Developments of Interest

New Cases of Interest - July 19, 2010

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Formet v. The Lloyd Termite Control Company (2010) 185 Cal.App.4th 595.  This case presents an analysis of the extent of the duty of a pest control company.  The plaintiff, the guest of a property owner, fell from a balcony area which plaintiff alleged was caused by dry rot that had not been discovered and disclosed by the pest control company.  The previous owner of the property had contracted with the company to provide a report.  The court concluded that the inspection conducted by the pest control company did not create a duty owed to the plaintiff.  The pest control company could not reasonably foresee whether the recommendations contained in its report would cause the owner to hire a contractor to repair the damage and did not exercise any direct control over the property, particularly since it was not employed to repair dry rot damage.  Even if the pest control company did owe a duty to discover and disclose the damage, there was no proximate cause because there was no indication that the property owner would have repaired any damage which was disclosed.

G.R. v. Intelligator (2010) 185 Cal.App.4th 606.  This is a case that arose after marital dissolution proceedings in which the ex-husband sued his former wife’s attorney for invasion of privacy based on filing a copy of his credit report without redacting personal information as required by California Rules of Court Rule 1.20.  The attorney filed a SLAPP motion.  The court held that the motion should be granted with attorney’s fees awarded to the attorney.  The attorney was engaged in protected activity under CCP §425.16(e)(1) and (2) and there was no reasonability probability of success on the plaintiff’s claims because the litigation privilege of Civil Code §47(b) applied.  Plaintiff had other remedies, such as sealing the records and requesting sanctions and did not have to file a separate action to seek redress.

Legacy Vulgan Corp. v. Superior Court (2010) 185 Cal.App.4th 677.  An insurer provided both excess and umbrella coverage and the issue before the court was the extent of that insurer’s duty to defend its insured.  The court held that the umbrella coverage was primary coverage, and that the existence of a duty to defend did not depend on the exhaustion of any underlying insurance.  This was based partly on interpretation of the policy, with the court finding an ambiguity as to whether underlying insurance meant only those policies which were attached in a schedule to the umbrella policy, or any other collectible primary insurance available to the insured.

Kruss v. Booth (2010) 185 Cal.App.4th 699.  This was a shareholder’s derivative action which alleged breach of fiduciary duty, but the most important part of the case is the question of whether Nevada or California law would apply.  The shareholder purchased stock in a Nevada public corporation but alleged that California law applied because more than half of the corporation’s voting shareholders lived in California and all of its business was conducted in California.  The trial court ruled that the case was governed by Nevada law, but the Court of Appeal reversed.  Even though more than half of the voting stock had been sold to non-California residents during the course of the year, California law continued to apply as provided in Corporations Code §2115(e) until the end of the year following the sale. 


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