The Pendergrass Rule Is Dead.

This month the California Supreme Court overruled Bank of America v. Pendergrass (1935) 4 Cal.2d 258 (Pendergrass). Seventy-five years ago, the Pendergrass court held that the fraud exception to the parol evidence rule could not be used to contradict any of a contract’s stated terms.

In reversing the Pendergrass decision, the Supreme Court in (2013) 2013 WL 141731 found that the Pendergrass rule was poorly reasoned, inconsistent with California law, and “may actually provide a shield for fraudulent conduct.”

The Riverisland decision will have far-reaching effects. In the past, lenders frequently relied on the Pendergrass rule to bar evidence by borrowers of oral promises at odds with the terms of their loans. Both Pendergrass and Riverisland involved claims by borrowers that their lenders had orally promised longer repayment terms than were stated in their loan agreements. The Riverisland decision means consumers can now present evidence of oral promises at odds with their written contracts.

However, this may not be a homerun for consumers. Like many consumers, the borrowers in Riverisland did not read the agreement before signing it. The Supreme Court in Riverisland refused to decide whether the borrowers could have justifiably relied on the lender's promises notwithstanding its decision in Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394 that the negligent failure to read a contract precludes a finding that it is void for fraud. The Riverisland Court left open the possibility of a more lenient rule in cases where equitable relief is sought for fraud in the inducement of a contract.

Bottom line: The Pendergrass rule is dead and the parol evidence rule has been severely diminished. Well-pled claims for promissory fraud will now survive demurrer, but whether they get past summary judgment will depend on the facts of the case. In cases where consumers have not read the agreements before signing them, they will have to show facts establishing that their failure to read the contracts was not negligent given the alleged promises or relationship of the parties.

Avoid Waiving Your Opposition to Evidentiary Objections.

Must a party oppose written evidentiary objections?

The recent decision of Tarle v. Kaiser Foundation Health Plan, Inc., 2012 WL 2529207, though not officially published, answers this question. The Court of Appeal in Tarle concluded that a plaintiff's failure to oppose a defendant's evidentiary objections to her declaration opposing defendant's summary judgment motion waived her right to appeal the trial court's order sustaining those objections.

The Court based its finding on the following principles: (i) a party cannot raise a new theory on appeal; (ii) the proponent of evidence must provide the court with the specific basis for its admissibility (e.g. the applicable hearsay exception, proper foundation, relevance, etc.); and (iii) the failure to offer the proper basis for the admissibility of evidence to the trial court before raising the issue on appeal is both inequitable and inefficient.

Opposition to evidentiary objections may be made prior to or at the hearing, and if properly sought, trial courts may grant parties reasonable continuances to allow for written opposition.

The bottom line: File opposition to objections to your important evidence before the hearing; if you cannot do so, you must oppose the court's order sustaining objections to evidence at the hearing. Failure to do so will result in waiver.

 

 

How to Make an Offer of Proof

In June, the Los Angeles Lawyer Magazine published my article . In the article, I offer advice on how to deal with the preclusion of evidence at trial and on appeal.

California Supreme Court Throws Out the Waiver Rule!

The California Supreme Court's recent decision in is welcomed news for judges and trial lawyers.

Previously, if a trial court failed to rule on objections to summary judgment evidence, the objections were waived and not preserved for appeal. (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670, fn. 1; Sharon P. v. Arman, Ltd. (1999) 21 Cal.4th 1181, 1186-1187, fn. 1.) The waiver rule created tension between overworked judges that are often bombarded with objections to summary judgment evidence, and trial lawyers who were required to request rulings on the objections at least twice at the summary judgment hearing to avoid waiving them. The waiver rule also presented problems for Courts of Appeal: some applied the waiver rule; while others considered evidentiary objections despite the lack of trial court rulings. In Reid, the California Supreme Court disapproved of its decisions Ann M and Sharon P, so the waiver rule and the tension it created are behind us.

Now, things are simple for all concerned. To preserve objections for appeal, litigants must simply object to specific evidence in writing before, or orally at, the summary judgment hearing. See . If the trial court fails to rule on the objections, then "it is presumed that the objections have been overruled, [] the trial court considered the evidence in ruling on the merits of the summary judgment motion, and the objections are preserved on appeal."

The Supreme Court also disapproved of Biljac Associates v. First Interstate Bank (1990) 218 Cal.App.3d 1410, 1419 to the extent that it permits a trial court to avoid ruling on evidentiary objections, and encouraged attorneys to limit their evidentiary objections to those that "really count."

I can't think of a more practical result.

 

Spoliation as Evidence of Guilt

In determining what inferences to draw from the evidence against a party, the jury is permitted to consider a party's willful suppression of evidence. . In Thor v. Boska (2nd Dist. 1974) 38 Cal.App.3d 558, a doctor, who was sued for malpractice, failed to produce his original charts. His explanation was that, after copying the records verbatim to make them more legible, he must have thrown away the originals. The fact that "the defendant was unable to produce his original clinical record concerning his treatment of the plaintiff after he had been charged with malpractice, created a strong inference of consciousness of guilt on his part."

Today, it is increasingly more common for parties to suppress harmful evidence, such as email. If they do, their conduct is admissible at trial. We had a case where the chief executive officer removed back-up tapes of electronic data from the company's safe.  Neither the officer nor the company produced the tapes during discovery. At trial, the officer's removal of the tapes was powerful evidence that helped convince the jury to find fraud and award punitive damages.