CALIFORNIA SUPREME COURT

Civil Procedure 

Madrigal et al. v. Hyundai Motor America (2025) _Cal. 5th_, 2025 WL 943693: The California Supreme Court decided a narrow question regarding the interplay between Code of Civil Procedure section 998 and the recovery of costs as the prevailing party under Code of Civil Procedure sections 1032 and 1033.5. The trial court ruled that section 998 did not apply because the parties settled before the trial was concluded. The Court of Appeal and the California Supreme Court disagreed, ruling that cost shifting under section 998 is not limited to cases resolved by trial or arbitration. The California Supreme Court ruled that when a plaintiff rejects a 998 offer or allows it be deemed withdrawn, and later agrees to settle before trial, section 998 sets the default rule regarding cost shifting if its terms are met, but the parties are free to agree to their own allocation of costs and fees as part of the settlement agreement. (March 20, 2025.)

Torts

Escamilla v. Vannucci (2025) _Cal. 5th_, 2025 WL 943692: The California Supreme Court reversed the Court of Appeal and the trial court, ruling that an action for malicious prosecution against an attorney, brought by formerly adverse parties and not by the attorney’s clients or the intended beneficiaries of the attorney’s clients, is governed by the two-year statute of limitations in California Code of Civil Procedure section 335.1, not the one-year limitations period in California Code of Civil Procedure section 340.6 for actions against attorneys. (March 20, 2025.)

CALIFORNIA COURTS OF APPEAL

Arbitration

Arzate v. ACE American Insurance Company (2025) _ Cal.App.5th _, 2025 WL 309326: The Court of Appeal reversed the trial court’s order that reversed its earlier order granting defendant’s motion to compel and lifted the stay of litigation after neither of the parties took any action to initiate arbitration. The underlying action was a wage and hour action by employees against defendant employer. The arbitration agreements at issue required any person having employment related legal claims to submit them to arbitration. They also required the party who wanted to start the arbitration procedure to begin the process by filing a demand for arbitration. The trial court concluded that the defendant had the obligation to commence arbitration, which is why it lifted the litigation stay after no one initiated arbitration. The Court of Appeal disagreed and reversed the trial court, concluding that under the arbitration agreements the party wanting to assert a claim governed by the arbitration agreements had the obligation to commence arbitration. In this case that was the plaintiffs. Defendant did not breach the arbitration agreements or waive its right to arbitration by failing to submit the plaintiffs’ claims to arbitration. (C.A. 2nd, filed January 27, 2025, published February 19, 2025.)

Employment

Lowry v. Port San Luis Harbor Dist. (2025) _ Cal.App.5th _, 2025 WL 615281: The Court of Appeal affirmed the trial court’s order granting defendant’s motion for summary judgment against plaintiff’s single cause of action alleging that defendant violated the Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.) when it concluded that plaintiff was not eligible for relief under FEHA and denied plaintiff’s request for disability retirement payments after plaintiff suffered a workplace injury rendering him unable to perform his essential functions as a harbor patrol officer even with reasonable accommodations. The Court of Appeal concluded that the denial of disability retirement payments is not an adverse employment action under FEHA. Disability retirement payments do not facilitate a qualified employee’s continued employment, job performance, or opportunity for advancement. They serve as income replacement for employees who can no longer work. An individual who is not a qualified employee cannot bring a disability discrimination claim under FEHA for the denial of disability retirement payments. (C.A. 2nd, February 26, 2025.)

Contracts

Miles v. Gernstein (2025) _ Cal.App.5th _, 2025 WL 942514: The Court of Appeal affirmed the trial court’s judgment, following a bench trial, concluding that an oral traditional surrogacy agreement that plaintiff (a single lesbian) entered into with defendant (a single gay man) controlled the relationship between plaintiff and the child born following that agreement, and plaintiff was not a parent to the child under that agreement. The Court of Appeal affirmed the trial court’s judgment, concluding that the law does not require that a traditional surrogacy contract be in writing, that Family Code section 7610 did not mandate a finding that plaintiff was the child’s mother, California case law did not prohibit the oral surrogacy agreement, and public policy supported the enforcement of the oral surrogacy agreement. (C.A. 3rd, March 28, 2025.)

Insurance

Prahl v. Allstate Northbrook Indemnity Co. (2025) _ Cal.App.5th _, 2025 WL 942513: The Court of Appeal affirmed the trial court’s order denying plaintiff’s petition to compel arbitration of his underinsured motorist claim. The accident occurred in 2016. After settling with the two other drivers, plaintiff initiated his underinsured motorist claim with defendant and defendant agreed to arbitrate the claim on May 29, 2018. The matter was set for arbitration in November 2022, but was continued due to the unavailability of plaintiff’s counsel. In late 2023, plaintiff contacted defendant to reschedule the arbitration, and defendant took the position that the arbitration could not go forward because the five-year deadline to complete arbitration set forth in Insurance Code section 11580.2(i) had expired. The trial court properly denied the petition to compel arbitration, properly concluding that arbitration was barred by Insurance Code section 11580.2(i) and Judicial Council emergency rule 10 (Cal. Rules of Court, appen. I, emergency rule 10) did not extend the deadline. (C.A. 3rd, March 28, 2025.)