November 22, 2013

Summary of November 20, 2013 conference report for civil cases

The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, November 20, 2013.  The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal.

Review Granted

Coker v. JP Morgan Chase Bank, S213137—Review Granted—November 20, 2013

A borrower was unable to make her mortgage payments, and agreed to sell her house to a third party to avoid foreclosure. However, the sale price was less than the amount the borrower owed on her loan. The mortgage lender agreed to the sale, but as a condition of approval, stated that the borrower would be responsible for any deficiency. The borrower filed a complaint for declaratory relief seeking a judicial determination that Code of Civil Procedure section 580b prohibits the lender from obtaining a deficiency judgment after the sale. The mortgage lender demurred to the complaint, and the superior court sustained the demurrer without leave to amend, finding section 580b applies only after a foreclosure. The borrower’s complaint was subsequently dismissed with prejudice.

The Court of Appeal, Fourth District, Division One, held in a published opinion, Coker v. JP Morgan Chase Bank (2013) 218 Cal.App.4th 1, that section 580b applies after a sale of property and there is no requirements in the statute that a foreclosure must occur to trigger its protections. Therefore, the Court of Appeal held that section 580b applied to the short sale that the mortgage lender approved.

The Supreme Court granted review on the following issues: (1) Do the anti-deficiency protections in Code of Civil Procedure section 580b apply to a borrower who engages in a “short sale” of real property when the lender approved the sale and reconveyed its deed of trust to facilitate the sale on the condition that the borrower remain liable for any outstanding balance on the loan following the sale? (2) Does a borrower’s request that the creditor release its security interest in real property to facilitate a short sale result in a waiver of the protection of the “security first” rule set forth in Code of Civil Procedure section 726?

Review Denied (with dissenting justices)

Banuelos v. LA Investment, LLC, S213972—Review Denied [Kennard, J., voting for review]—November 20, 2013

A mobile home owner brought an action against mobile home park owners and managers, who had brought an unlawful detainer action.  The mobile home owner alleged retaliatory eviction, bad faith, intentional and negligent interference with economic advantage, and negligence. The trial court sustained the park owner’s demurrers without leave to amend and dismissed the action.

The Court of Appeal, Second District, Division One, held in a published opinion, Banuelos v. LA Investment, LLC (2013) 219 Cal.App.4th 323, that the litigation privilege did not bar the mobile home owner’s suit under section 1942.5 for retaliatory eviction based on the mobile home park owners and managers’ action to recover possession of the premises.

The Supreme Court was presented with the following issue: Does the litigation privilege bar a tenant’s lawsuit for retaliation under Civil Code section 1942.5, where the only retaliatory act alleged is the landlord’s prosecution of an eviction action?

Poet, LLC v. California Air Resources Board, S213394—Review Denied [Kennard, J., voting for review]—November 20, 2013

The California Air Resources Board (ARB) is the state agency charged with regulating the sources of emission of greenhouse gases. To reduce emissions from transportation, ARB adopted a number of regulations, including the Low Carbon Fuel Standards (LCFS) regulations that require the reduction of the carbon content of transportation fuels sold, supplied, or offered for sale in California. Plaintiffs challenged the LCFS regulations on the grounds that ARB violated the Administrative Procedures Act (APA) and CEQA during the adoption process. They contended that the ARB violated the APA by excluding certain consultants’ emails from the rulemaking file made available to the public.

In a published opinion, Poet, LLC v. California Air Resources Board (2013) 218 Cal.App.4th 681, the Court of Appeal, Fifth Appellate District, held, among other things, that the ARB violated the APA by failing to include in its rulemaking file the four e-mails sent to it by its hired consultants.

The issues presented for review were: (1) Does the APA require a state agency to include in its public rulemaking file every communication from its hired consultants on the ground that these communications constitute “information . . . submitted to the agency” under Government Code section 11347.3, subdivision (b)(6); and (2) When a court concludes that a few documents were erroneously omitted from a rulemaking file, may the court order the agency to remedy the violation without first evaluating whether the agency failed to substantially comply with the APA?


Happy Nails & Spa of Fashion Valley, L.P. v. Su, S213396—Depublished Court of Appeal Opinion—November 20, 2013

Happy Nails appealed a decision upholding the Labor Commissioner’s determination that Happy Nails’ cosmetologists were employees.  Happy Nails sought to set aside the Commissioner’s assessment of civil penalties for failing to provide those cosmetologists with employee wage statements that itemized deductions. The Court of Appeal, Fourth District, Division One, held in a previously published decision, Happy Nails & Spa of Fashion Valley, L.P. (2013) 217 Cal.App.4th 1459, that a final decision of the California Unemployment Insurance Appeals Board that the cosmetologists are not employees collaterally estops the Commissioner from assessing those penalties. Therefore, the Court of Appeal reversed the judgment and remanded for further proceedings.  The Supreme Court ordered the opinion depublished.

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