Developments of Interest

New Cases of Interest - October 25, 2011

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Templo Calvario Spanish Assembly of God v. Gardner Construction Corporation (2011) 198 Cal.App.4th 509, modified at 199 Cal.App.4th 47a.  In this case an arbitration award was entered in a consumer’s favor in a construction contract dispute.  The contractor was unlicensed, and the arbitrator ruled as a result that the contractor had to disgorge the entire amount which the contractor had been paid.  The Superior Court, however, vacated the arbitration award on the basis that the underlying contract was illegal and void, leaving the arbitrator without the authority to render a decision.  The Court of Appeal reversed the Superior Court and directed that an order be entered granting the consumer’s petition to confirm the arbitration award.  The court held that the contractor’s unlicensed status at the time of signing the contract did not void the contract at its inception.  The prohibition against suits to collect compensation does not automatically void a contract entered into by an unlicensed contractor.  The agreement for contractor services has no wrongful object the enforcement of which is forbidden by fundamental public policy merely because the contractor was unlicensed at the time of executing it.  Because the contractor was unlicensed, the contractor was not able to collect on the contract.

Martin v. Inland Empire Utilities Agency (2011) 198 Cal.App.4th 611.  This is another SLAPP case.  In this case a defamation cause of action was brought by a former employee arising from allegedly false statements made by the employer which were injurious to the employee’s career.  The court held that the SLAPP motion was properly denied as to discrimination and retaliation claims made by the employee and that those claims did not arise from protected activity under the SLAPP statute.

SeeBright Insurance Company v. U.S. Airways, Inc. (2011) 52 Cal.4th 590.  An insurer brought an action against an airline claiming that the airline had caused an injury to an independent contractor’s employee who had been inspecting a luggage conveyor and has his arm entangled in its moving parts, thereby causing the injury.  The court held that the independent contractor’s hirer by inference delegates to the contractor any tort law duty which it has to provide a safe workplace.  There could therefore be no recovery from the airline on a theory that the workplace injury resulted from a non-delegable duty under OSHA regulations to provide safety guidelines on the conveyor.  Any tort law duty owed by the airline to the independent contractor’s employees existed only because of the work that the independent contractor was performing, and therefore it did not fall within the non-delegable duties doctrine.  It would be unfair to permit the employee to obtain full tort damages from the hirer of the independent contractor when such damages would be unavailable to employees who did not happen to work for a hired contractor.

Gramercy Investment Trust v. Lakemont Homes Nevada, Inc. (2011) 198 Cal.App.4th 903.  This case involved a foreclosure proceeding which resulted in a deficiency and the lender attempted to recover the deficiency from the defendant guarantors.  The underlying documents contained a contractual choice of law provision choosing New York law.  The only contact, however, with New York was the lender’s place of business and the court held that the choice of law was inapplicable to judicial foreclosure proceedings arising out of California property.  The court then also found that the guarantors had expressly waived anti-deficiency provisions in accordance with California law and now were stopped from asserting those protections.

Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153.  This is again a SLAPP case which arises in the context this time of a wrongful termination action.  The employee brought the SLAPP motion to strike an employer cross-complaint.  The employee had worked as in-house counsel for a group of affiliated companies and then ceased acting as counsel for an affiliated insurance company during an involuntary liquidation proceeding.  Several years later his employment was terminated and he informed the insurance commissioner that the employer was planning to auction certain artworks that purportedly belonged to the insolvent insurance company.  The employer then cross-complained for breach of confidence and breach of fiduciary duty and breach of the Rules of Professional Conduct.  The court upheld the SLAPP motion with respect to the violation of the Rules of Professional Conduct and equitable indemnity, but denied the motion as to the causes of action for breach of confidence and breach of fiduciary duty.  The court found that each of the claims in the cross-complaint arose from protected activity because the statements made in a pending litigation proceeding were made in connection with an issue under consideration by a court in a judicial proceeding.  The employer had established a probability of prevailing on its claim for breach of confidence and breach of fiduciary duty.

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