The recent Court of Appeal decision in Roche v. Hyde, Nos. A150459, A1500462 (filed 6/30/20), though unpublished, presents a cautionary tale for lawyers and clients. The case arises out of sale of a winery in Sonoma County by Roche (“Seller”) to Ram’s Gate, LLC (“Buyer”). The focus of the fraud and misrepresentation claims by the Buyer was Seller’s failure to disclose a seismic report that showed an active fault line under a building pad. Seller maintained the report had been delivered to the attorney for a predecessor entity of Buyer (these entities had common ownership and the same attorney, Hyde), in a previous attempt to buy the winery.

After discovering the seismic issues impacting Buyer’s construction plans, Buyer sued for breach of contract, fraud and negligence, alleging the non-disclosure of the seismic fault. After protracted discovery to obtain Buyer’s files and those of its attorney Hyde to prove prior knowledge of the seismic facts, resulting in multiple court orders to produce requested documents, Buyer dismissed its case without prejudice to avoid court ordered discovery sanctions and also agreed to pay Seller’s attorney’s fees and costs.  End of story? 

There is a common belief among some lawyers that a settlement is not complete until there is a formal written agreement signed by the parties that has all the “bells and whistles” typical of a settlement agreement. Not always so. In J.B.B. Investment  Partners LTD v. Fair (2019) 37 Cal.App.5th 1, Division 2 of the First Appellate District enforced a settlement based upon emails: one from Plaintiffs’ counsel stating a “last and final offer” setting out the terms; and one from Defendants, albeit somewhat ambiguous but which included the magic words “So I agree.” The Court of Appeal found that the plain outward manifestation of these emails (along with several others subsequently sent by Defendants), reflected that an agreement was reached on the terms set out in Plaintiffs’ counsel’s earlier email; and that the lack of a formal settlement agreement which the parties clearly had intended to sign, did not detract from the enforceability of the settlement. The emails satisfied the need for a “writing” to meet the requirements of the Statute of Frauds. For these reasons, the trial court granted summary adjudication on the breach of contract claim brought by Plaintiffs to enforce the settlement, which was upheld on appeal as there was no material dispute of fact over the settlement terms that had been stated in the email exchange; and the failure of Defendants to sign the formal written version of the settlement, did not render the settlement terms reflected in the underlying emails a nullity. The emails contained sufficient manifestations of the parties’ respective consent to settle on those terms.   

A motion to challenge a judge under Code of Civil Procedure section 170.6 has been called a “silver bullet” because it does not require proof of good cause; it only has to be timely filed. In Sunrise Financial, LLC v. Superior Court (2019) 32 Cal.App.5th 114, the Court of Appeal for the Fourth Appellate District resolved what it deemed an issue of first impression: when does the 15-day clock begin ticking to use the silver bullet in cases involving potential consolidation and coordination? The Court of Appeal held that the 15-day period to make a peremptory challenge to a judge assigned to a case for all purposes was triggered when defendants opposed consolidation of their action with other cases arising from the same fraudulent conduct. (See Code of Civil Procedure section 403 and California Rules of Court, rule 3.500(b), (c) & (d).) As a result, their peremptory challenge was untimely.

The recent decision of the California Court of Appeal, Second District in  Saheli v. White Memorial Medical Center (2018) 21 Cal.App.5th 308, proves again the point that what is stated in your contractual arbitration clause matters. While it may seem axiomatic that words matter, in reality business law scribes generally spend less time on crafting arbitration clauses than the business terms of an agreement.

Winning on appeal can sometimes spawn further litigation, including the launching of a malicious prosecution action. Indeed, if your client has prevailed in defeating a Uniform Trade Secrets Act (“UTSA”) case, been awarded attorney fees because the trial court found that action was brought in bad faith by the former employer, and the trial court’s decision upheld on appeal, malicious prosecution jumps out as the next logical step, right?

Maybe not. According to the California Supreme Court’s recent decision in Parrish v. Latham & Watkins, 2017 DJDAR 7724 (8/10/17), it all depends on whether your client (the former employee) brought a motion for summary judgment (or other ruling on the merits but not on technical or procedural grounds) which the former employer defeated on the merits (made a minimal showing of issues of fact requiring trial). In Parrish, a former employer sued former employees for misappropriation of trade secrets under the UTSA. After defeating the employees’ motion for summary judgment on flimsy evidence but albeit arguably meritorious, the employer lost a full evidentiary trial because the employer was shown to have no factual basis for bringing the action and did so for anti-competitive reasons. The former employees obtained substantial attorney’s fees on the grounds of bad faith as defined in the UTSA. Then, of course, they filed a malicious prosecution action against the employer’s lawyers. But that action was dismissed by way of an anti-SLAPP motion.