Case note - California court rules against Bakery and Puts Statute Prohibiting Discrimination Above First Amendment Rights

 

California appellate court makes plain it considers First Amendment protections inferior to state-level statutes against discrimination

 

In Civil Rights Dept. v. Cathy's Creations (March 5, 2025, F08580) the Fifth District of  California refused to properly apply precedent upholding the breadth of First Amendment.  Recall that California all but gutted the First Amendment during the three years of the pandemic, caused by the release of the COVID-19 virus by a lab in Wuhan, China (reference:  the United States Department of Energy and the Central Intelligence Agency) and, indeed, California courts did little to stop the infringement upon freedoms guaranteed by the Bill of Rights.  Nonetheless, the lack of consideration given to the First Amendment in the recent Cathy's Creations opinion is troubling.  As the Fifth District framed the issue:

 

This appeal involves a bakery’s refusal to sell a predesigned white cake, popularly sold for a variety of events, because it was intended for use at the customers’ same-sex wedding reception. The State of California, through the Civil Rights Department (the CRD), filed suit on behalf of real parties in interest Eileen and Mireya Rodriguez-Del Rio (the Rodriguez-Del Rios) when Tastries Bakery (Tastries) refused to provide them the cake for their wedding pursuant to the bakery’s policy that prohibited the sale of any preordered cake for a same-sex couple’s wedding. The case culminated in a bench trial on the CRD’s claim of discrimination under the Unruh Civil Rights Act (Civ. Code, § 51 et seq. (UCRA)), and the free speech and free exercise affirmative defenses of defendants
Tastries, Tastries’s owner Cathy’s Creations, Inc. (Cathy’s Creations), and Cathy’s Creations’s sole shareholder Catharine Miller (Miller) (collectively defendants).2
The trial court concluded there was no violation of the UCRA because the CRD
failed to prove intentional discrimination, and concluded Miller’s referral of the
Rodriguez-Del Rios to another bakery constituted full and equal access under the UCRA.
The trial court proceeded to consider defendants’ affirmative defenses as an alternative matter, and concluded the preparation of a preordered cake by defendants always constitutes expression protected by the federal Constitution’s First Amendment when it is sold for a wedding, and, as applied here, concluded the UCRA compelled defendants to speak a message about marriage to which they objected. . . .

 

One should further recall that in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Comm’n (2018) 584 U.S. 617, the United States Supreme Court ruled a bakery could not be forced to make a cake it found offensive and that the Colorado state government had evidenced hostility toward the baker's religious belief when it attempted to force the baker to do so.  As Justice Kennedy succinctly stated, "[w]hen the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires."  However, the Fifth District did not apply the holding in Masterpiece so as to constrain the ability of California to fine and harass Cathy's Creations, explaining:

 

If the mere act of providing and/or delivering a predesigned product for use at a same-sex wedding conveys a message of celebration and endorsement for same-sex
marriage, a baker could potentially refuse to sell any goods or any cakes for same-sex weddings as a protected form of expression; but this would be a denial of goods and services that likely goes “beyond any protected rights of a baker who offers goods and services to the general public .…” (Masterpiece, supra, 584 U.S. at p. 632.) Expanded logically, this reasoning would extend to a whole range of routine products and services provided for a wedding or wedding reception, including those highly visible items like jewelry, makeup and hair design for the wedding party, table centerpieces, stemware and alcohol for a toast, and catering displays. This is tantamount to business establishments being “allowed to put up signs saying ‘no goods or services will be sold if they will be used for gay marriages,’ something that would impose a serious stigma on gay persons.”
(Id. at p. 634.) If mere product provision to a wedding is considered expressive conduct,
then all wedding vendors could potentially claim their refusal to serve same-sex couples. . . (Id., pp. 56-57.)

 

In other words, Cathy's Creations explained that California could not and should not actually apply the First Amendment, despite the Masterpiece holding from the United States Supreme Court, because if we do then we will not be able to enforce anti-discrimination laws. But this is exactly what the First Amendment does:  puts real limits on the scope of government powers and, of course, as Masterpiece held "anti-discriminaton" laws are not exempt from the purview of the Bill of Rights.

Analysis

 

Even if one were to factually distinguish this case from the cake-baking case ruled upon by the United States Supreme Court, the discussion and holding in Cathy's Creations is troubling.  First Amendment protections permit persons to refuse to voluntarily engage in actions which require speech and that they find offensive and/or violate their religious beliefs should be of the utmost consideration in terms of any court's legal analysis.  But Justice Meehan and his two colleagues dismissed application of these crucial limits on government power because to do so would render null a state statute prohibiting discrimination.  The justification was rather slim, resting on the silly notion that though baking a cake requires care and skill (and, as I would add, a bit of love) such care and skill is not "expressive:"

Because we conclude the cake defendants refused to provide in this instance was not an expressive activity protected by the First Amendment, defendants’ free speech defense fails. A huge number of routinely produced goods in the stream of commerce are designed with attention to aesthetic details that may reflect the designer’s sense of color, balance and perspective, and while those elements might be viewed as artistic features, they are primarily applied and intended for broad appeal and profitability—not as a medium for self-expression. While a routinely produced and multi-purpose cake like the one here might be baked and decorated with skill and creativity, we cannot conclude it is inherently expressive. (Id., p. 57.)

 

In other words, the Court's analysis is fundamentally flawed because it failed to apply the analysis mandated by Masterpiece.  Instead, it made it very clear a state-mandated prescription against discrimination must take precedence over Federal protections because, well, otherwise, the state law could not be given its full intended effect.  

 

This begs the question:  when will religious freedom and freedom of speech be restored to California?  And an even better question:  why do those who favor unlimited government power seem especially keen on harassing small businesses that do not have the resources to fight back?

 

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Ride sharing service has no duty to perform background checks on all potential riders (Shikha v. Lyft)

California's Second District, Division Three, has ruled the general duty of due care one owes to another does not extend to include a duty owed by ride-share platforms to its drivers to perform "background checks" on all passengers. (Shikha v. Lyft (May 17, 2024, B321882.)

Writing for the court, Justice Adams summarized the factual and procedural background succinctly:

In February 2020, Al Shikha was working as a Lyft driver when he accepted a ride request through the Lyft app from passenger Ricky A. Alvarez.  During the ride, and without any warning or provocation, Alvarez repeatedly stabbed Al Shikha, causing lacerations to Al Shikha’s left hand and both legs.  In  April 2020, Al Shikha filed a complaint asserting three causes of action against Lyft: (1) failure to provide workers’ compensation insurance; (2) negligence; and (3) failure to provide a safe place of employment. (Id., pp. 2-3.)

The Second District explained there was no justification for imposing such a duty despite the general rule that all persons owe a duty of due care to others to act reasonably. (See, e.g., Civil Code section 1714.1.)   As the Second District opinion teaches, the statutory duty to verify the criminal record of a driver does not extend to doing so for passengers. As to any common-law duty, Shikha found no duty was owed to its own drivers even though Lyft was admittedly in a "special relationship" with these persons.  This conclusion required analysis of the factors enunciated by the Supreme Court in 1969's Rowland v. Christian, including the crucial factor of foreseeability:

To depart from the general principle that all persons owe a duty of care to avoid injuring others . . . ‘involves the balancing of a number of considerations’: ‘the 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.’ [Citation.]” (Brown, supra, 11 Cal.5th at p. 217, citing Rowland, supra, 69 Cal.2d at pp. 112– 113; accord, Kuciemba v. Victory Woodworks, Inc. (2023) 14 Cal.5th 993, 1021 (Kuciemba).)  We consider the Rowland factors at “ ‘a relatively broad level of factual generality.’ [Citation.]” [Citation.] . . . Before analyzing the Rowland factors, we must identify the specific duty Al Shikha asserts Lyft should undertake. (Castaneda v. Olsher (2007) 41 Cal.4th 1205, 1214 (Castaneda).)  The complaint alleges Lyft has a duty to conduct “basic, inexpensive public record background checks on passengers to determine whether they pose a risk of harm to drivers (or to obtain consent from drivers that they may be transporting a known criminal).” On appeal, Al Shikha argues Lyft is required to “either warn drivers about riders with serious criminal histories[ ] or otherwise exclude such riders from its network.” 

“ ‘The most important factor to consider in determining whether to create an exception to the general duty to exercise ordinary care . . . is whether the injury in question was foreseeable.’ [Citations.]” (Regents, supra, 4 Cal.5th at p. 629.) In assessing the Rowland factors in cases involving a defendant’s duty to prevent third party criminal conduct, courts have employed a “sliding-scale balancing formula.” [Citation.]  (Id., pp. 8-10.)

Discussing cases involving the duty to prevent the criminal acts of third parties, such as Ann M. v. Pacific Plaza v. Pacific Plaza Shopping Center (1993) 6 Cal. 4th 666, the Second District explained that in deciding whether to impose a duty of due care, the "burden" of preventing the plaintiff's harm must be balanced against the effectiveness of the proposed precautions.  Here, this analysis indicated no duty of due care was owed given the proposed precaution (background checks) was both burdensome and of "dubious" effectiveness:

Al Shikha contends conducting criminal background checks on all potential rideshare passengers would entail minimal costs and would not be highly burdensome. Lyft, in contrast, asserts the obligation would impose significant financial and social burdens. Lyft argues screening each passenger would require a “huge and unwieldy infrastructure”; that it would expose Lyft to liability because there is no guarantee it would successfully identify people inclined to violence; it would be impossible for passengers to download and sign up for the app at the time a ride is needed; it would burden those with criminal histories who are not inclined to violence but still need transportation; it would unfairly discriminate against broad segments of the population; it would have an “unfair or even unlawful[ly] discriminatory effect on minorities and marginalized populations”; and it would conflict with the strong public policy of maintaining consumer privacy. As the court determined in Castaneda, we similarly conclude here that conducting criminal background checks on all rideshare passengers would be “a burdensome, dubiously effective and socially questionable obligation . . . .” (Castaneda, supra, 41 Cal.4th at p. 1217.) (Id., p. 17.)

The Shikha  court noted that not only did plaintiff fail to provide any cogent argument as to why and how a background check would prevent future injuries, but logic dictated background checks cast a very wide net, as nearly one in three adult Californians have an arrest record. (Id., p. 19.)

It should also be noted Shikha discussed the recent case of Kuciemba v. Victory Woodwork, involving the supposed duty owed by a landowner to the spouse of someone working on the land to prevent the worker's exposure to COVID-19.  The  California Supreme Court unanimously held the spouse's was limited to a workers compensation remedy.

Of course, plaintiff in Shikha argued there was a "failure to warn" of the potential harm from the violent passenger.  However, in Moses v. McKeever a visitor to a condo similarly argued they were owed the duty to be "warned" about a defect in the HOA's common area because such an injury to those entering and exiting the condo was "foreseeable."  However, the appellate court found there was no duty owed by an individual owner or tenant to warn of defects in the HOA's common area.

Analysis

When looking at both practicalities and public policy, it appears the result in Shikha could not have been otherwise.  Indeed, if the duty plaintiff sought to impose were imposed on ride-sharing services, a whole host of persons who do not have access to their own vehicle could potentially be barred from using these services.  This includes not only convicted felons but also, more broadly, those who have been arrested for a wide variety of offenses even if not ultimately charged or convicted.

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Res ipsa loquitur does not apply to ordinary negligence claim (Howard v. Accor)

 

Hotel operator not liable for showerhead malfunction under res ipsa loquitur theory

The Second District, Division Eight has affirmed a grant of summary judgment by the Hon. Jill Feeney, Judge Presiding, of the Los Angeles County Superior Court. (Howard v. Accor Management (April 3, 2024) B320603.)  The plaintiff alleged two theories of negligence, claiming that:

As Monique Howard went to shower during her hotel stay, the handheld shower head fell apart. Howard cut herself and fell. Later she sued the hotel for negligence and premises liability. The trial court granted summary judgment. We affirm because Howard failed to mount a triable issue of material fact on the key issue of notice and failed to establish the applicability of a venerable but inapt doctrine—res ipsa loquitur. (Id., pp. 1-2.)

Specifically, plaintiff alleged the shower head malfunctioned not after she used it in the morning but after she did so later in the day, and thus only after her hotel room had been cleaned, and that on this second use the shower head fell apart:

As soon as I stepped in the shower and turned the water on I noticed that it was spraying me in the face, which was a little odd for me because I had took a shower earlier that day. I was -- kind surprised me, plus I had full makeup on. It was spraying me in my face. When that happened I went to take the shower off of the shower handle and that is when it just dismantled and fell apart.” (Id., p. 2)

Defendant Accor moved for summary judgment, which the trial court granted. The appellate court affirmed, finding plaintiff had not shown there was a triable issue as to the issue of whether the hotel had any notice of the defect in the shower head as plaintiff could not show either actual or constructive notice.

The appellate court also found that plaintiff could not show the doctrine of "res ipsa loquitur," Latin for "the thing speaks of itself," applied.  This doctrine may be used to show the negligence of the defendant from the factual scenario, i.e., that it was "more likely than not"  defendant was negligent, without the need to provide more specifics as to what the defendant actually did that breached the standard of care.  The Second District rejected this argument, noting the plaintiff had not proven the elements of the doctrine because, inter alia, the trial court had sustained objections to the proferred testimony of the plaintiff's safety expert, Brad Avrit, on the grounds his statements involved improper legal opinion.

Importantly, the court noted res ipsa did not apply because the facts did not show it was more likely the defendant's negligence, as opposed to some other cause, caused the injury:

Howard’s papers ask us to make many leaps of logic to infer it was more likely than not that the housekeeper’s negligence caused the shower wand to break. [Citation.] Howard’s deposition testimony leads to reasonable inferences the cause was something else: the shower head sprayed Howard because it was facing her, and Howard’s quick reach for the wand or an inherent defect could have caused its dismantling. There is no inconsistency between these causes and Howard’s and her boyfriend’s statements about the care they took with their earlier showers. The evidence does not show the shower wand was broken before Howard grabbed it. When describing the incident at her deposition, Howard did not say the wand was sharp or broken then. Nor does Howard’s declaration say she was cut before the wand fell apart. (Id., pp. 7-8.)

Conclusion and analysis

The opinion of Justice Wiley affirmed the grant of judgment in favor of hotelier Accor, finding the trial court made no errors of law and that the rulings upon the objections to Mr. Avrit's opinions were well within that court's sound discretion.  The key portion of the opinion is the discussion of res ipsa loquitur, which the trial court found was only applicable to show negligence when there was evidence, and not mere speculation, to show that all of its elements applied.  These elements, which the Howard court strictly construed, were summarized at pages nine and ten: 

. . . [A]s our Supreme Court has explained it, “certain kinds of accidents are so likely to have been caused by the defendant’s negligence that one may fairly say ‘the thing speaks for itself.’ ” (Brown v. Poway Unified School Dist. (1993) 4 Cal.4th 820, 825.) The doctrine has three requirements: (1) the accident was of a kind that ordinarily does not occur absent someone’s negligence; (2) the instrumentality of harm was within the defendant’s exclusive control; (3) the plaintiff did not voluntarily contribute to the harm. (Id. at pp. 825–826 & 836.)

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Court, not arbitrator, decides whether minor may disaffirm contract including arbitration provision

 

Class action suit by minors alleging deceptive practices in "in app" purchases may proceed despite the fact the videogame license came with arbitration provision

A minor, of course, may affirm or disaffirm a contract once they reach the age of majority. (Family Law Code sections 6700 and 6710.)  This is to protect minors from "their lack of judgment and experience. . . ." (Sparks v. Sparks (1950) 101 Cal. App. 2d 129, at 137.)  

California's Second District, Division Six, has upheld the role of a trial court in determining whether a minor has disaffirmed a contract made by said minor. (J.D. v. Electronic Arts (January 17, 2024) E080414.)  The appellate court summarized the complaint and challenges to such as follows:

On February 14, 2022, J.R. II filed a putative class action against EA, alleging causes of action for unlawful and unfair business practices in violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.), and unjust enrichment.  J.R. alleged that EA deceptively induced players of Apex Legends, “especially impressionable minors,” to purchase digital game-specific currency in order “to purchase cosmetic items, characters, lootboxes, and other items within the Apex Legends virtual world.”
EA moved to stay the action and to compel arbitration under Code of Civil Procedure sections 1281.2 and 1281.4, arguing that J.R. II’s claims are covered by an arbitration agreement contained within EA’s user agreement, which J.R. II agreed to in order to play Apex Legends. (Id., p. 1.)

Finding it had the authority to decide whether J.R. disaffirmed the contract with EA, the trial court found he had done so according to the declaration he had submitted in opposition to the motion.  The Hon. Craig Riemer, Judge Presiding of the Riverside County Superior Court, thus denied EA's motion to compel contractual arbitration under the rules of the American Arbitration Association; therefore permitted the class action to proceed.

EA appealed and argued that because the contract provided arbitration should proceed according to the rules of the AAA, the arbitrator must decide the issue of whether J.R. disaffirmed all or part of the agreement to arbitrate.  J.R. argued that he had disaffirmed the entire user agreement, including the "delegation clause" regarding arbitration, and argued the trial court had the authority to decide this issue.

In an opinion written by Justice Menetrez, the Second District found J.R.'s declaration provided that he had in fact disaffirmed the entire contract, including the delegation provision.  The court also explained the delegation provision was severable from the remainder of the contract and that the disaffirmance of this provision was valid no matter whether defenses to other parts of the agreement were valid.    

Analysis

This opinion continues the California trend of the increasing role of trial courts supervising private arbitration and, indeed, in deciding major legal issues related to what can or cannot be arbitrated.  Put another way, the time in which a trial court was more likely to have the arbitrator decide all issues related to contractual arbitration appears to be long passed. 

This suit also illustrates the dangers inherent in the apparently lucrative business of encouraging minors to make in-app purchases without the permission of their parents.

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Court may consider attorney incivility in deciding whether to lower attorney fees awarded (Snoek v. Exaktime)

 

Courts may consider the incivility of counsel in deciding whether to lower the amount awarded to a party for said attorney's efforts

The Second District, Division Three, of the California Court of Appeal has upheld a trial court ruling reducing the amount of attorney fees awarded to a party due to the incivility of counsel for that party.  (Snoek v. Evaktime (October 21, 2023) BC708964.)  The Hon. Michael P. Linfield, Judge Presiding, of the Los Angeles County Superior Court, applied such a modifier against the plaintiff for the conduct of his counsel when the trial court awarded attorney fees:

Plaintiff Steve Snoeck appeals from the trial court’s order awarding him $686,795.62 in attorney fees after the court applied a .4 negative multiplier to its $1,144,659.36 adjusted lodestar calculation “to account for [p]laintiff’s counsel’s . . . lack of civility throughout the entire course of this litigation.” The court awarded Snoeck fees after he prevailed on one of his six causes of action against his former employer ExakTime Innovations, Inc. on his complaint for disability discrimination under the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.) and related causes of action. The jury [had previously] awarded Snoeck $130,088 in damages on his claim ExakTime failed to engage in a good faith interactive process with him. (Id., p. 2.)

In ruling upon a post-trial motion for attorney fees, the trial court found plainrtiff's counsel's rates of $535.00 to $750.00 per hour "reasonable" but made several alterations to the fees requested, including mathematical corrections and applying a 1.2 positive multiplier to the to the "lodestar" rate awarded, given the length of the case and its "contingent" nature.  However, the trial court also found that plaintiff's counsel, Perry Smith, had been uncivil in sending communications containing ad hominem attacks on defense counsel and applied a .4 negative multiplier to the entire fee award.

In an opinion written by Justice Edgarton, the Second District found the trial court acted well within its discretion when it made this reduction.  In doing so the appellate court rejected the argument the .4 reduction was an improper "sanction" as well as that such a reduction controverted the purpose of the fee-shifting provision in FEHA:

Moreover, the court’s order specifically recognized civility was not just a moral good but an aspect of attorney skill. And, as discussed, ample evidence supports the court’s reduction of the lodestar to account for plaintiff’s counsel’s skill given his incivility toward opposing counsel and the court. (Cf. Edgerton v. State Personnel Bd. (2000) 83 Cal.App.4th 1350, 1363 [affirming application of positive multiplier given, in part, “ ‘the skill displayed by plaintiff’s counsel in overcoming the intransigent opposition of defendant’ ”].)
Nor did the court contravene the principles of the FEHA in doing so. The lodestar adjustment method—which gives the court the discretion to augment or diminish the lodestar figure to arrive at a reasonable fee—is the gold standard for determining an attorney fee award under the FEHA. (Id., p. 34; original emphasis.)

Potential consequences for counsel whose fees are reduced due to their own actions

To the extent such a fee reduction results in a decrease in monies ultimately paid to the client (and this is a hypothetical here, as we have no way of knowing if the plaintiff actually paid any fees out-of-pocket) a counsel whose actions have caused such a reduction in what is ultimately paid to a client may face certain consequences.  

First, the client may assert that engaging in uncivil conduct harming said client is a breach of the duty duties owed by the attorney, such as duties related to being a fiduciary and competently performing legal services.

Moreover, such an attorney assuredly owes a duty to the client to explain the consequences of such a ruling in terms of the reduction in attorney fees awarded including the specific reasons such fees are being reduced.  This implicates provisions of the California Rules of Professional Conduct, including rule 1.4 which provides a lawyer must keep a client informed as to significant developments in the case.  

Further, Rule 1.7 requires informing the client of any conflict of interest, and the breach of a fiduciary duty owed a client may be said to create such a "conflict."  Specifically, case law holds that  “attorneys have a fiduciary duty to disclose material facts to their clients, an obligation that includes disclosure of acts of malpractice.” (Beal Bank SSB v. Arter & Hadden LLP (2007) 42 Cal. 4th 503, at 514.)

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No Duty to Warn Tenant of Obvious Water Current (Nicoletti v. Goldrich Kest)

 

Landlord had no duty to warn of open and obvious condition of water current from flowing rainwater

The Second District, Division Eight has upheld a grant of summary judgment by the Hon. Daniel Crowley, Judge Presiding, of the Los Angeles Superior Court in a tenant versus landlord tort suit. (Nicoletti v. Goldrich Kest (November 14, 2023) B319377.)  Summary judgment was granted in favor of the landowner based on the defense that the hazard was an "open and obvious" condition.  Plaintiff Nicoletti allegedly fell due to a rainwater current while walking a dog on the premises she rented from defendant Dolphin Marina apartments, sued as the DBA of Goldrch Kent:

On April 9, 2020, Nicoletti took her neighbor’s dog for a walk around Dolphin’s apartment. . . . Nicoletti observed that it was raining that day with thunderstorms. At around 3:30 p.m., Nicoletti crossed the driveway of the North Side Gate entrance that led to the underground parking lot. The apartment complex also had a South Side Gate entrance and another entrance on Panay Way. Nicoletti testified that she had gone past the North Side Gate “thousands of times” before the incident.

Before crossing, Nicoletti observed that the concrete on the North Side Gate driveway was wet, and rainwater formed a current that was running down the driveway. Nicoletti did not observe any caution tape or other warning advisements. Nicoletti proceeded to cross, and the rainwater current knocked her down. Nicoletti then fell down the North Side Gate driveway and hit the gate at the bottom of the driveway. (Id., p. 2.)

The trial court found Dolphin did not have a duty to warn of the running rainwater on the driveway because it was a dangerous condition that was sufficiently obvious.  Dolphin countered  the danger from the water current was not obvious, but the trial court nonetheless granted summary judgment.  

The appellate court affirmed, noting the general rule that landowner must “maintain land in [its] possession and control in a reasonably safe condition.” (Alcaraz v. Vece (1997) 14 Cal. 4th 1149, at 1156; emphasis added.)  However, it also reiterated that "[a] harm is typically not foreseeable if the “dangerous condition is open and obvious," citing Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal. App. 5th 438, at 446.

Upon appeal, Nicoletti further argued that an exception to this doctrine applied, namely that of "necessity."  The appellate court noted this argument was waived as it was first made upon appeal; nonetheless, the Nicoletti court considered and rejected this argument.  Writing for the majority, Justice Viramontes explained the "necessity" argument was not supported by the facts, and, more to the point, public policy indicated no duty should be imposed to place "warnings" due to temporary weather conditions:

Our holding is also consistent with our Supreme Court’s declaration that courts must assign tort duties “to ensure that those ‘best situated’ to prevent such injuries are incentivized to do so.” [Citation.]  Under these circumstances, Nicoletti was in a better position to avoid the obvious danger of walking across a current of water that formed as a result of a rainstorm that began that same day. As discussed above, Nicoletti could have chosen to use a different entrance. The burden imposed on Dolphin to constantly monitor weather conditions and immediately install warning signals is outweighed by Nicoletti’s ability to avoid a condition she should have observed as obviously dangerous. (Id., p. 9.)

Counsel for plaintiffs should note the obvious lesson that arguments destined for a Court of Appeal should first be made in the trial court.  

Defendants should be prepared to argue the applicability of the "necessity" exception to the open and obvious rule.  The defense should also be keen to address public policy issues, such as the scope of the duty the plaintiff seeks to impose, an example being the duty proffered here by the plaintiff, namely, that the landlord should have warned of the current due to the heavy rain that day.

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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Post-trial civil procedure - Defense May Have to Pay Cost of Proof Sanctions for Failing to Stipulate to Medical Records as "Business Records" (Vargas v. Gallizzi)

 

Post-trial civil procedure - defense failure to stipulate to the authenticity of medical records as "business records" entitles plaintiffs to claim the cost of having to prove their admissibility

Division Seven of the Second Appellate District of California has upheld and reversed post-trial orders by the Hon. Graciela L. Freixes of the Los Angeles County Superior Court. (Vargas v. Gallizzi (October 13, 2023) B317540.)  Following a prior appellate opinion remanding for a new trial to consider both loss of use and future non-economic damages, plaintiffs prevailed in the second trial and the parties wrangled over who should pay what after trial.  Justice Perluss and his colleagues on the Second District panel affirmed the trial court’s award of costs to the defense based on a successful pre-trial offer to compromise, but reversed the trial court's denial of any of the requested "cost of proof" sanctions to plaintiffs, finding they were entitled to claim the reasonable cost of having to prove matters unreasonably denied by the defense.  The final result is that the defense will owe the plaintiffs $15,125 in damages, plus a to-be-determined amount relating to attorneys fees and costs, while the plaintiffs will owe the defense its allowable costs of suit, or $28,547.66, including $12,000 for a particular expert’s fees for testifying.

What are sometimes called "cost of proof" sanctions may be awarded for the pre-trial costs of proving a matter the other party will not admit 

Vargas explained California's procedure for claiming attorney fees and costs related to factual matters the other party will not admit:

During pretrial discovery a party may serve a written request that another party “admit the genuineness of specified documents, or the truth of specified matters of fact, opinion relating to fact, or application of law to fact.” (§ 2033.010.) Such requests “‘are primarily aimed at setting at rest a triable issue so that it will not have to be tried. Thus, such requests, in a most definite manner, are aimed at expediting the trial. For this reason, the fact that the request is for the admission of a controversial matter, or one involving complex facts, or calls for an opinion, is of no moment. If the litigant is able to make the admission, the time for making it is during discovery procedures, and not at the trial.’” (Id., p. 9; emphasis added but citation omitted.)

Counsel for plaintiffs made multiple attempts to have defense counsel stipulate to the admissibility of medical records, to no avail.  Indeed, defense counsel refused to stipulate that such records were "business records" under Evidence Code section 1271 and therefore twice denied requests for admissions to this effect.  The trial court ultimately settled this contested issue pre-trial by ruling most of the records were in fact "business records:" 

. . . [T]he court heard argument regarding the parties’ motions in limine. . . [and] it appears the admissibility of medical records was argued because the minute order for July 30, 2021 states, “The Court rules that any sealed subpoena records received will be considered as business records. The admissibility of said records is deferred to the time of trial.” 

 

The issue was revisited during trial when Vargas and Garcia’s counsel indicated he would use some of the medical records to refresh Vargas’s recollection during her testimony. Gallizzi’s counsel objected that Vargas could not authenticate the documents and the records contained hearsay. The court responded, “I’ve deemed them not hearsay with regards to authentication and foundation because they were provided . . . as part of the subpoenaed records.” Ultimately the medical records proffered by Garcia and Vargas were admitted into evidence at trial except for approximately 10 pages the court ruled contained hearsay within hearsay. (Id., pp. 5-6.)

After trial plaintiffs brought a motion requesting a staggering $350,000 in attorney fees and costs related to defendant's supposedly “unreasonable” denial of the requests for admissions.  The trial court denied this motion, explaining, inter alia, that the issue of the authenticity of the medical records had been decided before trial and there was therefore no need to expend attorney effort to "prove" such during the actual trial.

The Second District reversed, remanding the matter for reconsideration as to the amount of the attorney fees and costs to be awarded related to the denial of the requests for admissions.  As the appellate court explained, Code of Civil Procedure section 2033.420 does not limit its scope to what is proven "at trial," providing a post-trial award to the party who "thereafter proves the genuineness of that document or the truth of that matter.”  Consequently, a post-trial award may include attorney fees and costs incurred "pre-trial" as part of the "proof" referenced in the statute, including, as was the case in Vargas, efforts in bringing pre-trial motions.

The Vargas court explained that plaintiffs had "proven" the records were business records during the pre-trial hearing and, more to the point, the denial by the defense was not “reasonable:"

. . . [A] defendant ‘cannot be forced to admit [a] fact prior to trial despite its obvious truth. [Citation.]’ [Citation.] But the failure to do so comes with consequences, exposure to a costs of proof award.”  Gallizzi had no reasonably held good faith belief she could prevail on the merits of the business records issue. Her denial rested solely on the potential for opposing counsel’s procedural error. Accordingly, Vargas and Garcia were entitled to recover the reasonable expenses incurred in proving the medical records were business records. (Id., p. 15.)

However, the plaintiffs were not permitted to claim the cost of proving causation at trial

Predictably, counsel also did not permit defendant to admit that she caused "some injury" to either plaintiff.   However, during opening statements defense counsel stated "I believe these ladies were injured."  Nonetheless, plantiffs’ post-trial motion asked for attorney fees and costs related to having prove causation at trial.  The appellate court found the trial court and properly denied this request for “cost of proof” sanctions as the plaintiffs would have had to have proved the amount and severity of their damages no matter what the defenses admitted.

The appellate court also affirmed the award of costs to the defendant

The appellate court also affirmed, with no modifications, the substantial award of costs to the defense.  Plaintiffs rejected an offer to compromise from the defendant made pursuant to Code of Civil Procedure section 998 and apparently "beat" this offer as the verdict at the second trial was less than this offer.

Plaintiffs quibbled with these costs, arguing the fact the defense expert designation stated the cost of testimony would be $6,000 for up to four hours indicated the claimed $12,000 should be reduced; however, as the court noted, the expert at issue testified over two separate days and thus charged a $6,000 minimum each day.  The appellate court also rejected the claim the trial court abused its discretion in awarding the defense the cost of real-time court reporter transcription, explaining "[plaintiffs] have not cited any authority for the proposition that real-time transcription fees are not allowable when deemed appropriate by the trial court." (Id., p. 19.)

Tips for practitioners

This suit illustrates the effect of post-trial motions for sanctions and/or costs of suit in California, including that:

• In addition to any actual damages awarded, parties may recover from the other costs and/or sanctions and each party may therefore have a resulting award against the other; and,
• The result is that the "net" award may be to the defendant, and not the plaintiff, depending on amounts awarded by way of post-trial motion.  

This second point is illustrated in Vargas by the judgment for damages of$15,125 to plaintiffs versus the costs awarded to the defense of $28,547.66.  If the "cost of proof" sanctions are less than this amount, it appears likely the plaintiffs will owe the defendant money following this second trial.  

Practitioners should therefore treat requests for admissions, particularly those related to the introduction of evidence at trial, very seriously.  Matters that are routinely admitted, such as the authenticity and admissibility of documents, should be admitted if it would be unreasonable to deny them.  At the same time, counsel whose clients reject section 998 offers to compromise should be aware of the increasing cost of litigation, including the charges of medical experts, and should take a "ballpark" estimation of these costs, including the cost of any and all experts called by opposing parties, into account when considering whether to reject or accept a statutory offer.

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