California Appellate Lawyer & Attorney : Archer Norris Law Firm : Trial, Business, Torts : Sacramento, Bay Area, Los Angeles, California

Yesterday, the Third District determined that the time for filing an appeal was triggered by the court's alternative decree regarding dissolution of the parties' limited liability company, rather than from the final judgment on plaintiff's dissolution complaint.

Sometimes the timing for filing a notice of appeal is trickier than one might think.

In Dickson v. Rehmke, one partner of a Limited Liability Company brought suit for dissolution of the company. Pursuant to California Corporations Code Section 17351 the court had three appraisers value the company and each partner's interest, then issued an alternative decree ordering plaintiff to either pay defendant for his share or the process of winding up the business and dissolution would commence. It's not entirely clear from the court's opinion how explicit the trial court's order was, yet, the court comments that the order should have been specifically worded as an alternative decree, but it wasn't. Regardless, the import of the order was that - if plaintiff paid defendant his share, the court would issue a judgment in favor of defendants on plaintiff's dissolution complaint -- Should plaintiff decided to forego payment and permit the process of dissolution and winding up to move forward, judgment on the complaint would issue at the conclusion of that process.

Plaintiff paid defendant for his interest and judgment was entered in favor of defendant. Plaintiff appealed from the judgment.

The court, however, ruled that the appeal was untimely -- That the order plaintiff should have appealed from was the order of decree itself pursuant to the language of Section 17351. According to the court, the issue of the valuation of the business (which was the subject of plaintiff's appeal) was decided by the alternative decree, not the judgment. The judgment was merely a way to "terminate the proceedings" following the court's valuation:

That a judgment will follow the alternative decree upon a tender does not mean the party making or accepting the tender who is dissatisfied with the valuation may await its entry to appeal that issue. This later entered judgment is on the underlying dissolution complaint for the purpose of terminating that proceeding through denying the requested relief. This judgment is not a vehicle for raising the issues of valuation on appeal, because the dissolution proceeding itself never embraced them.

The timing of an appeal from valuation of a company pursuant to Section 17351 may not arise very often in your day-to-day practice. Yet, time and again, appeals are dismissed because attorneys automatically assume they can always appeal from the judgment, rather than from an interlocutory order. As the Dickson case illustrates, this is not always the case. Check and double check those rules. And, if your instincts tell you that an order issued by the court is irrevocable and finally decides a case against your client, check again. Your instincts are probably right that the time for an appeal is from the order, not from the judgment.

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This article was submitted by Jonathan W. Thames at Archer Norris.

The US Supreme Court today released a very significant decision on maritime punitive damages in the Exxon Valdez case, Baker v. Exxon Shipping. The Court granted certiorari to address three issues: (1) whether the general maritime law allows corporate liability for punitive damages on the basis of unratified acts of managerial employees; (2) whether the federal Clean Water Act forecloses an award of punitive damages because the statute provides for civil penalties and thus preempt any punitive damages award; and (3) whether the $2.5 billion punitive damages award confirmed by the federal appellate court (the Ninth Circuit) was excessive as a matter of the general maritime law.

Under the general maritime law can an employer be liable for punitive damages for the reckless acts of its managerial employees?

As we all know, the law in most every state for land-side cases is that employers are responsible for punitive damages for the acts of their employees that merit punitive damages. This is consistent with both the majority of states' common law (punitive damages available for acts of any employees) and the Restatement (Second) of Torts § 909(c) (1977) (punitive damages okay for acts of only managerial employees). The Ninth Circuit allowed punitive damages against Exxon directly for the acts of its managerial employee, Captain Hazelwood.

Exxon argued, though, that the general maritime law is different, and has been for over a century. Based on two very august cases from the 19th century (, Exxon argued that a vessel owner is not liable for the reckless acts of the master. It conceded that a vessel owner would be liable for the negligent acts of the master through the theory of respondeat superior, certainly, but not for reckless acts which were not "directed, countenanced or participated in by the owners." This relates to punitive damages because punitive damages cannot be awarded for merely negligent conduct, and thus vessel owner could not be on the hook for punitive damages for the reckless acts of the vessel's master or any of its employees. Baker argued, though, that the Ninth Circuit's decision should be affirmed, and the Supreme Court should bring the general maritime law in line with state common law and the Restatement. 

This could have been a very important ruling, but the Supreme Court for once exercised judicial restraint and punted. The justices were equally divided on the question, and so they left the Ninth Circuit's decision undisturbed-no reversal, no remand, no affirmation. The rule in this situation is that the appellate court's decision stands, but the Supreme Court's not reversing the decision has no precedential effect--it is not tantamount to an affirmation. Accordingly, the law in the Ninth Circuit will stand, and vessel owners can be liable directly for punitive damages for the reckless acts of their employees. However, this may or may not be the law in the various other circuits-they remain able to reach their own decisions, since the Supreme Court did not provide any certainty.

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Congratulations to Jon Tonsing on his most recent success in front of the First District in Lambert v. Carneghie (2008) 158 Cal.App.4th 1120!

Carneghi was a party appointed appraiser for plaintiffs in a fire insurance arbitration. The plaintiffs were disappointed with the result of that arbitration, having been awarded $1.2 million against their fire insurance carrier, rather than the $3 million they sought. They then sued their attorneys, their experts, and Carneghi.  The trial court found that Carneghi was protected by arbitral immunity, and was hence not subject to suit. The Court of Appeal affirmed, and the California Supreme Court declined to review.

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Legal Pad reports on a stiff reminder about verifying your declarations and evidence before the Ninth Circuit.  A Special Master recommends sanctions and attorneys fees and costs against plaintiff attorneys for submitting knowingly unverified and questionable translations of a writ of judgment issued by a Nicaraguan Court in an attempt to enforce a judgment against Shell Oil Company and Dole Food Company here in the U.S.  According to the Special Master's report and recommendations (.pdf), the attorneys knew that the "translation" provided to them by a third party was not an accurate representation of the actual judgment and yet they failed to bring it to the attention of the Ninth Circuit. 

Another interesting tidbit -- The Second District decided to rehear their February decision in In re Rachel L., 08 C.D.O.S. 2453 (more commonly known as the case that took down home schooling). 

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Ever find yourself questioning a victory as the verdict is read?

In Zagami, Inc. v. James A. Crone, Inc., Case no. D049563 (4th Dist. Mar. 10, 2008), the Fourth District remanded a case for a rehearing on damages finding that the jury’s verdict was hopelessly ambiguous and refusing to choose between two internally inconsistent verdicts. 

Zagami sued James A. Crone, Inc. seeking compensation after equipment disappeared following delivery.  Zagami claimed an agent of Crone signed for receipt of the equipment upon delivery.  Crone argued it never received the equipment and were therefore not liable for its disappearance.

The special verdict form requested damages on (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) good and services rendered; and (4) an open book accounting. The jury returned a verdict in favor of plaintiff in the amount of $15,500 on issues 1, 2, and 4.  On the value of goods and services rendered, however, the jury found that the lost equipment was worth $30,000.

The attorneys made a tactical decision in not asking for clarification of the verdict from the jury.  Instead, they argued before the trial court as to which amount --  $15,500 or $30,000 – was the proper judgment.  The trial court entered judgment in the amount of $15,500.  Plaintiff appealed.

The Fourth District reiterated that, on appeal, the correctness of the trial court’s interpretation of a special verdict is reviewed de novo.  There can be no inference in favor of the prevailing party and there is no preference for upholding a special verdict where the confusion is caused by two questions within that verdict.  Nor can the court choose between inconsistent answers.  Therefore, unless the court of appeal can interpret the verdict intended by the jury from its language in light of the pleadings and evidence, the case will be reversed and remanded for another trial on the issue of damages – which is exactly what they did here.

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Yesterday, the Second District issued an unfortunate reminder that CCP §§ 425.16, subd. (i), and 904.1, subd. (a)(13) make an order either granting or denying a Special Motion to Strike (Anti-SLAPP) immediately appealable.  Waiting until entry of final judgment after the grant of a Special Motion to Strike that disposes of all of the issues in a case could mean waiving your right to appeal the decision at all.  Russell v. Foglio (February 28, 2008) 73 Cal.Rptr.3d 87.

Plaintiff was successful on its Special Motion to Strike.  Defendant mistakenly waited until the entry of final judgment in the case to appeal the court's order.  The Second District found that it was too late and that the court no longer had jurisdiction to hear the appeal on that issue. 

Interestingly, Justice Rubin's concurrence includes a request to the Legislature that amendment may be needed to protect the unwary.  He argues that a more workable solution may be to have a denial of a Special Motion to Strike to be immediately appealable, but not necessarily the granting of such an order.

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Fourth District decision seems obvious -- if you want to hold your employees to an arbitration agreement -- having them actually sign an agreement is necessary.   But having run a small business myself, I know all too well how often this does not happen.

So, here is your friendly reminder that those employee handbooks, while necessary and useful, are not the end all be all of your HR Departments.  Is it time to review those employee agreements?

Mitri v. Arnel Management Company (Dec. 12, 2007) :  Employees sued management company for sexual discrimination and harassment.  The employer tried to enforce an arbitration agreement based solely on the language of the employee handbook requiring arbitration.  Court says "not happening" without an agreement to arbitrate signed by each employee.

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In two separate decisions yesterday, the Second District issued a strong reminder of the difference between raising a triable issue of fact and proving elements of a cause of action on summary judgment.

In Nielsen v. Beck (Los Angeles County Super. Ct. No. BC339322) the found that there remained a triable issue of fact as to whether an attorney continued to represent his client beyond a substitution of attorneys.  The trial court ruled that continued conversation between counsel and his former client did not establish a triable issue of fact sufficient to defeat defendants’ claim that the cause of action was barred by the statute of limitations.  The court disagreed, finding triable issues of fact as to the scope of the attorney’s continuing relationship with his client and regarding the actual date of termination of that relationship.  

In Raven v. Gamette (Los Angeles County Super. Ct. No. BC337558), a tenant sued her landowner for negligent failure to secure the rental premises in light of previous criminal activity.  The landlord brought a motion for summary judgment arguing that his tenant could not prove a causal link between her injuries and his failure to take safety precautions.  The trial court agreed, ruling that plaintiff had “failed to submit admissible evidence establishing a causal link between her injuries . . . and . . . decedent’s alleged breach of duty [and t]hus, plaintiff failed to establish the element of causation in her cause of action for negligence.”  

The Second District overturned the decision admonishing, “In order to defeat defendant’s summary judgment motion, plaintiff only needed to raise a triable issue of material fact as to the issue of causation; she did not need to establish that element of her negligence cause of action.” (Emphasis added).

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While most attorneys strive to write well-argued briefs on substantially justified legal theories (yes, I am an optimist), I don’t believe even the most conscientious of us realized that years ago, the Ninth Circuit created the “Slubby Mass” rule regarding the filings of appellate briefs:

"In order to give fair consideration to those who call upon us for justice, we must insist that parties do not clog the system by presenting us with a slubby mass of words rather than a true brief."  N/S Corp v. Liberty Mutual Ins. Co. (9^th. Cir 1997) 127 F.3d 1145, 1146. (Emphasis added.)

Have Opinion Will Travel does a great job of summarizing this esteemed line of jurisprudence here, and bears no repeating. However, the First District has apparently adopted the Ninth Circuit’s impatience with frivolous appeals.

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