In SIRY INVESTMENT, L.P. v. FARKHONDEHPOUR, the Supreme Court resolved a conflict in lower courts by ruling that treble damages and attorney’s fees pursuant to section 496(c) are recoverable in theft-related business tort cases.  The Court found it applies so treble damages and attorney’s fees can be awarded in a case concerning “fraudulent diversion of partnership funds.”  The Court also allowed a preponderance of the evidence proof, not clear and convincing. The plaintiff still must prove a knowing “theft”, but this will be the next new business tort remedy!

SIRY INVESTMENT, L.P. v. FARKHONDEHPOUR S262081

 

Lawyers tend to overlook the simple truth about the four elements “fair use doctrine” under 17 U.S.C. § 107 stretching arguments far beyond common sense.  A recent case clearly sets out the commonsense aspect of “fair use”.  In MCGUCKEN V. PUB OCEAN LTD. plaintiff’s slightly cropped photographs of a lake were posted without seeking or receiving a license.  The court held that did NOT invoke a fair use defense to the plaintiff’s copyright infringement claim where the defendant’s use was for commercial purposes, and it was not transformative because it used the photos, with only negligible cropping, for exactly the purpose for which they were taken– to depict the lake.

The bottom line as noted by the court was “In defining and identifying that creativity, a court considers whether the copying use is transformative, meaning that it adds something new and important.”  The key is what is “transformative” — cropping, or adding a caption is not going to be transformative!  The commonsense approach courts take on this issue is clear, “the
article used the photos for exactly the purpose for which they were taken: to depict the lake.”  

McGucken v. Pub Ocean Fair Use Explained 21-55854

The oral arguments are here!  McGucken v. Pub Ocean — Oral Arguments

Note: Is the image on this post copied from the internet without an indication of a copyright “fair use” assuming it was copyrighted under Federal law?    Let me know what you think.

A trial court that granted a defendant’s petition to compel arbitration has jurisdiction to lift the stay of trial court proceedings where a plaintiff demonstrates financial inability to pay the anticipated arbitration costs; in such a situation, the court may require the defendant either to pay the plaintiff’s share of arbitration costs or to waive the right to arbitration. Plaintiff filed a peremptory writ of mandate was filed, it is rare that the appellate court even hears these writs.  See Aronow v. Superior Court (Emergent) March 28, 2022

We have recently seen that the right to contract, may not mean much in various situations.  White are are other cases concerning inability to pay the arbitration fees, e.g. Weiler v. Marcus
& Millichap Real Estate Investment Services, Inc. (2018) 22 Cal.App.5th 970.  I guess now it is possible for a party to get free cake eat it too!

P.S. the facts ALWAYS MATTER!  The Aronow case was about A plaintiff suing his lawyers for malpractice, and the Weiler was a poor elderly lady ripped off by a huge brokerage.

The law provides in part that a minor’s “willful misconduct” causing injury or death to another, or damage to the property of another, “shall be imputed to the parent or guardian having custody and control of the minor” for civil liability purposes. (Civil Code §1714.1, et seq. as well as under the Education Code § 48904(a)) The law also provides for damages for mental distress caused by bullying.

Your school district may have additional policies.  For example, the Los Angeles Unified School District has an Anti-bullying Policy, LAUSD Anti-Bullying Policy Page as well as children’s rights under Article 1, Section 28(c) of the California State Constitution and the relevant portions of the California Education Code 32270, et seq. which should be reviewed.

Brewer v. Patel (1993) 20 Cal.App.4th 1017 made it clear that “on call” or “stand-by” time or waiting time is not compensable to property managers when they are waiting for a plumber or prospective renter to show up.  Brewer v. Patel concerned a motel employee who was required to live on the premises, but only worked about 5 hours a day.  Other cases to look at are Isner v. Falkenberg (2008) 164 Cal.App. 4th 1393 (wage order as applied to employee who lived on the premises for a nursing home) and Van Nothdurft v. Streck (2014) 227 Cal.App. 4th 524 (apartment manager who also had free rent and  Wage Order No. 5–2001).

While most employee competent employee oriented attorney’s know the law, some don’t.  So rather than sending a letter, I am going to start referring them to my website!

The California state legislature has passed, and the governor signed, AB832. Here is the text of AB832

See also Governor Newsom AB832

The highlights are:

  • Extension of Moratorium.  Senate Bill 91, the statewide eviction moratorium and rental assistance bill, is to be extended though and including September 30, 2021, and then no further extensions.
  • Increased Rental Assistance.  Rental assistance funding will be increased from 80% of past due rent to 100% of past due rent for qualified renters.  Housing providers and renters that had previously applied for the 80% will not be required to reapply as the process is to be streamlined so that the additional 20% will be automatically paid.
  • Tenants May Apply on Own / No Landlord Assistance Required.  In the event housing providers refuse to cooperate in the rental assistance program by filing an application for assistance, renters may apply on their own for 100% of past due rent; however, once approved, renters will be required to agree in writing, under penalty of perjury, that they will utilize the rental assistance funds to pay past due rent.
  • Renters That Moved On to Now Count.  Housing providers will be entitled to apply for 100% rental assistance even if their renter has moved-out and so long as rent is owed due to COVID-19 related financial impacts.
  • Preemption of Local Moratoriums.  Senate Bill 91 will be amended to include a provision to preempt any further extension of local eviction moratoriums through March 31, 2022.  Absent seeing the exact language, it is unclear how this might impact the City of Los Angeles’ eviction moratorium which current does not have an expiration date.  However, clearly cities with expired eviction moratoriums, such as Santa Monica, will be precluded from making further extensions until March 2022.
  • Debt Masking Protections.  Debt masking protections for tenants are to become permanent so that credit screening companies may not report past due COVID rental debt.
  • Federal Claw-Back of Funds.  The State of California now has a timing issue and must payout specified amounts of the Federal money it received to avoid Federal claw-back of funds (e.g., refund) by September 2022 and then again by September 2025.
  • Possible Evictions Allowed for Tenants That Have Not Been Impacted.  Landlords may be permitted to evict renters who can afford rent but that have not been paying rent and taking advantage of the eviction moratorium.
  • May Evict Tenants That Do Not Cooperate.  For renters that do not apply for rental relief funds, but the rental property owner has applied, landlords may then proceed with the eviction process beginning on October 1, 2021.
  • 3-Day Notices Are Back.  As of October 1, 2021, housing providers may again serve three-day notices, provided they indicate that they have applied for rental assistance, and there will then be 20-day time period to verify the application for rental assistance.  These provisions will continue until March 2022.

Crossing the line and too much information!  Effective Nov. 1, 2018 Cal. Rule of Professional Conduct 1.2.1.

The issue is if a lawyer knowingly choses a form, that is outdated, because he likes that it contains a clause beneficial to the client, but that clause has been made unenforceable (i.e. illegal) due to a statute or case law, the lawyer breached his fiduciary duties and the Code of Professional Conduct.  This issue is common in leases, contracts, promissory notes, etc.  Especially issues such as binding arbitration, choice of law, choice of venue, forfeiture of deposits, issues regarding a party filing bankruptcy, waiver of the right to jury trial, usury.  How about clients in the cannabis business?  It is illegal under federal law, and the client’s business may also be illegal under local laws (e.g. no valid permit).  What do you do when they ask you for assistance with a lawful component of their “illegal” business?  Is the lawyer acting unethically to draft an employment agreement, or employee handbook for an unlicensed cannabis business?  This is in addition to other grounds for Attorney’s liability for crimes, such as federal laws prohibiting conduct that aiding, abetting, violation of U.S. anti-money laundering laws 18 U.S.C. Sections 1956 and 1957 or assisting in a fraudulent conveyance “asset protection” estate plan.

Another issue is should the attorney limit the information obtained from a client?  Will a talkative client disclose a conflict of interest or an illegal transaction?  Balancing obtaining sufficient information to competently provide legal services,  conflicts of interest, and knowing too much!  See the ABA’s Suggestion as to information obtained from new clients.

Rule 1.2.1 Advising or Assisting the Violation of Law
(a) A lawyer shall not counsel a client to engage, or assist a client in conduct that the
lawyer knows* is criminal, fraudulent,* or a violation of any law, rule, or ruling of a
tribunal.
(b) Notwithstanding paragraph (a), a lawyer may:
(1) discuss the legal consequences of any proposed course of conduct with a
client; and
(2) counsel or assist a client to make a good faith effort to determine the
validity, scope, meaning, or application of a law, rule, or ruling of a
tribunal.

Conformed pages Complaint Finally, common sense prevails in Santa Monica “related to housing laws”!  In the Federal (9th Circuit) case of Salisbury v. City of Santa Monica (2021)  What is even more entertaining, is the video argument.  Check it out: Salisbury Video of Oral Argument  Judge Bea is so cool and old school, really knows how to get to the point!

This case was about a non-tenant, who stayed in a mobile home after his father died.  He wanted a parking space closer to his mobile home.  Instead he got booted out!  The Ninth U.S. Circuit Court of Appeals on Friday affirmed a summary judgment in favor of the City of Santa Monica by in a case brought by a man whose spinal condition which made his walking painful who was denied permission to park his car next to his mobile home, on a city mobile home park.  The man did NOT have a  lease nor paid any rent.

Senior Circuit Judge Carlos Bea wrote the city (as a lessor) had no duty under the federal Fair Housing Amendments Act of 1988 (“FHAA”) to accommodate plaintiff Lawrence Salisbury’s disability.  Salisbury’s father had occupied the space in the Mountain View Mobile Home Park from 1974 until his death in 2013, and Plaintiff’s father had paid rent.  The City had tried to get the Plaintiff to vacate since 2011.  A prior state court action by Salisbury to block eviction was dismissed on procedural grounds.

The Law of FHAA was found to not apply e.g. no standing.  While the FHAA makes it it unlawful makes “[t]o discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap” or “[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap.”  this Plaintiff was simply NOT a tenant.

“The relevant operative language of the FHAA bars discrimination “in the sale or rental” of a dwelling, “in the terms, conditions, or privileges of sale or rental of a dwelling,” and “in the provision of services or facilities in connection with such dwelling.”

Partners, and spouses, can lose title insurance if they transfer title out of their names or the entity in which they took title without first obtaining the proper title insurance Endorsement.  The most common endorsement is called a Residence Held in Trust Endorsement (HO 05 43)  If the transferor signs a grant deed, he is deemed to make the covenants described in Civ. Code § 1113, “and none other.” Id. If the person who signs a grant deed breaches any of the covenants set forth in the statute, he is not going to have any title insurance coverage, because title insurance does not protect the insured against his own acts.

Recently-issued title insurance policies, may provide coverage even though the insured transfers his interest into a revocable trust.   But be safe, ask for a trust endorsement.

Title Insurance Issues
 Need an endorsement for successors and transferees, e.g. successor trustee coverage. Obtain an endorsement on your title insurance policy;
 Obtain endorsement form CLTA 107.9 for transfer to revocable trusts or HO 05 43
 Obtain expanded coverage on your title insurance policy to include coverage for trustees and successor trustees; or
 Obtain a new CLTA/ALTA Homeowner’s Policy of Title Insurance from 1998 to present.

See also Kwok v. Transnation Title Ins. Co. (2009) 170 Cal.App.4th 1562
This California Court of Appeals case involved a transfer of title of real property by use of a grant deed. A grant deed “grants” or “conveys” title to real property from the grantor to the grantee. This is also the mechanism for funding revocable trusts established through Trust Agreements under California Probate Code §15200(b). In the Kwok v. Transnation Title Ins. Co. case, several individuals owned a limited liability company (LLC), and the LLC was the owner on title of a parcel of real property. The LLC (through it owners) transferred the LLC’s interest in the real property to the revocable trusts of the owners of the LLC. The court held that this transfer constituted a voluntary act not covered by their title insurance contracts, which consequently terminated their title insurance coverage. After Kwok, voluntary transfers of real property to a revocable trust may terminate title insurance for the real property under the terms of some title insurance policy provisions.

Residential leases, in any facility where a person “resides”, cannot contain a mandatory arbitration clause.  The plain language of Civil Code Section 1953 states that waivers of litigation rights in a lease or rental agreement are void as public policy, and Civil Code section 1940 extends these rights to tenants, lessees, boarders, or others of a “dwelling unit.”  This has been extended to senior care facilities because they also “reside” there.  See Harris v. University Village Thousand Oaks CCRC, LLC (2020) 49 Cal.App.5th 847

Another case on the same arbitration issue, concerning a tort claim for bed bugs, also held tenant’s cannot be forced to arbitrate.  See Williams v. 3620 W. 102nd Street, Inc. (2020) 53 Cal.App.5th 1087

Also, don’t forget, possibly the federal arbitration act could apply, if it involves interstate commerce, which is the prerequisite for the federal Act’s application. (Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651, 657