Wednesday, January 21, 2015

Nobody's Home but the Address Is Fine

Murray & Murray v. Raissi Real Estate Development Co., No. H039036 (D6 Jan. 20, 2015)

The plaintiffs in this case are lawyers who obtained a default judgment against a former client for unpaid fees. The client moved for relief from default, arguing, among other things, that plaintiff didnt comply with Code of Civil Procedure § 587, which requires an application for entry of default to be mailed to the defendant’s last known address. To establish compliance, plaintiff must file an affidavit attesting to the mailing service or explaining that the address is unknown. Plaintiff had previously tried and failed to personally serve defendant at what it believed to be the last known address—a vacant commercial building. Based on this failure, it concluded that the defendants address was unknown, and attested to that fact. The trial court found that § 587 had been complied with and declined to relieve defendant from default.

The court here finds, however, that it was error for the trial court to deny relief from default on that basis. Just because personal service can’t be effected at a particular address does not necessarily mean that the defendant won’t receive mail there. This was particularly true of the circumstances here. While a person might not be present at a vacant commercial building to let a process server in, it does not automatically follow that mail sent there would be returned as undeliverable. Plaintiff never attempted to mail the application to defendant at the address. It thus could not be said that, had it done so, defendant wouldn’t have received the notice. That makes this case distinguishable from prior authority holding that an address can be considered unknown when a defendant tries but fails to have mail delivered to that address, thus showing that further mailing would be be futile.


Philanthropy as Protected Activity

Save Westwood Village v. Luskin, No. B253013 (D2d2 Jan. 15, 2015).

Plaintiffs here are some kind of NIMBY group that is trying to stop UCLA from building a conference center. Their objection seems to be that the center will include what they characterize as a commercial hotel, which violates some statutory mandate on the UC Regents to not engage in commercial development. But they didnt just sue the Regents. They also sued a charitable foundation that raises money for UCLA and some of its big donors, one of whom also heads the foundation, for donating funds to UCLA in support of the project. That draws a anti-SLAPP motion, to which the plaintiffs responded by voluntarily dismissing these defendants. The trial court granted the motion and plaintiffs appealed.

The court holds that the plaintiffs claim arose from the charitable contributions and some letters these defendants wrote in support of the project. Unsurprisingly, that kind of stuff is conduct in furtherance of a free speech on an issue of public interest and thus protected activity under Code of Civil Procedure § 425.16(e)(4). And plaintiffs werent entitled to the protection of the public interest exception in § 425.17. While plaintiffs might have a public interest argument against the Regents, there really is no public benefit to be had by restraining philanthropists from donating to a charitable foundation that supports UCLA. And since plaintiffs dismissed the relevant defendants before the motion was heard, they effectively conceded that they had no likelihood of success.


Tuesday, January 20, 2015

Right to Jury Trial Applies to Dispute over Standing to Bring Construction Defect Claim

Stoffer v. Shappel Indus., Inc., No. A139385 (D1d5 Jan. 15, 2015)

Construction defect law has this rule that practitioners in the field sometimes call “standing, but which is really more of a claim accrual issue. Whoever owns a property when an injury due to a latent defect becomes manifest owns the claim. Later owners take the property subject to the defect and have no claim, unless there’s an assignment

Here, the facts about when the defect became known were disputed. The court resolved the dispute, in defendant’s favor, at a bench trial. But that was error. Although the ultimate determination of accrual might be a legal call for the judge to make, when disputed, the underlying fact issues are subject to the right to jury trial. 


RFA Denials Are Not Fair Game for Cross-Exam

Gonsalves v. Li, No. A140284 (D1d5 Jan. 13, 2015).

Defendant in this case crashed a BMW M3 during a test drive, injuring the car salesman who was riding along. Most of the opinion—which addresses various evidentiary, jury misconduct, and attorney misconduct issues—is unpublished. But the court does publish on two related issues: Are denials of requests for admission admissible evidence at trial and it is permissible to question a party about these denials during examination? The court says no to both.

During trial, plaintiff called defendant as an adverse witness under Evidence Code § 776. Plaintiffs lawyer aggressively questioned defendant about various lawyerly non-admissions contained in his RFA responses. And then plaintiff stridently argued at closing that the mealy denials called defendant's credibility into question, suggesting that the jury needed to make defendant take responsibility. The judge let the denials come into evidence, over objections, permitted the examination, and denied a new trial motion arguing improper argument.

Under the Discovery Act, any part of a deposition or interrogatory response is generally admissible as trial evidence. Cal. Code Civ. Proc. §§ 2025.620, 2030.410. But that’s not true when it comes to RFAs, for which only admissions are admissible. § 2033.410.

And as to questioning witnesses about denials, the court agrees that the situation is generally analogous to Rifkind v. Superior Court, 22 Cal. App. 4th 1255 (1994)—a key case that every California lawyer defending a depo should know. Rifkind says that you can’t ask a party-deponent (even the person most qualified testifying for an organization) questions about the nature of and evidence in support of that party’s legal contentions. Such questioning is unfair in that it addresses application of law to fact issues generally in the sole purview of counsel. That information is thus properly obtained through interrogatory, where counsel have the ability to participate and the time to contemplate to avoid a “gotcha” response to a complicated question with legal implications. 

RFA responses are similar. An RFA denial is not a statement of fact. It is merely a failure to admit, which potentially has consequences independent of discovery. See § 2033.420(a) (permitting fee awards as sanction for unreasonable denial of RFA). To permit cross-examination of a party witness about the basis for a denial entails questioning about the application of law to fact that, much like contention questioning, is similarly unfair to a lay witness.

Reversed and remanded.

No Fees for Farm Without Actual Damages

Belle Terre Ranch, Inc, v. Wilson, No. A137217 (D1d5 Jan. 13, 2015)

In a boundary dispute, plaintiff was awarded nominal damages for trespasses on the disputed property that, while annoying, did not cause any real property damage. Under these circumstances, it was not entitled to an award of attorneys’ fees under Code of Civil Procedure § 1021.9, which permits a fee award in an action to recover damages to agricultural property. It gives farmers a meaningful remedy when trespassers break through fences and drive motor vehicles onto private farm property. In contrast, this case is primarily a boundary dispute. Although plaintiff’s property—a vineyard—was agricultural, no damages had been proven as a result of the trespass, which made a fee award improper.


Tuesday, January 13, 2015

Collecting on a Big Foreign Judgment

Hyundai Securities Ltd. v. Lee, No. B257276 (D2d5, as modified Jan. 14, 2015)

Mr. Lee, a former officer of Hyundai, got tagged with a $24 million judgment, based in part on a Korean court's ordering him to indemnify the company for certain criminal fines it paid due to his conduct. The judgment carries post-judgment interest at the rate of 20 percent—the statutory rate for Korea. About $5 million in principal and $3 million in interest remain, and Hyundai is now trying to collect in California.

So Hyundai filed an action to have the judgment recognized under the Uniform Foreign Country Money Judgments Recognition Act, Code of Civil Procedure § 1713–24. In a prior appeal, the court held that, procedure-wise, a foreign country judgment can’t be domesticated by a simple petition; its validity needs to be recognized through trial or on summary judgment. So on remand, Hyundai did just that. The trial court found the judgment enforceable, including the accrued Korean interest, plus 20 percent interest going forward.

Lee raises three issues. First, he says that a California court should not have enforced the judgment under § 1715(b)(2), which excludes fines or other penalties from the scope of the Act. The gist of the provision is that the judiciary generally isn’t in the business of enforcing the public law, and in particular, the penal law, of other countries. So Lee says that since Hyundai's underlying liability that he is stuck with indemnifying was a criminal fine levied by the Korean government, a California court shouldn’t enforce that against him.

But the court here doesnt agree. Although the judgment might be requiring Lee to compensate Hyundai for damage it incurred by being fined, it was nonetheless a civil damage award in favor of a private party. Nothing in the case law or legislative of either the California Act, the promulgated Uniform Act, or in other states’ enactment of the Act says otherwise. Indeed, the weight of the authority suggests that the rule is meant to address situations where the sovererign itself is the judgment creditor.

Second, Lee says that the accrued Korean interest should not have been awarded. Generally, a party attempting to enforce a foreign judgment gets the same kind of post-judgment interest that a party enforcing a sister-state judgment would, § 1715, and for prior to the recognition of the judgment by a California court, that means the rate of interest under the law of that state, § 1710.25(a)(2). But Lee says 20 percent is “repugnant to the public policy of this state or United States,” and thus unenforceable under §1716(c)(3). In particular, Lee points to the 10 percent cap on post-judgment interest in Article 15 § 1 of the state constitution. But the fact that the Korean statutory rate is twice the state cap is not so offensive to public policy to make it repugnant under the standard of the Act. Repugnancy is a high bar, reserved for practices such as those that are injurious to public health, offensive to individual rights, or that undermine the administration of law. Double interest just isnt enough.

Finally, Lee argues that the court should not have awarded prospective 20 percent interest on the now-domesticated judgment. This one bears fruit. As noted, § 1715 adopts the sister state standard for foreign judgments. Under § 1710.25, once a sister state is domesticated, the court applies Californias 10 percent interest rate to the domesticated judgment going forward. The idea is that the new interest wasn’t part of the original Korean judgment, but a new merged California judgment that should carry California interest.

Which brings up a point. If you have a foreign or sister state judgment that carries interest over 10 percent, it probably doesn't make sense to domesticate it until you are on the verge of being able to collect. Otherwise, you are giving money away.

Reversed in part and remanded.

Monday, January 12, 2015

PAGA Again ...

Montano v. The Wet Seal Retail, Inc., No. B244107 (D2d4, as modified Jan. 13, 2015)

The court here holds that, following the California Supreme Court’s recent decision in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), Labor Code Private Attorney General Act claims aren’t arbitrable. And given that the agreement contained an anti-severance provision, the other claims plaintiff brought in the case aren’t arbitrable either.