Justia Contracts Opinion Summaries

Ty Whitehead suffered a serious head injury during a bicycle training ride for a charity fundraiser due to a large pothole on Skyline Boulevard in Oakland. Whitehead alleged that the City of Oakland breached its statutory duty to maintain a safe roadway. Prior to the ride, Whitehead signed a release and waiver of liability, which included a provision discharging the City from any liability for negligence.The Alameda County Superior Court granted summary judgment in favor of the City, holding that the release was valid and enforceable, thus barring Whitehead’s claim. The court reasoned that the release did not affect the public interest, relying on the multifactor test from Tunkl v. Regents of University of California. The Court of Appeal affirmed the trial court’s decision, also relying on the Tunkl framework.The Supreme Court of California reviewed the case and concluded that the release was against public policy under Civil Code section 1668, which prohibits contracts that exempt a party from responsibility for their own fraud, willful injury, or violation of law. The court held that an agreement to exculpate a party for future violations of a statutory duty designed to protect public safety is unenforceable. The court reversed the judgment of the Court of Appeal and remanded the case for further proceedings, allowing the City to argue the doctrine of primary assumption of risk on remand. View "Whitehead v. City of Oakland" on Justia Law

New England Country Foods, LLC (NECF) alleged that VanLaw Food Products, Inc. (VanLaw) intentionally undercut its business by promising to replicate NECF’s popular barbeque sauce and sell it directly to Trader Joe’s. NECF sued VanLaw in federal court, claiming tortious interference and other claims. The district court dismissed the case based on a clause in their manufacturing contract that limited damages. The United States Court of Appeals for the Ninth Circuit asked the California Supreme Court whether a contract clause that substantially limits damages for intentional wrongdoing is invalid under Civil Code section 1668.The district court dismissed NECF’s complaint, reasoning that the contract allowed only for direct damages and injunctive relief, while NECF sought lost profits, attorneys’ fees, and punitive damages. The court rejected NECF’s argument that section 1668 prevents limiting damages for future intentional conduct, stating it only prevents contracts that completely exempt parties from liability. NECF amended its complaint, but the district court dismissed it with prejudice, citing that parties may limit liability for breach of contract and that the contract did not bar all money damages but limited them to specific types NECF did not suffer. NECF appealed, and the Ninth Circuit sought guidance from the California Supreme Court.The California Supreme Court held that limitations on damages for willful injury to the person or property of another are invalid under section 1668. The court reasoned that the statute’s language and purpose, along with the policy against willful tortious conduct, support this interpretation. The court clarified that section 1668 does not preclude parties from limiting liability for pure breaches of contract absent a violation of an independent duty. The court’s decision ensures that parties cannot contractually limit their liability for intentional torts. View "New England Country Foods v. Vanlaw Food Products" on Justia Law

Oscar and Audrey Madrigal purchased a car from Hyundai Motor America in 2011 for $24,172.73. The car allegedly did not function as warranted, and repeated repair attempts failed. The Madrigals requested Hyundai to repurchase the car under the Song-Beverly Consumer Warranty Act, but Hyundai refused, leading the Madrigals to sue for violations of the Act. Hyundai made two settlement offers under California Code of Civil Procedure section 998, which the Madrigals did not accept. On the first day of trial, after the court tentatively ruled against the Madrigals on pretrial motions, the parties settled for $39,000, with the Madrigals retaining the right to seek costs and attorney fees by motion.The Placer County Superior Court ruled that section 998 did not apply because the case settled before trial, and awarded the Madrigals $84,742.50 in attorney fees and $17,681.05 in other costs. Hyundai appealed, arguing that the Madrigals should not recover any postoffer costs because they settled for less than the second 998 offer. The Court of Appeal reversed, holding that section 998’s cost-shifting provisions applied and remanded for further proceedings.The Supreme Court of California affirmed the Court of Appeal’s decision. The Court held that section 998’s cost-shifting provisions apply even when a case settles before trial but after a section 998 offer is rejected or deemed withdrawn. The Court reasoned that the statute’s language and purpose—to encourage the settlement of lawsuits before trial—support this interpretation. The Court clarified that parties are free to agree on their own allocation of costs and fees as part of a settlement agreement, but absent such an agreement, section 998’s default cost-shifting rules apply. View "Madrigal v. Hyundai Motor America" on Justia Law

A landlord, JJD-HOV Elk Grove, LLC (JJD), owns a shopping center in Elk Grove, California, and leased space to Jo-Ann Stores, LLC (Jo-Ann). The lease included a cotenancy provision allowing Jo-Ann to pay reduced rent if the number of anchor tenants or overall occupancy fell below a specified threshold. When two anchor tenants closed, Jo-Ann invoked this provision and paid reduced rent for about 20 months until the occupancy threshold was met again.The Sacramento County Superior Court ruled in favor of Jo-Ann, finding the cotenancy provision to be an alternative performance rather than a penalty. The Court of Appeal for the Third Appellate District affirmed this decision, distinguishing the case from a previous ruling in Grand Prospect Partners, L.P. v. Ross Dress For Less, Inc., which found a similar provision to be an unenforceable penalty.The Supreme Court of California reviewed the case to determine the validity of the cotenancy provision. The court held that the provision was a valid form of alternative performance, allowing JJD a realistic choice between accepting lower rent or taking steps to increase occupancy. The court found that the provision did not constitute an unreasonable penalty under California Civil Code section 1671, nor did it result in a forfeiture under section 3275. The court emphasized that contracts should be enforced as written, especially when negotiated by sophisticated parties.The Supreme Court of California affirmed the judgment of the Court of Appeal, upholding the cotenancy provision as a valid and enforceable part of the lease agreement. View "JJD-HOV Elk Grove, LLC v. Jo-Ann Stores, LLC" on Justia Law

Michael R. Rattagan, an Argentinian lawyer, was retained by Uber Technologies, Inc. through its Dutch subsidiaries to assist with launching Uber's ridesharing platform in Argentina. Rattagan also agreed to act as the Dutch subsidiaries' legal representative in Argentina, a role that exposed him to personal liability under Argentinian law. Despite warnings about potential personal exposure, Uber allegedly concealed its plans to launch the platform in Buenos Aires, which led to significant legal and reputational harm to Rattagan when the launch was deemed illegal by local authorities.The United States District Court for the Northern District of California dismissed Rattagan’s third amended complaint without leave to amend, ruling that his fraudulent concealment claims were barred by the economic loss rule as interpreted in Robinson Helicopter v. Dana Corp. The court concluded that Robinson provided only a narrow exception to the economic loss rule, which did not apply to Rattagan’s claims of fraudulent concealment. The court also found that Rattagan’s negligence and implied covenant claims were time-barred.The Supreme Court of California, upon request from the Ninth Circuit, addressed whether a plaintiff may assert a tort claim for fraudulent concealment arising from or related to the performance of a contract under California law. The court held that a plaintiff may assert such a claim if the elements of the claim can be established independently of the parties’ contractual rights and obligations, and if the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. The court clarified that the economic loss rule does not bar tort recovery for fraudulent concealment in these circumstances. View "Rattagan v. Uber Technologies, Inc." on Justia Law

The Supreme Court of California considered whether a health care agent, who had signed two contracts with a skilled nursing facility on behalf of a principal, had the authority to sign an optional, separate arbitration agreement. The first contract ensured the principal’s admission to the facility, while the second made arbitration the exclusive method for resolving disputes with the facility. The court concluded that the execution of the arbitration contract was not a "health care decision" within the authority of the health care agent. Therefore, the facility’s owners and operators could not rely on the agent’s execution of the arbitration agreement to compel arbitration of claims arising from the principal’s alleged maltreatment. The court affirmed the judgment of the Court of Appeal and remanded the case for further proceedings. View "Harrod v. Country Oaks Partners, LLC" on Justia Law

The Supreme Court affirmed the judgment of the court of appeal in this action alleging that Defendants entered into a lease-leaseback construction agreement in violation of various statutes and common law rules, holding that the specific lease-leaseback arrangement at issue in this case was not a "contract" within the meaning of Cal. Gov. Code 53511.Plaintiff brought this action alleging that the Fresno Unified School District and Harris Construction Co. entered into an unlawful lease-leaseback construction agreement. At issue before the Supreme Court was whether a lease-leaseback arrangement in which construction is financed through bond proceeds, rather than through the builder, is a "contract" within the meaning of section 53511. The Supreme Court held that the lease-leaseback arrangement in this case was not a "contract" under the statute because (1) the underlying project was fully funded by a prior sale of general obligation bonds and payment of the debt service on the bonds was from ad valorem property taxes; and (2) therefore, payment did not dependent on the lease-leaseback arrangement or on completion of the project. View "Davis v. Fresno Unified School District" on Justia Law

The Supreme Court affirmed the judgment of the court of appeal affirming the judgment of the trial court granting Plaintiff's postural motion seeking attorney's fees in the amount of $169,602 under the Song-Beverly Consumer Warranty Act, Cal. Civ. Code 1795, subd. (d), after awarding her $21,957.25 in damages on her claim for breach of the implied warranty of merchantability, holding that there was no error.Plaintiff purchased a used vehicle from a dealership pursuant to an installment sales contract that was later assigned to TD Auto Finance (TDAF). Plaintiff filed suit against the dealership and TDAF, alleging misconduct in the sale of the car. A jury found that Defendants breached the implied warranty of merchantability under the Song-Beverly Act and awarded damages and attorney's fees under the Song-Beverly Act. The court of appeal affirmed. The Supreme Court affirmed, holding that recovery under the Federal Trade Commission's Holder Rule does not limit the award of attorney's fees where, as a here, a buyer seeks fees from a holder under a state prevailing party statute. View "Pulliam v. HNL Automotive, Inc." on Justia Law

The Supreme Court held that Curtis Olson failed to show the requisite "minimal merit" on a critical element of his breach of contract claim and thus could not defeat Jane Doe's anti-SLAPP motion.Doe and Olson each owned units in the same condominium building. Doe brought a civil harassment restraining order against Olson, and as a result of court-ordered mediation, the parties agreed if they encountered each other in a public or common place "not to disparage one another." Doe later filed a civil lawsuit against Olson seeking damages. Olson cross-complained for breach of contract and specific performance, and Doe moved to strike Olson's cross-complaint under the anti-SLAPP statute. The Supreme Court reversed the court of appeal's judgment insofar as it reversed the trial court's order granting Doe's special motion to strike the breach of contract clause of action with respect to statements in Doe's civil complaint, holding that Doe had no obligation under the contract to refrain from making disparaging statements in litigation, and therefore, Olson could not defeat Doe's anti-SLAPP motion. View "Olson v. Doe" on Justia Law

The Supreme Court affirmed the judgment of the court of appeal ruling that a plaintiff seeking an accounting is not excused from the requirement set out in Cal. Code Civ. Proc. 580(a) to state a specific dollar amount to support a default judgment granting monetary relief, holding that the mere fact that plaintiffs have pleaded an accounting action does not insulate them from the obligation to notify defendants of the dollar amounts sought before such relief may be granted in default.At issue was the fact that in an accounting action a plaintiff does not know the sum certain owed by the defendant and, as such, the fact that a complaint seeking an accounting cannot state the exact amount of damages sought. The Supreme Court concluded that the most reasonable interpretation of section 580 is that the statute requires plaintiffs to have alleged their relief in terms of dollars if they are to receive monetary recovery. The Court expressed no view on the proper method for comparing the amount granted in default with the amount demanded in the complaint. View "Sass v. Cohen" on Justia Law