Claim of Malpractice by Partnership Does Not "Relate-Back" to the Filing of Partner's Malpractice Claim (Engel v. Pech)

 

For purposes of the statute of limitations, a claim of attorney malpractice by a partnership is independent of a partner's prior malpractice claim 

The Second District has upheld a demurrer to an entire complaint on the grounds that such is barred by the statute of limitations because the partnership's claim against their former counsel did not "relate back" to the prior date an individual partner filed his own malpractice claim. (Engel v. Pech (September 28, 2023) B324560.)  The court further held that, although timely, the individual partner's claim was not viable since any actual damages were suffered by the partnership itself.  The Hon. Maureen Duffy-Lewis, Judge Presiding, of the Los Angeles County Superior Court sustained the defendant attorney's demurer to the entire complaint, and the individual and partnership both appealed. 

Key to this ruling was the fact the prior malpractice claim of the partner was, by way of amendment to the complaint, later expanded to include that of the partnership; as the appellate court explained:

A limited liability partnership and one of its partners retained a lawyer but limited the scope of representation to having the lawyer represent the partnership in a specific, ongoing case. After the partnership lost the case, the partner sued the lawyer for malpractice. In an amended complaint, the partnership was added as a plaintiff. The partner’s complaint was filed before the statute of limitations ran; the amendment was filed after. (Id., p. 2; original emphasis.)

It should be noted that the alleged malpractice by Pech related to his work representing an accounting partnership, Engel & Engel, LLP (referred to by the court as "the LLP") in an action against Wells Fargo.  However, individual plaintiff and partner in the LLP, Jason Engel, was not named as an individual party to the suit against the bank.

In amending the partner's claim against Pech to also include the LLP, plaintiffs claimed the amendment "related back" to the date of filing the prior malpractice claim and therefore was proper even though it was beyond the one-year time-limit.  The Second District disagreed, characterizing the LLP's claim as "independent" and noting this was not analogous to other instances where a complaint "related back" because a newly-added plaintiff was enforcing the same right as the original plaintiff:

An amendment adding a new plaintiff will not relate back to a prior complaint if the new plaintiff is “enforc[ing] an independent right” that imposes a “‘wholly distinct and different legal obligation against the defendant’” (Bartalo v. Superior Court (1975) 51 Cal.App.3d 526, 533, italics omitted (Bartalo); Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 243 (Branick)). Because the partnership’s malpractice claims against the lawyer are distinct from—and in addition to—the partner’s malpractice claim, the partnership’s claims do not relate back and are untimely. (Id., p. 2; citation omitted.)

The Second District further noted the original complaint by the partner "misleadingly alleges that Engel himself. . . was. . . the party who prosecuted the Wells Fargo litigation" even though he was not. (Id., p. 5.)

As to the claim of Engel as an individual, the Second District found that even though both Engel and the LLP itself signed the retainer agreement with Pech, only the latter suffered damages. Writing for the majority, Justice Hoffstadt found this indicated only the LLP could bring a claim against Pech, given that the malpractice involved the Wells Fargo suit:

[T]he operative complaint is. . . explicitly limited to deficiencies in Pech’s representation during the Wells Fargo litigation, [meaning] the only entity that could have suffered damages as a result of that malpractice was the LLP, not Engel. (Id., p. 17.)

Tips for practitioners

Plaintiffs and their counsel should decide at the outset whom to include in the complaint and who has what particular claim.  Counsel should be especially careful in this regard where the subject of the lawsuit is prior business dealings that are well-documented.  Where there is such a trial of documents it is difficult to argue the plaintiff missed the statutory deadline to file because they were either 1) "ignorant" of the identity of a defendant, and/or 2) not aware of their specific role in the dealings between the parties.

Nonetheless, experience teaches that some counsel appear to rely far too heavily upon the general rule of "liberality" in amending pleadings and/or the "relation back" doctrine.  These counsel wrongly assume they may add parties who have different roles in the subject transactions and, therefore lesser or greater damages, at any stage in the proceedings by simply filing an amended complaint.

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Short take-away - Animal control must release, rather than euthanize, dogs (Santa Paul Animal Recue v. County of LA)

 

Short take-away - Animal Control does not have discretion to refuse to release dogs to pre-approved animal rescue group

The Second Appellate District, Division Five, has held that under California statute the Los Angeles County Animal Control Dept. does not have the discretion to refuse to release a dog to an animal rescue group. (Santa Paul Animal Rescue v. County of Los Angeles (August 21, 2023) B318954.)  Plaintiff animal rescue group wanted to adopt dogs which animal control defined as "unadoptable" due to behavioral problems.  Plaintiff filed a Petition for a Writ of Mandate with the Los Angeles County Superior Court, and Judge James C. Chalfont entered an order of dismissal following a demurrer by the County.  

Writing for the court, Justice Moor explained that while the County could decide who was an approved animal rescue organization, once they approved the organization they had no discretion to refuse to release a dog to it rather than proceed with euthanization.  The Hayden Act, and, in particular, Food and Agriculture Code section 31108, et seq., provide for what it termed a "ministerial duty" to release a dog whether or not the dog has been determined to be adoptable.  

Simply put, as long as the animal rescue organization has been approved by the County -- and the County does indeed have discretion in initially approving animal rescue organizations --  animal control has no discretion to refuse to release an animal to such an organization.  The only exception is for animals who are "irremediably" suffering from illness or injury.  This result comports with California public policy that all "adoptable" dogs be adopted.

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Notwithstanding Federal admiralty law, California worker’s compensation Law applies to Injury at yacht club (Ranger v. Alamitos Bay)

State courts have concurrent tort jurisdiction under admiralty and maritime law but plaintiff is limited to worker’s compensation recovery 

Plaintiff Ranger fell at the Alamitos Bay Yacht Club in Long Beach, California, while lowering a boat into the water.  He sued in state court but his tort claims were dismissed as worker's compensation was determined to be his exclusive remedy. (Ranger v. Alamitos Bay Yacht Club (September 6, 2023) B315302.)  Specifically, the Hon. Mark C. Kim of the Los Angeles County Superior Court sustained, without leave to amend, a demurer on the grounds that plaintiff Ranger could not state a tort claim in California Superior Court.  The Second District, Division Eight, affirmed the trial court but held it did not need to decide the issue of whether or not admiralty jurisdiction applied.

As set forth in both the Constitution and maritime statutes [1], Federal courts have exclusive jurisdiction over certain claims.  At the same time, state courts may adjudicate in personam “maritime claims” as they have “concurrent jurisdiction” over such suits. (Id., p. 2.)  

As the Ranger court explained, this means the issue of whether admiralty jurisdiction applies is “supernumerary,” or excess, to deciding whether California worker’s compensation is the exclusive remedy for a worker such as Ranger injured at a Yacht Club. (Id.)

This is because Ranger was an "employee" excluded from "maritime jurisdiction" under 1984 amendments to the Longshoremen’s and Harbor Worker's Act (“Longshore Act”) found at 33 U.S.C. section 902(3) and (3)(b).  This act established Federal worker’s compensation for what Ranger termed “maritime employment.” (Ranger, p. 3, citing 33 U.S.C. sections 902 and 905.)  More specifically, workers at a “club” are defined as such “employees,” as discussed in more detail below. 

In terms of interpreting this statute vis a vis common law precedent, Ranger explained that while what it called “admiralty courts” [2] are ostensibly “common law” courts, they look primarily to legislative enactments for guidance. (Ranger, p. 3; emphasis deleted.)  At page three, Ranger therefore summarized what it called “admiralty law" including "general maritime law:"

To set out our analysis in more detail, we begin by defining admiralty law. The Constitution implicitly directed courts sitting in admiralty to proceed as common law courts. Where Congress has not prescribed specific rules, these courts developed an amalgam of traditional, modified, and new common law rules. That amalgam is the general maritime law, which is no longer the exclusive province of federal judges. Congress and the states legislate extensively in these areas. When exercising their common law authority, admiralty courts look primarily to legislative enactments for policy guidance. (Citations omitted.)

Key to deciding Ranger were the 1984 amendments to the Longshore Act.  This act excluded many persons defined as an “employee” from Federal worker’s compensation, expressly providing the employee of a “club” is such an excluded employee:

In 1984, Congress responded by introducing a degree of clarity: Congress sharpened the Longshore Act’s focus to exclude employees who, although they happened to work on or next to navigable waters, lacked a sufficient nexus to maritime navigation and commerce. In response to the experiences of many witnesses, Congress adopted what it called a “case-specific approach.”

We now quote the textual result: the pertinent provision— subsection three of section 902 of the Longshore Act—as it stands after the 1984 amendments. Our italics highlight key words.

“The term ‘employee’ means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, . . . but such term does not include—

. . . 

 “(B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet. . .  (Ranger, p. 4-5; original emphasis.)

The Second District therefore disregarded oft-cited Federal common-law precedent that did not adequately address the 1984 language quoted above even though such cases have not been expressly overruled by Federal courts.  These included Green v. Vermilion Corp. (5th Cir. 1998) 144 F. 3d 332, and Southern Pacific Co. v. Jensen (1917) 244 U.S. 205, the Ranger court noting the later featured a “celebrated” dissent by Justice Oliver Wendell Holmes.

Justice Wiley, writing for the Ranger court, succinctly summed up the court’s holding that, pursuant to California’s Labor Code sections 3351 and 3600, Ranger’s remedy was limited to a worker’s compensation claim:  

 . . . California’s workers’ compensation law is Ranger’s exclusive remedy. Congress in 1984 decreed this state law aptly covers his situation. A core part of the state workers’ compensation bargain is that injured workers get speedy and predictable relief irrespective of fault. In return, workers are barred from suing their employers in tort. The trial court correctly dismissed Ranger’s tort suit against his employer. (Ranger, p. 13.)

Tips for practitioners

Those prosecuting or defending tort claims should remember the concurrent jurisdiction of state courts in regard to a personal injury involving “navigable waters” which may fall under Federal Maritime Law.  They should likewise note that despite what their law school professors may have stressed as to the supremacy of Federal law, the modern — though by no means recent — trend is to recognize “concurrent” state court jurisdiction as to personal injuries even if the claim would otherwise fall under admiralty law.  

At the same time, Ranger reminds us that tort claims that otherwise fall under this “concurrent” jurisdiction and might otherwise be decided by a state court may be pre-empted by worker’s compensation exclusivity.  Counsel on both sides should therefore look to the Longshore Act, as amended in 1984, and their state law to determine if such a tort claim is instead within the exclusive purview of the worker’s compensation scheme in their state.

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1 — Article Three, Section Two of the United States Constitution states in part:

The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;—between a state and citizens of another state;--between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects. (Emphasis added.)

By virtue of the Judiciary Act of 1989, Federal Courts have exclusive jurisdiction over admiralty and maritime Law claims but state courts retain their own jurisdiction over common law claims:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of . . . [a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled. (28 U.S.C. section 1333(1); emphasis added.)

2 — While the terms “admiralty” and “maritime” are often used interchangeably, the Constitution expressly gives Federal courts jurisdiction over admiralty "and" maritime law. (See note one.)  "Maritime law" may be said to have global application and encompasses international waters, while "admiralty law" encompasses commercial maritime activities and therefore includes disputes involving coastal areas and inland waterways which may be defined as “navigable waters.”

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Plaintiff who did not have to pay for drug may not make unfair competition claim (Williamson v Genetech)

 

A plaintiff may not use the “collateral source rule” to “borrow” an insurer’s injury so as to state a claim under California’s Unfair Competition law 

Plaintiff Williamson paid only his prescription-drug deductible, which he would have paid no matter the price of his medicine.  Nonetheless, he sued the drug maker, defendant Genetech, both individually and as representative of a putative class, alleging they overcharged for a leukemia drug. (Williamson v. Genetech (August 11, 2023) A164426.)  Despite his lack of actual harm, the plaintiff plead the novel theory that under the “collateral source” rule the harm to his insurer in having to overpay for a drug could support his individual claim:

Williamson later sued Genentech, on behalf of himself and a putative class of similarly situated individuals, alleging that Genentech violates the unfair competition law by selling Rituxan (and three other medications) in excessively large single-use vials.

In his operative (third amended) complaint, Williamson alleges that, because the appropriate dosage varies based on a patient’s body size, Genentech’s vial sizes are too large for most patients. He insists Genentech should be required to offer smaller vial sizes. . . to reduce waste of expensive medicine. . . . . However, Williamson alleges that he took only Rituxan, not the other three medications, and that, to do so, he paid a $231.15 deductible. He admits that “[a]ll remaining payments” were made by his health insurer. . . . (Id., p. 2.)

Genetech’s demurer was sustained without leave to amend by the Hon. Daniel S. Murphy of the Los Angeles County Superior Court and plaintiff appealed.  The Second District agreed with the trial court that under the facts plead plaintiff could not state an Unfair Competition claim:

The obvious problem here is that Williamson suffered no injury. He paid a deductible of $231.15 to obtain Rituxan; his insurer paid the remaining cost. He concedes that he would have paid the same deductible regardless of the size of Genentech’s vials. Thus, Genentech’s alleged unfair business practice—using excessively large vials—has not injured Williamson in any way. (See Kwikset, supra, 51 Cal.4th at pp. 323, 326.) Williamson does not dispute this point.

. . . Williamson wants to borrow an injury from somebody else to establish standing, using the collateral source rule. . . .

It is a creative argument. The collateral source rule concerns the amount of money owed by a tortfeasor to the injured victim: “if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.” (Id., pp. 4-4.)[2] 

Therefore, the Williamson panel outright rejected plaintiff’s “collateral source” theory:

The collateral source rule has no application here. First, in both tort and criminal restitution cases, the rule applies when a defendant injured a victim, and the issue is simply how much compensation the defendant owes to the victim in light of payments from an insurer or other collateral source. Williamson cites no cases in which the rule applied to a plaintiff who suffered no injury. (Id., p. 6.)

Williamson therefore held plaintiff simply had no“Article III standing” [1] to bring suit. 

The appellate court also rejected plaintiff’s argument that permitting him to bring a claim would “encourage” others to buy insurance, succinctly noting “people with insurance, like Williamson, are not injured, and people without insurance are injured.” (Id., p. 7; emphasis added.)

The appellate court further agreed with the trial court that plaintiff should not, as he requested, be granted leave to amend to add another class representative who may have suffered actual harm.  Not only are rulings regarding leave to amend left to the sound discretion of the trial court, meaning such decisions will not be disturbed absent an “abuse of discretion,” but the Second District found it relevant that plaintiff had not identified even one other potential plaintiff to take the place of Williamson. (Id., p. 8.)

Lessons for practitioners

In a suit such as this it is, of course, counsel rather than the client who “drives the train,” so to speak, as counsel defines the scope of the potential class claiming injury and must decide who is the named “representative.”  For the reasons stated above, plaintiff Williamson was not a suitable party, either as an individual or such a representative.  Presumably, there may have been another plaintiff who in fact suffered actual injury and who therefore would be better-suited to be the named plaintiff.  Indeed, one could argue that counsel admitted such in maintaining the complaint could be amended to add such another lead plaintiff.  But, as noted, counsel did not propose any specific person to take the place of Williamson.

1 - Plaintiff had no “actual injury” and therefore no Constitutional "standing" under Unfair Competition law.  Williamson explained that California law requires such an injury.  Moreover, standing, as defined by Federal law, and, in particular, Article III of the United States Constitution, requires an injury that is “(a) concrete and particularized, and (b) actual or imminent, not ‘conjectural’ or ‘hypothetical.’” (Williamson, p. 4, citing Kwikset Corp. v. Superior Court (2011) 51 Cal. 4th 310, at 232.) 

2 - On this and other points Williamson cited Helfend v. Southern California Rapid Transit Dist. (1970) 2 Cal.3d 1, as the leading case defining the scope of the “collateral source” rule in California. 

Equitable tolling may apply due to prior foreign actions (Metabyte v Technicolor)

“Equitable tolling” applies broadly so that prior civil and criminal complaints in France alleging similar harm may save a California suit filed beyond the statute of limitations

Justice Stratton, Presiding Justice of the Second Appellate District, Division Eight, explained that the legal saga in Metabyte v. Technicolor (August 9, 2023) B319338, had involved no less than four separate actions, two in the United States and two in France:

In a case which seems destined for the pages of a civil procedure casebook, Metabyte, Inc., appeals from the trial court's judgment of dismissal and order sustaining Technicolor's demurrer without leave to amend. This 2021 action represents Metabyte's fourth attempt to hold Technicolor liable for Technicolor's allegedly improper auction of a patent portfolio in 2009. The first two actions were brought in France, where Technicolor is headquartered. Metabyte brought a proceeding under Article 145 of the French Code of Civil Procedure (Article 145 proceeding), and then filed a criminal “plainte” against Technicolor. After the French courts ruled they lacked jurisdiction in the criminal action, Metabyte brought an action in United States District Court in California alleging a federal RICO claim and several state law causes of action. After the district court ruled that equitable tolling did not apply to its RICO claim as a matter of federal law, Metabyte dismissed the federal action and brought its state law claims in Los Angeles County Superior Court. (Id., p. 2; footnote omitted.)

These claims, of course, included fraud and related torts.  The Hon. Daniel S. Murphy of the Los Angeles County Superior Court granted Technicolor's demurrer without leave to amend, finding the Article 145 proceeding was dissimilar in the relief it sought and therefore equitably tolling did not apply.  The California action was therefore barred by the Statute of Limitations.

The genesis of Metabyte’s claims was that after obtaining a majority interest in a portfolio of patents owned by its subsidiary MNI, Technicolor then auctioned them off in a process that resulted in payment being made to preferred shares only and thus nothing to common shareholders such as Metabyte.

Metabyte is a California corporation. Metabyte's subsidiary Metabyte Networks, Inc (MNI) owned patents on digital video recording (DVR) technology used by cable television companies in set top boxes. Metabyte and its CEO and principal shareholder Manu Mehta owned the stock of MNI. At some point, Metabyte sold shares in MNI to an entity eventually known as Technicolor USA, but it retained majority ownership of MNI's stock. When MNI needed additional financing, it sold shares to Canal+ Technologies, a corporation in which Technicolor S.A. was a minority shareholder. An entity which became Technicolor International then purchased a controlling interest in Canal+ Technologies, giving Technicolor majority ownership of MNI stock.

At some point, Technicolor decided to liquidate MNI. In July 2001, liquidation preferences were set. Common shareholders such as Metabyte could not receive any money from the liquidation of assets until the preferred shareholders received over $16.4 million. In December 2009, Technicolor forced an auction of MNI's patent portfolio. A Technicolor subsidiary bought the patents for $1 million. In October 2010, Technicolor dissolved MNI. (Id., pp. 3-4.)

Metabyte later learned of allegations that Technicolor was being investigated in France for wrongfully acquiring assets of another company in which it invested, driving it into bankruptcy and then acquiring its assets for less than market value.  Metabyte alleged Technicolor committed similar fraud here in that it valued the patent portfolio originally owned by MNI for less than it was worth so that Metabyte received nothing. 

In 2010 Metabyte initiated an Article 145 proceeding in France, the result of which appears to have been mixed at best.  Metabyte obtained an order to have a bailiff appear unannounced at Technicolor to seize documents from Technicolor, but was then denied access to some of these documents.  While the Cour D’Appel and the Cour de Cassation (respectively, the Court of Appeal and Supreme Court) both ruled in favor of Metabyte, it appears Technicolor’s threats and an order it obtained from the Paris Bar discouraged the Bailiff in the section 145 proceeding from releasing documents to Metabyte.

Metabyte also initiated a criminal complaint in France.  However, the Prosecuting Magistrate found France lacked jurisdiction to prosecute French entity Technicolor on behalf of the American entity Metabyte.

Metabyte then filed a RICO complaint in the United States District Court for the Northern District of California.  The District Court granted Technicolor’s Rule 12(b) motion to dismiss, noting equitable tolling did not apply because the Article 145 proceeding did not seek the same relief and the statute of limitations barred the action.  Metabyte then voluntarily dismissed the District Court action but without prejudice.

When Metabyte filed the present suit in the Superior Court of Los Angeles County, Technicolor adopted the District Court’s reasoning as its chief defense argument.  Technicolor filed a demurrer based, inter alia, upon the statute of limitations which, as noted, was sustained without leave to amend.

Metabyte should have been given the opportunity to state additional facts showing equitable tolling might apply

Technicolor not only argued that equitable tolling did not apply to save the last-filed California court action, but also that judicial estoppel applied to bar the new California complaint.  Specifically, Technicolor argued the dismissal of the RICO action barred any subsequent state law claims by Metabyte.  The Second District disagreed, noting that where a demurrer is sustained with leave to amend (and, of course, the Rule 12(b) motion was akin to a demurrer), any subsequent dismissal “without prejudice” is not dispositive, and thus not res judicata on the claims dismissed so as to preclude these claims.  In a footnote, the appellate  court explained that even where a complaint is dismissed “with prejudice,” the res judicata effect is limited and a subsequent claim is not barred if “new or additional facts are alleged that cure the effects in the original pleading. . . .” (Metabyte, p. 12, citing to Wells v. Marina City Properties (1981) 29 Cal. 3d. 781, at 789.)

        

Having disposed of Technicolor’s argument that claim preclusion did not apply to bar the action, it turned to Metabyte’s argument that equitable tolling applied save the otherwise timely claims for fraud dating from the 2009 patent auction.  Technicolor argued the dissimilarity in the prior French actions meant the doctrine did not apply.  However, the appellate court stressed this was not the proper test; rather, in order to extend the statute of limitations by way of “equitable tolling,” a court must conduct a three-part analysis:

To determine whether equitable tolling may extend a statute of limitations, courts must analyze whether a plaintiff has established the doctrine's three elements: timely notice to the defendant, lack of prejudice to the defendant, and reasonable and good faith conduct by the plaintiff. (Metabyte, p. 16, quoting from Saint Francis Memorial Hospital v. State Dept. of Public Health (2020) 9 Cal. 5th 710, pp. 725–726.)

Metabyte then discussed the nature of this three-part analysis, calling it “fact-intensive” and concluding such issues are more properly resolved by way of a motion for summary judgment. (Id., pp. 16-17.)  Towards this, the Second District rejected Technicolor’s argument that the Article 145 procedure was so dissimilar as to make it impossible for plaintiff Metabyte to show a lack of prejudice to Technicolor, noting that the original French civil proceeding gave Technicolor sufficient notice to begin a defense to Metabyte’s claims.

The appellate court therefore held the trial court had improperly failed to grant leave to amend, explaining Metabyte should be given an opportunity to plead further facts which indicate it is entitled to equitable tolling, such as that it acted reasonably and in good faith in bringing the French actions before the California suit.  The Second District found this “good faith” had not been sufficiently plead, but also held Metabyte should be permitted to plead such facts.  In summary, the Metabyte court found that equitable tolling could, at least in theory, be based upon the section 145 proceeding:

We reverse the order insofar as it requires a legal remedy which seeks to lessen damages and which holds that Article 145 proceedings can never satisfy the requirements for equitable proceedings. (Id., p. 20.)

Lessons for practitioners

Perhaps an overly-simplistic way in which to view this foregoing is to note the “home court” advantage which Technicolor obtained in France, where the Bailiff would not turn over documents despite multiple orders to do so, and, at the same time, the advantage Metabyte obtained in California, where the appellate court revived claims of fraud based on a 2009 patent sale.  

Whether one agrees with this somewhat cynical view, the opinion offers other lessons for practitioners.  The Second District appears to have taken a broad view of when leave to amend should be granted, giving the plaintiff the benefit of the doubt as to facts which one could plead on the issue of equitable tolling so that the suit might survive claims it was untimely.  On this point one may speculate the actions of Technicolor in effectively blocking the Article 145 action and preventing the Bailiff from providing documents to Metabyte may have had some bearing on the issue of whether equitable tolling — with an emphasis on the word “equitable’ — applied in the California action

A more jaundiced view might be that a party who has plead a claim since 2009 on two continents has already been given sufficient opportunity to plead whatever it might plead.  Nonetheless, Metabyte was given leave at this late date to state additional facts to meet the test for the application of equitable tolling.  

Also relevant is the appellate court’s discussion of res judicata, giving a nuanced approach as to when the doctrine applies. Therefore, those who encounter an argument that dismissal with prejudice bars all future claims might want to cite Metabyte in support of their counter-argument that newly-discovered facts may in fact be an exception.

Employer owes no duty to employee's spouse to prevent employee's exposure to COVID-19 (Kuciemba v. Victory)

Though an employee’s wife may sue the employer in tort, no duty is owed to the spouse to prevent COVID exposure to the employee

A unanimous California Supreme Court has ruled in favor of an employer whose alleged negligence caused the employee to become exposed to COVID-19 who in turn exposed his wife. (Kuciemba v. Victory Woodworks, Inc. (July 6, 2023) S274191.)  Plaintiff and appellant Corby Kuciemba brought suit and defendant and respondent Victory Woodworks filed a demurrer arguing, inter alia, that the wife’s“exclusive remedy” against the employer was a claim under the Worker’s Compensation system.  After the United States District Court for the Northern District of California granted a motion to dismiss the action under Federal Rules of Civil Procedure, rule 12(b)(6), plaintiff appealed to the Ninth Circuit Court of Appeal certified the following questions of law to the California Supreme Court which it deemed necessary to decide the appeal:

(1) If an employee contracts COVID-19 at the workplace and brings the virus home to a spouse, does the California Workers’ Compensation Act (WCA; Lab. Code, § 3200 et seq.) bar the spouse’s negligence claim against the employer? (2) Does an employer owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members? (Id., p. 1.)

The California Supreme Court assumed, for purposes of its opinion, that the facts plead were indeed true.  Plaintiff alleged negligence on the part of the husband’s employer which led to his exposure to COVID at a job site and, in turn, exposure to plaintiff, his wife:

On May 6, 2020, Robert Kuciemba began working for defendant Victory Woodworks, Inc. (Victory) at a construction site in San Francisco. About two months later, without taking precautions required by the county's health order, Victory transferred a group of workers to the San Francisco site from another location where they may have been exposed to the virus. After being required to work in close contact with these new workers, Robert became infected. (Id., p. 3; footnotes omitted.)

Plaintiff also alleged she became ill with COVID and therefore required hospitalization.

The Supreme Court concluded the doctrine of Workers Compensation Exclusivity did not bar the wife’s complaint

While it did not ultimately change the outcome of the case, the Supreme Court agreed with appellant on the issue of workers’ compensation exclusivity.  Kuciemba thus held the suit by the wife was not barred by the fact her husband was the employee of the defendant, meaning the employer could be sued by the wife in a tort action.

Of course, in Kuciemba the wife’s suit was arguably “derivative” of her husband’s exposure to COVID.  Nonetheless, the Supreme Court found workers’ compensation was not her “exclusive remedy.”  Her claim was not “derivative” of his injury because, unlike a claim for loss of consortium, the claim of the wife depended on the husband’s exposure to COVID but not actual work-place injury to the husband: 

Accordingly, Victory's sole focus on viral transmission as a factual “but for” cause is misplaced. For the derivative injury rule to apply, Robert's infection must not only be the factual cause of Corby's illness; Corby's claim must also be “legally dependent on injuries suffered by” Robert. Robert's infection may have been a necessary factual step in the causal chain that led to Corby's illness. But it is not necessary for Corby to allege or prove injury to Robert to support her own negligence claim. The difference becomes clear when her claim is compared to a derivative claim like loss of consortium. If Corby had sought recovery for loss of consortium, she would have been required to prove that an injury to her spouse, Robert, in turn injured her by affecting their marital relationship. To support her negligence claim here against Victory, however, she need only show that Robert was exposed to the virus at the workplace and carried it home to her. (Id., p. 11; emphasis added)

This ruling was in accord with See’s Candies, Inc. v. Superior Court (2021) 73 Cal. App. 5th 66 (review denied April, 13, 2022, S272923).  It should be noted the Court of Appeal opinion in Sees was decided after the Ninth Circuit had already certified its question to the California Supreme Court.

However, dismissal of the suit was proper as no duty of due care was owed to the plaintiff by her husband’s employer

The wife being able to sue her husband’s employer in tort, the case then turned upon the second issue related to duty.  The Supreme Court explained that the scope of duty in California is statutorily-defined by Civil Code section 1714(a), stating broadly that “everyone” owes a duty of care “to another:” 

Everyone is responsible, not only for the result of his or her willful acts, but also for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person, except so far as the latter has, willfully or by want of ordinary care, brought the injury upon himself or herself.

In Rowland v. Christian (1968) 69 Cal. 2d 108, the Supreme Court held that not all persons owe a duty of due care to all other persons in all circumstances.  As the Supreme Court later clarified, Rowland provides there are several considerations that, when balanced by the court, may justify an exception to the general duty of reasonable care embodied in section 1714. (Cabral v. Ralphs Grocery Co. (2011) 51 Cal. 4th 764.)  These “Rowland factors” include, as Cabral explained, all of the following: 

. . . [T]he foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved. (Id., p. 771.)

Cabral further explained that despite the landmark holding in Rowland, courts only balance these factors and consider whether or not a duty of due care is owed where there are clear “public policy reasons” for doing so because “in the absence of a statutory provision establishing an exception to the general rule of Civil Code section 1714, courts should create one only where ‘clearly supported by public policy.’ [Citations.]” (Id., quoting Rowland, 69 Cal. 2d at 112.) 

Kuciemba grouped these Rowland factors into two categories, to wit, those that involved the foreseeability of harm and those involving public policy.  “Foreseeability” factors are forward-looking and the “public policy” factors are backward-looking. (Id., p. 30.)  The Supreme Court found the Rowland factors involving foreseeability indicated a duty of due care was owed to the plaintiff, but that this was not dispositive.  Rather, the factors related to public policy must also be considered, and these factors did not indicate a duty of due care was owed.  For example, consideration of “prevention of future harm” indicated no duty was owed: 

The next Rowland factor, the “policy of preventing future harm is ordinarily served, in tort law, by imposing the costs of negligent conduct upon those responsible.”  . . . This factor thus examines both the positive and the negative societal consequences of recognizing a tort duty. Public policy strongly favors compliance with health orders to prevent the spread of COVID-19. Recognizing a duty of care beyond the workplace could enhance employer vigilance in this regard. However, there is only so much an employer can do. Employers cannot fully control the risk of infection because many precautions, such as mask wearing and social distancing, depend upon the compliance of individual employees. Employers have little to no control over the safety precautions taken by employees or their household members outside the workplace. Nor can they control whether a given employee will be aware of, or report, disease exposure. There is also a possibility that imposing a tort duty not covered by workers’ compensation could lead some employers to close down. . . . (Id., p. 38; citations omitted.) 

In summary, the economic and other consequences of imposing a duty upon employers to prevent COVID transmission from their employees to third parties indicated no such duty was owed.  As Justice Corrigan stated succinctly, such a duty could not be imposed because of the broad swatch of potential liability which would result:

. . . [A] duty to prevent secondary COVID-19 infections would extend to all workplaces, making every employer in California a potential defendant. (Id., p. 38; original emphasis.)

Why the discussion of public policy in Kuciemba is important

The Supreme Court opinion in Cabral has been interpreted by many courts something like this: as a general rule, everyone owes everyone else a duty of due care unless there is a crystal-clear public policy reason for not imposing a duty.  In particular, this approach has been used by many trial courts as an excuse to not consider public policy vis a vis the facts of the case even though such is required to rule upon a demurrer and or motion for summary judgment.

Trial courts therefore refuse to dismiss claims by way of demurrer or motion under the rubric the defendant broadly owes the plaintiff a duty of due care, no matter the tenuous nature of fatal causation.  Causation being a question of fact for the jury, the trial court does not conduct any detailed analysis of the facts of the case in terms of whether public policy indicates there should be liability, instead simply finding the case must proceed to a jury trial. 

As discussed in our prior post, one such example is Razoumovitch v. Hudson Ave. LLC (May 1, 2023) B316606.  The Second District, Division Seven held a tenant who accesses a roof area after being locked out of their apartment is owed a “duty of care” by their landlord to prevent injury from re-entering their apartment by attempting to “swing” up to roof ledge not designed to be accessed by tenants.  Razoumovitch concluded the general duty of due care applied because the defense had not shown there were clear public policy considerations that indicated otherwise.  Razoumovitch discussed the oft-cited proposition that someone is not owned a duty of due in regards to warning of an obvious defect.  But it also noted that this rule had a crucial exemption and does not apply where the injury is “foreseeable” because plaintiff has a “necessity” to encounter the harm, citing to Kinsman v. Unocal Corp. (2005) 37 Cal. 4th 659, at 673.

While it would be speculative to say whether or not Razoumovitch would have been decided differently had Kuciemba been decided first, there is considerable language in the latter opinion which may be cited to rebut the contention that every defendant owes a duty of due care to every plaintiff with no exception.  Specifically, the Supreme Court in Kuciemba made it plain the burden to society caused by imposing a duty of due care, and, in particular, imposing a duty under novel circumstances, is an important factor for courts to consider.

Defendants may therefore wish to cite to Kuciemba’s discussion as to the scope of the potential liability imposed, as the Supreme Court aptly noted that virtually every employer in the state would become a potential defendant if a duty were owed by employers to family members to prevent employee exposure to COVID.  

The court continued this analysis by noting the impracticability of imposing liability upon employers given they “cannot fully control the risk of infection because many precautions, such as mask wearing and social distancing, depend upon the compliance of individual employees.” (Id., p. 38.)  Moreover, even though imposing such liability night encourage employers to enact more stringent safety measure, it is also true that measures taken by employers to lessen their liability might impede the delivery of essential services. (Id., p. 43.)  

Courts deciding issues of duty in other contexts should be asked to undertake a detailed public policy analysis -- as part of their ruling upon a demurrer or motion for summary judgment -- with similar rigor rather than simply finding the defendant owes anyone and everywhere a duty of due care under Civil Code section 1714(a).  Where a trial court refuses to do so and the economics of the case warrant such, a writ petition, such as a Petition for Peremptory Writ made pursuant to Code of Civil Procedure section 437c(m)(1), may be filed arguing the trial court did not properly consider the issue of duty as it did not undertake the analysis required by Rowland, Cabral, and Kuciemba.

Veterinarian may be liable for intentional infliction of emotional distress for fraudulent treatment of pet (Berry v. Frazier)

 

In California, a plaintiff may plead fraud and intentional infliction of emotional distress against a D.V.M. for the botched euthanasia of a pet and thus may state a claim for punitive damages 

In Berry v. Frazier (May 15, 2023) A164168, plaintiff engaged a service to provide humane in-home euthanasia of her cat.  This service in turn engaged defendant Frazier, a Doctor of Veterinarian Medicine, who ultimately ended up utilizing an intracardiac injection, allegedly without anesthesia, upon plaintiff’s feline.  As the doctor allegedly said, this was because an overdose of medication would “take too long:” 

Frazier and an assistant arrived at Berry’s home in the late afternoon. The euthanasia was to take place in the backyard, where Frazier and his assistant prepared the cat for the insertion of a catheter. During this initial attempt to sedate the cat, Frazier told Kraus and Berry [the owners of the cat], “ ‘Go over there,’ ’’ indicating they should move 30 feet away. They complied, and waited for Frazier to indicate when they could return. After a few moments, Frazier told them that he was unable to place the catheter even though he had tried to do so in all the cat’s limbs. Berry and Kraus became upset and Kraus suggested an overdose of an oral medication (buprenorphine) that had been prescribed for the cat. Frazier responded that it would “ ‘take too long,’ ” but did not explain how long or why the length of time was significant. 

Frazier then suggested euthanasia by “ ‘heart stick’ ” injection, the colloquial term for intracardiac injection, a procedure by which fluid is injected directly into the heart. When Kraus said he had never heard of the procedure, Frazier responded, in a calm and reassuring demeanor, with comments like, “ ‘[i]t’s a small needle,’ ” “ ‘it’s very quick,’ ” and the cat will “ ‘never know what’s happening’ ” and “ ‘won’t feel a thing.’ ” When Berry became emotional, Frazier again calmly described the procedure, adding phrases along the lines of “ ‘it’s the right thing.’ ” Based on Frazier’s representations and in reliance on Frazier’s expertise, Berry consented. Frazier then instructed Berry and Kraus to go inside the house, which they did. Frazier and his assistant completed the procedure and left with the cat.

Berry later learned of the “horrors” of using an intracardiac injection to euthanize a conscious cat. Contrary to Frazier’s representations, it was

“ ‘extremely painful’ ” and generally considered “ ‘inhumane’ ” when performed on a conscious cat. [Footnotes omitted.] (Id., pp. 3-4.)

Berry sued, alleging causes of action for 1) breach of fiduciary duty, 2) conversion of chattel, 3) trespass to chattel, 4) “fraud/deceit /intentional misrepresentation,” 5) intentional infliction of emotional distress, and 6) violation of Civil Code section 3340.  She also alleged entitlement to punitive or exemplary damages.  The trial court sustained the defendant doctor’s demurrer to the second through sixth causes of action and plaintiff dismissed the sole remaining cause of action.  The Hon. Ethan P. Schulman of the San Francisco County Superior Court then denied the motion to strike portions of the complaint, including the request for punitive damages, as moot. 

Judgment was then entered for the defendant and plaintiff appealed.  The California Cout of Appeal for the First District, Division Three, found the appeal from the judgment timely and proper, citing Abatti v. Imperial Irrigation Dist. (2012) 205 Cal. App. 4th 650, at 655.  Specifically, there were no portions of the complaint still pending and the parties had not stipulated to further litigate any claims.  At the same time, the appellate court dismissed the purported appeal from the Motion to Strike ruling as being made from a non-appealable order and not a final judgment. 

Plaintiff properly pled trespass and conversion of chattel

The Berry court rejected the defense claim that there could be no claims for conversion or trespass because the facts merely alleged “professional negligence.”  As the appellate court explained, such defense arguments “ignore the specific allegations that Berry had a legally protectable right to decide the time and manner of the euthanasia of her cat because the cat was her personal property.” (Berry, p. 16.) 

Plaintiff also properly pled intentional infliction of emotional distress and fraud based upon facts showing an intentional misrepresentation

Defendant also argued plaintiff could not state a claim for intentional infliction of emotional distress under her third cause of action, citing McMahon v. Craig (2009) 176 Cal. App. 4th 1502.)  In McMahon, plaintiff plead intentional infliction of emotional distress resulting from malpractice which caused the death of the plaintiff’s dog.  McMahon held the pet’s owner was not entitled to damages for loss of companionship and related emotional distress, as such a claim is not recognized by California law:

We recognize the love and loyalty a dog provides creates a strong emotional bond between an owner and his or her dog. But given California law does not allow parents to recover for the loss of companionship of their children, we are constrained not to allow a pet owner to recover for loss of the companionship of a pet. (McMahon, pp. 1519–1520.)

Berry, however, did not find McMahon dispositive, explaining that liability in McMahon was limited because it involved the measure of damages for professional malpractice.  Here, by contrast, plaintiff alleged not only fraud but also trespass to personal property:

In McMahon, the plaintiff alleged defendants engaged in negligent veterinary malpractice and lied to her to cover up their malpractice. (Id. at p. 1506.) While the complaint included a cause of action for conversion, McMahon did not address that cause of action in resolving the appeal. (Id. at pp. 1508– 1520.) Nor did the McMahon court address a cause of action for trespass to chattels. (See Plotnick, supra, 208 Cal.App.4th at p. 1606 [court held plaintiff could recover emotional distress damages for trespass to chattels cause of action, finding McMahon was inapposite as it “did not involve an action for trespass to personal property”].) (Id., pp. 14-15.) 

The First District further explained McMahon was inapposite because it did not involve a claim for fraud.  In stark contrast, here plaintiff alleged Dr. Frazier made an intentional misrepresentation to her.  Therefore, his actions were directed toward plaintiff Berry and not merely her animal:

In urging that Berry’s claimed loss (her right to “ ‘give the cat a good death’ ”) is not actionable because Berry was not the subject or beneficiary of the veterinary care, Frazier asks us to consider McMahon v. Craig (2009) 176 Cal.App.4th 1502 (McMahon) at page 1510: “[A]lthough a veterinarian is hired by the owner of the pet, the veterinarian’s medical care is directed only to the pet. Thus, a veterinarian’s malpractice does not directly harm the owner in a manner creating liability for emotional distress.” McMahon is inapposite as that court was not concerned with, and therefore had no occasion to address, the nature of damages that could be recovered for a claim of fraud based not on a veterinarian’s malpractice but rather on intentional misrepresentations made to induce a pet owner to consent to an unnecessary, unjustified, and painful procedure. [Citation.] (Id., p. 12; emphasis added.)

Plaintiff could not state a separate cause for action based upon Civil Code section 3340, though this statute could be the basis for a claim for punitive damages

The Berry court termed section 3340 “broadly-worded.” This section provides for punitive damages for “willful” and “inhumane” injury to animals and states in full:

For wrongful injuries to animals being subjects of property, committed willfully or by gross negligence, in disregard of humanity, exemplary damages may be given.

According to Berry, this section remains valid and relevant, but it does not support a separate cause of action.  Rather, it permits an award of punitive damages where a plaintiff proves its elements.  In other words, section 3340 may be the basis for punitive damages to be pled as part of the damages in other causes of action.

More importantly, Berry held that this section may support a claim for punitive damages independent of such a claim being made under Civil Code section 3294.  This latter section sets forth the basis for punitive damages in California and requires a plaintiff prove such by way of “clear and convincing evidence.”  Section 3294 also defines the “malice, oppression, and fraud” necessary to state a claim for punitive damages.  

However, as Berry explained, the procedural safeguards found in section 3294 do not apply to a claim for punitive damages under section 3340, which, as quoted above, applies where there has been an injury to an animal “in disregard of humanity.”  In holding each section could be read independently of the other, Berry aptly noted sections 3294 and 3340 were both enacted in 1874.  While the legislature has amended section 3294 multiple times over the years, it has not made similar changes to section 3340 despite the opportunity to do so. 

Advice for practitioners defending or prosecuting claims for injuries to animals

In summary, Berry overturned the judgment in favor of the defendant and remanded the matter back to the trial court.  Plaintiff was to be given an opportunity to amend her complaint to attempt to state a claim for punitive damages under section 3340 as to any remaining causes of action.

Counsel for plaintiffs are therefore advised to consider whether, under a cause of action involving a claim for injury to an animal which may be considered “inhumane,” they may claim punitive damages under either, or both, section 3340 (for injuries to animals “in disregard of humanity”) or section 3284 (for “malice, oppression, or fraud”).  

Defendants should, of course, be prepared to test the applicability and scope of these allegations by way of demurrer and/or motion to strike.  They should be aware that while section 3340 may provide the basis for a claim for punitive damages, it should not be pled as a separate cause of action.

Depending on the facts pled, a defendant may also wish to make public policy arguments in presenting their defense.  On the one hand, public policy supports discouraging any licensed professional from making fraudulent misrepresentations.  On the other hand, the doctor in Berry was likely paid only a modest fee for his services, being in turn hired by the service plaintiff engage.  Moreover, even plaintiff admitted the doctor attempted to use a catheter before pivoting to the injection plaintiff alleges was inhumane.  Despite this, the defendant doctor now faces potentially ruinous liability, given that any award of punitive damages is uninsurable. (See Insurance Code section 533 prohibiting the insurability of claims based upon intentional conduct.)  Therefore, California public policy may not favor making it riskier for a veterinarian to attempt at-home euthanasia of a pet. 

1 - For a discussion of negligent versus intentional infliction of emotional distress, see our discussion of (Downey v. City of Riverside (April 26, 2023) D080377.