Defendant cannot recover costs under FEHA, absent finding the action was “objectively groundless”

Williams v. Chino Valley Independent Fire District, No. S213100 (Cal. May 14, 2015)

If the defendant prevails in a case brought under the Fair Employment and Housing Act (FEHA), can it recover courts costs as a matter of right, as provided in Code of Civil Procedure § 1032, “or only in the discretion of the trial court pursuant to Gov. Code § 12965, a provision of FEHA itself?” And if the court has such discretion, then what is the legal standard for determining a cost award to a prevailing defendant?

The California Supreme Court resolves these questions in a case brought by a firefighter who sued his fire district under the FEHA, alleging disability discrimination. The trial court granted summary judgment in favor of the defendant and then awarded it over $5,000 in costs. In so doing, the court outright rejected the plaintiff’s argument that the court should apply to the cost claim the same “asymmetrical” legal standard in Christianburg Garment Co. v. EEOC, 434 U.S. 412 (1978) – namely, under which a defendant (unlike a plaintiff), even though the prevailing party would not receive attorney fees, unless the plaintiff’s action was objectively groundless. In awarding costs to the defendant in this case, the trial court made no findings that the plaintiff’s action was frivolous, unreasonable or groundless. The Court of Appeal affirmed, concluding that the Christianburg standard applied only to attorney fees, not costs.

In a unanimous decision, the California Supreme Court reversed, holding that the award of costs was wrong, in the absence of any finding the underlying action was “objectively groundless.” The Supreme Court’s adoption of an asymmetrical Christianburg standard for awarding fees and costs under the FEHA turns on a key analogy to similar awards under the Americans with Disabilities Act, which “makes fees and costs parallel” and gives trial courts discretion to award both, relying on the Christianburg standard, even though that case only involved attorney fees. Bottom line: In an FEHA case, the award of costs are controlled by Gov. Code § 12965, not Civil Procedure Code § 1032; and the awards must conform to the asymmetrical Christianburg standard.

Cities may impose conditions on businesses whose operations invite criminal activity, even in high-crime neighborhoods

Benetatos et al. v. City of Los Angeles, (2nd Dist. Ct. of App.), 2015 DJDAR 4149 (April 14, 2015)

Approving a potential mechanism for low income communities working with local government to combat crime in economically depressed neighborhoods, the Court of Appeal recently upheld a city’s effort to hold business owners accountable for their role in facilitating criminal activity.

The Los Angeles zoning administrator imposed, and the city council land use committee affirmed, a number of mitigation measures on the owners of a 24-hour fast food restaurant in Los Angeles that had become a magnet for prostitution, drug trade and public intoxication.

The owners filed a petition for writ of mandate in Superior Court challenging the operating conditions imposed by the city, resisting the requirements that they hire a security guard, reduce nighttime service hours and install video surveillance equipment. They contended that prior anti-crime measures they undertook at the request of the Los Angeles Police Department, including removing pay phones and outdoor seating, resulted in a significant loss of revenue. The owners argued that the court should use the independent review standard in assessing the validity of the operating conditions due to significant expense involved in complying with those conditions. The petitioners also argued that the restaurant was located in a high-crime area and the city was holding the owners responsible for the criminal activity of third parties. Applying the substantial evidence standard, the court found the operating conditions were a valid exercise of the city’s police power because it properly determined that the petitioner’s failure to maintain their property in a manner consistent with public safety and to discourage criminal activity constituted a public nuisance subject to abatement.

On appeal to the 2nd District Court of Appeal, the owners argued their petition should have been reviewed using the independent judgment standard, since the abatement measures imposed were so expensive they would force the owners to close the restaurant, abridging a fundamental vested right. Finding that the owners presented insufficient evidence of the cost or burden of the operating conditions imposed by the city, the court held that the owner’s right was not a fundamental vested right and that the court below appropriately used the substantial evidence standard of review. The court further held that substantial evidence supported the lower court’s finding that under Los Angeles Municipal Code Section 12.27.1, the restaurant was operated in a manner that constituted a nuisance and that the city’s abatement measures properly addressed that nuisance.

DHCS may recover from special needs trust after a beneficiary’s death where trust’s purpose was to preserve Medi-Cal eligibility

Herting v. Calif. Dept. of Health Care Services, (6th Dist. Ct. of App.), 2015 DJDAR 3521 (March 27, 2015)

Alexandria Pomianowski was severely injured in a auto accident at age 19.  For the next four years, until her death, she required constant nursing and personal care. A personal injury lawsuit related to the accident resulted in a large damages award for Ms. Pomianowski and that award was placed in a special needs trust for her care to facilitate her continued eligibility for Medi-Cal. Her mother, appellant, was named trustee.

Relying upon federal and state law that bars Medi-Cal from seeking reimbursement from a decedent’s estate for care provided to  via Medi-Cal to him or her while younger than 55, appellant sought to terminate the trust in which more than $1 million remained and deny Medi-Cal’s claim for reimbursement for more than $400,000 in health care costs it paid for the woman’s care. Department of Health Care Services (DHCS) pursued its claim, citing state and federal regulations that special needs trusts must provide for reimbursement to the state upon death. Ms. Pomianowski’s trust included such a provision.

Finding that the Ms. Pomianowski’s trust was established for the “specific and exclusive” purpose of maintaining the her eligibility for Medi-Cal and to pay for her additional needs not covered by Medi-Cal during her life rather than as an instrument to preserve and distribute estate property, the court held that DHCS may recover its expenses for her care prior to her death.  Appellant should have paid DHCS’s claim for its expenses for Ms. Pomianowski’s care in accordance with the terms of the trust, which specifically provided for such reimbursement.

Court bars personal suits by junior lienholders when foreclosure proceeds are insufficient to repay loan

Alborzian et al. v. JPMorgan Chase Bank, (2d Dist. Ct. of App.), 2015 DJDAR 2950 (March 12, 2015)

In a decision clarifying the rights of borrowers, the 2d District Court of Appeal held that junior lienholders may not sue a borrower personally to recover a loan balance post-foreclosure and borrowers may sue such junior lienholders under certain federal and state fair debt collection statutes if lienholders’ collection efforts imply that a debt is still enforceable.

Appellant former homeowners sued JP Morgan Chase Bank after the bank attempted, nearly a year after the foreclosure sale, to collect the remaining balance on the junior lien, which was not repaid with the foreclosure sale proceeds. The bank sent letters to the appellants implying that they were personally liable for the debt and offering to settle for a smaller amount. Appellants argued the collection efforts were misleading and violated several state and federal statutes including the Fair Debt Collection Practices Act (FDCPA), the Rosenthal Fair Debt Collection Practices Act and California’s Unfair Competition Law.

Despite the fact that respondent’s collection letters included a disclaimer saying the letter did not constitute an attempt to collect a debt or impose personally liability, the court held that the letters were ambiguous and allowed the appellants to allege misrepresentation and deception sufficient to survive demurrer on the FDCPA claim. However, the court held that mortgage borrowers may not sue collectors or lienholders under the Consumer Legal Remedies Act because the statute applies only to debt collection involving “goods and services” and mortgages are money debts.

“Plain meaning” requires narrow definition of who qualifies for enhanced relocation benefits

City of Los Angeles v. Superior Court of Los Angeles County, (2nd Dist. Ct. of App.) 2015 DJDAR 1724, (February 10, 2015).

The Los Angeles Municipal Code, as part of its rent stabilization ordinance, guaranteed certain displaced tenants relocation assistance. Any head of household who is “handicapped” as defined by the Calif. Health & Safety Code Section 50072 is deemed a “qualified tenant” under the code section and received an enhanced payment.

The real party in interest in the case, Mr. Wade, was evicted by his landlord after his rental unit was deemed an illegal rental by the city. Mr. Wade argued he was entitled to the enhanced payment due to his disability, but his request was denied at the administrative level because he was a single person, and according to the city not the head of a household. He filed a petition for writ of administrative mandamus pursuant to Calif. Code of Civ. Proc. Section 1094.5. Finding that the term “head of household” can be an individual who is the head of a household of one, the Superior Court held the application for the writ in abeyance and directed the city to conduct an additional administrative hearing. The city appealed.

While the Court of Appeal found that the lower court had not actually issued the writ and its decision was therefore not a final judgment, it treated the appeal as a petition for writ of mandate and, applying the plain language principle of statutory construction, held that since Calif. Health & Safety Code Section 50072 specifically defined “handicapped” as including a “family in which the head of household is suffering from an orthopedic disability impairing personal mobility…”, a single person, like Mr. Wade, could not be a “qualified tenant” and he was consequently not entitled to the enhanced relocation assistance payment.

Court of Appeal upholds rent control protections for lawful occupants

Mosser Companies v. San Francisco Rent Stabilization and Arbitration Board, (1st Dist. Ct. of App.) 2015 DJDAR 878, (January 21, 2015).

Upholding the trial court’s denial of a landlord’s petition for writ of mandate, the Court of Appeal held that San Francisco’s rent control ordinance limiting rent increases for “original occupants” of a unit under a rental agreement protects any lawful original occupants, including minors.

The case involves a landlord’s attempt to nearly double the rent on a unit when the original signatories to the lease vacated the unit, but their son remained. The son was 13 years old when the family took possession of the unit ten years before and had lived in the unit continuously since his parents entered into the rental agreement. The case hinges on the definition of “occupant” under both the rent control ordinance and the 1995 Costa-Hawkins Act, which prohibited vacancy control ordinances that limited a landlord’s ability to set rental rates for new tenancies. The court found that in both laws, occupant meant lawful occupant and the son was a lawful, original occupant of the unit and entitled to protection under the ordinance. The court was careful to note that its ruling did not establish a right to inherit a parent’s tenancy, rather the son in this case had his own personal right to occupancy as he had been a continuous, lawful occupant since the family moved into the unit.