assignment of cause of action california

Assignment of a claim or cause of action

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• Increase efficiency
• Enhance productivity
• Improve response time
• Substantive Law
• 1 Scope of this note
• Effect of contractual prohibition on assignment
• 3 At what stage may a claim be assigned?
• 4 To whom can a cause of action be assigned?
• Legal assignment or equitable assignment?
• Requirements for a legal assignment
• Requirements for an equitable assignment
• Effect of consideration
• No loss occurring to assignee before assignment of claim
• General principles
• Exceptions to the rules on maintenance and champerty
• Security for costs
• Costs incurred by the assignor before the assignment
• Who is liable for costs awarded in favour of the defendant?
• Assignment of benefit and burden of solicitors' retainer
• When might an office-holder assign a claim?
• Who may assign a claim in insolvency?
• Claims capable of assignment by an office-holder
• Claims not capable of assignment by an office-holder
• Assignment of claims to an office-holder
• Potential liability of office-holder
• 10 Drafting an assignment of a cause of action
• Legal assignment
• Equitable assignment
• Assigning proceedings that have been commenced
• Counterclaims where a claim has been assigned

Assignment of claims

An untraditional approach to combining the claims of plaintiffs; how it differs from class actions, joinder, consolidation, relation and coordination

A large class of plaintiffs engages you to bring a common action against a defendant or set of defendants. As counsel, you resolve to combine the plaintiffs’ various claims into a single lawsuit. In this article, we touch on some of the traditional approaches, such as a class action, joinder, consolidation, relation, and coordination. To that list, we add as an approach the assignment of claims, a procedural vehicle validated by the United States Supreme Court, but not typically employed to combine the claims of numerous plaintiffs.

Class actions

In Hansberry v. Lee (1940) 311 U.S. 32, the United States Supreme Court explained that “[t]he class suit was an invention of equity to enable it to proceed to a decree in suits where the number of those interested in the subject of the litigation is so great that their joinder as parties in conformity to the usual rules of procedure is impracticable. Courts are not infrequently called upon to proceed with causes in which the number of those interested in the litigation is so great as to make difficult or impossible the joinder of all because some are not within the jurisdiction or because their whereabouts is unknown or where if all were made parties to the suit its continued abatement by the death of some would prevent or unduly delay a decree. In such cases where the interests of those not joined are of the same class as the interests of those who are, and where it is considered that the latter fairly represent the former in the prosecution of the litigation of the issues in which all have a common interest, the court will proceed to a decree.” ( Id. at pp. 41-42.)

In California’s state courts, class actions are authorized by Code of Civil Procedure section 382, which applies when the issue is “‘one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court.’” ( Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 968; see also, e.g., Cal. Rules of Court, rules 3.760-3.771.) “The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.” ( Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021.) “The community of interest requirement involves three factors: ‘(1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.’” ( Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435; see Civ. Code, § 1750 et seq. [Consumers Legal Remedies Act]; cf. Fed. Rules Civ.Proc., rule 23(a) [prerequisites for federal class action].)

Parties, acting as co-plaintiffs, can also obtain economies of scale by joining their claims in a single lawsuit. Under California’s permissive joinder statute, Code of Civil Procedure section 378 (section 378), individuals may join in one action as plaintiffs if the following conditions are met:

(a)(1) They assert any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or

(2) They have a claim, right, or interest adverse to the defendant in the property or controversy which is the subject of the action.

(b) It is not necessary that each plaintiff be interested as to every cause of action or as to all relief prayed for. Judgment may be given for one or more of the plaintiffs according to their respective right to relief.

This strategy of joining multiple persons in one action has been referred to as a “mass action” in some decisions involving numerous plaintiffs. (See Aghaji v. Bank of America, N.A. (2016) 247 Cal.App.4th 1110, 1113; Petersen v. Bank of America Corp . (2014) 232 Cal.App.4th 238, 240 ( Petersen ); cf. 28 U.S.C. § 1332(d)(11)(B) [federal definition of “mass action”].)

In Petersen , for example, 965 plaintiffs who borrowed money from Countrywide Financial Corporation in the mid-2000’s banded together and filed a single lawsuit against Countrywide and related entities. ( Petersen , supra , 232 Cal.App.4th at pp.  242-243.) The plaintiffs alleged Countrywide had developed a strategy to increase its profits by misrepresenting the loan terms and using captive real estate appraisers to provide dishonest appraisals that inflated home prices and induced borrowers to take loans Countrywide knew they could not afford. ( Id. at p. 241.) The plaintiffs alleged Countrywide had no intent to keep these loans, but to bundle and sell them on the secondary market to unsuspecting investors who would bear the risk the borrowers could not repay. ( Id. at pp. 241, 245.) Countrywide and the related defendants demurred on the ground of misjoinder of the plaintiffs in violation of section 378. The trial court sustained the demurrer without leave to amend and dismissed all plaintiffs except the one whose name appeared first in the caption. ( Id . at p. 247.) The Court of Appeal reversed and remanded for further proceedings. ( Id . at p. 256.)

Petersen resolved two questions. First, it concluded the operative pleading alleged wrongs arising out of “‘the same . . . series of transactions’” that would entail litigation of at least one common question of law or fact. ( Petersen, supra, 232 Cal.App.4th at p. 241.) The appellate court noted the individual damages among the 965 plaintiffs would vary widely, but the question of liability provided a basis for joining the claims in a single action. ( Id. at p. 253.) Second, the appellate court concluded “California’s procedures governing permissive joinder are up to the task of managing mass actions like this one.” ( Id. at p. 242.)

Consolidation

Code of Civil Procedure section 1048, subdivision (a) provides that, “[w]hen actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.” (See also Fed. Rules Civ.Proc., rule 42.)

There are two types of consolidation. The first is a consolidation for purposes of trial only, when the actions remain otherwise separate. The second is a complete consolidation or consolidation for all purposes, when the actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment. ( Hamilton v. Asbestos Corp., Ltd. (2000) 22 Cal.4th 1127, 1147 ( Hamilton ).)

Consolidation is designed to promote trial convenience and economy by avoiding duplication of procedure, particularly in the proof of issues common to the various actions. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleadings, § 341, p. 470.) Unless all parties in the involved cases stipulate, consolidation requires a written, noticed motion (Cal. Rules of Court, rule 3.350(a); Sutter Health Uninsured Pricing Cases (2009) 171 Cal.App.4th 495, 514), and is subject to the trial court’s discretion. ( Hamilton, supra, 22 Cal.4th at p. 1147.)

In a procedure somewhat similar to consolidation, under California Rules of Court, rule 3.300(a), a pending civil action may be related to other civil actions (whether still pending or already resolved by dismissal or judgment) if the matters “[a]rise from the same or substantially identical transactions, incidents, or events requiring the determination of the same or substantially identical questions of law or fact” or “[a]re likely for other reasons to require substantial duplication of judicial resources if heard by different judges.” ( Id. , rule 3.300(a)(2), (4).) An order to relate cases may be made only after service of a notice on all parties that identifies the potentially related cases. No written motion is required. ( Id ., rule 3.300(h)(1).) The Judicial Council provides a standard form for this purpose. When a trial court agrees the cases listed in the notice are related, all are typically assigned to the trial judge in whose department the first case was filed. ( Id ., rule 3.300(h)(1)(A).)

Related cases are not consolidated cases. Related cases maintain their separate identities but are heard by the same trial judge. Consolidated cases, in contrast, essentially merge and proceed under a single case number.

Coordination

Under Code of Civil Procedure section 404, the Chairperson of the Judicial Council is authorized to coordinate actions filed in different courts that share common questions of fact or law. (See Cal. Rules of Court, rule 3.500 et seq.) The principles underlying coordination are similar to those that govern consolidation of actions filed in a single court. (See Pesses v. Superior Court (1980) 107 Cal.App.3d 117, 123; see also 28 U.S.C. § 1407 [complex and multidistrict litigation].)

Thus, for example, in McGhan Med. Corp. v. Superior Court (1992) 11 Cal.App.4th 804 ( McGhan ), the plaintiffs petitioned for coordination of 300 to 600 breast implant cases pending in 20 different counties. Coordination was denied because the motion judge found that common questions did not predominate “in that the cases involve[d] different implants, different designs, different warnings, different defendants, different theories of defect, different modes of failure, and different injuries.” ( Id. at p. 808.) Among other factors, the trial court concluded that it was impractical to send hundreds of cases to a single county and that the benefits of coordination could be best achieved by voluntary cooperation among the judges in the counties where the cases were pending. ( Id. at p. 808, fn. 2.)

The Court of Appeal reversed in an interlocutory proceeding, ruling the trial court had misconceived the requirements of a coordinated proceeding. ( McGhan, supra, 11 Cal.App.4th at p. 811.) As the appellate court explained, Code of Civil Procedure section 404.7 gives the Judicial Council great flexibility and broad discretion over the procedure in coordinated actions. ( Id. at p. 812.) Thus, on balance, the coordinating judge would be better off confronting the coordination drawbacks (including difficulties arising from unique cases, discovery difficulties, multiple trials, the necessity of travel, and occasional delay) because the likely benefits (efficient discovery and motion practice) were so much greater. ( Id. at pp. 812-814.)

Civil Code section 954 states “[a] thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.” The term “thing in action” means “a right to recover money or other personal property by a judicial proceeding.” (Civ. Code, § 953.) California’s Supreme Court has summarized these provisions by stating: “A cause of action is transferable, that is, assignable, by its owner if it arises out of a legal obligation or a violation of a property right. . . .” ( Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) The enactment of Civil Code sections 953 and 954 lifted many restrictions on assignability of causes of action. ( Wikstrom v. Yolo Fliers Club (1929) 206 Cal. 461, 464; AMCO Ins. Co. v. All Solutions Ins. Agency, LLC (2016) 244 Cal.App.4th 883, 891 ( AMCO ).)

Thus, California’s statutes establish the general rule that causes of action are assignable. ( AMCO, supra , 244 Cal.App.4th at pp. 891-892.) This general rule of assignability applies to causes of action arising out of a wrong involving injury to personal or real property. ( Time Out, LLC v. Youabian, Inc. (2014) 229 Cal.App.4th 1001, 1009; see also, e.g., Bush v. Superior Court (1992) 10 Cal.App.4th 1374, 1381 [“‘assignability of things [in action] is now the rule; nonassignability, the exception. . .’”].)

Although the assignment of claims on behalf of others to an assignee, or group of assignees, is not unique, it has not typically been used as a procedural vehicle for combining the claims of numerous plaintiffs. But, that’s not to say it can’t be done.

In fact, the United States Supreme Court has sanctioned such an approach. In Sprint Communications Co., L.P. v. APCC Services, Inc. (2008) 554 U.S. 269 ( Sprint ), approximately 1,400 payphone operators assigned legal title to their claims for amounts due from Sprint, AT&T, and other long-distance carriers to a group of collection firms described as “aggregators.” ( Id. at p. 272.) The legal issue presented to the United States Supreme Court was whether the assignees had standing to pursue the claims in federal court even though they had promised to remit the proceeds of the litigation to the assignor. ( Id . at p. 271.) The Court concluded the assignees had standing.

In support of its conclusion, the Court recognized the long-standing right to assign lawsuits:

. . . [C]ourts have long found ways to allow assignees to bring suit; that where assignment is at issue, courts — both before and after the founding — have always permitted the party with legal title alone to bring suit; and that there is a strong tradition specifically of suits by assignees for collection. We find this history and precedent ‘well nigh conclusive’ in respect to the issue before us: Lawsuits by assignees, including assignees for collection only, are ‘cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.’

( Sprint , supra , 554 U.S . at p. 285.)

On this basis, the Court concluded:

Petitioners have not offered any convincing reason why we should depart from the historical tradition of suits by assignees, including assignees for collection. In any event, we find that the assignees before us satisfy the Article III standing requirements articulated in more modern decisions of this Court.

( Sprint , supra , 554 U.S at pp. 285-286.)

The Court also considered the argument that the aggregators were attempting to circumvent the class-action requirements of Federal Rule of Civil Procedure 23. ( Sprint, supra, 554 U.S. at pp. 290-291.) The Court rejected this argument as a barrier to aggregation by assignment on the grounds that (1) class actions were permissive, not mandatory, and (2) “class actions constitute but one of several methods for bringing about aggregation of claims, i.e., they are but one of several methods by which multiple similarly situated parties get similar claims resolved at one time and in one federal forum. [Citations.]” ( Id. at p. 291.)

Granted, Sprint arose in the context of Article III, a “prudential standing” analysis. However, in reaching its decision that assignees had standing, the Court relied significantly on three California state decisions addressing assignment of rights under California law. (See Sprint, supra, 554 U.S. at pp. 294-296.)

Under California law, assignment of claims is not a panacea. Not all claims can be assigned. In California, assignment is not allowed for tort causes of action based on “wrongs done to the person, the reputation or the feelings of an injured party,” including “causes of action for slander, assault and battery, negligent personal injuries, seduction, breach of marriage promise, and malicious prosecution.” ( AMCO, supra , 244 Cal.App.4th at p. 892 [exceptions to assignment also include “legal malpractice claims and certain types of fraud claims”].) Other assignments are statutorily prohibited. (See, e.g., Civ. Code, § 2985.1 [regulating assignment of real property sales contracts]; Gov. Code, § 8880.325 [state lottery prizes not assignable].)

Likewise, because a right of action cannot be split, a partial assignment will require the joinder of the partial assignor as an indispensable party. (See, e.g., Bank of the Orient v. Superior Court (1977) 67 Cal.App.3d 588, 595 [“[W]here . . . there has been a partial assignment all parties claiming an interest in the assignment must be joined as plaintiffs . . . ”]; 4 Witkin, Cal. Procedure, supra, Pleadings, § 131(2), p. 198 [“If the assignor has made only a partial assignment, the assignor remains beneficially interested in the claim and the assignee cannot sue alone”].)

That said, California’s rules of law regarding standing and assignments do not prohibit an assignee’s aggregation of a large number of claims against a single defendant or multiple defendants into a single lawsuit. To the contrary, no limitations or conditions on this type of aggregation of assigned claims is imposed from other rules of law, such as California’s compulsory joinder statute. (See Sprint , supra , 554 U.S. at p. 292 [to address practical problems that might arise because aggregators, not payphone operators, were suing, district “court might grant a motion to join the payphone operators to the case as ‘required’ parties” under Fed. Rules Civ.Proc., rule 19].)

There are many procedural approaches to evaluate when seeking to combine the claims of multiple plaintiffs. Class actions and joinders are more traditional methods that trial counsel rely on to bring claims together. Although a largely unexplored procedural approach, assignment appears to be an expedient way of combining the claims of numerous plaintiffs. It avoids the legal requirements imposed for class actions and joinders, and it sidesteps a trial judge’s discretion regarding whether to consolidate, relate, or coordinate actions. Indeed, under the right circumstances, an assignment of claims might provide a means of bypassing class action waivers in arbitration agreements. Perhaps an assignment of claims should be added to the mix of considerations when deciding how to bring a case involving numerous plaintiffs with similar claims against a common defendant or set of defendants.

Judith Posner

Judith Posner is an attorney at Benedon & Serlin, LLP , a boutique appellate law firm.

Gerald Serlin

Gerald Serlin is an attorney at Benedon & Serlin, LLP , a boutique appellate law firm.

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When Assigning the Right to Pursue Relief, Always Remember to Assign Title to, Or Ownership in, The Claim

• Posted on: Oct 4 2016

Whether a party has standing to bring a lawsuit is often considered through the constitutional lens of justiciability – that is, whether there is a “case or controversy” between the plaintiff and the defendant “within the meaning of Art. III.” Warth v. Seldin, 422 U.S. 490, 498 (1975). To have Article III standing, “the plaintiff [must have] ‘alleged such a personal stake in the outcome of the controversy’ as to warrant [its] invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on [its] behalf.” Id. at 498–99 (quoting Baker v. Carr , 369 U.S. 186, 204 (1962)).

To show a personal stake in the litigation, the plaintiff must establish three things: First, he/she has sustained an “injury in fact” that is both “concrete and particularized” and “actual or imminent.” Lujan v. Defenders of Wildlife , 504 U.S. 555, 560 (1992) (internal quotation marks omitted). Second, the injury has to be caused in some way by the defendant’s action or omission. Id . Finally, a favorable resolution of the case is “likely” to redress the injury. Id . at 561.

When a person or entity receives an assignment of claims, the question becomes whether he/she can show a personal stake in the outcome of the litigation, i.e. , a case and controversy “of the sort traditionally amenable to, and resolved by, the judicial process.’” Sprint Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008) (quoting Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 777–78 (2000)).

To assign a claim effectively, the claim’s owner “must manifest an intention to make the assignee the owner of the claim.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc. , 106 F.3d 11, 17 (2d Cir. 1997) (internal quotation marks and brackets omitted). A would-be assignor need not use any particular language to validly assign its claim “so long as the language manifests [the assignor’s] intention to transfer at least title or ownership , i.e., to accomplish ‘a completed transfer of the entire interest of the assignor in the particular subject of assignment.’” Id. (emphasis added) (citations omitted). An assignor’s grant of, for example, “‘the power to commence and prosecute to final consummation or compromise any suits, actions or proceedings,’” id. at 18 (quoting agreements that were the subject of that appeal), may validly create a power of attorney, but that language would not validly assign a claim, because it does “not purport to transfer title or ownership” of one. Id.

On September 15, 2016, the New York Appellate Division, First Department, issued a decision addressing the foregoing principles holding that one of the plaintiffs lacked standing to assert claims because the assignment of the right to pursue remedies did not constitute the assignment of claims.  Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 2016 NY Slip Op. 06051.

BACKGROUND :

Cortlandt involved four related actions in which the plaintiffs – Cortlandt Street Recovery Corp. (“Cortlandt”), an assignee for collection, and Wilmington Trust Co. (“WTC”), an indenture trustee – sought payment of the principal and interest on notes issued in public offerings. Each action alleged that Hellas Telecommunications, S.a.r.l. and its affiliated entities, the issuer and guarantor of the notes, transferred the proceeds of the notes by means of fraudulent conveyances to two private equity firms, Apax Partners, LLP/TPG Capital, L.P. – the other defendants named in the actions.

The defendants moved to dismiss the actions on numerous grounds, including that Cortlandt, as the assignee for collection, lacked standing to pursue the actions. To cure the claimed standing defect, Cortlandt and WTC moved to amend the complaints to add SPQR Capital (Cayman) Ltd. (“SPQR”), the assignor of note interests to Cortlandt, as a plaintiff. The plaintiffs alleged that, inter alia , SPQR entered into an addendum to the assignment with Cortlandt pursuant to which Cortlandt received “all right, title, and interest” in the notes.

The Motion Court granted the motions to dismiss, holding that, among other things, Cortlandt lacked standing to maintain the actions and that, although the standing defect was not jurisdictional and could be cured, the plaintiffs failed to cure the defect in the proposed amended complaint. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l. , 47 Misc. 3d 544 (Sup. Ct., N.Y. Cnty. 2014).

The Motion Court’s Ruling

As an initial matter, the Motion Court cited to the reasoning of the court in Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch , No. 12 Civ. 9351 (JPO), 2013 WL 3762882, 2013 US Dist. LEXIS 100741 (S.D.N.Y. July 18, 2013) (the “SDNY Action”), a related action that was dismissed on standing grounds.  The complaint in the SDNY Action, like the complaints before the Motion Court, alleged that Cortlandt was the assignee of the notes with a “right to collect” the principal and interest due on the notes. As evidence of these rights, Cortlandt produced an assignment, similar to the ones in the New York Supreme Court actions, which provided that as the assignee with the right to collect, Cortlandt could collect the principal and interest due on the notes and pursue all remedies with respect thereto. In dismissing the SDNY Action, Judge Oetken found that the complaint did not allege, and the assignment did not provide, that “title to or ownership of the claims has been assigned to Cortlandt.” 2013 WL 3762882, at *2, 2013 US Dist. LEXIS 100741, at *7. The court also found that the grant of a power of attorney (that is, the power to sue on and collect on a claim) was “not the equivalent of an assignment of ownership” of a claim. 2013 WL 3762882 at *1, 2013 US Dist. LEXIS 100741 at *5. Consequently, because the assignment did not transfer title or ownership of the claim to Cortlandt, there was no case or controversy for the court to decide ( i.e. , Cortlandt could not prove that it had an interest in the outcome of the litigation).

The Motion Court “concur[red] with” Judge Oeken’s decision, holding that “the assignments to Cortlandt … were assignments of a right of collection, not of title to the claims, and are accordingly insufficient as a matter of law to confer standing upon Cortlandt.”  In so holding, the Motion Court observed that although New York does not have an analogue to Article III, it is nevertheless analogous in its requirement that a plaintiff have a stake in the outcome of the litigation:

New York does not have an analogue to article III. However, the New York standards for standing are analogous, as New York requires “[t]he existence of an injury in fact—an actual legal stake in the matter being adjudicated.”

Under long-standing New York law, an assignee is the “real party in interest” where the “title to the specific claim” is passed to the assignee, even if the assignee may ultimately be liable to another for the amounts collected.

Citations omitted.

Based upon the foregoing, the Motion Court found that Cortlandt lacked standing to pursue the actions.

Cortlandt appealed the dismissal. With regard to the Motion Court’s dismissal of Cortlandt on standing grounds, the First Department affirmed the Motion Court’s ruling, holding:

The [IAS] court correctly found that plaintiff Cortlandt Street Recovery Corp. lacks standing to bring the claims in Index Nos. 651693/10 and 653357/11 because, while the assignments to Cortlandt for the PIK notes granted it “full rights to collect amounts of principal and interest due on the Notes, and to pursue all remedies,” they did not transfer “title or ownership” of the claims.

The Takeaway

Cortlandt limits the ability of an assignee to pursue a lawsuit when the assignee has no direct interest in the outcome of the litigation. By requiring an assignee to have legal title to, or an ownership interest in, the claim, the Court made clear that only a valid assignment of a claim will suffice to fulfill the injury-in-fact requirement. Cortlandt also makes clear that a power of attorney permitting another to conduct litigation on behalf of others as their attorney-in-fact is not a valid assignment and does not confer a legal title to the claims it brings. Therefore, as the title of this article warns: when assigning the right to pursue relief, always remember to assign title to, or ownership in, the claim.

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CACI No. 326. Assignment Contested

Judicial council of california civil jury instructions (2024 edition).

© Judicial Council of California .

Page last reviewed May 2024

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Understanding the cause of action in California legal proceedings

• April 26, 2024

Jennifer Anderson

The precise legal definition of a cause of action is important to understand for legal professionals today.

For many legal practitioners within the State of California, a “cause of action” (or “CoA” as we’ll sometimes refer to it here) is synonymous with litigation – and for good reason. At its core, a CoA is what makes up a valid lawsuit; preparation , as always, is key.

Ultimately, a CoA is the state law equivalent of the “claim for relief” set forth in Federal Rule of Civil Procedure, Rule 8 . It is the legal theory and corresponding set of facts that gives one litigant the right to seek judicial relief against another. 

And while it’s certainly possible to get highly academic and historical about this common mechanism, we’re not going to do that here.

In this article, we simply aim to explore what you need to know about causes of action within the California judicial system – from properly pleading a CoA to the mistakes that might lead to the dismissal of one or more CoAs within a complaint. 

And, just for good measure, I’ll finish off by sharing the best tip I ever received for drafting bulletproof CoAs in California.

Legal definition of a cause of action

The legal definition of a cause of action refers to a set of facts or circumstances that give an individual the right to seek judicial relief. It represents the legal grounds on which a plaintiff can bring a lawsuit against a defendant.

A cause of action must include a legally recognized harm or injury caused by the defendant’s actions or failure to act, as well as the necessary elements to establish liability, such as duty, breach, causation, and damages.

Common types of causes of action include breach of contract, negligence, fraud, and violation of statutory rights.

What makes up a cause of action?

In an effort to avoid legalese, think of a cause of action as a ticket into the courtroom. It’s what a plaintiff must present to the court to say, “Here’s why I believe I’m entitled to some form of legal relief.” Without pleading a valid CoA, you won’t get very far in the process. 

The cause of action starts with two main ingredients: a legal theory and a set of facts. The theory is your legal basis for seeking relief; it’s the rule that you believe has been violated.

The set of facts, on the other hand, is your story. It’s the specific events that occurred that you claim have infringed upon your rights or caused you harm.

Let’s break those down a bit:

Legal theory

Your legal theory is the backbone of your CoA. Whether it’s a breach of contract, negligence, or any other legal violation, your theory must have some basis in statutes or common law.

In California, some legal theories are so common that the court system actually provides form complaints to help litigants properly plead their CoA. As mentioned prior, some examples include breach of contract , general negligence , products liability , and motor vehicle negligence .

That said, the list of legal theories that form the bases of California causes of action is long. So, if you don’t find yours among California’s prepared forms, don’t give up. Somebody, somewhere, has probably sued someone using the same CoA you wish to assert. ( See the last section of this article for more on that).

Statement of facts

It’s one thing to have a solid legal theory, but the facts are what breathe life into your CoA. In fact, the California Code of Civil Procedure requires that litigants plead a “statement of facts constituting the cause of action, in ordinary and concise language .” (Emphasis added). 

The italicized portion of the statute is important. You don’t want to give the court a long-winded recitation of facts that includes extraneous details. Rather, you just want to tell them what they need to know in order to determine whether your lawsuit can proceed. 

This means your facts should address each element of your cause of action. Elements, of course, are the necessary components of a particular claim. For a breach of contract CoA, for example, you’d need to lay out facts showing:

• The existence of the contract, 
• The obligations it created, 
• How those obligations were breached, and 
• The resulting damage to you.

Note that this is one area where California practice varies substantially from Federal practice . While Federal courts generally only require notice pleading ( i.e. , giving just enough detail to let the defendant know what your lawsuit is about), California is a fact-pleading state.

That means your complaint needs to assert specific facts that, if proven, would result in you winning your case.

The importance of getting it right

Even though California has fairly generous policies when it comes to amending complaints , the importance of adequately pleading the elements of your cause of action cannot be overstated.

Indeed, a meticulous approach to drafting CoAs is not just about adhering to procedural formalities; it’s about avoiding costly delays (at best) and having your case dismissed (at worst). 

Specifically, poorly drafted CoAs are the gateway to a demurrer, a procedural challenge that can derail your lawsuit before you and your client ever set foot in a courtroom. Let’s talk about that risk for a moment, shall we?

Understanding the demurrer

A demurrer serves as a sort of bouncer in the California legal process. A demurrer is a responsive pleading that objects to your complaint and asks the court to throw out your lawsuit. And, in case you’re wondering, “failure to state facts sufficient to constitute a cause of action” is one of the chief bases for a demurrer.

In essence, it is the defendant’s first opportunity to scrutinize the sufficiency of the allegations stated in your complaint. By filing a demurrer, the defendant is asserting that, even if everything you’ve claimed is true, your causes of action cannot possibly survive.

And even though demurrers to complaints are rarely favored by California judges , (a) they do cause delays in your case (which always come with costs to your client), and (b) they can give an early signal to your judge that you’re not a careful practitioner.

Indeed, drafting a cause of action that withstands a demurrer’s test isn’t merely about avoiding dismissal; it’s about affirming the legitimacy and seriousness of your legal endeavor.

A well-constructed CoA serves as a testament to the credibility of your client’s grievances, and reinforces the narrative that their claims are worthy of the court’s attention and, ultimately, relief.

Common pitfalls to avoid

Let’s boil all of this down to some cold, hard advice on drafting adequate CoAs. More particularly, let’s begin by recapping what not to do when trying to draft causes of action that will survive a demurrer:

• Lack of specificity: Perhaps the most frequent misstep is failing to provide enough detail. Unlike a claim for relief in Federal Court, a California CoA needs to be more than just a broad assertion; it requires a narrative that clearly outlines how each element of the legal theory is supported by the facts. Generic claims without specifics are ripe for dismissal.
• Overloading information: On the flip side, inundating your CoA with an excess of irrelevant details can dilute its effectiveness. It’s crucial to strike a balance, focusing on the pertinent facts that directly support your legal theory. Again, the goal is to craft a coherent and compelling narrative that guides the court through your reasoning.
• Misunderstanding the legal bases: Applying the wrong legal principles or misinterpreting statutes can fatally undermine your CoA. This includes overlooking updates to laws or relevant case law precedents. Continuous legal education and thorough research are your best defenses against this pitfall.

Hot tip for drafting a bulletproof CoA

One of the best tips I ever got when it comes to drafting demurrer-proof CoAs was handed to me by an older attorney when I was in my first year of practice. When I initially heard his advice, I thought perhaps he’d lost his mind.

“Go look at the jury instructions,” he said.

“Jury instructions?” I thought to myself. “We haven’t even filed the complaint and this guy wants me preparing for trial? That’s preposterous!” 

Oh, how wrong I was.

Once I overcame my young attorney bravado (and after scratching my head over how to draft the complaint for a couple of hours), I followed his advice. And guess what I found? Everything you need to draft the perfect CoA is right there in the California Civil Jury Instructions . 

Let’s say you’re drafting a complaint for breach of contract. Well, Jury Instruction 303 is literally titled “Breach of Contract – Essential Factual Elements.” 

He was right! Everything I needed to allege (and eventually prove) was laid out in black and white.

The instruction read something like this:

To recover damages from Defendant for breach of contract, Plaintiff must prove all of the following:

• That Plaintiff and Defendant entered into a contract;
• That Plaintiff did all, or substantially all, of the significant things that the contract required;
• That Plaintiff was excused from having to [specify things that plaintiff did not do, e.g., obtain a guarantor on the contract];
• That [specify occurrence of all conditions required by the contract for Defendant’s performance, e.g., the property was rezoned for residential use];
• That [specify condition(s) that did not occur] [was/were] [waived/excused];
• That Defendant failed to do something that the contract required;
• That Defendant did something that the contract prohibited;
• That Plaintiff was harmed; and
• That Defendant’s breach of contract was a substantial factor in causing Plaintiff’s harm.

Understanding the legal definition of a cause of action is essential for legal professionals, especially in the California judicial system, where precise and effective drafting can make or break a case.

Properly structuring and pleading causes of action not only enhances the chances of a successful lawsuit but also demonstrates competence and professionalism.

By avoiding common issues such as lack of specificity, overloading information, and misunderstanding the exact legal definition and application of a cause of action and other legal bases, practitioners can craft robust causes of action that withstand procedural challenges.

That’s it, folks. All you have to do is fill in the factual details and, Voila ! You’ve got yourself a bulletproof cause of action. It’s not the equivalent of legal rocket science, but it is important to spend the time to do it right. 

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By Katie E. Brach

In the context of large construction defect litigation, we are seeing more partial settlement strategies involving assignments of claims.  The most common is when the Developer/General Contractor agrees as part of a partial global settlement to assign its indemnity claims against one or more of the Non-Settling Subcontractor Cross-Defendants to the Plaintiff.  In theory, this type of settlement arrangement is beneficial to both the Developer/General Contractor and the Homeowner/Association Plaintiff because it allows the General Contractor to settle out around a stubborn or non-contributing subcontractor without having exposure to the fees and costs associated with a voluntary dismissal of its Cross-Complaint, and it provides the Plaintiff with additional damage claims and an avenue for recovery of attorney’s fees under the assigned subcontract(s).  This type of settlement is also designed to put additional pressure on the non-settling Subcontractor(s) by leaving them exposed to the balance of Plaintiff’s and General Contractor’s claims and essentially placing them in the position of the “last defendant standing” in Plaintiff’s game of musical chairs.  While this strategy may have its advantages in pressuring global resolution, the procedural implications of such a deal (if not properly executed) can be problematic if the case ultimately proceeds to trial.  Therefore, it is important that counsel on both sides carefully consider the terms of any proposed settlement with an assignment before making such a commitment.

First, it is likely the settlement will need to be subject to the Court declaring it in good faith pursuant to Code of Civil Procedure section 877 et seq., which means that a valuation will have to be placed on the assignment. In the context of proving whether the settlement is in “good faith” pursuant to CCP §887.6, the value of the assigned rights is not necessarily going to be the total amount of recoverable damages assigned. In California, the Courts have approved valuations of assigned rights at 20% of the total recoverable value for those rights.   See   Erreca’s v. Superior Court , (1993) 19 Cal.App.4th 1475.  In  Errecas’s , the discounted value was deemed reasonable to account for unknown factors such as the cost of prosecuting the claims, the probability of prevailing on the claims, the likelihood of collecting on any potential judgment, and the increased difficulty in proving a negligence claim as opposed to a strict liability claim.  Id.  at 1496-1499. In addition to placing a value on the assignment, the monetary portion of the settlement will need to be allocated amongst Plaintiff’s claims in support of any good faith motion.  The allocations and value of the assignment will inevitably play a critical role down the road with respect to Plaintiff’s ultimate recovery against the Non-Settling Subcontractors on its direct claims, so Plaintiff and the Non-Settling Subcontractor(s) should be mindful of the arguments they make during the good faith process because those same arguments will apply to the potential off sets available in relation to future jury verdicts or judgments.

Second, if the General Contractor’s Cross-Complaint is being assigned to Plaintiff, all parties need to be cognizant of the application of the assignment, and change in party positions, with relation to the pleadings on file.  Pursuant to Cal. Code Civ. Proc. §368.5, when claims are assigned during a pending action, the action “may be continued in the name of the original party, or the court may allow the person to whom the transfer is made to be substituted in the action or proceeding.”  Therefore, Plaintiff has the option of continuing the prosecution of the General Contractor’s Cross-Complaint against the Non-Settling Subcontractors in the name of the General Contractor, or the Plaintiff can seek to be substituted in as Cross-Complainant in place of the General Contractor.  No action by the Court is required to continue a case in the name of the original party after an assignment of interest in the action.  Cleverdon v. Gray,  (1944) 62 Cal.App.2d 612, 616.  However, if the Plaintiff wants to be substituted in place of the General Contractor, the Plaintiff must bring a motion to the Court to obtain an order for the substitution and seek leave to file a supplemental Cross-Complaint to allege the assignment and substitution.  It is within the trial court’s discretion whether or not to allow the substitution.  Alameda County Home Inv. Co v. Whitaker,  (1933) 217 Cal. 231, 234.

Third, a change in counsel may be necessary and further actions by the General Contractor may be required. In the event of a transfer of interest in a pending action, the attorney for the nominal party/assignor does not automatically cease to be the attorney of record.  Casey v. Overhead Door Corp.,  (1999) 74 Cal.App.4th 112.  If the Plaintiff is going to continue to prosecute the Cross-Complaint in the name of the General Contractor, the Plaintiff’s attorney should substitute in as the attorney of record for the General Contractor (after Plaintiff dismisses its Complaint as to the General Contractor, of course). This is something that counsel for the General Contractor should discuss with his or her client when contemplating an assignment.  The General Contractor should be aware that Plaintiff’s Counsel, who was actively prosecuting claims against the General Contractor, could potentially become the General Contractor’s counsel of record. While control of the continued litigation of the Cross-Complaint will rest solely with the Plaintiff, the General Contractor remains a nominal party to the action with exposure to the potential entry of an adverse judgment against it.  Union Bank v. County of Los Angeles,  (1963) 223 Cal.App.2d 687.

Although the assignment will likely include an assumption by Plaintiff of all liability in connection with the continued prosecution of the Cross-Complaint, including responsibility for all orders and/or judgments entered for or against General Contractor, further legal action by the General Contractor may be required to enforce the provisions of the assignment in the event of an adverse ruling.  Conversely, further legal action by Plaintiff may be required to enforce the provisions of the assignment in the event General Contractor refuses to cooperate with Plaintiff’s requests for assistance in the form of witness testimony or documentation in support of the Cross-Complaint.

In short, an assignment of claims during the pendency of litigation can be a powerful tool in negotiating a settlement, but any counsel recommending an assignment must make sure they fully understand the terms of the assignment and advise their clients of the risks and benefits associated with such an agreement.  For more information regarding assignment of claims, contact Partner Katie Brach in LGC’s San Diego office.

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Filing a Complaint to Start a Civil Lawsuit in California

This Guide provides general information and resources pertaining to filing a civil lawsuit in Sacramento County Superior Court . The steps for filing a lawsuit in other counties, small claims court, family law, probate, or a federal court are not discussed in this Guide.

Forms you may need

All cases require a Complaint. [1] In some cases, there is a fill-in-the-blanks Judicial Council form to use; in other cases, you must research and type your Complaint on 28-line pleading paper. See Step 2 below for more information about selecting complaint forms.

In addition to the Complaint, the Judicial Council forms commonly used when filing a lawsuit are:

• Civil Case Cover Sheet ( CM-010 )
• Summons ( SUM-100 )
• Alternative Dispute Resolution Information Package ( CV\E–100 )

The Sacramento County Superior Court requires two additional forms in unlimited civil cases only :

• Stipulation and Order to Mediation – Unlimited Civil ( CV-E-179 )
• Program Case Notice for Unlimited ( CV\E-143U )

Other counties may have different requirements. Check their Local Rules for information.

Steps required to file a lawsuit

Filing a lawsuit with the court is the first step any plaintiff in a civil case must take to ask the court to decide a dispute. These first papers filed with the court identify who you are suing, the basis for your lawsuit, and the court in which your lawsuit is filed. When you file the paperwork and pay the fee, the court creates a file for your case, and issues a case number.

Research your case

Prior to starting your lawsuit, you will need to research the laws related to your situation. It is essential that you research these issues, because the answers you find will help you select the proper forms or documents to start your case; determine the court where you will file your case; and identify who to name as the defendant(s) in your lawsuit. Some of the legal issues you will want to research include:

Causes of action (legal grounds for your lawsuit)

In every lawsuit, there must be at least one legal cause of action. A cause of action is the specific legal claim for which the plaintiff seeks compensation. In other words, the cause of action is the legal reason why the defendant owes the plaintiff money or other compensation. There are hundreds of available causes of action; you will want to thoroughly research your case, to ensure you’re including all the applicable causes of action.

Every cause of action comprises several “elements,” each of which you will need to prove to win your case. When researching and selecting your causes of action, you will need to pay careful attention to these elements, to determine if you have the facts and evidence necessary to prove each element.

Statutes of limitation (deadline to file the case)

A lawsuit must be filed within a limited amount of time of whatever wrongdoing is alleged in the lawsuit. This deadline is referred to as the statute of limitations. Most of these limitations are defined in the  California Code of Civil Procedure (CCP) §§ 335-366.3 .

The statute of limitations for several common causes of action in California include:

• Personal injury or wrongful death: 2 years (CCP § 335.1).
• Damage to personal property: 3 years (CCP § 338).
• Breach of a written contract: 4 years (CCP § 337).
• Breach of an oral contract: 2 years (CCP § 339).

Determining the appropriate statute of limitations in a case can be deceptively complex. Additionally, research is often required to determine the exact date the statute started running.

Additional restrictions exist if the defendant is a government entity, as government entities and their employees are generally immune from lawsuits that seek damages. In some cases the government is required to waive this immunity, but only if a prospective plaintiff timely files an appropriate claim under the  California Government Claims Act  ( Govt. Code §§ 900  et seq . ). The time limit to file a claim is often much shorter than the statute of limitations for a private individual, typically six months or less. For more information, see our article Claims Against the Government .

Because the failure to file within the statute of limitations or failure to file a required claim in a timely manner is usually fatal to a case, one of your first research goals should be to determine the applicable statute limitations and whether a claim requirement exists in your case.

For more information on researching and calculating statutes of limitations, see our article on Statutes of Limitation .

Venue (choosing the correct court)

As a plaintiff, you have the ability to choose to file a lawsuit, and some degree of choice over where the lawsuit is filed. Typically, a lawsuit is filed in your choice of:

• The county where the real property ( i.e . land) that is the subject of the lawsuit is located ( CCP § 392 );
• The county where the accident or other wrongdoing that is the subject of the lawsuit took place ( CCP § 393 );
• The county where any defendant lives at the time the lawsuit is filed ( CCP § 395 );
• The county where the contract that is the subject of the lawsuit was to be performed ( CCP § 393 ); or
• The county where defendant corporation, LLC, or other business entity has its principal place of business ( CCP § 395.5 ).

A contract may also specify the court that will hear any disputes related to the contract.

If the lawsuit arises out of a loan or other extension of credit that was primarily for:

• personal or household use ( CCP § 395(b) ),
• a retail installment contract ( Civil Code § 1812.10 ),
• a financed automobile ( Civil Code § 2984.4 ),

the plaintiff must file and serve a Declaration or Statement of Venue, stating the facts that allow the case to be heard in the county in which the lawsuit is being filed ( CCP § 396a ). You can find a sample  Declaration of Venue  on our forms page here .

Complete all necessary forms

You will need to complete several forms to begin your case, including:

• Complaint (form or customized pleading, depending on type of case)
• Summons   ( SUM-100 )
• Civil Case Cover Sheet  (CM-010)

The Complaint is the main document you will use to initiate your lawsuit. In it, you will outline your case against the defendant; describe the legal basis for your lawsuit (your causes of action ); provide the facts giving rise to your claim; and explain what you’d like the court to order the plaintiff do, such as pay damages or perform a certain action. The specific forms or documents you will need depend on the nature of your lawsuit.

Judicial Council standardized forms

The Judicial Council has developed fill-in-the-blanks forms for a few common types of lawsuits: breach of contract and personal injury or property damage. You must include the basic Complaint  and  one or more Causes of Action:

Breach of Contract

Complaint- Contract (PLD-C-001)   and one or more :

• Cause of Action- Breach of Contract (PLD-C-001(1) )
• Cause of Action- Common Counts ( PLD-C-001(2))
• Cause of Action- Fraud (PLD-C-001(3))

Personal Injury/Torts

Complaint- Personal Injury, Property Damage, Wrongful Death (PLD-PI-001 )  and one or more :

• Cause of Action- Motor Vehicle (PLD-PI-001(1))
• Cause of Action- General Negligence (PLD-PI-001(2))
• Cause of Action- Intentional Tort (PLD-PI-001(3))
• Cause of Action- Premises Liability (PLD-PI-001(4))
• Cause of Action- Products Liability (PLD-PI-0 01(5) )
•   Exemplary Damages Attachment (PLD-PI-001(6))

For instructions on completing a Complaint using fill–in–the–blank forms, see Chapter 5 of  Win Your Lawsuit  ( KFC 968 .Z9 D86  (Self-Help)).

All Other Cases:

If there is no fill-in-the-blank form, you will need to research and write the complaint yourself, using 28-line pleading paper. Pleading paper pre-formatted for Sacramento County Superior Court may be downloaded from our website. You will still need the Judicial Council forms for Summons and Civil Case Cover Sheet.

Make copies

After completing and signing your forms/pleadings, make two additional copies of your documents, and assemble your packet for filing as follows:

• Original  Civil Case Cover Sheet  (CM-010), and two copies, together in one packet
• Original  Summons  (SUM-100), and two copies, together in one packet
• Original  Complaint  with all causes of action and attachments, and two copies, together in one packet.

In Sacramento, the  original  of each multiple-page document is  not stapled , while each of the  copies  is  stapled . ( Sacramento County Superior Court Local Rule 2.02 .) Each county has its own rules regarding this, so if you are filing in another court, be sure to check that court’s rules. In counties that use physical files for documents, rather than scanning them, originals must be two-hole punched at the top of the page. Two-hole punching in Sacramento is optional.

File your documents

In Sacramento, new complaints are filed in the drop box in Room 100 on the first floor of the  Gordon D. Schaber Courthouse  at 720 Ninth Street in downtown Sacramento.

4.1: Determine your filing fee

The filing fees currently range between $225 and $435, depending on the type of case, and damages demanded. Current fees are available on the Sacramento County Superior Court’s fee schedule or the website of your local court. Payment must be made by check or cashier’s check only. If you qualify for a fee waiver, you may file a request with the court along with your Complaint, instead of the fee. For more information, see our guide on Fee Waivers .

Step 4.2: File your documents in the drop-box

Near the dropbox, you will find a supply of  Civil Document Drop-Off Sheets  and a date stamp machine. Date-stamp the back of each of your original documents. This will be the filing date of your documents.

Following the instructions posted at the drop box, place your documents in the drop box. Be sure you include:

• Civil Document Drop-Off Sheet;
• The packets you made in Step 3;
• A check or cashier’s check for the filing fee, or the Fee Waiver forms if asking the court to waive the filing fee;
• Self-addressed stamped envelope, if you want the court to return a filed/endorsed copy of these documents to you. Be sure to include sufficient postage to return your document packet.

The court will process your paperwork and scan it into the electronic filing system. This may take several weeks; the Sacramento Court’s Civil Department page lists the dates of documents currently being processed. If you included a self-addressed stamped envelope, the court will return a filed/endorsed copy to you. Otherwise, you may download endorsed copies of your documents at no charge from the Sacramento Court’s Public Portal .

Have your documents served

Once you receive the endorsed copies, you must arrange to have each defendant served. Service must be completed by someone over the age of 18, who is not a party to the case. This can be the Sheriff’s Civil Bureau, a registered process server, an attorney, or a friend or family member who is over 18 and not a party in the case.

Each defendant must be served with a stamped copy of:

• Summons  (SUM-100)
• Complaint  plus all causes of action
• ADR Package

If you are filing an unlimited civil case in Sacramento County, you must also serve:

• Stipulation and Order to Mediation – Unlimited Civil  (CV-E-MED-179 )
• Program Case Notice for Unlimited  (CV\E-143U)

You may make as many photocopies of the endorsed documents as necessary. Service of photocopies is acceptable.

The defendant must usually be served by the server handing it directly to the defendant. For more about service of the summons and complaint, see the California Courts’ guide on “Service of Court Papers.”

What’s next?

If the defendant files an Answer (or other response), the parties begin the long process of preparing for trial. There will be many more documents to file and serve throughout the lawsuit. For an overview, see our article, “ Steps in a Lawsuit .”

If the defendant does not file an answer, you can request a default judgment after their time to respond runs out. This prevents them from filing anything in the case (other than a request to set aside the default judgment). But be aware that the defendant can file an answer late if you have not yet filed your request for default . For more information, see our guides on Requesting a Default Judgment by Clerk and Requesting a Default Judgment by Court .

SH@LL (Self-Help at the Law Library) (formerly Civil Self Help Center) 609 9 th Street, Sacramento CA 95814 (916) 476-2731 (Appointment Request Line)

Services Provided: SH@LL provides general information and basic assistance to self-represented litigants on a variety of civil legal issues, including name changes. All assistance is provided by telephone. Visit “What we can help with ” for a list of qualifying cases.

Eligibility: Must be a Sacramento County resident or have a qualifying case in the Sacramento County Superior Court.

For more information

The following books have information about the process of filing and prosecuting a lawsuit, and/or information about the causes of action you may wish to include. They are all available at the Law Library.

California Civil Practice: Procedure ( KFC 995 .A65 B3 (Vol. 2, Chap. 7))

California Civil Procedure Before Trial ( KFC 995 .C34 (Vol. 2, Chap. 15)). Electronic Access: On the Law Library’s computers, using OnLaw.

California Causes of Action ( KFC 1003 .C35 ). Electronic Access: On the Law Library’s computers, using VitalLaw .

California Elements of an Action ( KFC 1003 .S74 )

California Forms of Pleading and Practice ( KFC 1010 .A65 (Ready Reference)). Electronic access: On the Law Library’s computers, using Lexis Advance . Includes common topics such as:

• Attorney Professional Liability, Vol. 7, Chap. 76
• Automobiles, Vol. 8, Chaps. 80-92
• Claim and Delivery, Vol. 12, Chap. 119
• Contract, Vol. 13, Chap. 140
• Conversion, Vol. 13, Chap. 150
• Injunctions, Vol. 26, Chap. 303
• Libel and Slander, Vol. 30, Chap. 340
• Medical Malpractice, Vol. 36, Chap. 415
• Negligence, Vol. 33, Chap. 380
• Partition of Real Property, Vol. 35, Chap. 397
• Premises Liability, Vol. 36, Chap. 421
• Products Liability, Vol. 40, Chap. 460

California Jurisprudence 3d (CalJur 3d) ( KFC 80 .C35 (Ready Reference))

California Practice Guide: Civil Procedure Before Trial ( KFC 995 .W45 (Vol. 1, Chap. 6; Forms Volume, Chap. 6))

California Practice Guide: Civil Procedure Before Trial: Statutes of Limitations ( KFC 995 .W45)

California Practice Guide: Civil Procedure Before Trial: Claims and Defenses ( KFC 995 .W45 )

Litigation By the Numbers ( KFC 995 .G67 (Chap. 1))

Win Your Lawsuit ( KFC 968 .Z9 D86 (Self-Help))

• A few types of specialized cases require a Petition. These always require additional research and are not covered in this guide. ↑

This material is intended as general information only. Your case may have factors requiring different procedures or forms. The information and instructions are provided for use in the Sacramento County Superior Court. Please keep in mind that each court may have different requirements. If you need further assistance consult a lawyer.

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Bush v. Superior Court (Rains) (1992)

WILLIAM BUSH et al., Petitioners, v. THE SUPERIOR COURT OF SACRAMENTO COUNTY, Respondent; D. W. RAINS et al., Real Parties in Interest.

(Superior Court of Sacramento County, No. 516498, Joe S. Gray, Judge.)

(Opinion by Blease, Acting P. J., with Sims and Scotland, JJ., concurring.) [10 Cal. App. 4th 1375]

Wilke, Fleury, Hoffelt, Gould & Birney, Philip R. Birney, Peter J. Pullen, Hardy, Erich, Brown & Wilson and John Quincy Brown III for Petitioners.

No appearance for Respondent.

Shernoff, Bidart & Darras, Randy D. Curry and William M. Shernoff for Real Parties in Interest.

BLEASE, Acting P. J

In this mandamus proceeding we decide that plaintiffs (the Rains) may settle their claims against one concurrent tortfeasor by taking as part of the settlement an assignment of that tortfeasor's American Motorcycle fn. 1 claim for equitable indemnity against other concurrent tortfeasors. The petitioners are defendants in an action brought by the Rains as assignees of the American Motorcycle claim. Petitioners seek relief from the overruling of their demurrers. They say the assignment violates public policy and the action should be abated because there is another action pending on the same cause of action, the Rains' personal injury tort action against them. We issued an alternative writ of mandate to consider the novel questions of law posed.

We will deny the petition. The California rule is that a chose in action is presumptively assignable ( Civ. Code, §§ 953, 954) and petitioners have shown no good reason why they should be excepted from its application.

Petitioners' most troublesome claim is that if the Rains prevail in both the indemnity and tort actions they will recover more than full compensation for their injuries because the assignment has value only if the settling tortfeasor paid more for the Rains' injuries than is warranted by its comparative share of fault. The rhetorical force of this argument lies in the failure to recognize that in the indemnity action the Rains stand in the shoes of the settling party; it is the settling party's money that is in issue. If the assignment has value it is the petitioners who seek a windfall, an offset of the excess paid by the settling party which is attributable to petitioners' share of fault.

Thus, we will reject petitioners' claim for two reasons. First, if such a recovery occurs it will not be at the expense of petitioners-the most they [10 Cal. App. 4th 1379] will be asked to bear is "liability for damage ... in direct proportion to their respective fault," the same exposure to liability that existed before the assignment. (Li v. Yellow Cab Co. (1975) 13 Cal. 3d 804 , 813 [119 Cal. Rptr. 858, 532 P.2d 1226, 78 A.L.R.3d 393], italics added.) The Rains would receive by means of the assignment only that to which the settling tortfeasor was entitled. Second, the policy against overcompensation does not outweigh the policy of fostering settlement which is advanced by permitting such an assignment.

Facts and Procedural Background

In light of the generic nature of petitioners' claims the necessary background may be stated briefly. After their home burned, D. W. and O. L. Rains, real parties in interest, sued their fire insurance carrier, State Farm Fire and Casualty Insurance Company (State Farm), alleging that in bad faith it failed to pay benefits due them under the insurance policy and that O. L. Rains suffered consequential and severe emotional distress. In a separate action O. L. Rains sued petitioners Robert Wright and William Bush for medical malpractice and American Therapeutics, Inc., for products liability alleging that permanent physical injuries arose from the side effects of a drug prescribed in the treatment of the emotional distress.

The Rains settled the bad faith action with State Farm for $1,750,000 and an assignment of its claims against the petitioners and American Therapeutics, Inc., for equitable indemnity. The Rains then filed the complaint in this action for the amount paid by State Farm to them which is attributable to petitioners' comparative fault. Petitioners demurred on grounds that the complaint failed to state a cause of action and that there is another action pending between the same parties on the same cause of action. The superior court overruled the demurrers.

Introduction

In Li v. Yellow Cab Co., supra, 13 Cal. 3d 804 , the California Supreme Court discarded the common law rule under which a plaintiff's contributory negligence barred recovery in tort. It adopted a rule of comparative negligence, "a system under which liability for damage will be borne by those whose negligence caused it in direct proportion to their respective fault." (Id. at p. 813, fn. omitted.) In American Motorcycle, supra, 20 Cal. 3d 578 , it discarded the analogous all-or-nothing cause of action for equitable indemnity between tortfeasors and replaced it with a rule of partial indemnity. "In [10 Cal. App. 4th 1380] order to attain [the system envisioned in Li], in which liability for an indivisible injury caused by concurrent tortfeasors will be borne by each individual tortfeasor 'in direct proportion to [his] respective fault,' we conclude that the current equitable indemnity rule should be modified to permit a concurrent tortfeasor to obtain partial indemnity from other concurrent tortfeasors on a comparative fault basis." (Id. at p. 598.)

The issues are whether such a cause of action lawfully may be assigned to the plaintiff, and if so, whether an action upon the assignment can be maintained when the plaintiff is also suing other concurrent tortfeasors on the underlying tort. Petitioners contend that in these circumstances an action on the assignment would offend traditional principles of equity and indemnity and violate public policy.

A. An American Motorcycle Claim Is Assignable to a Third Party.

[1] The right to equitable indemnity stems from the principle that one who has been compelled to pay damages which ought to have been paid by another wrongdoer may recover from that wrongdoer. [2a] Petitioners argue that the Rains' complaint is deficient because it fails to plead that they were compelled to pay damages. The argument neglects the elementary consideration that an assignee of a chose in action does not sue in his own right but stands in the shoes of the assignor. (See, e.g., Brown v. Guarantee Ins. Co. (1957) 155 Cal. App. 2d 679 , 695-696 [319 P.2d 69, 66 A.L.R.2d 1202].) A thing or chose in action would never be assignable if the assignee independently had to meet the requirements already satisfied by the assignor. If he could meet the requirements he would need no assignment; if not he could not use the assignment.

Under the early English common law the doctrines of champerty and maintenance prohibited an assignment of a chose in action. (See, e.g., 14 Am.Jur.2d, Champerty and Maintenance, § 1, p. 842.) In California this common law doctrine has been superceded by statute. [3] " [S]ections 953 and 954 of the Civil Code [of 1872] have lifted many of the restrictions imposed by the rule of the common law upon this subject." (Wikstrom v. Yolo Fliers Club (1929) 206 Cal. 461, 464 [274 P. 959]; Jackson v. Deauville Holding Co. (1933) 219 Cal. 498, 501 [27 P.2d 643].) These presently provide: "A thing in action is a right to recover money or other personal property by a judicial proceeding." ( Civ. Code, § 953.) "A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner." ( Civ. Code, §§ 954, 1458.) [10 Cal. App. 4th 1381]

These statutes establish the policy of the state, the " 'assignability of things [in action] is now the rule; nonassignability, the exception; and this exception is confined to wrongs done to the person, the reputation, or the feelings of the injured party. ...' " (Webb v. Pillsbury (1943) 23 Cal. 2d 324 , 327 [144 P.2d 1, 150 A.L.R. 504], brackets in Webb; see also Wikstrom, supra, 206 Cal. at p. 463; Jackson, supra, 219 Cal. at p. 500.) [2b] For this reason it is petitioners' burden to show that some exception to the rule applies in this case. They fail to do so.

They argue that no precedent has "authorized" a plaintiff in a tort action to acquire an American Motorcycle claim by assignment. They offer nothing to suggest that such a claim is per se unassignable, e.g., unassignable to a bona fide third party purchaser. The thing assigned is not a wrong which is personal to the holder of the right of indemnity, as is shown by analogous rights which have been held assignable. [4] For example, a subrogation right is assignable. (See, e.g., Quinn v. Warnes (1983) 144 Cal. App. 3d 309 [ 192 Cal. Rptr. 660 ], upholding an assignment of subrogation rights by a worker's compensation insurance carrier to the third party tort defendant.)

A subrogation right bears a strong resemblance to the right to equitable indemnity sanctioned by American Motorcycle.

"Subrogation is an equitable remedy which arises under the following basic circumstances: (1) The obligor (defendant) owes a debt or duty of some kind to the creditor (subrogor). (2) The subrogee (plaintiff), pursuant to his own obligation to the creditor, pays that debt or discharges that duty. (3) These circumstances make it inequitable that the subrogee should bear the loss while the obligor is unjustly enriched." (4 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 112, p. 147, original italics.) Under American Motorcycle the tortfeasor from whom the plaintiff first recovers is in effect a subrogee, entitled to recover insofar as it has borne liability for damages attributable to the fault of other concurrent tortfeasors.

Another analogous remedy is contribution. (See 4 Pomeroy, Equity Jurisprudence (5th ed. 1941) § 1416, p. 1070.) While we have found no California authority on point, out-of-state cases hold that such a chose in action is assignable. (See, e.g., McKay v. Citizens Rapid Transit Co. (1950) 190 Va. 851 [59 S.E.2d 121, 20 A.L.R.2d 918].)

[2c] Thus, if the assignment of an American Motorcycle claim offends traditional doctrines of indemnity it must arise from the status of the assignee as the plaintiff in the tort action rather than the fact of assignment per se. [10 Cal. App. 4th 1382] B. Assignment of an American Motorcycle Claim to a Tort Plaintiff Offends No Traditional Principle of Indemnity.

The Rains rely on Fortman v. Safeco Ins. Co. (1990) 221 Cal. App. 3d 1394 [ 271 Cal. Rptr. 117 ] as a precedent upholding an "assignment of a cause of action for equitable indemnity" to the tort plaintiff. In that case the plaintiff in a tort action settled with the defendant and his excess insurance coverage carrier; the latter settlement was for $1,125,000 of its $2 million policy limits and an assignment of its equitable subrogation claim against the defendant's primary insurer. The primary insurer had repeatedly rejected settlement offers within the primary insurance policy limits. (Id. at pp. 1396-1397.) While Fortman is an example of an assignment of a subrogation claim to the original obligor, it furnishes little precedential support because the issue whether such an assignment could be made was not discussed.

[5] (See fn. 2.) However, Fortman does point to a closely related claim as to which assignment to the tort plaintiff has been sanctioned by case law, a first party insurance bad faith claim. fn. 2

"We have thus determined that the insured's cause of action for wrongful refusal to settle could validly pass to the trustee in bankruptcy and be assigned by him to others. Therefore, the complaint states facts sufficient to constitute a cause of action by plaintiff (as successor in interest of the insured) against defendant. This result may seem anomalous in that the plaintiff, who previously offered to settle his claim for $5,000, has now acquired the right to maintain against defendant insurer an action which arose by reason of that offer to settle. But it must be borne in mind that plaintiff merely stands in the shoes of the insured; it is the insured who has allegedly suffered the wrong at the hands of the insurer. It might be said that the result reached herein will cause more injured claimants to propose settlement for the policy limit when the insurance company is defending the action against an insured who is apparently judgment-proof. Yet the insurer has nothing to fear so long as its refusal to settle is made in good faith. And it is fundamental that the law favors settlements." (Brown, supra, 155 Cal.App.2d at pp. 695-696, cited with approval in Comunale v. Traders & General Ins. Co. (1958) 50 Cal. 2d 654 , 661 [328 P.2d 198, 68 A.L.R.2d 883]; also see Critz v. Farmers Ins. Group (1964) 230 Cal. App. 2d 788 [41 Cal. Rptr. 401, 12 A.L.R.3d 1142], upholding against an argument it violates public policy such an assignment made prior to judgment in return for a covenant not to execute on the judgment.) [10 Cal. App. 4th 1383]

A first party bad faith claim for an insurance company's refusal to settle also resembles a subrogation claim. The insured, in suffering an excess judgment or exposure to an excess judgment, is called upon to bear a portion of the tort plaintiff's loss that should have been "borne" by the insurer by accepting the earlier settlement offer within policy limits. Accordingly the insured's incremental loss is shifted to the insurance company obligor.

Petitioners argue that Fortman is inapposite. Presumably they would make the same argument as to first-party insurance bad-faith-claim assignments. Both kinds of claim are related to the plaintiff's underlying tort cause of action. In both the recovery is calculated based on plaintiff's tort damages ascertained at trial. It is true that the conduct of the defendant upon which the bad faith claim is founded differs from that here. In bad faith cases the pertinent conduct is the failure to settle in good faith. In the American Motorcycle context it is the nonsettling defendant's tortious conduct which causes harm to plaintiff, considered in comparison to the culpable conduct of the settling defendant. That is a closer relationship to the issues in the underlying tort action. However, petitioners do not explain why the greater degree of convergence is meaningful.

Petitioners suggest as to a bad faith claim that assignment is permitted in part because it vindicates the policy that insurance companies should fulfill their legal obligations to settle in good faith. However, one might as easily say that the assignment of an American Motorcycle claim vindicates the policies expressed in Li and in the defendant's duty in tort, i.e., that the defendant bear liability for plaintiff's harm in full proportion to the share of fault. Petitioners do not suggest in what manner their arguments bear on "traditional equity and indemnity principles." We find them unpersuasive.

[6a] Petitioners argue that the assignment cannot be upheld because the settlement was collusive as a matter of law, i.e., it "aimed to injure" their interests. However, as we shall show, petitioners are not exposed to any greater liability or burden than would be the case without the assignment.

Lastly, petitioners argue that equitable indemnity will not lie on behalf of a tortfeasor who has intentionally injured the plaintiff and that the Rains pled intentional infliction of emotional distress in their complaint against State Farm. We have no occasion to reach the merits of this claim. The Rains' complaint against State Farm states causes of action for negligent and intentional torts. There is no way at this stage in the proceedings to ascertain the validity of or the weight of these claims. Assuming that recovery is legally barred on this ground the nature of State Farm's conduct is a matter of fact that must be placed in issue in the indemnity action by petitioners' answers. [10 Cal. App. 4th 1384] C. The Demurrers Should Not Have Been Sustained on the Ground of Abatement.

[7a] Petitioners argue that the trial court should have sustained their demurrers because "[t]here is another action pending between the same parties on the same cause of action." ( Code Civ. Proc., § 430.10, subd. (c).) However, the American Motorcycle indemnity action and the plaintiff's tort action are not on the same cause of action.

[8] The identity of two causes of action is determined by a comparison of the facts alleged which show the nature of the invasion of plaintiff's primary right.

"California follows the 'primary right theory' of Pomeroy: 'Every judicial action must therefore involve the following elements: a primary right possessed by the plaintiff, and a corresponding primary duty devolving upon the defendant; a delict or wrong done by the defendant which consisted in a breach of such primary right and duty; a remedial right in favor of the plaintiff, and a remedial duty resting on the defendant springing from this delict, and finally the remedy or relief itself. ... Of these elements, the primary right and duty and the delict or wrong combined constitute the cause of action. ...' " (4 Witkin, Cal. Procedure, supra, Pleading, § 23, pp. 66-67, original italics.)

[7b] The primary right in O. L. Rains's tort action is his right to freedom from bodily harm caused by negligence. The primary right in the American Motorcycle indemnity action is State Farm's right to freedom from disproportionate liability for damages attributable to the negligence of the concurrent tortfeasors. These are different primary rights. Even as pled the tort actions against State Farm and petitioners are based upon different causes of action. (See Ash v. Mortensen (1944) 24 Cal. 2d 654 , 657 [150 P.2d 876].)

Petitioners argue that the causes of action are identical because a finding in either action on a petitioner's negligence would be res judicata in the other action. That is not correct. It rests on a confusion between issue and claim preclusion. (See Rest.2d Judgments, §§ 17-19, 27.) A finding in either action would give rise to collateral estoppel, or issue preclusion. But, because the causes of action are not the same, it would not give rise to res judicata or claim preclusion.

[9] That brings us to petitioners' facially appealing argument-that the Rains should not be permitted to maintain the action on the assignment [10 Cal. App. 4th 1385] because if they prevail O. L. Rains will obtain more than full compensation for his damages. Petitioners correctly note that neither equitable indemnity nor assignments of choses in action are permitted in derogation of public policy. (See, e.g., Platt v. Coldwell Banker Residential Real Estate Services (1990) 217 Cal. App. 3d 1439 , 1444-1445 [ 266 Cal. Rptr. 601 ].) They submit that the prospect of excess recovery must be nipped in the bud on this ground. We disagree. As in Brown, supra, 155 Cal. App. 2d 697 , we accept the anomaly because the petitioners ought not profit from their wrong and because it advances another public policy-the fundamental policy that the law favors settlements.

There is a possibility of recovery greater than the full measure of damages in tort. If O. L. Rains prevails in the American Motorcycle action he will also recover in his tort action, barring some procedural misadventure. O. L. Rains's recovery in the tort actions against petitioners and American Therapeutics, Inc., cannot exceed the amount of his damages less the portion of the State Farm settlement attributable to those damages. ( Code Civ. Proc., § 877, subd. (a).) The aggregate recovery in the tort actions will equal his damages. Hence, a recovery in the American Motorcycle action would provide him with something more than the amount of his total tort damages as measured by the litigation.

Petitioners rely on the general principle which opposes the granting of relief where the result is a recovery greater than one full measure of compensation. (See, e.g., Ash, supra, 24 Cal. 2d 654 ; 6 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 1322, p. 779.) They cite to Hartley v. St. Francis Hospital (1964) 24 Wis.2d 396 [129 N.W.2d 235], opinion on denial of rehearing (1964) 130 N.W.2d 1, as a precedent for applying this principle to bar the assignment here.

In Hartley the tort plaintiff was crushed by a truck and in the course of treatment he was reinjured by an employee of St. Francis Hospital. Plaintiff settled his action with the truck owner for the liability insurance policy limits and a promissory note, aggregating far less than his claimed damages. He did so by means of a general release in which he failed to reserve explicitly his right to sue the hospital. The "major issue" was whether this settlement barred his tort claim on the theory it was conclusively presumed that the settlement included compensation for the medical malpractice injuries. (24 Wis.2d at p. 400.) The Hartley court held that the claim was barred under the now discredited common law rule that a release discharges the liability of concurrent tortfeasors. (See e.g., Milicevich v. Sacramento Medical Center (1984) 155 Cal. App. 3d 997 , 1006, fn. 12 [ 202 Cal. Rptr. 484 ]; Prosser & Keeton, Torts (5th ed. 1984) pp. 332-334.) The Wisconsin Supreme Court overruled Hartley on this point in Krenz v. Medical Protective Co. of Fort Wayne, Ind. (1973) 57 Wis.2d 387 [ 204 N.W.2d 663 ].) [10 Cal. App. 4th 1386]

The minor issue in Hartley arose out of the plaintiff's efforts to cure the misstep which had doomed his tort claim under the application of the common law rule. Seven months after his ill-advised settlement the plaintiff obtained from the truck owner's insurance company an assignment of any claim for damages it might have had against the hospital and he sought to recover under the assignment. (24 Wis.2d at p. 398.) The Hartley court was not receptive to this stratagem for avoiding the strictures of the common law rule. While perplexed as to the nature of the chose in action assigned (originally viewed as a question of indemnity but changed to subrogation on rehearing), the court refused to sanction the assignment because the settlement and release had fixed the value of his damages at $25,000 and it would be contrary to public policy to allow him a further recovery.

In Krenz, supra, the court suggested that Hartley's original characterization of the chose in action as sounding in indemnity was analytically embarrassing. "If, however, the right of the first tortfeasor were simply based upon his payment of a claim, part of which the doctor should have paid, the first tortfeasor's right against the doctor logically would not have been derived from the injured party but would be one of indemnity. This theory, while adopted in the opinion of the court, was repudiated on rehearing and the subrogation theory that the first tortfeasor in the settlement acquired the right of the injured party to sue the doctor was adhered to." (204 N.W.2d at p. 669.)

The force of Hartley, as a precedent on the point for which petitioners cite it, is diminished by its argumentative shortcomings and reliance on a common law rule which has now been repudiated in Wisconsin. Under California law the Rains' chose in action is not predicated upon the subrogation of their cause of action, but upon equitable indemnity, the assignment of State Farm's payment of a claim which petitioners ought to have paid. Aside from these analytic concerns, the facts of this case critically differ from those in Hartley.

The assignment of State Farm's American Motorcycleequitable indemnity claim occurred as a part of the consideration for a settlement. California has a strong public policy in favor of encouraging settlement. (See, e.g., American Motorcycle, supra, 20 Cal.3d at p. 603; Milicevich, supra, 155 Cal.App.3d at p. 1006; Brown, supra, 155 Cal.App.2d at p. 696.) Sanctioning the assignment of an American Motorcycle chose in action to the tort plaintiff fosters settlement with the tortfeasor most willing to settle. In this case the [10 Cal. App. 4th 1387] assignment appears to have been a valuable consideration to the Rains, since they bargained for it in the settlement agreement. fn. 2

We do not disagree with the public policy that, all things being equal, the plaintiff should recover no more than full compensation for an injury. A cause of action is not a lottery ticket. But, as with every such policy, the policy against excess recovery must be balanced against other germane public policies. (See Roe v. Workmen's Comp. Appeals Bd. (1974) 12 Cal. 3d 884 , 888 [117 Cal. Rptr. 683, 528 P.2d 771].) In Roe, for example, the Supreme Court held that, despite the policy against excess recovery, a workers' compensation insurance carrier could not obtain a credit before the Workers' Compensation Appeals Board, notwithstanding a full third party recovery, if the employer had been negligent.

[10] California law, in the main, adheres to the collateral source rule. (See, e.g., Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal. 3d 1 , 10-14 [84 Cal. Rptr. 173, 465 P.2d 61, 77 A.L.R.3d 398]; 6 Witkin, Summary of Cal. Law, op. cit. supra, Torts, §§ 1388-1396.) In part this is justified on the ground that, because the injured plaintiff must bear its own attorney fees, the plaintiff rarely receives full compensation for the injuries as computed by the jury in the tort action. (Helfend, 2 Cal.3d at pp. 12-13.) This consideration is applicable here. [6b] A further consideration is that, "[i]n any event, it is clear the possibility of a double recovery in favor of [plaintiff] will not impose a double burden on [the tortfeasor who] bears responsibility only for the single burden of his wrong." (Phillip Chang & Sons Associates v. La Casa Novato (1986) 177 Cal. App. 3d 159 , 170 [ 222 Cal. Rptr. 800 ].)

In this case petitioners, if liable, are subject to damages in the tort action by O. L. Rains measured by his total damages minus the value of the portion of the State Farm settlement attributable to those damages. In the American [10 Cal. App. 4th 1388] Motorcycle assignment action the measure of exposure is the value of the portion of the State Farm settlement attributable to O. L. Rains's tort damages minus State Farm's proportional share of those damages. The result is that the maximum aggregate exposure for each petitioner is O. L. Rains's total tort damages times each petitioner's share of fault-or as American Motorcycle has it, the "liability ... borne by each individual tortfeasor 'in direct proportion to [his] respective fault ....' " (20 Cal.3d at p. 598.) As to petitioners this presents no unfairness.

As Roe, supra, explains, the policy against excess recovery is primarily designed to prevent the imposition of a disproportionate burden on the protected tortfeasor. (12 Cal.3d at p. 889.) When one who is asked to bear no more than his or her proportionate share raises this shield he or she implicitly complains on behalf of another tortfeasor who has borne a disproportionate share. This prompts the rhetorical question: " 'What's Hecuba to him or he to Hecuba, that he should weep for her?' " (Ibid.) Petitioners offer no persuasive argument why they should be allowed to impugn State Farm's settlement and assignment on the ground that State Farm may have borne more than its proportionate share of liability. (Compare 12 West's U.Laws Ann. (1992 pocket pt.) Comparative Fault Act, § 6: settlement does not release other tortfeasors, "However, the claim of the [tort plaintiff] against other persons is reduced by the amount of the released person's equitable share of the obligation ....")

For all of the foregoing reasons, we conclude that the trial court did not err in overruling petitioners' demurrers. The alternative writ is discharged. The petitions are denied.

Sims, J., and Scotland, J., concurred.

FN 1. American Motorcycle Assn. v. Superior Court (1978) 20 Cal. 3d 578 [146 Cal. Rptr. 182, 578 P.2d 899].

FN 2. Such a claim is not fully assignable. The part of the claim, if any, for the insured's emotional distress or punitive damages cannot be assigned. (Murphy v. Allstate Insurance Co. (1976) 17 Cal. 3d 937 , 942 [132 Cal. Rptr. 424, 553 P.2d 584].)

FN 2. Of course, if the Rains prevail on the American Motorcycle cause of action then State Farm gave up something of additional value by agreeing to its assignment. However, the tort plaintiff might place a greater value on the American Motorcycle chose in action than the settling tortfeasor. This could result from a different evaluation of various matters, e.g., the strength of the case against other alleged tortfeasors.

In the kind of case presented here the tort plaintiff may more strongly desire the assignment to eliminate the settling tortfeasor as a future adversary. If there is no assignment State Farm and the Rains have adverse interests after the settlement. To maximize its American Motorcycle recovery State Farm would have an interest in maximizing the amount of the settlement that will be attributed to damages for which it shares responsibility with petitioners. The Rains would have the opposite interest since O. L. Rains's recovery in tort is inversely proportioned to that amount. Petitioners could reasonably insist that these matters be adjudicated in one proceeding to prevent, different answers to this question. But that would effectively place State Farm and the Rains as litigation adversaries despite their settlement.

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When a contract is broken (breach of contract)

A breach of contract case is a case when an agreement or contract is broken (breached). The agreement can be in writing, it can be verbal, or it can be implied from the situation. In these cases, one side argues that the other side broke their agreement and it hurt them in some way. 

On this page

What's a contract and breach of contract 

• Basic things to consider before suing 
• Forms you can use for a breach of contract case 

Things you may want to talk to a lawyer about

A contract is an agreement between two or more parties where each party agrees to do, not do, or pay something according to the terms of the agreement.  The agreement can be written, it can be verbal, it can be verbal but have some documents that show its existence, and it can be implied from the situation.

To sue someone for breaking a contract, there needs to be a valid contract

For a contract to be legally binding and enforceable (which allows someone to sue in court), there must be:

A mutual agreement: Both sides must agree to be bound by their contract and must agree on the essential terms.

An offer and an acceptance: One side makes a clear or definite offer and agrees to be bound by the contract and the other side clearly accepts that offer and to be bound by the contract

Consideration: Each party to a contract must give something of value to the other.  This can be legally complicated so talk to a lawyer if you’re not sure if something of value was exchanged in your situation.

Capacity by all parties: Each party must understand what they’re doing. If someone is a minor or does not have the mental capacity, there may not be an enforceable contract.

Legal purpose: The purpose of the agreement must not break the law. A judge can't enforce a contract to do something illegal, like sell illegal drugs.

Additionally, some types of contracts must be in writing. For example, a contract to buy or sell real estate or that the terms call for carrying on more than a year  must be in writing. If you are not sure if the contract must be in writing, get help from a lawyer.

A breach of contract is when one party to the contract doesn't do what they agreed

Breach of contract happens when one party to a valid contract fails to fulfill their side of the agreement. If a party doesn’t do what the contract says they must do, the other party can sue.

You lend a friend $15,000. You both make a verbal agreement that your friend will pay you within 6 months. 6 months go by and your friend refuses to pay you. You can sue your friend for breach of contract because they did not do what you both agreed. 

You hire a licensed contractor. Halfway through the project, the contractor walks away from the job. You have to hire a new contractor to finish the job and fix some shoddy work from the first contractor. You can sue the first contractor for the money you paid that they did not do the work for, repairs the new contractor had to do, and any other damages you have suffered like costs related to the delay, higher costs for materials, etc.

There are some common defenses to breach of contract

The defendant may argue:

• They did do what your agreement says. This is common in cases where there's a disagreement about what one side agreed to do. For example, a painter agreed to paint the inside of your house. You paid in advance. They painted it with 1 coat of paint. You can still see the old paint through it and you say the painter should have known to paint 2 coats. The painter might argue they did what they said they would, paint the house. 
• You broke the agreement first or it's your fault they couldn't do what they agreed to do. For example, you have a contract with a flooring company to replace all of your flooring. You agree that by Saturday at 8am you will have the house emptied out so they can do their job. They agreed to re-do the flooring of the house by 5pm on Sunday. But, you don't empty the house til Saturday at 4pm. The flooring company may say they couldn't do what they agreed to because you were late emptying out the house. 
• The contract was supposed to be in writing.  This is called the Statute of Frauds, this laws require certain contracts to be in writing. This can be legally complicated so talk to a lawyer if the defendant argues the contract was supposed to be in writing.
• The contract is indefinite —meaning that essential terms of the contract were never agreed to, like if you did not consider the deal to be final, or if a court would not be able to sort out the essentials of the contract.

If you're being sued for a breach of contract because you haven't paid on a debt you owe, check out the  debt collection information .

Basic things to consider before suing

You have to sue before a deadline (statute of limitations).

For a written contract, you generally must file your lawsuit within 4 years of when the agreement is broken. For a verbal contract, you must file it within 2 years of when the agreement is broken. If you're defending yourself and the lawsuit was not filed within the deadline, you can ask the judge to dismiss the case.

Check if your contract says anything about what happens if there's a breach

Sometimes a written contract will have language that says what can happen if one side sues the other.

Arbitration or mediation:  A contract may say you must go to arbitration or mediation before you can sue or be sued. It might even say arbitration is the only option. 

Venue and choice of law: The contract may say either side has to file a lawsuit in a particular state with the laws of that state, not California.

Attorney fees and costs: The contract may say that if one side sues the other, the side that loses pays the other side's attorney fees. 

Where to sue (venue)

For a breach of contract case, the county where the case has to be filed can be any of these places:

• Where the defendant lives or does business
• Where the contract was made
• Where the contract is to be (or was) performed 
• Where the contract was broken

You need to sue the person or business who signed or entered into and then breached the contract. Generally, s omeone cannot sue a third party they do not have a contract with. Only the one who signed or entered into the agreement with you is responsible for the damages to you.

You sign a contract with a cabinet store for kitchen cabinets to be delivered by a certain date. The cabinet store is not the one that’s making the cabinets. They are just the ones selling them to you. They have a cabinet maker they contract with. If the cabinet maker ends up getting really delayed or does shoddy work, you can sue the cabinet store for breach of contract but not the cabinet maker, since your agreement is with the cabinet store.

What are the legal reasons for the lawsuit and what is the proof

A plaintiff needs at least one legal reason, called a cause of action, to file a lawsuit. Every part (element) in that cause of action has to be proven. The defendant should also be aware of what the plaintiff needs to prove and how they can defend themselves.

What damages were suffered 

This could be as straightforward as only the money you’re owed from an unpaid loan plus interest, or the money to buy a product from someone else. But it could get more complicated if the breach caused delays that cost you money, or if the breach caused you to have to hire someone else to do repairs to the work you already paid for. The law limits the types and amounts of damages that can be claimed in a breach of contract case. Basically, the law wants to put the non-breaching party where they should have been if the contract had been performed. Sometimes this is called getting the benefit of the bargain. 

Collect evidence proving your position

Both sides need to get evidence to prove their side. This could be the contract itself or proof of a verbal agreement, receipts or bills showing expenses, letters, emails, other written communication, pictures, and witness statements. It would also include proof that you are not responsible for the breach or are only responsible for part of it, or that there was no breach of contract (or even no contract) at all.

Forms you can use for breach of contract cases

In civil cases, most of the court forms are optional. You can use the optional forms if they work for your case, or you can create your own documents, called “pleadings.” Forms can be easier to use if they are available because they help you know what to ask for.

For the plaintiff

As a plaintiff, you always need a Summons, a Complaint, and at least one cause of action.

• You must use the Summons ( form SUM-100 ) and a  Civil Case Cover Sheet  ( form CM-010 )
• You can use Complaint—Contract ( form PLD-C-001 ) or create your own.

There are several causes of action forms you can use if they fit your situation:

• Cause of Action—Breach of Contract ( form PLD-C-001(1) )
• Cause of Action—Common Counts ( form PLD-C-001(2) )
• Cause of Action—Fraud ( form PLD-C-001(3) )

For the defendant

As the defendant, you have the right to respond to the lawsuit. You must do so within 30 days of being served with the Summons and Complaint. There are several options for how to respond so make sure you read “ Decide what to do if you are sued ” to learn more.

• To answer the lawsuit (which is one of your options to respond), you can use Answer—Contract ( form PLD-C-010 ) or create your own.  You may also be able to use a form called a  General Denial  ( form PLD-050 ). Read the instructions on that form very carefully to make sure you can use it in your case.
• In an answer, you tell the court which parts of the plaintiff’s claim are true and which are not.
• You can also bring up affirmative defenses. These are legal defenses which give you a good reason for not being held responsible for breaking the contract, either as a full defense or partial.

Check out the guide from the Sacramento County Law Library on Answering a breach of contract lawsuit . Most of the information is true for every county in California.

Any side can benefit from consulting a lawyer. But, there are times when it is particularly important to get advice from a lawyer. For example:

The contract has a binding arbitration clause.  This means that the contract says you must go to arbitration and whatever is decided in arbitration is final.

There are major losses or they are very hard to figure out.  If the money lost due to the breach of contract is very high or the losses are hard to calculate, it may be worth paying a lawyer to either make sure you pursue your case correctly or to defend you from a case that could end up costing you a lot of money. 

It's not clear who is at fault.   A lawyer can help in cases where is confusion as to who really is at fault or there are several people who could be at fault. Or if you are or could be partially at fault.

The case is old.  Determining the legal time limit (statute of limitations) for a case can be tricky, and calculating when it started to run can be difficult.  And there are things that may extend the time to file a case. Talk to a lawyer if you think your case is old.

Have a question about Civil lawsuits?

California Supreme Court Overrules Existing Law on Assignment of Claims After Loss

On August 20, 2015, the California Supreme Court issued its unanimous opinion in Fluor Corp. v. Superior Court , Opinion No. S205889, an appeal from Fluor Corp. v. Superior Court (2012) 208 Cal.App.4th 1506, review granted and opinion superseded sub nom. Fluor Corp. v. S.C. (Cal. 2012) 149 Cal.Rptr.3d 675 (" Fluor ").  Petitioner Fluor Corporation asked the California Supreme Court to revisit its opinion in Henkel Corp. v. Hartford Accident and Indemnity Co. (2003) 29 Cal.4th 934 (" Henkel ").

Overruling Henkel , in an opinion written by Chief Justice Cantil-Sakauye, the Court unanimously sided with Fluor, holding that:

For the reasons set forth, Insurance Code section 520 applies to third party liability insurance. Under that provision, after personal injury (or property damage) resulting in loss occurs within the time limits of the policy, an insurer is precluded from refusing to honor an insured's assignment of the right to invoke defense or indemnification coverage regarding that loss. This result obtains even without consent by the insurer — and even though the dollar amount of the loss remains unknown or undetermined until established later by a judgment or approved settlement.

The Court remanded the case to the Court of Appeal for proceedings consistent with the Court's opinion.

The State of the Law Prior to Fluor .

This dispute arises out of the enforceability of anti-assignment clauses that are commonly included in insurance policies.  A typical anti-assignment clause reads:

Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured.

Henkel addressed the issue of whether the insured conveyed its liability insurance policies by operation of law when it sold certain assets to a successor corporation, where those assets included liabilities (i.e., a chemical products business).  Claimants sued the successor corporation for personal injuries allegedly caused by the predecessor corporation's chemical products business.  The predecessor corporation's liability insurers refused to defend the claim against the corporate successor, contesting the assignment of the insurance policies.  The successor corporation sued the liability insurers for refusing to defend. 

Henkel held that anti-assignment clauses in liability insurance policies are enforceable except if:

(1) at the time of the assignment the benefit has been reduced to a claim for money due or to become due, or

(2) at the time of the assignment the insurer has breached a duty to the insured, and the assignment is of a cause of action to recover damages for that breach.

( Henkel at 945.)  In other words, with regard to a liability policy, a court will enforce an anti-assignment clause unless the claim has already been reduced to a judgment or settlement, or the insurer has committed an assignable breach.

Fluor's facts are nearly identical to Henkel's . A successor corporation seeks coverage for asbestos claims under a predecessor corporation's liability policies. ( Fluor at 528.)  The policyholder, seeking to avoid an anti-assignment clause, argues that Henkel was wrongly decided.  The policyholder argues that Henkel ignored California Insurance Code section 520, enacted in 1872, which states "[a]n agreement not to transfer the claim of the insured against the insurer after a loss has happened, is void if made before the loss...."  In other words, Henkel appears to conflict with Insurance Code section 520. 

The Court of Appeal began its opinion by noting:

During the 130 years since its enactment, the 1872 statute has been cited only once. No one raised it in Henkel . This decision will be the second judicial opinion in the history of the state to even mention the statute, and the first to address it.  ( Id. )

After reviewing cases in both California and other states, the court of appeal concluded:

Here is the nub. The 1872 Legislature drew no bright lines and made no controlling pronouncements about liability insurance, or about how "loss" in the context of such policies is to be defined. We see nothing in Insurance Code section 520 or in Henkel to support Fluor–2's assumption that the Supreme Court would have reached a different result had the parties in that appeal briefed or argued the statute's applicability. In the absence of an express legislative directive, stare decisis controls.  ( Id . at 537.)

In sum, Henkel held that a policyholder can assign its rights, despite an anti-assignment clause, only after liability had been established (or a breach occurred).  Fluor Corporation argued, based on statute and on common law grounds, that a policyholder can assign its rights any time after a "loss" has occurred.  In the case of a liability policy, the "loss" is the event that triggers coverage under the policy (e.g., "bodily injury" or "property damage").

The California Court of Appeal in Flour sided with Hartford. The Court of Appeal concluded that section 520 does not apply to liability insurance. The appellate court further suggested that even assuming the statute applies to such policies, it should be construed to reflect the same rule articulated in Henkel .  On appeal to the California Supreme Court, Fluor argued against both propositions. 

The California Supreme Court's Opinion in Fluor .

In a unanimous decision written by the Chief Justice, the Supreme Court agreed with Fluor on both issues.  The Court, applying section 520, found that the statute applies to third party liability insurance, and that, properly construed in light of its relevant language and history, section 520 bars an insurer from refusing to honor an insured's assignment of policy coverage regarding injuries that predate the assignment.  The Court concluded that "It follows that the decision in Henkel, which assessed the proper application of a consent-to-assignment clause under common law principles, cannot stand in view of the contrary dictates of the controlling statutory provisions of section 520." (Slip Op. at 3.)

The Court concluded:

As further explained below, the rule embodied in section 520 is consistent with the overwhelming majority of cases decided before and since Henkel. The principle reflected in those cases — precluding an insurer, after a loss has occurred, from refusing to honor an insured's assignment of the right to invoke policy coverage for such a loss — has been described as a venerable one, borne of experience and practice, facilitating the productive transformation of corporate entities, and thereby fostering economic activity. ( Id .)

In short, after the Fluor decision the law in California is that courts will not enforce anti-assignment provisions in liability insurance policies after the loss has occurred.  With regard to standard occurrence-based liability policies, the "loss" is the coverage-triggering event, such as "property damage" or "bodily injury," and not the finding of liability.

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California Causes of Action

Table of Contents

• Chapter 1 Negligence
• Chapter 2 Emotional Distress
• Chapter 3 Physical Torts
• Chapter 4 Procedural Torts
• Chapter 5 Fraud and Negligent Misrepresentation
• Chapter 6 Products Liability and Commercial Sales
• Chapter 7 Debtor/Creditor: Fraudulent Transfers
• Chapter 8 Business Torts and Actions
• Chapter 9 Real Property Torts
• Chapter 10 Real Estate Broker, Escrow Agent and Notary Liability
• Chapter 11 Contract Actions
• Chapter 12 Defamation and Privacy
• Chapter 13 Insurance
• Chapter 14 Employment
• Chapter 15 Intellectual Property
• Chapter 16 Animal Torts
• Chapter 17 Industrial Injury/Third Party Cases
• Chapter 18 Governmental Tort Liability
• Chapter 19 Wrongful Death/Survival Actions
• Chapter 20 Family Law
• Chapter 21 Defenses

This edition of  California Causes of Action  includes new and updated case law and text throughout the book and 9 new sample complaints. The highlights include:

CHAPTER 1 NEGLIGENCE

Elder and Dependent Adult Abuse

• Distinguishing and defining physical elder abuse and financial elder abuse
• Proof required to establish “recklessness,” “oppression”, “fraud,” and “malice”
• Pleading a causal link between the neglect and the injury, so as to recover enhanced damages

CHAPTER 2 EMOTIONAL DISTRESS

• Establishing a breach of duty owed to direct victim
• Viability of a claim for negligent infliction of emotional distress claims by plaintiffs who witness acts of medical negligence

CHAPTER 12 DEFAMATION AND PRIVACY

• Plaintiff’s burden of proving actual malice when plaintiff is a public figure
• Establishing a level of public activity that elevates a person to public figure status

Intrusion [Invasion of Privacy]

• Establishing a cause of action pursuant to Civil Code §1708.85
• Court’s obligation toward the plaintiff to keep the matter confidential in a Civil Code §1708.85 case

CHAPTER 13 INSURANCE

• Types of claims that can and cannot be assigned
• Enforceability of an “escape clause” between two primary insurers

CHAPTER 19 WRONGFUL DEATH/SURVIVAL ACTIONS

• Viability of claims involving a putative spouse, children of putative spouse, stepchildren or parents

9 NEW SAMPLE COMPLAINTS

• Legal Malpractice
• Negligent Infliction of Emotional Distress – Bystander
• Age Discrimination
• Breach of Contract; Negligent Interference with Prospective Economic Advantage; Violation of Business and Professions Code §17200; Unjust Enrichment
• Wrongful Termination in Violation of Public Policy – National Origin Harassment
• Civil Rights Violations and  Monell  Claim
• Negligence – Personal Injuries
• Negligent Infliction of Emotional Distress – Direct Victim
• Wrongful Termination in Violation of Public Policy – Retaliation; Harassment and Related Causes of Action
• Wrongful Death

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Causes of Action

A “cause of action” is a set of facts or legal theory that gives an individual or entity the right to seek a legal remedy against another. This applies to the filing of a civil lawsuit for such wrongs as property damages, personal injury, or monetary loss, as well as to wrong doings such as battery, theft, or kidnapping. They can arise in employment or contractual matters, or even if the parties have never met before.  A cause of action may come from an act or failure to act, breach of duty, or a violation of rights, and the facts or circumstances of each specific case often have a significant effect on the case. And the cause of action typically gives the victim a right to seek damages or equitable relief.

Below, please find a long list of causes of action in California. One cannot say that is comprehensive--rather, causes of action are perpetually non-exhaustive. New causes of action are being imagined, asserted, and tested in the courts almost every day. Furthermore, new ones are created by the legislature. Nevertheless, the below list includes causes of action in the state of California and the 9th circuit (federal).

Hopefully, this list will assist you in brainstorming your case. Or, in the alternative, it will serve as a check-list to review before finalizing your complaint.

Torts & Statutory Violations

• Defamation (libel & slander; Civ. Code, §§ 43,45, 46(3)-47) • Intentional Infliction of Emotional Distress • Negligent Infliction of Emotional Distress • Negligent Supervision/Retention • Right to Privacy (California common law) • Invasion of Privacy (Cal. Const., Article 1, Section 1) • Public Disclosure of Private Facts (invasion of privacy) • False Light (invasion of privacy) • Improper Disclosure of Health/Medical Information (Civ. Code,  56.20; HIPAA) • Improper Disclosure of Social Security Number (Civ. Code, § 1798.85) • Improper Use of Consumer Credit Report (Civ. Code, § 1785.1) • Improper Use of Investigative Report (Civ. Code, § 1786) • Assault (California common law) • Battery (California common law) • Civil Extortion (California common law) • Fraud and Constructive Fraud (Civ. Code, §§ 1572-1573; 1709-1710) • Sexual Battery (Civ. Code, § 1708.5) • Civil Conspiracy to violate [add tort] (not freestanding, must be paired with violation of a law) • Unfair Business Practices (Bus. & Prof. Code, §§ 17200-17500 et seq.) • Whistleblower Protection Act (CA) (Gov. Code, §§ 9149.20-23, 8547.1-12; 8548.1-5; Whistleblower Health and Safety Code, § 1278.5; Health & Safety Code, § 53298 (health & safety); [note - whistleblowers are also protected under California common law].) • Physician-employee advocating medically appropriate health care (Bus. & Prof. Code, § 2056(c))

Employment, Contract, Termination

• Failure to Hire (based on discrimination/FEHA; Cal. Const. Article One, Section 8) • Public Policy Tort Termination (Tameny tortious discharge) • Tortious Constructive Discharge (forced to resign) • Retaliation (Govt. Code, § 12653; Lab. Code, § 1102.5) • Wrongful Demotion ( Scott v. PG&E, (1995) 11 Cal.4th 454.) • Breach of Contract (oral or written) • Breach of Implied Covenant of Good Faith and Fair Dealing • Intentional Interference with Prospective Economic Advantage • Intentional Interference with Contract • Promissory Estoppel (detrimental reliance on unenforceable promise) • Unjust Enrichment/Quantum Meruit • Conversion (of wages) (California common law) • Conversion of personal property (California common law) • Fraud; Deceit (Civ. Code, §§ 1709-1710; 1534) • Negligent Hire and Retention • FEHA Violations (Gov. Code, §§ 12960, et seq.); Includes:

• Discrimination: based on race, age, sex (includes breast feeding per AB 2386), pregnancy, sexual orientation, gender identity, disability, religion (includes religious dress & grooming practices per AB 1964) veteran or active military status (per AB 556) [based on disparate treatment or disparate impact]
• Sexual Harassment (conduct need not be motivated by sexual desire per AB 292)
• Failure to Prevent Discrimination/Harassment (Govt. Code, § 12940(k))
• Failure to Accommodate Disability (Govt. Code, § 12940(m))
• Failure to Engage in Interactive Dialogue (Govt. Code, § 12940(n))
• Failure to Accommodate Religious Preferences (Govt. Code, § 12940(k))
• Retaliation (Govt. Code, § 12940(h))
• Aiding & Abetting (Govt. Code, § 12940(g))

• Wage Discrimination • Unruh Civil Rights Act Violation (discrimination against non-EE (Civ. Code, §§ 51 et seq.) Wage & Hour, Other Labor Code Violations • Failure to hire, demotion, suspension or discharge from employ because employee engaged in lawful conduct during non-work hours (Labor Code, § 96k) • Discrimination for exercise of rights (Labor Code, § 98.6; AB 262 expanded to include protections for employee engaging in immigration-related activities; AB 254 makes employer liable for criminal extortion for threatening to report immigration status) • Discrimination for filing work comp claim (Labor Code, § 132a) • § 201 wages due on termination (immediate) • § 202 wages due on quitting (72 hours) • § 203 penalties for willful failure to pay discharged/quitting ee • § 210 willful failure to pay - see also Lab. Code §§ 2698 and 225.5 • § 215 makes failure to pay wages due a misdemeanor • § 206.5 forced to sign release for wages due • § 218.5 attys fees for any action relating to non-payment of wages (limited ER’s ability to recover attys fees as prevailing part only if EE brought claim in bad faith per SB 462) • § 221 makes illegal collection back from employee of any wages paid • § 223 makes illegal any deal to pay less than prevailing wage due under statute or contract • § 225.5 penalties (query whether can be demanded under private atty gen.) • § 226 penalty/remedy due to employee’s failure to provide specified info on wage stmts (SB 1255 employee “injury” as failure to provide accurate wage stmts even if no actual injury) • § 226.7 illegal to make employee work during meal or rest period - 1 hr penalty (recovery period required to cool down to prevent employee heat illness per SD 435) • § 227.3 vacation time due at termination • § 229 allows employee to sue in court for wages despite any agreement to arb. • § 230 Jury duty or witness leave • § 230.1 Domestic Violence Leave (includes victims of stalking per SB 288) • § 230.2 Crime Victim Leave (allows victims of crime time off to testify in court) • §230.3 prohibits discrimination against employee for performance of emergency duty as volunteer firefighter, reserve peace officer or emergency rescue personnel • § 230.4 Temporary Training Leave & reinstatement for voluntary firefights, reserve peace officer or emergency rescue personnel (14 days/no retaliation for taking leave per AB 11) • § 230.7 prohibits termination or discrimination against employee for req’d appearance in school after child suspended • § 230.8 protects employee who is parent, guardian or grandparent having custody of child for taking time off (up to 40 hrs/yr) to participate in child’s activities in school • § 232 prohibits retaliation or termination of employer for discussing or disclosing wages or refusing to agree not to disclose wages • § 233 Kin Care Leave (allows use of sick leave for illness of child, parent, spouse) • § 234 makes violation per se where policy counts sick leave as absence 4 • § 351 makes it illegal to take tips from employee • § 353 requires employee to maintain tip records • § 407 Unlawful to require investment or stock purchase • § 432 allows employee to get copy of any writing he has signed • § 432.2 prohibits use of polygraph • § 432.5 forcing employee to sign agreement to engage in illegalities • § 432.7 prohibits requiring applicant to disclose arrest not resulting in conviction or dismissal or info concerning a referral or participation in pre/post trial diversion program • § 432.8 protects employee from disclosing Cannabis possession conviction more than 2 yrs old • § 435 no audio/video recording of employees in bathroom, changing rooms • § 510 work day 8 hours, overtime 1 ½ after 80. • § 512 meal period • § 515(d) requires nonexempt employee’s be paid OT for hours beyond 40 hrs/wk, 8 hrs/day • §752 non-unionized employee’s in smelters or underground mines have right to fair and impartial election to establish workday > 8 hrs • § 923 right to spokesperson of own choosing (pre-empted by NLRA; limited to attorney or coworker representation w/consent) • § 970 misrep (of kind, nature or duration) inducing change of residence for purpose of work, double damages § 972 • § 980 restricts employer from requesting access to employee’s social media • § 230.7 makes termination illegal for parent to visit child’s school • § 232 makes illegal refusal to allow employees to discuss wages • §§ 1025-1028 Alcohol Drug Rehab Leave prohibits ER w/25 or more ees from discriminating/retaliating against employee who believes is denied accommodation to participate in rehab program) • §1041 Adult Literacy Leave (prohibits employee from discriminating/retaliating against employee who believes denied accommodation to enroll & participate in adult literacy program) • § 1050 (misrepresentation to potential new ers) • § 1061(b)(1) Janitorial and building serve ees may not be terminated without cause for 60 days follows change in building services contractor. • §§ 1101-1102 prohibits dx/retaliation against employee for engaging in political choice • § 1102 threat of discharge as coercion of political activity • § 1102.5 whistleblower rights re refusal to engage or threatening to or actually reporting legal violations (see also CAL OSHA type reports, § 6310-6311) (SB 496 modified to protect employee regardless of whether disclosing info is part of job duties & includes complaints based on reasonable belief of violation of local rule or regulation) • § 1102.6 shifts burden of proof to employer to prove by clear and convincing evidence that termination would have occurred regardless of whistle blowing • § 1102.8 requires posting by employer of whistleblower numbers 5 • § 1182.5 min wage $9/hr (effective 7/1/14) and $10/hr after 1/1/16 (AB 10) • § 1194 authorizes civil action regardless of agreement to contrary re min & OT wages due (§ 1194a) attorney fees authorized. • § 1194(a) civil action for unpaid min wage or OT • § 1194.2 double amount • § 1197.1 liquidated damages for willful failure to pay min wage to Lab Comm. • § 1197.5 wage discrimination based on gender (violation of Cal. Equal Pay Act) • § 1197.1 liquidates damages for willful failure to pay min wage • § 1198.3 protects EE who refuses to work hrs in excess of those permitted by IWC orders • § 1198.5 reqs inspection of personnel records w/in 30 days written request ($750 penalty – see also § 226 which requires copies of all wage statements upon EE’s request) • §§ 1400 et seq. WARN (Worker Adjustment and Retraining Notification Act (mass layoff requirements for State of CA; minor differences with fed WARN) • §1450 Domestic Workers Rights Act (OT after 9 hrs/day or 45 hrs/wk) • §1512 Donor Leave (protects EE who took paid leave to donate organ/bone marrow) • § 2699 Private Attorney General Act (PAGA) (administrative exhaustion required) • § 2751 commission agreements must be in writing • § 2802 indemnification to EE • § 2810 require written agreements for certain labor & services contracts (warehouse contractor (AB 1855), construction, farm labor, garment, security guard, janitorial) • § 2856 excuses noncompliance with illegal orders • § 2929 no termination for one judgment’s garnishment (LC notice req’d in some cases) • § 2930 failing to provide copy of shopping investigator’s report before disciplining or terminating when based on report of employee’s conduct, performance or honesty) • § 6310 no discrimination against EE for safety complaints to gov’t (note: complaint to ER is complaint to the gov’t for whistle blowing protection rights) • § 6311 no discharge for refusing to work in violation of Cal OSHA • California Code of Regulations (cite as Cal. Code Regs. Tit 2, section 7286.9A9)(1) (back pay to be in position as if discrimination had not occurred). • § 6399.7 protects EE for complaining/testifying re non-compliance w/ Hazardous Substances Information & Training Act • § 6402 no ER shall require or permit any EE to be in place of employment which is not safe and healthful. • § 6403.5 protects health care worker for refusing to lift, reposition or transfer patient due to concerns re patient/EE safety or b/c of lack of trained lift team personnel or equipment • § 6404 no ER shall occupy or maintain any place of employment that is not safe and healthful • § 6405 no employer shall construct or cause to be constructed unsafe premises. • Industrial Welfare Commission Orders (governs minimum wages, maximum hours and overtime in California, Lab. Code §§ 1173, 1176-1182, 1184-1190; also cited as 8 Cal. Code Regs §§ 11000 et seq. (IWC defunded in 2004 but orders remain operative) 6 • Health & Safety Code § 1278.5 (Health care ER may not discriminate or retaliate for EE making grievance to gov’t re quality of care, services or conditions. • Cal. Fin. Code § 6530 (savings association may not retaliate against whistle blower)

§ 954 Form 1. Assignment—Chose in action | Secondary Sources | Westlaw

§ 954 Form 1. Assignment—Chose in action

Cacf-civ § 954 form 1 jay e. grenig west's california code forms with commentaries, civil  (approx. 3 pages).

What is “Assignment” of a Bad Faith Claim?

When an insurance company fails to settle a claim within its insured’s policy limits (despite a reasonable likelihood that a verdict will exceed those policy limits), the insurance company may be exposed to a claim for bad faith. 

Under the law, an insurance company has a duty to give fair consideration to the rights of its insured when considering a settlement offer. 

Let’s say an insurance company fails to consider its policyholder’s rights in deciding whether to accept a reasonable settlement offer. As a result, the policyholder’s assets are exposed to a judgment in excess of their insurance protection. In this situation, the policyholder may have a bad faith claim against the insurance company.  

For example, a driver of a vehicle who is insured with a policy limit of $100,000 causes an accident that results in over $300,000 in damages to the other driver.  The injured driver wants to settle the case for the $100,000 limit, but the at-fault driver’s insurance company refuses to accept the offer without a reasonable basis for doing so.

The case then proceeds to trial and results in a verdict far exceeding the amount of the coverage available, jeopardizing the policyholder’s personal assets.  In that situation, the policyholder is personally on the hook for $200,000 when their insurance company should have ensured they paid nothing out of pocket. 

If there is a reasonable likelihood of an excess verdict, like when the injured claimant’s medical bills exceed the policy limit, and the insurer still fails to settle the claim, the insurance company has breached its duty of good faith to its policyholder. 

In this situation, the policyholder has the right to bring a cause of action against the insurer, not the injured driver, for the amount of the excess verdict. The policyholder had a contractual relationship with the insurer, and the policyholder is obligated to compensate the injured victim.  Technically, it is the insured who was wronged through their relationship with the insurer.  Thus, the bad faith claim belongs to the insured. 

How does the injured victim get compensated?

Only a small minority of states allow the injured third-party to bring a bad faith action directly against the insurance company. However, in many jurisdictions, including Illinois, the policyholder can transfer, or “assign,” their right to pursue the bad faith claim against the insurer to the injured victim. 

Often, the policyholder will trade their rights to prosecute the bad faith claim, in exchange for an agreement not to execute the judgment against the policyholder’s assets.   Essentially, they trade their case against the insurance company for relief from the judgment.  The assignment of a bad faith claim can be accomplished by a voluntary agreement or may be compelled by an order of the court. 

What happens when an insurance company refuses to defend its policyholder?

Sometimes, an insurance company may refuse to defend its insured in a third-party claim by an injured party.  Insurers may claim that there is no coverage for an occurrence for whatever reason, and because there is no covered event, there is no duty to defend the insured. 

Some courts find that, where an insurer improperly refuses to represent its insured, the insured may settle the claim on their own, directly with the injured claimant, and then seek reimbursement from the insurance company. [i]  

This is often true, even if the policy precludes settlements made without the insurance company’s consent. [ii]   Often where this is the rule, an insured can agree to have a judgment entered against them for a certain amount, and then assign the bad faith claim connected to that judgment to the injured victim. 

In summary, even though a third-party claimant will most likely be unable to pursue a claim for bad faith directly against the offending insurance company, compensation for the injured victim can often be awarded via assignment of the insured’s bad faith claim. 

[i] See, e.g. Ansonia Assoc. Ltd. P’ship v. Pub. Serv. Mut. Ins. Co., 693 N.Y.S.2d 386, 389 (1998)

[ii] See Id.

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U.S. Will Make Millions of Bird Flu Vaccines This Summer

By Robin Foster HealthDay Reporter

MONDAY, June 3, 2024 (HealthDay News) -- As the H5N1 avian flu continues to spread among dairy cows in the United States, nearly 5 million doses of flu vaccine are now being prepared for possible use in humans.

Since the outbreak in livestock began this spring, bird flu has been confirmed in three humans who worked on dairy farms in Texas and Michigan, and health experts are concerned the virus could mutate to the point where it could spread easily among humans.

In response, vaccine maker CSL Seqirus announced last week that it has been tasked with making the additional doses of flu vaccine at its North Carolina plant.

"It utilizes a highly scalable method of production and is currently positioned to deliver up to 150 million influenza vaccine doses to support an influenza pandemic response within six months of a pandemic declaration," the company noted in a  news release .

“The CDC [U.S. Centers for Disease Control and Prevention] maintains the risk to public health as low. We are closely monitoring the situation because we are acutely aware of the threat that influenza virus strains like H5N1 can pose and take seriously our role in preparedness efforts alongside our government and public health partners,” Marc Lacey , global executive director for pandemic at CSL Seqirus, said in the news release. “This agreement... will help support the U.S. government’s ability to respond swiftly in the event that the current avian flu situation changes.”

The new vaccine doses combine an antigen that targets the H5 portion of the H5N1 virus with an ingredient designed to boost the immune response triggered by the vaccine.

While the production of these new flu vaccine doses is set to be completed "later this summer," they may not be ready for use right away.

The U.S. Food and Drug Administration has previously approved other vaccines for potential H5N1 pandemics, including a  vaccine  by Seqirus, but it isn't certain how soon the FDA might clear use of the new shots.

"If it is determined that the U.S. population needs to be vaccinated to prevent H5N1 influenza, then the FDA will use its regulatory pathways to take the appropriate steps to ensure vaccines are available in the timeliest manner possible," an FDA spokesperson told CBS News .

It is unclear who would be prioritized for the first shots if they are eventually rolled out for the public, CBS News reported.

A panel of the CDC's outside vaccine advisers is set to meet June 26 to discuss H5N1 alongside its routine votes on seasonal flu vaccines.

While the CDC says the risk to the general public remains low, the agency has warned that workers on dairy farms and in production facilities are at higher risk of infection and it has urged the industry to take safety precautions.

The latest human case of bird flu in Michigan involved respiratory symptoms for the first time, officials announced Thursday, which could make it easier for the virus to spread from person to person. The two previous patients only experienced eye symptoms.

"Simply put, someone who's coughing may be more likely to transmit the virus than someone who has an eye infection like conjunctivitis," the CDC's Nirav Shah said Thursday, CBS News reported.

The CDC is now investigating whether the strain that infected the latest Michigan patient might have developed key mutations that could raise its risk of spread among humans, CBS News reported.

"The mere fact that this individual displayed some respiratory symptoms, again we should be alert, but in and of itself is not a cause to change course or suggest that we're at an inflection point," Shah told reporters.

More information

The U.S. Centers for Disease Control and Prevention has more on bird flu .

SOURCE: CSL Seqirus, news release, May 30, 2024; CBS News

Copyright © 2024 HealthDay . All rights reserved.

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Ticketmaster Confirms Data Breach. Here’s What to Know.

The hacking group ShinyHunters has claimed responsibility for stealing the user information of more than 500 million Ticketmaster customers.

By Sopan Deb

Ticketmaster confirmed in a federal filing on Friday that it was investigating a data breach after a hacking group known as ShinyHunters claimed responsibility for stealing the information of more than 500 million Ticketmaster customers.

In the filing , with the U.S. Securities and Exchange Commission, Ticketmaster’s parent company, Live Nation Entertainment, said it had “identified unauthorized activity within a third-party cloud database environment.”

Who is behind the breach?

ShinyHunters, a hacker group believed to have been formed around 2020, is believed to have been behind the breach.

Brett Callow, a threat analyst with the cybersecurity company Emsisoft, said it was a “credible threat actor,” though not much more was known about the group.

Its chief aim appears to be to obtain personal records and sell them.

Its past victims have included Microsoft and AT&T, among dozens of other companies in the United States and elsewhere, according to federal prosecutors.

In March, AT&T confirmed a breach in a news release and said it had affected roughly 70 million past or present customers.

In January, the U.S. Department of Justice announced that a 22-year-old member of ShinyHunters — a French citizen named Sebastien Raoult — had been sentenced to three years in prison and ordered to pay more than $5 million in restitution for conspiracy to commit wire fraud and aggravated identity theft.

Who was affected in the Ticketmaster breach?

The hack was first revealed on a May 28 post on a forum called BreachForums.

According to a screenshot of the post shared by Mr. Callow, the group posted that it had the identifying information of 560 million Ticketmaster customers, including credit card numbers and ticket sales.

The group listed its asking price for the data — said to be 1.3 terabytes in size — to be $500,000.

It was not immediately clear when the breach had occurred.

According to Ticketmaster’s public filing, the company first identified “unauthorized activity” on May 20.

“We are working to mitigate risk to our users and the company, and have notified and are cooperating with law enforcement,” the filing said. “As appropriate, we are also notifying regulatory authorities and users with respect to unauthorized access to personal information.”

The F.B.I. did not respond to a request for comment on Friday. Representatives for Ticketmaster did not respond to a request for additional comment.

In its filing, Live Nation said it did not believe the breach would have “a material impact on our overall business operations or on our financial condition or results of operations.”

I’m a Ticketmaster customer. What should I do to protect myself?

For now, Mr. Callow said, it doesn’t appear that customer passwords have been compromised.

But if you do have a Ticketmaster account, you should nonetheless change your password as a precaution, he said.

This is the latest episode to place Ticketmaster under scrutiny.

The Justice Department filed a lawsuit against Live Nation on May 23, calling on a federal court to disband the company over what the government said was the maintenance of an illegally maintained monopoly over the live entertainment industry.

The company has called the government’s accusations “baseless allegations.”

Sopan Deb is a Times reporter covering breaking news and culture. More about Sopan Deb

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