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  1. Peterson, Martin & Reynolds LLP Obtains $2+ Million Settlement for Commercial Landlord Client

    Maria Tanzillo2020-05-29May 29, 20204:52 amComments Off on Peterson, Martin & Reynolds LLP Obtains $2+ Million Settlement for Commercial Landlord Client
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    In January, 2020, Peterson, Martin & Reynolds LLP obtained a settlement for a commercial real estate client for $2,103,745.  PMR’s client had leased a 31,320 square foot biotech facility in Foster City, CA for 10 years to a leading international biotech company.  When the biotech company moved out, it failed to properly restore the premises, which delayed and interfered with the client’s ability to re-lease the premises.  The lawyers of  Peterson, Martin & Reynolds LLP sued on behalf of their commercial landlord client.  After protracted litigation, including two unsuccessful appeals by the biotech company lawyers, the biotech company settled the case before the scheduled February, 2020 trial.

  2. Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One

    Maria Tanzillo2017-06-05June 5, 20175:04 pmComments Off on Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One
    By: , Posted:

    By M. Henry Walker

    This case involves the appeal of a trial court’s judgment granting an equitable easement over rural property in Ventura County. Plaintiff Hinrichs originally owned two large parcels which he inherited from his mother. He grew up in a home located on the southern parcel but hadn’t lived there since moving to Alaska in the 1980s. He sold the southern parcel to a third party based on the belief that he still had access to the only public road servicing the area via an historic trail which first appeared on a federal survey map in 1868 and which traversed several neighboring parcels. He was wrong in this regard; the owners of the neighboring parcels denied him access over the historic trail meaning his northern parcel was actually landlocked.

    Hinrichs sued several neighbors, claiming he had an easement which was appurtenant to the original land patent, that he had acquired a prescriptive easement, and that he was entitled to an equitable easement by necessity. The trial court rejected the first two theories but entered judgment in favor of Hinrichs on the third, creating an equitable easement by necessity. The location of the created easement, however, was not over the historical trail area previously used for ingress and egress but rather over a new indirect route which was less accessible due to the terrain. While portions of the newly created easement had existing driveways, in order for Hinrichs to use the judicially created easement he would be required to grade two new roadways to connect to the existing portions. The trial court applied the “balancing of hardships” test and determined this to be the best location because this location would only minimally interfere with the servient parcels.

    Hinrichs appealed, arguing the trial court erred in denying him an easement over the historic trail. The other parties appealed as well, claiming among other things that the trial court erred in creating a new easement where none had ever existed. The appellate court focused on the issue of whether a court can create an equitable easement by necessity where the party claiming the easement has made no prior use of the easement. On the latter issue, the appellate court affirmed the trial court’s judgment, holding that “the court may grant an equitable easement without there being a preexisting use by the landowner seeking the easement.” The appellate court reasoned that despite the holdings of several cases which recognize the imposition of an easement by necessity in the case of a “long-standing encroachment,” such an encroachment is not an absolute requirement for an equitable easement. Moreover, the court found no evidence that Hinrichs was negligent in creating the landlocked parcel because he had a reasonable belief that he had a right of way over the trail.

    This case serves as a reminder that while the law recognizes a strong interest in preventing land-locked parcels, a trial court sitting in equity must balance the rights of all parties rather than focus solely on the rights of the party claiming the equitable easement. In other words, Hinrichs got his easement but can’t be heard to complain that the location was not over the best access route. Perhaps that’s why it’s called an easement by necessity rather than an easement by convenience.

    Hinrichs v. Melton (2017) 17 C.D.O.S. 4217.

  3. Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects

    Maria Tanzillo2017-04-20April 20, 20178:46 pmComments Off on Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects
    By: , Posted:

    In California, the Right to Repair Act, codified at Civil Code sections 895 et seq., was established with the goal of resolving construction defect claims in an expeditious and nonadversarial manner. The Act requires that, prior to filing a lawsuit, a homeowner must provide the builder with a notice of claim. The notice must contain the claimant’s name, address, and preferred method of contact. The notice must also state that claimant is alleging a violation pursuant to section 910 of the Act, and describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the alleged defects.

     

    Once such a claim is delivered via overnight mail, certified mail, or personal delivery to the builder, the statutory timelines go into effect. The builder must acknowledge receipt of the claim within 14 days, may elect to conduct an initial inspection of the property within the following 14 days, and may offer to repair the violation and compensate the owner within 30 days of the initial or second inspection. The owner then has 30 days to authorize the builder to proceed with the repair or request alternative contractors. If the builder fails to strictly comply with any of the requirements or timelines, the owner is released from the requirements of the Act and may proceed with filing a lawsuit.

     

    In a recent case, Blanchette, the owner of one of 28 homes constructed by GHA Enterprises, served GHA with a notice of claim under the Act. GHA did not respond to the notice until 21 days later. GHA’s response asserted that Blanchette had not alleged the defects with sufficient detail as required by the Act. Because the response took 21 days, Blanchette took the position that it was untimely and filed a construction defect class action against GHA. GHA moved to stay the lawsuit, and the trial court granted the motion, agreeing that Blanchette’s notice of claim lacked sufficient detail to trigger GHA’s obligations under the Act.

     

    The Court of Appeal reversed the trial court decision, finding that the timelines under the Act are to be strictly construed. Although the Court agreed that Blanchette’s notice of claim lacked sufficient detail of the alleged defects, the Act nonetheless requires that the builder respond and acknowledge the claim within 14 days. Here, the builder should have raised any objection to the sufficiency of the notice within the 14 day time period rather than relying on that defect as a basis to delay the response. Because GHA did not timely acknowledge receipt of the claim and set forth its objections, Blanchette was released from the requirements of the Act and could proceed with the lawsuit.

     

    This case serves as a reminder to builders in California to make sure and strictly comply with all provisions of the Right to Repair Act, or risk becoming embroiled in what may become much more lengthy and expensive civil litigation.

     

    Blanchette v. Superior Court (GHA Enterprises) (Feb. 10, 2017) 17 C.D.O.S. 1302

    (2/17)

  4. Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners

    Maria Tanzillo2017-04-208:45 pmComments Off on Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners
    By: , Posted:

    Jacobs, a licensed real estate broker, signed a vacant land listing agreement granting her the exclusive right to sell a parcel of property in Marin County. The listing agreement was signed by one of the property owners, Locatelli, as trustee for the Locatelli trust. There were signature lines on the listing agreement for five additional owners, but they did not sign. However, the term “owner” was defined in the agreement as the Locatelli trust “et al.”, which means “and others”. Locatelli told Jacobs he was authorized to act on behalf of all owners.

     

    Jacobs marketed the property and found a potential buyer, The Trust For Public Land (TPL). When Jacobs informed Locatelli, he claimed that he had already been speaking with TPL for 3 years and would deal with them directly. He instructed Jacobs to cease all communications with TPL. The owners later sold the property to TPL, and refused to pay Jacobs a commission.

     

    Jacobs filed a complaint against the owners and TPL to recover the commission. The owners who had not signed the listing agreement moved to dismiss the case against them, and the trial court granted their demurrer. The court of appeal reversed the decision, thus keeping all the owners in the case.

     

    The non-signing owners argued that Jacobs’ complaint was barred by the statute of frauds, which provides that a broker’s commission agreement is invalid unless some form of it is in writing and signed by the party to be charged or the party’s agent. The court, however, found the statute inapplicable because Jacobs alleged there was a written agency agreement between Locatelli and the owners allowing him to act on their behalf, and he signed the listing agreement. In addition, Jacobs alleged that at least two of the other owners had acknowledged her as the listing broker during the marketing of the property. As such, the court of appeal held that the trial court should have allowed extrinsic evidence on these claims rather than dismissing the complaint.

     

    The owners also argued that the parol evidence rule barred introduction of extrinsic evidence to dispute the listing agreement because it was a fully integrated and thus a final agreement. The court of appeal also found this rule inapplicable, because there was no apparent contradiction between the terms of the listing agreement and Jacobs’ allegations, i.e., that all owners had retained her through their agent, Locatelli.

     

    This case was decided correctly under the facts and circumstances involved. It is nonetheless an important warning and reminder to brokers and agents to ensure that all necessary parties sign listing agreements and other transaction documents, so as to avoid unnecessary litigation and problems down the line.

     

    Jacobs v. Locatelli (Feb. 9, 2017) 17 C.D.O.S. 1232

    (2/17)

  5. Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer

    Maria Tanzillo2017-04-208:42 pmComments Off on Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer
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    It is settled law in California that a real estate broker representing both seller and buyer has fiduciary duties to both parties. In a recent decision, the California Supreme Court has now confirmed that, when there is such dual agency by the broker, the associate licensee acting solely as the listing agent under the broker’s license also has a fiduciary duty to the buyer.

     

    In this case, seller retained Coldwell Banker to list a luxury residence for sale. The listing agent marketed the home as having approximately 15,000 square feet, which was more than reflected in public records. Buyer was also represented by Coldwell Banker, but by a different salesperson in a separate office. As required by law, buyer had knowledge of and consented to the dual agency. The listing agent provided copies of public records and the marketing flyer, but did not advise buyer to verify the square footage. After the purchase, buyer discovered the discrepancy and sued for breach of fiduciary duty.

     

    Initially, the trial court decided that listing agent had no fiduciary duty to buyer. After the Court of Appeal reversed that decision in 2014, the California Supreme Court agreed to hear the case. The court first examined the history of dual agency in California, noting many developments since the early 1980s. At issue was interpretation of the final two sentences of Civil Code section 2079.13(b), in which the term “agent” refers to the broker and contemplates a real property transaction: “The agent…bears responsibility for his or her associate licensees who perform as agents of the agent. When an associate licensee owes a duty to any prinicipal, or to any buyer or seller who is not a principal,…that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions.”

     

    The listing agent argued that, taken in context, the “equivalent” language merely clarifies that the broker assumes duties owed by its agents, not the other way around. The court, however, agreed with buyer’s contrary position that because the agent’s authority derives solely from that of the employing broker, the second sentence imposes on the agent the same responsibility as held by the broker. This reading of the statute is supported by its full legislative history.

     

    As such, the court affirmed that listing agents, when their brokers act as dual agents, owe buyers a duty to learn and disclose all information materially affecting the value or desirability of the property being purchased. In this instance, that included a duty by the listing agent to the buyer to investigate and disclose everything he could learn about the square footage. Here, the duty to investigate arose because there was a known discrepancy regarding square footage.  This decision further clarifies and strengthens protection afforded to real estate buyers in California.

     

    Horiike v. Coldwell Banker Residential Brokerage Company (Nov. 21, 2016) 16 C.D.O.S. 12228

    (12/16)

  6. “Buyer/Tenant” Beware: Purchase Contract May Include Lease Agreement

    Maria Tanzillo2016-06-28June 28, 20164:32 pmComments Off on “Buyer/Tenant” Beware: Purchase Contract May Include Lease Agreement
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    The case of Taylor v. Nu Digital Marketing, Inc. involved an unusual purchase contract for residential property.  The contract set forth payment of the “purchase price,” and also included a provision that Buyer would pay monthly “probationary installments” for 60 months, which would not count toward the purchase price.  Only payments in excess of the monthly probationary amount went toward the purchase price.  The contract also provided that the probationary payments would increase by any increase in the mortgage payments.  Finally, the contract gave Buyer the right to possession only while making the monthly probationary payments, and gave Seller the right to evict Buyer for failure to do so if not cured.

     

    The monthly mortgage increased but Buyer failed to pay the corresponding increase in the monthly probationary amount.  Seller served a five-day Notice to Quit, and Buyer failed to cure.  Seller filed an unlawful detainer action, and the court ruled in favor of Seller, finding that the “purchase contract” also included a lease agreement, with the “probationary installments” as rent.  Seller appealed, arguing that the contract was for purchase and sale, and thus Buyer could not state a claim for unlawful detainer.

     

    The appellate court affirmed.  While unlawful detainer actions are typically not available to a seller to regain possession of property when the buyer defaults on an installment payment on the purchase price, they are available to a landlord when a tenant fails to pay rent or otherwise breaches a lease.  The court recognized that an agreement can be for both a purchase/sale and lease, where possession is achieved through a landlord-tenant relationship.   In determining whether the contract at issue is for purchase and sale, a lease, or a combination thereof, the court looked to the rights and obligations of the parties.

     

    In this case, the contract did not require a down payment and subsequent installment payments to pay off the purchase price.  Rather, it required a down payment plus monthly probationary installment payments for 60 months.  Possession was conditioned on the continued payment of the probationary amounts.  Importantly, only payments in excess of the probationary payments went toward the purchase price.  The court therefore concluded that the probationary installment payment provisions created a 60-month lease, with the monthly payments constituting rent.  This was bolstered by the fact that both parties routinely referred to such payments as “rent.”  As such, an unlawful detainer action for non-payment of rent was appropriate.

     

    Buyers, sellers and brokers should pay careful attention to purchase contract language that may raise lease issues.

    Taylor v. Nu Marketing, Inc. (2016) 16 C.D.O.S. 2284

    (03/16)

  7. Interfere With Your Neighbor’s Trees, Be Prepared to Restore Them And Pay Money Damages Times Three

    Maria Tanzillo2016-06-284:30 pmComments Off on Interfere With Your Neighbor’s Trees, Be Prepared to Restore Them And Pay Money Damages Times Three
    By: , Posted:

    The Salazar family (“plaintiffs”) lived in San Francisco but owned, since 1982, a 10-acre parcel of rural property in Mendocino County that they visited frequently over the years.  The property, which included many large trees and a spring, was completely undeveloped except for a small cabin, and the family enjoyed it as a respite from city life.  Plaintiffs valued the property and the trees in their undisturbed natural state for aesthetics, recreation and privacy.

     

    Defendant Matejcek purchased the adjacent 20-acre parcel in 2007.  Without first conducting a survey, defendant cleared numerous trees on plaintiffs’ property, and added a road, fence, gate, plastic water tanks and a pool, all of which encroached on plaintiffs’ property.  He also apparently moved markers placed by plaintiffs’ surveyor.

     

    The court awarded money damages for encroachment, treble damages for removal of timber, and an injunction requiring defendant to restore plaintiffs’ land.  Defendant appealed.

     

    The measure of damages for wrongdoing that injures property, including trees, is the amount that will compensate for all the detriment proximately caused thereby.  (Civ. Code § 3333.)  Typically, this is measured by the monetary value of the property before and after the damage.  However, this measure may be insufficient where the aesthetic and personal value of the trees to the owner exceeds their monetary value.  In that case, the court may devise an alternative measure based on a more appropriate formula, such as the cost of restoring the property to its former condition even if the cost exceeds diminution in value.  Plaintiffs here relied on this “personal reason” exception to the standard measure of damages, and their expert estimated a cost of $67,500 to remediate the trees.  The court thus found that a damage award of $67,500 was reasonable even if the entire 10-acre parcel was worth only $75,000.

     

    The court then trebled the restoration damages to $202,500 based on a finding of willful and malicious conduct.  (Civ. Code § 3346; CCP § 733.)  The evidence showed that defendant had pulled records and harassed plaintiffs to sell him their property for years before he purchased the neighboring parcel, did not obtain a survey prior to the work, may have moved or ignored survey markers, and failed to advise plaintiffs of his construction plans.

     

    Defendant also argued that plaintiffs elected to recover money damages and could not also obtain equitable relief.  An injunction provides an equitable remedy as opposed to money damages.  In order to obtain such equitable relief, where the court orders that defendant take or refrain from some action, plaintiff must prove that there is no other adequate remedy.  The court can then fashion the remedy that is most appropriate under the circumstances.

     

    Here, plaintiffs alleged irreparable injury to their property rights because continuance of the encroachments could ripen into a prescriptive easement and give defendant legal rights to use it.  This could not be compensated by an ordinary damage award.  The court thus ordered a permanent injunction compelling defendant to remove the encroachments, return the roadway to its original grade, and to otherwise restore the property, after which plaintiffs could replant the trees for their use and enjoyment.  Had the encroachment been innocently made and not caused irreparable injury, and if cost of removal outweighed inconvenience to plaintiff, the court could have denied the injunction and awarded only money damages, but here both the legal and the monetary remedy were fully warranted.

     

    Salazar v. Matejcek (2016) 16 C.D.O.S 2682

     

    (03/16)

  8. Appellate Court Slams Scofflaw Tenant for Bogus Anti-SLAPP Motion

    Maria Tanzillo2016-06-284:20 pmComments Off on Appellate Court Slams Scofflaw Tenant for Bogus Anti-SLAPP Motion
    By: , Posted:

    This case pitted the competing goals of two very important statutory schemes.  On the one hand, an unlawful detainer action provides landlords a means to evict a tenant in a short, simplified proceeding where the only issue to be tried is whether the tenant is in lawful possession of the premises.  The availability of such an expedited procedure is hugely important to landlords, especially given that landlords are prohibited from using “self-help” to remove a tenant.

     

    This case pitted the competing goals of two very important statutory schemes.  On the one hand, an unlawful detainer action provides landlords a means to evict a tenant in a short, simplified proceeding where the only issue to be tried is whether the tenant is in lawful possession of the premises.  The availability of such an expedited procedure is hugely important to landlords, especially given that landlords are prohibited from using “self-help” to remove a tenant.

     

    On the other hand, the anti-SLAPP statutory scheme is designed to deter the filing of non-meritorious lawsuits which are aimed at thwarting a party’s valid exercise of protected activity, such as the exercise of free speech or the filing of a lawsuit to remedy a wrong.  When invoked by a defendant in a proper case, a plaintiff must present evidence at the very beginning of a case to establish the probable validity of their case or face dismissal.  Moreover, discovery is stayed pending resolution of the motion.

     

    In what may have seemed like clever legal maneuvering at the time, the tenant in this case (who was behind in rent and presumably knew that eviction was inevitable) filed an action claiming its landlord was liable for allowing another tenant to monopolize parking spaces in a shopping center.  After the landlord filed a separate unlawful detainer (eviction) action, the tenant responded by filing an anti-SLAPP motion to strike which argued that the landlord’s unlawful detainer action was filed to thwart tenant’s exercise of its free speech rights.

     

    The trial court denied the motion to strike and sanctioned the tenant almost $3,500 for filing a frivolous motion, finding that the purpose of the landlord’s unlawful detainer action was to address the tenant’s failure to pay rent and common area charges rather than to thwart the tenant’s public participation in a protected activity.  The Court of Appeal agreed that while the tenant beat the landlord to the courthouse by filing its action first, the mere timing of the two lawsuits was not dispositive.  The court looked to the California Supreme Court’s opinion in Navellier v. Sletten, (2002) 29 Cal. 4th 82, which provides that the mere fact that an action was filed after, or even triggered by, protected activity does not establish that the action arose from that activity as required by the anti-SLAPP statute.

     

    Applying the holding of Navellier, the Court of Appeal concluded that “the unlawful detainer complaint arose from Tenant’s unprotected activity in allegedly failing to pay rent and CAM charges, rather than from its protected petitioning activity in filing the prior lawsuit.”  According to both the trial court and appellate court, this was not even a close call.

     

    This decision is yet another reminder that, as powerful as an anti-SLAPP motion to strike can be, discretion must be used in bringing such motions because they are only proper in cases which truly arise from protected activity.

    Olive Properties v. Coolwaters Enterprises, Inc. (2015) 241 Cal.App.4t 1169

    (03/16)

  9. Ninth Circuit Confirms Old Adage in Home Buyer’s Rescission Action: “He Who Hesitates Is Lost”

    Maria Tanzillo2016-06-284:16 pmComments Off on Ninth Circuit Confirms Old Adage in Home Buyer’s Rescission Action: “He Who Hesitates Is Lost”
    By: , Posted:

    First Tennessee National Bank Association (“FTB”) initiated a nonjudicial foreclosure on residential real property and sold the property at a foreclosure sale to DM Residential Fund II, LLC (“DM”).  The property lacked a utilities easement needed to provide electrical service to the new home on the property.  DM discovered the easement issue shortly after buying the property but waited two years to file suit against FTB seeking to rescind the transaction based on FTB’s failure to disclose this defect.

     

    The district court granted FTB’s motion for summary judgment on the grounds that DM was not entitled to the equitable remedy of rescission.  Even though a jury could have reasonably concluded that DM could not have discovered the utility easement issue prior to the foreclosure sale, and therefore a genuine issue of material fact existed, a party seeking the equitable remedy of rescission must do so “promptly upon discovering the facts which entitle him [or her] to rescind.”  (Civ. Code § 1691.)

     

    It was undisputed that shortly after the sale DM discovered it did not have electricity and could not obtain any absent the purchase of an additional easement.  Nevertheless, the Ninth Circuit, relying on a 1920 California Supreme Court case, ruled that “a reasonable person would be put on inquiry notice as to whether there had been some wrongdoing in the sale of the residence, at which point a duty to investigate the wrongdoing arises.”

     

    DM presented no evidence that would allow a trier of fact to conclude it would not have been able to discover the facts supporting its right to rescind at the time it discovered the defect.  The Court further noted that DM took actions inconsistent with “unwinding the contract” including encumbering the property, building improvements and attempting to sell it.  By taking those actions and waiting two years to sue FTB, DM affirmed the transaction and its right to rescind was gone.  As such, the Ninth Circuit concluded that there was no genuine question of material fact on this issue and affirmed the trial court’s granting FTB’s motion for summary judgment.

     

    The moral of the story is he who sits on his rights, with knowledge that his rights may have been violated, is lost and may be stuck with a defective property with no path for recourse.  Therefore, a party who may be entitled to rescind a contract must act “promptly upon discovering the facts which entitle him to rescind” or else he may find himself stuck with the object of the contract.  And this is true even if any applicable statute of limitations has yet to expire such as the three-year statute of limitations for fraud; an argument made in the dissenting opinion.

    DM Residential Fund II, LLC v. First Tennessee Bank Nat’l Assoc. (December 30, 2015) 2015 U.S. App. LEXIS 22816.

    (03/16)

  10. Homeowners Were Not Liable, This Time, for Injury Sustained by Employee of Their Unlicensed, Uninsured Contractor

    Maria Tanzillo2015-12-09December 9, 201512:05 amComments Off on Homeowners Were Not Liable, This Time, for Injury Sustained by Employee of Their Unlicensed, Uninsured Contractor
    By: , Posted:

    Vebr v. Culp serves as a cautionary tale for any homeowner considering hiring a contractor to perform work on their home.

     

    The Culps contracted with OC Wide Painting to paint the interior of their home. The contract specified that OC Wide had workers’ compensation insurance, or would acquire it. Culp confirmed online that OC Wide had a valid license and also checked OC Wide Painting’s references. Before signing the contract, Culp reviewed the California Contractors State License Board’s detail for OC Wide which stated: “This License is exempt from workers compensation insurance; they certified that they have no employees at this time.”

     

    An hour into working in the Culps’ home, OC Wide’s employee, Plaintiff Tomas Vebr, fell from an extension ladder provided by OC Wide resulting in serious injury. The ladder was supported by two helpers employed by OC Wide. OC Wide never did acquire workers’ compensation insurance as promised in the contract and the Culps did not halt the project despite the fact that other individuals were working in their home.

     

    California Business and Professions Code § 7125.2(a)(2) provides that a contractor’s license is automatically suspended by operation of law as of the date the contractor is required to obtain workers’ compensation insurance but fails to do so. Labor Code § 2750.5 provides that a worker who performs services for which a license is required but lacks such a license is rebuttably presumed to be an employee, not an independent contractor.

     

    Vebr sought to hold the Culps liable in tort under the theory of respondeat superior as Vebr’s statutory employer in light of OC Wide’s unlicensed and uninsured status. The Culps moved for summary judgment on the grounds there were no facts to show that they were liable for Vebr’s injuries, that they breached any duty owed to Vebr, that the premises were dangerous or defective, or that the Culps’ actions were the legal or proximate cause of Vebr’s injuries. The trial court agreed and granted the motion for summary judgment. Vebr appealed, and the Court of Appeal, Fourth Appellate District, affirmed the decision of the Orange County Superior Court.

     

    Ordinarily, when an employee sustains a worksite injury, the exclusive remedy is provided by the workers’ compensation law, and the employer is immune from a lawsuit. (Lab. C. §§ 3600, 3601, 3602.) But if the employer has not secured workers’ compensation coverage, an injured employee may bring a civil suit against his employer. (Lab. C. § 3706.) If the employee establishes that he was injured in the course and scope of his employment, a rebuttable presumption is created that an uninsured employer was negligent and the employer is precluded from claiming comparative fault or assumption of risk as a defense. (Lab. C. § 3708; Huang v. L.A. Haute (2003) 106 Cal.App.4th 284, 289–291.)

     

    When an employee of a contractor is injured, and the contractor is unlicensed and uninsured at the time of injury, the injured employee’s recourse may be against not only the contractor, but also against the landowner who hired the contractor, as an additional employer. (Heiman v. Workers’ Comp. Appeals Bd. (2007) 149 Cal.App.4th 724, 734.) The injured employee may have the landowner deemed a “statutory” employer and seek workers’ compensation benefits through the landowner’s general liability or homeowners’ insurance policy. In this case, the Culps were insured under a homeowners’ policy but Vebr did not qualify as a “residence employee” under that coverage. This meant that if the Culps were found liable, they would have to pay out of pocket for Vebr’s injuries.

     

    The potential scope of a homeowner’s tort liability to an injured employee of an unlicensed contractor whom the homeowner hired has not yet been resolved by the California Supreme Court. (See Cortez v. Abich (2011) 51 Cal.4th 285, 291 [“Whether unlicensed contractors or their workers may or must be deemed the homeowners’ employees under section 2750.5 … are difficult and unsettled questions.]; Ramirez v. Nelson (2008) 44 Cal.4th 908, 916 [same].

     

    The Court ruled that it did not need to decide whether the Culps were the statutory employer of Vebr because no triable issue of material fact existed regarding such liability. The court concluded: “Here, the undisputed facts show the cause of Vebr’s fall is a mystery. There is no evidence showing what had occurred or that Vebr was free from negligence himself. There is no evidence, for example, that at the time of the fall, he was holding on the ladder with two hands and did not cause the fall himself by losing his balance. On this record, there is no reasonable and logical inference that…anyone…present in the residence at the time of the accident, was negligent. Someone might have been negligent, but we do not and likely never will know whether that was the case.”

     

    Don’t count on being as lucky as the Culps. If you are considering hiring a contractor to perform work in your home, review their license and insurance status. If the license deems the contractor exempt from carrying workers’ compensation insurance because there are no employees, make sure no one other than the contractor himself performs work at the property. Otherwise, immediately halt the work and demand written proof of workers’ compensation insurance. Doing so will reduce the possibility of being deemed a statutory employer and possibly held liable for injuries sustained by workers on your property.

     

    Vebr v. Culp (2015) 14 C.D.O.S. 11845

    (12/15)