Pappas Law Blog

This is a big one on the plaintiffs’ personal injury side: Yanez v. SOMA Environmental Engineering, Inc.: Pretty much anyone who has a pulse knows that it costs a lot more for an uninsured person to obtain medical services than health care insurers reimburse doctors for those same services. The health care insurers get a huge “volume discount.” That discount can be seen on the Statements of Benefits that insured people receive from their health care providers: The original charges, the much lower payments by the insurer, and the write-off (usually) taken by the health care provider. For years, in personal injury cases, the defendant who caused injury has been claiming the benefit of those write-offs by arguing that the injured party’s actual medical expenses are only those amounts paid by the health care insurer and accepted by the medical care provider. Recently, however, in a couple of cases the plaintiffs’ lawyers have pursued the issue in the Court of Appeals, and prevailed.

Yanez succeeded in having the Court of Appeals rule that the amount originally billed by the health care providers was the amount of medical damage she was entitled to recover from the defendant who was responsible for her injury, and that the defendant should not receive the benefit of the discount received by Yanez’ health care insurer who paid the medical bills. This is an application of the “collateral source rule” which holds that, as part of a public policy to encourage people to acquire insurance, the fact that they have done so should not inure to the benefit of people who injure them.

If memory serves, there are now three cases in the California Courts of Appeals (and its six appellate districts) addressing the issue. The first, decided many years ago, went against the plaintiff, but within the last year or so two have favored the plaintiff, including the Yanez case. I imagine that this conflict among the districts will be taken up by the California Supreme Court soon. Whoever replaces retiring Chief Justice Ron George may have a very large influence on the outcome of the issue.

Uniformly, health care insurers have provisions built into their policies which require their insureds to reimburse them for damages the insureds receive in personal injury cases attributable to payments made by the insurers. Now, rather than simply forking over the entire portion of a personal injury award attributable to insured medical expenses (other than the attorney’s fee, which the insurers are required to credit), there will be something left for the injured party.

Good one, eh? Espinosa v. Kirkwood. Apparently Kirkwood wasn’t a very good getaway driver…he hit two cars when the police were chasing him, and injured his passengers who were escaping the scene of a burglary. They sued him. California Civil Code section 3333.3, which resulted from the passage of Proposition 213, says a person may not recover any damages in a lawsuit based on negligence if his or her injuries were “in any way proximately caused by the plaintiff’s commission of any felony, or immediate flight therefrom, and the plaintiff has been duly convicted of that felony.” Held: the statute applied to prohibit the burglars’ recovery of damages from their getaway driver.

Breiner v. Nevada Department of Corrections: After a male prison guard impregnated one of the inmates, the Nevada Department of Corrections imposed a quota requiring that 70% of the guards be female, and hired only females as supervisors (lieutenants). Held: This is gender discrimination in employment. The exception allowing discrimination in jobs for which gender is a bona fide occupational qualification was held not to apply, because the Nevada Department of Corrections did not prove that the essence of its business operations would be undermined by hiring males. Such proof would have included proof that women by virtue of their gender could better understand the behavior of female inmates. Really? How hard would that have been to prove? Can’t courts take judicial notice of the obvious?

Toyota Motor Sales U.S.A. v. Tabari: The Tabaris were auto brokers who used domain names “buy-a-lexus.com” and “buyorleaselexus.com” to advertise for business. Toyota Motor Sales U.S.A. filed suit for trademark infringement. Miraculously, the Tabaris stood up to the deep pocket corporation, and despite losing in the trial court, prevailed on appeal. The 9th Circuit Court of Appeals held that the Tabaris’ use of the word “Toyota” in their domain names was fair use, because the web sites did not suggest endorsement or sponsorship by Toyota, and used no more of Toyota’s trademark than was necessary to denote the fact that the Tabaris specialized in brokering Toyotas. In other words, there could be no “confusion as to source,” the linchpin of a trademark infringement case.

GreenLake Capital LLC v. Bingo Investments LLC:  GreenLake sued Bingo to recover a commission earned pursuant to a contract GreenLake had with Bingo to help Bingo raise money.  GreenLake had arranged a $275 million secured line of credit for Bingo.  Bingo defended on the ground that GreenLake was not a licensed real estate broker and therefore could not legally earn a commission on the transaction.   The Court of Appeals overturned the trial court’s order of summary judgment dismissing GreenLake’s case, holding that there were issues of fact which deserved a trial arising out of the nature of the services rendered by GreenLake and the collateral for the line of credit.  If the collateral was actually real estate, and GreenLake had brokered a loan, then GreenLake would have been required to hold a real estate broker’s license.  However, the transaction arranged by GreenLake was a line of credit rather than a loan, GreenLake’s contract called for it to provide “advisory services” rather than act as a broker, and the record on appeal suggested that the collateral might be ownership interests in a corporation or LLC that owned real estate, rather than real estate itself.  Summary judgment was therefore inappropriate.  The Court of Appeals held that the trial court should look at the transaction to determine if the services provided by GreenLake could be severed into services which did not require a broker’s license and those which did, stating that GreenLake could be compensated for those services provided which did not require a broker’s license.

Legacy Vulcan Corp. v. Superior Court (Transport Insurance Company):

Zoran Corp. v. Chen:  Zoran sold equipment components to companies owned by Chen and his relatives, in which many corporate decisions were heavily influenced, if not entirely controlled, by Chen despite the fact that others were officers.  Zoran sued Chen on a theory of “alter ego liability” for debts owed by the corporations.  After the trial court dismissed the case on summary judgment, Zoran appealed.  Held:  issues of fact remained as to whether Chen was the alter ego of the debtor corporations (making Chen liable for their debt), so the case was remanded to the trial court for trial.  The determinative fact seemed to be that Chen directed the maintenance of very low account balances in his corporations and sent corporate funds to another corporation he controlled in Taiwan.

The alter ego theory, or “piercing the corporate veil”, relies on the court weighing several factors reflecting on whether an individual exercises “domination and control” over the corporation, but the ultimate issue is whether treatment of the corporation as a separate entity from the individual would amount to a fraud on creditors.  (Not using “fraud” in its technical sense here.)

Ok, the idea here is that I am going to blog about the new Court of Appeals cases that are relevant to my practice.  I read the new cases pretty much every day to make sure I am up to date with my legal knowledge, and to help with my issue spotting.  I will be catching up on some reports that I have been saving while we (my crack webmasters, my daughter and her boyfriend) were getting this blog set up.

6/18/10

Wolf v. CDS Devco:  Wolf, a director of a subsidiary corporation, frequently demanded to inspect the corporation’s financial records.  Wolf was also a shareholder of the corporation’s parent corporation.  A meeting of the subsidiary’s shareholders (the parent) was held to remove Wolf as a director of the subsidiary.  Prior to the meeting, Wolf sued for a declaration that he be allowed to continue inspecting the subsidiary’s financial records.  Held:  After he was removed as a director, Wolf lacked standing to inspect the subsidiary’s financial records.

Minkler v. Safeco Insurance Co.:  Minkler sued David Schwartz and Minkler’s mother, Betty Schwartz, alleging that David had sexually molested him and that Betty was negligent in her supervision of David.  Betty tendered defense to her homeowners insurance provider, Safeco.  Safeco’s policies over the years, on the one hand excluded coverage for intentional acts of “an insured”, and acts of “an insured” from which injury was “expected or intended.” On the other hand, Safeco’s policy had a severability-of-interests or “separate insurance” clause stating that “this insurance applies separately to each insured.”  Safeco denied coverage on the ground that David was “an insured”  and that therefore his intentional acts were excluded.  In the insurance coverage lawsuit which followed, the court held that the “separate insurance” clause creates an ambiguity, applied the familiar rule that ambiguities in an insurance policy are to be construed in favor of the insured, and thus held that the homeowners’ policies provided liability coverage and a duty to defend Betty from Minkler’s lawsuit.