Developments of Interest

New Cases of Interest - July 26, 2010

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Adolph v. Coastal Auto Sales, Inc.  (2010) 184 Cal.App.4th 1443.  In this case the defendant, an automobile seller, filed an action to compel arbitration under a provision in a purchase contract which contained an arbitration clause.  The defendant, however, waited to do this until after initially participating in a legal action filed by the plaintiff.  Defendant filed a demurrer to the First Amended Complaint which was sustained but leave to amend was allowed.  Defendant then filed a demurrer to a Second Amended Complaint which was overruled.  Plaintiff had also propounded written discovery requests and noticed depositions of defendant’s personnel, as to which defendant had “stalled” and indicated that its witnesses were not available on the date set.  Defendant similarly responded to written discovery requests in a manner which the plaintiff deemed to be insufficient.  Not until the same day on which the court overruled the demurrer to the Second Amended Complaint did the defendant seek arbitration under the purchase agreement.  The court held that this was too late, and that by its conduct, defendant had waived the right to compel arbitration.

Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) Cal.App.4th 1539.  This case arises under the SLAPP statute, CCP §425.16.  The SLAPP motion was filed by a landlord and the landlord’s general partner with respect to causes of action brought by a tenant for breach of fiduciary duty and an accounting.  The landlord’s general partner was the tenant’s president prior to the current dispute.  The tenant’s action alleged that the general partner had breached his fiduciary duties to the tenant while he served as the tenant’s president.  Two of the allegations in the cause of action for breach of fiduciary duty and an accounting were that the president had conspired with others to testify falsely in depositions in an earlier lawsuit and that he had also publicly misrepresented facts about that lawsuit.  The Court of Appeal directed that the SLAPP motion be granted.  The court found that the statements relating to the earlier lawsuits were statements made in connection with civil litigation and were therefore protected under CCP §425.16 whether or not they were false.  In addition, the court found that the motion to strike should have been granted because the tenant failed to demonstrate a probability that it would prevail.

Scalzo v. Baker (2010) 185 Cal.App.4th 91.  This is another SLAPP case and involves a situation in which plaintiffs sued their brother, as well as other defendants, for causes of action relating to the brother’s both successful and unsuccessful efforts to obtain the plaintiffs’ credit card statements and to disseminate those statements outside of litigation.  The plaintiffs’ brother’s motion to strike was initially granted by the trial court, but reversed and denied by the Court of Appeal.  The court found that the litigation privilege did not protect illegal conduct which results in damages and because the plaintiffs could demonstrate that damages had arisen separate from the litigation itself, the brother’s alleged wrongful and potentially criminal conduct was not saved by the prior litigation.  In addition, the court found that the brother failed to establish as a matter of law that plaintiffs could not succeed on their claims by showing that illegal acts had occurred and that damage resulted from them.

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