The Centurion's View

If I have an Option ARM Loan, do I have a Case against my Bank for Fraud?

2011-08-25T17:09:00.000-07:00

Depending on what the loan documents say, homeowners with Option Arm loans may have a case against their lender for fraud. Loan documents which fail to clearly disclose that making the scheduled monthly payments will result in negative amortization may be deceptive and fraudulent. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4^th 230).

Last week the Court of Appeal held in Boschma, that loan documents were deceptive in stating negative amortization could occur rather than stating negative amortization would certainly occur as a result of making the scheduled monthly payments. The Court believed that stating only the possibility of negative amortization as opposed to its certainty was inaccurate and a half-truth. Plaintiffs alleged that if the lender had disclosed to them the amount they would have to pay each month to avoid negative amortization, then they would not have entered into the loan. The Court accepted this allegation as sufficient for pleading the intent to defraud element of a fraud claim.

Homeowners with similar loan documents now have a precedent for a fraud claim against their lender. Thus, borrowers should take a closer look at their loan documents, or have an attorney review them, to see whether the disclosures were accurate and adequate about the consequences of making the scheduled minimum monthly payments.

Don't Mess With Someone Else's Password

2011-08-24T17:41:00.000-07:00

Teenagers may think it's cool to hack into someone's Facebook page, alter the subscriber's profile, and post sexually explicit comments, but it may also be a crime. In a recent case, a juvenile used a girl's email password and account to gain access to her Facebook account, where he posted, in her name, prurient messages on two of her male friend's pages (walls) and altered her profile description in a vulgar manner. The juvenile was found guilty of identity theft under California Penal Code section 530.5 and ordered to serve 90 days to a year in the county juvenile Alpha Program. (In re Rolando S. (2011) 197 Cal.App.4th 936).

If I do not Believe my Homeowners Association's Parking Regulations are Effective, do I have a Case for Fraud?

2011-08-24T16:04:00.000-07:00

Nope. In a fraud case, one of the many elements you have to prove is called "detrimental reliance." This means that you relied on the defendant's false statement to your detriment. In other words, because you believed the statement was true, you took some action that you would not have taken had you known the statement was really false.

For example, you wouldn't have paid $5,000.00 for a "Rolex" watch at the swap meet if you knew it was just an imitation, worth only $50.00, but because the seller told you it was a genuine Rolex, and even gave you a certificate of authenticity, you bought it. Later you found out the certificate was false, and your jeweler told you the watch was junk. Because you relied on the seller's word, believing his word and the certificate to be true, you were out of pocket $5,000.00. This is detrimental reliance.

In a recent Orange County case, a homeowner's complaint for fraud was thrown out for lack of detrimental reliance. The homeowners association ("HOA") notified plaintiff that amended parking regulations prohibiting the parking of inoperable vehicles on association property were effective immediately. Plaintiff objected, saying the amended regulations were not effective because they were not recorded, so he kept his inoperable van parked in a prohibited space for two months. The HOA had the van towed.

Plaintiff sued for fraud, claiming the HOA representation that the regulations were effective immediately was false. (Sui v. Price (2011) 196 Cal.App.4th 933; partial publication). The court held that plaintiff failed to plead detrimental reliance. Because plaintiff had alleged that he did not believe the regulations were effective, he could not possibly have relied upon the representation to his detriment. As the court said: "failure to believe the representation is the opposite of reliance." Moreover, the fact that plaintiff left his van parked in a prohibited space for two months indicated that plaintiff did not believe the parking regulations were effective.

So, to have a case for fraud, one of the elements you must prove is that when the statement was made to you, you believed it to be true, and acted upon it. In other words, if you did not believe the statement when it was made to you, and acted as if you did not believe it, then you did not detrimentally rely on the statement, and you have no case for fraud.

Court Slams Wells Fargo Bank Tactics Against Homeowner

2011-05-04T14:49:00.000-07:00

Considering the current recession brought on by the mortgage-lending practices of several large banks, it is good to see one court was not going to let the perpetrators of financial ruin add insult to injury.

A few weeks ago, federal judge A. Howard Matz, United States District Court Judge for the Central District of California, denied Wells Fargo Bank's motion to order homeowners Abundio and Luz Cruz to pay $18,552.50 in attorney's fees the Bank incurred in defending against their lawsuit to stop a foreclosure on their home. The Cruz's claimed they were deceived by Wells Fargo Bank into agreeing to a payment-option, adjustable rate mortgage.

Wells Fargo successfully moved to dismiss the case on technical grounds, showing that the Cruz's complaint was, among other things: (1) preempted by federal law and (2) had to be dismissed because the Mortgage Reform and Anti-Predatory Act of 2010 was enacted too late to apply to the Cruz's case.

Wells Fargo then filed a motion asking the Court to order the Cruz's to pay the attorney's fees the bank incurred in successfully defending the lawsuit. Wells Fargo argued that under California law (Code of Civil Procedure, Section 1032), it was entitled to payment of attorney's fees because the Cruz's promised to pay such fees when they contractually agreed to the loan.

The Court, however, pointed out there was a higher principle of law, namely, that federal courts have the discretion to deny contractually-authorized attorney's fees if an award of fees would be inequitable and unreasonable. (Cruz v. Wachovia Mortgage, Well Fargo, et al., (2011) 2011 U.S. Dist. LEXIS 24784). In fact, the court noted it would be an abuse of its discretion for a court to award contractually-authorized attorney's fees under circumstances making the award inequitable or unreasonable. (Id.)

Under the circumstances of this case, the Court concluded that to permit Wells Fargo to recover its attorney's fees would be both inequitable and unreasonable.

The Court's conclusion is well-reasoned. First of all, Wells Fargo had never disproved the Cruz's allegations; rather, Wells Fargo prevailed on technical defenses that did not address the merits of the Cruz's allegation that the lenders disregarded their underwriting requirements to get the Cruz's to obtain a loan they would not be able to repay. The Court believed the allegation was plausible. In the words of the Court, "as the revelations of mortgage and banking abuses over the past two years have demonstrated, this allegation is by no means implausible." (p.3). Moreover, Wells Fargo did not claim the Cruz's suit was frivolous.

Second, the contractual attorney's fees provision was in fine print, buried in six pages of legalese. As the Court put it, 'the size of the print is so tiny that most readers blessed with 20-20 vision would experience the trevails of Mr. Magoo in trying to decipher it." (p.4).

Lastly, the Court found Wells Fargo's motivation to be offensive. "Now, Wells Fargo Bank seeks to punish Plaintiffs for daring to sue it." (p.3). "Plaintiffs are already facing the loss of their home. To saddle them with nearly $20,000.00 in attorney's fees sought by a giant financial institution because they had the temerity to file a lawsuit would be worse than inequitable and unreasonable ; it would be a travesty." (p.7).

This opinion should give hope to homeowners contemplating a lawsuit to save their home. Anyone considering a lawsuit for breach of contract or a loan agreement that contains an attorney's fees provision should seriously consider their liklihood of prevailing before filing suit. But as this case shows, an attorney's fees provision in an agreement with a mortgage lender or bank should be construed in the context of the abuses perpetrated by the lenders.

It remains to be seem whether other courts will agree; nevertheless, it is undeniable the lenders played a major role in creating the current crisis. Moreover, the banks received hundreds of billions of dollars to bail them out of the crisis they created; for them to to get attorney's fees from insolvent homeowners, just to punish and deter hoeowners' legal attempts to save their homes would just add insult to injury.

Court Rules That Homeowner's Lawsuit Can Proceed Against U.S. Bank for Bank's Alleged False Promise

2011-04-30T14:11:00.000-07:00

On January 27, 2011, the Second Appellate District of the California Courts of Appeal reversed the trial court's granting of U.S. Bank's demurrer to homeowner Jacqueline Aceves' causes of action for promissory estoppel and fraud, holding that Aceves had alleged facts sufficient to proceed on these claims. (Aceves v. U.S. Bank (2011) 192 Cal.App.4th 218)

Aceves fell behind in her mortgage payments and filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code. She intended to convert her bankruptcy to a Chapter 13 case and "save her home" with her husband's financial assistance. She contacted her lender, U.S. Bank, which promised to work with her on a loan reinstatement and modification if she would forgo further bankruptcy proceedings. Relying upon U.S. Bank's promise, Aceves did not convert her bankruptcy to a Chapter 13 proceeding, and she did not oppose the Bank's motion to lift the automatic stay against legal proceedings against her.

Despite its promise, U.S. Bank was simultaneouly complying with the notice requirements to conduct a trustee's sale of Aceves' home. Five days after the bankruptcy court granted the Bank's motion to lift the stay, the Bank scheduled Aceves' home for sale, without contacting her to negotiate reinstatement of the loan or its modification, as it had previously promised.

Aceves alleged that U.S. Bank never intended to negotiate the loan with her; rather, the Bank just wanted to induce her into dropping her bankruptcy proceedings so the Bank could foreclose on her home. The Court of Appeal held that Aceves' allegations were sufficient to state claims against U.S. Bank for promissory estoppel and fraud.

As this case shows, if a lender makes a specific promise to reinstate a loan, to modify a loan, or to proceed with some other loan workout remedy, such as a short sale, forebearance, or deed in lieu of foreclosure, but secretly proceeds with foreclosure, the homeowner may have a case against the lending bank. In addition to showing the false promise, the homeowner must also show that his or her reliance on the bank's promise was foreseeable, reasonable, and resulted in harm to the homeowner.

A false promise is evident when the bank promises to do one thing and then does another. The promise, however, must be false at the time it was made; that is, the promise was made with no intention of keeping it, as in this case where U.S. Bank said it would negotiate with Aceves to reinstate her loan, yet it was simultaneously proceeding with all the legal prerequisites to foreclose on her home.

Truckers Beware

2011-03-29T17:10:00.000-07:00

This month, the California Supreme Court affirmed a jury's verdict holding Ralph's Grocery Company partially liable for the death of a motorist who veered off the freeway and collided with a parked Ralph's truck. (Cabral v. Ralph's Grocery Company (2011) 51 Cal.4th 764). The Court ruled that a trucker owes a duty of ordinary care when parking alongside a freeway to park in such a manner as to avoid injury or death to other motorists. Stopping on the dirt shoulder of the freeway, in an area designated for emergency parking, to have a snack, is not an emergency, and will result in liability for injuries or death to the motorist whose vehicle veers off the freeway and collides with the parked truck.

Forced Abortion Constitutes Political Persecution

2011-01-22T13:13:00.000-08:00

Last summer, the United States Court of Appeals for the Ninth Circuit held that the Board of Immigration Appeals must reconsider its denial of an asylum application by Nai Yuan Jiang, a Chinese man whose girlfriend was forced to have an abortion in China. In his application, Jiang claimed he was persecuted under China's coercive family planning policies. The Court agreed. The key to the Court's decision in Jiang's favor was its finding that forced abortion constitutes political persecution within the meaning of our immigration laws. (Jiang v. Holder, 611 F.3d 1086 (9th Cir. 2010)).

Upon reading the Court's opinion, one is readily inclined to agree that the Court made the right call; after all, it must be horrible to live in a country where the government controls population growth through the barbaric practice of forced abortion. But wait, in the context of abortion, what is the difference between China and the United States ? Well, U.S. citizens are not forced to have abortions; to the contrary, they volunteer to have them! How enlightened we are; how superior we are to those barbarians in China. China's abortions constitute political persecution but ours are politically correct.

Is the difference between China and the U.S. simply freedom of choice? Does a person's freedom to choose change the nature of the act itself? Of course not. Any act is objectively good or bad in itself; the goodness of the act does not depend on whether the act is done freely or under force. Forced action changes a person's culpability for an action, but it does not change the nature of the act itself. A person can be absolved of responsibility for an act done against their will, but the act itself does not change.

So again, one must ask what is the difference between the U.S. and China? Thomas Aquinas teaches that there are three parts to the morality of any act and all three parts must be good for any act to be morally good. The three are (1) the objective act itself, (2) the subjective motive, and (3) the situation or circumstances. (Peter Kreeft, Making Choices, Practical Wisdom for Everyday Moral Decisions, (Servant Books, Cincinnati, Ohio, 1990) pp. 29-30). By applying this test to the act of abortion we can see that we are more culpable than the Chinese.

Of course, there are some who will say that an abortion, in and of itself, is neither good nor bad; rather, it's no different than disposing of hamburger, both are just lifeless flesh. It's possible that such people have never laid their hand on a pregnant woman's stomach and felt the movement of a child in the womb. On the other hand, it is impossible that such people have ever felt a pound of packaged hamburger moving and kicking.

On this day, the 38th anniversary of the Roe v. Wade holding, we must stop and think. How can we look down our noses at China for its law of forced abortions while at the same time seeing ourselves as superior for our law of free abortions?

The abortion issue is the most important issue of our time. The next generation might well ask of us, like we have asked of Germans who lived next door to concentration camps during WWII, why more wasn't done to stop these murders. Six million people were killed under Nazism; 30,000,000 were killed under Stalinism, and approximately 54,000,000, so far, have been killed in the name of individualism since Roe v. Wade. (See statistics kept by the U.S. Center for Disease Control).

Mother Teresa said "the greatest destroyer of peace today is abortion because it is war against the child...A direct killing of the innocent child, murder by the mother herself...And if we can accept that a mother can kill even her own child, how can we tell other people not to kill one another?"

An Appeal Filed Before Trial Court's Intended Ruling is Untimely.

2011-01-21T13:55:00.000-08:00

Late filing of a notice of appeal is always a fatal error, and sometimes filing too soon can also be fatal. The recent case of Silver v. American Fish Co., Inc. (2010) 198 Cal. App.4th 688, illustrates this point. Silver filed a notice of appeal after rendition of judgment and after the defendant filed a motion for attorney's fees and costs, but well before the trial court heard and ruled on the attorney's fees motion. By court rule, a notice of appeal filed after rendition of judgment or statement of intended ruling but before entry of judgment may be treated as being filed immediately after entry of judgment. (Cal. Rules of Court, rule 8.104(e)(1) and (2)). Such appeals are referred to as "premature" appeals, meaning they are timely though early.

Silver's appeal, however, did not come within the rule because his appeal was filed before the trial court announced its intended decision on the motion for attorney's fees. (Silver, supra at 691).

If the issue of entitlement to attorney's fees has been adjudicated prior to judgment, such that a judgment includes an award of attorney's fees and leaves only the amount to be determined later, then an appeal from the judgment would include the subsequent award of the amount of attorney's fees. (Silver, supra, citing Grant v. List & Lathrop (1992) 2 Cal.App.4th 993, 998). But Silver could not bring himself within this rule because the trial court had not adjudicated the issue of entitlement until after Silver's notice of appeal was filed. As a result, Silver's attempted appeal from the award of attorney's fees was untimely, and since an appellate court lacks jurisdiction to hear an untimely appeal, Silver's appeal had to be dismissed.

Beware of Separately Appealable Post-Judgment Orders

2011-01-21T13:03:00.000-08:00

Most litigators and trial attorneys know that an appeal from the final judgment includes an appellate court's review of all the non-appealable orders and rulings the trial court made before the final judgment. However, many attorneys mistakenly assume the appeal from the judgment also includes trial court orders made after the judgment. This assumption is a trap for the unwary because some post-judgment orders are separately appealable, meaning that another notice of appeal must be filed in order to secure appeallate review of the post-judgment order.

If a second, separate notice of appeal is not filed, then the appellate court has no jurisdiction to review the post-judgment order. Failure to timely secure appellate review means the separately-appealable order will become final and enforceable, i.e., collectible.

In most instances, post-judgment orders awarding attorney's fees are separately appealable, yet attorneys repeatedly fail to file a separate notice of appeal from the post-judgment award of attorney's fees, thinking that the notice of appeal from the final judgment includes the subsequent award of attorneys fees. (See for example: Silver v. American Fish Co., Inc., (2010) 190 Cal.App.4th 688, 690-694).

The term "separately appealable" means that an order may be appealable independently, and apart from, the appeal taken from the final judgment. In practical procedural terms, this means that one notice of appeal would be filed from the final judgment, and later, another notice of appeal would be filed from the "separately appealable" order. Most often, when two or more separate appeals are filed in the same case, the appellate court consolidates all the appeals.

Appeal Timely Though Filed 193 Days After Order

2011-01-04T16:34:00.000-08:00

The last possible day to file a notice of appeal from an appealable order is 180 days after the signed order is filed. (Cal. Rules of Court, rule 8.104(d)(3)). But "what happens when a file-stamped appealable order disappears into the judicial equivalent of a sock drawer?" (In re Marriage of Mosley (2010) 2010 Cal. App. Lexis 2079). The Fourth Appellate District of the Court of Appeal of the State of California addressed this question and held that an order is not "filed" unless it is filed in a public place where its presence is capable of being known.

A proposed order modifying child and spousal support, prepared by the ex-husband, was signed by the court and file-stamped on April 1, 2010, but for unknown reasons, the order was not physically placed in the court's file, was not entered on the court's computerized case management system, and was not served on the parties. The appellant wife phoned the court to inquire about the order, but she was told by the court clerk that the judge would be getting to it as soon as she was able. When the appellant phoned back she was told nothing had been filed. On August 20, 2010, the court clerk located the order that had been "misplaced." On September 10, 2010, the order was entered into the court's computerized case management system. On October 1, 2010, the wife filed her notice of appeal from the order, 193 days after the file-stamped date of April 1, 2010.

The Court of Appeal issued an order to the parties that it was considering dismissing the appeal as untimely because the notice of appeal was filed more than 180 days after the appealable order modifying child and spousal support.

The appellant wife submitted a letter brief in response to the appellate court's order, along with evidence in the form of her sworn declaration, copies of her telephone records, and copies of her e-mails with respondent husband, all of which showed that the order had been misplaced and that she had been diligent in searching for it. Also, the court clerk submitted a declaration stating the order had been misplaced and had not been located until August 20, 2010. The respondent husband did not oppose or contradict any of the wife's evidence.

The Court of Appeal found that wife successfully rebutted the presumptive filing date of April 1, 2010, by showing that the order was not a public record and that she had been diligent in searching for it. Under these circumstances the Court of Appeal ruled that the 180-day limit, within which an appeal must be filed, begins to run from the date the appealable order was filed as a public record. Since the order was placed in the court's computerized case management system on September 10, 2010 (where it was presumably viewable by the public) the notice of appeal filed on October 1, 2010, was timely.

The Court of Appeal explained that the purpose of the 180-day time limit to appeal derives from the the need for finality. "Without an outside limit, orders could be appealed years after the fact based on deficiencies in service." Hence, "Litigants are on inquiry notice that a judgment may be forthcoming and have an outside deadline of 180 days from entry of that judgment to appeal." The lack of notice of entry of judgment does not stop the 180-day clock from running. The lack of notice does not jeopardize the judgment.

But, the 180-day rule presupposes that so-called "filed" documents in the offical record are open and available to the public. Such records need to be available to the public in order to avoid an absurdity and to preserve the constitutional right of appeal. "Without such a reasonable and sensible construction, trial courts (whether wittingly or unwittingly) could shield judgments from appellate review by holding them in pectore until the 180-day outside time limit had run its course. This plainly cannot be the law."

Accountants Did Not Breach Any Duty to Waiters for Allegedly Over-reporting Tip Income

2010-08-31T12:56:00.001-07:00

Three waiters employed at a popular Los Angeles restaurant alleged that their income was negligently over-reported on W-2 forms prepared by the restaurant’s accountants. The waiters further alleged that the restaurant’s managers improperly allocated a percentage of the tips to themselves, and that the accountants included the tip money taken by the mangers as income received by the waiters. (Emanuele Giacometti, et al., v. Aulla, LLC et al. (2010) 2010 Cal.App. Lexis 1484).

The accountants were hired by the restaurant, not the waiters, to prepare year-end documents with respect to earnings and taxes. Hence, the waiters had no contract with the accountants; in legal terminology, the waiters were not in privity of contract with the waiters. As a general rule, privity of contract is required in order for a party-plaintiff to state a cause of action for professional negligence. Where a plaintiff is not in privity of contract, courts analyze professional negligence claims by considering a number of factors first articulated in the landmark case of Biakanja v. Irving (1958) 49 Cal.2d 647.

After taking the Biakanja factors into consideration, the Court of Appeal concluded the waiters had no case against the accountants because the accountants had not breached any duty to the waiters. In other words, the waiters were unsuccessful in convincing the Court of Appeal that the accountants owed a duty to accurately report the waiters’ income to the IRS.

The waiters’ case failed mainly because they did not allege, and apparently could not honestly allege, that the accountants knew about the alleged wrongdoing or had a duty to investigate the accuracy of the income reported by the restaurant. As pointed out by the Court of Appeal, “there is no allegation that the accountants were the sources of the inaccurate numbers or that they had an obligation to ascertain the accuracy of the income reported for each employee.” Reasoning from an analogous case concerning auditors, the Court of Appeal stated “an auditor is a watchdog, not a bloodhound.” Hence, the key to understanding the Court’s reasoning is fact that the record contained no evidence the accountants knew the restaurant managers were, allegedly, taking the waiter’s tips.

The Court’s holding in this case is important for clients of the Law Offices of James F. Lindsay for a number of reasons. (see www.jameslindsaylaw.com for more information). In any case potentially involving negligence it is absolutely necessary to show a duty owed by the defendants. A duty may arise from contract, or in the absence of a contract, from a special relationship between the plaintiff and the defendant, from a voluntary undertaking by the defendant, from the words of a statute, code or regulation, or from affirmative findings of the Biakanja factors. Under any of these legal theories of liability, proof of the defendant’s knowledge of, participation in, consent to, or aiding and abetting of the wrongdoing that caused harm to plaintiff will be crucial to holding the defendant liable for damages.

The opinion was filed on August 25, 2010. The accountants were ably represented by Randall Dean and Andrew Wright of Chapman, Glucksman, Dean, Roeb & Barger.

Lawyers Must Disgorge Fees From Ponzi Scheme

2010-08-20T15:41:00.000-07:00

On Tuesday, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s finding that a lawyer should have known that a $375,000.00 non-refundable flat fee received from his client was paid with the ill-gotten gains of a Ponzi scheme. As a result, the district court’s order imposing a constructive trust upon $238,300.00 of the fee was not an abuse of discretion or legally erroneous. (Federal Trade Commission v. Network Services Depot, Inc. (2010) 2010 U.S. App. Lexis 17080).

This is an important decision for clients of the Law Offices of James F. Lindsay who are trying to recover money lost as a result of unwittingly investing in a business that turns out to be a Ponzi scheme. (see www.jameslindsaylaw.com for more information). Far too often the principal perpetrator of the Ponzi scheme has squandered most of the funds invested in the scheme, so full recovery of the invested funds from the perpetrator is often impossible. However, where the perpetrator has tried to hide funds under the guise of payment of legal fees, Tuesday’s opinion provides the precedent for pursuing and recovering those fees from the perpetrator’s lawyer.

If it can be shown that the fees were paid from the proceeds of the Ponzi scheme, and the lawyer knew, or should have known, that the source of payment was from the scheme, then the lawyer will be required to disgorge all such fees.

Prop. 8: A Long History or a New History?

2010-08-19T12:38:00.000-07:00

Proponents of Proposition 8 recently asked the trial court to block same-sex marriages while they consider taking an appeal. In opposition to the request, attorneys for Gov. Arnold Schwarzenegger argued that allowing same-sex marriages “is consistent with California’s long history of treating all people and their relationships with equal dignity and respect.” Huh? Does California really have a long history of treating all people with equal dignity, or have the learned counsel for the Governor chosen to re-write history to justify their position?

Regarding the history of American Indians in California from 1849 to 1879, historian Hubert Howe Bancroft writes “that part of the early intercourse between aboriginal Americans and Europeans which belongs to history may be briefly given, short work was made of it in California. The savages were in the way; the miners and settlers were arrogant and impatient; there were no missionaries or others present with even the poor pretense of soul saving or civilizing. It was one of the last human hunts of civilization, and the basest and most brutal of them all.” (see www.nps.gov/history/history/online_books/5views/5views1c.htm).

The gold rush era was also a time of less-than-dignified treatment for Chinese-Americans. In 1886 the United States Supreme Court held that a City of San Francisco ordinance prohibiting laundries in wooden buildings, unless a permit was obtained, was applied in a discriminatory fashion against Chinese. (Yick Wo v. Hopkins (1886) 118 U.S. 356). Although most of the city’s wooden building laundries were owned by Chinese, not one of them were granted a permit whereas only one non-Chinese was denied a permit.

In 1946 the United States District Court for the Central District of California found that the Westminster school district’s segregation of Mexican-American schoolchildren into separate “Mexican schools” was unconstitutional. (Mendez v. Westminster, 64 F.Supp. 544 (C.D. Cal. 1946). The district court’s ruling was affirmed on appeal, aided in part by an amicus curiae brief by Thurgood Marshall, who later became Supreme Court Justice, and whose experience in this case contributed to the landmark holding in Brown v. Board of Education. (see Strum, Mendez v. Westminster: School Desegregation and Mexican-America Rights (2010), and Ettinger, A Leader in the Fight Against School Segregation, Daily Journal (July 8, 2010) p.6).

The war years also saw the mistreatment of Japanese-Americans, who were rounded-up and placed in internment camps. (see Korematsu v. United States, 323 U.S. 214 (1944). Inspired by a desire to prove their loyalty, many young Japanese-Americans enlisted in the armed forces, and the Japanese-American soldiers of the 442 Infantry Regiment became the most-decorated regiment in the history of the United States Armed Forces, earning 18,000 individual decorations. The 442nd and the 100th Battalion from Hawaii, another Japanese-American unit, earned a total of 21 Medals of Honor. The price these young men paid to overcome suspicion and earn equal dignity was high. The 442nd/100th sustained 9,486 wounded and over 600 killed, the highest casualty rate of any American unit during the war.

After WWII, the Cold War began. During this period one can recall the revisionist history proclaimed by Communist party leaders, a re-writing of history that was laughable. Today we have President Ahmadinejad of Iran denying that the Holocaust ever occurred. We just laughed at him, but now we have counselors wiping clean the pages of history in order to make their cause seem righteous by association with the past, a past that didn’t exist. Who’s laughing now?

Faulty Rental Release Fails to Protect Scuba Shop

2010-06-03T11:50:00.000-07:00

Last Wednesday the Second Appellate District of the Court of Appeal of the State of California held that an unambiguous release of liability applying to the use of rented scuba-diving gear for boat dives or multiple day rentals did not apply to a one-day rental of the scuba-diving equipment for use from shore. As a result, a summary judgment entered by the trial court in favor of the scuba-diving shop was an error; hence, the Court of Appeal reversed the judgment. Huverserian v. Catalina Scuba Luv, Inc. (2010) 2010 Cal.App.LEXIS 750.
The sad facts of the case concern a father and son who had rented scuba-dving equipement from Catalina Scuba Luv for a day of diving at the Casino Point underwater dive park in Avalon on Catalina Island. The father ran out of air at 60 feet. He was able to reach the surface by buddy-breathing with his son, but he went into cardiac arrest on shore. He died the next day at UCLA Medical Center.
There was no dispute over how the accident happend; rather, the scuba shop's liability depended on whether the rental release signed by the decedent fully protected the shop from any damages claim. In bold underlined letters, the pertinent language in the release stated: "Equipment rental agreement, liability release and assumption of risk of scuba & snorkel gear for boat dives or multiple day rentals."
Just about any experienced Southern California diver can see the problem with this language, as the usual use of rented scuba gear at the Casino dive park is for diving from shore and for just one day. Thus, a release that applies to boat dives or multiple-day dives would not apply. This was exactly the reasoning of the Court of Appeal.
The law provides that a written release may fully insulate a wrongdoer from damages due to negligence, but the release must be clear, unambiguous, and explicit in expressing the intent of the parties; otherwise, the release is ineffective.
In this case the Court held that the release was clear and unambiguous, as it explicitly stated that it applied to boat dives or multiple day dives, and since Huverserian rented the equipment for just one day use from shore at the dive park, he did not come within either the boat dive or multiuple-day dive categories specified in the release. Hence, the release did not apply to him.
As the Court stated, "a person reading the rental agreement who is neither a boat diver nor multiple day rentor could reasonably conclude that the exculpatory language following the limiting language did not apply to him or her."
Undoubtedly Catalina Scuba Luv, Inc. had hoped and intended for the release to cover all rentals, not just boat dives or multiple day use. As locals know, the bulk of the shop's rentals are used for one day shore dives at the dive park behind the Casino.
The lesson to be learned from the case is to be careful and precise in describing the scope of the release. The languge should be as broad and as all-encompassing as possible, covering all potential uses of the rented equipment. An inartfully drafted release, one that fails to cover the circumstances most often arising from the use of the rented equipment, can fail to protect the releasor.
Now that the Court of Appeal has reversed the judgement in favor of Catalina Scuba Luv, Inc., the case will go back to the trial court for further proceedings, including the possibility of a trial to determine the amount of damages, if any, that the shop may have to pay.