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June 1995 
Preview Issue ISSN 1087-6219
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The California Supreme Court has ruled that the attorney-client privilege does not protect disclosures made to an attorney in his capacity as a friend. The ruling came in a criminal case, but may have broader implications.
A jury convicted Thomas Gionis, a doctor, of conspiracy to commit an assault, in connection with the beating of his ex-wife and her friend. (The ex-wife was John Wayne's daughter.) John Lueck was an attorney who referred clients to Gionis for medical evaluations. Gionis and Lueck were also friends.
At the trial, Lueck testified that Gionis had told him that his wife "had no idea how easy it would be for him to pay somebody to really take care of her." Gionis made the statement in a conversation at Lueck's house shortly after he had received divorce papers from his wife. Before Gionis went to Lueck's house, Lueck had told him that he did not want to be involved in Gionis's divorce case, because he knew both Gionis and his wife.
During the conversation, Lueck said that a change of venue out of Orange County for the divorce case might be a good idea, because of John Wayne's close association with the county. Lueck also advised Gionis that he would be a prime suspect if anything happened to his wife during the divorce proceedings, and that he should quickly retain a good attorney. A few months later Lueck made an emergency court appearance for Gionis, for which he received $750.
The Supreme Court ruled that Gionis had no reasonable basis for believing that an attorney-client relationship existed during the critical conversation. Even though the two had discussed legal issues, Gionis should have understood that Lueck was only responding in his capacity as a friend. One might question whether the distinction between friendly advice and legal advice is so clear.
People v. Gionis, 95 Daily Journal D.A.R. 5745 (May 4, 1995).
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The First District Court of Appeal in San Francisco ruled that Irwin Memorial Blood Centers was not liable for the death of a person who contracted AIDS from Irwin's blood products. The court followed earlier rulings that had afforded blood banks the benefits of professional liability rules. See, e.g., Osborn v. Irwin Memorial Blood Bank, 5 Cal. App. 4th 234 (1992). Those rules impose a duty of care based only on what others in the profession were actually doing in similar circumstances. A plaintiff cannot prove professional liability by simply presenting expert testimony that the professional should have acted differently. In the words of the decision, the court should not allow an expert to "second-guess an entire profession."
In October 1984, Sherrie Spann received infusions of blood products from Irwin as treatment for a blood disease. The treatment was successful, but the blood products infected Spann with the AIDS virus. She died from the disease in May 1990. In the ensuing wrongful death action, Spann's husband contended that Irwin should have listed exposure to the AIDS virus as a risk of the treatment on its informed consent form for Spann's treatment. He also argued that Irwin should have reduced the number of donors whose blood a patient might receive.
The Court of Appeal ruled that Irwin was not liable for failure to institute a donor reduction program. There was no evidence that any other blood bank in the country had adopted such a program in 1984. The informed consent claim failed because Spann's husband could not prove that the non-disclosure caused her death. Both she and her husband knew that infusions of blood products carried a risk of AIDS.
Spann v. Irwin Memorial Blood Centers, 95 Daily Journal D.A.R. 5471 (Cal.Ct.App. April 17, 1995).
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Code of Civil Procedure section 473 provides that a court must relieve a party from a default or dismissal upon an application accompanied by an attorney's affidavit of fault. However, the court must deny relief if it finds that the default or dismissal "was not in fact caused by" the attorney's fault. The statute does not define the standard for causation.
In a decision by the Second District Court of Appeal in Los Angeles, the trial court had dismissed plaintiff's case for failure to comply with discovery requests. Claiming that she and her husband had been in poor health, plaintiff then moved for relief from the dismissal on grounds of excusable neglect. The court denied the motion, because it did not believe that plaintiff's health had made it impossible to respond to the discovery requests.
Plaintiff's attorney then sought automatic relief under section 473. His affidavit of fault explained that he had not attended the hearing where the court granted the dismissal because of a calendaring error. Although the trial court granted relief, the Court of Appeal could find no basis for concluding "that his presence would have altered the outcome." Therefore, it ruled that counsel's conduct did not "actually cause" the dismissal. Other courts of appeal have shown similar skepticism about affidavits of fault that appeared to be no more than attempted cover-ups for the client. See Johnson v. Pratt & Whitney Canada, Inc., 28 Cal. App. 4th 613 (1994); Rogalski v. Nabers Cadillac, 11 Cal. App. 4th 816 (1992).
Todd v. Thrifty Corp., 95 Daily Journal D.A.R. 5697 (Cal.Ct.App. April 6, 1995).
Practice Tip Frequently,
attorney error will not be the sole cause of a default or dismissal. The Todd case
does not provide any firm guidelines for deciding when automatic relief is available in
such cases. Counsel seeking such relief should urge the court to apply the
"substantial factor" test that California courts use to determine causation in
fact in tort and contract cases. Under that test, an act is a "cause" of an
event if the act is a "substantial factor" in bringing it about. See Mitchell
v. Gonzales, 54 Cal. 3d 1041 (1991); Bruckman v. Parliament Escrow Corp., 190
Cal. App. 3d 1051 (1987).
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A property owner who leases land to the operator of a gas station is generally not responsible for damage to adjoining property caused by fuel leaks. A ruling from the Fourth District Court of Appeal, Division Three, in Santa Ana, California, contradicts the suggestion in another decision that lessors might be liable in such circumstances. The plaintiff in the Fourth District's case had asserted three causes of action-nuisance, trespass and negligence.
A continuing discharge of contaminants may constitute both a nuisance and a trespass. However, the Court of Appeal ruled that a lessor is not liable for either of those torts unless it actively participates in the activity that causes the contamination. The court disagreed with a suggestion to the contrary in Capogeannis v. Superior Court, 12 Cal. App. 4th 668, 673 (1993).
The negligence claim failed because there was no duty to the adjoining owner with respect to the leaks from the gas station. The Court of Appeal explained that a landlord is not responsible for all dangerous activities in which its tenants may engage.
A property owner should inspect the premises for dangerous conditions before turning possession over to a lessee. However, there is no obligation to refrain from renting to a business that will conduct potentially dangerous activities. After the lessee takes possession, the landlord will be liable for contamination of adjoining property, if it has reason to know the contamination has not stopped. The landlord will also be liable, if it knows that damage is imminent and unavoidable.
Resolution Trust Corp. v. Rossmoor Corp., 95 Daily Journal D.A.R. 5143 (Cal.Ct.App. April 21, 1995).
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From time to time businesses face problems associated with the departure of key employees to work for another business. Covenants not to compete and trade secret laws provide two methods for dealing with such problems. The Second District Court of Appeal in Los Angeles recently explained the applicable legal principles in a case involving an insurance brokerage business.
Robb and his partner sold their brokerage business to Hilb, Rogal. Robb signed one agreement that provided for the merger of the business into one of Hilb, Rogal's subsidiaries. He also signed an employment agreement that contained a covenant not to compete in southern California for three years after his employment terminated. Robb resigned to work for a competitor.
The trial court granted a preliminary injunction to prevent Robb from using customer information, refused to enforce the covenant not to compete before trial. The Court of Appeal ruled that Hilb, Rogal was not entitled to any relief.
The Court of Appeal assumed, without deciding, that the customer information was a trade secret. However, Hilb, Rogal did not prove that Robb had misused the information. He had simply announced that he was changing employment. He did not actively "solicit" the customers.
Hilb, Rogal could not enforce the non-competition covenant because the balance of hardship weighed heavily in Robb's favor. Hilb, Rogal faced no immediate threat of harm, because Robb had lost his job at the competitor, and was no longer competing. An injunction would also place financial hardship on Robb.
The Court of Appeal went on to explain that, if circumstances changed, it might become appropriate to enforce the non-competition covenant. California law generally outlaws covenants not to compete. Cal. Bus. & Prof. Code § 16600. However, there is an exception for covenants that accompany the sale of all shares that a shareholder owns in a corporation. Cal. Bus. & Prof. Code § 16601. The fact that Robb's covenant appeared in a separate employment agreement, rather than in the merger agreement, did not make the exception inapplicable.
In arriving at its conclusion, the court distinguished an earlier decision. In Vacco Industries, Inc. v. Van Den Berg, 5 Cal. App. 4th 34 (1992), the court had suggested that covenants not to compete contained in separate employment agreements might not be enforceable. However, the statement was dictum, because the court had gone on to enforce a non-competition clause contained in a different document. In addition, the court may have doubted that the employment agreement was actually part of the sale of stock.
Hilb, Rogal and Hamilton Ins. Services of Orange County v. Robb, 95 Daily Journal D.A.R. 5081 (Cal.Ct.App. April 6, 1995).
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The Court of Appeal in San Bernardino has ruled that the statute of limitations for an employment discrimination claim runs from notice to the employee of the adverse decision, not the effective date of the decision. It is the date of the allegedly discriminatory act that governs, rather than the date the plaintiff suffered the consequences of that act.
Ellen Steinsapir began a 5-year residency in general surgery at UC San Diego in 1989. In March 1992 the school informed her that she would have to repeat her third year, or leave the program. She chose not to repeat, but worked in the laboratory for a year. She left the program on June 30, 1993.
Claiming discrimination and harassment had caused her departure, Steinsapir filed an administrative claim on July 12, 1993, and a lawsuit on August 23, 1993. She alleged violations of the Fair Employment and Housing Act (FEHA), wrongful termination in violation of public policy, and negligent retention of the employee that she accused of wrongful conduct. A 1-year statute of limitations governed all causes of action. Cal. Gov. Code § 12960; Cal. Civ. Proc. Code § 340(3). The Court of Appeal determined that her claims were barred, because she did not assert them within a year after the school announced its decision.
Steinsapir attempted to bring herself within the rule of cases involving continuing violations. Such cases hold that a claim based on a systematic discriminatory policy is not barred even if some of the acts occurred prior to the limitations period. See, e.g., Accardi v. Superior Court, 17 Cal. App. 4th 341 (1993). However, the Court of Appeal ruled that such cases still required at least one discriminatory act during the limitations period. Steinsapir could prove none.
The court also rejected Steinsapir's attempt to convert her claim into one for wrongful constructive discharge that would have accrued upon her departure in 1993. Under Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238 (1994), such a claim requires proof that intolerable working conditions caused the employee to quit. However, the school's decision in March 1992 gave her no choice; she had to either repeat or leave the program. Nor did Steinsapir offer any evidence of intolerable conditions during the year that she worked in the laboratory. In the court's words, it was the classic case of the discharged employee who says: "You can't fire me, because I quit."
Regents of the University of California v. Superior Court, 95 Daily Journal D.A.R. 4743 (Cal.Ct.App. April 14, 1995).
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This section will contain subsequent treatment of decisions reported on in earlier issues.
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