California has long prohibited employers from requiring employees to sign agreements denying the employee the right to disclose information about unlawful acts in the workplace, including but not limited to, sexual harassment in order to obtain a raise or bonus or as a condition of employment or continued employment.
Prior to joining Diemer and Wei, Paul John practiced construction litigation and contract disputes at a firm in Sacramento. Paul John received his J.D. with a specialization in intellectual property from the University of California, Davis School of Law, where he served on the Environs Environmental Law and Policy Journal as well as the boards of the King Hall Intellectual Property Law Association and the Filipino Law Students Association. Prior to law school, Paul John was a civil engineer in southern California, primarily working on stormwater and wastewater projects.
Pear v. City and County of San Francisco (No. H045045, Court of Appeals of California, Sixth District. Filed July 28, 2021.)
The Pear case involves a very high traffic area in Mountain View, California—namely the Target shopping center area off El Camino and near San Antonio. Of particular interest, the Pear opinion goes on at some length to parse out what uses are available to the Pear family, who hold the easement rights as the dominant tenement.
HOLDING: The Sixth District Court of Appeals found that the Pear’s easement over the land did not give them the right to have a parking lot for their commercial tenant, Target. The access language did give them the right to have customers drive over and across and (incidentally park) upon the Wheel Works auto bays.
This is the time of year when I sum up big legal milestones in real estate. Unsurprisingly, COVID-19 was the driving force for emergency regulation in 2020 and most of the new law was due to the pandemic. In reviewing the real estate legal landscape in California for 2020, it’s not surprising that I would dub it The Year of the Lease.
The big law of 2019 was AB1482 (the California Tenant Protection Act of 2019) and the big law of 2020 was AB3088, the COVID-19 Tenant Relief Act of 2020, followed closely by Prop 19 and SB1079. Both AB1482 and AB3088 were enacted to protect California’s residential tenants.
In a 74-page decision last Thursday, October 22, the California Court of Appeal upheld the lower court’s grant of preliminary injunction that “restrains Uber and Lyft from classifying their drivers as independent contracts.” The People of the State of California v. Uber Technologies, Inc., et al. (2020) 2020 Cal. App. LEXIS 988, 2020 WL 6193994.
The current law governing whether a worker is an employee or an independent contractor comes from a 2018 California Supreme Court case, Dynamex Operations W. v. Superior Court (2018) 4 Cal. 5th 903, which the California legislature codified into Labor Code Section 2775. Section 2775 establishes a presumption that one who provides labor or services for payment is an employee. (California Labor Code § 2775, subd. (b)(1).) This presumption may be rebutted if “the hiring entity” establishes multiple elements referred to as the “ABC test.”
Many entrepreneurs will organize their business into a limited liability company (LLC) or similar entity to obtain limited liability protections. Lawyers counseling these business owners often recommend that their clients observe corporate formalities by following such practices as conducting regular corporate meetings, taking minutes of those meetings, and approving resolutions of important actions taken by the LLC. Maintaining limited liability is an important reason for a company to follow corporate formalities and maintain formal records, but there are other important reasons to maintain these practices that are even more basic.
In the case Kelegian v. Mgrdichian (1995) 33 Cal. App. 4th 982, a California Court of Appeal quoted the trial judge’s wise words:
After obtaining a judgment against a party, the next step for the judgment creditor is to enforce the judgment against the judgment debtor. If the judgment debtor owns real estate in California, a creditor can record a judgment lien against the judgment debtor’s real property. Cal. Civ. Proc. Code § 697.340. A judgment lien gives the creditor priority over unsecured creditors , and secures the right to be paid from the proceeds of a sale of the debtor’s real property or from the debtor’s monetary award in another lawsuit assuming there is equity in the property.
Businesses are closed due to government mandate. In the San Francisco Bay area, other than in San Mateo county until it ended up on California’s county watch list, businesses like movie theaters, gyms, and salons have not been able to operate at all. What business can sustain four months to a year of no income?
Other than salary, the next largest operating expense for businesses is often rent.
These are the evaluations that businesses and landlords are making moving forward:
How will backrent be addressed?
Can the business continue in a post-Covid world and remain in the leased premises?
What are the consequences for terminating the Lease?
Foreclosure filings were initially down nation wide for COVID-related reasons but as we head into fall, those moratoriums are all lifting. That means it’s time to talk about bid instructions to the trustee and why lenders should beware of the full credit bid.
Lenders Lose Rights When They Take a Property Back With a Full Credit Bid.
After the Notice of Default has been recorded, and the borrower fails to reinstate the loan, the foreclosing trustee will ask the beneficiary to provide bidding instructions for the trustee’s sale. The trustee will ask what the opening bid amount is.
Since the outbreak of COVID-19 began, business as usual has been disrupted. As a result of various government interventions, there has been a disruption of supply chains across all industries. Manufacturing, processing, transportation, and agriculture have either slowed or ground to a halt. As a result of these disruptions, businesses find it increasingly difficult to meet their demands and, in some cases, their contractual obligations.
This leaves an unanswered question, who should bear the losses and face the consequences of a contractual breach?
California Judicial Council Adopts New Rules to Lower Jail Population, Suspend Evictions and Foreclosures
By Julia M. Wei, Esq.
On April 6, 2020 by teleconference, the Judicial Council issued 11 temporary rules effective immediately. The full text of the emergency rules here.
As our firm’s earlier update regarding eviction moratoriums noted, there has been movement both on the state and local government level to halt or otherwise slow the progression of evictions due to non-payment of rent for COVID-19 related reasons. The practical implications are that any unlawful detainer must be filed in the courts and now the California Rules of Court emergency rules are in effect as to ALL unlawful detainer actions (whether COVID-19 related or not). My reading of the new rules is that it applies to both commercial and residential eviction.
In these unprecedented times, many local and state governments have taken various steps to protect tenants, in some instances including commercial tenants, from eviction. On the state level, on March 27, 2020 Newsom issued an Executive Order effectively delaying all residential unlawful detainer actions. The text of the Executive Order is here. The Order gave all residential tenants an additional 60 days to respond to an eviction lawsuit if the tenants notified their landlord that they were unable to pay rent due to Covid-19 issues. The California order did not stop or delay any evictions that were occurring for other reasons such as illegal activity on the property or an owner move-in. This protection is to last until May 31, 2020 unless otherwise extended.
Businesses of all kinds will be forced to keep their doors closed in the coming weeks in the face of COVID-19 and the orders from Governor Newsom  and the Santa Clara County Health Officer.  Business owners should be turning to their insurance policies to consider what help they will be able to obtain. Each business will have different results depending on the kind of coverage they have. This article outlines a few of the common insurance issues that will be relevant in the current crisis.
We are getting a lot of questions about contract enforcement during this state of emergency. Many people need to be excused from contract performance for reasons entirely out of their control. That means we are throwing around terms like "force majeure" to address whether performance is excused due to COVID-19's' effects such as the State of Emergency and California's Executive Orders, and the various counties' shelter-in-place orders.
Palo Alto City Council voted last night to adopt the Urgency Ordinance to halt residential evictions for COVID-19 related hardship.
The city's moratorium on evictions will remain in effect until the city's state of emergency expires. After that, residents would have 120 days to make full payment of the back rent.
Looking at the Agenda for the Palo Alto meeting reveals that the council is also evaluating to extend the eviction moratorium to small businesses, non-profits and commercial tenants also impacted by the State of Emergency. Agenda found here.
The moratorium applies to all residential properties in San José, including single-family homes, rooms rented in single-family homes, duplexes, condominiums, income-restricted apartments (i.e., affordable housing), rent-stabilized apartments, market-rate apartments, and mobilehomes.
Please note the moratorium only applies to residential evictions for nonpayment of rent due to impacts of the COVID-19 outbreak. There is no moratorium on lawful evictions for other just causes.
Neighbor disputes are expensive, time consuming, and there is no attorneys’ fees provision. The recent case of Madani v. Rabinowitz is one where the misplaced fence was moved, and the wronged neighbor received no damages.
Mr. Madani sued his neighbor for trespass and nuisance after he had a survey done and learned that the shared fence encroached on his side of the property and that Mr. Rabinowitz was parking cars on his property.
In California, the statute of limitations for bringing a trespass claim is three years. (Code Civ. Proc., § 338, subd. (b).) The same three-year statute of limitations applies to private nuisance claims.
As the legalized marijuana at the state level continues to thrive, bankruptcy courts flirt with marijuana’s place within the Bankruptcy Code. One principle begins to emerge: while presence of marijuana does not automatically call for dismissal, if the court and trustee have to participate in or condone the illegal conduct in any way, the case will be dismissed.
Since the legalization of marijuana has occurred in several states over the past several years, multiple courts have ruled that the continued illegality of marijuana on a federal level prevents debtors entrenched in the marijuana industry from garnering the benefits of bankruptcy protection. See In re Rent Rite Super Kegs W. Ltd., 484 B.R. 799 (Bankr. D. Colo. 2012) (A debtor whose plan relied on roughly 25% of its income from renting property to marijuana growing operation was “cause” to dismiss case under 11 U.S.C 1112(b), constituted gross mismanagement of the estate, and debtor was not operating with “clean hands.”); In re Arenas, 514 B.R. 887 (Bankr. D. Colo. 2014) (prohibition against marijuana related activities extended to cases under Chapter 7 and Chapter 13).
On December 30, 2019, Uber and Postmates filed a lawsuit to stop enforcement of AB-5, California’s new legislation that makes it more difficult to classify workers as independent contractors.
Obviously Uber and Postmates’ entire business model relies on having “gig” workers who drive for them. Other industries, such as trucking, have also filed suit to enjoin the enforcement of AB5.
Prior to California enacting AB5 to expand the definition of employee, California businesses needed to meet the ABC test laid out in the Dynamex case in order to classify an worker as an independent contractor. Those factors were:
Worker is not controlled by the company in performing work; and
Worker has work outside the company’s usual course of business; and
Worker is engaged in an independently established trade, occupation, or business of the same type of work performed for the company (perhaps certified or licensed).