Berger Kahn's monthly e-publication 
The most important court decisions of the month
Welcome to Berger Kahn's monthly e-publication summarizing the most important California state and federal court decisions.

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Liability Insurance Coverage - Disparagement
Hartford Casualty Insurance Company v. Swift Distribution, Inc.
(Cal. Sup. Ct.), filed June 12, 2014

Swift Distribution’s product resembled a product that Gary-Michael Dahl sold. Dahl sued Swift for patent and trademark infringement, unfair competition, and misleading advertising. Swift asked Hartford to defend under a liability insurance policy that provided coverage for “advertising injury” that was defined to include injury arising out of publication of material that disparaged a person’s or organization’s goods, products, or services. The California Supreme Court held that Hartford did not have a duty to defend because Swift’s advertisement did not refer to Dahl’s product expressly or by implication, a necessary element in a disparagement claim.

Insurance "Bad Faith" - Uninsured Motorist
Maslo v. Ameriprise Auto and Home Insurance
(Cal. Ct. of App., 2d Dist.), filed June 27, 2014

Ted Maslo was the insured on an automobile insurance policy issued by Ameriprise. After being injured by an uninsured motorist, Maslo filed a claim seeking the $250,000 limit on the policy’s UM coverage. Ameriprise demanded UM arbitration. After being awarded $164,120.91 by the arbitrator, Maslo sued Ameriprise alleging that it breached the implied covenant of good faith and fair dealing by forcing him to arbitrate his claim without fairly investigating, evaluating and attempting to resolve it. The Court of Appeal held the complaint adequately stated such a claim. The court rejected Ameriprise’s argument that its right to resolve a disputed claim through arbitration relieves it of its statutory and common law duties to fairly investigate, evaluate and process the claim. It also rejected the suggestion that an insurer may escape liability for bad faith simply because the amount ultimately awarded in arbitration was less than the policy limits or the insured’s initial demand. Finally, it concluded that the complaint adequately alleged causation where, as pled, the conduct of the insurer made arbitration inevitable and settlement impossible.

Liability Insurance— Conspiring To Kidnap?
Upasani v. State Farm General Insurance Company
(Cal. Ct. of App., 4th Dist.), filed June 6, 2014

Meera Upasani and Mohan Upasani were sued for conspiring to aid a mother in abducting her son from his father. Their insurance carrier, State Farm, denied the Upasanis’ tender of defense. It concluded that the claims were not an “occurrence” because no accident was alleged. The Upasanis sued, and the trial court granted State Farm’s summary judgment motion. The Court of Appeal affirmed. The fact that the Upasanis proved they were not liable in the underlying case did not change the fact that the claims were not for accidental injuries. Nor did the fact that two of the causes of action against them were framed in terms of negligence because “the factual allegations of those causes of action, and the evidence supporting them, showed the conduct that the Upasanis were alleged to have committed was intentional conduct.”


"Lemon Law” — Jury Instructions
Orichian v. BMW of North America, LLC
(Cal. Ct. of App., 2d Dist.), filed June 12, 2014

Tamar Orichian sued BMW of North America under the Song-Beverly Consumer Warranty Act and the federal Magnuson Moss Warranty Act based on its alleged failure to repair certain defects in her 2007 BMW X5 automobile. The trial court gave jury instructions on breach of express warranty under Song-Beverly but not under Magnuson-Moss. The jury found that there was no defect that BMW had not repaired. The Court of Appeal held that Orichian was entitled to instructions under both Song-Beverly and Magnuson-Moss, but that the trial court’s failure to give both was not prejudicial in view of the jury’s finding there was no defect.

Alter Ego Liability
Wells Fargo Bank, National Association v. Weinberg
(Cal. Ct. of App., 4th Dist.), filed May 28, 2014

Wells Fargo Bank sued Steven Weinberg’s professional law corporation after it defaulted on a line of credit. It also sued Weinberg on an alleged guarantee on the line of credit. The trial court dismissed the claim against Weinberg himself after sustaining Weinberg’s demurrer. It then granted a summary judgment in favor of the bank against the law corporation. Next, the bank added Weinberg himself as a judgment debtor based on an alter ego theory. The Court of Appeal affirmed. It held the issue of Weinberg’s liability as an alter ego of the corporation had not been resolved as it was not raised in his demurrer. And, it held that there was substantial evidence Weinberg was the alter ego of the corporation: Weinberg, who owned his professional corporation, stopped its operation, but continued to practice law as a sole proprietor using the same name, in the same location, using the same equipment, and in the last 18 months of the corporation’s existence, allegedly paid himself and other family members $420,981.78 from the corporation.

Nonjudicial Foreclosure Procedures
Keshtgar v. U.S. Bank, N.A.
(Cal. Ct. of App., 2d Dist.), filed June 9, 2014

When Saeed Keshtgar failed to pay his mortgage, the assignee of the deed of trust, started to foreclose. Keshtgar sued to stop it. The Court of Appeal held California’s nonjudicial foreclosure statutes was “an insuperable barrier” that “stands in his way.” They provide a comprehensive framework for nonjudicial foreclosures as a quick, inexpensive and efficient remedy against a defaulting borrower. They do not authorize judicial action to determine whether the person initiating the process is authorized to do so. Recognition of such a right would undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely to delay valid foreclosures.


Attorney’s Fees - $1,000 An Hour
Chodos v. Borman
(Cal. Ct. of App., 2d Dist.), filed June 19, 2014

Navabeh Borman hired attorney Hillel Chodos to represent her in a divorce case. There was no written fee agreement, but there was an oral agreement that she would pay him $1,000 per hour. As time passed, Chodos and Borman, through another attorney, did enter into negotiations regarding a contingency fee, but no agreement was ever consummated. Chodos ultimately sued Borman. A jury found the Chodos’ reasonable hourly fee to be $1,000, that he had spent 1,800 hours on the matter, and that he was entitled to have the fee multiplied by a factor of 6 as a “lodestar” adjustment. The Court of Appeal found that a “lodestar” adjustment was not warranted because there was an agreement on the hourly rate and it was not contingent on the outcome of the case.

Medical Malpractice - Expert Witness Exchange
Staub v. Kiley
(Cal. Ct. of App., 3d Dist.), filed May 20, 2014

The defendants in a medical malpractice action served a demand for the exchange of experts by mail on December 6, 2011. It specified an exchange date of December 27, 2011. The plaintiffs did not serve their designation until January 9. On defendants’ motion, the trial court precluded the plaintiffs from calling experts at trial. The Court of Appeal held the trial court erred because the exchange date of December 27 was “premature” due to the fact that service by mail extends compliance dates by 5 days. It also found that under the circumstances, plaintiffs’ untimely designation was not unreasonable.

Contractor Licenses
E. J. Franks Construction, Inc. v. Sahota
(Cal. Ct. of App., 5th Dist.), filed June 5, 2014

The Sahotas hired Edward J. Franks, II, a licensed general contractor who operated as a sole proprietor, to build a house for them. While building it, Franks incorporated his company and his contractor’s license was reissued to the corporation. The Sahotas refused to pay for certain work. In the ensuing lawsuit, they argued they were not obligated to pay because the corporation was not a licensed contractor at the time the contract was made. The court rejected the argument because Business and Professions Code, section 7031 does not apply when a licensed sole proprietorship converts to a corporation.


Landlord - Tenant?
Erlach v. Sierra Asset Servicing, LLC
(Cal. Ct. of App., 6th Dist.), filed June 10, 2014

Joseph Erlach rented a room in Mary Schwann’s house. When Schwann had the utilities turned off, the city “red-tagged” the house. A few days later Sierra Asset Servicing bought the house at a foreclosure sale. The Court of Appeal held Erlach could state causes of action against both Schwann and Sierra as landlords who failed to provide habitable premises. The court held that Sierra was liable as a landlord because the red-tag did not terminate Erlach’s tenancy.



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Orange County

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Orange County

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S. F. Bay Area

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San Diego



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