The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

California Supreme Court Rules That an Insured Seeking to Undo a Settlement Agreement with Its Insurer Must Sue for Rescission and Return the Settlement Proceeds

By Frederick Baker on Posted in California

This case arises out of an insured’s claim against its insurer for property damages caused by an earthquake that struck the Los Angeles area in 1984.  After a protracted dispute (during which the insurer made substantial payments) over the value of the claimed damages, and the extent to which they were earthquake-related, the parties entered into a settlement agreement.  The insurer agreed to pay an additional $1.5 million, and the insured executed a standard release by which it waived its right to recover any undiscovered damages and agreed to forbear bringing suit on any and all claims, known or unknown.

Several years later, the insured brought a lawsuit seeking to recover additional damages under the policy.  It argued that it was fraudulently induced into entering into the settlement agreement and that under general contract principles it could elect to affirm the agreement (and thus keep the money it had already received) and sue for damages caused by the alleged fraud.  The trial court, relying on decades of precedent from the Supreme Court and the Court of Appeal, as well as the statutory scheme governing settlements and releases, granted dispositive motions in favor of the insurer.  The authorities, the court said, made clear that a party seeking to undo a settlement agreement must seek rescission and return any monies obtained as consideration for the release.  The Court of Appeal reversed.  Distinguishing the prior authorities on the basis that they involved third-party personal injury claims, rather than first-party breach of contract claims, the court found that public policy supports the rule (followed in several jurisdictions) that a policyholder may affirm, keep the money, and sue, despite having executed a full release.

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Florida Court Allows Retaliation Claim By Former Employee Prohibited From Volunteering

By on Posted in Employment

In Gates v. Gadsden County School Board (.pdf), Florida’s First District Court of Appeals has allowed a former teacher’s retaliation claim to proceed where she was prohibited from continuing as a volunteer mentor, which she had done since her resignation.

Teacher Martha Gates filed a Title VII discrimination suit against the Gadsden County School Board in 2004 and resigned from her teaching position.  Even though she resigned, she continued to participate in the school district’s volunteer mentoring program.  Six months after her resignation, the School Board prohibited her from continuing to volunteer, and she filed a Title VII retaliation claim.  The trial court entered summary judgment against Gates, concluding that a volunteer could not maintain a Title VII retaliation claim and, further, that she could demonstrate no materially adverse employment action.

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California Commission Confirms Judicial Nominations, Including for Chief Justice

By on Posted in California

The California Commission on Judicial Appointments has unanimously confirmed the nomination of Associate Justice Tani Gorre Cantil-Sakauye, of the Third Appellate District of the Court of Appeal (Sacramento), as the new Chief Justice of California.

In the same session, the Commission also confirmed by unanimous vote: 

Justices Cantil-Sakauye, Codrington and Hill will stand for election in their new positions in the November 2010 election.
 

Illinois Supreme Court Announces Oral Argument Calendar for September Term

By Kirk Jenkins on Posted in Illinois

The Illinois Supreme Court has announced its oral argument calendar [pdf] for the upcoming September term, and it contains just one civil case. On September 22, 2010, the Court will hear argument in Hossfeld v. Illinois State Board of Elections, No. 109725.  Hossfeld involves the question of whether the appellant was a qualified primary voter for the Republican Party, such that his “Statement of Candidacy” in the February 2010 Republican primary for State Senator was valid, and he was therefore entitled to be on the ballot.  For more information on Hossfeld, click “Election Law” in the Illinois Supreme Court Updates.

A Mediator Cannot Confirm the Terms of the Settlement Reached Without a Waiver under California Evidence Code § 703.5

By on Posted in California, Civil and Appellate Procedure

In a case brought to enforce a settlement reached at mediation, a dispute arose about the final terms of the settlement reached. One of the parties offered the declaration of the mediator to confirm the accuracy of the attached agreement. In Radford v. Shehorn, the Second District Court of Appeal held this was inadmissible under Evidence Code § 703.5, which declares that a mediator is incompetent "to testify, in any subsequent civil proceeding, as to any statement, conduct, decision, or ruling, occurring at or in conjunction with the prior proceeding…." The court ruled that this extended to a statement regard the terms of any agreement reached. While the parties can waive this restriction, in Radford the dispute extended to whether the signed waiver was actually part of the agreement. With that in dispute, the mediator remained barred from testifying. Ultimately, this error was found harmless, as a declaration of counsel confirming receipt of the agreement from opposing counsel was found sufficient to identify the final agreement. Note: Radford is consistent with an earlier case, Eisendrath v. Superior Court (2003) 109 Cal.App.4th 351, which barred a party from deposing the mediator in an action to correct the written agreement signed at the mediation.

California Supreme Court Issues Two Opinions – Addressing Collateral Estoppel and Compelling Arbitration of Medical Malpractice Wrongful Death Claims

By on Posted in California
  • Murray v. Alaska Airlines, Inc. holds that collateral estoppel applies to the administrative findings of a federal agency when those findings were subject to objection and judicial review that was never pursued, resulting in a final nonappealable order based on those findings. The Court found that in a subsequent civil lawsuit, those administrative findings have an issue-preclusive effect against the claimant who failed to challenge those findings and allowed them to become a final order and also failed to take any steps to withdraw his administrative complaint. For more details about Murray, see the Civil Procedure/Evidence/Discovery update page.
  • Ruiz v. Podolsky holds that an arbitration agreement between a patient and treating physician extends to compel the heirs of that patient to arbitrate a wrongful death lawsuit when the agreement so extends by its own terms. The Court found that this result was compelled by C.C.P. § 1295, which by its terms intended to extend the arbitration of medical malpractice allegations to wrongful death claims. For more details about Ruiz, see the ADR update page.
     

No Private Right of Action Under Labor Code § 351 for Claim that Employer Wrongfully Took Tips

By on Posted in California, Employment

Labor Code § 351 bars an employer from collecting any gratuity that is left for an employee. Previous cases have addressed whether various tip pooling systems (i.e. systems which pool gratuities for division among a set of employees) operated by the employer are permitted under Labor Code § 351. Facing a split in the Court of Appeal on the existence of a private cause of action by the employee, the Supreme Court did not address the issue of whether the tip pooling system imposed in Lu v. Hawaiian Garden Casino was permitted. Instead, the Court unanimously ruled that Labor Code § 351 does not authorize a private right of action to sue an employer for allegedly taking gratuities. Finding no statutory language or legislative intent to provide such a remedy, the Court declined to create one. For more details about Lu, see the Employment-Compensation & Benefits update page.

California Supreme Court Grants Review in Three Civil Cases

By on Posted in California

This week the Supreme Court granted review in three civil cases, covering a variety of issues:

  • Serrano v. Stefan Merli Plastering, in which the Court of Appeal, formerly at 184 Cal.App.4th 178 affirmed the denial of attorney’s fees under C.C.P. § 1021.5, finding that the trial court was within its discretion following Adoption of Joshua S. (2008) 42 Cal.4th 945, on the grounds that plaintiffs were protecting their own interests and only inadvertently triggered a published opinion which may have benefited others. For more details, see the Attorney-Related update page.
  • Retired Employees Assoc. v. County of Orange, in which the Court certified review of the following issue: Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees. For more details, see the Employment – Compensation & Benefits update page.

California Supreme Court Clarifies Application of Triple-Penalty For Elder Claims

By on Posted in California

In Clark v. Superior Court, the Supreme Court considered the claims of elderly plaintiffs under California’s unfair competition law, Business & Professions Code, § 17200 et seq., which sought treble damages under Civil Code § 3345. Under Civil Code § 3345, which is part of the Consumers Legal Remedies Act, the trier of fact is authorized to impose a penalty (i.e. a remedy intended to punish or deter) three times greater than otherwise provided for by the authorizing statute, when considering specified types of conduct regarding claims brought by or on behalf of elderly or disabled persons. If the statute does not provide a specific amount, then the trier of fact is authorized to increase the penalty it would otherwise have imposed, up to triple the original amount. The Court first ruled that § 3345 is not limited to claims brought under the Consumers Legal Remedies Act, but applies as a penalty enhancement for any claim which satisfies the terms of § 3345. However, following this statutory language, only “penalties” are potentially tripled, not compensatory damages. As such, the Court also ruled that § 3345 does not apply to claims brought under Business & Professions Code §17200, et seq., since the only monetary award provided for there is for restitution, which is not a “penalty” by definition. For more details about the Clark case, see the B & P 17200/Class Actions/Commercial update page.

 

The California Supreme Court Accepts Review – Can an Appellant Recover as Costs on Appeal the Interest Paid on Sums Borrowed To Secure a Letter of Credit Used to Secure a Surety Bond?

By on Posted in Civil and Appellate Procedure

The California Supreme Court has accepted review in Rossa v. D.L. Falk Construction, to review the issue of whether California Rules of Court, rule 8.278(d)(1)(F), which permits a successful appellant to recover "the cost to obtain a letter of credit as collateral," allows the recovery of interest paid on sums borrowed to fund a letter of credit used to secure a surety bond. The Court of Appeal denied the claim, finding no statutory basis for awarding such costs. In doing so, Rossa first distinguished Cooper v. Westbrook Torrey Hills (2000) 81 Cal.App.4th 1294, which allowed the recovery of interest incurred in making a cash deposit pending appeal. However, Rossa then went on to “question its holding,” referring to the “obvious faultline” in Cooper’s analysis, arguing that Cooper is “further undermined” by a lack of statutory support and that it “stands as a conspicuous exception to the principles that costs are awarded only if statutorily authorized, and that such statutes are strictly construed.” Presumably, the Supreme Court accepted review in Rossa with the intention of resolving this conflict between the First and Fourth Districts. For more procedural details about the review in Rossa, see the Appeals & Writs update page.

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