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California Case Law Update

Prevailing Party

David S. Karton, A Law Corporation v. Dougherty (2014) ___ Cal.Rptr.3d ___, 2014 WL 6065707 (Nov. 14, 2014, Cal. App. 2 Dist.)

An attorney brought an action against a former client for allegedly unpaid fees and costs. The Superior Court, Los Angeles County, entered a default judgment and twice awarded supplemental attorney fees, costs and interest. The Superior Court denied the client’s motion for relief from the second order amending the judgment. The ruling was reversed on appeal with directions. The Superior Court then vacated the default, entered judgment after a bench trial awarding the attorney no relief on any of his claims and awarding the attorney more than $1 million in attorneys’ fees as the prevailing party. The trial court determined that Dougherty (the client) had already repaid his entire contractual debt, including interest, but identified the attorney to be the prevailing party for purposes of costs and contractual attorney fees. The client and the attorney cross-appealed. As to attorneys’ fees, the Court found that because Karton, the plaintiff, obtained no relief in the action on the contract, Karton could not have recovered greater relief than Dougherty. Additionally, pursuant to Civil Code Section 1717(b)(2), where the defendant proves the amount of the contractual debt was tendered, the defendant is the prevailing party as a matter of law. As to costs, Karton attempted to argue that because he collected funds, he obtained a recovery. The Court states, however, that enforcement of a void judgment does not constitute “recovery” or “relief.” The Court ultimately reversed the ruling of the trial court, finding that Dougherty was the prevailing party for both costs and attorneys’ fees.

Employment – Gateway Issues with Arbitration Provisions

Garden Fresh Restaurant Corporation v. Superior Court
(2014) ___ Cal.Rptr.3d ___, 2014 WL 6306143 (Nov. 17, 2014, Cal. App. 4 Dist.)

Alicia Moreno sued Garden Fresh, her former employer, for claims related to a variety of alleged Labor Code violations. Moreno filed the action as a putative action and also pursued relief under the Private Attorney General Act of 2014 (PAGA). Garden Fresh moved to compel arbitration on an individual basis, based upon two arbitration agreements signed by Moreno. The trial court granted the motion to compel arbitration, but left the arbitrator to decide the question of whether the arbitration agreement s between the parties contemplated class wide and/or representative arbitration. The Court of Appeal ruled that whether class and/or representative arbitration is available is a question of arbitrability and, therefore, a gateway issue for the Court to decide. The Court of Appeal issued a writ of mandate directing the trial court to (1) vacate the portion of its order leaving the arbitrator to determine whether the parties agreed to class and/or representative arbitration and (2) to conduct further proceedings as necessary to determine whether the parties’ arbitration agreement contemplates class and/or representative arbitration.

Under Insured Motorist – Coverage

Elliott v. Geico Indemnity Company (2014) ___ Cal.Rptr.3d ___, 2014 WL 6466952 (Nov. 19, 2014, Cal. App. 3 Dist.)

Elliott appealed from a judgment dismissing her lawsuit against Geico, which was entered after the trial court granted Geico’s motion for summary judgment. Elliott’s husband was killed when his motorcycle was struck by a truck being driven by a drunk driver. The trial court concluded that Geico was not required to pay underinsured motorist benefits under a motorcycle insurance policy because Elliott recovered more than the $100,000 underinsured motorist coverage limits in the settlement of a wrongful death action against the drunk driver and the owners of a restaurant who served drinks to the drunk driver (drunk driver’s policy paid $15,000; restaurant’s general liability insurer paid $250,000). The Court of Appeal found the Geico policy unambiguously allowed Geico to deduct from the underinsured motorist coverage limits “the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.” In this regard, the Court of Appeal agreed and affirmed the ruling of the trial court.

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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