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Posts Tagged ‘California’

Changes In Store for California HOA Elections

Posted on: November 18th, 2019

By: Nicole Clowdsley

With 2020 fast approaching, California HOAs should be proactively preparing to comply with a litany of new statutorily mandated changes to their election processes. On October 12, 2019, California Governor Gavin Newsom signed Senate Bill 323 into law resulting in amendments to multiple sections of the California Civil Code regulations governing HOA elections. These changes become effective January 1, 2020.

Among the more significant substantive changes are specific standards HOAs may use to disqualify candidates from running, such as ineligibility of persons with certain past criminal convictions. Also, in order for an HOA to allow for board member acclamation – meaning there are more open positions than nominees and the nominees simply take the board seats – an HOA needs to have at least 6,000 units! HOAs may no longer suspend any member’s voting rights for any reason other than not being a member. Finally, in addition to limiting who may serve as an inspector of elections, HOAs must now ensure the inspector retains additional election materials, such as candidate registration and voter lists, for one year following the election process.

In addition to all the new requirements HOAs must abide by, associations needing to amend their election operating rules must now do so no later than 90 days before an election. So, for those HOAs with elections after the first of the year, time is of the essence. HOAs must act quickly to ensure upcoming elections are conducted in accordance with California’s extensive new requirements, or, they could find their election results overturned for legal noncompliance.

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

California Lawyers Cannot Churn Files

Posted on: November 7th, 2019

By: Greg Fayard

Under the Rules of Professional Conduct applicable to California lawyers, attorneys are not supposed to do things where the substantial purpose is to delay, prolong, or cause needless expense. Under Rule 3.2, lawyers can be disciplined for churning a file for the substantial purpose of increasing legal fees. Examples of needless work would be lawyers spending time researching irrelevant issues, working on a case just to increase the legal fees, and seeking to continue a case for no valid reason, such as to extend a billing opportunity or delay a case simply to aggravate the opposing party.

Of course, the California State Bar might have trouble proving a violation of Rule 3.2, as most legal work has a motivation that is not based substantially on delay or increasing expenses.

That said, the best practice for all lawyers is to do what is necessary but which potentially advances the client’s interests.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

What You Don’t Know Can Hurt You: The Enforceability of Long-Term Leak Exclusions

Posted on: October 24th, 2019

By: Anastasia Osbrink

My family and I recently arrived home one evening to discover our laminate floors warm to the touch and pushing up at the seams. A friend who was visiting asked if we had heated floors. Heated floors? Not in Southern California. What I was experiencing first-hand was a water pipe leak under our flooring. My first call was to a plumber who would be out the next morning to do a “slab leak detection.” My second call was to my homeowner’s insurance.

Indeed, the plumber detected a slab leak; and two days later the claims specialist from my insurance company met me at the house to examine the damage. The floors had been torn up by a remediation company. As we walked through the demo-zone trying to speak to one another over the deafening sound of massive fans and dehumidifiers trying to dry everything out, my claims specialist said something to me that I hadn’t considered: “you’re so lucky that you are in the 10% of homeowners who don’t have a long-term leak exception.” She stated she rarely sees a policy that doesn’t have the exclusion. I asked what constitutes “long term.” My claims specialist answered “long term” means over 14 days; and based on the amount of damage she observed the leak probably had been going on for a month or more. But there was no way I could have discovered the leak prior to the evening two days earlier. It doesn’t matter. Such exclusions apply whether or not the homeowner is, or could be, aware of the leak.

California courts (and courts throughout the country) are clear that long-term leak exclusions to coverage for water damage in homeowner’s policies are enforceable. (See Brown v. Mid-Century Ins. Co. (2013) 215 Cal. App. 4th 841 [insurance policies, like any contract, must be interpreted based on their plain meaning, and the plain meaning of a “sudden” leak that excludes long-term leak damage is self-evident and enforceable].) Though there are frequent disputes between homeowners and insurers about whether the leak did in fact exist for more than two weeks, insurers often refer insureds to plumbers from their “preferred vendor” lists. Frequently insurers ask those plumbers to opine as “experts” on how long the leak has existed. Homeowners may not realize when the leak first occurs. By the time they do notice, much of the water has dried up and the evidence has disappeared. Later, when the disgruntled homeowners consider a suit against their homeowners’ insurer for breach of contract, they have lost the ability to present evidence regarding the length of the leak. Additionally, these types of claims often raise a reasonable, genuine dispute regarding the existence of coverage. (See Chateau Chamberay Homeowners Assn. v. Associated Int’l Ins. Co. (2001) 90 Cal.App.4th 335, 347.)

An insured may argue that some of the claimed damage occurred immediately due to sudden discharge, which should be covered. (See Wheeler v. Allstate Ins. Co., 687 F. App’x 757 (10th Cir. 2017).) The Court in Wheeler, applying Utah law, held that coverage existed for any damage the homeowner could show resulted from the initial sudden leak within the first 13 days of the leak. (Id. at 772-73.) The court in another case in Florida, Hicks v. American Integrity Insurance Company of Florida, came to a similar conclusion. (Hicks v. Am. Integrity Ins. Co. (Fla.Dist.Ct.App. 2018) 241 So.3d 925, 926.) The practical effect of these rulings was to force a close examination of the insured’s evidence of a sudden leak and of the claimed damage caused by that sudden leak, as distinct from other damage.

Recent attempts by the California legislature to graft a delayed discovery rule onto such contractual exclusions (which would require both the homeowner’s actual discovery of the leak and the homeowner’s delayed reporting) have failed. Additionally, while nationwide there does not appear to be a push by state legislatures to pass such laws, there have been varied approaches by both insurers and departments of insurance to clarify these exclusions and the type of coverage available. For instance, the Texas Department of Insurance issued an Order stating that USAA reported to it that it would cover damage, including mold, caused by a “hidden” long-term leaks despite the fact that its policies contain standard exclusion language. (Texas Department of Insurance, Commissioner’s Order 02-0523.) Such clarifications could benefit not only consumers, but also insurers hoping to avoid breach of contract and bad faith litigation based upon exclusions.

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

California Lawyers Now Have A Duty of Diligence

Posted on: September 13th, 2019

By: Greg Fayard

The prior rules of professional conduct for California lawyers required them to be competent but were silent on also being “diligent.” Under the latest version of the rules, California lawyers now have an express duty of diligence. (Rule 1.3) That is, California lawyers can now be disciplined by the State Bar for neglecting or disregarding a matter.

The State Bar, after all, is a consumer protection organization, and its focus is on protecting the public from unscrupulous or incompetent lawyers. It is not a trade association that promotes lawyer interests.

Hence, California lawyers now have a duty “to get the job done”—the new duty of diligence. Lawyers should therefore stay on top of their matters and not let them languish. Doing so could expose the lawyer to a State Bar complaint.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Attempts to Change Standard of Liability for Use of Force Claims

Posted on: August 29th, 2019

By: Sara Brochstein

Earlier this month, California enacted a new measure that goes into effect in 2020 altering the use of deadly force standard for law enforcement officers. The law was originally introduced in response to the March 2018 shooting of Stephon Clark in Sacramento.

The new standard dictates that the use of deadly force is acceptable only when it is “necessary in defense of human life” and no other alternatives are available.  And in determining whether deadly force is necessary, officers are required to evaluate each situation in light of the particular circumstances of each case and use other available resources and techniques if reasonably safe and feasible to an objectively reasonable officer.

This is a departure from the federal standard of whether the officer’s use of deadly force was “objectively reasonable” as addressed by the Supreme Court in Tennessee v. Garner (1985) and Graham v. Connor (1989).  However, the new law fails to set forth a specific definition of “necessary,” which would leave interpretation to the courts on a case-by-case basis. Thus, while many view the new standard as “heightened,” it remains to be seen whether it will yield different results.

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