CA Pub. Decisions

Complaint by bank against its landlord, in which plaintiff alleged that insured landlord's failure to maintain premises breached lease and resulted in economic damage, including need to replace its safe deposit boxes to the first floor leased premises, which resulted in fewer boxes being rented and the consequent denial of the use of that space for other purposes, and did not allege any physical injury to tangible property or loss of use of tangible property that was not physically injured, did not raise possibility of coverage for an "occurrence" under landlord's commercial general liability policy. Insurer had no duty to defend or indemnify landlord, based on "wrongful eviction" aspect of "personal injury" coverage, where such coverage applied only to injury to "persons" and not to corporations or other organizations. "Supplementary payments" provision did not obligate insurer to pay costs and attorney fees imposed on insured in underlying action where there was no duty to defend or indemnify, as supplementary payments provision cannot be broader than the duty to defend.

Trial court did not abuse its discretion in refusing to set aside the order of dismissal where plaintiff's motion to vacate dismissal order was not filed until more than 10 months after plaintiff's counsel received written notice of the dismissal.

Defendant law firm, retained by primary insurer to provide legal services with respect to the defense of certain claims, owed no duty of care to plaintiff reinsurer in absence of express agreement between plaintiff and defendant creating such duty, even though plaintiff had reinsured 100 percent of primary insurer's potential policy liability and had multiple communications with defendant, who was obligated as primary insurer's counsel to keep reinsurer informed of the status of claim adjustment and defense.

Under legislative scheme permitting private health insurers to create panels of "preferred providers" for subscribers and immunizing from antitrust liability "the formation of groups and combinations of providers and purchasing groups for the purpose of creating efficient sized contracting units," a physical therapy provider group did not violate antitrust laws by noncoercively contracting with major insurer to be its exclusive physical therapy providers and placing geographic considerations on its membership restrictions to ensure adequate coverage of subscribers.

Insurer's denial of coverage based on a reasonable interpretation of policy exclusion does not, with respect to an action for bad faith, excuse its failure to investigate other possible bases for claim, such as "additional coverage" provisions that would provide coverage independent of the exclusion. Where insured sued insurer for failing to cover a "collapse" of plaintiff's house allegedly caused by a fungus, evidence presented by plaintiff including evidence that adjuster disregarded experts; recommendations that a structural engineer be retained by insurer to inspect the property; that insurer never asked its expert to determine whether there had been a collapse; that despite internal correspondence about the possibility that "collapse" coverage might apply, insurer never communicated anything to insured about this coverage potential until insured's attorney finally received a copy of the policy (which he had been requesting) and noted the collapse provision; and that insurer gave adjuster complete autonomy to decide whether a collapse occurred, despite the fact that she had no credentials or background for making structural engineering decisions and refused to interview insured's expert solely because he was hired by insured established triable issue as to whether insurer conduct a full, fair, thorough, and timely investigation of insured's claim as it related to and relied on the "entire collapse" provisions of the policy. While the Unfair Insurance Practices Act cannot be the basis for a tort action, expert testimony that insurer violated several provisions of the act was properly admitted to support plaintiff's claim that such violations breached the implied covenant of good faith.

A modification decision.

Plaintiff moves to recuse defendants' lawyer in a lawsuit over a partnership and lease agreement. Prior to the lawsuit, the attorney briefly represented plaintiff concerning the possible formation of a partnership and lease agreement with another party involving the same business that is the subject matter of the lawsuit. Plaintiff knew that the attorney had represented the defendants in other matters. Defendants were present at the meetings between plaintiff and the attorney, and privy to all their discussions.
Did the trial court properly disqualify the attorney? Yes. Defendants' presence at meetings between plaintiff and the attorney does not sufficiently attenuate the attorney's conflict. To separate the conflict from the two sets of clients is to separate the silk from the thread. It cannot be done.
Defendants Perry Ferguson and Paula Ferguson appeal an order granting plaintiff's Laura Knight's motion to disqualify the Fergusons' attorney, Richard Wideman. Knight had consulted previously with Wideman about forming a partnership and entering into a commercial lease to establish a new restaurant. The dispute between Knight and the Fergusons concerns that business venture. There is a substantial relationship between Wideman's representation of the Fergusons in this case and his prior consultations with Knight. Court affirm.

Trial court's finding of fact and conclusion of law that defendant manufactured allegedly defective products in compliance with specifications plaintiff supplied does not preclude finding that defendant breached implied warranty of merchantability where the implied warranty and the express warranty of plaintiff's specification can be reasonably construed as consistent and cumulative, such as where specification requested standard product but did not tell defendant how to make the product. Uniform Commercial Code provision excluding implied warranty as to readily discoverable defects where buyer inspected or refused to inspect goods did not apply where buyer performed tests that were commonly done in industry and gave reasonable explanation as to why it did not do more extensive testing that would have resulted in discovery of defects. Trial court's finding that seller breached implied warranty of merchantability was supported by substantial evidence that product failed in normal use. Trial court's finding that consequential damages were foreseeable was supported by substantial evidence where plaintiff, while aware of problems with another product of defendant's, did not know the cause of that problem and did not continue to sell the product over which it sued to its customer after it learned the cause of the problem and had an available alternative.

Trial court's finding of fact and conclusion of law that defendant manufactured allegedly defective products in compliance with specifications plaintiff supplied does not preclude finding that defendant breached implied warranty of merchantability where the implied warranty and the express warranty of plaintiff's specification can be reasonably construed as consistent and cumulative, such as where specification requested standard product but did not tell defendant how to make the product. Uniform Commercial Code provision excluding implied warranty as to readily discoverable defects where buyer inspected or refused to inspect goods did not apply where buyer performed tests that were commonly done in industry and gave reasonable explanation as to why it did not do more extensive testing that would have resulted in discovery of defects. Trial court's finding that seller breached implied warranty of merchantability was supported by substantial evidence that product failed in normal use. Trial court's finding that consequential damages were foreseeable was supported by substantial evidence where plaintiff, while aware of problems with another product of defendant's, did not know the cause of that problem and did not continue to sell the product over which it sued to its customer after it learned the cause of the problem and had an available alternative.

Trial court's finding of fact and conclusion of law that defendant manufactured allegedly defective products in compliance with specifications plaintiff supplied does not preclude finding that defendant breached implied warranty of merchantability where the implied warranty and the express warranty of plaintiff's specification can be reasonably construed as consistent and cumulative, such as where specification requested standard product but did not tell defendant how to make the product. Uniform Commercial Code provision excluding implied warranty as to readily discoverable defects where buyer inspected or refused to inspect goods did not apply where buyer performed tests that were commonly done in industry and gave reasonable explanation as to why it did not do more extensive testing that would have resulted in discovery of defects. Trial court's finding that seller breached implied warranty of merchantability was supported by substantial evidence that product failed in normal use. Trial court's finding that consequential damages were foreseeable was supported by substantial evidence where plaintiff, while aware of problems with another product of defendant's, did not know the cause of that problem and did not continue to sell the product over which it sued to its customer after it learned the cause of the problem and had an available alternative.

Trial court's finding of fact and conclusion of law that defendant manufactured allegedly defective products in compliance with specifications plaintiff supplied does not preclude finding that defendant breached implied warranty of merchantability where the implied warranty and the express warranty of plaintiff's specification can be reasonably construed as consistent and cumulative, such as where specification requested standard product but did not tell defendant how to make the product. Uniform Commercial Code provision excluding implied warranty as to readily discoverable defects where buyer inspected or refused to inspect goods did not apply where buyer performed tests that were commonly done in industry and gave reasonable explanation as to why it did not do more extensive testing that would have resulted in discovery of defects. Trial court's finding that seller breached implied warranty of merchantability was supported by substantial evidence that product failed in normal use. Trial court's finding that consequential damages were foreseeable was supported by substantial evidence where plaintiff, while aware of problems with another product of defendant's, did not know the cause of that problem and did not continue to sell the product over which it sued to its customer after it learned the cause of the problem and had an available alternative.

Trial court's finding of fact and conclusion of law that defendant manufactured allegedly defective products in compliance with specifications plaintiff supplied does not preclude finding that defendant breached implied warranty of merchantability where the implied warranty and the express warranty of plaintiff's specification can be reasonably construed as consistent and cumulative, such as where specification requested standard product but did not tell defendant how to make the product. Uniform Commercial Code provision excluding implied warranty as to readily discoverable defects where buyer inspected or refused to inspect goods did not apply where buyer performed tests that were commonly done in industry and gave reasonable explanation as to why it did not do more extensive testing that would have resulted in discovery of defects. Trial court's finding that seller breached implied warranty of merchantability was supported by substantial evidence that product failed in normal use. Trial court's finding that consequential damages were foreseeable was supported by substantial evidence where plaintiff, while aware of problems with another product of defendant's, did not know the cause of that problem and did not continue to sell the product over which it sued to its customer after it learned the cause of the problem and had an available alternative.

Petitioner Joe Machado challenges an order disqualifying his counsel, Ed Freidberg in a pending action. The motion was filed by a nonparty, Michael Atherton, Freidbergs former client and business partner. Court find Atherton had standing to make the motion and a disqualification order in a related case precludes relitigation of the merits. Court deny the writ.

Federal Arbitration Act, which makes valid and enforceable any arbitration provision in a contract "evidencing a transaction involving commerce," preempts California law allowing a purchaser of real property to bring an action in court for construction and design defects, notwithstanding an agreement to arbitrate. Application of FAA to construction defects case was consistent with Commerce Clause where products used in construction were manufactured outside California, even if those products were not the source of the alleged defects.