Procedural Posture

Procedural Posture

BUSINESS

Appellant landlords sought review of a judgment of the Superior Court of Los Angeles County (California) in favor of respondent city after its successful demurrer. The landlords had sought a declaration that portions of a Santa Monica ordinance on tenant harassment were unconstitutional.

Overview

The tenant harassment ordinance prohibited a wide variety of malicious acts by landlords with regard to tenants in rent-controlled housing. Violation of the ordinance was a misdemeanor, and its provisions could be enforced by a civil action brought by any person, including the city, with penalties of actual damages or statutory damages, attorney’s fees and costs, and punitive damages. A violation could be asserted as an affirmative defense in an unlawful detainer action. The landlords challenged those portions of Santa Monica, Cal., Municipal Code §§ 4.56.020(i), 4.56.040 that addressed a landlord’s efforts to terminate a tenancy through legal proceedings. The court found that the challenged portions of the ordinance were contradictory to Cal. Civ. Code § 47(b) in that they prohibited and punished what the litigation privilege protected. Local law was preempted when it was contradictory to state law. Parties’ litigation attorney California appeal.

Outcome

The court reversed the judgment and directed the trial court to enter a judgment declaring that the ordinance was preempted by state law.

Procedural Posture

Plaintiff buyers sued defendants, three individuals and two corporations, alleging, essentially, that defendants defrauded them when the parties entered into asset and trademark purchase agreements by failing to disclose that the trademarks were subject to an ownership claim by one defendant’s ex-wife. The buyers, who had been denied partial summary judgment, moved to establish the crime-fraud exception to the attorney-client privilege.

Overview

The buyers, according to the federal district court, wanted the district court to find that the crime-fraud exception applied so that they could discover all communications between defendants and their counsel relating to the asset and trademark sales. The buyers contended that they had made a prima facie case of fraud. However, the district court found no merit to the buyers’ motion, finding that such a prima facie case had not been established. Both the asset and trademark purchase agreements specifically provided that the representations and warranties by defendants were limited as set forth in the “Seller Disclosure Schedule,” one of which was attached to both agreements. Both schedules referenced the ex-wife’s action to assert a community property claim and thereby claim an interest in the assets and liabilities that were previously divided in the parties’ marriage. Thus, defendants did not conceal a material fact and, as such, the buyers had not met their burden of demonstrating a prima facie case for the application of the crime-fraud exception.

Outcome

The district court denied the buyers’ motion to establish the crime-fraud exception to the attorney-client privilege.