California Case Law Update

Anti Slapp

Lennar Homes of California, Inc. v. Stephens
(Dec. 18, 2014) ___ Cal.Rptr.3d ___, 2014 WL 7184219 (Cal.App.4 Dist.)

Lennar brought an action against purchasers of a home to recover attorney’s fees and costs incurred in defending a class action lawsuit under an indemnity agreement. The Riverside County Superior Court granted the purchasers’ SLAPP motion and Lennar appealed. The Court of Appeal found that (1) Lennar’s cause of action against the home purchaser under an indemnity agreement to recover attorney fees and costs incurred in defending a federal class action lawsuit joined by the purchaser’s husband arose out of protected activity under the anti-strategic lawsuit against public participation (SLAPP) statute, even though purchaser herself was not named as a plaintiff in the federal litigation, and regardless of whether purchaser actively participated behind the scenes of the lawsuit, since the purchaser’s husband effectively brought suit on behalf of both himself and purchaser by asserting rights belonging jointly to both; (2) the indemnity provision in Lennar’s contract with the purchaser, conceded to be a contract of adhesion, contains a low level of procedural unconscionability; (3) the indemnity agreement requiring individual home purchasers to indemnify Lennar for purchasers’ own nondisclosure claims against Lennar established a high degree of substantive unconscionability, since the indemnity provision precluded any possibility that a purchaser who had a meritorious claim of fraud falling within the scope of the indemnity clause could be made whole; and (4) the indemnity provision unenforceable due to its high degree of substantive unconscionability.

Arbitration

Hyundia Amco America, Inc. v. S3H, Inc.
 (Dec. 17, 2014) ___ Cal.Rptr.3d ___, 2014 WL 7174606 (Cal.App.4 Dist.)

Hyundai Amco America, Inc. (Hyundai Amco), and S3H, Inc. (S3H), entered into a subcontractor services agreement. Their agreement provided that disputes would be subject to arbitration. Hyundai Amco sued S3H for breaching the agreement, as well as for other related causes of action. S3H filed a motion to compel arbitration; the trial court denied the motion on the ground that S3H had failed to allege (1) it demanded arbitration and (2) Hyundai Amco refused. The Court of Appeal ruled that S3H’s petition to compel arbitration of the general contractor’s complaint did not require proof of formal demand for arbitration, as the general contractor’s filing of a lawsuit (rather than commencing arbitration proceedings as required by the arbitration agreement) affirmatively establishes the general contractor’s refusal to arbitrate the controversy, where the lawsuit was for a controversy clearly related to the parties’ performance under the agreement.

Safari Associates v. Superior Court
(Dec. 2, 2014) 231 Cal.App.4th 1400 (Cal.App. 4 Dist.)
Petitioner Safari Associates (Safari) and real party in interest Alan Tarlov arbitrated a dispute pursuant to a written agreement. The arbitrator awarded Safari damages, attorney fees, and costs. Safari petitioned to confirm the arbitration award in the trial court. In response, Tarlov filed a motion to modify or correct the award on the ground that the arbitrator acted in excess of his powers in awarding Safari attorney fees. Specifically, Tarlov contended that the arbitrator exceeded his powers by “void[ing]” the definition of prevailing party provided in the parties’ agreement, and instead applying the definition of prevailing party specified in Civil Code section 1717, subdivision (b)(1). The trial court ruled the arbitrator’s decision to apply section 1717 was subject to judicial review, and concluded the arbitrator erred in failing to apply the definition of “prevailing party” as contained in the parties’ agreement. The trial court corrected the award by ruling the definition of prevailing party contained in the parties’ agreement applied and remanding the matter to the arbitrator for further proceedings to apply the agreement’s definition of prevailing party in determining whether to award attorney fees. Safari filed a petition for writ of mandate requesting that the Court of Appeal direct the trial court to vacate its order. The Court of Appeal held that “California law is clear that “arbitrators do not ‘exceed[ ] their powers’ … merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the controversy submitted to the arbitrators,” citing Moshonov v. Walsh (2000) 22 Cal.4th 771, 775–776. In this regard, the Court directed the trial court to vacate its order.

Attorney Fees

Drell v. Cohen (Dec. 5, 2014) ___ Cal.Rptr.3d ___, 2014 WL 6852697 (Cal.App.2 Dist.)

Defendants Bob M. Cohen & Associates (“Cohen”) represented nonparty Paul Slack in a personal injury action on a contingency basis. Cohen withdrew from representation. Plaintiff Michael Drell (“Drell”) took over Mr. Slack’s case. Cohen asserted an attorney fee lien, informing one of the insurers in the case that payment of funds was subject to a lien for their fees incurred during representation. Drell subsequently negotiated a settlement on Mr. Slack’s behalf. The settlement check was made payable to Drell and Cohen. Drell filed a declaratory relief action to determine the status of Cohen’s lien. Cohen filed an anti-SLAPP motion, arguing that the declaratory relief action arose from a “protected activity” of asserting a lien in a demand letter which threatened litigation. The trial court denied the motion. The Court of Appeal affirmed the trial court’s ruling, stating that “[n]one of the purposes of the anti-SLAPP statute would be served by elevating a fee dispute to the constitutional arena, thereby requiring a party seeking a declaration of rights under an attorney lien to demonstrate a probability of success on the merits in order to obtain equitable relief.”

Electronic Communications

JBB Investment Partners, Ltd. v. Fair (Dec. 5, 2014) ___ Cal.Rptr.3d ___, 2014 WL 7421609 (Cal.App.1 Dist.)
R. Thomas Fair (Fair), Bronco RE Corporation (Bronco), BRE Boulevard LLC (Boulevard) and BRE Cameron Creek LLC (collectively, Defendants) appeal from a judgment following the trial court’s granting of a motion pursuant to Code of Civil Procedure section 664.6 by J.B.B. Investment Partners, Ltd. and Silvester Rabic (collectively, Plaintiffs) to enforce a settlement between Plaintiffs and Defendants. The trial court held that Fair’s printed name at the end of his e-mail where he agreed to settlement terms set forth in an e-mail from Plaintiffs’ counsel was an “electronic signature” within the meaning of California’s Uniform Electronic Transactions Act (Civ. Code, § 1633.1 et seq.) and what the trial court referred to as the “common law of contract” or “contract case law.” The Court of Appeal reversed stating that, while “a printed name or some other symbol might, under specific circumstances, be a signature under UETA and might satisfy the even more rigorous requirements under Code of Civil Procedure section 664.6 . . . a printed name is not a signature under contract law simply because the person deliberately printed his or her name. ‘[I]t is a universal requirement that the statute of frauds is not satisfied unless it is proved that the name relied upon as a signature was placed on the document or adopted by the party to be charged with the intention of authenticating the writing.’” In this case, the Court of Appeal found that the record lacked any evidence demonstrating Fair intended to execute a settlement agreement by electronic means when he printed his name at the end of his email.

ABOUT THE AUTHOR: Elizabeth Terrill is an associate at Tyson & Mendes. Elizabeth specializes in the areas of construction defect and construction injury claims. Contact Elizabeth at 858.263.4113 or eterrill@tysonmendes.com.

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