Developments of Interest

New Cases of Interest - June 24, 2013

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Block v. California Capital Loans, Inc. (2013) 216 Cal.App.4th 264.  In this case a lender was a corporate entity which was wholly owned by a licensed real estate broker who arranged the loan to the borrower.  The broker's only compensation was the corporation's profit from the interest on the loan.  The borrower defaulted, the lender foreclosed, and the borrower subsequently challenged the transaction contending that it was usurious.  The court, however, held that the exemption from the usury statute in Civil Code §1916.1 applied because: 1) the borrower was a person for whom the broker performed services and 2) the corporation that made the loan expected to profit from the interest on the loan and anticipated profits qualified as compensation for the purposes of the broker exemption.  The court felt it was not material that the broker obtained his compensation by way of a dividend from the corporation rather than receiving a commission payment.

McCoy v. Pacific Maritime Association (2013) 216 Cal.App.4th 283.  In this case the court holds that an employee's claims for sexual harassment are legally insufficient on a hostile workplace theory when the evidence indicated that comments were made about women's bodies by coworkers, including one coworker with partial responsibility for training, at the most on nine and possibly as few as five occasions and none of the comments were directed at the employee, nor were the comments made by supervisors.  The court did find that there was a cause of action for retaliation when the evidence indicated that company management had provided to coworkers the details of a confidential settlement agreement and the employee was then subject to harassment from the coworkers upon whom she relied for training which was necessary for her to advance her employment status.  The jury was entitled to infer that the information in the confidential settlement agreement was provided to the coworkers by management with the intent to turn the coworkers against the employee, thereby making her training period intolerable.

Corrie v. Soloway (2013) 216 Cal.App.4th 436.  In this case Gagen McCoy's client, Sidney Corrie, Jr., prevails on his argument that parties can cure what was original noncompliance with the requirements of the Subdivision Map Act when the cure occurs prior to the exercise of an option and when the party holding the option paid consideration throughout the option period.  The amended option agreement was enforceable and there was no evidence that any party had intended to circumvent the Subdivision Map Act and that the failure to include the original condition was anything more than a drafting oversight by previous counsel.

Castleman v. Sagaser (2013) 216 Cal.App.4th 41.  A former client of an attorney brought an action for breach of fiduciary duty, breach of the duty of loyalty, conversion and invasion of privacy, alleging that when an attorney left a law firm that had represented the clients, he used the client's confidential information against them.  The attorney brought a SLAPP motion, which was denied by the trial court and the denial affirmed by the court of appeal.  The court found that the causes of action alleged by the client arose from the alleged breach of professional and ethical duties, not from protected litigation activity.  The court also noted that actions which are based on an attorney's breach of professional and ethical duties owed to clients are not within the scope of the SLAPP statute, even when protected litigation activity is present in the factual background.  Further, the court noted that an attorney's alleged breach of fiduciary duty owed to a client does not constitute protected speech or petitioning activity.

Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497.  A borrower sued several financial institutions contending that the deed of trust provided by the borrower went into a securitized investment trust where it was pooled with other home loans but without proper compliance with the investment trust pooling and servicing agreement.  The trial court sustained a demurrer and the court of appeal affirmed finding that the borrower was not entitled to declaratory relief on the issue as to whether defendants had the authority to initiate nonjudicial foreclosure because the nonjudicial foreclosure statutes did not authorize a preemptive action by the borrower and did not require that the foreclosing party have an actual beneficial interest in both the promissory note and the deed of trust to commence and execute a nonjudicial foreclosure sale.  The court found that the borrower was unable to state an actual controversy because it was undisputed that the borrower had a debt owed to somebody which was in arrears with the court concluding that the borrower lacked standing to enforce the investment trust pooling and servicing agreement.  The court also found that Civil Code §2932.5 is inapplicable to deeds of trust and the borrower was unable to plead a causal link between her economic injury, the impending nonjudicial foreclosure and the alleged unfair or unlawful acts.

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