California Business Litigation Attorney Blog

What is the standard of care for a veterinary pre-purchase examination? This question was asked recently in the March 2013 California case, Quigley v. McClellan. In Quigley the buyers hired the veterinarian who had been treating the horse for the past two years to conduct a pre-purchase examination. The buyer sued the veterinarian and his medical group for veterinary malpractice alleging that the veterinarian failed to disclose that he himself had treated the horse for lameness and had personal knowledge that the horse had been laid up for a six month period. The surprising outcome of this case hinged not on what the witnesses said but on the questions not asked by the Buyer's attorney during the course of the trial. Thus, the question remains, Although this case does not discuss what the standard of care for the veterinarian should be, it does demonstrate why it is important to hire an experienced litigation lawyer who is familiar with equine law issues in these types of cases.

The buyer's expert testified at trial that, "the three critical parts of the prepurchase to me are identifying the problems . . . documenting them, and then explaining the relevance . . . to the potential buyer." The expert then went on to testify as to how the horse's problems were not, in his opinion, documented properly.
The jury found in favor of the buyer and returned a verdict of negligence against the veterinarian. The veterinarian appealed the verdict and the appellate court reversed it because the expert testified only as to his own opinion and did not establish for the jury the applicable "standard of care" in the community. While this case underscores the importance of hiring an experienced litigation attorney who knows how to ask the correct questions, it does not answer the question of what should go into a proper pre-purchase examination.

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Civil mediation in California (as opposed to mediation in family law or other cases) is a type of alternative dispute resolution that helps parties try to resolve their cases without having to face the time and expense of trial. Although many people have heard the term "mediation" they often do not know what to expect. There are a number of rules and procedures regarding mediation and understanding these procedures may help ease anxiety before mediation occurs.

Initiating Mediation. Mediation may be initiated at any time. Sometimes the parties may agree to mediation prior to a lawsuit and other times mediation is scheduled after a complaint is filed. Mediation can be initiated by the court or the parties. The court may order mediation if it determines that the case is suitable and may be resolved before trial. The parties can initiate mediation by agreement, for example through a mandatory contract clause, or by a signed stipulation. If the parties agree to mediation by stipulation, the stipulation must be filed not later than 90 days before trial, unless the court permits otherwise.

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Practicing law in January is always challenging because with the New Year there are always changes in California law. This year is no exception. Governor Jerry Brown signed over 800 new laws that took effect in California on January 1, 2013. Some of the new laws that will be of interest to our clients in the areas of litigation, real property law, business and contract law, and privacy are listed below.

Privacy. California has joined many other states in banning employers and colleges from demanding the passwords for an employee, prospective employee or college applicant's social media account. Employers and colleges can no longer demand or even ask for social media login information. This does not mean you can freely post whatever you want on Facebook, that information can still be the subject of discovery.

Changes in Litigation Laws. AB 1875 limits depositions to seven hours of testimony. There are a number of important exceptions to this rule but it will make it more difficult to harass witnesses and litigants by keeping them at their depositions unreasonably. AB 1631 allows out-of-state attorneys to represent a party in an arbitration proceeding in California if certain conditions are met.

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Unfortunately, more often than not property owners find themselves involved in a dispute with a contractor or subcontractor whom they have hired. The property owner withholds payment for work that is not performed properly or timely and the contractor retaliates by recording a Mechanic's Lien against the owners' property. If the Mechanic's Lien was not filed correctly or has grown stale, the Mechanic's Lien can be removed or "expunged" by a court fairly quickly. It is critical in these cases to seek the assistance of an attorney who is experienced with expunging Mechanics Liens.

The California Mechanic's Lien Law was completely revised and restructured as of July 1, 2012. The change in law means that contractors and subcontractors needed to update their forms and use slightly different procedures to enforce a Mechanics' Lien. (See Cal. Civ. Code sections 8000 - 9566.) This created a trap for unwary contractors who used the same form they used prior to July 1, 2012.

Continue reading "How to Remove an Improper Mechanics' Lien" »

With the uncertainty of the economy, many California home and business owners have elected co-ownership when purchasing a home, commercial property, or business. A partnership interest in a business can be a wise investment, but can also lead to the demise of the business if the relationship goes sour. What happens if one person disagrees with the way the business is run or how the real estate is being used? What if one person wants to move away or retire? Can this disgruntled owner part ways and still reap the benefits of his or her investment? When there is a quarrel between co-owners or partners, hiring an experienced business lawyer or real estate attorney to file a partition action may be the best and only way to settle the dispute in a fair and just manner.

What Is A Partition Action? A partition action allows the court to divide property equally between interested parties. California Code of Civil Procedure section 872.010 et seq. contains the rules regarding partition actions. Since many partition actions involve real estate, this type of lawsuit is commonly associated with real property. However, partition may also be applied to dissolving any type of partnerships. This is known as an action for partition of partnership property. Although personal and real property can be divided through a partition action, community property (property acquired during a marriage) cannot be partitioned by this section of the California code.

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Last Friday, in Plotnik v. Meihaus, the Court of Appeal recognized that under California law, pet owners may recover for "mental suffering" which is caused if another person intentionally injures or kills their animal. This is a case that we have been watching because of its impact on California horse law and the horse industry.

Among the cases cited by the court in upholding over $160,000 in damages and over $93,000 in attorney fees was the 2009 case of Jamgotchian v. Slender (2009) 170 Cal.App.4th 1384 in which a horse owner sued the track steward for trespass when the horse was injured in a race after the steward rejected the owner's request that the horse be scratched from the race. The court looked at the growing trend across the country allowing pet owners to recover for mental suffering caused by another's wrongful acts that result in injury or death of a beloved animal including the nightmarish Kentucky case, Burgess v. Taylor (2001) 44 S.W.3d 806 in which a lessor under a "feed lease" sold the leased horses for slaughter and then lied about it to the owner.

Continue reading "Emotional Distress Damages Are Awarded for Injury to Family Pet: Dog, Cat and Horse Owners Are Vindicated!" »

Anyone who wants to buy a business needs to be cautious before signing an offer. It is critical to consult with a lawyer who is experienced in California business sales to guide you through the process. Very often the business purchase agreements presented by brokers to potential buyers are designed to protect the broker and not the parties to the agreement. By contrast, the California Association of Business Brokers has an excellent standard form that is a good starting point for negotiations.

Structuring the Transaction. First you need to decide the structure of the agreement. Structuring the transaction is not an issue that should be determined by a business broker. You should consult with your tax advisor and attorney to determine how you are going to hold the company. Will you operate the business as an S-Corporation, a C-Corporation, a limited liability company or some other form? Are you buying an existing company or only the assets of the business? Each transaction is different and must be separately evaluated.

Continue reading "Buying a Business: Common Dangers and Pitfalls" »

One of the sad truths a business litigation lawyer must explain to their client is that sometimes the cost of going to court exceeds the amount of damages that can be recovered. This is true because in California, unless there is a special statute that allows the recovery of attorneys' fees, those fees are not recoverable unless they are required by a written contract. This is one of the problems with an oral agreement; if a party breaches the agreement, the aggrieved party is not entitled to recover attorneys' fees. Because of this rule, arguably the most important clause in a contract can be the attorney fee provision. This is the second installment of a multi-part blog that explains some of the more common provisions found in California agreements.

Unilateral Attorney Fee Clauses. In some states unilateral attorney fees provisions are permitted. An example of a unilateral attorney fee clause would be a clause that says if Company A has to sue Company B and prevails, Company B must pay Company A's attorney fees. This leaves Company B with no attorney fees if it wins. In California unilateral attorney fee provisions are automatically construed to be reciprocal under Civil Code section 1717. Therefore, in the example above, Company A would still be allowed attorney fees even though the contract seemed to provide for attorneys' fees only if company B won. Part 1 of this blog dealt with Choice of Law, Jurisdiction and Venue provisions. This is an excellent example of why choice of law provisions are critical. In California, unilateral attorney fee clauses are not allowed, in other states they are.

Continue reading "Boilerplate: What Does the Fine Print Mean? Part 2 - Attorney Fee Provisions " »

The standard legal provisions that appear at the end of a contract are often called "boilerplate provisions." Although most people are not interested in the fine print of a contract, these provisions are important and because of the nuances in California law, it is important to understand why those provisions appear in your agreement. In fact, one of the biggest problem with online legal forms is that many of them have flawed or no standard legal provisions appropriate for California. The failure to include a critical provision can cost you tens of thousands of dollars in damages and legal fees if something goes wrong.

This is the first installment of a multi part blog that explains some of the more common provisions found in California agreements such as Choice of Law, Jurisdiction, and Venue. Before you sign any business contract, service contract, real estate agreement or other agreement whatsoever, it is important to have that agreement reviewed by an experienced business attorney who can make sure you understand and can live with all the provisions of the agreement. Indeed, as noted in a recent case, Ruiz v. Affinity Logistics Corp., even if the contract does include a choice of law provision, it does not necessarily mean that the provision is actually enforceable. There are many rules that go into determining if the clause, as drafted, will be upheld by a court.

Continue reading "Boilerplate: What Does the Fine Print Mean? Part 1 Choice of Law, Jurisdiction and Venue" »

Recently, California courts have been overwhelmed with lawsuits brought under the Americans with Disabilities Act (ADA) and Unruh Civil Rights Act. Unfortunately, many commercial leases are drafted without addressing the critical issue of how the parties will comply with the ADA or who will absorb the cost of an ADA lawsuit. It is up to Landlords and Tenants to secure competent real estate lawyers to assist them with these issues. Although there are bipartisan attempts in Sacramento to reduce rampant ADA lawsuits, the most recent proposed legislation, SB-1186, has been modified and does not appear to have sufficient substance to provide relief for small businesses in the near future.

Addressing ADA Issues in Commercial Leases. The ADA obligates anyone who "owns, leases (or leases to), or operates" a "place of public accommodation" to make sure that place or premises complies with ADA guidelines. The question then becomes, who will have the burden of paying for compliance? It is important to allocate the burden in the lease. If it is a "gross" lease, the landlord will probably be responsible for the structure and building, however, if there are issues that are solely within the tenant's control (such as placement of furniture), the tenant should still be responsible. Nevertheless, if the lease does not clearly allocate responsibility, problems will arise. At a minimum the lease should include a statement as to whether the property and the project in which it is located complies with the ADA, who will be responsible for retrofitting if it is required, and how the cost of compliance will be allocated. If the lease calls for Tenant Improvements and includes a Work Letter, ADA issues should be addressed in the Work Letter.

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Debt collection in California is tricky. It is never worthwhile to try to harass or embarrass a debtor into paying a debt. There are a myriad of laws protecting debtors and even though your debt is legitimate it is best to consult with a business lawyer to make sure your debt collection practices will not expose you to liability so that you wind up owing your debtors money. The laws that apply to debt collection in the business world apply equally to debt collection in the horse industry. While each case may vary, it is best to avoid these types of debt collection practices:

Discussing a Debt with Third Parties. Generally speaking, it is best to discuss a debt only with the debtor or the debtor's lawyer. Under the Federal Fair Debt Collection Practices Act; and the Rosenthal Fair Debt Collection Practices Act communications with anyone but a debtor or a debtor's attorney is prohibited. The publication or posting of "deadbeat lists" not only can violate the California and Federal laws listed above but they can also give rise to an action called known as "Public Disclosure of Private Facts." (See California Civil Jury Instruction 1801). Similarly, comparing notes with other vendors, "black-listing" a client, or other public humiliation tactics expose you to the risk of suit if they result in damage to the debtor. Even mentioning the debt can be risky. Further, if the information you convey is not completely accurate you also face the possibility of being sued for defamation. You may not communicate with the debtor's employer or trainer or any horse show or horse association regarding the debt unless you are specifically authorized to do so by law or by a written waiver from the debtor. While you are not obligated to continue providing services, you do not owe anyone an explanation and a statement such as "they owed me money" can be enough to get you sued if you then caused the debtor damage. The best answer is "it is a private business matter" and leave it at that.

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Last week in United States v. Alvarez, the United States Supreme Court struck down the "Stolen Valor Act" which made it a crime to lie about receiving a military decoration or medal. The court recognized that a lie, in and of itself, is protected by the First Amendment unless it creates some "legally cognizable harm." One of the types of "legally cognizable harm" recognized by the court was defamation. In California, the rules on defamation change depending on whether the defamed individual is a public figure or a private figure and it also depends on whether the lie is about a matter of public concern or private concern. As a business law litigation attorney, most of the defamation cases I deal with involve private figures who are defamed about private matters. Most of our cases arise in a business context where two parties have a dispute and then tell others about their point of view.

The elements of this type of defamation action can be found in the California Civil Jury Instructions. First, the statement had to be made to a person other than the Plaintiff. In other words, it is not defamation to tell someone a lie about themselves. If some one writes a letter addressed to you personally telling you that you cheated them on a real estate transaction, that alone is not defamation; the statement had to be made to someone else. However, let's say you are in a crowded elevator and someone loudly shouts defamatory statements to you. Since the statement was heard by others, that may satisfy this requirement.

Continue reading "Is it Defamation? The Basic Elements of Slander and Libel." »

I often get calls from clients who are looking for a real estate lawyer to put a lis pendens on someone's real property. I then explain to them that they must file a lawsuit to do this and they are surprised. A lis pendens literally means a "Notice of Pending Action." In other words, it is a notice to the world that there is a lawsuit regarding title to that real estate. A lis pendens is not a lien and it cannot stop someone from selling or getting a loan secured by real property, however, it usually does effectively deter others from selling or borrowing money because it means the ownership rights to that property are in question.

A lis pendens is permitted in some types of lawsuits and actually required in other types of actions. It is required in lawsuits for Partition, Eminent Domain, Quiet Title, Claims to Escheted Property, Forefeiture Proceedings, and Actions to Declare a Building Uninhabitable. It is permitted in other types of cases where someone has a real property claim such as mechanic's lien foreclosure lawsuits, divorces, suits to enforce easement rights, and suits to specifically enforce a real estate contract. It is critical, however, to consult a real estate litigation lawyer who is familiar with these laws because you may subject yourself to liability later for improperly filing a lis pendens.

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