| Now that we are all back at our desks, we thought it was the perfect time to resurrect our seasonal newsletter and update our firm clients and friends on what has been going on in and out of the office. |
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Welcome to the Salisian | Lee LLP Newsletter
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Now that we are all back at our desks, we thought it was the perfect time to resurrect our seasonal newsletter and update our firm clients and friends on what has been going on in and out of the office. As always, please reach out to us at info@salisianlee.com for any questions or concerns. Happy Spring!
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Firm News
New Hires: Associates Woody Jones and Marius Mateescu, Paralegal Paige Tuttle, and Legal Administrator Cynthia Rosas have recently joined the firm. They are all welcome additions to our growing team.
Advancement: Congratulations as well to Tyler Sanchez on his recent promotion to Senior Associate.
Events: Our social events are back in full swing. So far in 2022, we have bowled at Lucky Strike, raged at The Rage Room, commiserated over busted brackets for March Madness, and celebrated birthdays and anniversaries. We hope to keep the camaraderie going throughout the year!
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Cases to Note
By Marius Mateescu, Associate
Sheen v. Wells Fargo Bank, N.A., No. S258019, 2022 Cal. LEXIS 1155 (Cal. Mar. 7, 2022)
The issue was whether Wells Fargo owed Plaintiff a duty of care to reasonably process his mortgage modification.
The case arose over negotiations of a loan modification initiated by Plaintiff borrower, which Wells Fargo failed to process, leading to a loan servicer foreclosing on Plaintiff's home. Plaintiff sued Wells Fargo for negligence, contending it had a duty to process, review, and respond carefully and completely to his loan modification application.
After analyzing statutory and common law, the California Supreme Court held that a lender does not have a general tort duty of care to a mortgagor seeking a loan modification and to process it in a way that avoids damage to the mortgagor's purely economic interests because the parties' contract fully sets out their rights and obligations. Before this case, California law did not clearly specify whether a lender had a general tort duty in this context. The Court's decision clarifies the law in this area and limits the scope of negligence liability applicable to lenders.
Generally speaking, caselaw has provided lenders with the ability to ignore loan modification applications without tort liability attaching, where the lender's involvement in the loan transaction does not exceed customary business practices nor breach the loan contract, subject to various exceptions.
The ways in which the lower courts apply this case will prove interesting as loan servicers start enforcing defaults stemming from COVID 19.
Nat'l Pork Producers Council v. Ross, 6 F.4th 1021 (9th Cir. 2021)
The issue was whether California's Proposition 12 violates the Federal Constitution's "dormant Commerce Clause," which forbids States from imposing certain state regulations on interstate commerce.
The dispute arose out of the passage of Proposition 12, which, among other things, requires pork producers to house pigs in cages allowing them to move. Various pork producers filed suit challenging the law, contending it would cause massive disruptions to their business operations by increasing their business costs.
The District Court held that Proposition 12 did not directly regulate commerce between the States because it applied to in-state and out-of-state producers evenhandedly, and did not unduly burden interstate commerce because increased production costs for some out-of-state producers was not enough, standing alone, to show an undue burden on national commerce as a whole. The Ninth Circuit affirmed the District Court’s holding and reasoning. The United States Supreme Court granted certiorari on March 28, 2022.
This case may have far-reaching implications for producers of goods being sold throughout the United States. The Supreme Court will address the limitations on States' power to impose regulations on national industries that effectively raise the national cost of production and require national changes to the industry's current production methods. If the Supreme Court declares Proposition 12 void because California had no power to pass it, other similar state regulations mandating nationwide changes to methods of production that result in increased costs and operational disruptions on a national scale may be successfully challenged.
Empyreal Enterprises LLC v. United States, Case No. 5:22-cv-94-JWH-SHKx, 2022 U.S. Dist. LEXIS 66052 (C.D. Cal. Jan. 31, 2022)
The issue is whether local law enforcement's seizure of cash contained in vehicles transporting the proceeds of lawful marijuana-related transactions is lawful.
This case arose out of Plaintiff's lawful transport of money connected to lawful marijuana transactions. The Sheriff's office caused its deputies to seize Plaintiff's property various times while driving through San Bernardino County without justification, for the purpose of turning it over to the federal government to initiate civil asset forfeiture proceedings against it. Plaintiff sued for various causes of action.
The court has not ruled on the merits yet. This case may provide protection to entities transporting cash connected to legal marijuana-related transactions from federal civil asset forfeiture proceedings. Although under current state law, local law enforcement cannot seize and forfeit cash connected to lawful marijuana related transactions, federal law implicitly incentivizes them to do so via profit sharing arrangements between the local agency and the federal government, in which the federal government agrees to transfer a portion of the sale proceeds from the seized property to the local agency in exchange for the local agency delivering the property to the federal government. If the cost (settlements related to unconstitutional seizures) is outweighed by its benefit (receipt of a percentage of the proceeds from the federal civil asset forfeiture proceedings), local agencies may not continue this practice.
Plaintiff argued that lawful transportation connected to lawful marijuana sales cannot be subject to federal civil asset forfeiture at the behest of local law enforcement because the transportation is legal under California law. If the Court accepts this argument, local law enforcement will clearly not be able to seize the cash of those transporting proceeds connected to legal marijuana transactions. If they do so, they will likely not be shielded by sovereign immunity, thereby increasing the claim value of the unconstitutional seizure suits. This should incentivize local agencies to stop seizing property and will spur profits for those operating in the marijuana financial services industry.
A ruling on this issue will have implications for the nascent marijuana financial service industry throughout the nation, as it appears this is the first case of its kind.
Artus v. Gramercy Towers Condominium Assn., No. A161265, 2022 Cal. App. LEXIS 264 (Cal. Ct. App. Mar. 30, 2022)
The issue is who is a prevailing party for purposes of an attorneys' fees award under the common interest development laws.
The dispute arose out of various purported failures by a condominium association to adhere to election and voting rules in its governing documents. The Plaintiff sued the association for various causes of action, attempting to enforce the governing documents.
Although Plaintiff prevailed on one cause of action, both the trial and appellate court held she was not a prevailing party under the Davis-Sterling Common Interest Development Act or Code of Civil Procedure § 1021.5 et seq., as she did not sufficiently change the status quo by prevailing on one cause of action related to procedural voting rules. The association also was not a prevailing party where it did not achieve its litigation objective of proving that its conduct conformed to its governing documents. Rather, the lawsuit ended as a result of the case being mooted by the association deciding to adopt new rules pertaining to the lawsuit's subject matter.
This case demonstrates the complexity of determining the prevailing party for purposes of an attorney's fees award. As this case exemplifies, those involved in disputes in this context should not necessarily rely on such award, even where a cause of action is resolved in their favor.
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Topics Making Headlines
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Rekeying the LA Housing Market After the Moratorium: 3 Post-Eviction Moratorium Predictions
By Tyler Sanchez, Senior Associate
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In September 2020, the California legislature passed an emergency measure intended to protect tenants suffering financial hardship due to the COVID-19 pandemic. The California COVID-19 Tenant Relief Act of 2020, and related emergency bills extending the eviction moratorium, prevented landlords from evicting residential tenants in arrears from March 1, 2020 to September 30, 2021 because of COVID-19 illness or related lost-income, with a litany of additional exceptions and requirements.
Los Angeles County followed by introducing a more expansive moratorium that applied to both residential and commercial tenancies. Los Angeles also forbade evictions for "no-fault" reasons (including substantial remodels or demolition of property); COVID-19 related violations due to unauthorized occupants or pets; nuisance; or denying entry to a landlord.
The state eviction moratorium, which has been at the center of fervent debate, ended on September 30, 2021. Thus, as of October 1, 2021, subject to numerous exceptions and requirements, landlords across the state should have been able to begin the process of evicting tenants for unpaid rent, including the rent accrued and owed during the eviction moratorium.
Not so fast - responded the LA County Board of Supervisors. Rather, LA will continue its eviction moratoriums for residential tenants until December 31, 2022. Commercial tenants in arrears, however, are no longer protected from eviction as of February 1, 2022. They will be granted between six months, for commercial tenants with 10 to 100 employees, and a year, for commercial tenants with 0 to 9 employees, to repay past due rent in equal installments.
Once this seemingly never-ending eviction moratorium lifts, it will have far reaching social, economic, and legal repercussions. Here are three things to expect:
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An Emphasis on Settling Possession Issues Without Inundating Courts with Unlawful Detainer Trials
Years' worth of uncertainty and landlord frustration will spill into courts throughout Los Angeles County. Landlords, who may feel that certain tenants took advantage of the system to the landlords' detriment, will hardly be inclined to settle cases. For the benefit of the courts and the parties, however, litigants should explore settling possession issues through stipulated judgments and writs of possession, reserving damages for separate or continued civil actions.
Unlawful detainer actions are entitled to priority trial preference and shortened schedules, unlike other civil actions. But Courts must fit these expedited actions into already overloaded dockets amidst the backdrop of the pandemic, and its deleterious effects on court procedures. An influx of unlawful detainer actions at once will most likely overwhelm already taxed court staffs and dockets. Trial dates and sympathy from the courts will be hard to come by for litigants unwilling to attempt to resolve their possession claims through stipulated judgments, payment plans, etc.
This backlog will be further exacerbated by the expiration of commercial tenants' extended timeline to pay arears, all coming due between August 2022 and February 1, 2023.
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Confusion Amongst Landlord, Tenants, and Courts Regarding When Landlords May Institute Successful Eviction Proceedings
The eventual lifting of the eviction moratorium may see numerous landlords running to their nearest courthouse to institute multiple unlawful detainer actions as increasingly complicated deadlines expire. Over-zealous landlords, however, should be cautious and educated about the many requirements to succeed in a post-eviction moratorium unlawful detainer action.
After April 1, 2022, a residential tenant need only self-certify that they are unable to pay rent due to the pandemic, which serves as an affirmative defense to an unlawful detainer action. On June 1, 2022, however, this defense will only apply to households with incomes at or below 80 percent of the Area Median Income, and will continue until June 30, 2023.
Confusion regarding these new requirements will inevitably lead to an increase in litigation and uncertainty that landlords must consider in deciding how to proceed with delinquent tenants.
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Increased Inventory Resulting from Successful Unlawful Detainer Actions Will Affect Rental Prices
If enough informed and persistent landlords successfully navigate the quagmire of the new pandemic-related unlawful detainer regulations, there will be substantial repercussions to the housing market in Los Angeles.
Because of the eviction moratorium, in part, the inventory of rental vacancies has been severely limited in the Los Angeles area during the pandemic. With the lifting of the moratorium, however, there will be an influx of available units to prospective renters. This, coupled with changes in peoples' professional and social behaviors because of the pandemic, will certainly have an impact on the rental prices landlords are able to charge prospective tenants.
This article only scratches the surface of the intricacies of the eviction moratorium legislation and the potential repercussions. Any landlord navigating this new landscape would be wise to carefully review the requirements and consult a qualified attorney.
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Navigating Vaccine Mandates in Law Firms
By Glenn Coffman, Associate
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For attorneys, as well as much of the general working population in the United States, March 2022 marks the two-year anniversary of the compulsory institution of the work-from-home model, necessitated by the unforeseen COVID-19 pandemic. While the ability and feasibility of working from home has varied by industry, attorneys at law firms have largely adjusted to the transition to a more remote-based environment.
Following numerous months - and now years - of uncertainty surrounding the pandemic, not to mention periodic spikes in infections further necessitating remote work, the United States has mostly begun to transition to a state of relative normalcy, thanks in large part to the effectiveness of vaccines. As the American (and global) population has gotten and continues to get vaccinated and boosted against COVID-19, a return to "normalcy" appears inevitable.
However, despite the science behind the effectiveness of vaccines, the role of businesses mandating vaccines for its employees is not without controversy, and law firms are not exempt. As law firms, too, seek to return to at least part-time in-person work, the vaccination of their employees is crucial, but not without legal difficulties.
For instance, law firms may not necessarily or routinely keep their employees' medical information, and will need to navigate confidentiality concerns, including the protection of such confidential information. As another example, and as set forth below, California's proposed legislation on the matter includes an exemption for a "sincerely held religious belief." How law firms – or any business – legislate the validity and sincerity of a "sincerely held religious belief" is unsettled.
In an effort to aid the transition of the American workforce back to a largely in-person environment, in late-2021 the Biden administration attempted to implement a workplace vaccine mandate for employees at business with more than 100 workers, or the option to submit to masking and weekly testing. However, the Supreme Court blocked the proposed mandate for all companies with over 100 workers but allowed it in certain health care industries.
As such, law firms – many of which employ over 100 workers – as well as the clients they advise, have been left in a state of limbo as it relates to implementing their own policies to comply with and respect their employees' rights, as well as keeping up with the ever-changing landscape surrounding federal and/or statewide vaccine mandates.
In California, AB 1993 was introduced in February, making numerous proposals regarding employer vaccine mandates: The bill would require an employer to require employees or independent contractors who are eligible to receive the COVID-19 vaccine to show proof of vaccination to the employer; and would establish an exception for a person who is ineligible to receive a COVID-19 vaccine due to a medical condition or disability or because of a sincerely held religious belief.
The bill would also require, on January 1, 2023, each employer to affirm, in a form and manner provided by the Department of Fair Employment and Housing, that each employee or independent contractor complied with these provisions, and would require the employer to affirm that each new employee or independent contractor is in compliance at the time of hiring or contracting with that person; and would require the imposition of a penalty of an unspecified amount on an employer for any violation of these provisions.
Further, this bill would remain operative until the U.S. Centers for Disease Control and Prevention determines the COVID-19 vaccines no longer necessary, at which point the bill will be repealed. As of April 2022, the bill is pending in committee, and as such, is an important development to track for law firms and their clients.
Given the unprecedented nature of the post-pandemic world, employers must remain flexible in their approaches to ensuring a safe, healthy, and legal work environment, as federal and statewide regulations continue to develop.
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Contemplative Counselors: Lawyering with Mindfulness
By Woody Jones, Associate
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One of the goals of law school is to teach law students "how to think like a lawyer." While that sounds vague, somehow the message gets through that thinking like a lawyer means critical thinking. Merriam-Webster's dictionary defines "critical" as: "inclined to criticize severely and unfavorably" and "exercising or involving careful judgment or judicious evaluation." One synonym provided for "critical" is "faultfinding." Turns out law schools do know what they are doing when they teach students how to "think" like a lawyer.
That said, a lot is changing in the legal field. In an industry where New York lawyers initially considered it "unprofessional" to use the telephone for business calls when the phone first came out in 1878, according to the Prologue of John Oller's legal history book White Shoe, the pace at which the legal profession has embraced mindfulness meditation is an encouraging development.
Mindfulness, it seems, is the latest buzzword in the management area of the legal profession. The Washington State Bar Association made "Mindfulness and the Law" their cover story in April of 2014; "Lawyers Go Zen, With Few Objections" reads a 2015 Wall Street Journal article detailing the rise of mindfulness in law schools and firms; and the Louisiana State Bar Association made "Mindful Lawyering" its theme for 2021.
Why are so many state bar associations, law schools, firms, and other professionals in the legal field welcoming this new phenomenon of mindfulness? Do lawyers even know what it is? There are many potential answers as to why the industry seems to be embracing mindfulness, but a starting point is to clearly to offer a definition. Practically speaking for attorneys, mindfulness would seem to mean giving counsel to their clients with the focus being on the present moment and being "aware" of the here and now. It is an extension of the idea that to act in your client's best interest, an essential component is to be fully present in your time with and for them - not distracted by other cases, personal interests or external obligations. It also lends itself to the idea that to be the best advocate for a client, attorneys should seek to be the best version of themselves - in mind, body and spirit.
Many articles and books pitch mindfulness to lawyers as a great way to help them focus or concentrate, but also to practice emotional skills such as compassion and empathy. When one is trained to think critically, which the dictionary equates to "faultfinding", maybe there's a subconscious reason we are attracted to being more "compassionate" in our job.
It can, however, be very difficult to change an attorney's approach to their profession - with many norms so deeply ingrained in what remains a highly traditional field. Law school is three intense years of mental sculpting – the refiner's fire of shaping analytical skills, sharpening legal reasoning to cut through the opposing side's argument. After all, perhaps there are some attorneys reading this with skepticism, prepared to argue that "faultfinding" is what makes them so good at their job. That "involving careful judgment or judicious evaluation" is what has helped them along their career and has led to sound judgments of law from the courts to further justice in our courts and society.
While that is an apt assessment, some clarity might help that skeptic come around by learning what benefits mindfulness would potentially bring. Mindfulness can help critical thinking and infuse empathy, balancing both sides of our minds to arrive at the best outcome for our client. In short, this is the true definition of a contemplative counselor’s approach.
"Objection, your honor!"
Lawyers are trained to object, not to accept. So, when mindfulness touts the ability to accept the mind as it is, it naturally rubs the faultfinding lawyer's mind the wrong way. But the practice of mindfulness - perhaps by including meditation in a daily practice - isn't trying to do away with a lawyer's objections or sharp analysis or competitive spirit, it's just trying to get attorneys to cut through opposing counsel's argument, not opposing counsel.
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Legal Disclaimer: The information contained in this newsletter is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the state of California.
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