December 2022 Update
The current update includes changes that reflect recent developments in case law, legislation, court rules, and jury instructions. Summarized below are some of the more important developments included in this update since publication of the 2021 update.
Economic loss rule. In Sheen v Wells Fargo Bank, N.A. (2022) 12 C5th 905, the California Supreme Court declined to extend economic loss rule exceptions to a case involving a negligence claim on a loan modification application. The court held that a lender owes no duty sounding in general negligence principles to “process, review and respond carefully and completely to” a borrower’s loan modification application. See §1.15.
Arbitration clauses. In Quach v California Commerce Club, Inc. (review granted Aug. 24, 2022, S275121, opinion at 78 CA5th 470, to remain published and citable until further order), the court concluded that the plaintiff failed to demonstrate prejudice resulting from party-directed discovery and associated costs for purposes of satisfying the heavy burden required for a waiver of arbitration. See §1.16.
Interest. In Soleimany v Narimanzadeh (2022) 78 CA5th 915, the court held for the first time that for a note secured by a deed of trust on real property, in the absence of a legal interest rate specified in the note—including a note with a void usurious rate—the default prejudgment interest rate is 7 percent, under the California Constitution. See §1.20.
Attorney fees. In City of Los Angeles Dept. of Airports v U.S. Specialty Ins. Co. (2022) 79 CA5th 1039, the court upheld the trial court’s reasonable conclusion that there was no prevailing party for a CC §1717 fee award. See §1.26.
In United Grand Corp. v Stollof (2022) 74 CA5th 62, the court held that a defendant who tendered payment of a default judgment before the default judgment was vacated, and necessarily before the defendant filed an answer in the case, was a prevailing party under CC §1717(b)(2). See §1.26.
In Pulliam v HNL Automotive Inc. (2022) 13 C5th 127, the California Supreme Court held that where state law provides for attorney fees against a holder of a consumer credit contract, nothing in the Federal Trade Commission’s Holder Rule (limiting a debtor’s recovery in claims against a seller or its assignee) prevents their award to the full extent provided by state law. See §§1.30, 1.30A.
Federal preemption and jurisdiction. In Columbia Export Terminal, LLC v International Longshore and Warehouse Union (9th Cir 2022) 23 F4th 836, the Ninth Circuit held that a federal Racketeer Influenced and Corrupt Organizations Act claim was preempted or precluded by the LMRA. See §3.2.
Rehabilitation Act of 1973. The U.S. Supreme Court held in Cummings v Premier Rehab Keller P.L.L.C. (2022) 596 US ___, 142 S Ct 1562 that emotional distress damages are not available under §504 of the Rehabilitation Act of 1973 (29 USC §794). See §3.30.
First Amendment rights and political activity. In Kennedy v Bremerton Sch. Dist. (2022) 597 US ___, 142 S Ct 2407, the U.S. Supreme Court restated the appropriate test for determining a public employee’s rights to free speech, and concluded that the employer’s stated interest did not outweigh the employee’s interests in free speech, in the case of a public employee praying “quietly” on a public school football field. See §3.80.
Meal and rest periods. In Ferra v Loews Hollywood Hotel, LLC (2021) 11 C5th 858, the court held that “regular rate of compensation” under Lab C §226.7(c) encompasses all nondiscretionary payments, not just the regular hourly wage rate. See §3.88A.
In Naranjo v Spectrum Sec. Servs., Inc. (2022) 13 C5th 93, the California Supreme Court held that Lab C §226.7 missed-break premium pay constitutes wages subject to the Labor Code’s timely payment and reporting requirements and, therefore, “it can support section 203 waiting time penalties and section 226 wage statement penalties where the relevant conditions for imposing penalties are met.” Further, the applicable prejudgment interest rate on a Lab C §226.7 claim for unpaid premium pay is 7 percent, which is the default interest rate under the California Constitution where no statute specifies a higher rate. See §3.88A.
Statutes of limitations. Rule 9 of the California Rules of Court Emergency Rules Related to COVID-19, which tolled certain statutes of limitations from April 6, 2020, to October 1, 2020, sunsetted on June 30, 2022, by its own terms, but the sunset did not nullify the effect of the tolling of the statutes of limitations. See §§4.8, 4.21, 4.27, 4.34, 4.47, 4.55, 4.57, 4.59, 4.61, 4.64, 4.77, 4.82, 4.85, 4.105.
Legislative developments related to COVID-19. The COVID-19 Tenant Relief Act (CCP §§1179.01–1179.07) took effect August 31, 2020, to address the economic impact of the COVID-19 pandemic, and has been amended multiple times since its enactment. See, e.g., Stats 2021, ch 2 (SB 1); Stats 2021, ch 5 (AB 81); Stats 2021, ch 27 (AB 832); Stats 2022, ch 13 (AB 2179). Notably, the COVID-19 Tenant Relief Act prohibits local jurisdictions from extending the time period for tenants to repay COVID-19 rental debt beyond August 31, 2023. CCP §1179.05(a)(2)(C). Additionally, the 1-year statute of limitations applicable under CCP §1161(2) is tolled for any time period during which a landlord was prohibited from serving a notice demanding COVID-19 rental debt. CCP §1179.05(c). Accordingly, tenants may be liable for the entire sum of back rent from March 1, 2020, through June 30, 2022, by or even before August 31, 2023. CCP §§1179.05(a)(2)(C), (c). Note that the COVID-19 Tenant Relief Act is scheduled for repeal on October 1, 2025. CCP §1179.07. Counsel should consult the latest statutory and case developments in this fast-moving area of law. For additional discussion of the COVID-19 Tenant Relief Act and the COVID-19 Rental Housing Recovery Act, see California Eviction Defense Manual (2d ed Cal CEB) and California Landlord-Tenant Practice (2d ed Cal CEB). See §4.86.
Attorney fees. Until October 1, 2025, CCP§871.11 limits attorney fees that may be awarded by a court in any action to recover COVID-19 rental debt. See §§4.96, 4.109.
Injury to Property
Blockage of Air, Light, or View. In Kahn v Price (2021) 69 CA5th 223, the court held that a tree view obstruction constituted a continuing nuisance and violated the San Francisco Tree Dispute Resolution Ordinance. See §5.11.
Encroachment. Romero v Shih (review granted Aug. 10, 2022, S275023, opinion at 78 CA5th 326, to remain published and citable until further order) is currently under review by the California Supreme Court to determine whether the trial court correctly found the existence of an implied easement under the facts, where the appellate court concluded that the subject encroachment was not de minimus or necessary to protect the public health or safety or for essential utility purposes. See §5.19.
Preliminary injunction. In Chase v Wizmann (2021) 71 CA5th 244, a preliminary injunction mandating the relocation of air conditioning and pool equipment was upheld due to constant violations of municipal ordinance decibel levels. See §5.26A.
Punitive damages. In Siry Inv. v Farkhondehpour (2022) 13 C5th 333, the California Supreme Court held that a plaintiff may recover treble damages and attorney fees under Pen C §496 when property “has been obtained in any manner constituting theft,” referring to the unambiguous language of Pen C §496(a), endorsing the analysis of Bell v Feibush (2013) 212 CA4th 1041 and Switzer v Wood (2019) 35 CA5th 116. See §5.38.
Statutes of limitations. Rule 9 of the California Rules of Court Emergency Rules Related to COVID-19, which tolled certain statutes of limitations from April 6, 2020, to October 1, 2020, sunsetted on June 30, 2022, by its own terms, but the sunset did not nullify the effect of the tolling of the statutes of limitations. See §§5.42, 5.43, 5.44A.
Fire suppression liability. In Presbyterian Camp & Conf Ctrs., Inc. v Superior Court (2021) 12 C5th 493, the California Supreme Court ruled that Health and S C §§13009 and 13009.1 incorporate the common law theory of respondeat superior, such that a corporation can be held liable for the cost of suppressing fires that its agents or employees negligently or unlawfully set or allowed to escape, affirming the court of appeal’s decision, and disapproving Department of Forestry & Fire Protection v Howell (2017) 18 CA5th 154. See §5.54.
Intellectual Property Infringement and Misappropriation
Prejudgment interest. In Kaufman v Microsoft Corp. (Fed Cir 2022) 34 F4th 1360, the court held that the defendant had failed to show prejudice for purposes of denying the plaintiff prejudgment interest, despite the plaintiff’s 5-year delay in filing suit. See §6.14.
Statutes of limitations. Rule 9 of the California Rules of Court Emergency Rules Related to COVID-19, which tolled certain statutes of limitations from April 6, 2020, to October 1, 2020, sunsetted on June 30, 2022, by its own terms, but the sunset did not nullify the effect of the tolling of the statutes of limitations. See §§6.34, 6.40, 6.43.