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

By Limor Lehavi

Default judgments can be appealed for failure to state a cause of action and excessive damages.  That is the holding of a recent opinion written by Justice Bedsworth for the California Court of Appeal, Fourth Appellate District, in which the court overturned a default judgment, and entered judgment for the defendants instead.  (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267.)

The complaint was filed by a creditor for payment on promissory notes.  The creditor attached seven promissory notes to the complaint.  The creditor also alleged that the debtors complied with the loan obligations until approximately one year before the complaint was filed.  Six of the notes had maturity dates that were much earlier, and the creditor did not allege any extensions had been given.  The seventh note required payment only when the business had cash available, and the complaint did not allege that cash was available.  Although the complaint failed to state a cause of action, the court entered a default judgment for $30 million.

But the default judgment would not stand.

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A recent decision by the Third Appellate District is a reminder of the opportunity and the limits of a motion for judgment on the pleadings.  The case is Collins v. eMachines, Inc. 

In Collins, the plaintiffs brought a putative class-action against eMachines for defects in its computers.  eMachines moved for judgment on the pleadings.  As set forth in Code of Civil Procedure section 438, judgment on the pleadings allows a plaintiff to assert that the answer does not state facts sufficient to constitute a defense.  And as is more commonly used, judgment on the pleadings allows a defendant to allege jurisdictional defects or that the complaint/cross-complaint fails to state a cause of action.  Judgment on the pleadings can be used if the opportunity to demur has passed.

The trial court, in a two-sentence order, granted judgment on the pleadings as to plaintiffs' Consumer Legal Remedies Act (CLRA), Unfair Competition Law (UCL), common law fraud and unjust enrichment causes of action, then dismissed the complaint with prejudice.  The court stated that plaintiffs did not and could not allege any facts to support their claims. 

The plaintiffs appealed.

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A recurring theme is that collectively speaking, lawyers often make and evaluate Code of Civil Procedure section 998 offers without a complete understanding of how the statute operates.  That knowledge gap is a little scary. 

But before you conclude I am talking down to trial lawyers (and many have heard me admire how trial lawyers react in real time and keep all those plates in the air), check this out: judges sometimes get 998 offers wrong too.  And think about this – if anyone sees 998 offers in operation the most – it’s the civil trial court judges.  After all, they have the robust caseloads and are more apt to regularly deal with 998 offers.

In preparing for the upcoming 2011 MCLE Spectacular presentation, I came across a splendid example of how section 998 trips up lawyers and sometimes judges alike.  The case is Warfield v. Chandler 2011 Cal.App. Unpub. LEXIS 4024.  Warfield has a lot to offer.

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What's that old saying that a good lawyer can argue just about anything?  While that may be true, a recent decision by the Sixth District Court of Appeal demonstrates that some arguments are better left not taken.  Sometimes it's probably better to walk away. 

But if taken, a proper record should be designated, or what follows could be quite, well, unpalatable.  For failure to properly perfect the record on appeal can be viewed as evidence that the appeal is frivolous.  And if the Court of Appeal finds the appeal frivolous, it can award sanctions in the form of respondent's attorney fees and fines paid to the court.  That's exactly what happened in Foust v. San Jose Construction Company, where appellant was ordered to pay $15,000 in sanctions. 

What went wrong?

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A recent ruling by the Fourth District Court of Appeal confirms that unless an order of dismissal is in writing, signed by the trial judge, and filed, it is ineffective as a judgment under Code of Civil Procedure section 581d.  In Powell v. County of Orange (Aug. 8, 2011)  2011 Cal.App. LEXIS 1024, the court held that neither a stamped, nor a signed minute order meets the requirements of section 581d.  Consequently, such an order does not qualify as a final judgment that might serve the basis for appellate jurisdiction.  For the decision, please click here

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Here's a reminder about the appellate lawyer's obligation to tie legal arguments to the record.  In addition, every now and then you run across what appears to be a little judicial jab in an appellate opinion:

"Under the circumstances, [Plaintiff] has not met his burden of showing abuse of discretion.  Each appellate brief must 'support any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears.'  (Citation)  'The reviewing court is not required to make an independent, unassisted study of the record in search of error or grounds to support the judgment.  It is entitled to the assistance of counsel.'  (Citation)  'It is the duty of counsel to refer the reviewing court to the portion of the record which supports appellant's contentions on appeal.  If no citation is furnished on a particular point, the court may treat it as waived.'  (Citation)  Further, [Plaintiff] has already filed three complaints without being able to state a single cause of action."  (Durrell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1371-1372.)

Okay, so maybe more than just a little jab.

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Speaking of Code of Civil Procedure section 998 offers, another decision came out on May 25, 2011.  It is interesting because one would think that the issue had already been covered by a published opinion, but apparently not.  The case is Puerta v. Torres, 2011 Cal.App. LEXIS 649.  And it holds, simply enough, that if a 998 offer lacks a place for the offeree to accept by signing, the offer is invalid. 

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A recent appellate decision is notable for two reasons.  First, it has to be one of the shortest published opinions on record -- the text fits on one page.  Second, it holds that when a Code of Civil Procedure section 998 offer includes the phrase, "each side to bear their own costs," the word "costs" includes any attorney fees available to the offeree as a prevailing party.  The case is Martinez v. Los Angeles County Metropolitan Transportation Authority 2011 Cal.App. LEXIS 620 (2d Dist.).  

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As appellate veterans know, oral arguments in the Ninth Circuit frequently tend to be hotter than in the state appellate courts.  And one of the great things about being director of the Hastings Appellate Project, the clinical program in which Hastings students handle pro bono cases in the Ninth Circuit, is watching the students argue their cases.  On any given day, the Hastings students are easily among the best advocates on the calendar.  Which brings to mind that old saw about how you get to Carnegie Hall...

And last week was no exception.  Teresa Li, third-year law student at Hastings and Archer Norris law clerk, argued in the Ninth Circuit.  Under my supervision as well as that of assistant director Stephen Tollafield, Teresa and fellow student Brian Pettit represented a pro se plaintiff in an employment discrimination case.  The case involved the unsettled state of the federal pleading requirements since the United States Supreme Court decided Twombly and Iqbal.  Those cases set out a "plausibility--fair notice" standard replacing the longstanding "no set of facts" standard from Conley v. Gibson.  The federal courts have been perplexed ever since, including the district court which dismissed the complaint for failure to meet the Twombly and Iqbal standards.

But on March 16, 2011, Teresa argued before Circuit Judges William Fletcher, Procter Hug, and Milan Smith.  After Teresa laid out a litany of reasons why the plaintiff's complaint satisfies Twombly and Iqbal, Circuit Judge Smith interjected that he thought her client has a "slum dunk" case.  The decision is pending. 

Photo, left to right:  Stephen Tollafield, Brian Pettit, Teresa Li, Gary Watt

The oral argument audio is available at:
http://www.ca9.uscourts.gov/media/view_subpage.php?pk_id=0000007204

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An ongoing and unresolved question in California is whether Labor Code section 2750.5 applies to homeowners and makes them the "employer" of an unlicensed contractor and the unlicensed contractor's employees.  Think about that one.  You hire a contractor to spruce up the bathroom or remodel the kitchen.  One of the workers is injured.  And the contractor turns out to be unlicensed. 

So?  So the Privette doctrine does not apply.  So myriad Cal-OSHA and other regulations may be used by the plaintiff to create a presumption of negligence under Evidence Code section 669.  (Elsner v. Uveges (2004) 34 Cal.4th 915, 928.)  So being deemed plaintiff’s employer can also expose you to civil and criminal penalties, not just tort liability.  (See, e.g., Labor Code § 6423 et seq.)  And depending on the language in your homeowners’ policy, being deemed an “employer” could trigger the “business pursuits” coverage exclusion.  These are only some of the ways that being deemed an employer can carry potentially devastating consequences.

As the California Supreme Court recently put it, "whether unlicensed contractors or their workers may or must be deemed the homeowners’ employees under [Labor Code] section 2750.5, either for purposes of tort liability generally or with regard to Cal-OSHA specifically, are difficult and unsettled questions in this court.”  (Cortez v. Abich (2011) 51 Cal.4th 285, 291.)  And unfortunately, the Court missed a golden opportunity in Cortez to resolve these issues, leaving in place instead an alternative approach that is bound to create inconsistent results in the trial and appellate courts.

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Ever notice how the appellate courts provide "guidance" to the lower courts on remand?  You know what I mean, "we take no position" and "while the lower court is free to revisit" and so on.  Of course, usually followed by a magnificent qualifier, that says "but" in capital letters.  Here's a gem:

Because we are vacating the district court's Rule 11 orders on other legal grounds, we express no opinion at this stage about the particular reasonableness of any fees the district court elected to award Mattel.  We do, however, encourage the district court on remand to ensure that the time spent by Mattel's attorneys was reasonably and appropriately spent in relation to both the patent frivolousness of Christian's complaint and the services directly caused by the sanctionable conduct. FN 12

FN 12: For example, because the action was frivolous on its face, why would Mattel's attorneys need to spend 700 hours . . . for the summary judgment motion and response? . . . Mattel's theory was stunningly simple and required little explication . . .  Christian v. Mattel, 286 F.3d 1118, 1131-32, FN 12 (9th Cir. 2002).

Don't you love it?!  We express no opinion but see our footnote for our actual opinion.  And oh, by the way, if you (district court) fail to correctly read our "no opinion" you will be reversed.  Again!

Remand diplomacy. 

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Just got back from Houston.  The University of Houston's Blakely Law Center and the Andrews Kurth law firm host the Moot Court National Championship.  The competition, only three years old, is invitation only.  It features the top 16 moot court programs based on the prior academic year's final intercollegiate competition rankings.  Hastings has been invited every year.  And by the way, this year Hastings was the only team west of the Rockies to be invited.

This year's problem was patent infringement and trademark dilution.  Our Hastings team won four preliminary rounds and made it to the semifinals before bowing out.  They were amazing advocates.  The team, pictured left to right, included Erica Connolly, Coach Watt, Thomas Fay, and Ryan Rezai.  Not pictured is student-coach and Hastings 3L, Josephine Mason.  Their success was even more impressive because this time my team was all 2Ls.

Last year, Hastings did not field a team due to budget cuts.  But in the inaugural event, we were also semifinalists.  Two trip, two semifinalists.  Not bad.

But not good enough.  So with apologies to Dean Martin fans, if there is such a thing, next year "I'm going back to Houston, Houston, Houston." 

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Last Monday I had the privilege of introducing Chief Justice Tani Cantil-Sakauye to the student body of the Deer Valley Law Academy and assembled guests including local dignitaries, politicians, lawyers, community activists and other community members.  For those not aware of this great program, the Academy introduces Antioch's Deer Valley High School students to the potential of a career in law.  The students learn about the court system, criminal and civil law and procedure, the Constitution, how to do legal research and much more.  The DVLA is new, in just its second year of existence.  DVLA can use mentors, volunteers and more.  And there are deserving students that would love to spend the summer doing your filing in exchange for getting a taste of law and lawyers.  Check it out, talk about empowering young minds.

Oh, there was the small matter of introducing the Chief Justice.  It was nice to have the opportunity to speak to some of the milestones and highlights of her career and to point out to the students that her path from high-school student to lawyer was not exactly traditional.  But the best thing was listening to Justice Cantil-Sakauye address the crowd.  The Chief Justice has charisma and energy, not just smarts.

She's going to need it.  After all, she takes the helm from Ronald George at a time when the courts, like the rest of state and local government, are awash in red ink and facing severe shortages of funding, staffing, and the means to provide justice.  As she told the crowd at DVLA, she's making the rounds and getting up to speed quickly by, among other things, beating a path to Chief Justice George's office as the time winds down for his Court.

My theme for the introduction was that in tough economic times the stakes are raised, so the students need to bring more to the table.  Well, I guess that's a good sign for the courts too.  Because the new chief justice has it all in spades.  In a new year made up of tall orders and daunting challenges, it looks like a great leader will be at the helm.

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So the client is on the wrong end of a judgment.  And at the very end of the judgment, the court says the other side "shall recover . . . attorney fees and costs of suit."  The judgment is entered and notice of entry is served.  Counsel timely appeals.  The notice of appeal states that the appeal is a challenge to the fee award. 

Counsel chooses to use an appellant's appendix, saving client some record preparation costs, and starts drafting the opening brief.  In the meantime, at the trial court, the issue of fees is resolved after the usual briefing and a hearing.  An order stating the amount of fees client has to pay is entered.  Counsel makes sure to include that order in the appendix.  The opening brief is filed.  Confident in getting the fee award undone, counsel waits for the response brief.

But what arrives is a motion to dismiss the appeal.  A bead of sweat emerges on counsel's forehead.  Counsel grabs the appendix, checks the notice of entry date, compares the notice of appeal date, it's well within 60 days.  Everything will be okay.

Or will it?

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Most cases, if they have any interest to us at all, are interesting because of what they say.  After all, the holding gives us insights into how a particular statute or rule applies to a given set of facts.  Sometimes, it's the facts that draw our interest, simply because the facts are so out of the ordinary.  And then there are those cases that are interesting by what they don't say.  It's the unanswered questions they raise - questions that are more entertaining and curious than a hundred ground-breaking decisions.

A recent decision by the Fourth District is one of the latter.  Baharian-Mehr v. Smith 2010 Cal.App. LEXIS 1779.  There, the appellate court affirms the dismissal of an anti-SLAPP motion and an award of $1,500 in attorney fees, describing it as "one of the weakest anti-SLAPP motions this court has reviewed in some time, which is not an inconsiderable achievement."  It doesn't exactly give counsel a gold star when it later adds, "Although Smith's [appellate] briefing is an improvement over his original motion in the trial court, his legal arguments are equally devoid of merit, and therefore, attorney fees [on the appeal] are appropriate."

But more intriguing are the unspoken premises and unanswered questions.  Who appeals an award of attorney fees when the award is only $1,500?  Did counsel tell the client that losing the appeal would mean, um, more attorney fees?  That opposing counsel's fees on the appeal would far outpace the $1,500 at issue?  And who takes on the appeal knowing the award is so small?  What is counsel's hourly rate?  I mean, creating the shell document for the appeal will pretty much burn through the $1,500 right?  Okay, add the notice of appeal, the case information statement, designate the record.  Are we there yet?

But here's the clincher; maybe it was barter.  Smith was in the adult entertainment business.  And I'm pretty sure that doesn't mean baseball.  See?  In this one, it's the unspoken premises and the unanswered questions that make it memorable!

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California’s economic downturn means that public works projects are fewer in number and smaller in scale as local and state agencies grapple with reduced funding. As a result, public works bidding is more fiercely contested than ever. A recent decision provides a good example. (Schram Construction Inc. v. The Regents of the University of California (2010) 187 Cal.App.4th 1040.)

In Schram, the University sought bids for the design and construction of the mechanical, electrical and plumbing work for UCSF Medical Center at Mission Bay. The bidding was structured around multiple packages and trades. The University used the “best value” method, a modified approach awarding the bid to the bidder with the best ratio between bid price and best-value-questionnaire score. (See Public Contracts Code § 10506.5(g).) The idea is that this method incorporates and weighs factors other than the bid price, resulting in the best contractor being selected from among the lowest bidders. 

After the first set of bids were received and reviewed, the University decided that the bidding should be redone. In addition to the original six bid packages, the University invited bids on three alternative packages. It also changed the weights given to various factors used to calculate the best value scores. Schram Construction Inc. (SCI) initially bid on just two independent bid packages. Later, SCI did not bid on any of the new, alternative packages, choosing instead to bid on three of the separate bid packages. Two of its separate bids, if combined, covered one of the alternative bid packages: the HVAC (heating, ventilating and air conditioning) and plumbing for the Energy Center and Outpatient Building. But the University awarded that work to another bidder on the grounds that SCI did not bid the alternative package. As a result, SCI was not even considered for that work.

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Failure to timely file a notice of appeal is fatal.  There is no relief.  Sixty days is a long time.  But is the clock ticking?  When did it start to run?  When does it run out?  Are you sure?

Under California Rules of Court,rule 8.104, the clock starts ticking when either of two things happens: the clerk mails or a party serves - a document entitled “notice of entry” of judgment or a file-stamped copy of the judgment.  If it is the clerk, the document must show the date it was mailed.  If a party, the document must be accompanied by a proof of service.  The 60-day deadline starts running from the mail (clerk)/service (party) date.  But if neither the clerk mails nor the party serves notice, a 180-day “outer limit” is allowed to file the notice of appeal.  Warning, it is rare that no notice occurs, so proceed with extreme caution.

The 60 day time limit is also subject to extension under rule 8.108.  Under that rule, timely and valid motions for new trial, to vacate judgment, JNOV, and to reconsider an appealable order, can result in extensions.  But if there is a procedural minefield, this is the place.  And the mines explode with surprising frequency.  When they do, there are no survivors.

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So you are thinking of appealing.  In California’s state courts, initiating an appeal requires a final judgment or an appealable order.  An order is appealable if either a statute expressly says so or it carries the same effect as a final judgment.  Hmnn, getting complicated already.  A good place to start is Code of Civil Procedure section 904.1.  Listed there, for example, is an order granting a new trial or denying a JNOV motion.  So is an order granting or denying an injunction.  So too, an order granting or denying an anti-SLAPP motion.  But a preliminary order that is followed by a final judgment is not an appealable order. 

The difference between a final judgment and an order that is not appealable can seem slight.  For example, an order granting a motion for summary judgment or sustaining a demurrer without leave to amend may look and sound final to the losing party, but is not an appealable order.  The ensuing judgment disposing of the action, however, is appealable.  Likewise, an order denying summary judgment is not directly appealable, but may be appealed from the final judgment.  (Waller v. TJD Inc. (1993) 12 Cal.App.4th 830, 836.)  But be careful, given the subsequent trial on the merits, a writ should be considered in order to avoid the denial of summary judgment being viewed as harmless error when the appeal is finally taken.  (Gackstetter v. Frawley (2006) 135 Cal.App.4th 1257, 1269-1270.)            

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These days the focus of appellate advocacy is on the writing skills of an attorney: framing the issues, arguing in the briefs. Once upon a time, however, there was much more emphasis on the oral arguments before the court.

Recently, we represented one of numerous defendants responding to an appeal by a singular appellant with a fairly sympathetic case. On repeated conference calls, counsel argued over the prudence of attending oral arguments. Some argued that appearing for oral arguments would only give appellants another opportunity to argue in support of their brief, which they did not believe was particularly strong. Certain counsel went so far as to posit that appearing for oral arguments was offensive to the court and counsel as it assumed that the arguments were not laid out clearly in the written briefs.

Others (including myself) argued that we would never waive oral arguments -- that it was an opportunity to enhance arguments made in our brief and respond to questions by the court. As much as I would like to believe that my written briefs are all the information the justices need to decide a matter, I felt it was arrogant to assume the court would not have any questions on our position.

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There are few resources -- either online or in our rapidly diminishing libraries --that offer guidance on protecting your client’s case on appeal while you develop your case at the trial court level. Most practitioners wait until after the trial court has already ruled on a particular issue before evaluating the potential outcome of appellate review of the issue. How the issue is presented to the trial court before it is ruled upon significantly impacts the manner in which the issue is considered by the appellate court. This blog is intended to offer some insight as how to best present such issues at the trial level so that their merits are given maximum consideration at the appellate level.    

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