California Law Update – May 2025

1. 1. (Liability Waiver) Waiver releasing Oakland from liability during charity bike-ride was against public policy to the extent it released the City for negligently violating its statutory duty to maintain public safety. Ty Whitehead v. City of Oakland (No. S284303 First Appellate District Division Three A164483 Alameda County Superior Court RG18896233 Filed May 1, 2025)
   2. (Workers’ Compensation) Special risk exception did not apply to employee injured during commute because there was no relationship between the risk and the location of the premises/conditions within the employer’s control. Zenith Insurance Company v. Workers’ Compensation Appeals Board and Javier Hernandez (No. No C10549 WCAB Case No. ADJ16567838 California Court of Appeal Third Appellate District Filed May 1, 2025)
   3. (Arbitration) Plaintiff/cross-defendant’s conduct constituted waiver of the right to pursue arbitration, where he sought injunctive relief and a jury trial; opposed a demurrer; and propounded over 700 discovery requests. Stephen R. Hofer v. Vicky Boladian (No. B339542 Los Angeles County Super. Ct. No. 23SMCV04868 California Court of Appeal Second Appellate District Division Five Filed May 9, 2025)
   4. (MSJ-Dangerous Condition) Trial court properly granted summary judgment for city, where plaintiff presented no evidence of the city’s actual or constructive notice of the crack in the street that caused her skateboard accident. Jennifer Restivo v. City of Petaluma (No. A169918 Sonoma County Super. Ct. No. SCV-270474 California Court of Appeal first Appellate District Division One Filed May 20, 2025)
   5. (EMS Fees) Contract-based claim for declaratory relief related to obligations arising after treatment was not foreclosed by prior holding regarding hospitals’ duty to disclose fees prior to providing emergency treatment. Joshua Naranjo v. Doctors Medical Center of Modesto, Inc. (No. F083197 Super. Ct. No. CV-21-001363 California Court of Appeal Fifth Appellate District Filed May 23, 2025)
   6. (Wiring Settlement Funds) Trial court correctly concluded that defendants, who wired settlement funds to impostor pretending to be plaintiffs, were in the best position to prevent the fraud. Brian Thomas v. Corbyn Restaurant Development Corp (No. D083655 Super. Ct. No. 37-2021-00047188-CU-PO-NC California Courts of Appeal Fourth Appellate District Division One Filed May 27, 2025)
   7. (Conditions of Admission Assignment of Benefits) Hospital’s conditions of admission and assignment of benefits were unenforceable and therefore could not be invoked to compel payment from insurance company. Dameron Hospital Association v. Progressive Casualty Insurance Company (No. C099467 Super Ct. No. STK-CV-UBT-20150002249 California Court of Appeal Third Appellate District (San Joaquin) Filed May 27, 2025)
   8. (Discovery Sanctions) Imposition of sanctions under Code of Civil Procedure sections 2023.10 and 2023.030 for gamesmanship tactic was valid as an unusual form of discovery abuse. Shawn Agnone v. Frank CharlesAgnone II (No. B321252 Los Angeles County Super. Ct. No. BD659645 California Court of Appeal Second Appellate District Division Three Filed May 30, 2025)

The above court decisions came to our attention during this last month. Please find below a summary of the court opinions for your consideration.

Plaintiff alleged to have suffered a serious head injury during a bicycle training ride for a charity fundraiser because the defendant City breached its statutory duty under Government Code Section 835 to maintain a safe roadway for public use. The trial court granted summary judgment to the City. Plaintiff appealed and the Court of Appeal affirmed on the basis of a release and waiver of liability that the plaintiff signed on the morning of the training ride. The release and waiver included a provision discharging the ride organizers, as well as any public entities providing facilities for the ride, from any liability for negligence.

The matter was appealed to the California Supreme Court which reversed finding that such a release was against the policy underlying California Civil Code section 1668, to the extent it purports to relieve the City of liability for negligently violating a statutory duty relating to public safety. California Civil Code section 1668 renders unlawful any contract that seeks, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willing injury to the person or property of another, or violating of law, whether willful or negligent. The Court found that a release of this type could possibly exculpate a public entity for future violations of a statutory duty designed to protect public safety and therefore against the policy of the law under Civil Code Section 1668.

2. (Workers’ Compensation) Special risk exception did not apply to employee injured during commute because there was no relationship between the risk and the location of the premises/conditions within the employer’s control. Zenith Insurance Company v. Workers’ Compensation Appeals Board and Javier Hernandez (No. No C10549 WCAB Case No. ADJ16567838 California Court of Appeal Third Appellate District Filed May 1, 2025)

The original workers compensation proceeding concerned application of the so-called “going and coming rule” that generally provides that workers’ compensation benefits are not available for an injury sustained during an employee’s commute. In this matter, respondent the Workers’ Compensation Appeals Board (the Board) determined that under the “special risk” and “dual purpose” exceptions to the going and coming rule, workers’ compensation coverage applied to injuries that the respondent sustained while riding home in a vanpool arranged by another employee.

The Petitioner Insurance Company appealed and argued the Board’s findings were based on legal error and not supported by substantial evidence. The Insurance Company argued that the respondent’s injury was noncompensable because it fell within the scope of the going and coming rule and the exception relied upon by the Board do not apply to the facts before the appellate division.

The appellate court agreed with the Insurance Company and that the exception relied upon by the Board did not apply and therefore vacated the Board’s order and remanded for further proceedings consistent with the opinion. The exceptions relied upon included (1) if but for the employment the employee would not have been at the location where the injury occurred (zone of employment) and (2) if the risk is distinctive in nature or quantitatively greater than risks common to the public than the special risk exception would apply. The Court of Appeal noted that neither the Board nor the respondents supplied authority for rendering the zone of employment exception as large as an entire commute. Under the exception, there must be a relationship between the risk and the location of the employer’s premises and/or conditions over which the employer exercised some control. Because no relationship existed, the court deemed the exception inapplicable.

3. (Arbitration) Plaintiff/cross-defendant’s conduct constituted waiver of the right to pursue arbitration, where he sought injunctive relief and a jury trial; opposed a demurrer; and propounded over 700 discovery requests. Stephen R. Hofer v. Vicky Boladian (No. B339542 Los Angeles County Super. Ct. No. 23SMCV04868 California Court of Appeal Second Appellate District Division Five Filed May 9, 2025)

Under the California Arbitration Act pursuant to California Code of Civil Procedures Section 1280 et seq., a party with a contractual right to compel arbitration of a dispute may waive that right. The California Supreme Court noted in the Quach v. California Commerce Club, Inc. (2024) that a waiver of this right can occur under the California Arbitration Act if it is shown that a party has intentionally relinquished or abandoned its known right to compel arbitration. In this case, the litigants seeking to compel arbitration initiated this lawsuit by filing a complaint in court and, while in the judicial forum, sought two forms of preliminary injunctive relief, opposed a demurrer, propounded more than 700 discovery requests, demanded a jury trial in their case management conference statement and represented that they would be litigating substantive motions, and posed jury fees. It was not until the opposing party filed a cross-complaint that the litigants filed a motion to compel arbitration for more than six months into the litigation in court. The appeals court concluded that the conduct of the litigants in this case constituted a waiver of the right to compel arbitration. The appeals court therefore affirmed the trial court’s order denying the motion to compel.

4. (MSJ-Dangerous Condition) Trial court properly granted summary judgment for city, where plaintiff presented no evidence of the city’s actual or constructive notice of the crack in the street that caused her skateboard accident. Jennifer Restivo v. City of Petaluma (No. A169918 Sonoma County Super. Ct. No. SCV-270474 California Court of Appeal first Appellate District Division One Filed May 20, 2025)

In this appeal from a summary judgment in a dangerous condition of public property case, the plaintiff alleged that a wheel of a skateboard caught in a large crack in a residential street, causing her to fall and sustain serious injury to her arm. The defendant City moved for summary judgment on numerous grounds, including that it had neither actual nor constructive notice of the alleged dangerous condition. The trial court ruled that the plaintiff raised no triable issue as to this element of her dangerous condition claim, and that was the sole issue on appeal.

The appeals court affirmed the trial court’s ruling. It noted that to establish liability under Government Code section 835, a plaintiff must prove that, at the time of injury, a dangerous condition existed on public property, that it created a reasonably foreseeable risk of the kind of injury suffered, and that it proximately caused the injury. Plaintiff must also prove that a public employee’s negligence or misconduct created the dangerous condition, or that the public entity had actual constructive notice of the condition for a sufficient time before the injury to protect against it. The appellate court echoed the trial court’s conclusion that the plaintiff presented no evidence of the city’s actual or constructive notice. Plaintiff made sweeping assertions that the city was generally aware of cracks in the street, or that it knew of street conditions due to Pavement Management Reports, were insufficient. The appeals court found that summary judgment was proper as the plaintiff raised no triable issue of fact.

5. (EMS Fees) Contract-based claim for declaratory relief related to obligations arising after treatment was not foreclosed by prior holding regarding hospitals’ duty to disclose fees prior to providing emergency treatment. Joshua Naranjo v. Doctors Medical Center of Modesto, Inc. (No. F083197 Super. Ct. No. CV-21-001363 California Court of Appeal Fifth Appellate District Filed May 23, 2025)

Plaintiffs brought this class action lawsuit against defendant hospital, alleging, among other things, that the hospital violated provisions of unfair competition law (UCL) (Bus. & Prof. Code section 17200 et seq.) and Consumers Legal Remedies Act (CLRA) (Civ. Code, section 1750 et seq.) in connection with the hospital’s emergency room billing practices. In particular, plaintiff alleged that the hospital’s practice of charging him (and other similarly situated persons) an undisclosed “Evaluation and Management Services Fee” (EMS Fee) ‘without any notification of its intention to charge such a fee and without any agreement to pay for such separate fee” was an “unfair, deceptive, and unlawful practice” in violation of these statutes.

The trial court sustained the hospital’s demurrer to each cause of action in the first amended complaint without leave to amend and entered a judgment of dismissal. The appeals court noted that in 2023, it filed an opinion reversing the judgment, concluding that plaintiff had stated valid causes of action under the UCL and CLRA and for declaratory relief based on the hospital’s failure to apprise prospective emergency room patients of the EMS Fee, and directed the court, on remand, to consider anew any future motion by the plaintiff to amend the his FAC to state a breach of contract cause of action. The California Supreme Court granted review.

In February of 2025, the California Supreme Court transferred the case back to this appellate court and directed it to vacate its decision and reconsider the matter in light of the California Supreme Court ruling in Capito v. San Jose Healthcare System, LP (2024), in which it held Hospital’s did not have a duty under the UCL or CLRA, beyond their obligations under the relevant statutory and regulatory scheme, disclose EMS fees prior to treating emergency patients.

Having considered the matter in light of Capito decision, the appeals court reversed its judgment. It concluded that (1) the plaintiff’s claims were barred to the extent that they were premised on a contention that the hospital had a duty beyond those required and the relevant statues and regulations to disclose its intent to charge prospective emergency room patients and EMS Fee prior to providing their emergency care treatment and (2) the plaintiff had otherwise stated a valid contract-based cause of action for declaratory relief to determine his payment obligation under the hospital’s “Consent for Treatment and Conditions of Admission” (COA); and (3) leave to amend should have been granted, and plaintiff should have been granted and the plaintiff should be permitted to amend its complaint to state, if he is able, causes of action for breach of contract and violations of UCL and CLRA subject to parameters stated in the appellate divisions opinion.

In summary, the appellate division determined that there was a dispute as to the definition of charges for services within the COA. It found that both the plaintiff and hospital’s interpretation and characterization of that term were reasonable. Accordingly, there were questions regarding whether the COA obligated the plaintiff to pay the EMS Fee. This, although most of the plaintiff’s claims were focused on the hospital’s duty to disclose the EMS Fee prior to treatment which were resolved by Capito, this contract-based declaratory relief claim was not resolved by the California Supreme Court’s decision and fell within the ambient of Code of Civil Procedure section 1060, which states that a person interested under a written agreement may bring an action for the declaration of right, including the determination on questions of construction or validity arising under the instrument.

6. (Wiring Settlement Funds) Trial court correctly concluded that defendants, who wired settlement funds to impostor pretending to be plaintiffs, were in the best position to prevent the fraud. Brian Thomas v. Corbyn Restaurant Development Corp (No. D083655 Super. Ct. No. 37-2021-00047188-CU-PO-NC California Courts of Appeal Fourth Appellate District Division One Filed May 27, 2025)

This case presented an issue of first impression in California as to which party bares the risk of loss when an imposter causes one party to a settlement to wire settlement proceeds to the imposter instead of the other settling party. After plaintiff and defendants settled a personal injury lawsuit for $475,000, an unknown third party purporting to be plaintiff’s counsel sent “spoofed” emails to defendants’ counsel providing fraudulent wire instructions for the settlement proceeds. Defendants’ counsel wired the settlement proceeds to the fraudulent account and the third party absconded with the funds. Once fraud was discovered, plaintiff asked for the settlement money, but defendants refused to pay. Plaintiff then applied ex parte to enforce the settlement agreement.

Noting the lack of California authority discussing this topic, the trial court applied persuasive federal case law that uniformly shifts the risk of loss to the party in the best position to prevent the fraud. After looking at the totality of the circumstances, the trial court found the defendants were in the best position to prevent the fraud and that the plaintiff bore no comparative fault. The court granted the plaintiff’s application to enforce the settlement and entered judgment in his favor for the sum of the settlement proceeds.

On appeal, defendants maintained the trial court chose the correct law to apply but applied it incorrectly by mischaracterizing the evidence that supported shifting the blame to the defendants, and by failing to consider the evidence that supported shifting the blame to the plaintiff. The Defendants assert that by doing so, the trial court undertook an overly simplistic analysis that presumed the payor is in the best position to avoid fraud. Notwithstanding, the appellate division agreed with the authority and which the trial court relied on and disagreed with the trial court misapplied it. The record showed that the trial court assessed each party’s role in preventing the fraud. Substantial evidence supported the court’s finding that several red flags should have alerted the defendants to the fraud, and that there were none that should have alerted the plaintiff. Accordingly, the appeals court affirmed the judgment.

7. (Conditions of Admission Assignment of Benefits) Hospital’s conditions of admission and assignment of benefits were unenforceable and therefore could not be invoked to compel payment from insurance company. Dameron Hospital Association v. Progressive Casualty Insurance Company (No. C099467 Super Ct. No. STK-CV-UBT-20150002249 California Court of Appeal Third Appellate District (San Joaquin) Filed May 27, 2025)

A patient received health care coverage through Medi-Cal after she suffered injuries in an automobile accident. She was treated at the plaintiff’s hospital. The plaintiff hospital requires patients or their family members to sign a condition of admissions (COA) when the hospital provides patients’ emergency medical care. The COA contains an assignment of benefits (AOB) with language that assigns to hospital direct payment of uninsured and underinsured motorist benefits that would otherwise be payable to those patients under their automobile insurance policies.

Here, the patient’s policy with defendant and respondent Insurance Company included Uninsured and Underinsured motorist coverage, and the hospital sought to collect payment for the patient’s treatment directly from the insurance company out of the insurance benefits at rates above the rates Medi-Cal would pay. The insurance company did not pay the hospital and settled a claim to collect the uninsured motorist benefits with the patient. The hospital sued the insurance company seeking damages, and injunction to enjoin the insurance company from ignoring the AOB, and declaratory relief holding that the AOB was enforceable.

While this case was pending, the appeals court issued the decision in another case involving the same hospital. It found among other things that the COA forms at issue were contracts of adhesion and the AOBs were unenforceable because it was not within the reasonable possible expectations of patients that a hospital would collect payments for emergency care directly out of their uninsured motorist benefits. Applying their decision in that case to the present case, the trial court sustained the demurrer to the operative complaint in this action without leave to amend. The trial court found that the action barred by collateral estoppel. The trial court also found that even if collateral estoppel were not to apply, multiple holdings and the reasoning in the earlier hospital defendant case required it to sustain the demurrer.

On appeal, the hospital argued that because the patient had Medi-Cal insurance, a fact pattern not considered in the earlier case involving the hospital, the trial court improperly found collateral estoppel applied. The hospital also argued that given the statutes and regulations governing Medi-Cal coverage, the reasoning that was applied in the first hospital case regarding AOBs did not otherwise support the trial court’s ruling.

The appeals court concluded that under reasoning applied in the earlier case, the COAs remain contracts of adhesion, it was not within the reasonable expectation of Medi-Cal patient that a COA will contain an assignment of insurance benefits to the facility providing him or her with emergency care and therefore the AOB contained in the COA was unenforceable. The appeals court therefore affirmed the trial court’s order sustaining the demurrer and the judgment on behalf of the insurance company.

8. (Discovery Sanctions) Imposition of sanctions under Code of Civil Procedure sections 2023.10 and 2023.030 for gamesmanship tactic was valid as an unusual form of discovery abuse. Shawn Agnone v. Frank Charles Agnone II (No. B321252 Los Angeles County Super. Ct. No. BD659645 California Court of Appeal Second Appellate District Division Three Filed May 30, 2025)

Plaintiff subpoenaed a third-party witness in connection with a marital dissolution action against her former husband. After the witness’s attorney refused to turn on his webcam or otherwise make himself visible to the plaintiff’s counsel during the remote deposition, the plaintiff counsel filed a motion to compel compliance with a subpoena and a request for sanctions under provisions for Civil Discovery Act (Code of Civil Procedures section 2016.010 et seq.) and other statutes governing third-party subpoenas. The witness’s counsel opposed the motion; however, before plaintiff filed her reply brief, and the plaintiff and her former husband settled the dissolution action, rendering the motion to compel moot. The plaintiff withdrew her motion to compel, but argued sanctions were nonetheless warranted to reimburse her for the expenses incurred due to the witness and his counsel’s gamesmanship during the deposition. The trial court granted the request for sanctions in part, ordering the witness to pay plaintiff counsel fees of nearly $10,000.

Earlier this case was the subject of an appeal where the appellate court concluded that sections 2023.10 and 2023.030 of the California Discovery Act did not independently authorize the trial court to impose monetary
sanctions for discovery misuses like those at issue here. The California Supreme Court granted the plaintiff’s petition for review of this decision and deferred further action pending consideration and disposition of a related issue in a case called City of Los Angeles v. PricewaterhouseCoopers, LLP (2024). That case held a trial court may invoke its independent authority to impose monetary sanctions when confronted with an unusual form of discovery abuse not already addressed by the method-specific sanctions provisions of the Civil Discovery Act. The California Supreme Court transferred this matter back to this appellate division with directions to vacate its original decision and to reconsider the cause in light of the City of Los Angeles v. PricewaterhouseCoopers, LLP decision. The appeals court concluded that the trial court had authority to oppose sanctions against the witness and counsel notwithstanding the plaintiff’s withdrawal of her motion to compel. The plaintiff requested sanctions because plaintiff and his attorney’s gamesmanship made it impossible to determine or develop evidence of any coaching, misuse of the discovery process.

Should you have any questions concerning these court decisions or desire a copy of any of them, please do not hesitate to contact our office.