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Posts Tagged ‘California’

Before bringing or defending an enforcement action filed in court involving an HOA, ask, does your state first require ADR or that a request for ADR be made?

Posted on: March 12th, 2019

By: Michael Shepherd

As courts across the country become more congested, many courts now order the parties to participate in some form of alternative dispute resolution, such as mediation or non-binding arbitration. When it comes to Homeowners Associations, many state legislatures have taken the affirmative step of requiring HOAs or owners bringing an enforcement action to at least request ADR before filing a lawsuit in court.

It is important to carefully examine your state’s laws to see (1) whether ADR or a request for ADR is required and (2) under what circumstances. For example, California only requires a request for ADR in civil actions that (1) solely seek declaratory, injunctive, or writ relief; (2) solely seek declaratory, injunctive, or writ relief in conjunction with monetary damages not in excess of the limits for small claims actions; and (3) seek to foreclose on an owner’s interest. Cal. Civil Code §§ 5930(b) and 5705. Moreover, a request for ADR is not required in California if the action is filed in small claims court or if preliminary or injunctive relief is necessary. Cal. Civil Code §§ 5930(c) and 5950(a)(3).

In California, the Davis-Sterling Act prevents associations or owners from filing an enforcement action in court before the parties have attempted to submit their dispute to ADR. An enforcement action is defined as a civil action brought to enforce the Davis-Sterling Act, to enforce the Nonprofit Mutual Benefit Corporation Law, or to enforce the governing documents of the HOA. Cal. Civil Code § 5925(b). ADR can take the form of mediation, arbitration, conciliation, or any other nonjudicial procedure that involves a neutral party in the decision-making process. While there is no requirement that the parties participate in ADR, a party’s unreasonable refusal to participate in ADR may be considered when attorney’s fees and costs are recoverable. Cal. Civil Code § 5960. Furthermore, the parties must file a certificate of compliance with the civil action stating that ADR was requested or that a request is not required under the circumstances. Failure to file the certificate of compliance exposes the complaint to a demurrer or a motion to strike.

In today’s world of congested courts, it is important to be apprised of when ADR is required as it is often implemented as a way to relieve court dockets. This is just as true in enforcement actions involving HOAs. Therefore, before bringing or defending an enforcement action involving an HOA, be sure to learn whether your state requires ADR or a request for ADR.

If you have any questions or would like more information, please contact Michael Shepherd at [email protected].

Trends in Real Estate Claims

Posted on: March 5th, 2019

By: Peter Catalanotti

In representing real estate brokers through their Errors & Omissions insurance for over a decade, I often get asked what types of claims are trending. What follows is my experience regarding real estate broker claim trends.

Real estate broker claims tend to track the economy.

In increasing and level markets, the claims against real estate brokers often include equitable relief such as specific performance. Often times the plaintiff/buyer will be a plaintiff/attempted buyer. With increasing or level markets, sellers may receive multiple offers. The decision of which offer a seller should take is sometimes a close call. When something goes wrong during the transaction or delays the close of escrow, the seller often prefers to get out of the purchase contract and sell to a backup buyer. Sellers may think that the backup buyer will be less trouble. Occasionally, the seller will offer to repurchase the property.

In decreasing markets and recessions, we see more claims for misrepresentation, failure to disclose, and fraud cases. Sometimes, these cases often involve buyer’s remorse. Plaintiff/buyer then sues for damages. The property they purchased is worth less than they paid for it, so the buyer has an interest in recouping this loss. At least in California, there is almost always a defect in a transaction that an expert can exploit. A buyer who was marginally able to afford a property may be looking for a way out. Buyers behind on mortgage payments may sue the lender, mortgage broker, and real estate broker in an attempt to renegotiate the terms of their mortgage.

One of the reasons that real estate broker claims are hard to track is that the cases that make it to an appellate court or state supreme court were most likely filed years earlier. Therefore, when analyzing a real estate broker claim, it is important to take note of the economy at the time of purchase and the motivations of the plaintiff. Understanding the plaintiff’s motivation can at times help bring the case close to an early resolution.

If you have any questions or would like more information, please contact Peter Catalanotti at [email protected].

Can California Associate Attorneys Be Disciplined For Their Boss’s Misconduct?

Posted on: February 27th, 2019

By: Gregory Fayard

The answer to this question is yes, in certain circumstances. In November 2018, after 29 years, California enacted new rules of professional conduct for lawyers. The new rules have some major changes from the old rules. One of the biggest changes applies to associate attorneys who are just doing what their boss-lawyer tells them. But what if the associate’s boss is instructing the associate to do something obviously unethical? In that case, the associate can be disciplined by the State Bar. The new rule on this point is 5.2. For example, if the associate’s boss advises the associate to lie to a client, or forge a signature, or divulge client secrets, then those breaches are so obvious the associate could be disciplined. All California lawyers must comply with ethics rules, even if acting at the direction of another. The Nuremberg defense does not fly.

What about a close call? What if the associate’s boss tells the associate to do the bare minimum on a case? That order arguably violates a lawyer’s duty of diligence (Rule 1.3). Or, what if the associate’s boss orders an associate to do everything and anything on a file? That order might violate Rule 3.2 which says lawyers shall not do tasks whose substantial purpose is to prolong or cause needless expense. In these two situations, the ethical breach is an arguable question—a “close call” if you will. In these situations the California associate would have a good argument for not being disciplined.

The new California rules of professional conduct, however, have created a potentially awkward employment situation for associates: if the subordinate lawyer believes his or her supervisor’s solution to an ethics issue would violate an ethical rule, “the subordinate is obligated to communicate his or her professional judgment regarding the matter to the supervisory lawyer.”  (See Comment to Rule 5.2.)

What should California lawyers keep in mind, then?

  1. Don’t blindly follow directions from your supervisor without thinking of the ethical implications;
  2. Doing something obviously unethical can get you in trouble with the State Bar even if the direction came from your boss;
  3. You probably will not be disciplined if an ethical question can be answered more than one way;
  4. You may have to have a talk with your boss if he or she is doing something obviously unethical.

My next blog will discuss whether a supervising lawyer in California can be disciplined for an associate’s unethical lapse.

If you have any questions or would like more information, please contact Greg Fayard at [email protected].

Cal. Attorney Sanctioned $50,000 for Reckless and Malicious Conduct at Deposition

Posted on: February 18th, 2019

By: Jenny Jin

A California Court of Appeal upheld a $50,000 sanction against an attorney based on conduct at a deposition.

On February 4, 2019, the Court of Appeal issued its opinion in the case Anna Anka v. Louis Yeager. This case involved a child custody dispute between Paul Anka’s ex-wife, Anna Anka, and her first husband, Louis Yeager. As part of this dispute, the trial court had ordered that a confidential child custody and evaluation report be performed. Mrs. Anka was then subsequently involved in a second child custody dispute with her second husband/now ex-husband, Paul Anka.

Mrs. Anka was represented by the same attorney in both custody disputes. Mrs. Anka’s attorney took Mr. Yeager’s deposition as part of Mrs. Anka’s second custody dispute. During the deposition, Mrs. Anka’s attorney asked Mr. Yeager a series of questions to attempt to elicit confidential information regarding the contents of the evaluation and report from the first child custody dispute. Mr. Yeager testified that he could not recall the information. However, the trial court still sanctioned Mrs. Anka and her attorney $50,000 jointly and severally for her attorney’s reckless and malicious line of questioning that was orchestrated to elicit confidential child custody information.

The Court of Appeal affirmed the $50,000 sanctions against the attorney, but reversed the sanctions award as to Mrs. Anka. The Court found that the disclosure of confidential information was due solely to the attorney’s reckless and malicious conduct during the deposition. The Court opined that “besides being an advocate to advance the interest of the client, the attorney is also an officer of the court” and further that “counsel’s zeal to protect and advance the interest of the client must be tempered by the professional and ethical constraints the legal profession demands.” The Court held that the attorney’s conduct in eliciting confidential information during the deposition was not only reckless, but was intentional and willful.

The takeaway from this case is that in both California and across all states, there are real ethical limitations to zealous representation during depositions. Attorneys must remember to balance their duty to zealously represent their client’s interests with their duty as officers of the court to conduct themselves with integrity, courtesy, and professionalism.

If you have any questions or would like more information, please contact Jenny Jin at (415) 352-6451 or [email protected].

Serving That Whiskey Might Be Risky – Liability Of Social Hosts In DUI Accidents

Posted on: February 15th, 2019

By: Stacey Bavafa

Under California Civil Code Section 1714, social hosts and other third parties may be held to be partially liable in the event of a drunk driving accident depending on the circumstances that led up to the accident. Under Sec. 1714, everyone is responsible for the result of his or her willful acts, but also for injuries sustained by another by a want of ordinary care or skill in the management of his or her property or person.

California courts have held that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather that the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person. Vesley v. Sager (1971) 6 Cal.3d 153; Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313; and Coulter v. Superior Court (1978) 21 Cal.3d 144.

Therefore, social hosts who provide alcoholic beverages to a person may not be held legally accountable for damages suffered by the intoxicated person, or for damages the intoxicated person inflicts on another person resulting from the consumption of alcoholic beverages. In other words, if John Doe had 5 glasses of whiskey at a bar and ends up swerving in and out of his lane due to his inebriated state, and hits another vehicle causing injury to a third person, the bar who provided John Doe the 5 glasses of whiskey will not be required to pay for damages sustained by the third party.

There are however, two exceptions to the rule outlined above:

If an adult, including a parent or guardian, who knowingly serves alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age, the adult may be held liable for actions the minor takes as a result of the consumption of alcohol.

Further, if a business sells alcohol to an obviously intoxicated minor, in such that a reasonable person would be able to tell the minor was intoxicated, the business may face liability for harm arising out of the minor’s actions.

In the case of the underaged drinker, both the underaged drinker and the person who was harmed by the actions of the underaged drinker can file a civil claim against the social host or business to obtain recovery of his or her medical bills, property damage, pain and suffering, loss of income, and legal fees.

If you have any questions or would like more information, please contact Stacey Bavafa at (213) 615-7026 or [email protected].