California Supreme Court Civil Issues Pending: B & P 17200/Class Actions/Commercial


Can a Borrower Challenge the Assignment of the Note While Claiming Wrongful Foreclosure? The Court granted review on the following issue: In an action for wrongful foreclosure on a deed of trust securing a home loan, does the borrower have standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void? Yvanova v. New Century Mortgage Corp., S218973 (opinion below B247188, formerly 226 Cal.App.4th 495). Review was granted 8/27/14.

Can City Officials Invoke CCP §425.16 Against an Allegation that They Had a Financial Interest in the Contract? The Court granted review of the following issue: Did votes by city officials to approve a contract constitute conduct protected under CCP §425.16 despite the allegation that they had a financial interest in the contract? City of Montebello v. Vasquez, S219052 (opinion below B245959, formerly 226 Cal.App.4th 1084). Review was granted 8/13/14.

Can Parties Who Are Joint and Several Be Sued Separately?  The Court limited review to the following issues: (1) Can parties who are jointly and severally liable on an obligation be sued in separate actions? (2) Does the opinion of the Court of Appeal in this case conflict with the opinion of this court in Williams v. Reed (1957) 48 Cal.2d 57DKN Holdings LLC v. Faerber, S218597 (opinion below E055732, formerly 225 Cal.App.4th 1115). Review was granted 7/23/14.

Did Borrower Waive Protections for Mortgagee in Short Sale? The Court granted review on the following issues: (1) Do the anti-deficiency protections in CCP § 580b apply to a borrower who engages in a “short sale” of real property when the lender approved the sale and reconveyed its deed of trust to facilitate the sale on the condition that the borrower remain liable for any outstanding balance on the loan following the sale? (2) Does a borrower’s request that the creditor release its security interest in real property to facilitate a short sale result in a waiver of the protection of the “security first” rule set forth in CCP § 726? Coker v. JP Morgan Chase Bank, N.A., S213137 (opinion below D061720, formerly 218 Cal.App.4th 1).  Review granted 11/20/13.

Is the Proposed Development Consistent with the City’s General Plan? After the Court of Appeal affirmed in part and reversed in part in an action for writ of administrative mandate, the Court granted review of the following issue: Is the proposed development project of low density housing at issue in this case consistent with the city’s general plan? Orange Citizens for Parks & Recreation v. Superior Court, S212800 (opinion below G047013, G047219, formerly 217 Cal.App.4th 1005). Review granted 10/28/13.

What Is the Standard of Review When Challenging Housing Ordinances?
After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: What standard of judicial review applies to a facial constitutional challenge to inclusionary housing ordinances that require set asides or in-lieu fees as a condition of approving a development permit? (See San Remo Hotel L.P. v. City & County of San Francisco (2002) 27 Cal.4th 643, 670.) California Building Industry Assn. v. City of San Jose, S212072 (opinion below H038563, formerly 216 Cal.App.4th 1373). Review was granted 9/11/13.

How Can Multistate Business Income Taxes Be Apportioned? After the Court of Appeal reversed the judgment in a civil action, the Court granted review on the following issue: Were multistate taxpayers required to apportion business income according to the formula set forth in Revenue and Taxation Code § 25128 as amended in 1993 or could they elect to apportion income according to the formula set forth in former Revenue and Taxation Code § 38006 pursuant to the adoption of the Multistate Tax Compact in 1974? The Gillette Co. v. Franchise Tax Bd., S206587 (opinion below, A130803, and opinion on rehearing, formerly 209 Cal.App.4th 938), review granted 1/16/13.

What is the Vicarious Liability of a Franchisor for the Tortious Conduct of a Supervising Employee of a Franchisee? After the Court of Appeal reversed a summary judgment, the court limited review to this issue: Whether the defendant franchisor is entitled to summary judgment on plaintiff’s claim that it is vicariously liable for tortious conduct by a supervising employee of a franchisee. Patterson v. Domino’s Pizza, LLC, S204543 (opinion below B235099, formerly 207 Cal.App.4th 385), review granted 10/10/12.  Update 2/13/13: Review granted in Monarrez v. Automobile Club of Southern California, S207726 (opinion below B233512, formerly 211 Cal.App.4th 177, as modified 211 Cal.App.4th 701a). Briefing was deferred pending a decision in PattersonUpdate 5/8/14: Oral argument scheduled for 6/4/14. Update 6/4/14: Case argued and submitted. Briefs are hereUpdate 8/28/14: Opinion issued. While divided 4-3 on the outcome, the Court appears to agree on the general principle that the franchisor can only be held liable for those portions of the franchise operation over which it exercises sufficient control. The Court disagreed over whether there was a triable question of fact in this case on whether Domino’s Pizza exercised such control over the discharge of employees at the franchise. The majority, written by Justice Baxter, found no question of fact and held for Domino’s Pizza. Justice Werdergar’s dissent found a sufficient question of fact to reverse the summary judgment.

Does the FAA Preempt State Consumer Protections Against Mandatory Arbitration? Does the Federal Arbitration Act (9 U.S.C. § 2), as interpreted in AT&T Mobility LLC v. Concepcion (2011) 563 U. S. __, 131 S.Ct. 1740, preempt state law rules invalidating mandatory arbitration provisions in a consumer contract as procedurally and substantively unconscionable? Sanchez v. Valencia Holding Co. LLC, S199119 (opinion below B228027, formerly 201 Cal.App.4th 74), review granted 3/21/12.  Update 5/9/12: Review granted in Buzenes v. Nuvell Financial Services, S200376 (opinion below B221870, nonpublished). Briefing deferred pending decision in SanchezUpdate 6/13/12: Review granted in Mayers v. Volt Management Corp., S200709 (opinion below G045036, formerly 203 Cal.App.4th 1194). Briefing deferred pending decision in SanchezUpdate 12/19/12: Review granted in Goodridge v. KDF Automotive Group, Inc., S206153 (opinion below D060269, formerly 209 Cal.App.4th 325), with briefing deferred pending the resolution of SanchezUpdate 5/1/13: review granted in Natalini v. Import Motors, Inc., S209324 (opinion below A133236, formerly 213 Cal.App.4th 587), with briefing deferred pending the resolution of Sanchez. Update 6/12/13: review granted in Compton v. Superior Court, S210261 (opinion below B236669, formerly 214 Cal.App.4th 873), with briefing deferred pending the resolution of Sanchez. Update 6/26/13: Review granted in Vasquez v. Greene Motors, Inc., S210439 (opinion below A134829, originally 214 Cal.App.4th 1172, as modified 215 Cal.App.4th 764a), with briefing deferred pending the resolution of SanchezUpdate 8/21/13: Review granted in Vargas v. SAI Monrovia B, Inc., S212033 (opinion below B237257, formerly 216 Cal.App.4th 1269), with briefing deferred pending the resolution of SanchezUpdate 11/26/13: Review granted in Gonzales v. Metro Nissan of Redlands, S214121 (opinion below E056160, nonpublished), with briefing deferred pending the resolution of Sanchez.

Update 2/19/14: The court invited the parties and interested persons to file supplemental briefing on the following questions. In formulating the standard for determining whether a contract or contract term is substantively unconscionable, this court has used a variety of terms, including “unreasonably favorable” to one party (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145); “so one-sided as to shock the conscience” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 246); “unfairly one-sided” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071–1072; “overly harsh” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114; and “unduly oppressive” (Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 925). (1) Should the court use only one of these formulations in describing the test for substantive unconscionability and, if so, which one? (2) Are there any terms the court should not use? (3) Is there a formulation not included among those above that the court should use? (4) What differences, if any, exist among these formulations either facially or as applied?  Update 6/25/14: review granted in Cheroti v. Harvey & Madding S218724 (opinion below A135553, nonpublished), with briefing deferred pending the resolution of Sanchez.  Update 7/9/14: Review granted in Gillespie v. Svale Del Grande, Inc., S218704 (opinion below, H039428, nonpublished opinion), with briefing deferred pending the resolution of Sanchez.   Update 8/27/14: Two cases in which briefing was deferred pending the decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, are still retained by the Court with briefing now deferred pending a decision in Sanchez: Caron v. Mercedes-Benz Financial Services USA LLC, S205263 (opinion below, G044550, formerly 208 Cal.App.4th 7) and Flores v. West Covina Auto Group, LLC, S208716 (opinion below B238265, formerly 212 Cal.App.4th 895).

Can Attempts to Prolong Patent Life be Challenged Under the Cartwright Act? 
May a suit under the Cartwright Antitrust Act (Bus. & Prof. Code, § 16720 et seq.) be brought to challenge “reverse exclusionary payments” made by pharmaceutical manufacturers to settle patent litigation with generic drug producers and prolong the life of the patents in question? In re Cipro Cases I & II, S198616 (opinion below D056361, formerly 200 Cal.App.4th 442), review granted 2/15/12.  Update 6/26/13: The Court directs the parties to submit supplemental briefs discussing the relevance of Federal Trade Com. v. Actavis, Inc. (June 17, 2013, No. 12-416) __ U.S. __ [2013 WL 2922122] to the issues in this case. Update 7/10/13: Request for stay granted pending class action settlement approval proceedings in San Diego County Superior Court.

Are Claims of State Labor and Insurance Laws Violations Preempted by the Federal Aviation Administration Authorization Act? Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company’s alleged violation of state labor and insurance laws “related to the price, route, or service” of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)? People ex re. Harris v. Pac Anchor Transportation, Inc., S194388 (opinion below B220966, formerly 195 Cal.App.4th 765), review granted 8/10/11.  Update 6/26/13: Court orders supplemental briefing addressing the effect of American Trucking Associations, Inc. v. City of Los Angeles (2013) 569 U.S. ___ [2013 U.S. LEXIS 4539], and Dan's City Used Cars, Inc. v. Pelkey (2013) 569 U.S. ___ [133 S. Ct. 1769] on the issue of preemption by the Federal Aviation Administration Authorization Act of 1994.   Update 12/11/13: Review granted in Rodriguez v. RWA Trucking Company, Inc., S214150 (opinion below B241727, formerly 219 Cal.App.4th 692, as modified), with briefing deferred until a decision in Pac Anchor. Update 5/1/14: Oral argument scheduled for 5/28/14.  Update 5/28/14: Case argued and submitted. The briefs are here.  Update 7/28/14: Opinion issued. The unanimous Court held that the FAAAA does not preempt the People’s UCL action against defendants because the FAAAA addresses the transportation of property, not labor and insurance issues and that this action is independent of defendants’ prices, routes, or services with respect to the transportation of property. Update 7/30/14: Review granted in Grupp v. DHL Express (USA), Inc., S218754 (opinion below B245297, formerly 225 Cal.App.4th 510), with briefing deferred until a decision in Pac Anchor.

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