Plaintiff wine company and defendant grower both appealed a judgment from the Superior Court of Fresno County (California), which awarded defendant damages in the form of underpaid sales price, additional harvest expense, interest, and restitution from plaintiff’s breach of the parties’ grape purchase contract, entered a restitution judgment on behalf of nonparty growers, and denied defendant’s claim for attorney’s fees.

Overview

On appeal, plaintiff wine company contended that a “reasonable price” standard should have been applied in calculating contract damages because alleged findings with respect to price, made in connection with an administrative proceeding, were binding through collateral estoppel. The court disagreed and held that the application of the “highest price” standard contained in the parties’ contracts was not precluded because collateral estoppel was not applicable where there was no identity of issue or remedy between the two actions. The court partially affirmed, upholding the award of interest in addition to the statutory late fees in the administrative action as being appropriate under the cumulative remedy provision of Cal. Food & Agric. Code § 55437. Nevertheless, the court then reversed the judgment insofar as it awarded restitution to nonparty growers because of the due process concerns raised by the methods employed by the trial judge. The court concluded by noting that the denial of defendant grower’s motion for attorney’s fees, which had been predicated on the benefit conferred on the nonparty growers, was appropriate in light of the reversal of that judgment.

Outcome

Although the court affirmed the judgment in favor of defendant grower on the award of damages, interest, expense, and restitution because plaintiff wine company had failed to show that all of the elements of collateral estoppel were present, the court reversed the award of restitution to the nonparty growers because of the potential for due process abuses in the method employed by the trial judge in awarding such relief. The class action attorney California counseled the civil litigants during trial to the jurors.

Procedural Posture

Appellant insurer challenged a judgment of the Superior Court of Alameda County (California), which refused to order arbitration despite an arbitration provision in an insurance contract between appellant and respondent insureds.

Overview

Appellant insurer contended that the lower court misapplied governing state case law in refusing to order arbitration despite an arbitration agreement in an insurance contract between appellant and respondent insureds. In the alternative, appellant argued that state case law was preempted to the extent it conflicted with the Federal Arbitration Act (FAA), 9 U.S.C.S. §§ 1 et seq. The court agreed with appellant, and reversed the decision below. The court held that forfeiture of the right to arbitration occurred if the insurer breached the covenant of good faith and fair dealing by engaging in bad faith conduct designed to mislead the insured. Also, state case law was not preempted by the FAA. Consequently, its holding that an insurer forfeited the right to arbitrate if the covenant of good faith and fair dealing was breached did not violate federal law.

Outcome

The judgment was reversed, and the matter was remanded. The trial court improperly refused to order arbitration between appellant insurer and respondent insureds, because under governing state law pertaining to arbitration, appellant had not forfeited its contractual right to arbitration.