Wasserman's Appellate Summaries
July 19, 2000
By Lawrence Wasserman, Esq.
Netlaw Libraries welcomes attorney Lawrence Wasserman as a new website contributor. We are pleased to announce that his guest column, which synopsizes the recent decisions from the Ninth Circuit Court of Appeals, the California Supreme Court, the six California appellate districts, as well as some of the recent and interesting decisions from the U.S. Supreme Court, will be appearing as a regular feature for members and guests visiting the Netlaw Libraries website. We hope that you will find it to be a good way to start your legal research day and welcome your comments and criticisms regarding the column.
Kendrick v. City of Eureka
Case No. A088104
California Court of Appeal, First District, Division Two
CIVIL-STATUTE OF LIMITATIONS-TOLLING OF STATUTE OF LIMITATIONS ON SUPPLEMENTAL STATE CLAIMS DURING FEDERAL APPEAL
Kendrick, and five other plaintiffs are various relatives of four individuals who died or were fatally injured while being detained at the Humboldt County Jail. They filed suit on in federal court on February 6, 1995, alleging claims for wrongful death and denial of due process, asserting claims of mistreatment and failure to obtain medical assistance. The district court granted the City's motion for summary judgment as to the federal claims, then declined jurisdiction over the remaining state claims and dismissed the remaining state claims. Plaintiffs appealed the summary judgment. The judgment affirming the district court’s dismissal was filed on June 12, 1998. Plaintiffs then filed for a writ of certiorari with the United States Supreme Court on October 20, 1998, 130 days after the Ninth Circuit’s final judgment was filed. By letter dated February 22, 1999, the Supreme Court notified the parties that the petition had been denied. On March 15, 1999, appellants filed a complaint in the Humboldt County Superior Court asserting the state law claims that the federal court had earlier dismissed without prejudice. The trial court sustained respondents’ demurrer without leave to amend, on statue of limitations grounds.
HELD: The one-year time period set out in Code of Civil Procedure is the statute of limitations applicable to appellants’ state law claims. Since the acts on which the action was based occurred on January 7, 1995, and the complaint was filed on March 15, 1999, appellants’ claims would clearly be barred unless the limitations period is tolled. By statute federal court have supplemental jurisdiction over any state law claims that are so related to the federal claims in the action. When federal courts decline to exercise supplemental jurisdiction, a claimant is relegated to pursuing these state law claims in state court. Federal law provides for tolling of supplemental state law claims while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period. The federal tolling provision includes the time during which a federal appeal with the Court of Appeals is pursued, and the 30-day grace period commences once the judgment of dismissal is affirmed by that court. Unlike Court of Appeals review, normally appeals to the United States Supreme Court are not afforded as a matter of right, but are completely discretionary with that body. A petition of certiorari seeking discretionary review by the Supreme Court must be filed within 90 days and does not affect the finality of the judgment below nor does it act to stay the mandate of the court below. Perfecting an appeal with the Court of Appeals must take place within 30 days of the district court’s dismissal. At a maximum, appellants were required to file their state law claims in state court within 30 days of the Ninth Circuit’s judgment affirming the district court’s dismissal. Affirmed.
Assilzadeh v. California Federal Bank
Case No. B133105
California Court of Appeal, Second District, Division Five
REAL PROPERTY-DUTY OF SELLER OF REAL PROPERTY TO DISCLOSE-FIDUCIARY DUTY OF BROKER ACTING AS DUAL AGENT TO DISCLOSE TO BUYER
California Federal Bank, entered into an Exclusive Authorization and Right to Sell Agreement with codefendant FSR Brokerage, Inc., Assilzadeh made an offer to purchase the condominium unit in which he lived through defendant, Grasso, who was employed by FSR, which acted in the capacity of dual agents, representing both the seller and the buyer. Assilzadeh was advised that the homeowners had received a settlement from the builder for faulty construction. When he sought to install marble flooring in his entryway he was advised that her condo unit would not support the weight because of the faulty construction. Assilzadeh sued for failure to fully disclose. Summary judgment was for defendants.
HELD: When the seller knows of facts materially affecting the value or desirability of the property and also knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer, the seller is under a duty to disclose them to the buyer. Undisclosed facts are material if they would have a significant and measurable effect on market value. A breach of this duty of disclosure will give rise to a cause of action for both rescission and damages. California Federal satisfied its duty of disclosure by informing Assilzadeh of the existence of the construction defect litigation and its settlement. The details of the suit were within the diligent attention of the buyer, who could have examined the file in its entirety to learn all the details of the suit and its settlement. The duty of care of a seller’s broker, including the duty to disclose facts about the property, has been codified. The duty is to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal, if that broker has a written contract with the seller to find or obtain a buyer. That duty does not include or involve an inspection of areas that are reasonably and normally inaccessible to such an inspection, nor an affirmative inspection of areas off the site of the subject property or public records or permits concerning the title or use of the property, and, if the property comprises a unit in a condominium does not include an inspection of more than the unit offered for sale. As a dual agent FSR has fiduciary duties to both the buyer and seller and has a duty to learn the material facts that may affect the principal’s decision. A broker’s fiduciary duty may be much broader than the duty to visually inspect and may include a duty to inspect public records or permits concerning title or use of the property, a duty which is expressly excluded by the statute. This fiduciary duty was fulfilled when Assilzadeh was informed that a construction defect lawsuit had been filed and settled. At that point Assilzadeh should have investigated further. Affirmed.
Rosales v. City of Los Angeles
Case No. B134358
California Court of Appeal, Second District, Division Five
TORTS-DISCLOSURE OF POLICE OFFICER PERSONNEL RECORDS WITHOUT COMPLIANCE WITH STATUTORY PROVISIONS FOR RELEASE
Rosales was sued by an underage female Police Explorer Scout who alleged that Rosales engaged in inappropriate sexual conduct with her in his capacity as a police officer. Pursuant to a discovery request filed on behalf of the Explorer Scout, the deputy city Attorney, Sopuch, disclosed the personnel records of Rosales without complying with the statutory procedures established for the disclosure of such records that are set forth in Penal Code and Evidence Code. Rosales sued for invasion of privacy and related causes of action. Defendants demurrer was sustained without leave to amend.
HELD: Peace officers have a statutory conditional privilege in the privacy of their personnel records. Any disclosure of the records requires adherence to the motion and hearing requirements of the Evidence Code, which requires notice and provides for the right to seek a protective order. Despite its comprehensiveness, the statutory scheme does not provide a remedy for violation of its disclosure procedures and does not give rise to a private cause of action. Affirmed.
Amelco Electric v. City of Thousand Oaks
Case No. B129406
California Court of Appeal, Second District, Division Six
REAL PROPERTY-CONSTRUCTION CONTRACT-ABANDONMENT OF CONTRACT BY EXCESSIVE CHANGES-APPLICATION TO GOVERNMENT CONTRACT-INSTRUCTIONS
Amelco was awarded a contract for a substantial construction project for the City of Thousand Oaks. During the two-year construction process, City furnished 1,018 sketches to clarify or change the original contract drawings. At least 248 of the sketches changed the electrical design. City and Amelco agreed upon 32 change orders, each encompassing several design changes reflected in the sketches. As a result of these change orders, City agreed to and paid Amelco $1,009,728 above the contract price, an increase of nearly 17 percent. City generated more sketches than any of Amelco's personnel anticipated or had ever seen on other jobs. By the time construction was completed, City had changed every part of the electrical work at least once. The electrical work in one room was changed more than 40 times. Many of the sketches were drawn at a different scale from the contract drawings. On completion of its electrical work Amelco submitted a bill for $1,700,000 as a result of the design changes and poor project coordination, which was rejected by the City. Amelco filed this lawsuit for abandonment and breach of the construction contract. Judgment was for Amelco in excess of $2.5 million.
HELD: In the specific context of construction contracts. it has been held that when an owner imposes upon the contractor an excessive number of changes such that it can fairly be said that the scope of the work under the original contract has been altered, an abandonment of contract properly may be found. Although the contract may be abandoned the contractor cannot abandon the work. The Public Contracts Code provides for the circumstances under which a public agency may decide to terminate, amend or modify a public works contract and provides for the compensation of contractors who are affected by such a decision. It has no application where, as here, the public agency dramatically expands the scope of the work resulting in abandonment. Under these circumstances, the public agency's liability for damages caused by its breach is the same as that of a private individual. The jury's finding that the contract had been abandoned, by changing every aspect of the electrical work, is supported by substantial evidence. City did not request a jury instruction on the mutual intent issue, or an instruction pinpointing its theory that the number of changes was not excessive because the parties did not ignore the contract's change order procedures and were able to keep accurate cost records. The trial court had no duty to explain these defense theories sua sponte. It is not reasonably probable City would have obtained a more favorable result had the jury received more detailed instructions. Affirmed.
United States v. Ciccone
Case No. 98-10483
U.S. Court of Appeals for the Ninth Circuit
CRIMINAL-TELEMARKETING FRAUD-FAILURE TO DISCLOSE ALL FACTS RELATING TO WITNESSES-HARMLESS ERROR-SENTENCING-VULNERABLE VICTIMS
Ciccone was the owner of Feed America Inc., a telemarketing company in Las Vegas, Nevada. He ran a scheme to defraud people who had previously relied upon the promises of other telemarketers, and persuade them to send money to Feed America. They told victims that they had won money, a fabulous prize, and the opportunity to donate to charitable causes. The lucky victims first had to pay a sizeable sum to Feed America. Ciccone was convicted of one count of conspiracy, thirty-four counts of wire fraud and aiding and abetting, and thirty-six counts of money laundering and aiding and abetting, and one count of forfeiture. At trial the district court erred excluded evidence of satisfied donors and charities to support Ciccone good faith defense. In sentencing the trial court added six points after finding that Ciccone had laundered $2,235,135.20. It then added another two points on the ground that the victims were vulnerable because they had previously fallen for telemarketing schemes.
HELD: The evidence of satisfied donors was properly excluded. Ciccone's proffered evidence would not have shown that donors actually gained or that his scheme was beneficial to anyone but Ciccone. The evidence merely showed that donors thought that they had received a benefit. There was no requirement for the USA to prove the scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension. Although such definition of "specific intent" appears to support Ciccone's contention, this contention has previously been rejected. It is immaterial whether only the most gullible would have been deceived by the defendants' scheme. To convict a person of wire fraud, the government must prove beyond a reasonable doubt that the accused: (1) participated in a scheme with intent to defraud; and, (2) used the wires to further the scheme. The government can establish knowledge of a fraudulent purpose by circumstantial evidence. The evidence was sufficient to convict. The government violates the Due Process Clause when it fails to disclose material favorable evidence ("Brady rule"). The rule applies to both exculpatory and impeachment evidence. Evidence is material only if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different. No prejudice resulted from the failure to show one witness worked closely with the FBI in securing information against Ciccone. The district court did not clearly err when it determined that the victims were vulnerable because they were "repeatedly targeted for further fraudulent solicitations. Affirmed.
Union Pacific v. Mower
Case No. 98-36140
U.S. Court of Appeals for the Ninth Circuit
CIVIL-EXPRESS AGREEMENT SUPERSEDING IMPLIED DUTY OF FORMER EMPLOYEE TO PROTECT CONFIDENTIAL INFORMATION OF FORMER EMPLOYER-IMPRECISE INJUNCTION
Mower was employed by Union Pacific. His primary responsibility was the investigation and resolution of thousands of occupational illness claims filed against UP. Mower worked closely with UP's legal department on certain issues and, for a portion of his career, was considered a member of the legal department. Mower was asked to resign and he executed a Resignation Agreement. The agreement provided that Mower would serve as a consultant to UP for a period of three years. It also stipulated that for three years he would not reveal UP's confidential and privileged information or any other information harmful to UP's best interests. Mower complied with the agreement. Two years after the expiration of the specified period an injured employee of UP sought to have Mower testify as to studies he had done for UP senior management. UP obtained a broad injunction against Mower, prohibiting him from disclosing or revealing to third parties any confidential information he obtained while employed.
HELD: Oregon law imposes on every employee a legal duty to protect an employer's trade secrets and other confidential information, an obligation that continues beyond the term of employment. Oregon law also generally permits parties to alter by negotiation duties that would otherwise be governed by state law. The existence of an express agreement is relevant both in determining whether a particular employee is bound by a duty of confidentiality and in defining the scope of that duty. The Resignation Agreement limited protection of confidential information to a distinct period of time. The agreement constituted a waiver of any further implied duty of confidentiality. Mower's duty of confidentiality terminated at the end of the specified period. Additionally, the injunction did not specify in sufficiently precise terms to the information being protected. Reversed and vacated injunction.
Omega Environmental, Inc. v. Valley Bank
Case No. 98-35731
U.S. Court of Appeals for the Ninth Circuit
CIVIL-CERTIFICATE OF DEPOSIT AS NEGOTIABLE INSTRUMENT-PERFECTION OF SECURITY INTEREST IN CERTIFICATE OF DEPOSIT
Valley Bank issued an Irrevocable Standby Letter of Credit to Omega Environmental, Inc., in exchange for a promissory note payable to the Bank. The note was secured by a certificate of deposit. The Bank honored a request for payment of the Letter of Credit. Omega filed for protection under the Bankruptcy Code. The Bankruptcy Court granted the Bank's motion terminating an automatic stay to permit it to enforce its right to payment of the CD. The district court affirmed.
HELD: A security interest in an "instrument" is perfected by possession. It is undisputed that at all times relevant to this action the Bank had possession of the CD. Unfortunately a CD is neither a "negotiable instrument" nor a security agreement nor a lease. The weight of authority supports the conclusion that a nonnegotiable certificate of deposit, even if bearing words limiting its transferability as in this case, is an "instrument" as defined under the UCC, even if it bears the legend "nontransferable". The bankruptcy court properly granted the Bank relief from the automatic stay. Affirmed.
Abovian v. Immigration and Naturalization Service
Case No. 98-70934
U.S. Court of Appeals for the Ninth Circuit
IMMIGRATION-DUE PROCESS-ADVERSE CREDIBILITY FINDING FIRST MADE BY BOARD OF IMMIGRATION APPEALS-REQUIREMENT FOR OPPORTUNITY TO EXPLAIN PERCEIVED INCONSISTENCIES IN TESTIMONY
When Abovian was in the Soviet army he refused to be stationed in Cuba. As a result, Abovian was physically beaten and placed in the army jail for six months. He has visible scars from the beatings he endured while in jail. He was labeled as mentally ill on his identity papers and could get only menial work. The members of the Abovian family are natives and citizens of Armenia. Their six-year-old son was born in this country and is a U.S. citizen. Both Abovian's mother and his wife's parents are permanent United States residents. Abovian, as lead petitioner, concedes deportability but seeks asylum and withholding of deportation on the basis of past persecution or a well-founded fear of future persecution because he refuses to work for and adopt the communist ideology of the KGB and its successor the National Security Council. Although the IJ made no credibility finding, the BIA made its own adverse finding. Their petition was denied.
HELD: Due process requires that when the BIA decides an asylum case "based on an independent, adverse, credibility determination, contrary to that reached by the IJ, it must give the petitioner an opportunity to explain any alleged inconsistencies that it raises for the first time. Even assuming no due process violation, the BIA's credibility finding is not supported by substantial evidence. To deny asylum on credibility grounds, the BIA must have a legitimate articulable basis to question the petitioner's credibility, and must offer a specific, cogent reason for any stated disbelief. Independent corroborative evidence is not required from asylum applicants where their testimony is unrefuted. Petition granted. The BIA's denial of asylum was vacated and the matter remanded so that Abovian may be provided with a reasonable opportunity to explain the perceived deficiencies in his testimony.
United States v. Ruelas-Arreguin
Case No. 99-50213
U.S. Court of Appeals for the Ninth Circuit
CRIMINAL-ILLEGAL ENTRY INTO UNITED STATES AFTER BEING DEPORTED-VENUE FOR ACTION-SENTENCING-RIGHT TO ADJUSTMENT FOR ACCEPTANCE OF RESPONSIBILITY
Ruelas-Arreguin is a native and citizen of Mexico who illegally returned to the United States after having been deported. Upon reentry, he was transported through Southern California undetected in the bed of a pickup truck traveling east towards Yuma, Arizona. He was apprehended a few miles within the Arizona border. He was indicted in the Southern District of California on one count of being a deported alien found in the United States. At the conclusion of his trial his motion to dismiss for improper venue was denied.
HELD: If a defect in venue is clear on the face of the indictment, a defendant's objection must be raised before the government has completed its case. If the venue defect is not evident on the face of the indictment, a defendant may challenge venue in a motion for acquittal at the close of the government's case. The Constitution requires that venue lie in the district where a crime was committed. The crime of being found in the United States is completed when the "alien is discovered and identified by the immigration authorities. Affirmed, sentence vacated and remanded for resentencing because the district court erred when it withheld the additional one-level adjustment for acceptance of responsibility.
Firestone/Miyashiro v. Southern California Gas Company
Case No. 98-56468
U.S. Court of Appeals for the Ninth Circuit
LABOR-FEDERAL PREEMPTION OF CALIFORNIA STATUTE PROVIDING FOR OVERTIME PAY-EFFECT OF COLLECTIVE BARGAINING AGREEMENT FOR RATE OF PAY FOR OVERTIME
Firestone and others initiated a class action against Southern California Gas for unpaid overtime wages. The suit was predicated on the requirement for overtime pay under both federal and California fair labor provisions when work is performed in excess of 8 hours in a day. The district court held that plaintiffs' claim was preempted by the Labor Management Relations Act, because resolution of the essential dispute between the parties about the applicability of the California exemption required interpretation of the complex pay and overtime pay provisions in the collective bargaining agreement. It also dismissed the claim under the federal Fair Labor Standards Act.
HELD: The LMRA provides that suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce may be brought in any district court of the United States having jurisdiction of the parties. The California statue relating to overtime provides and exception to its provisions when an employee is covered by a collective bargaining agreement if the agreement provides premium wage rates for overtime work and a cash wage rate for such employee of not less than one dollar ($1.00) per hour more than the minimum wage. Opt-out provisions for negotiated alternatives to state-law standards are not in conflict with federal preemption law. These narrowly drawn opt-out provisions" exempt employees covered by a collective bargaining agreement that contains a negotiated provision on the same subject but different from the statutory provision. Since the question of whether plaintiffs were receiving a premium wage rate for overtime requires interpretation of the collective bargaining agreement. California law is preempted. Affirmed. Since it was unclear from the record whether the district court inadvertently dismissed those claims without considering them. A remand is appropriate for proper consideration of these claims.
Wasserman's Archived Appellate Summaries
Back to Netlaw Libraries' Home Page