The U.S. Supreme Court just FUCT’d the Lanham Act.  The Lanham Act (15 U.S.C. § 1052(a)) prohibits the registration of “immoral[] or scandalous” trademarks. Respondent founded a clothing line that uses the trademark FUCT. The U.S. Patent and Trademark office decided the trademark was prohibited under the Lanham Act. The U.S. Supreme Court held that the prohibition on “immoral[] or scandalous” trademarks was facially unconstitutional, stating: “There are a great many immoral and scandalous ideas in the world (even more than there are swear words), and the Lanham Act covers them all.  It therefore violates the First Amendment.” (Iancu v. Brunetti (U.S., June 24, 2019) 2019 U.S. LEXIS 4201.)

https://www.supremecourt.gov/opinions/18pdf/18-302_e29g.pdf

P.S. FUCT  is reportedly an acronym for “Friends U Can’t Trust”.

The day after a responsive pleading was due, plaintiff’s lawyer sent defendant a letter and an email telling her that the time to respond was past due and threatening entry of default if a responsive pleading was not filed by the next business day. When a pleading was not filed by 3:00 p.m. the next business day, plaintiff’s counsel filed a request for entry of default. Defendant quickly hired a lawyer who filed a motion to set aside the default pursuant to Code of Civil Procedure § 473, subdivision (b). The trial court denied defendant’s motion to set aside the default, despite a fact-filled declaration describing how defendant had been up to her neck taking care of urgent personal circumstances.  The Court of Appeal reversed and quoted from Code of Civil Procedure § 583.130 that “. . . all parties shall cooperate in bringing the action to trial or other disposition,” and concluded: “Attorneys who do not do so are practicing in contravention of the policy of the state and menacing the future of the profession.” (LaSalle v. Vogel (Cal. App. 4th Dist., Div. 3, June 11, 2019) 36 Cal.App.5th 127.) Continue Reading Lawyer Civility Includes More Than a Pro Forma Attempt to be Civil” (LaSalle v. Vogel (2019) 36 Cal.App.5th 127.)

Plaintiff sued for fraudulent transfer. Defendants then paid the judgment, but instead of dismissing his complaint, plaintiff amended it to seek damages caused by the delay in paying the judgment. The trial court sustained defendants’ demurrer. On appeal, plaintiff argued his amended complaint asserted a common law fraudulent transfer claim, which gives rise to consequential and punitive damages. Reversing, the Court of Appeal agreed with plaintiff, stating: “Accordingly, the damages alleged by Berger fall within the scope of recoverable tort damages and satisfy the damage element for a fraudulent transfer claim for purposes of demurrer.” (Berger v. Varum (Cal. App. 1st Dist., Div. 1, June 3, 2019) 35 Cal.App.5th 1013.)  Lessons, 1.  Timely pay your debts, 2. Always get a release of claims!

Employers with 5 or more employees (not including independent contractors), must provide at least 2 hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all non-supervisory employees by January 1, 2020, and once every 2 years thereafter.  An employer includes a person who regularly receives the services of five or more persons providing services pursuant to a written contract, such as from a temporary employment staffing company.

Government Code § 12950.1 “(i) (1) For purposes of this section only, “employer” means any person regularly employing five or more persons or regularly receiving the services of five or more persons providing services pursuant to a contract, or any person acting as an agent of an employer, directly or indirectly, the state, or any political or civil subdivision of the state, and cities.

The cost to the employer should be mitigated because this law also requires the Department of Fair Employment and Housing to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace on the department’s Internet Web site.

Senate Bill 1343 is codified as Government Code §§ 12950 and 12950.1. Effective January 1, 2019. Compliance deadline is January 1, 2020.

Prior law prohibiting an employer from asking or relying upon the applicant’s salary history is modified. Employers may now inquire into an applicant’s salary expectation for the position being applied for such as for seniority or merit.  Sexual based salary decisions remain illegal.  Labor Code §§ 432.3 and 1197.5. Effective January 1, 2018.

An employer cannot require the execution of a release or non-disparagement agreement in exchange for any condition of employment and broadened non-employee harassment. Changes to the laws concerning harassment, discrimination, etc. (Government Code § 12940, 12965, 12923, 12950.2, and 12964.5) broadened the definition of harassment to include any type of harassment, not merely sexual, for which an employer may be responsible when committed by a non-employee. The law also makes it unenforceable to require a release or non-disparagement agreement in order to obtain or keep a job.

The legislature took notice of Justice Ruth Bader Ginsburg statements in her concurrence in Harris v. Forklift Systems (1993) 510 U.S. 17 by enacting Government Code §§ 12940, 12965, 12923, 12950.2, and 12964.5. Effective January 1, 2019.

The limitation as to release agreements is if it is a condition to new or continued employment except if is part of a negotiated settlement agreement for an existing dispute.  See Government Code § 12964.5 which provides in pertinent part:

Government Code § 12964.5: (a) It is an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, to do either of the following:

(1) (A) For an employer to require an employee to sign a release of a claim or right under this part.

(B) As used in this section, “release of claim or right” includes requiring an individual to execute a statement that he or she does not possess any claim or injury against the employer or other covered entity, and includes the release of a right to file and pursue a civil action or complaint with, or otherwise notify, a state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.

(2) (A) For an employer to require an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.

(B) For purposes of this paragraph, “information about unlawful acts in the workplace” includes, but is not limited to, information pertaining to sexual harassment or any other unlawful or potentially unlawful conduct.

(b) Any agreement or document in violation of this section is contrary to public policy and shall be unenforceable.

(c) (1) This section does not apply to a negotiated settlement agreement to resolve an underlying claim under this part that has been filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process.

The primary published case is Del Monte Properties & Investments, Inc. v. Dolan (2018) 26 Cal.App.5th Supp. 20, 24.  In Del Monte the Court held that the landlord must prove that the actual losses caused by late payment of rent were extremely difficult or impracticable to determine. Moreover, an agreement to the term setting the amount is not enough.   Landlord must show that the losses caused by late payment of rent in this case were extremely difficult or impracticable to determine, liquidated damages were not justified under Civil Code § 1671.  

The Court also held that “Setting the liquidated damages to a percentage of the contract price demonstrates a purpose other than compensating losses. Garrett v. Coast & Southern Fed. Sav. & Loan Assn., 9 Cal.3d at 740. Some analysis of actual losses is required prior to setting the amount. Util. Consumers’ Action Network, Inc. v. AT&T Broadband of Southern California, Inc. (2006) 135 Cal.App.4th 1023, 1031. Post-hoc rationalization will be rejected. In re Cellphone Termination Fee Cases, 193 Cal.App.4th at 328.
(Del Monte Properties & Investments, Inc. v. Dolan (2018) 26 Cal.App.5th Supp. 20, 24 )

Here is a summary of some of the larger new real estate oriented laws for 2019.

  1. Landlord Tenant: Evictions – Three Days’ Notice Excludes Holidays and Weekends:  When counting a three days’ notice to pay rent or quit or a three days’ notice to perform covenant or quit, or in responding to a complaint for unlawful detainer, Saturdays, Sundays and judicial holidays are now excluded.  (Code of Civil Procedure §§ 1161 and 1167.  Effective September 1, 2019.)
  2. Landlord Tenant: Commercial Property Abandonment:  Allows a commercial landlord to serve Notice of Belief of Abandonment after the rent is unpaid for three days (or any longer period required under the terms of the lease for a monetary default), as opposed to 14 days under prior law, and allows delivery of that notice by overnight courier. (Civil Code § 1951.35 and as an amendment to Civil Code §§ 1946 and 1951.3. Effective January 1, 2019.)
  3. Landlord Tenant: Commercial Property  – Disposal of Tenant’s Personal Property:  Increases the calculation of the total resale value of the personal property from $750 (or $1 per square foot, whichever is lesser) to either $2,500 or an amount equal to one month’s rent for the premises the tenant occupied, whichever is greater.  (Civil Code §§ 1993.04 and 1993.07. Effective January 1, 2019.)
  4. Requires landlord to accept rent tendered by a third party. While no right of tenancy is created by acceptance of rent by a third party, nor is a landlord required to accept housing assistance programs such as section 8 (which probably will be the new law next year).  The landlord may condition acceptance of rent from a third party on a signed acknowledgment that no tenancy is created with the third party who pays the rent.  Assembly Bill 2219 codified as an amendment to Civil Code § 1947.3. Effective January 1, 2019.
  5. Victims of Domestic Violence Protection from Eviction  Victims of domestic violence and other types of abuse cannot be evicted because they or the landlord has had to call law enforcement to respond to incidents of violence or abuse.  The protection is not unlimited or if calls or a pattern of 9-1-1 calls were frivolous in nature or not necessary to prevent or address a crime, emergency, or incident of abuse.  Technically, this statute creates a rebuttable presumption in unlawful detainer cases and is an affirmative defense if the landlord or owner files a complaint for unlawful detainer within 30 days of a tenant summoning law enforcement on behalf of, a victim of abuse.  The landlord may also rebut the presumption by showing that some other reason was a substantial motivating factor for filing the complaint.  Assembly Bill 2413 is codified as Civil Code § 1946.8 and amendments to Code of Civil Procedure § 1161.3 and Government Code § 53165. Effective January 1, 2019.
  6. Attorneys representing clients in mediation will have to provide a notice to the client about the confidentiality of mediation.  While most mediators have the parties (and attorneys) sign a form during the mediation stating the law about confidentiality, this law requires an attorney representing a person participating in a mediation to provide his or her client with a printed disclosure, per a statutory form, containing the confidentiality restrictions related to mediation, and to obtain a printed acknowledgment signed by that client stating that he or she has read and understands the confidentiality restrictions.  Remember, all communications, negotiations, or settlement offers in the course of mediation must remain confidential.  Statements made and writings prepared in connection with a mediation are not admissible or subject to discovery or compelled disclosure in noncriminal proceedings.  A mediator’s report, opinion, recommendation or finding about what occurred in a mediation may not be submitted to or considered by a court or another adjudicative body.  A mediator cannot testify in any subsequent civil proceeding about any communication or conduct occurring at, or in connection with, a mediation.  The law also provides that the failure of an attorney to comply with these disclosure requirements does not invalidate an agreement prepared in the course of, or pursuant to, a mediation.  SB 954 is codified as Evidence Code §§ 1122 and 1129. Effective January 1, 2019.
  7. Landlord Tenant: Inspection of Decks, Balconies, Stairways and Walkways:  This law requires that buildings with 3 or more multifamily dwelling units with decks, balconies, stairways and walkways must be inspected by a properly licensed person by 2025, and a subsequent inspection must be done every 6 years. The owner would have to make repairs if the inspector found that the decks or balconies were in need of repair.  (Civil Code § 1954 and Health and Safety Code §§ 17973 et seq. Effective January 1, 2019.)
  8. Landlord Tenant: Service Member Protections: The new law requires a landlord or even a property manager who believes that a service member’s request to terminate a lease due to deployment within 30 days of the request set forth in writing the lessor’s objections. See Military & Veterans Code §409.15 and The Soldiers’ and Sailors’ Civil Relief Act, Title 50 of the United States Code, Section 534.
  9. Building Permits: Expiration period extended:  A building permit remains valid despite changes in the building code as long as work is commenced within 12 months after issuance, unless the permittee has abandoned the work authorized by the permit. The law also authorizes a permittee to request and the building official to grant, in writing, one or more extensions of time for periods of not more than 180 days per extension.  (Health and Safety Code § 17958.12. Effective January 1, 2019.)
  10. Civil Liability for sexual harassment expanded:  Even if a business, service, or professional “relationship” does not presently exist, a person such as a real estate agent (or probably an investor among other persons) may be liable for sexual harassment when he or she holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party. This law eliminates the element that the plaintiff prove there is an inability by the plaintiff to easily terminate the relationship.  (Civil Code § 51.9, and Government Code §§ 12930 and 12948. Effective January 1, 2019.)
  11. “Clean Up” Legislation Clarifying that Realtors may be “independent contractors”.  The California Association of Realtors sponsored “clean-up” legislation to address a number of substantive issues in real estate law and have those laws “conform” more closely to current practice.  The most important provision of this legislation specifically reiterates that existing law permits salespersons and brokers to establish their relationship as one of either independent contractor or employment.  This change was in response to a recent case, Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, which called into question the ability of real estate licensed salespersons and brokers to elect an independent contractor relationship.  Brokers should consult with their in-house counsel regarding the impact of the various provisions of this legislation, which in some cases modify the required disclosure forms.
  12. Licensing: Applicant for a Real Estate license cannot be required to disclose citizenship or immigration status:  This law prohibits a licensing board, including the DRE, from requiring an individual to disclose either citizenship status or immigration status for purposes of licensure, or from denying licensure to an otherwise qualified and eligible individual based solely on his or her citizenship status or immigration status.  (Business and Professions Code §§ 30 and 1247.6; Education Code §§ 44339.5; Family Code §§ 4014, 17506, and 17520; and Health and Safety Code §§ 1337.2, 1736.1, 1797.170, 1797.171, 1797.172, 106995 and 114870. Effective January 1, 2019.)
  13. Licensing: Criminal convictions may be limited to seven years to deny a license:  This law limits a seven year “look back period” for a board, including the DRE, to consider a criminal conviction in denying a license, and only if the crime is substantially related to the qualifications, functions, or duties of the business or profession for which the application is made. There are exceptions such as convictions for serious crimes and sex offenders, and a specific exception for the DRE, among other boards, in regard to financially related crimes. In any case, a board may not deny a license to a rehabilitated applicant or one whose criminal record has been expunged.  (Business and Professions Code §§ 7.5, 480, 480.2, 481, 482, 488, 493, and 11345.2. Effective July 1, 2020.)
  14. CC&R’s:  New Private Transfer Fees Outlawed:  Prohibits developers from creating new property covenants, conditions, or restrictions that force subsequent owners to pay specially designated fees every time the property is transferred, unless the fee provides a “direct benefit” to the property, as defined in federal law. (Civil Code § 1098.6. Effective January 1, 2019.)

Due process prevails.  A common mistake is pleading damages (other than as limited in Family/PI/wrongful death cases) according to proof without providing the defendant with a number of possible damages.  The result is a default but no money to the plaintiff.  The law states a default judgment cannot exceed the type and amount of relief sought in plaintiff’s operative pleading.  (Code Civ. Proc., § 580, subd. (a).)  A similar problem occurs in an accounting action seeking damages related to the valuation of a business without stating what the damages may be.  Now, the courts clearly require a clear statement of what the total amount of the judgment could be. E.g. $1,000,000 or according to proof even on an accounting cause of action.

The courts have now held that if you only allege a certain dollar amount of damages, (e.g. 50% of a million dollar home) then that is what you are limited to.  If you only say 50% of the value of the business without stating what is the approximate value of the business, that may be a problem for the plaintiff on default.  This applies even if you allege in excess of $25,000 or according to proof, you cannot obtain relief greater than $25,000.  The Court of Appeal held: “We hold that actions alleging an accounting claim or otherwise involving the valuation of assets are not excused from limitations on default judgments and, in so doing, add our voice to the growing chorus of cases so holding. We also hold that the amounts of damages awarded and demanded are to be compared on an aggregate basis.”  (Sass v. Cohen (Cal. App. 2nd Dist., Div. 2, Mar. 7, 2019) 32 Cal.App.5th 1032.)  Note, this case is a Marvin v. Marvin (1976) 18 Cal.3d 660, 674-675, 684 type of case.  The Plaintiff in this case was the woman the [married] man imported from London to be his life time lover and business partner.  Just after meeting the woman the defendant asked her to move to California, seven years later he dumped her.

The Sass v. Cohen case does a nice job analyzing the issue.  I am also pleased it mentioned this cite in a footnote: “In such instances, the default is less of an affirmative “tactical” choice not to participate in the lawsuit in the first place (Stein v. York (2010) 181 Cal.App.4th 320, 325) and more of a sanction for making bad “tactical” choices in how to litigate a case in which the defendant initially decided to participate.”

The Court held that a broker must disclose that the seller’s neighbor told him he planned to remodel and his remodeled house would overlook the seller’s pool and interfere with the view.  This case case also found expert broker testimony is not always necessary to find breach of a broker’s duty care.  The Court stated that a layman (the jury) can also decide if a fact requires disclosure.  This will save at least $5,000 in expert witness fees!

A seller’s broker has a duty to disclose known material facts to buyers (Civil Code 2079, Easton v Strassburger (1984) 152 Cal.App.3d 90) AND a duty to disclose the same known material facts to the seller.  The knowledge of the agent (or real estate broker) is attributable to the principal (See, Civil Code sections 2332 and 2338).  This also helps the seller so he knows material facts about his own property (e.g. a neighbor is going to remodel and block his view/privacy).

Seller’s can no longer “close their ears” to neighbor ranting and whining.  If material, it must be disclosed!   Disclosure between sellers and their brokers is critical (see Carleton v Tortosa (1993) 14 Cal.App.4th 745 and Roberts v Lomanto (2003) 112 Ca;.App.4th 1553) just as between buyers and brokers (either their own or those representing the seller)  Seller’s cannot claim “hear no evil, speak no evil” approach to disclosure.   In Ryan this non-disclosure resulted in a $1,000,000 damages judgment!