Beneficiaries of a trust lost a challenge to the sale of trust property by the trustee. The trial court ordered them to pay the trust’s attorney fees and costs, making the beneficiaries personally liable. The Court of Appeal affirmed the award of attorney fees, but reversed the order insofar as it made the beneficiaries personally liable for them, stating: “We conclude that the attorney fees and costs were properly and lawfully imposed under the trial court’s equitable power over the trust, except to the extent the trial court made [the beneficiaries] personally liable for attorney fees and costs, rather than liable solely from their shares of the trust assets.” (Pizarro v. Reynoso (Cal. App. 3rd Dist., Jan. 18, 2017) 2017 Cal. App. LEXIS 33.)

A homeowner who is an attorney accused a bank of violating Civil Code § 2923.6, subdivision (c) by  foreclosing while his loan modification application was pending. The attorney did not pay his mortgage for eight years. The attorney sued the bank, and the bank’s demurrer was sustained without leave to amend. The Court of Appeal affirmed and stated:  “A person who borrows money from a bank to purchase or refinance a home has a reasonable expectation that the bank will fund the loan. The bank has a reasonable expectation that monthly mortgage payments will be made. Here, appellant’s reasonable expectations were met. The bank’s were not. Nonpayment of the mortgage for approximately eight years while the borrower remains in possession is an egregious abuse. Respondent argued, and the trial court agreed, that appellant is ‘gaming the system.’ The game is over.” (Gillies v. JPMorgan Chase Bank, N.A. (Cal. App. 2nd Dist., Div. 6, Jan. 24, 2017) 2017 Cal. App. LEXIS 47.)


Attorney Fees gavelWhile Code of Civil Procedure § 1717a bars attorneys fees if the cause of action is on a contract, look to Santisas v. Goodin (1998) 17 Cal.4th 599.  In Santisas, attorney fees were awarded on a tort claim because the home purchase agreement attorney fee provision stated it covered claims “ ‘arising out of the execution of this agreement or the sale’ ” which was interpreted as being broad enough to cover tort claims and contract claims.  These attorneys fees, would then be claimed as an element of costs. (Code Civ. Proc., §§1032(a)(4) and §1033.5, subd. (a)(10)(A).)

A summary of how some prior courts have interpreted other provisions click here: Continue Reading Attorneys Fees Awarded on Tort Claims due to an overbroad attorney fee clause even on a dismissed case

Business-Entity-SelectionAfter the initial Statement of Information is filed within 90 days of forming the entity, a corporation (‘Inc.”) in California must file a Statement of Information form EVERY year Corps.C. § 1502(a)).  A limited liability corporation (“LLC”) files EVERY OTHER YEAR (Corps. C. § 17702.09(a)).  See subsequent filing schedule from Secretary of State’s Office.

  • Failure to file the required Statement of Information with the Secretary of State will result in penalties being assessed by the Franchise Tax Board and suspension or forfeiture.  File the form, pay the $20, otherwise, the penalty is $250!

no-weedMedical marijuana protection is unlikely under California fair housing laws. In Ross v. Ragingwire (2008) 42 Cal. 4th 920, the California Supreme Court held that the FEHA does not protect a fired employee who failed a drug test even though he was also a qualified patient under California’s Compassionate Use Act. The Court held the Compassionate Use Act was primarily to protect persons with a medical need for marijuana from criminal prosecution and not as a broader protection in other contexts.  Furthermore, the court stated that “[n]othing in FEHA precludes an employer from firing, or refusing to hire, a person who uses an illegal drug” even though in this instance the conduct was illegal only under federal law. (Ross v. Ragingwire (2008) 42 Cal. 4th 920.

Further, so long as the shadow of asset forfeiture hangs over a landlord, it would not be a reasonable accommodation for a tenant’s disability to allow onsite marijuana possession and use when that violates federal law and may trigger the possible loss of the landlord’s real property. 

ADA wheelchare marijuanaFederal law states that a user of illegal drugs (under Federal law) will not be considered “an individual with a disability” for the purpose of the law (42 USC section 12210).  The exclusion of the use of medical marijuana, even if in conformity with state law, will not be protected by the ADA.  James v. City of Costa Mesa (9th Cir. 2012) 700 F.3d 394, 397.

The Ninth Circuit has held that “medical marijuana use is not protected by the ADA [ (Americans with Disabilities Act (42 U.S.C. § 12101 et seq.)) ],” because the ADA “defines ‘illegal drug use’ by reference to federal, rather than state, law, and federal law does not authorize the plaintiffs’ medical marijuana use.” (James v. City of Costa Mesa (9th Cir. 2012) 700 F.3d 394, 397.)

This was re-affirmed in the State case, The Kind and Compassionate v. City of Long Beach (2016) 2 Cal.App.5th 116, 121.

Should_Your_Rental_Lease_Have_a_Marijuana_Clause_V4-bannerThe lease must expressly prohibit the tenant from engaging in conduct that violates any law, that includes Federal law.  I suggest delineating, “shall not violate any law, including but not limited to Federal, State, or local laws.  Possessing, cultivating and using marijuana in any form remains a violation of federal law even if the U.S. Department of Justice policy, expressed in the Odgen Memo October 19, 2009 and and revised in the Cole memos, Cole Memo June 29, 2011, Cole Memo August 29, 2013, Cole February 14, 2014, state that the federal government will not make the prosecution of qualified patients or primary caregivers who utilize medical marijuana in conformity with state medical marijuana laws a law enforcement priority.  The Cole 2014 “Bank” Memo is guidance to banks that unless the marijuana business violates law other than the legal sale of marijuana, no Suspicious Activity Report needs to be issued.

timewarpUsually clients do not  understand or want to respond to discovery.  Same with lawyers, but be careful with pre-signed verification forms.  At trial it does not look good when the client testifies he never saw the discovery before.  In Drociak v State Bar (1991) 52 Cal. 3d 1085, a lawyer had obtained several pre-signed verifications from his client. After attempting to locate her without success, and with discovery due, he attached a pre-signed verification as an accommodation to his client to interrogatories he created from information in the client’s file. Drociak was disciplined and suspended for 30 days when it was subsequently learned that his client had died. ‘The use of pre-signed verification in discovery proceedings without first consulting with the client to assure that any assertions of fact are true is a clear and serious violation of the statutes and rules.'”