February 1996 Vol. 2 No. 2 ISSN 1087-6219
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In This Issue

• Three Court of Appeal decisions discuss availability of emotional distress damages
• Supreme Court allows independent civil rights suit after arbitration of Keller dues allocation
• Malpractice claim for representation in criminal case accrues no later than remand to custody
• Confession of judgment requires declaration signed by independent counsel
• Retirement hotel may have duty to prevent suicide of resident
• Full faith and credit does not require recognition of injunction that interferes with discovery

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Three Court of Appeal decisions discuss availability of emotional distress damages

Availability of emotional distress damages can be a difficult issue. If there is physical injury, the plaintiff certainly may recover for emotional distress as an item of "parasitic damages." If there is no physical injury, the plaintiff must show some other special circumstance, such as intentional conduct or a recognized duty to avoid inflicting emotional distress. See Potter v. Firestone Tire & Rubber Co., 6 Cal. 4th 965 (1993). Three recent decisions explore the issue.

In Macy's California, Inc., the First District Court of Appeal in San Francisco ruled that a Macy's customer could not recover for fear of getting AIDS. She had pricked her finger on a hypodermic needle in the pocket of a jacket returned by another customer. The needle prick was not a "physical injury," because it did not cause "detrimental change to the body." Absent physical injury, the customer would have to prove her fear arose from knowledge, supported by reliable scientific opinion, that an AIDS infection would more likely than not result from the needle prick.

In Waters, the Second District Court of Appeal in Los Angeles vacated a $1,375,000 emotional distress award in an insurance bad faith case. After plaintiffs' home suffered fire damage, they got into a dispute with their insurer over the cost of repairs, which caused extreme emotional distress. However, because the primary purpose of a bad faith lawsuit is to recover for economic loss, there can be no recovery for emotional distress without proof of economic loss.

In Kellogg, the First District Court of Appeal ruled that emotional distress damages were not available to the estate of a decedent who died after submission of his case, but before entry of judgment. Code of Civil Procedure section 377.34 (formerly Probate Code section 573(c)) provides generally for the survival of a decedent's causes of action, but excludes recovery of "any damages for pain, suffering, or disfigurement."

Macy's California, Inc. v. Superior Court, 41 Cal. App. 4th 744 (1995); Waters v. United Services Auto. Ass'n, 1996 Cal. App. LEXIS 24 (Cal. Ct. App. Jan. 10, 1996); Kellogg v. Asbestos Corp. Ltd., 1996 Cal. App. LEXIS 51 (Cal. Ct. App. Jan. 23, 1996).

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Supreme Court allows independent civil rights suit after arbitration of Keller dues allocation

In Keller v. State Bar of California, the United States Supreme Court ruled that the State Bar could not use compulsory dues to finance political activities not reasonably needed to regulate the legal profession. As a result of Keller, the State Bar annually calculates the portion of its dues devoted to nonchargeable political activities. Members do not have to pay that portion of their dues. Members who object to the calculation may have their objections arbitrated.

For 1991, the State Bar determined that $3 of the $478 annual fee was nonchargeable. An arbitrator ruled that the State Bar should refund an additional $4.36 to those who challenged the calculation. The challengers then filed an action under 42 U.S.C. section 1983 in the Sacramento Superior Court, which sustained the State Bar's demurrer. The State Bar had argued that the challengers' sole remedy was a petition to vacate the award under Code of Civil Procedure section 1285 (which only allows relief in very limited circumstances).

The California Supreme Court ruled that the challengers could assert their section 1983 claim in a separate lawsuit. Congress intended that section 1983 claims generally should be resolved by a court. A state remedy may replace the section 1983 remedy only when Congress has expressed such an intent. There was no evidence of any such intent in this case.

The Supreme Court decided that the State Bar's demurrer to the section 1983 claim should have been overruled. However, it did not determine how much, if any, preclusive effect the arbitrator's decision would receive in the lawsuit. The State Bar may still be able to establish that the arbitration constituted an "administrative adjudication," which should be accorded preclusive effect. See University of Tennessee v. Elliott, 478 U.S. 788 (1986).

Brosterhous v. State Bar of California, 12 Cal. 4th 315 (1995).

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Malpractice claim for representation in criminal case accrues no later than remand to custody

The Fifth District Court of Appeal in Fresno has ruled that a criminal defendant's claim for legal malpractice against his public defender accrues when he is remanded to custody. Ronald Fantazia went to jail on December 29, 1988. At a habeas corpus proceeding on September 28, 1990, the Superior Court determined that Fantazia had been denied effective assistance of counsel. On December 7, 1990, Fantazia was released from custody, after the prosecution declined to proceed with a new trial. He filed his malpractice complaint on June 24, 1991.

Code of Civil Procedure section 340.6 provides that the statute of limitations for a legal malpractice claim is tolled until the plaintiff sustains "actual injury." It is the fact that damage occurred, and not the exact quantification of the extent of the damage that constitutes "actual injury."

Fantazia argued that he did not sustain "actual injury" until December 7, 1990, because he did not know if the public defender's alleged malpractice was harmless until then. Relying on Laird v. Blacker, 2 Cal. 4th 606 (1992), the Court of Appeal rejected his argument. Laird established that the defendant in a civil action suffers "actual injury" when the original judgment is entered, not when a later appeal becomes final. A similar rule applies to malpractice in criminal proceedings. The defendant suffers "manifest and palpable" injury when deprived of personal liberty after a conviction. Post-conviction proceedings only affect the extent and duration of the injury.

Fantazia v. County of Stanislaus, 1996 Cal. App. LEXIS 53 (Cal. Ct. App. Jan. 23, 1996).

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Confession of judgment requires declaration signed by independent counsel

The First District Court of Appeal in San Francisco has reminded litigants that California's confession of judgment procedure requires a declaration from a truly independent counsel for the judgment debtor. It affirmed an order setting aside a judgment based on a declaration from an attorney who had a conflict of interest.

On September 20, 1994, attorney Peter Chernik received a tentative decision determining that his client, Vivek Hejmadi, had no claim to the assets of Dyna-Tel. The next day Hejmadi, as president of Dyna-Tel, executed a confession of judgment in favor of Rivercourt. Chernik signed a declaration stating that he had examined the proposed judgment and advised Dyna-Tel about it.

Code of Civil Procedure section 1132(b) prohibits entering a confession of judgment unless an attorney "independently representing the defendant" certifies that the attorney has advised the defendant about the procedure. Because he represented Hejmadi in the dispute over ownership of Dyna-Tel, it was a conflict of interest for Chernik to represent Dyna-Tel in the confession of judgment procedure. Therefore, he should not have signed the declaration. The confession of judgment was invalid.

Rivercourt Co. v. Dyna-Tel, Inc., 1996 Cal. App. LEXIS 57 (Cal. Ct. App. Jan. 24, 1996).

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Retirement hotel may have duty to prevent suicide of resident

The Second District Court of Appeal in Los Angeles has ruled that the operator of a retirement hotel is not entitled to summary judgment on a claim that it negligently allowed an elderly resident to commit suicide. State regulations and the hotel's special relationship with the decedent imposed a duty of due care on the hotel.

Rose Goldbaum died as a result of a fall from the roof of the Hancock Park Retirement Hotel. The hotel claimed that she committed suicide, and that it had no duty to prevent the suicide.

State regulations established standards for admission and care of the hotel's residents. Plaintiffs asserted that the hotel's violations of those regulations caused their decedent's death. The court determined that the regulations imposed a duty under a negligence per se theory. See Cal. Evid. Code sec. 669.

The court also found a common law duty based on the hotel's special relationship with the decedent as a provider of residential care services. The hotel had argued that Nally v. Grace Community Church, 47 Cal. 3d 278 (1988) required a different result. In Nally, the Supreme Court refused to impose a duty to prevent suicide on nontherapist religious counselors. The hotel's status as a highly regulated commercial enterprise distinguished it from Nally's counselors.

Klein v. BIA Hotel Corp., 1996 Cal. App. LEXIS 31 (Cal. Ct. App. Jan. 11, 1996).

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Full faith and credit does not require recognition of injunction that interferes with discovery

The Fifth District Court of Appeal in Fresno has ruled that trial courts should not recognize a Michigan injunction that would interfere with discovery in two pending California lawsuits. Recognizing the injunction would violate fundamental California public policy.

Robert Elwell at one time worked for General Motors' Engineering Analysis Group. As part of a settlement of a dispute between GM and Elwell, a Michigan court entered an agreed upon permanent injunction. The order prohibited Elwell from testifying or consulting in connection with litigation to which GM was a party. Plaintiffs in two California actions against GM wished to take Elwell's deposition.

The courts of one state are required to give the same "full faith and credit" to decisions from a sister state that the sister state would give. U.S. Const. art. IV, sec. 1; 28 U.S.C. sec. 1738. In cases involving equitable decrees, a state may decline to give full faith and credit if doing so would violate the state's fundamental public policy.

California courts have determined that agreements to suppress evidence are void as against public policy. They need not recognize foreign injunctions that violate that policy.

Stephens v. Superior Court, 41 Cal. App. 4th 1014 (1996).

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UPDATES

Subsequent treatment of decisions reported on in earlier issues:

1111 Prospect Partners, L.P. v. Superior Court (November 1995 issue), review granted (Jan. 18, 1996). The decision may no longer be cited. Cal. R. Ct. 976(d), 977.

Adams v. Paul (December 1995 issue), now reported at 11 Cal. 4th 583 (1995).

California Court Reporters Ass'n v. Judicial Council (December 1995 issue), time for granting or denying review extended (Jan. 18, 1996).

Collings v. Longview Fibre Co. (September 1995 issue), cert. denied, 1996 U.S. LEXIS 97 (Jan. 8, 1996).

Farmers Ins. Group v. County of Santa Clara (January 1996 issue), now reported at 11 Cal. 4th 992 (1995).

Lisa M. v. Henry Mayo Newhall Memorial Hospital (January 1996 issue), now reported at 12 Cal. 4th 291 (1995).

Lorenz v. Commercial Acceptance Ins. Co. (January 1996 issue), now reported at 40 Cal. App. 4th 981 (1995).

Pacific Inland Bank v. Ainsworth (January 1996 issue), now reported at 41 Cal. App. 4th 277 (1995).

Romano v. Rockwell Int'l, Inc. (November 1995 issue). review granted (Jan. 18, 1996). The decision may no longer be cited. Cal. R. Ct. 976(d), 977.

Scott v. CIBA Vision Corp. (October 1995 issue), review denied (Dec. 21, 1995).

Smiley v. Citibank (South Dakota) N.A. (October 1995 issue), cert. granted 1996 U.S. LEXIS 700 (Jan. 19, 1996).

Stokes v. Dole Nut Co. (January 1996 issue), now reported at 41 Cal. App. 4th 285 (1995).

Western Security Bank, N.A. v. Beverly Hills Business Bank (November 1995 issue), review granted (Jan. 18, 1996). The decision may no longer be cited. Cal. R. Ct. 976(d), 977.

Zuniga v. Housing Authority of the City of Los Angeles (January 1996 issue), now reported at 41 Cal. App. 4th 82 (1995).

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