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California Case Law Updates

PERSONAL INJURY

Reasonable Value of Medical Services Provided

Ochoa v. Dorado (July 22, 2014) ___ Cal.Rptr.3d ___, 2014 WL 3589887 (Cal.App.2 Dist.)

Ochoa was driving a big-rig tractor without a trailer, with passenger Moreno, when the vehicle was struck from behind by a tractor-trailer driven by Dorado, a driver for Trimac Transportation Service. Dorado and Trimac conceded liability and a jury awarded damages to both plaintiffs. After several post-trial motions, the trial court ordered a new trial as to medical damages, lost earnings damages and household expenses damages. The Court of Appeal ultimately reversed the trial court’s rulings regarding a new trial as being premature, but, in anticipation of post-trial motions that would be filed on remand, made the following rulings: (1) Pursuant to Howell v. Hamilton Meats (2011) 52 Cal.App.4th 541 and subsequent cases, unpaid medical bills are not evidence of the reasonable value of the services provided; and (2) no expert witness declaration is required for treating physicians to the extent that their opinion testimony is based upon facts acquired independently of the litigation (i.e. acquired in the course of the physician-patient relationship and any other facts independently acquired). The Court of Appeal specifically stated it is appropriate for a treating physician to provide an opinion as to the reasonable value of services the treating physician either provided to the plaintiff or became familiar with independently of the litigation assuming the treating physician is qualified to offer an expert opinion on reasonable value (e.g. has special knowledge concerning the market value of medical services through his or her own practice).

INSURANCE

Bad Faith / Breach of Duty to Attempt to Settle Claim

Maslo v. Ameriprise Auto & Home Insurance (July 22, 2014) 227 Cal.App.4th 626, 173 Cal.Rptr.3d 854

Appellant, Ted Maslo, was the insured on an auto policy issued by Ameriprise Auto and Home Insurance. After sustaining bodily injuries as a result of an accident caused by an uninsured motorist, Maslo filed a claim, seeking the $250,000 limit on the policy’s uninsured motorist coverage. The insurer demanded arbitration. Maslo was awarded $164,120.91 by the arbitrator. Maslo then filed a Second Amended Complaint, alleging the insurer breached the implied covenant of good faith and fair dealing by forcing Maslo to arbitrate without fairly investigating, evaluating, and attempting to resolve the claim. The trial court sustained a demurrer by the insurer and the appeal followed. The Court of Appeal states an insurer is required to thoroughly and fairly investigate, process, and evaluate claims. The insurer argued four points, all of which were addressed by the Court as follows: (1) Good faith and fair dealing obligation is not the same in the context of uninsured motorists: the Court responded that “to fulfill its obligation [of good faith and fair dealing], an insurer must give at least as much consideration to the interests of its insured as it gives to its own interests.” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713). (2) “Genuine dispute” rule protects the insurer from a bad faith claim: the Court stated this rule does not relieve an insurer from its obligation to thoroughly investigate, process and evaluate the insured’s claim. (3) Statutory right to arbitrate claims above a certain amount: The Court clarified the insurer has a statutory right to arbitration when the insurer and insured disagree over the existence or extent of coverage, but this does not abrogate the insurer’s duty of good faith in handling the uninsured motorist claim. (4) Alleged failure is not the cause of Maslo’s damages: The Court responded it was not Maslo’s initial demand that made arbitration inevitable, rather the insurer’s refusal to investigate and process his claim. Ultimately, the Court of Appeal found the Second Amended Complaint alleged facts sufficient to state a tort claim for the insurer’s breach of the duty of good faith and fair dealing under common law and for failure to attempt to effectuate a prompt and fair settlement under the Insurance Code and that this breach directly and proximately caused Maslo to suffer damages, including incurring the unnecessary costs and fees of arbitration.

FRIVOLOUS CLAIMS – SANCTIONS

Peake v. Underwood (July 17, 2014) 227 Cal.App.4th 428, 173 Cal.Rptr.3d 624

A purchaser, Peake, brought an action against the sellers of a house and their real estate agent, Ferrell, seeking to recover damages for an alleged failure to disclose defective subfloors in the home. Ferrell moved for terminating and monetary sanctions against Peake and her attorney, alleging the claims were frivolous, pursuant to Code of Civil Procedure, section 128.7. This section provides a trial court with the discretionary authority to impose sanctions where a party files a pleading that is factually or legally frivolous. Ferrell argued there was undisputed evidence showing that the real estate agent had fulfilled his statutory and common law disclosure duties and that Peake had actual notice of facts disclosing prior problems with the subfloors. Rather than dismissing the action during the statutory safe harbor period, Peake amended her complaint to add claims similar to the claims previously dismissed. After a hearing, the trial court found the claims were without legal or evidentiary support and continued maintenance of the lawsuit demonstrated “objective bad faith,” warranting sanctions. As sanctions, the trial court dismissed Peake’s claims against Ferrell and ordered Peake and her attorney to pay Ferrell $60,000 for his attorney fees. On appeal, the Court held that the trial court acted within its discretion in awarding the sanctions and that no reasonable attorney would have concluded Peake’s statutory and common law claims were factually and legally supported.

PUBLIC INTEREST

False Advertising / Anti-SLAPP Suits:

Demetriades v. Yelp, Inc. (July 24, 2014) ___ Cal.Rptr.3d ___, 2014 WL 3661491 (Cal.App.2 Dist.):

Plaintiff James Demetriades, who operates a restaurant, filed a complaint seeking an injunction under the Unfair Competition Law (Bus. & Prof.Code §17200 et seq.) and False Advertising Law (Bus. & Prof.Code §17500 et seq.) to prevent defendant, Yelp, Inc., from making claims about the accuracy and efficacy of its “filter” of unreliable or biased customer reviews. The trial court granted Yelp’s special motion to strike plaintiffs’ complaint under Civil Code § 425.16, finding that Yelp’s statements regarding the filtering of reviews was a matter of public interest. The Second District Court of Appeal reversed. The Court of Appeal found that Yelp’s representations about its review filter constitutes commercial speech as defined within the Commercial Speech Exemption under the Anti-SLAPP statute (Civil Code, Section 425.17(c)), making the Anti-SLAPP statute inapplicable. Specifically, although Yelp’s website is a public forum and contains matters of public concern in the form of review of businesses, Yelp’s statements about its review filter are commercial speech about the quality of its product intended to reach third parties to induce them to engage in a commercial transaction.

Public Entities – Sanctions in Frivolous Actions

Settle v. State of California (July 23, 2014) ___ Cal.Rptr.3d ___, 2014 WL 3615482 (Cal.App.2 Dist.):

Plaintiff Kathryn Settle sued the state of California and the City of Morro Bay for a dangerous condition of public property after a sand escarpment on the beach collapsed, causing her to fall into the water and rocks. The State did not own, control or maintain the beach. This was confirmed in discovery when the City admitted that it owned and maintained the property. Counsel for the State warned Plaintiff’s counsel it would seek sanctions pursuant to Code of Civil Procedure, section 1038 (requires mandatory award of defense costs where a trial court grants summary judgment and finds the plaintiff lacked reasonable cause and good faith in filing or maintaining a tort action against a public entity) if the Complaint against the State was not dismissed. The State and City moved for summary judgment, arguing the action was barred by a statutory immunity for injuries caused by a natural condition on unimproved public property, such as a beach. (Gov. Code §§831.2 and 831.21.) The trial court ruled in favor of the State and City, ordering the payment of attorney’s fees and costs by Plaintiff and her attorney, James McKiernan. McKiernan appealed. The Court of Appeal found Civil Code §1038 does not authorize an award of “sanctions” against counsel and reversed the trial court’s order as to Mr. McKiernan.

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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