Early Sullivan Obtains $4.85 Million Jury Verdict for Client in Wrongful Foreclosure Case
An Early Sullivan Wright Gizer & McRae trial team, comprised of Scott Gizer, Rebecca Claudat and Zachary Hansen obtained a $4.85 million jury verdict on behalf of their clients Cashera Plaza, LLC and Tony Khodadad regarding a wrongful foreclosure on vacant land in Hanford, CA. Cashera Plaza had obtained a $1.13 million construction loan from Defendants to build a self-serve car wash and auto repair facility. The Defendants entrusted the construction funds to a fund control agent, but then secretly used those same funds for a gold refining venture without Plaintiffs’ knowledge or consent. When this gold venture failed, Defendants tried to hold Cashera Plaza responsible for the entire $1.13 million despite Cashera only receiving approximately $140,000, asserting that the fund control agent was under Cashera Plaza’s control and then trying to hide evidence of Defendants’ secret gold venture. Liability was found and the critical issue at trial became whether Plaintiffs could establish damages for lost profits since Plaintiffs’ car wash and auto repair facility was never built due to Defendants’ breaches and fraud. The jury unanimously found that Plaintiffs had established lost profits with reasonable certainty and awarded Plaintiffs the entire amount of lost profits claimed as well as emotional distress damages for Defendants’ fraud.
Early Sullivan’s Coverage Determination On Behalf Of Old Republic Affirmed On Appeal
The United States Court of Appeals for the Fifth Circuit upheld Early Sullivan's coverage determination, involving a complex mechanic’s lien dispute, on behalf of client Old Republic National Title Insurance Company (“Old Republic”). At the center of the dispute was the famed Cal-Neva Lodge & Casino that sits on the border of California and Nevada -- a property Frank Sinatra once co-owned in the 1960s. Hall filed suit against Old Republic for breach of contract, breach of the duty to defend, breach of the duty of good faith and fair dealing, and violations of Chapter 541 of the Texas Insurance Code, claiming that coverage was improperly denied, for which Hall sought over $5,000,000 in damages. The coverage opinions, prepared by Scott Gizer, concerned whether Hall had coverage under the insuring provisions of the title policy that insured the lien priority of Hall’s deed of trust, and under certain mechanic’s lien endorsements, as well as whether Hall’s claims were excluded from coverage under Exclusions 3(a), excluding matters created by the Insured, and 3(d), post-policy events. Scott Gizer opined that, because all of the work covered by the mechanic’s liens was post-policy work, and arose due to Hall’s internal decision to discontinue funding its construction loan months prior to notifying any of the contractors, there was no coverage for the claim and was excluded from coverage. Early last year, the U.S. District Court for the Northern District of Texas found that Scott Gizer's and Old Republic’s coverage opinions were correct, Ordering that Hall take nothing by its claims against Old Republic, and that those claims be dismissed with prejudice. The United States Court of Appeals for the Fifth Circuit recently affirmed summary judgment. Click "Download PDF" to read the 5th Circuit Opinion.
California Court Of Appeal Affirms Demurrer Victory Obtained By William Wright on Behalf of First American Title Insurance Company
In Pak v. First American Title Insurance Company, the Court of Appeal has affirmed a demurrer ruling obtained by Early Sullivan for its client First American Title Insurance Company. The Pak case concerned claims for breach of title policy and bad faith relating to an easement on commercial property in Los Angeles. The Superior Court sustained First American’s demurrers without leave to amend, agreeing that First American had no duty of defense or indemnification in light of the individual insureds’ prior conveyance of the property to their LLC, which conveyance terminated coverage under Condition 2 of their policy. The Court of Appeal’s decision in Pak involves issues that are important to the title insurance industry and its insureds, because it interprets and provides clarity regarding a key policy provision, namely Condition 2. The language of Condition 2 – which provides that coverage under the policy shall continue in force in favor of an insured only so long as the insured “retains an estate or interest in the land” – is ubiquitous in title policies of all types issued in California and around the country. The Pak decision is the first in California to specifically analyze and interpret the language “estate or interest in the land” in Condition 2, and is the first to find that an insured owner’s conveyance of its fee interest in property to a limited liability company (LLC) owned by the insured, terminates coverage under Condition 2. The opinion is also the first California appellate decision to find that rescission of a conveyance of land does not revive coverage in a title insurance policy that has been terminated under Condition 2.
Early Sullivan Prevails on Demurrer on Behalf of Stewart Title of California
Early Sullivan Prevails in Breach of Contract/Bad Faith Case for Client Stewart Title Guaranty Company
Sophia Lau recently prevailed on appeal in Ifeoma Ukoha v. Provident Title Company, et al., a breach of contract/bad faith case, on behalf of client Stewart Title Guaranty Company (“STGC”). Plaintiff Ifeoma Ukoha purchased an apartment building that was later lost to foreclosure due to the seller’s misappropriation of Ukoha’s mortgage payments. In her first amended complaint, Ukoha asserted breach of contract, breach of the implied covenant of good faith and fair dealing, concealment, promissory fraud, and violation of California Business and Professions Code section 17200/unfair competition.
Ukoha alleged that STGC was effectively a long-time business partner of the seller, whose other properties were embroiled in civil and criminal litigation, and STGC should have informed Ukoha of the risk of purchasing the subject property because of the seller’s bad business practices. Ukoha sued both the underwritten title company, Provident Title Company, Inc. (“Provident”), and the title insurer, STGC, alleging collusion with the seller. The trial court sustained both STGC’s and Provident’s demurrers without leave to amend on the grounds that the post-policy foreclosure was not a title defect, and the title companies owed no duty of disclosure to Ukoha.
The California Court of Appeal agreed with the trial court and stated that a title insurance company does not owe the insured any duty of disclosure outside the policy. In affirming the judgment, the appellate court held that “[b]ecause Ukoha alleged no facts indicating she had any viable cause of action, defendants’ demurrers were properly sustained. Because she offers no alternate, cognizable theory on appeal, nor any indication that she could successfully amend, and none appearing from the record, leave to amend was properly denied.”
Early Sullivan Prevails in Breach of Policy/Bad Faith Case on Behalf of Fidelity National Title Insurance Company
Christopher Ritter (with the involvement of William Wright) prevailed on summary judgment for the Firm’s client Fidelity National Title Insurance Company against PennyMac in the action entitled, PennyMac Mortgage Investment Trust Holding I, LLC v. Fidelity National Title Insurance Company. The breach of contract/bad faith action before the American Arbitration Association was initiated by PennyMac and its firm Blank Rome. It arose from Fidelity’s denial of a defense in an underlying action brought by a homeowner against PennyMac alleging that PennyMac’s deed of trust was invalid. Based on the Firm’s briefing and argument, the arbitrator relied on the California XWarehouse case stating: “The court points out the well-established principle that the title insurance policy insured only the validity of the deed of trust and not the note secured by that deed of trust, therefore it did not matter whether the [loan] funding was established at the time of the tender, because either way, the title insurer would have had no obligation to pay money.” Still pending is the arbitrator’s tentative determination to award Fidelity its attorney’s fees and costs.
Early Sullivan’s Coverage Determination At Heart of Old Republic’s Summary Judgment Victory
Early Sullivan client Old Republic National Title Insurance Company (“Old Republic”) retained the Firm to handle coverage on a complex mechanic’s lien dispute involving Old Republic’s insured Hall CA-NV, LLC (“Hall”) and the renovation of the famed Cal-Neva Lodge & Casino that sits on the border of California and Nevada -- a property Frank Sinatra once co-owned in the 1960s. Hall filed suit against Old Republic for breach of contract, breach of the duty to defend, breach of the duty of good faith and fair dealing, and violations of Chapter 541 of the Texas Insurance Code, claiming that coverage was improperly denied, for which Hall sought over $5,000,000 in damages. At the center of the lawsuit were the coverage opinions prepared by Early Sullivan’s Scott Gizer. The coverage opinions concerned whether Hall had coverage under the insuring provisions of the title policy that insured the lien priority of Hall’s deed of trust, and under certain mechanic’s lien endorsements, as well as whether Hall’s claims were excluded from coverage under Exclusions 3(a), excluding matters created by the Insured, and 3(d), post-policy events. Scott opined that, because all of the work covered by the mechanic’s liens was post-policy work, and arose due to Hall’s internal decision to discontinue funding its construction loan months prior to notifying any of the contractors, there was no coverage for the claim and was excluded from coverage. After both sides moved for summary judgment on the legal interpretation of the title insurance policy in-question, the U.S. District Court for the Northern District of Texas, found Scott’s and Old Republic’s coverage opinions to be correct, Ordering that Hall take nothing by its claims against Old Republic, and that those claims be dismissed with prejudice. Click "Download PDF" to read the Final Order.
Early Sullivan Prevails on Behalf of Client My Instant Guru (“MIG”) Regarding Data Storage Master Service Agreement
After a week-long arbitration, in Arya Group vs. My Instant Guru, the Hon. Richard A. Stone (Ret.) ruled in favor of Early Sullivan client, My Instant Guru (“MIG”), in its dispute with high-end architectural firm Arya Group, which was seeking damages just south of $50 million. Scott Gizer acted as lead counsel for MIG in the arbitration. Arya claimed that MIG, which Arya hired for networking, backup, and disaster recovery services, set up a faulty computer network and failed to maintain sufficient backups for MIG's files. As a result, when Arya’s server crashed, Arya claims to have lost all of its data, including architectural drawings (CAD files) that would cost tens of millions of dollars to recreate. Arya alleged five claims against MIG: (1) a breach of contract claim based on MIG’s alleged failure to maintain backups; (2) a negligence claim based on MIG’s purported duty; (3) breach of fiduciary duty; (4) negligent misrepresentation; and (5) fraud. MIG argued that it fully performed as required and that the server crash and loss of data occurred because Arya failed to heed MIG’s warnings and follow MIG’s advice. Based upon the testimony of the parties and witnesses, the documentary evidence and the arguments of counsel, the Arbitrator ruled in favor of MIG regarding Arya’s claims against it. "Arya failed to heed MIG’s explicit and repeated advice regarding the server upgrade,” the ruling reads. The arbitrator found “there were simply too many opportunities for Ayra to protect itself, or allow MIG to protect it, to permit a finding for Arya in this matter.”
Early Sullivan Prevails for Client Sun West in Bench Trial Over Defective Loan
Following a bench trial before the Honorable Dennis J. Landin, a statement of decision was issued in favor of Early Sullivan client Sun West regarding a defective loan it was sold by First Alliance Home Mortgage LLC (“First Alliance”). First Alliance entered into a correspondent agreement with Sun West through which First Alliance would sell loans to Sun West that Sun West would then sell on the secondary market to certain governmental entities, including Fannie Mae and Ginnie Mae. Sun West was required to repurchase the loan in question from Fannie Mae because it did not meet certain regulations relating to borrower reserves. When Sun West demanded that First Alliance repurchase this loan from Sun West, First Alliance refused to do so claiming that Sun West should have caught the borrower reserve problem before purchasing the loan because Sun West had underwritten the loan. At the trial, First Alliance again argued Sun West was the underwriter, but the evidence at trial showed that First Alliance was the final underwriter of the loan and that Sun West only performed a more limited underwriting review. Further, the evidence established that even if Sun West personnel were engaged in duties similar to those of an underwriter, they were not given the information about the borrower’s insufficient cash reserves until after the time of closing and, thus, could not have caught the issue. Therefore, the judge ruled that First Alliance was obligated under the parties’ contract to repurchase the loan. First Alliance further argued that Sun West did not sufficiently attempt to mitigate the damages. The court found this unpersuasive as Sun West was not obliged to sell the loan on the open market, and it made efforts to convince Fannie Mae to keep the loan and sought further documentation from First Alliance to rectify the deficiency, which was never produced. Additionally, Sun West proposed a “lender credit” to Fannie Mae to reduce the risk. Due to the reasons listed above the court ruled in Sun West’s favor stating it “did all it was required to do under the law.” Click “Download PDF” to read order.
Early Sullivan Prevails for Client Sun West in 11th Circuit Affirmation
Scott Gizer successfully prevailed in Iaffaldano v. Sun West Mortgage Company, Inc. after the United States Court of Appeals for the Eleventh Circuit affirmed a judgment by the District Court for the Southern District of Florida finding that Early Sullivan client, Sun West Mortgage Company, Inc., had not violated RESPA when it procured force placed flood insurance for its borrower Michelle Iaffaldano. Iaffaldano had argued that Sun West had established an escrow account for her when it created a Repayment Plan pursuant to which Iaffaldano was to reimburse Sun West for the fees advanced for the force placed insurance. Iaffaldano further argued that establishing an escrow account precluded Sun West from obtaining force placed insurance and, instead, required Sun West to renew Iaffaldano’s voluntary insurance. The District Court disagreed that the Repayment Plan established an escrow account and found Sun West’s conduct to be proper and in compliance with RESPA. The 11th Circuit affirmed finding that the District Court had been correct in its judgment that the plaintiff did not have an escrow account (as defined in 12 C.F.R. § 1024.17(b)) with Sun West, and was therefore not entitled to protections from force-placed insurance afforded under § 1024.17(k)(5).
Early Sullivan Prevails in the Second Appellate District of California
Scott Gizer, Diane Luczon, and Zachary Gidding successfully prevailed in Charles Johnson v. Sun West Mortgage Company Inc. et al. The Court of Appeal affirmed the lower court’s ruling on Early Sullivan’s motion for summary judgment in favor of Sun West Mortgage Company, finding that the trial court properly excluded an expert witness declaration in its entirety when granting the motion and finding that Sun West had no liability to Plaintiff. This was a putative class action matter wherein the Plaintiff asserted that Early Sullivan client, Sun West Mortgage Company, had engaged in an illegal kickback scheme with its insurance broker whereby Sun West received below market services in exchange for securing a commission for the broker from the Sun West’s forced placed flood insurer. The Court of Appeal examined the expert declaration and report, and found that the trial court properly exercised its discretion in granting Sun West’s objection to exclude the witness’s declaration, which had been the basis for arguments that the defendants supposedly had “vastly” overcharged the plaintiff and others for forced placed insurance. In examining the subject declaration, the trial court found it to be “unreliable,” with some parts “simply arbitrary, unverifiable, and unfalsifiable." The Court of Appeal further affirmed the trial court’s decision that Sun West had not engaged in any improper conduct. Click “Download PDF” to read the full decision.
Early Sullivan Knocks Out Entire Case on Demurrer
In Pak v. First American Title Insurance Company, Los Angeles Superior Court Case No. 18STCV04840, William Wright obtained a judgment of dismissal for the Firm’s client, First American Title Insurance Company. The case concerned claims for breach of title policy and bad faith relating to a commercial property in Los Angeles. The Court sustained First American’s demurrers without leave to amend, agreeing with Mr. Wright that First American had no duty of defense or indemnification in light of the individual plaintiffs’ prior conveyance of the property to their LLC, which conveyance terminated coverage as a matter of law pursuant to Condition 2 of the policy.
Early Sullivan Prevails in 10th Circuit Published Opinion
Scott Gizer and Sophia Lau successfully prevailed in Banner Bank v. First American. In the attached published opinion (click "Download PDF"), the 10th Circuit reversed the district court’s ruling on summary judgment with instructions to enter judgment in favor of Early Sullivan client First American finding that one of the nations’s largest title companies had no duty to defend or indemnify its insured, Banner Bank, in an action that alleged that the Bank’s deed of trust was the subject of a fraudulent transfer. The district court has previously held that First American had a duty to defend and indemnify Banner, breached the implied covenant of good faith and fair dealing, and was responsible for attorneys’ fees by focusing on a single allegation in the complaint against the Bank stating that the Bank’s deed of trust was invalid. This resulted in an award of damages ($675,000) plus attorneys’ fees in an underlying lawsuit ($159,288), and consequential damages of attorneys’ fees in this case ($130,411.50). The 10th Circuit reversed finding that the district court erred by reading this single allegation in isolation, instead of reading the complaint as a whole as required when determining the duty to defend. When the complaint was read as a whole, the 10th Circuit noted that First American reached the correct legal conclusion that it did not owe a duty to defend or indemnify; it reached this conclusion after complying with its duty to “diligently investigate the facts to enable it to determine whether a claim is valid,” “fairly evaluate the claim,” and “act promptly and reasonably in rejecting or settling the claim.” Prince v. Bear River Mut. Ins. Co., 56 P.3d 524, 533 (Utah 2002).
Bryan Sullivan Settles Lawsuit for Client Terry Crews
Several publications, including Vanity Fair and The Hollywood Reporter covered Bryan Sullivan’s representation of actor Terry Crews in his #MeToo case against behemoth agency WME and agent Adam Venit. Bryan filed the civil lawsuit last year against WME and Venit following allegations that he groped Crews at an industry party in 2016. WME admitted that Venit had exhibited a pattern of this type of behavior. As part of the settlement, Venit will be retiring from WME and the agency will institute a new, landmark policy to address workplace conduct of this nature. Additionally, Bryan authored an exclusive Forbes article about his experience representing Crews in his lawsuit.
Early Sullivan’s Demurrer Victory Upheld on Appeal
The California Court of Appeal has affirmed, in its entirety, the judgment of dismissal that Partner William Wright obtained for the Firm’s client First American Title Insurance Company, in the case entitled Jaisinghani v. U.S. Bank National Association, et al.. The Court of Appeal agreed with Mr. Wright on all five causes of action that were asserted against First American in the various amended complaints filed in Santa Monica Superior Court by Jaisinghani (including causes of action for negligent undertaking, negligent supervision/selection of agent, breach of title insurance policy, breach of agency agreement and unjust enrichment/restitution). Click here to read the full Court of Appeal ruling.
Early Sullivan Prevails at Trial in Breach of Loan Agreement Case
Scott Gizer, Diane Luczon and Zachary Gidding secured a decision in favor of their client Mazakoda, Inc. for breach of a loan agreement following a bench trial in Los Angeles County Superior Court. Plaintiff Mazakoda, Inc. had alleged that it provided a loan to defendants J&J Oil, Shawn Melamed, Edmond Melamed, Jenous Tootian and Rozita Safaeipour for $500,000, which the defendants failed to pay back. However, the promissory note was lost and only an unsigned copy of the promissory note could be found. Defendants attempted to argue that they never signed the promissory note and that the money they received was not a loan, but a settlement payment to resolve a dispute between the parties. Following a bench trial before the Honorable Daniel Murphy, the Court ruled in favor of Early Sullivan’s client, Mazakoda, finding the preponderance of the evidence supported Mazakoda’s case and that the defendants were not credible witnesses. Mazakoda was awarded its full loan balance of over $900,000 plus attorney’s fees and costs incurred and issued an order permitting Mazakoda to judicially foreclose on the Defendants’ property.
Click “Download PDF” for the court’s decision.
Early Sullivan Obtains Defense Verdict in Favor of Sun West for Alleged RESPA Violations
Scott Gizer, along with Diane Luczon, recently achieved an outstanding result on behalf of the firm's client, defendant Sun West Mortgage Company, Inc., in lawsuit where the plaintiff had alleged that Sun West had violated certain RESPA provisions when it force-placed flood insurance on plaintiff’s behalf. Specifically, the plaintiff had alleged that Sun West failed to follow the requirements of the Florida Insurance Code when procuring the force-placed insurance, which in turn violated Section 2605 of RESPA. Following a Bench Trial in the United States District Court, Southern District of Florida, Judge Robin Rosenberg found in favor of Sun West holding that the plaintiff could not use section 2605 of RESPA to assert of violation of the Florida Insurance Code when the Florida legislature had not provided for a private right action. The decision, which was covered in RESPA News, was of critical importance to lenders because it limits the ability of plaintiffs to use RESPA to assert violations of State statutes that a plaintiff would not be able to sue directly under.
The full article from RESPA News is below. Florida court rules on extent of RESPA private right of action In a case involving a reverse mortgage which fell into foreclosure proceedings, a lender purchased forced-placed insurance on the property. After the borrower brought her account current through a Florida government program and the foreclosure complaint was dismissed, she sued the lender and the insurance intermediary for RESPA violations. The borrower alleged to a Florida district court that the force-placed rates charged were not bona fide and reasonable under RESPA because the procedure for obtaining the rates violated state regulations. The district judge ruled that RESPA contains only three private rights of action, and the borrower could not “bootstrap” the state regulations through another cause of action. The case is Michelina Iaffaldano v. Sun West Mortgage Co. and Proctor Financial (U.S. District Court, Southern District of Florida, 17-cv-14222). Scott Gizer, the lead attorney for Sun West on the case and a partner at Early Sullivan Wright Gizer & McRae LLP, told RESPA News the ruling was significant. “If plaintiff’s argument was accepted, plaintiffs could use section 2605 of RESPA to assert claims far beyond those three areas,” he said. “The judge’s decision is important because it prevents plaintiffs from using state statutes to create new causes of action where no private right of action was intended.” In the ruling, District Judge Robin Rosenberg described the three private rights of action in RESPA under established law: Payment of a kickback and unearned fees for real estate settlement services; Requiring a buyer to use a title insurer selected by the seller; and The failure of a loan servicer to provide proper notice about the transfer of loan servicing rights or to respond to a qualified written request for loan information under Section 2605(e). None of those acts were alleged by Iaffaldano, though, with the court saying the allegations were that Sun West failed to advance insurance premiums on her behalf through an escrow account in violation of 12 C.F.R. § 1024.17 and that the force-placed rates charged were not bona fide and reasonable because the procedure for obtaining those rates violated Florida Insurance Code Section 626.916. “However, it has been expressly held that 12 C.F.R. § 1024.17, governing escrow accounts, does not create a private right of action for alleged negligence with respect to the administration and maintenance of an escrow account,” Rosenberg wrote, citing Perron v. JP Morgan Chase Bank, N.A, (S.D. Ind. Mar. 10, 2014). “Likewise, it has been held that 12 C.F.R. § 1024.37 does not create a private right of action. Wing Kei Ho v. Bank of Am., N.A., (S.D. Fla. June 21, 2016).” That logic, Rosenberg wrote, extended to the allegation of bona fide and reasonable charges, because section 626.916 does not create a private right of action – which Iaffaldano did not dispute in the case. “A plaintiff may not plead around this bar by trying to bootstrap section 626.916 through another cause of action,” Rosenberg wrote, citing Lemy v. Direct Gen. Fin. Co., (M.D. Fla. 2012). “In Lemy v. Direct General Finance Company, the court held that while certain sections of the Florida insurance code provide for a private remedy, section 626.916 is not one of those sections.” Rosenberg wrote that the court in Lemy explained that “a plaintiff ‘may not evade the Florida legislature’s decision to withhold a statutory cause of action’ for a violation of the insurance code ‘by asserting common law claims based on such violations.’ ” The Lemy decision focused on common law claims under Florida law, but Rosenberg ruled the reasoning applied would be applicable to a federal cause of action. “In other words, the court fails to see how a federal RESPA claim could be premised upon an alleged violation of a Florida regulatory statute which contains no private right of action,” Rosenberg wrote. In fact, the court asked for guidance to case law where it did, and found none. “The court expressly asked counsel for Iaffaldano to provide case law for the proposition that her RESPA claim could be premised on a Florida statute which lacked a private right of action, and counsel was unable to provide any authority to the court,” Rosenberg wrote. “For these reasons, Iaffaldano has not established that a private right of action exists for any of the RESPA violations she alleges have occurred.” Iaffaldano also brought an allegation of tortious interference with a business relationship against Proctor, but Rosenberg ruled the claim failed because “the record evidence shows that Proctor did not intentionally or unjustifiably interfere with Iaffaldano’s relationship with Sun West.”
Early Sullivan Successfully Defends Its Client Against $12.5 Million Claim
Early Sullivan attorneys Mary Kaufman and Zachary Gidding successfully defended, with Scott Gizer, a quiet title action for Defendant CFIC-2014 NV FI-PSC, LLC (“CFIC”) in the Nevada District Court Case entitled LLV Holdco, LLC v. Atalon Management Group LLC, et al, where they prevailed on summary judgment. CFIC purchased vacant lots of land in 2014 for $12.5 million from other defendants, who the Plaintiffs alleged fraudulently induced the Plaintiffs to waive their right of first refusal to purchase those lots in 2012. Plaintiffs sought to quiet title to the subject property against CFIC. CFIC defended the claim on the ground it was a bona fide purchaser with no knowledge of the purported fraudulent conduct of one of the other defendants, and further argued that even if CFIC was under a duty of inquiry regarding the waiver that Plaintiffs signed in 2012, CFIC should still prevail because, based on key testimony obtained by Early Sullivan, Plaintiffs’ board members admitted that if CFIC had approached the Plaintiffs about the waiver, the Plaintiffs would have confirmed its validity. The Court agreed with Early Sullivan’s client CFIC and granted its motion for summary judgment.
Ninth Circuit Rejects En Banc Review Bid in Risinger v. SOC
9th Circ. Won't Rethink Class Cert. For Private Iraq Guards
By Vin Gurrieri
Law360, New York (October 17, 2017, 9:15 PM EDT)
The full Ninth Circuit on Tuesday let stand its decision that thousands of armed guards at U.S. military bases in Iraq can collectively pursue claims that the private security contractor they worked for forced them to work far in excess of the hourly limits imposed by the federal government.
A three judge panel issued a one page order rejecting a bid by SOC LLC and its parent company Day & Zimmermann Inc. for an en banc review of a September decision that upheld a ruling by U.S. District Judge Miranda M. Du to certify a class of armed guards represented by plaintiff Karl Risinger.
Judge Du had held that the guards could collectively pursue claims that SOC uniformly misrepresented the amount of time they were required to work at no more than six days per week and up to 12 hours per day — a ruling the Ninth Circuit affirmed in its September decision.
But in a Sept. 15 petition for en banc review, SOC said the Ninth Circuit essentially used an approach to class certification that existed before the U.S. Supreme Court’s landmark Dukes decision in 2011 that decertified 1.5 million female Walmart employees. The decision was widely perceived as raising the bar for plaintiffs bringing classwide discrimination claims.
Plaintiffs' counsel Scott E. Gizer of Early Sullivan Wright Gizer & McRae LLP told Law360 Tuesday that "we are pleased the Ninth Circuit correctly and unanimously denied SOC’s petition, moving us one step closer to justice for these brave plaintiffs."
Representatives for SOC were not immediately available for comment Tuesday.
The dispute stems from a $485 million contract awarded to SOC in 2009 by the U.S. Department of Defense. Under the terms of that deal, SOC had to staff 16 military bases in Iraq and had to limit guards at 72 hours per week, according to court filings by the plaintiffs. Those parameters were communicated to potential employees by SOC recruiters, who used call scripts, and outlined in the workers’ employment contracts, according to court documents.
Risinger, a U.S. Army veteran who worked for SOC in Iraq for a period, alleged in a 2012 lawsuit that the company intentionally understaffed bases and that those manpower shortages meant that guards at the 16 bases in Iraq were forced in practical terms to work seven days a week for more than 14 hours per day, with some going months before having a day off.
The lawsuit, which sought to represent all individuals employed as armed guards by SOC in Iraq from 2006 through 2012, included allegations of promissory fraud, negligent misrepresentation, and breach of contract related to the company’s alleged misrepresentation of guards’ anticipated work schedule before they went to Iraq and breach of its employment contract after they arrived. The class could potentially include in excess of 4,000 people, according to court filings.
In appealing the class certification ruling, SOC had challenged Judge Du’s conclusion that the guards met the predominance prong for certification, which requires that questions of law or fact that are common to class members predominate over any questions that affect only individual class members. But the Ninth Circuit in its September ruling said that Judge Du had “permissibly found” that SOC recruiters made nearly identical representations concerning guards’ anticipated work schedule in scripts used by recruiters. Additionally, SOC employees and several recruits described a similar understanding of the work schedule limits, according to the Ninth Circuit ruling. “Because the district court’s finding renders the misrepresentation element of Risinger’s fraud claims amenable to classwide proof, the district court did not abuse its discretion by concluding that common issues would predominate,” the panel said, adding that the lower court also correctly decided that a common question of contract interpretation predominates for Risinger’s breach of contract claim. Day & Zimmermann is also named as a defendant. Circuit Judges Susan P. Graber and Mary H. Murguia as well as U.S. District Judge Edward Davila sat on the panel for the Ninth Circuit. Risinger is represented by Scott E. Gizer and Devin A. McRae of Early Sullivan Wright Gizer & McRae LLP. SOC is represented by Theodore J. Boutrous, Theane Evangelis and Bradley J. Hamburger of Gibson Dunn & Crutcher LLP, and Kimberly J. Gost, Matthew J. Hank and Rick D. Roskelley of Littler Mendelson PC. The case is Karl Risinger v. SOC LLC, case number 1615120 in the U.S. Court of Appeals for the Ninth Circuit. --Editing by Kelly Duncan.
Scott Gizer and Mary Kaufman Obtain Summary Judgment on Behalf of Sun West
Scott Gizer and Mary Kaufman obtained summary judgment on behalf of client Sun West Mortgage Company in Causey v. Sun West Mortgage Company Inc. The MSJ victory came on Willie J. Causey Jr.’s complaint for declaratory relief and violations of the Truth in Lending Act (“TILA”). Sun West denied claims that the company had violated TILA, moving for summary judgment on the grounds that any purported failure to disclose was either not required by law or fell within the safe harbor tolerances of TILA, and that because no TILA violation occurred, Causey's rescission demands were properly rejected. The Court agreed with Sun West and granted Sun West’s motion in its entirety. The ruling was significant in that the Court clarified that the safe harbor provisions of TILA and Regulation Z apply to both the finance charge and the amount financed, which has been an area of dispute.
Billy Wright Earns Successful Final Judgment on Behalf of First American Title Insurance Company
In Jaisinghani v. U.S. Bank, et al., Los Angeles Superior Court Case No. SC125165, Judge Lisa Hart Cole, Billy Wright successfully represented First American Title Insurance Company in connection with the defense of an action brought by a borrower/developer who asserted numerous tort and contract-based claims relating to a multi-million dollar property in Malibu. The Court awarded First American with a favorable judgment after four rounds of demurrers brought by the Firm.
Early Sullivan Successfully Defends Warner/Chappell Music Against Breach of Contract Action
In Johnny Gill v. Warner/Chappell Music, Inc. et al., the firm successfully defended Warner/Chappell Music, Inc. against a breach of contract action brought by musician Johnny Gill, relating to the alleged failure to pay songwriting royalties owed to Gill.
Early Sullivan Obtains Dismissal of Action on Behalf of Fidelity National Title Insurance Company
In Pennymac Holdings, LLC v. Fidelity National Title Insurance Company, et al., Case No. A-16-746790-C, Nevada, the Firm represented Fidelity National Title Insurance Company against a lender claiming to have a priority lien. The case arose from Nevada’s controversial homeowners’ association lien priority laws. The Firm’s motion to dismiss caused the action to be dismissed in its entirety.
Eric Early, Scott Gizer and Diane Luczon Obtain Summary Judgment on Behalf of Homeowner
The firm obtained summary judgment on behalf of client Behrooz Salim in Saud v. Salim, et al., Case Number SC122618, Santa Monica, Judge Nancy Newman. Salim purchased a $7 million home in Beverly Hills, but Saudi Arabian Princess Seeta bint Abdulaziz Al Saud claimed she owned and never sold the property. The Princess sued Salim for ejectment and quiet title. Litigation in the case spanned three different Federal and State courts and several years. The Firm eventually filed a motion for summary judgment on the grounds that the Princesses’ action was barred by the three year statute of limitations governing quiet title actions based in fraud. The Court agreed with the Firm and granted summary judgment in favor of Salim, which ended the dispute and allowed Salim and his family to keep the Beverly Hills property.
The Firm Obtains Summary Judgment on Behalf of Sun West
A class action lawsuit (Johnson v. Sun West Mortgage Company, Inc., et al., Case Number BC541571, Los Angeles Superior Court, Honorable John Shepard Wiley) was filed against our client, Sun West Mortgage Company, alleging that the company, as a reverse mortgage servicer, would obtain excessively priced lender placed insurance for its borrowers in exchange for various alleged kickbacks from insurers, and allegedly improperly backdated those policies even if there was no evidence of damage to the property being insured. On behalf of Sun West, the Firm filed a motion for summary judgment as to all five claims. The Court agreed with Sun West and granted the motion in its entirety. The Court found that class plaintiff Johnson provided no evidence to support his unsubstantiated claims, and that Johnson failed to provide any evidence to support his or the class’s theories that Sun West and Proctor Financial Inc. received “kickbacks” or commissions.
Peter Scott Obtains Full Dismissal of Charges Against Reconstruction Engineering Firm
The firm represented a collision reconstruction engineering firm at trial and obtained a full dismissal of charges that had been brought against the client by the California Attorney General’s Office. The case involved an Administrative Hearing before the State Board for Professional Engineers, Land Surveyors and Geologists and Dept. of Consumer Affairs. The matter, In re Alvin Lowi, Citation No. 10368-L, Office of Administration Hearings No. 2016021000, Hon. Jennifer M. Russell, was confirmed on appeal on what was essentially a matter of first impression.
Peter Scott Successfully Wins Appeal of Trial Court Order on Behalf of Client
In Manapat v. Hoffman, et al., LASC Case No. LC101642, Appellate Case No. B268328, the firm represented respondents/defendants in an appeal of a trial court order dismissing the entire case on demurrer. Our clients prevailed completely on appeal.
Early Sullivan Obtains Summary Judgment on Behalf of Afkarian
The firm obtained summary judgment for client Afkarian in Wells Fargo v. Afkarian, et al., Case No. 37-2014-00075037-CU-OR-CTL, San Diego Superior Court; Judge Judith Hayes, a case brought by Wells Fargo. Wells Fargo claimed to hold a $1.2 million lien on Afkarian's property.
Early Sullivan Obtains Summary Adjudication, Near Immediate Case Settlement for Nursing Home Operator
The firm represented one of the leading nursing home operators in California against 18 causes of action arising from alleged financial malfeasance and investor-related fraud in Remba v. Preimesberger, LASC Case No. BC575724, Los Angeles Superior Court, Hon. Gregory Keosian. We obtained summary adjudication on behalf of our client on 17 of the 18 causes of action, which led to near immediate settlement of the case on favorable terms.
Tribe Member Knew Of Flaws In Trust Land Leases, Court Told – Law360
The Firm Obtains Dismissal of Case Midway Through Deposition
In Jorgensen, et al. v. First American, Case No. 2:2016CV00068 — a lawsuit against an escrow company filed in the State of Washington — the Firm exposed the plaintiffs’ real estate broker’s perjurious testimony in the middle of his deposition and leveraged that testimony to cause the plaintiffs to immediately dismiss the case against our client midway through the broker’s deposition.
Early Sullivan Obtains Summary Adjudication for Nursing Home Operator
In Dalsukhbhai K. Patel v. Preimesberger, et al., LASC Case No. VC064586, Los Angeles Superior Court, Hon. Margaret Bernal, the firm obtained summary adjudication for one of the leading nursing home operators in California on claims of corporate alter ego status, thereby gutting the plaintiff’s entire case.
Early Sullivan Successfully Defends First American Title Insurance Company Against Tort and Contract-Based Claims
The Firm represented First American Title Insurance Company in Gul Jaisinghani v. U.S. Bank, et al., Los Angeles Superior Court Case, No. SC125165. We defended an action brought by a borrower/developer who asserted numerous tort and contract-based claims relating to a multi-million dollar property in Malibu, California. After four rounds of the Firm’s demurrers, and following multiple efforts by opposing counsel to add numerous legal theories and claims in several amended complaints, the Court entered judgment in favor of the Firm’s client First American.
Early Sullivan Obtains Summary Judgment on Behalf of Secured Lenders
In Wolkowitz v. Fidelity Mortgage Lenders, et al., a bankruptcy trustee for a recording studio filed adversary proceeding against certain secured lenders, arguing that the $1.5 million deed of trust securing their debt was invalid because the loan was not approved by a supermajority of the debtor’s principals. The Firm obtained summary judgment on behalf of the secured lenders and against the bankruptcy trustee, after arguing that the subject provision of the written partnership agreement was not enforceable against the secured lenders.
Bryan Sullivan Represents Marcel Granier in Sale of Rare Ferrari
Bryan Sullivan represented Venezuela media mogul, Marcel Granier, in the sale of Mr. Granier’s multi-million dollar collector’s item Ferrari to Ferrari dealer DK Engineering. The Ferrari was a 1966 Ferrari 275 GTB of which only 200 were made and far less still available in the world. The transaction involved significant customs issues with the Ferrari being transported from Venezuela to the United States.
Judge Grants Salma Hayek Permanent Restraining Order Against Alleged Stalkers
Early Sullivan Partner Bryan Sullivan recently obtained a permanent restraining order on behalf of Oscar-nominated actress Salma Hayek. According to the court filings, two women repeatedly harassed Ms. Hayek, impersonating her on multiple occasions and threatening to kidnap her daughter. Today, Los Angeles Superior Court Judge Carol Boas Goodson extended the temporary order, ruling that the individuals must stay away from Ms. Hayek and her family, and not attempt to contact her for the next three years.
Devin McRae Named in The Best Lawyers in America 2016 for Intellectual Property Litigation
Early Sullivan Partner Devin McRae was recently selected by his peers for inclusion in the 2016 edition of The Best Lawyers in America in Litigation - Intellectual Property. Best Lawyers® is one of the oldest and most respected guides to the legal industry. Inclusion is exclusive, based on a comprehensive peer-review process designed to capture the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. Corporate Counsel magazine has called The Best Lawyers in America “the most respected referral list of attorneys in practice."
Salma Hayek Gets Temporary Restraining Order Against Women Accused Of Impersonating Her
Early Sullivan Partner Bryan Sullivan recently obtained a temporary restraining order on behalf of well-known actress Salma Hayek. According to the filing, two women repeatedly impersonated Ms. Hayek and made threats to kidnap her child. After hearing Mr. Sullivan’s petition on Friday, Superior Court Judge M.D. Fried ordered that the individuals must stay 100 yards away from Ms. Hayek and her family.
Early Sullivan Successfully Represents United General Title Insurance Company on Appeal in RNT Holdings, LLC v. United General Title Insurance Company
Early Sullivan successfully represented United General Title Insurance Company (“United General”) in opposing RNT Holding’s appeal of Early Sullivan’s underlying summary judgment victory for United General. RNT is a company owned by billionaire mogul Ronald N. Tutor. The Court of Appeal’s decision in RNT Holdings, LLC v. United General Title Insurance Company, Case No. B250089 is of paramount importance to the title insurance industry. The decision provides clarity regarding the interpretation of key title insurance Exclusion 3(a) (which language is included in most title insurance policies) ruling that Exclusion 3(a) is triggered if the insured’s conduct was intentional, regardless of: (a) whether the insured actually intended to create a title defect through its conduct, and (b) whether the insured knew that a title defect might occur from the insured’s intentional act. The decision also establishes for the first time that an insured lender’s release of its insured interest in a subject property terminates the insurer’s potential liability under the policy, regardless of the occurrence of a covered risk at the time of the release. Click on “Download PDF” to the right to read the full decision.
Early Sullivan Wright Gizer & McRae’s Appeal Prevails in Moorefield Construction, Inc. v. Intervest Mortgage Investment Company
In the recently published appellate decision Moorefield Construction, Inc. v. Intervest Mortgage Investment Company, et al., D065464, the California Court of Appeals reversed a trial court's decision awarding a general contractor $2.2 million on its mechanic's lien. The Court of Appeals upheld a subordination agreement that the general contractor (Moorefield Construction, Inc.) had signed with Early Sullivan client Intervest Mortgage (formerly known as Sterling Savings Bank), "subordinating" Moorfield's mechanic's lien claim to Intervest’s Deed of Trust, which was security for the construction loan. This Court of Appeals' reversal establishes case law ensuring that via the subordination agreement (standard in deals between lenders and general contractors) a lender’s deed of trust is in first position, trumping the general contractor's mechanic's lien. Subordination agreements are the lifeline of construction lending because they provide construction lenders with confidence that they will always be in first position in the event of a default. If the Court of Appeals would have upheld the trial court ruling, then the uncertainty of a lender’s position in the event of a default would have dramatically impacted construction lending. Click on "Download PDF" to read the published decision.
Croft Holding Corp. v. Healstone Investment Real Estate, Inc. et al.
Early Sullivan’s strategic use of law and motion and discovery to focus on the fatal flaws in plaintiff’s $35 million breach of fiduciary duty and professional negligence action brought so much pressure to bear on plaintiffs that they walked from their case for a $17,500 settlement.
Domini and Morros v. Ticor Title of Nevada, Inc. and Ticor Title Insurance Company
Early Sullivan represented Ticor Title of Nevada, Inc. (an escrow company) and Ticor Title Insurance Company (a title insurance company) in two separate actions filed by plaintiffs in Reno, Nevada, arising from a $15 million Ponzi-scheme orchestrated by an unscrupulous Reno lender who is currently under federal indictment. We vigorously defended both actions in Washoe County, Nevada, leading to favorable settlements for Ticor.
Lindell v. Chicago Title Company, et al.
Early Sullivan’s Motion to Dismiss was granted in the trial court in Washoe County, Reno, Nevada, in another of the actions arising from the $15 million Ponzi-scheme in Reno. The ruling resulted in the complete dismissal with prejudice of plaintiff’s action against Chicago Title in which it had been sued for breach of contract, conspiracy, negligence, negligent misrepresentation, deceit, breach of fiduciary duty, unjust enrichment, conversion, false advertising, and deceptive trade practices. The Court granted Chicago Title’s motion on several grounds, including plaintiffs failure to allege that they had suffered an actionable loss and because by law, plaintiffs could not assert negligence based claims against Chicago Title based on the issuance of a title policy.
Derek Fisher v. Fox Sports
Early Sullivan currently represents Los Angeles Laker and National Basketball Players Association President, Derek Fisher, in his dispute with Fox Sports regarding statements published about Mr. Fisher by Fox Sports and writer Jason Whitlock.
Holder v. Howe
Early Sullivan obtained voluntary dismissal, with prejudice, of all causes of action against Ozzie Silna, an American businessman best known for his success in the textile industry and pioneering ownership of the Spirits of St. Louis of the original American Basketball Association. The Court sustained our demurrer to all causes of action, including corporate director liability, illegal distribution, breach of fiduciary duty, and aiding and abetting.
Early Sullivan is currently representing Howie Mandel in a dispute against International Imagination, Inc. over a licensing agreement that required Mr. Mandel to provide video shooting and voice over production related to three separate and unique DVD games entitled “Would You Rather,” “Fact or Crap,” and “The Wrong Game.”
Early Sullivan represented actress, director, screenwriter, and producer Illeana Douglas in connection with a request for a restraining order arising from alleged harassment.
JMA Architects v. Vestin Realty Mortgage I, Inc., et al.
Early Sullivan appeared before the Nevada Supreme Court on behalf of Vestin Realty Mortgage I, Inc. The state’s highest court upheld a trial court’s order granting Vestin summary judgment. The action involved the validity of mechanic’s lien claims and JMA’s purportedly unpaid architectural fees. JMA asserted that its mechanic’s liens had priority over Vestin’s deeds of trust because Vestin had actual knowledge of JMA’s work, and that the 2003 revisions to Nevada’s mechanic’s lien statute created an actual knowledge requirement. In a question of first impression regarding the impact of the 2003 revisions, the Nevada Supreme Court agreed with our appellate briefing that the 2003 revisions did not create an actual knowledge requirement. The Court, instead, reaffirmed the requirement that for a mechanic’s lien to have priority, work must be visible on the property.
Bodo Scriba v. Twentieth Century Fox
Early Sullivan is currently representing German media tycoon Bodo Scriba and Gemini Film International in the United States District Court for the Central District of California, against claims brought by Twentieth Century Fox International Corporation over monies purportedly owed under various film distribution agreements for the distribution of Fox films in Russia.
Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc.
Early Sullivan represented Aviva Sports in its action to enforce a subpoena in connection with discovery disputes pending in Los Angeles, California arising out of a trademark infringement/unfair competition case pending in United States District Court for the District of Minnesota. Following a finding that defendant engaged in significant efforts to evade service of a subpoena, Aviva Sports was able to obtain an order to depose a key knowledgeable, third-party witness.