The California Supreme Court Discards the State's Idiosyncratic Interpretation of the Fraud Exception
Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association (No. S190581, January 14, 2013)
The California Supreme Court has unanimously overruled the often-criticized decision that for decades significantly restricted the use of the fraud exception to the parol evidence rule in California Courts. The new decision brings California law into harmony with the low of the majority of other states and the Restatement of Contracts.
In 1935 in Bank of America, etc. Assn v. Pendergrass 4 Cal.2d 258 (Pendergrass) held that to be admissible under the fraud exception to the parol evidence rule, evidence had to tend to establish an independent fact or representation, an action probative of intent to defraud that was more than a promise which conflicted with the contents of the document.
The Riverisland decision examines Pendergrass for flaws and finds many. Pendergrass has kept California out of step with other jurisdictions and authorities. The rule it establishes has the potential to be used to shield fraudulent conduct, the very thing the fraud exception is intended to protect people against. In the decades since Pendergrass the efforts of the Courts of Appeal to reconcile Pendergrass with the language of the statute it was interpreting have led to conflicting results and the creation of distinctions between types of evidence that cause confusion rather than enlightenment.
Ultimately, however, the Riverisland decision rests on a finding that Pendergrass was an incorrect statement of California law when it was written. Pendergrass was inconsistent with both the language of the statute it was applying and earlier decisions of the California Supreme Court. Upon examination the Court found the authorities cited in Pendergrass did not support its novel interpretation and the reasoning it used was unpersuasive.
The Riverisland decision overrules a seventy-seven year line of cases and greatly simplifies the use of the fraud exception to the parol evidence rule in California.
Tuesday, January 15, 2013
Tuesday, October 27, 2009
A Judgment Without Previous Notice of Lawsuit
I Was Informed There's a Judgment Against Me But I Never Heard of Any Lawsuit
It's relatively unusual for a person who had no notice that they had been named as a defendant in a civil action to be informed that there is a civil judgment against them. Recently I prepared a general description of what a person who got that startling information might want to know. I have decided to share it here.
There are general rules that apply to every civil lawsuit. The general rule is that a person must be given notice of a civil lawsuit that has been filed against them by being served with a summons and a copy of the complaint. If the plaintiff can prove to the court that despite making significant efforts to locate a defendant he has been unable to do so the court can approve service by publication of a notice in a newspaper. Service by publication is relatively rare. If a person has a stable home or work address it is very unlikely that a court would give permission for service by publication. If a lawsuit names a person who does not live or work in California there is a complex rule that determines whether a California court can have jurisdiction over that person. A very similar rule applies to determining whether an out-of-state court can have jurisdiction over a person who lives in California. How that rule applies can only be determined by an attorney who has been consulted by the person and is providing legal advice based upon the specific facts of the situation. If the suit was filed in another state the person may need to consult an attorney who is licensed to practice law in that state. The rules for serving the summons and complaints upon corporations and other business entities, such as partnerships, are different from the rules for individuals.
If a person has been informed that there is a California civil judgment against him the most important information which that person needs is the name of County in which the lawsuit was filed. The California court system operates on a county basis and each county has the files for civil lawsuits which have been brought in that county. County court clerks' offices do not have the files for civil lawsuits that were filed in other counties. It is extremely helpful to also have the case number assigned to that case. Each County uses a separate numbering system. If a person has been informed of a judgment against them through a document from the court or a document from an attorney representing a party in the lawsuit, both the name of the County and the Case Number should be on that document. Any document from the court or from an attorney representing a party in the lawsuit should have the County and Case Number on it.
If a person has learned of an alleged judgment against them by being told orally about it, the person should ask whoever told them for the name of the County and the Case Number. Even if the individual does not have the case number he or she may know the name of the County which is the most important piece of information. There is an exception to this rule. If for ANY reason a person believes that the individual who told them of the judgment might be potentially dangerous to them, they should avoid all contact with that individual and consult an attorney about how to get information about the alleged judgment. In addition, if the person believes that there is ANY possibility that someone poses a threat to them they should get advice about how to handle that situation. The fastest way to do this may be to call a domestic violence hotline (a local one if possible). Even if the potential threat does not arise from a domestic situation but from a business relationship or even a stranger the hotline may be able to suggest some helpful precautions and refer the person to a source of information about how to handle their specific situation. If any specific threats have been made or if the person believes that violence is likely, he or she should contact the police. It is very, very, very, very rare for a civil lawsuit all by itself to lead to any violence. Becoming involved in a civil lawsuit is not by itself a reason to seek advice about possible violence. However a person knows more about their contacts and communications with another party than an outsider does, and they should rely upon their own judgment based upon all of the other party's conduct and communications, not just those related to the lawsuit. If the feeling of possible danger arises after the person has hired an attorney, he or she should consult their attorney about it as soon as possible.
A person who has been told that there is a California civil judgment against them even though they were not aware that anyone had sued them and had not been served with any notice should consult an attorney about the situation. This should be done as soon as possible because the first six months after a judgment is entered are the best time to address the situation. Although California attorneys are licensed by the state bar, the counties have voluntary bar associations. Some of those bar associations will provide referrals to members of the public who are seeking legal advice. In addition quite a few attorneys offer a free initial consultation. This consultation will often be enough to allow a person to learn whether or not they need to hire an attorney to represent them. Having the County and the Case Number of the lawsuit will very helpful for the consultation. Any documents that are connected with the alleged lawsuit and judgment, or with the event or contract that the lawsuit is based on, should be brought to the consultation.
Whether or not information about civil lawsuits filed in that county is available online varies from county to county. It may be possible to look at a list of the documents that have been filed in a lawsuit or even the actual documents themselves through the individual court's website. Court files can also be read in person at the court clerk's office. Having copies of some or all of the documents in the court file will be helpful when consulting an attorney. Reading the court file will usually help a person figure out who sued them and what event the lawsuit is based on. The facts that the person knows about that person and that event will permit an attorney to provide specific legal advice. However someone who is not an attorney should not rely upon their interpretation of the documents for an understanding of the legal situation. Legal documents, especially in lawsuits, use very specific legal terms and phrasing that can easily be misunderstood by non-lawyers.
It's relatively unusual for a person who had no notice that they had been named as a defendant in a civil action to be informed that there is a civil judgment against them. Recently I prepared a general description of what a person who got that startling information might want to know. I have decided to share it here.
There are general rules that apply to every civil lawsuit. The general rule is that a person must be given notice of a civil lawsuit that has been filed against them by being served with a summons and a copy of the complaint. If the plaintiff can prove to the court that despite making significant efforts to locate a defendant he has been unable to do so the court can approve service by publication of a notice in a newspaper. Service by publication is relatively rare. If a person has a stable home or work address it is very unlikely that a court would give permission for service by publication. If a lawsuit names a person who does not live or work in California there is a complex rule that determines whether a California court can have jurisdiction over that person. A very similar rule applies to determining whether an out-of-state court can have jurisdiction over a person who lives in California. How that rule applies can only be determined by an attorney who has been consulted by the person and is providing legal advice based upon the specific facts of the situation. If the suit was filed in another state the person may need to consult an attorney who is licensed to practice law in that state. The rules for serving the summons and complaints upon corporations and other business entities, such as partnerships, are different from the rules for individuals.
If a person has been informed that there is a California civil judgment against him the most important information which that person needs is the name of County in which the lawsuit was filed. The California court system operates on a county basis and each county has the files for civil lawsuits which have been brought in that county. County court clerks' offices do not have the files for civil lawsuits that were filed in other counties. It is extremely helpful to also have the case number assigned to that case. Each County uses a separate numbering system. If a person has been informed of a judgment against them through a document from the court or a document from an attorney representing a party in the lawsuit, both the name of the County and the Case Number should be on that document. Any document from the court or from an attorney representing a party in the lawsuit should have the County and Case Number on it.
If a person has learned of an alleged judgment against them by being told orally about it, the person should ask whoever told them for the name of the County and the Case Number. Even if the individual does not have the case number he or she may know the name of the County which is the most important piece of information. There is an exception to this rule. If for ANY reason a person believes that the individual who told them of the judgment might be potentially dangerous to them, they should avoid all contact with that individual and consult an attorney about how to get information about the alleged judgment. In addition, if the person believes that there is ANY possibility that someone poses a threat to them they should get advice about how to handle that situation. The fastest way to do this may be to call a domestic violence hotline (a local one if possible). Even if the potential threat does not arise from a domestic situation but from a business relationship or even a stranger the hotline may be able to suggest some helpful precautions and refer the person to a source of information about how to handle their specific situation. If any specific threats have been made or if the person believes that violence is likely, he or she should contact the police. It is very, very, very, very rare for a civil lawsuit all by itself to lead to any violence. Becoming involved in a civil lawsuit is not by itself a reason to seek advice about possible violence. However a person knows more about their contacts and communications with another party than an outsider does, and they should rely upon their own judgment based upon all of the other party's conduct and communications, not just those related to the lawsuit. If the feeling of possible danger arises after the person has hired an attorney, he or she should consult their attorney about it as soon as possible.
A person who has been told that there is a California civil judgment against them even though they were not aware that anyone had sued them and had not been served with any notice should consult an attorney about the situation. This should be done as soon as possible because the first six months after a judgment is entered are the best time to address the situation. Although California attorneys are licensed by the state bar, the counties have voluntary bar associations. Some of those bar associations will provide referrals to members of the public who are seeking legal advice. In addition quite a few attorneys offer a free initial consultation. This consultation will often be enough to allow a person to learn whether or not they need to hire an attorney to represent them. Having the County and the Case Number of the lawsuit will very helpful for the consultation. Any documents that are connected with the alleged lawsuit and judgment, or with the event or contract that the lawsuit is based on, should be brought to the consultation.
Whether or not information about civil lawsuits filed in that county is available online varies from county to county. It may be possible to look at a list of the documents that have been filed in a lawsuit or even the actual documents themselves through the individual court's website. Court files can also be read in person at the court clerk's office. Having copies of some or all of the documents in the court file will be helpful when consulting an attorney. Reading the court file will usually help a person figure out who sued them and what event the lawsuit is based on. The facts that the person knows about that person and that event will permit an attorney to provide specific legal advice. However someone who is not an attorney should not rely upon their interpretation of the documents for an understanding of the legal situation. Legal documents, especially in lawsuits, use very specific legal terms and phrasing that can easily be misunderstood by non-lawyers.
Monday, May 11, 2009
Hospital's Suit For Reimbursement Is Not Preempted by ERISA
Court of Appeal Reverses a Judgment Sustaining a Demurrer by Blue Cross
Coast Plaza Doctors Hospital v. Blue Cross of California (2009) 173 Cal.App.4th 1179
11 p.
According to the allegations in the complaint, a patient checked into an out-of-network hospital for previously scheduled surgery. Because the Hospital was out-of-network the patient made an advance cash payment for the surgery. The surgery went smoothly and is not at dispute in this litigation. However, a few days after the surgery the patient suffered a life threatening respiratory distress which required her to be put on a ventilator and moved to the Hospital's ICU. (This was emergency treatment.)
Once the patient was stabilized the Hospital contacted the Independent Practice Association (IPA) that Blue Cross had contracted with to provide medical care for the patient, in order to arrange for the transfer of the patient to an in-network provider. The IPA refused to approve the transfer or to be involved in any decisions regarding the patient's medical care. The patient spent two months in the Hospital's ICU before being transferred.
The Hospital sued Blue Cross for slightly under $600,000 for the emergency care that it provided to the patient.
Blue Cross successfully demurred on the ground that because the patient's health insurance was an employee benefit, the Hospital's action against it was preempted by ERISA. The Hospital elected not to amend its complaint and appealed from the judgment that followed.
The Court of Appeal held that the Hospital's action was based on Health and Safety Code section 1371.4, and that section 1371.4 falls within ERISA's saving clause (ERISA section 514(b)(2)(A)) as state law regulating insurance. It reversed the judgment and remanded for further proceedings.
Coast Plaza Doctors Hospital v. Blue Cross of California (2009) 173 Cal.App.4th 1179
11 p.
According to the allegations in the complaint, a patient checked into an out-of-network hospital for previously scheduled surgery. Because the Hospital was out-of-network the patient made an advance cash payment for the surgery. The surgery went smoothly and is not at dispute in this litigation. However, a few days after the surgery the patient suffered a life threatening respiratory distress which required her to be put on a ventilator and moved to the Hospital's ICU. (This was emergency treatment.)
Once the patient was stabilized the Hospital contacted the Independent Practice Association (IPA) that Blue Cross had contracted with to provide medical care for the patient, in order to arrange for the transfer of the patient to an in-network provider. The IPA refused to approve the transfer or to be involved in any decisions regarding the patient's medical care. The patient spent two months in the Hospital's ICU before being transferred.
The Hospital sued Blue Cross for slightly under $600,000 for the emergency care that it provided to the patient.
Blue Cross successfully demurred on the ground that because the patient's health insurance was an employee benefit, the Hospital's action against it was preempted by ERISA. The Hospital elected not to amend its complaint and appealed from the judgment that followed.
The Court of Appeal held that the Hospital's action was based on Health and Safety Code section 1371.4, and that section 1371.4 falls within ERISA's saving clause (ERISA section 514(b)(2)(A)) as state law regulating insurance. It reversed the judgment and remanded for further proceedings.
Monday, April 20, 2009
Life Insurance is Not Covered by the Consumer Legal Remedies Act
Supreme Court Affirms Decision But Narrows the Holding From All Insurance to Just Life Insurance
Fairbanks v. Superior Court (2009) 46 Cal.4th 56
10 p.
At the time that the Court of Appeal decision in Fairbanks came out I praised it for its thoroughness and suggested that the issue would not have to be revisited by the California courts anytime soon. I was completely wrong because the California Supreme Court granted review of the decision. Today the Supreme Court issued its opinion.
A unanimous Supreme Court affirmed the Court of Appeal decision but narrowed its holding from all insurance to just life insurance. In the decision's only footnote the court explained that although the parties, the trial court and the Court of Appeal all took the broad view that the issue was whether insurance is a service for the purpose of the CLRA, the Supreme Court had "narrowed the issue to focus only on life insurance."
Like the Court of Appeal, the Supreme Court found the statutory language determinative and held that life insurance is not covered by the CLRA.
Fairbanks v. Superior Court (2009) 46 Cal.4th 56
10 p.
At the time that the Court of Appeal decision in Fairbanks came out I praised it for its thoroughness and suggested that the issue would not have to be revisited by the California courts anytime soon. I was completely wrong because the California Supreme Court granted review of the decision. Today the Supreme Court issued its opinion.
A unanimous Supreme Court affirmed the Court of Appeal decision but narrowed its holding from all insurance to just life insurance. In the decision's only footnote the court explained that although the parties, the trial court and the Court of Appeal all took the broad view that the issue was whether insurance is a service for the purpose of the CLRA, the Supreme Court had "narrowed the issue to focus only on life insurance."
Like the Court of Appeal, the Supreme Court found the statutory language determinative and held that life insurance is not covered by the CLRA.
Wednesday, April 15, 2009
California Supreme Court Hears Hughes v. Pair
Oral Argument in Sexual Harassment Case Was Heard on April 7
During its April 7th Oral Argument session the California Supreme Court heard arguments in the sexual harassment action Hughes v. Pair. In that action Suzan Hughes, the mother of a minor child whose trust was administered by Christopher Pair, sued Pair for sexual harassment under Civil Code section 51.9. The Court of Appeal had held that the words "pervasive and severe" have the same meaning in 51.9 as they do in FEHA and Title VII.
Section 51.9 applies specifically to a relationship with a professional when the plaintiff is unable to easily terminate the relationship. It thus always refers to a first party sexual harassment claim rather than the employer-ratification argument that is usually made in FEHA and Title VII actions.
The Supreme Court's discussion is sure to be interesting to those who follow sexual harassment law.
During its April 7th Oral Argument session the California Supreme Court heard arguments in the sexual harassment action Hughes v. Pair. In that action Suzan Hughes, the mother of a minor child whose trust was administered by Christopher Pair, sued Pair for sexual harassment under Civil Code section 51.9. The Court of Appeal had held that the words "pervasive and severe" have the same meaning in 51.9 as they do in FEHA and Title VII.
Section 51.9 applies specifically to a relationship with a professional when the plaintiff is unable to easily terminate the relationship. It thus always refers to a first party sexual harassment claim rather than the employer-ratification argument that is usually made in FEHA and Title VII actions.
The Supreme Court's discussion is sure to be interesting to those who follow sexual harassment law.
Tuesday, January 27, 2009
California Supreme Court Reverses Patel Decision
Contract Was Enforceable Because Settled Law Provided a Time for Payment
Patel v. Liebermensch (December 22, 2008, S156797)
9 p. decision
The California Supreme Court unanimously reversed the Court of Appeal decision in Patel v. Liebermensch, agreeing with the trial court that the parties had entered into an enforceable contract. The absence of terms specifying the time and manner of payment did not make a real estate contract too uncertain to enforce.
The Court pointed out that the manner of payment was not actually in dispute, that the only missing term was the time of payment. It is settled law that if a contract for the sale of real property specifies no time of payment, a reasonable time is allowed.
The Court of Appeal had improperly relied on the parties' conduct after the dispute arose to conclude that an agreement had not been reached when the contract was signed. When the contract was executed it contained easily ascertainable essential terms. Neither party could render it unenforceable by seeking to change those terms.
Note: This was an action for specific performance of a real estate option contract for a condominium unit in San Diego. When Patel exercised the option in July, 2004 one of his reasons was because he wanted to take advantage of the mortgage interest rates available at that time. It would be interesting to know how the parties feel about this transaction now given the dramatic changes in real estate values and mortgage availability since the time that this suit was filed.
Patel v. Liebermensch (December 22, 2008, S156797)
9 p. decision
The California Supreme Court unanimously reversed the Court of Appeal decision in Patel v. Liebermensch, agreeing with the trial court that the parties had entered into an enforceable contract. The absence of terms specifying the time and manner of payment did not make a real estate contract too uncertain to enforce.
The Court pointed out that the manner of payment was not actually in dispute, that the only missing term was the time of payment. It is settled law that if a contract for the sale of real property specifies no time of payment, a reasonable time is allowed.
The Court of Appeal had improperly relied on the parties' conduct after the dispute arose to conclude that an agreement had not been reached when the contract was signed. When the contract was executed it contained easily ascertainable essential terms. Neither party could render it unenforceable by seeking to change those terms.
Note: This was an action for specific performance of a real estate option contract for a condominium unit in San Diego. When Patel exercised the option in July, 2004 one of his reasons was because he wanted to take advantage of the mortgage interest rates available at that time. It would be interesting to know how the parties feel about this transaction now given the dramatic changes in real estate values and mortgage availability since the time that this suit was filed.
Tuesday, August 19, 2008
Family Court to Remain Open in Riverside County
Dismissal of Misdemeanors Because No Courtroom Was Available is Upheld
People v. Cole, Appellate Division, Riverside County (July 25, 2008, APP-004096)
Civil procedure, in the form of civil trials, has been the intermittent collateral damage in the court congestion crisis in Riverside County. The crisis itself arises out of the backlog of criminal cases in the county and has led to some conflict between the District Attorney and the Superior Court Judges. Now, in a development that brings no comfort to those engaged in traditional civil actions, but that may well be in the best interests of the people of Riverside County, a three judge panel has upheld the decision of a trial court judge not to give precedence to criminal cases in the family, probate, traffic, small claims and juvenile courts.
Because these were appeals from misdemeanor charges the decision was made by the Appellate Division. The three judge panel was made up of specially assigned Orange County Superior Court Judges because all of the Riverside County judges had disqualified themselves on the grounds that the issue was one of their court's policy.
Late in the afternoon on Friday, January 26, 2007 two misdemeanor prosecutions came before the court on the last day that they could be brought to trial. During an extended discussion with the deputy district attorney about possible available courtrooms, the trial judge pointed out that because of the backlog in criminal cases, the court had completely eliminated all civil trials.
Since January, 2007 that backlog has been significantly reduced by a strike team of judges sent to Riverside by Chief Justice George. However the strike team is now gone and the funding for seven new judgeships has been postponed for a year because of the state budget crisis. In July, 2008 twenty-two criminal cases were dismissed because there was no judge available to hear them. For those seeking civil trials, the situation remains bleak.
People v. Cole, Appellate Division, Riverside County (July 25, 2008, APP-004096)
Civil procedure, in the form of civil trials, has been the intermittent collateral damage in the court congestion crisis in Riverside County. The crisis itself arises out of the backlog of criminal cases in the county and has led to some conflict between the District Attorney and the Superior Court Judges. Now, in a development that brings no comfort to those engaged in traditional civil actions, but that may well be in the best interests of the people of Riverside County, a three judge panel has upheld the decision of a trial court judge not to give precedence to criminal cases in the family, probate, traffic, small claims and juvenile courts.
Because these were appeals from misdemeanor charges the decision was made by the Appellate Division. The three judge panel was made up of specially assigned Orange County Superior Court Judges because all of the Riverside County judges had disqualified themselves on the grounds that the issue was one of their court's policy.
Late in the afternoon on Friday, January 26, 2007 two misdemeanor prosecutions came before the court on the last day that they could be brought to trial. During an extended discussion with the deputy district attorney about possible available courtrooms, the trial judge pointed out that because of the backlog in criminal cases, the court had completely eliminated all civil trials.
Since January, 2007 that backlog has been significantly reduced by a strike team of judges sent to Riverside by Chief Justice George. However the strike team is now gone and the funding for seven new judgeships has been postponed for a year because of the state budget crisis. In July, 2008 twenty-two criminal cases were dismissed because there was no judge available to hear them. For those seeking civil trials, the situation remains bleak.
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