California Business Litigation Blog

For over 45 years the Magic Castle has been the clubhouse of the Academy of Magical Arts (AMA). On February 21, 2008 the AMA flied a lawsuit against Magic Food & Beverage Inc., a company with an affiliation to Magic Castle Park LLC, the owner of the property, which has been for sale since last year. Although not a subsidiary of Magic Castle Park LLC, Magic Food and Beverage Inc. is affiliated through corporate officers and/or executives common to both entities. This information is based solely on the complaint filed, Case No: BC 385828, in Los Angeles Superior Court.

The lawsuit includes 4 “Causes of Action” as follows:

• Trespass

• Trespass to personal property

• Assault

• Injunctive relief

The following sentence is heresay: AMA members have been told that the AMA wants to stay in the building known as the “Magic Castle”. NOTE: If the AMA governing board would like to make a formal statement to the contrary, I will post a retraction here.

Here is the question. If you were a tenant (AMA) in a 100 year old building (known as the Magic Castle) which was a small part of a parcel of land (10 plus acres) currently for sale and positioned for total redevelopment, would it be smart to sue those affiliated with your landlord if you wanted to stay?

This lawsuit appears to indicate the contrary. Personally, it would be unlikely that I would sue anyone affiliated with my landlord if I wanted to stay.

Following the filing of this lawsuit, the plaintiff (AMA) filed an ExParte application for temporary restraining order and an order to show cause RE: preliminary Injunction.

From the Court Document: “The Court has read and considered the above stated Ex Parte Application.

After argument of Counsel, the Application is denied.”

Continue reading "How Will Magic Castle/AMA Lawsuit Affect Its Future? " »

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , Contract Litigation

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Allianz Life Insurance Co. is reportedly the largest seller of annuities in California. According to the Department of Insurance, Allianz allegedly used deceptive sales tactics to mislead thousands of elderly people into purchasing unstable and/or unsuitable annuities. Many of those mislead were over 80 years old!

An annuity is a contract between a person and a financial institution (insurer) in which the person makes at least one payment and in turn receives "tax-deferred growth of earnings" back from the insurer.

California Department of Insurance officials conducted an examination into Alliance which revealed that in 2004/2005 Allianz replaced 126 existing annuities with financially unsuitable annuities for elderly clients.

In addition to the $10 Million penalty, Allianz agreed to implement a “suitability review” for customers over 65 to insure they are “fully aware of the products they are purchasing."

California Insurance Commissioner Steve Poizner stated “This landmark settlement ends years of aggressive and misleading marketing schemes targeted to our most elderly and vulnerable. The fact that Allianz used deceptive practices and high-pressure sales tactics to lure and cajole seniors into buying unsuitable policies is appalling. However, today's settlement represents a real change for the industry and is a tremendous victory for all California seniors."

Anyone with questions regarding insurance matters can contact the California Department of Insurance consumer hot line at (800) 927-HELP or visit http://www.insurance.ca.gov.

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Business Litigation , Contract Litigation , False Advertising

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The California Supreme Court took steps to clarify the process of suing a governmental entity that Courts of Appeal have disagreed on for years. The Supreme Court has clarified the requirement of the “Tort Claims Act,” requiring the filing of a demand prior to the institution of tort and contract litigation against a governmental entity.

Prior to this ruling, Courts of Appeal in California presented contradictory rulings on the issue. Some ruled that the “Tort Claims Act” excluded contract disputes and others ruled that it included contract disputes with governmental entities.

To further clarify, the Supreme Court went as far as changing the name of the act. The new name is the “Government Claims Act”.

In a unanimous opinion, Justice Carol Corrigan wrote “Government Code section 905 requires that ‘all claims for money or damages against local public entities’ be presented to the responsible public entity before a lawsuit is filed. Failure to present a timely claim bars suit against the entity. (§ 945.4.) Here we hold that these requirements apply to breach of contract claims.”

The decision is available for review here on the California Supreme Court website.

To sum up, if you have a dispute with any public entity within the State of California, you are required to file a claim with that entity before filing a lawsuit. With this decision in place, failure to file a claim will provide the public entity the legal clout to have your lawsuit dismissed.

Continue reading "California Supreme Court: “You Must File a Claim Before Suing the Government!”" »

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Posted In: Business Litigation , Contract Litigation

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Pamela Hope Cincotta and Joyce Kraus are plaintiffs in a class action lawsuit alleging price gouging at 2 different hospital emergency rooms. The class action lawsuit was filed December 3rd by attorney Ron Bochner against the California Emergency Physicians Medical Group (known today as CEP America).

From the lawsuit “…CEP provides emergency room professional services for many hospitals in California. It separately bills patients for such services. Plaintiffs are informed and believe and theron allege that in so billing patients, CEP has engaged, and continues to engage, in a pattern and practice of charging unfair, unreasonable and inflated prices for medical care to its uninsured patients who are generally the least able to pay these inflated and unreasonable charges. CEP also pursues aggressive collection techniques in charging these unfair, unreasonable, irregular and inflated prices. In doing so, they have attempted to collect, by various means, the unfair, unreasonable and inflated prices for medical care to CEP’s uninsured patients as debts in California.”

CEP provides ER services to approximately 55 hospitals in California. The results of this lawsuit would likely affect prices and billing practices at all of those hospitals.

Dr. Wes Curry, president of CEP America, said "We're confident that our billing practices are proper."

Technically the lawsuit is a class action complaint for violation of California Unfair Business Practices Act; Consumers Legal Remedies Act; Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing; Unjust Enrichment.

California has approximately 7 million uninsured residents.

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Posted In: Business Litigation , Contract Litigation

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What does the writers strike, the success or failure of the movie “State of Play” and contract law all have in common? They will all factor in to Universal’s decision about suing Brad Pitt in the future.

Pitt pulled out of the movie last month. It is believed that Pitt was unhappy with script rewrites and due to the writers strike and shooting schedule, further changes could not be made.

Universal issued this statement: "Brad Pitt has left the Universal Pictures production of State of Play. We remain committed to this project and to the filmmakers, cast members, crew and others who are also involved in making the movie. We reserve all rights in this matter."

There are an almost infinite number of factors involved in assessing any breach of contract lawsuit.

A few of the common ones in business contracts include: Which party drafted the contract? Are the terms clear and concise or subject to interpretation? Was there a “meeting of the minds”? Was there an exchange of value? Was there full disclosure or possible fraud?

Not being a mind reader (and not having seen the contract), I won’t try to predict whether Universal will file suit. But the last sentence in their statement “We reserve all rights in this matter." literally shouts that they are giving it serious consideration.

And the latest news? Russell Crowe has stepped in to take the lead in “State of Play”.

Continue reading "Will Brad Pitt be Sued by Universal?" »

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Posted In: Business Litigation , Contract Litigation

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We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

The initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client's defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

The next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff's case goes first. The defendant then has an opportunity to respond to the plaintiff's case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.

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Posted In: Business Litigation , Contract Litigation , Employment Law , False Advertising , Internet , Real Estate

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The case of City of Santa Monica v. Baron & Budd, B187425, simply stated, is a case about legal fees and retainer agreements. The City of Santa Monica hired attorneys, discharged attorneys and hired more attorneys. The retainer agreement in dispute included contingent fee provisions. It also had a clause stating that the attorneys were entitled to a reasonable fee if the contingent fee provisions could not be enforced. Further it stated that the amount of the fee was subject to arbitration before JAMS (Judicial Arbitration and Mediation Services).

The next 5 to 10 paragraphs could be spent describing the legal wrangling of a city government and 3 law firms. Instead I will just give the highlights.

Around the time the City of Santa Monica was resolving/settling the legal matter which caused it to hire outside counsel, the attorneys and the city realized there were disagreements about calculations and fees to be paid to outside counsel.

With no resolution at hand the city sued for declaratory relief in May 2004. It later amended the complaint to allege breach of fiduciary duties. Coming as no surprise, the lawyers cross-complained for their fees.

In May 2005, Los Angeles Superior Court Judge David Minning denied the city’s motion for summary adjudication. Five months later, the city moved to compel arbitration. Judge Minning denied the motion.

Court of Appeal Justice Robert Mallano said the trial judge was correct.

He cited the 17-month delay between the filing of the suit and the demand for arbitration, that the parties had extensively litigated the issues that would be the subject of the arbitration, and the prejudice the law firms would have suffered as a result of having to provide the city with more discovery than would have been required had the case been assigned to arbitration at the outset.

Los Angeles Superior Court Judge Frank Jackson, sitting on assignment, concurred in the opinion, while Justice Frances Rothschild concurred separately.

Continue reading "Court of Appeal to Santa Monica: Your Litigation Waived Your Right to Arbitration in Lawsuit" »

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Posted In: Business Litigation , Contract Litigation

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In a recent court of appeal decision (Kim v. Euro Motors, et al.), the Court held that notwithstanding the fact that a defendant settled prior to trial, it could be liable for attorney’s fees. Kim brought an action against a car dealer pursuant to the Consumer Legal Remedies Act (CLRA, Civil Code § 1750, et seq.) in connection with a Porsche Turbo that he leased from a dealer. During the first year of the lease, the vehicle was out of service for over 78 days, due to various problems. When the dealer was unable to fix the car to Kim’s satisfaction, he demanded that the dealer take the car back and refund to him all monies that he had spent. When his demand was refused, he brought an action against the dealer for damages and for recission of the lease. Kim ultimately settled with the dealer, short of trial and entered into a mutual general release and settlement agreement wherein, among other things, the dealer agreed to take back the vehicle, terminate the lease and pay a$10,000 lump sum settlement to Kim. Kim acknowledged that the payment was in full and final settlement of all claims with the exception of attorney’s fees and costs. The agreement contained the usual language that neither party admitted liability or that the other was the prevailing party.

Kim filed an application for attorney’s fees, which was opposed by the dealer on the grounds that Kim was not the prevailing party. The trial court denied the application finding in light of the settlement, there was no prevailing party. Kim appealed.

Continue reading "Porsche Lessee Settles Lawsuit Against Auto Dealer... California Court of Appeals Remands Case Back to Trial Court RE: Attorney’s Fees " »

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Posted In: Business Litigation , Contract Litigation

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It’s an old Hollywood tale: Someone makes a film. Someone else finances and produces it and even before the editing is finished the question of who controls the film rights becomes a legal battle. The twist is that the filmmaker is only eleven (yes 11) years old! With 23 movie credits (see New Yorker Article), Kay had always planned to direct. In his directorial debut “Saving Angelo” creative differences arose between Kay and Malibu neighbor/producer Conroy Kanter, who contributed $11,000 to the making of the film.

In last month’s settlement, Kay got full ownership and creative control of the 15 minute film and Kanter got a producer’s credit. By the way, Kevin Bacon plays a fireman in “Saving Angelo”.

Now that the legal issues have been settled, Kay can return to more important things like finishing the editing in preparation for the film’s submission to festivals.

Returning to the law, this case like so many, illustrates the importance of having a contract that spells out each parties rights and responsibilities. Sadly, huge numbers of contracts are not written well enough to avoid litigation, and that my friends is one of the reasons our courts are clogged and more states are creating Business Courts (see March 10, 2007 post " Business Lawsuits Heard in Their Own Court...Will California be next?”)

The remaining question is: Will Dominic Scott Kay become the next Ron Howard?

Posted by Richard Oppenheim | Permalink | Email This Post

Posted In: Contract Litigation , Intellectual Property

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A California Superior Court judge ruled March 29th that a startup's media server does not violate the security technology used to protect DVD disks because the standard licensing contract and specifications for the technology are so poorly worded.

Rather than spend a lot of time analyzing the specifics of this case between Kaleidescape and the DVD Copy Control Association (DVD CCA), let’s just look at this from a contract law/litigation perspective.

Judge Leslie C. Nichols stated that the DVD CCA provided a license for its Content Scramble System (CSS) to Kaleidescape without including tech specs in the license agreement. Judge Nichols also stated "This [CSS spec] is a product of a committee of lawyers."

What can we learn from this? Sadly, this is very basic contract law.

Importantly, a contract is whatever the court says it is. Further, any ambiguities in a contract are held against the writer/creator/author of the contract.

Using the above case as an example, the judge held the DVD CCA responsible for its poorly worded licensing agreement (contract) and ruled in favor of Kaleidescape.

Lastly, contract lawyers usually fall into two categories.

Continue reading "California Judge Rules in Favor of Kaleidescape and Consumers" »

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Posted In: Business Litigation , Contract Litigation

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