Surfrider Foundation Blocks Billionaire’s Attempt To “Drop In” On The Public’s Use Of Martins Beach

With A Recent Decision By The San Mateo Superior Court, The Surfrider Foundation Blocks Billionaire’s Attempt To “Drop In” On The Public’s Use Of Martins Beach

Public access to California’s 840 miles of coastline has been a point of contention between groups attempting to preserve historic access and private landowners for decades.  One ongoing controversy is access to the northern California surf spot of Martins Beach.  Access to Martins Beach, an ideal surfing spot, secluded and protected from wind by jutting cliffs on either end, is only available by way of Martins Beach Road, an offshoot of the Pacific Coast Highway.  The road traverses 53 acres of land owned by billionaire Vinod Khosla, a co-founder of Sun Microsystems.  Khosla does not own a home on the land and has indicated no intention to build one.  At the edge of Martins Beach Road lies a low-slung gate.  For a time, the public was occasionally allowed access by Khosla’s property manager, but, in 2010, Khosla allowed the gate to be closed permanently, despite the receipt of a letter from the county demanding the gate remain open every day.

Khosla’s property manager, Steve Baugher, testified it was his decision to close the gate and stated he had even hired security guards to “deter trespassers.”  In October 2013, five surfers marched past the guards to proclaim their right to the beach.  These surfers, known as the “Martin’s 5,” were arrested, but the District Attorney declined to prosecute, leading other surfers to hop the fence for access to the beach.

Public access to California beaches is protected by the public trust doctrine, the principle that certain natural and cultural resources are preserved for public use, and that the government owns and must protect and maintain these resources for the public’s use.

The Surfrider Foundation claimed that under the 1976 Coastal Act, which gave a statewide Coastal Commission jurisdiction over beachfront land, Khosla would need to apply for a development permit in order to close the gate to Martins Beach Road.  In practice, the commission will generally only grant such a permit, typically in order to build a structure, if the public is given an easement to access the beach.  Judge Barbara Mallach of the San Mateo Superior Court agreed, ruling on behalf of the Surfrider Foundation. Though Surfrider was seeking fines against Khosla as well, the Court did not go so far, stating that the closing of the gate was done in good faith by those who believed they had a right to do so.

In an earlier case, a group called Friends of Martins Beach attempted to sue Khosla based on a clause in the California Constitution that declares that no entity “shall be permitted to exclude the right of way to such water whenever it is required for any public purpose.” (Cal. Const., Art. 10, Sec. 4.)  The judge in that case found for Khosla, due to Martins Beach having been part of a land grant that settled the Mexican American war in 1848, prior to the adoption of the constitution.

Aside from the ongoing litigation, other avenues are being pursued to bring resolution to this matter.  California Senator Jerry Hill has proposed a bill, Senate Bill 968, that would require the State Lands Commissioner to consider purchasing Martins Beach Road.  The bill initially centered on eminent domain, mandating the state to take the land if negotiations with Khosla failed.  The bill has been revised now, however, to remove references to eminent domain and would mandate only the commission to negotiate with Khosla.  In addition, the Coastal Commission has been requesting testimony from people about how they have used the area in the past.  This could be used to prove a historic right of access that the Attorney General could sue to restore.

While the end of this dispute appears to be far from over, the Surfrider Foundation is lauding this decision as an important step in the fight for the public’s beach access rights.

8/15/17 UPDATE: The First District Court of Appeals unanimously ruled that Khosla violated state law when he blocked the public from accessing Martins Beach and ordered the access road be opened. The decision also requires Khosla to pay nearly half a million dollars in attorney’s fees. (Read the full decision here and a timeline of the events leading up to it here.)

In the meantime, Senator Hill continues to press forward a bill to accept funding through donations to purchase 6.4 acres of Khosla’s property through eminent domain. San Mateo County has pledged up to $1M for the acquisition. However, Khosla and the State Lands Commission have failed to agree on the price. The official estimates for the portion of land values it at $360,000 while Khosla demands $30M. (Khosla purchased the entire 53 acres of land in 2008 for $37.5M.)

By: Jessica Coffield

The information presented in this article is intended for general educational purposes. It is not intended to be legal advice. Every company or person’s situation is different and requires individual analysis by competent counsel before legal advice can be rendered. If you are confronted by a legal issue retain competent legal counsel to advise you immediately. This article is not a substitute for legal advice from an attorney licensed to practice in your jurisdiction.

Firm Successes in 2016

2016 was a busy year for MCAQ.  It was so busy we forgot to report some of our noteworthy successes on behalf of our clients.  Here is a recap of the year:

January 2016 started out great with a jury verdict in favor of a municipal utility client in a case alleging power theft and breach of contract.  Stephanie L. Quinn and Mariel Covarrubias tried the case to a Sacramento County jury.  Representing the plaintiff, Ms. Quinn and Ms. Covarrubias successfully established that the defendants were responsible for damages arising out of the unlawful diversion of power from a home in Sacramento County that was used to grow marijuana. The trial lasted 7 days.

In February 2016, Douglas Alliston and Suzanne M. Nicholson obtained summary judgment against the California Insurance Guarantee Association in a case where CIGA had declined to pay the obligations of an insolvent insurer once the insurer was discharged in its liquidation proceeding. Ms. Nicholson, a certified appellate specialist, is currently defending against CIGA’s appeal.

The firm had another trial success in March 2016.  We received a statement of decision and judgment on a residential real estate case in which the plaintiff sued our clients alleging nondisclosure of defects in a high-end Granite Bay residential property sold to the plaintiff. In the closing brief the plaintiff claimed damages of $1,659,000. The trial of that case began on August 5, 2015 and concluded nineteen days later on August 24, 2015. The judge ruled in our client’s favor on all causes of action and thereafter entered judgments directing the plaintiff to pay $59,000 in costs and $371,000 in attorney fees. Both of those judgments were paid in full in August 2016.  Mark A. Campbell was lead trial counsel in the case.

In the Spring, Mark A. Campbell and Mariel Covarrubias obtained dismissals for a foreign company and one of its directors, in a case alleging trademark infringement, unfair competition and breach of contract.  They successfully argued that the California court did not have personal jurisdiction over the defendants on a motion to quash service of the summons.  The case was venued in Ventura County.

In July, Stephanie L. Quinn and Raymond Tuason obtained a victory in a Federal Employers’ Liability Act case on behalf of a railroad company.  The case was brought by a railroad employee who alleged she suffered a career ending back injury as a result of her employer’s negligence.  The court granted our motion for summary judgment, dismissing the case.  The court found that as a matter of law, the plaintiff could not establish that the employer was negligent or that its negligence was the cause of her injuries.  The case was venued in the U.S. District Court for the Eastern District of California.

The firm had two other noteworthy summary judgment victories in 2016 in cases handled by George E. Murphy and Suzanne M. Nicholson.  One involved a contract dispute over who was responsible to pay medical expenses incurred by employees of the other party. Mr. Murphy and Ms. Nicholson also obtained summary judgment plus attorneys’ fees for an owner of commercial property based on breach of contract.

November brought another trial victory for the firm.  Stephanie L. Quinn and Mariel Covarrubias obtained a defense verdict in a 12 day jury trial in Placer County Superior Court.  The firm represented a railroad company who was being sued by a locomotive engineer for violations of the Federal Employers’ Liability Act, the Locomotive Inspection Act, and various federal regulations. After deliberating less than two hours, the jury returned a verdict for our client on all causes of action.

Mariel Covarrubias, who has been with the firm since 2012, was also selected by Super Lawyers as a Rising Star in 2016.

In addition to trial victories, our attorneys have been successful in resolving cases short of trial.  This past year, George E. Murphy was successful in obtaining a six figure settlement in a personal injury case on behalf of a client.  Susan A. DeNardo, in our employment group, has strategically handled employment law cases in front of the Equal Employment Opportunity Commission and Department of Fair Employment and Housing, bringing about resolutions for our clients that allowed them to avoid the grave expense involved in litigating employment law cases in California.

One of our firm’s specialties is insurance coverage disputes.  2016 brought successes in this arena as well.  George E. Murphy was successful in persuading multiple insurance companies to provide coverage to our clients in cases where the carriers had originally denied coverage, leaving their insureds out in the cold. In representing a large apartment complex, we convinced an insurance company to provide coverage for our client whose property sustained significant damage when a large truck spilled gallons of oil on pavement throughout the complex. The insurance company originally denied coverage, but ended up paying substantial sums to repair the damage.

We also represented a real estate broker and were successful in convincing the broker’s insurance company to assume our client’s defense in a lawsuit alleging breach of contractual and legal duties in the context of a real estate transaction. The insurer originally denied any coverage obligations, but ended up paying to settle the case on behalf of our client. In representing a commercial tenant and business owner who sustained significant water damage to his premises and inventory, we convinced the landlord’s insurer to pay for damages suffered by our client, after the insurer originally refused to pay any amounts for repair.

The firm ended the year on a high note. In December, our appellate team, George E. Murphy and Suzanne M. Nicholson, obtained a huge victory on behalf of a municipal client in a case alleging that the City of Atwater was liable for the dangerous condition of an intersection where a pedestrian was killed by a motorist.  The California Court of Appeal for the Fifth Appellate District issued a published opinion, overturning a $3.2 million dollar jury verdict from Merced County.  The Court of Appeal determined that the design immunity defense immunized the City from liability for any dangerous condition of the intersection.  The decision in Gonzalez, et al. v. City of Atwater, can be found here:  Gonzalez, et al. v. City of Atwater Decision

By Stephanie L. Quinn

April Showers Bring Employment Empowers

April is not only the month for Californians to fixate on taxes but this year it has been an active month of change in the employment arena. Changes have occurred that many Californians deem as socially necessary and morally correct, but will no doubt place a heavy burden on small businesses in the state.  California legislators proposed a $15 minimum wage initiative called “Fair Wage Act of 2016” (#15-0032) and alternative legislation was proposed to this bill, Senate Bill 3, which Governor Jerry Brown signed into law this month.  The signed alternative legislation still raises California’s mandatory minimum wage to $15 an hour but allows for an additional year to complete the task by the year 2022.  New York is the only other state to commit to such an increase to the minimum wage.

Even the Governor appeared to question the economic rationale of his commitment but stood by this decision based on the fact that it morally made sense, indicating that individuals should be able to support their families based on the minimum wage. The legislation amends  Labor Code Section 1182.12 to now designate each incremental escalation for employers who employ 26 or more employees to increase the minimum wage by January 1, 2017 to $10.50. By January 1, 2018, the minimum wage would be increased to $11 and each January 1st until the year 2022 the wage would increase in one dollar increments. (Labor Code Section 1182.12(b)(1)(A)-(F).)  Employers with 25 or fewer employees have an additional year to begin the increase with the first increase to $10.50 commencing on January 1, 2018. By January 1, 2019, the wage would increase to $11 dollars and continue to increase in one dollar increments until the year 2023. (Labor Code Section 1182.12(b)(2)(A)-(F).)

The amendments to this Labor Code section tie the raises to inflation and also carved out the ability to allow the Governor to delay minimum wage hikes in the event of an economic decline.  Each July 28th the Director of Finance must make a determination and certify to the Governor and Legislature whether enumerated conditions are met in order to annually ensure that economic conditions in California can support a minimum wage increase. (Labor Code Section 1182.12(d)(1).) The Governor is left with the ability to temporarily suspend the minimum wage increases scheduled for the following year.

Another empowering change for employees this month happened in the City by the Bay.  San Francisco became the first city to approve fully paid parental leave.  California’s parental leave scheme allows employees to receive 55 percent of their pay from employee-paid public disability insurance for 6 weeks for employees who contribute to the California State Disability Insurance fund. (Unemployment Insurance Code Section 3300 et seq.)  San Francisco’s Board of Supervisors unanimously passed a law requiring full pay for parental leave with employers paying the gap of 45 percent in pay. The ordinance will amend the Police Code to add Article 33H to require employers to provide supplemental compensation to employees who receive State paid family leave for the purposes of bonding with a new child. (Board of Supervisor’s File No. 160065.) The intention of the ordinance is to supplement the California Paid Family Leave partial wage replacement by providing compensation that in combination will total 100 percent of an employee’s weekly salary.

The city ordinance will go into effect on January 1, 2017 for companies that have 50 or more employees. The law will go into effect on January 1, 2018 for companies that employ 20 or more workers. The legislation applies to both parents.  The law also applies to both births and adoptions. The city ordinance is for both part-time/temporary and full time employees who work at least 8 hours of work per week within San Francisco. The ordinance contains rebuttable presumptions that a wage decrease or a termination within 90 days of an employee having made a request or application for California Paid Family Leave was done to avoid the covered employer’s supplemental compensation obligations under article 33H. That presumption must be rebutted with clear and convincing evidence that the actions were taken solely for reasons other than avoiding an obligation to pay supplemental compensation, otherwise the employer will be obligated to pay the employee’s supplemental compensation during the leave period even if terminated. One protection for the employer is a provision that requires an employee who voluntarily leaves work within 90 days of the end of the leave period to reimburse the employer for the full amount of the supplemental compensation the employee received. The employer should ensure that the employee signed a form prescribed by the Agency as a precondition of receiving supplemental compensation and the employer must make a request for reimbursement in writing.

The economic effect of these changes will undoubtedly have the most significant impact on small businesses as the increased costs of maintaining a workforce grow.  These changes will either result in an increase in consumer costs and prices or a large increase in unemployment as businesses may be forced to cut the workforce and cut costs by reducing hours or laying off employees. Companies would likely only keep the most productive employees at the higher minimum wage rate. Only time will tell what the economic effects will be on businesses and the workforce in California from these changes in  the employment arena.

By Mariel Covarrubias, Esq.

Critical Steps to Follow Upon Receipt of an Accusation

I Received an Accusation, Now What?

If you are a licensed medical professional, you may, at some point during your career, receive a “Notice of Accusation.”  A “Notice of Accusation” should not be ignored or taken lightly. An Accusation is the vehicle by which your licensing agency (the California Medical Board) initiates a disciplinary proceeding against you, the licensee. Upon receiving an Accusation, it is incumbent on the licensee that the Accusation is read carefully. The Accusation lays out the charges sought by the agency and must specify the statutes and rules the licensee is alleged to have violated. (Gov. Code. § 11503.)



If you have received an Accusation the following has already occurred:

  1. A Complaint was filed with the Medical Board;
  2. The Medical Board investigated said Complaint; and,
  3. The Medical Board found a violation of the Medical Practices Act.

Note: Up to this point, the complaint and Investigation are not public information. However, this information becomes public once an Accusation has been filed.

If a violation of the Medical Practices Act is found, the Medical Board may pursue disciplinary actions against the licensee following the Administrative Hearing.  Such actions include:

  1. Revoking of the medical license;
  2. Suspension of the license for up to 1 year;
  3. Placing the license on probation, restricting the license, or limiting the scope of practice permitted under the license;
  4. Imposing additional requirements such as psychiatric treatment, require additional clinical training, or practice under supervision; or
  5. Issue a public reprimand.

While the purpose of regulating licensed medical professionals is not to discipline them, but rather to protect health care consumers, enforcement of any of the above disciplinary actions can have deleterious effects on one’s practice and reputation, thus necessitating the proper handling and resolution of an Accusation. So, what do you do you ask?


  • Locate the date on the proof of service.  You have 15 days from this date to file the accompanying “notice of defense.”

Accompanying the Accusation, you will find a “Notice of Defense.”  It is equally important to not ignore the Notice of Defense. Signing and returning this notice to the agency is your acknowledgement of receipt of the accusation and provides the agency notice of your intent to defend against the accusation.


  • File the “notice of defense” within 15 days of receiving the Accusation.

(Note: You do not need an attorney to file this, however, due to the complex nature of Administrative Proceedings, it is advised that one consult with a legal professional.)

Filing a notice of defense allows the licensee to do any of the following: 1) request hearing; 2) challenge the accusation; 3) admit the accusation in whole or part; and 4) present new information to the agency. Once the Notice of Defense is filed, the licensee is entitled to a hearing.

CAUTION: failure to submit a “Notice of Defense” can result in waiver of certain rights.

Once the notice of defense is filed, this lets the agency know you will be defending against the Accusation. At this point, discovery begins. Discovery is the process by which the parties request and obtain information about the accusation. The information obtained can be used during the hearing and in any pre-hearing motions.

Following the hearing, the Administrative Law Judge will render a decision which is then sent to the Medical Board.  The Medical Board will review said decision and make the final decision.  In this decision, the Medical Board will state what, if any, disciplinary actions will be imposed. As discussed above, the disciplinary actions range in severity from a public reprimand to a revocation of your license.  Given the range in severity of disciplinary actions, it is recommended that legal counsel be sought.

So You Won Your Case…Now What?

We tend to think of winning a case and securing a judgment as the end of the legal process. Until faced with attempting to collect on a judgment, we rarely consider the process of how one actually collects such money.

Imagine you fought a long, hard battle to secure a civil money judgment. The time for appeal has passed and your judgment is final. How do you get your money? It can often be difficult to get the losing party to part with their money, even in the face of a final judgment ordering them to pay. The battle to recover money that is rightfully yours can be an even longer and more arduous process than winning the judgment itself and, at the end of the day, a judgment is nothing without the ability to enforce it.

Luckily, collecting a judgment can be made less daunting by understanding the processes by which it is done. The following is a brief description of how to determine what property a judgment debtor has and how different types of property can be reached to satisfy a money judgment.

This article does not discuss the exemptions to property that can be reached to satisfy a judgment.  Suffice it to say for these purposes that there are certain types of property, such as social security payments, that a judgment creditor cannot reach to satisfy the judgment. This discussion focuses only on the ways to determine what is in the judgment debtor’s possession and how one could theoretically reach it.

Keep in mind that this is only an overview and you should consult an attorney who is familiar with collecting judgments if you are faced with this situation.

How Do You Know What The Judgment Debtor Has?

Post-Judgment Discovery

Discovery is the process by which you gain information from the opposing party. The discovery process post-judgment is very similar to the discovery process in a civil action. You can send the judgment debtor written questions (known as interrogatories) and request from them relevant documents (known as requests for production or inspection demands) in the same manner as discovery in a civil action.

It is important to note that interrogatories cannot be sent to third persons. Third persons must be examined, as discussed briefly below, or the debtor’s interest in property in their possession or control garnished. In addition, although a judgment creditor can issue a subpoena duces tecum to a third party (a subpoena is a formal document that orders an individual to appear or produce documents at a specified time and place; a subpoena duces tecum is a request for documents), it may only do so after having obtained a court order for the third party’s examination.

Order of Examination

An examination of a judgment debtor or third party is the post-judgment equivalent of a deposition (a process by which a person is asked questions under oath outside of court). An examination can be used to identify property in the possession or control of the judgment debtor or a third person and to require the debtor or third person to turn over property to the levying officer. A levying officer, generally a sheriff or marshal, seizes and sells the property to raise money to satisfy the judgment.

Upon service of an examination order, the judgment debtor is required to appear in court to provide information to aid in enforcement of the money judgment.

Conducting an examination has some significant advantages. For instance, service of the order of examination generally creates a one-year lien on all of the debtor’s non-exempt property, including property in which the judgment debtor has an interest but that is not in his or her possession or control. A lien is a process by which you can take possession or force a sale of the debtor’s property to satisfy the judgment.

In addition to the examination, you can subpoena documents showing the debtor’s assets and liabilities at the same time as the examination order (or sooner). Alternatively, the judgment creditor may serve the debtor with a notice to produce documents and other tangible evidence in his or her possession.  The notice to produce must be served at least 20 days before the examination date (or within any shorter time ordered by the court).

Examining a Third Party

If you believe a third person is in possession or control of property in which the judgment debtor has an interest or owes the judgment debtor more than $250, such third person may be ordered to appear for examination by requesting such an order from the court.

An examination order served on a third person creates a one-year lien on the debtor’s interest in property in the third person’s possession or control, provided the property is adequately described in the creditor’s application for the examination order. As stated above, having a lien on such property will allow the creditor to take possession or force a sale of the property to satisfy the judgment.

In addition, it appears that any person with knowledge leading to enforcement of the judgment (e.g., debtor’s bookkeeper, accountant or nondebtor spouse) can be required to testify before the court or a referee in an examination proceeding in the same manner as a trial witness.

Now You Know What The Judgment Debtor Has.  How Do You Get It?

Real Property

In order to reach real property (i.e. land and all things attached to it) to satisfy a judgment, you need to create a judgment lien on that property.  A judgment lien on real property is created by recording an abstract of the judgment in the office of the county recorder of the county where the real property is located. An abstract of judgment is a written summary of a judgment that states how much money the losing party (the debtor) owes the person who won the lawsuit (the judgment creditor), the rate of interest to be paid on the judgment amount, any court costs and specific orders the judgment debtor must obey.

It is important to note that mere entry of the judgment does not create a real property lien in California.

If you believe the judgment debtor has real property in more than one county, an abstract of judgment has to be recorded in each of those counties.

Interest in Limited Liability Companies (LLCs) and Partnerships

In order to reach a debtor’s partnership or LLC interest, the judgment creditor must obtain a court order charging those interests with the amount of the judgment, known as a charging order. A motion for a charging order can be made in the court that entered the judgment or in any other court of competent jurisdiction. A lien on a judgment debtor’s interest is created by service of the notice of the motion for charging order. Such a lien will mean that the judgment creditor will receive any and all disbursements that would have been provided to the judgment debtor. This lien continues under the terms of the court’s charging order until the judgment is unenforceable or is extinguished if the court refuses to issue a charging order.

Interest in Corporations

In order to reach a judgment debtor’s interest in a corporation, you need to get a writ of execution then levy on that writ. A writ of execution is a court process directed to the levying officer (i.e., sheriff, marshal, or constable) of the county where the levy is to be made and to any registered process server. The writ requires the levying officer to enforce the money judgment in the manner prescribed by law. Note that a separate writ of execution must be issued for each county in which a levy is to be made.

After a writ of execution is issued, it must be delivered to the levying officer, either the marshal or sheriff, depending on the county, with instructions and the required fee. The levying officer then “levies” upon specified property of the judgment debtor by taking it into custody or otherwise subjecting it to a lien in favor of the judgment creditor. The property levied upon can then be collected or sold to satisfy the judgment. The levying officer has the authority to levy on the property for 180 days from receipt of the writ. Any number of levies can be made during that time period, but none following without a successive writ. It is good practice to direct the levying officer to hold the writ for further instructions. Unless you advise this, a levying officer may return the writ as soon as the instructed levy or sale is complete, thereby leaving the creditor without an effective writ.

This basic process is always the same, but differs depending on whether the securities are certificated or uncertificated and if it is held by the judgment debtor or by a broker or custodian.

Bank Accounts

The same process, writ of execution and levying on said writ, is used to reach a judgment debtor’s interest in bank accounts. At the time of levy or promptly thereafter, the levying officer must serve the judgment debtor with copies of (i) the writ, (ii) the notice of levy, (iii) if the debtor is a natural person, a list of exemptions and their dollar amounts and the forms the debtor may use to make a claim of exemption and provide a financial statement, and (iv) any affidavit of identity for the names of the debtor listed on the writ of execution.

Location of service of the writ of execution can be made at the office or branch that has actual possession of the property levied upon or at a designated centralized location for service of legal process. If no centralized location exists, a written request can be filed with the financial institution to identify a branch or office.

Importantly, no court order is required to levy on an account in the name of the judgment debtor, whether alone or with a third person, or an account in the name of judgment debtor’s spouse, whether alone or with third persons.


Although the last thing you want to have to do after securing a money judgment is to start a new battle to collect your money, understanding the methods by which you may collect on your judgment can make the entire process more easily accomplished. Nothing in this article is a substitute for legal advice and you should consult an attorney to assist you with your collection efforts.

By: Jessica B. Coffield

“Hoooommmeeessss”: The Resurgence of the Zombie Foreclosure

If you want to write a blockbuster movie or a catchy song, zombies are great.  If you want to protect your credit, they aren’t.

Upon receiving a notice of foreclosure, some homeowners move out, assuming the lender will simply take over the property. Unfortunately for these homeowners, in some cases the foreclosure process is not completed.  In the meantime, the property is left vacant and often falls into disrepair or is occupied by squatters. Since the foreclosure was never completed, title remains in the homeowner’s name. This situation is referred to as a “zombie foreclosure” and it can lead to devastating results for the homeowner. While the number of zombie foreclosures has decreased in recent years, it is a situation that still plagues homeowners. In the past year, there has been a resurgence of zombie foreclosures in California.

When a home is left unattended, visible signs of distress will appear, causing the value of the property itself, and the surrounding properties, to decrease, making it even more difficult to complete the foreclosure and thus perpetuating the housing crisis. Some of the consequences for those bitten by a zombie foreclosure include liability for unpaid property taxes, homeowners association assessments, fines for failing to comply with housing codes or other ordinances, and local government bills for repairs, trash removal, and maintenance. This all leads to a lower credit score for the homeowners, making it even more difficult for them to get back on their feet, leaving them feeling like the walking dead.

Interestingly, the recent increase in zombie foreclosures may actually indicate that the market is improving. Daren Blomquist, the vice president of RealtyTrac, which collects data on foreclosures throughout the country, believes that the increase is an indication that the banks are finally moving forward with foreclosure, since they are finally entering into the public record data RealtyTrac collects.

Once the property has been foreclosed upon, borrowers should be aware of a valuable weapon in their arsenal, known as an anti-deficiency statute. This can be a bullet to the head of the devastation from a zombie foreclosure as it can cut off more loss following foreclosure. California has significant protection from deficiency judgments, though there are exceptions a borrower should be aware of. A deficiency is the difference between what the foreclosure sale brought in and the outstanding balance of the loan. A deficiency judgment, then, is a judgment based on such a deficiency and can include costs of sale and other penalties (depending on the state). Some states permit a lender to foreclose on a property and seek the deficiency. In California, a lender is barred from seeking a deficiency judgment in most circumstances. For instance, the majority of foreclosures in California are what are called “nonjudicial foreclosures,” meaning the foreclosure has no judicial supervision and is handled by a trustee. In California, a lender cannot get a deficiency judgment after a nonjudicial foreclosure (Cal. Code Civ. Proc. § 580d). However, if the borrower has a junior lien or home-equity lines of credit (HELOCs) not owned by the foreclosing lender, the borrower may face a deficiency lawsuit from those lenders.

If a lender chooses to pursue a judicial foreclosure, deficiency judgments are generally allowed. However, deficiency judgments are still barred in judicial foreclosures where the loan was 1) used to purchase a 1-4 unit dwelling that is owner-occupied (known as a “purchase-money loan”), 2) seller-financed, or 3) a refinanced purchase-money loan that was executed after January 1, 2013.

Thus, anti-deficiency statutes can provide a weapon to borrowers, but it is wise to be aware of those circumstances where they do not. For instance, anti-deficiency statutes often only work for original purchase-money loans, for residential property, and for the borrower’s actual personal residence and not second homes or investment homes. Furthermore, deficiency judgments are allowed after a deed in lieu of foreclosure (where the lender agrees to accept a deed to the property instead of foreclosing to obtain title) unless the agreement specifically states that the transaction is in full satisfaction of the debt.

The safest course of action if you are faced with foreclosure is to await an official notice to vacate before leaving your property and to confirm with the county recorder’s office that title to the property was effectively transferred. Familiarizing yourself with your state’s anti-deficiency judgment laws can also provide some guidance on your options moving forward. It is wise to consult an attorney upon receipt of a notice of foreclosure to fully inform you of the law and assist you in negotiating with the lender. And, of course, don’t forget to keep hold of your brains.

By: Jessica B. Coffield

Post-Judgment Interest Following Appeal: When a “Reversal” is Really a Modification

Most practitioners are generally aware that interest on a judgment runs from the date of entry, and continues to accrue even pending an appeal. The accrual of interest at the standard rate of 10% per annum (7% for public entities) can be a significant consideration in evaluating the potential costs and benefits of an appeal. If you are successful in obtaining an outright reversal of the judgment, all is good: post-judgment interest goes the way of the judgment. However, if the matter is reversed and remanded for further proceedings, or reversed with directions, what happens to post-judgment interest is entirely dependent upon the “substance and effect” of the appellate court’s disposition. A disposition which effects a true reversal of the judgment will result in interest running from the date of entry of any new judgment following remand, whereas a disposition which effects only a “modification” of the original judgment leaves interest accruing from the date of the original judgment. Knowing which is which is critical, and educating the trial court prior to entry of any new judgment can save the parties the expense and delay that would be occasioned by a second appeal on this issue.

A true reversal is one which requires the trial court to conduct further fact-finding to resolve the matter at issue on appeal. However, a reversal which simply requires the trial court to reduce or increase the amount of the judgment or order to what it should have been on the date of its original entry is, in substance and effect, a modification.

The seminal case illustrating this distinction is Stockton Theatres, Inc. v. Palermo (1961) 55 cal.2d 439. There, plaintiff sought to recover costs following an appeal and the trial court disallowed the cost of a surety bond. Plaintiff appealed that order, and the appellate court reversed, holding the surety bond should be allowed if the trial court determined it was “necessary.” Further proceedings were held, after which the trial court concluded the bond was not necessary, and again denied the item of costs. Plaintiff appealed for a second time, and the appellate court held that the evidence established the necessity of the bond as a matter of law, and reversed with directions to allow the cost of the bond. Interest, however, ran only from the date the trial court found the bond to be “unnecessary” and not from the date of the original order. “Up until this point no award of costs for this item could have been made because there had been no hearing or finding on the issue of necessity for the bond.” Once that hearing was held, however, plaintiff’s entitlement to the item of costs was set, and the trial court’s erroneous determination did not prevent interest from running on what the order should have stated as of that date.

Other examples of true reversals are reversals for insufficiency of the evidence to support the judgment, or reversals based on the trial court’s lack of authority to award damages at the time the award was made.

Even though the basic principles governing post-judgment interest have been around for a long time, the trial courts can still get it wrong. The most recent example is found in Chodos v. Borman (2015) 190 Cal.Rptr.3d 889, where the appellate court held the trial court erroneously applied a multiplier to an attorney’s fee award and reversed the judgment with directions to enter a new lodestar amount. The award was reduced from $7.8 million to about $1.7 million. In spite of what appears to have been a fairly straightforward modification rather than a true reversal, the trial court did not allow post-judgment interest from the date of the original judgment. Not surprisingly, on a second appeal, the appellate court held this was error.

Given the practical effect of the accumulation of interest on a judgment, practitioners and trial courts alike need to take particular care in analyzing the substance and effect of any “reversal” on appeal and how that bears on the date from which post-judgment interest will run. As a general rule, if the reversal does not impact on the party’s entitlement to the award at issue, but only on the amount, then interest will run from the date of the original judgment.

By: Suzanne M. Nicholson



California Appellate Court Holds Supervisor-Induced Stress Is Not a Disability

Employers in California with five or more employees must be concerned with both mental and physical disability discrimination allegations under the Fair Employment and Housing Act (FEHA).  The definition of mental disability is expanding.  Offering some hope to employers, however, California’s Third District Court of Appeal in Higgins-Williams v. Sutter Medical Foundation, 2015 Cal. App. Lexis 455 (May 26, 2015) found no disability where the plaintiff was diagnosed by her treating physician as having an adjustment disorder with anxiety resulting from dealing with Human Resources and her manager.  Sutter granted Plaintiff Michaelin Higgins-Williams leave under the California Family Rights Act (CFRA) and the Family Medical Leave Act (FMLA) based on this diagnosis, but she exhausted the maximum amount of leave she could take under these laws. Ms. Higgins-Williams then returned to work briefly.  She received a negative performance evaluation by her supervisor and alleged she was singled out and given an inappropriate amount of work.  Ms. Higgins-Williams claimed her manager grabbed her arm and yelled at her, after which she suffered a panic attack and left work, never to return.

Sutter allowed Ms. Higgins-Williams five months leave of absence based on a variety of doctor’s notes and as an accommodation for her disability.  The doctor’s notes first stated that Ms. Higgins-Williams could come back to work only if given a different supervisor, and later that Plaintiff was “willing to try” and return to work under her old supervisor.   Sutter requested she provide information within one week regarding whether she would be able to return to her clinical assistant position or that additional leave would effectuate such a return.  Plaintiff failed to provide the requested information and she was terminated.  Ms. Higgins-Williams’ lawsuit included a claim for disability discrimination brought under the FEHA and a claim that she was wrongfully terminated for using CFRA and FMLA leave and in violation of public policy.

The Court of Appeal found that Plaintiff’s cause of action for disability discrimination failed because she was not disabled.   “Disability” under the FEHA is more broadly defined than it is under the Americans with Disability Act of 1990 (ADA). Under the FEHA, a “disability” must limit a major life activity while under the ADA, the “disability” must substantially limit a major life activity.  Despite California’s broader standard, the Court in Higgins-Williams v. Sutter Medical Foundation ruled that the inability to work with a particular supervisor because of anxiety and stress related to the supervisor’s standard oversight of the employee’s job performance does not constitute a disability under California’s disability statute.  Not being able to work stress free with a particular supervisor is not the same as being unable to do one’s job without accommodation, which is what the FEHA is meant to address.  Plaintiff’s causes of action under CFRA and FMLA failed because she had already exhausted her leave.  Her claim that Sutter violated public policy also failed because the Court believed that Sutter had a legitimate reason for the termination. The Plaintiff was equivocal about whether she could come back to work under her supervisor.  Sutter provided Plaintiff five months of leave in addition to the maximum allowed under CFRA and FMLA.  While not expressly stated, the Court implicitly found Sutter had a legitimate business reason in being able to depend on its employees coming to work.

While the result of this decision is favorable to employers, caution should still be exercised when dealing with alleged mental disability as employment cases are generally quite fact specific.  It is also worth mentioning, that if a fitness for duty exam is warranted, the examination must be limited to the effect of the employee’s condition on his or her ability to perform the essential job functions with or without reasonable accommodation.  Appropriate legal advice should be sought before negotiating in this uncertain landscape.

By: Susan A. DeNardo

Fighting Fair: The Benefits of Alternative Dispute Resolution

In nearly every litigated case there is a benefit to engaging in early alternative dispute resolution (“ADR”). Although there may be some tactical advantages of delaying the scheduling of a mediation session, such as the filing of a dispositive motion to make unreasonable offers more narrowly tailored to the facts of the case, in the end you may find yourself at the edge of the cliff with limited resources before you even reach the courthouse steps.

Many clients embarking on the battle that is litigation find that costs surmount quickly and energy is rapidly drained. This article attempts to describe the several types of alternative dispute resolution to be considered at the onset your case.

Although many people conceive ADR to be a new age concept its roots are ancient, with commercial arbitration agreements dating back to Phoenician and Greek Traders. (See Kellor, F., American Arbitration: Its History, Functions, and Achievements, 3 (Port Washington, N.Y.: Kennikat Press 1948).) In the United States, ADR predates both the Declaration of Independence and the Constitution.  The right to privately settle claims outside of the courtroom was known in the time of our forefathers, but it was not until 1922 that ADR became institutionalized in the United States. Presently, clients are faced with a plethora of choices for ADR. The benefit of ADR is it can be more efficient and cost effective than litigation.  It is crucial for parties to understand which form of ADR is most compatible with their dispute. Therefore a review of the various forms of ADR is instructive.

Arbitration allows a party to pursue its own goals, much like litigation, without the necessity of meeting the opposing party in the middle.  Arbitration is generally supported by a state’s statutes, which provide for the enforcement of future agreements to arbitrate, and stipulate that a trial court can enforce an award rendered by an arbitrator. Parties using arbitration give up the possibility of an appeal for the benefit of an efficient, economical, and certain final and binding award. Arbitration itself varies depending on the specific nature of the dispute. One should note that arbitration is now regularly accompanied by the same discovery and motion practice that is typical of litigation however it is still more expeditious than trial.  In order to initiate litigation, the prerequisite of ripeness applies so that only an actual controversy makes it to court rather than a mere hypothetical dispute.  Recently the Court of Appeal held that the ripeness requirement does not apply to arbitration unless the parties’ agreement contains such a requirement as arbitration is foremost a creature of contract. (See Bunker Hill Park Limited v. U.S. Bank National Association (2014) 231 Cal.App.4th 1315, 1326-1327.)  An expansive arbitration provision as in the Bunker Hill case did not on its face limit the universe of arbitrable disagreements to those that are “ripe.” (Id. at 1327.)

A dispute review board (“DRB”) is a product of the construction industry that may be applicable to other projects as well. A DRB consists of a panel of each party’s representatives and a neutral chairperson. Unlike arbitration, the DRB’s recommendations are generally not binding. Furthermore, a DRB is formed at the start of the project and meets periodically throughout the life of the project. A newer form of ADR called partnering is also being used in the construction industry which may be applicable to other industries. In partnering, the dispute resolution process takes place during the life of the project, and does not wait until completion of the project before initiating the resolution process. Partnering agreements generally provide for chief executives to resolve disputes through higher levels of meeting and discussion if not resolved at the lowest level.

Mediation is generally viewed as an extension of negotiation.  In mediation confidentiality can be a concern as it requires the disclosure of the parties’ positions, even the negative portions, in order to be effective. Generally in mediation the parties do not pursue their own goals but rather they meet in the middle and “split the baby”.   Med-arb is a hybrid form of ADR which promotes the benefits of both mediation and arbitration in one forum, where the same neutral acts as both the mediator and the arbitrator.

Another form of ADR is a Mini-trial.  Mini-trials allow lawyers to make abbreviated presentations of a dispute to a panel of decision-makers made up of senior executives of the two disputing organizations that do not have direct responsibility for the project giving rise to the dispute. Mini-trials are voluntary and nonbinding. Private judging is another form of ADR that allows for a private judge to render a report that the court can adopt as the judgment or render the judgment depending on the type of private judge.  This form of ADR allows for appellate review of the decision rendered by the private judge.  A newer form of ADR is the collaborative law process where litigation counsel for each side of the dispute agrees to settle the matter without threats of litigation. Counsel must take a stand on every issue and cooperate to negotiate in good faith and work together in informal discovery.  If either side seeks court intervention both attorneys working in the process must withdraw from representing the parties.

The undeniable benefit of ADR is its effectiveness, efficiency, and the willingness of the parties to voluntarily invest time in resolving disputes. It is critical to assess your individual case prior to selecting the form of ADR that is right for you.

By: Mariel Covarrubias, Esq.

The information presented in this article is intended for general educational purposes. It is not intended to be legal advice. Every company or person’s situation is different and requires individual analysis by competent counsel before legal advice can be rendered. If you are confronted by a legal issue retain competent legal counsel to advise you immediately. This article is not a substitute for legal advice from an attorney licensed to practice in your jurisdiction.