Developments of Interest

New Cases of Interest - September 2, 2013

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There are two significant cases by the California Supreme Court this month concerning the unfair competition law.

Zhang v. Superior Court (2013) 57 C4th 364 involved an action by an insured against an insurer in which the insured alleged that the insurer had withheld payment in bad faith with respect to fire damage on commercial property and that the insurer had also engaged in false advertising by promising to provide timely coverage in the event of a compensable loss, while not intending in fact to provide such payment or coverage.  The Supreme Court found that the insured's allegations were sufficient to support a claim of unlawful business practices.  Although there is no private cause of action under the Insurance Code in Section 790.03(h), the claim for relief was sufficient under the unfair competition law, Business and Professions Code Section17200 et seq. based upon conduct which was prohibited by the Unfair Insurance Practices Act, Insurance Code Section 790 et seq. and independently actionable under the common law of insurance bad faith.

Rose v. Bank of America (2013) 57 C4th 390.  In this case plaintiff brought an action alleging unlawful and unfair business practices against a bank based on violations of the federal statute known as the Truth in Savings Act and particularly its disclosure requirements.  Although Congress had repealed a provision of that statute, which authorized civil actions for damages, Congress had also indicated that state laws which were consistent with the federal statute were not specifically superseded.  The Supreme Court viewed the unfair competition law as being consistent with Congressional intent and determined that plaintiffs were not suing to enforce the Truth in Savings Act, nor were they seeking damages for violations of that Act.  Instead, plaintiffs were seeking the remedies of restitution and injunctive relief under the unfair competition law based on violations of the federal statute.

Trapp v. Naiman (2013) 218 Cal.App.4th 113.  This is a SLAPP case which arises from non-judicial foreclosure proceedings initiated by a bank with respect to plaintiffs' property.  Plaintiffs sued the defendant's attorneys, who filed the SLAPP motion.  Plaintiffs had made claims for negligence, abuse of process, quiet title, wrongful foreclosure, breach of the duty of good faith and fair dealing, and unfair business practices.  The Court of Appeal held that the SLAPP motion should have been granted because all of the causes of action arose from protected activity and in fact defendant's only connection to plaintiffs' claim arose from their representation of their client in the underlying unlawful detainer action that was associated with the non-judicial foreclosure.  The defendant attorney's representation of their client was a protected activity and a proper subject of a SLAPP motion.

Renewable Resources Coalition, Inc. v. Pebble Mines Corp. (2013) 218 Cal.App.4th 384 is another SLAPP case.  In this case, an environmental organization had sought donations from its supporters in connection with the Clean Water Ballot Initiative.  After the initiative failed, two mining companies filed a complaint with a public agency alleging that the environmental organization had violated campaign finance laws.  The environmental organization's subsequent lawsuit against the mining companies alleged that the attorneys for those companies had wrongfully purchased confidential documents from the environmental organization's fundraiser, knowing the documents would be confidential.  The court held that the SLAPP motion should not have been granted, and that the tortious interference claims brought by the environmental organization were not subject to a SLAPP motion because those claims did not arise from the constitutionally protected activity of filing the campaign finance administrative complaint.  Instead, the claims arose from the purchase and sale of confidential documents.

Bently Reserve LP vs Papaliolios (2013) 218 Cal.App.4th 418 is still another SLAPP case.  In this case the plaintiff sued the defendants for libel based upon a negative review of an apartment building which the defendant had posted on an internet website.  The defendant filed a SLAPP motion.  The Court of Appeal affirmed the denial of the motion, concluding that the defendant's review as posted could reasonably be construed as a provable false assertion of fact.  Plaintiffs made the requisite showing required under the SLAPP statute as to the merits of their claim.

Purton v. Marriott International, Inc. (2013) 218 Cal.App.4th 499.  In this case, an employee consumed alcoholic beverages at an employer-hosted party, became intoxicated, but was able to drive home safely.  After having done so, however, the employee left to drive another intoxicated co-worker home and during that drive the employee struck another car killing a motorist.  Defendant contended that the intoxicated employee having first gone home ended the scope of employment activity.  The Court of Appeal, however, disagreed, finding that when the employee engaged in the negligent conduct of becoming intoxicated at the party, this act was within the scope of employment and proximately caused the accident, and the intervening drive home did not break the proximate cause chain.

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