse him for work purportedly performed on the County’s behalf pursuant to an oral contract. The contract did not contain any fixed payment, and no bid was submitted nor approved pursuant to relevant county ordinances governing public contracts. Ponte disregarded opportunities to abandon his claims after the County provided him with pertinent legal authority demonstrating that his claims lacked merit. After multiple sustained demurrers, the trial court granted summary judgment to the County on Ponte’s third amended complaint. The court later awarded substantial attorney fees, finding Ponte’s claims, including those based on promissory estoppel, were not brought or maintained in both subjective and objective good faith. Ponte appealed. Finding no reversible error, the Court of Appeal affirmed. View "Ponte v. County of Calaveras" on Justia Law

Property owners who purchased through a foreclosure sale sued the bank that sold the house, alleging that they were mislead the bank’s deed of trust was the first deed of trust, when another remained on the property, and was not extinguished by the foreclosure sale. Wells Fargo assigned any claim against the title insurer it had to David and Lina Hovannisian (the property owners), and the Hovannisians sued First American Title Insurance Company, alleging breach of contract, negligent misrepresentation and breach of the implied covenant of good faith and fair dealing. First American moved for summary judgment, arguing its title insurance coverage had terminated, and no benefits were due. The motion was granted, and the Hovannisians appealed, arguing First American failed to establish that coverage did not continue under the title policy or there were no benefits due under the policy. They also contended triable issues of fact existed regarding their bad faith claim. The Court of Appeal affirmed, finding First American showed, based on the facts Wells Fargo and the Hovannisians presented before and after the underlying action was filed, that there was no potential for coverage under the policy. The Hovannisians did not learn about the first deed of trust until after they purchased the property at the foreclosure sale without warranty. Thus, the only potential claim they had against Wells Fargo was for the alleged misrepresentations for which there was no liability or loss under the policy. View "Hovannisian v. First American Title Ins. Co." on Justia Law

FC Surety posted $150,000 bail to secure Ventura‘s release from custody in San Francisco. On September 15, 2014, when Ventura failed to appear, the court issued a bench warrant and declared the bond forfeited, stating FC‘s obligation to pay the bond would become absolute on April 10, 2015. On March 12, FC‘s agent discovered Ventura was in custody in Contra Costa County and tried to surrender the San Francisco warrant and have Ventura held. The Contra Costa County Sheriff found no active warrants, although the agent had verification from the San Francisco Sheriff. On April 3, the bail agent moved to vacate the forfeiture and exonerate the bond, arguing that failure to enter the warrant into the National Crime Information Center was an error that required exoneration of liability on the bond under Penal Code 980(b). The court denied the motion because the bench warrant remained outstanding. The agent then, unsuccessfully, orally requested to extend the time to secure Ventura‘s appearance. On August 19, the court issued summary judgment of bail forfeiture. The court of appeal reversed in favor of FC. FC‘s motion was timely and supported by good cause; under Penal Code 1305(c)(3) a court “shall vacate the forfeiture and exonerate the bail” if, outside the county where the case is located, the defendant is surrendered to custody by the bail or is arrested in the underlying case. View "P.eople v. Financial Casualty & Surety" on Justia Law

In a 2005 Cooperation and Option Agreement to facilitate Russell's construction and operation of the Energy Center, a natural gas-fired, combined cycle electric generating facility in Hayward, the city granted Russell an option to purchase 12.5 acres of city-owned land as the Energy Center's site and promised to help Russell obtain permits, approvals, and water treatment services. Russell conveyed a 3.5-acre parcel to the city. The Agreement's “Payments Clause” prohibited the city from imposing any taxes on the “development, construction, ownership and operation” of the Energy Center except taxes tethered to real estate ownership. In 2009, Hayward voters approved an ordinance that imposes “a tax upon every person using electricity in the City. … at the rate of five and one-half percent (5.5%) of the charges made for such electricity” with a similar provision regarding gas usage. Russell began building the Energy Center in 2010. In 2011, the city informed Russell it must pay the utility tax. The Energy Center is operational.The court of appeal affirmed a holding that the Payments Clause was unenforceable as violating California Constitution article XIII, section 31, which provides “[t]he power to tax may not be surrendered or suspended by grant or contract.” Russell may amend its complaint to allege a quasi-contractual restitution claim. View "Russell City Energy Co. v. City of Hayward" on Justia Law