The defense theory sounds tidy. Recording a lien is the first step toward foreclosure, so recording a lien is the first step toward litigation. But the Court of Appeal just rejected that logic.

How a Senior Lender Ended Up at the Back of the Line

The lender in Diplomat Property Manager, LLC v. FortiFi Financial, Inc. (Cal. Ct. App., 4th Dist., Div. 1, No. D086371, certified for publication Oct. 20, 2026) traces its position to construction loans its predecessor made to developer Andre Wegner and his company, Top Flight, taking deeds of trust (recorded security interests that let a lender foreclose) as collateral. Top Flight then signed contracts under California’s PACE program, which lets owners finance energy upgrades through their property tax bills. FortiFi, the private administrator, recorded the assessments as tax liens, and by statute those liens outrank the others.

Diplomat alleges FortiFi paid the PACE money up front, with no invoices, to a Wegner-controlled contractor that never completed the work. Top Flight then defaulted on the loans and stopped paying property taxes. A court-appointed receiver (a neutral officer who sells property under court supervision) sold the properties, and because buyers wouldn’t take them subject to the PACE liens, Diplomat says the receiver paid FortiFi first. Diplomat sued for interference, conspiracy to commit fraud, and unfair competition, seeking $844,205 among other relief. The trial court denied FortiFi’s motion to strike.

Recording a Lien Isn’t Anti-SLAPP Petitioning When No Dispute Exists

FortiFi argued that judicial foreclosure (a court-supervised sale) is the only way to enforce a PACE lien, and recording comes first. So, in its view, recording counts as protected prelitigation activity.

The court disagreed. Prelitigation conduct earns protection because it connects to a dispute headed for court. When FortiFi recorded these assessments, nobody had a grievance. Owners sign PACE contracts voluntarily, the statute requires recording to create the lien, and in the ordinary course the owner pays the assessment with property taxes and no one ever sees a courtroom. FortiFi, the court said, hadn’t yet reached the “on ramp” of nonpayment.

So the court compared PACE liens to deeds of trust instead of mechanic’s liens. A contractor records a mechanic’s lien because it already went unpaid, and it must sue to foreclose within 90 days. A deed of trust exists to finance something. Litigation only becomes possible after a default that may never come.

The court also refused to let FortiFi use the alleged conspiracy to prove it always planned on court. Borrowing from an earlier decision about inflated earthquake damage reports, it warned that protecting conduct because it might someday reach a courtroom would grant “immunity for any kind of criminal fraud so long as the defrauding party was willing to take its cause to court.”

The Later Litigation Didn’t Change the Claims

FortiFi’s fallback pointed to its intervention in the receivership case, where it objected to sales that would have stripped its liens. But none of Diplomat’s six claims rested on that litigation conduct. The alleged injury was complete once the liens sat on properties that never got the promised upgrades and Top Flight defaulted.

What This Means for Lenders, Investors, and Defendants

Lenders and investors who get primed (pushed behind a lien the law ranks first) now have published authority to clear the threshold step of an anti-SLAPP motion when their claims target how the lien came to exist. That keeps fraud and interference claims alive long enough for a court to test them on the merits.

Defendants get the opposite lesson. Showing that a document is a legal prerequisite to some future lawsuit won’t carry the motion without a real dispute at the time, and later courtroom conduct won’t recast claims built on what came before. The decision has limits, too. It doesn’t decide whether Diplomat’s allegations are true, and it leaves in place earlier precedent treating mechanic’s liens as protected.

Bottom Line

The anti-SLAPP statute protects people who take real disputes to court. It doesn’t convert every recorded document into protected petitioning because a lawsuit might follow someday. If a priority lien pushed you down the payment line, Diplomat gives you a clearer path to the merits. If you’re defending, measure the motion against when the dispute actually began before you file it.

Horst Legal Counsel handles business litigation, real estate and lending disputes, and appeals, including anti-SLAPP motions on both sides. If you have questions about your lien position or a motion you’re facing, we’re glad to talk it through. Contact us here.

The post The Anti-SLAPP Statute Won’t Protect a Lien Recorded Before Any Dispute Existed appeared first on Horst Legal Counsel.

The decision is Fanuc Corp. v. Superior Court (Cal. Ct. App., 4th Dist., Div. 2, Oct. 9, 2026), and it turns on personal jurisdiction, the legal power a court needs over a defendant before it can enter a binding judgment against it. The injured worker here had a sympathetic case. He still lost the jurisdiction fight, because the law asks a narrower question than most people expect.

How a Robot Injury Became a Jurisdiction Fight

Abraham Bernal was a maintenance technician at a Niagara Bottling plant. In June 2020, while he was securing a ladder beneath a machine’s gripper head suspended 15 to 20 feet above the floor, the machine released the head and severely injured him. A robot made by Fanuc Corporation, a Japanese company, had malfunctioned during the same incident. Bernal sued the Japanese manufacturer along with its American subsidiary, Fanuc America, a Delaware corporation headquartered in Michigan.

Fanuc America didn’t contest being sued in California. Fanuc Japan did. It filed a motion to quash, the procedural tool a defendant uses to argue a court has no power over it, pointing out that it has no California office, no California property, no California bank accounts, and no registration to do business here. The trial court let the case proceed anyway, reasoning that the parent could be reached through its subsidiary. The Court of Appeal disagreed and reversed.

Why Personal Jurisdiction Didn’t Reach the Foreign Parent

Courts recognize two ways to acquire personal jurisdiction. General jurisdiction, which lets a court hear any claim against a defendant, exists only where a company is “essentially at home,” meaning, for a corporation, its state of incorporation or its headquarters. Specific jurisdiction is narrower and applies only when the lawsuit itself arises out of the defendant’s contacts with the state.

Bernal’s theory was that Fanuc America’s California activity should be attributed to Fanuc Japan, making the parent “at home” here. The court rejected it for a clean reason. Even if you treat the subsidiary’s contacts as the parent’s, Fanuc America itself isn’t “at home” in California, because it’s incorporated in Delaware and headquartered in Michigan. A subsidiary that isn’t at home in the forum can’t anchor all-purpose jurisdiction over its foreign parent, whether the theory is agency (one company acting for another) or alter ego (treating two companies as one because the corporate separation is a sham). The court also noted that the U.S. Supreme Court’s Daimler decision gutted the older California cases that let plaintiffs reach foreign parents through a “representative services” theory, so that route is effectively closed.

The Injury Has to Connect to the Company’s California Contacts

That left specific jurisdiction, and here the court focused on a requirement called relatedness: the plaintiff’s injury has to arise out of or relate to the defendant’s contacts with California. Even assuming Fanuc Japan reached into the state through its subsidiary, Bernal couldn’t clear that bar. The specific robot model that hurt him was sold in Europe to the company that built the larger machine, not in California. Bernal pointed to Fanuc America’s three California service centers and to his employer’s purchase of other Fanuc robots. But neither fact showed that this robot’s alleged defect connected to Fanuc’s California business. Selling other products here, and running repair shops here, doesn’t create jurisdiction over a product that was never shown to be marketed, sold, or installed in the state.

What This Means for Companies With Cross-Border Structures

If you operate through a parent-subsidiary structure that crosses borders, the protection here is concrete. Your American subsidiary can do substantial business in California without exposing the foreign parent to all-purpose jurisdiction, as long as the subsidiary is incorporated and headquartered somewhere else. That’s a planning point, not just a litigation outcome. Where you incorporate and base a U.S. subsidiary shapes where the parent can be sued.

For companies defending product claims, relatedness is a gate worth using. A plaintiff has to tie the specific product that caused the harm to your contacts with the forum, and a generalized market presence won’t do it. And for anyone on the other side, bringing the claim, the lesson is to build the jurisdictional record around the actual product, its actual sales, and its actual path into the state, not the defendant’s overall footprint.

The Bottom Line

Corporate structure is risk management, and this decision shows how much can ride on where a subsidiary is incorporated and based. A foreign parent isn’t automatically suable in California just because its U.S. arm sells heavily here, and a product claim won’t reach a foreign manufacturer unless the specific product is tied to that manufacturer’s California contacts. Companies with cross-border structures should map their jurisdictional exposure before a lawsuit forces the question, and companies facing product claims should test relatedness early. Horst Legal Counsel advises businesses on jurisdictional strategy, cross-border litigation risk, and the defense of product and personal injury claims. If you want to understand where your company, or its parent, can actually be sued, we’re glad to talk it through.

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The case is Chin v. DoorDash, Inc. (Cal. Ct. App., 2d Dist., Oct. 5, 2026), and the maneuver it shut down is one plaintiffs’ lawyers have been testing since the statute passed. An employee can’t quietly sit on a known harassment claim, let the court send the whole case to arbitration, and then spring the statute months later to drag everything back into court. Do that, and you give up the statute’s protection for every claim, including the harassment claim you were holding in reserve.

The Statute at the Center of This

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, a 2021 federal law usually shortened to the EFAA, lets an employee alleging sexual assault or harassment invalidate a predispute arbitration agreement and litigate in court instead. Here’s the catch that decided this appeal. The protection isn’t automatic. The statute says it applies “at the election of” the person alleging harassment, which means the employee has to actually choose it, and choose it at the right moment.

How Chin Played It

Andrew Chin joined DoorDash in 2020. He took nine weeks of parental bonding leave in early 2023 and says the company punished him for it, denying him a comparable role when he returned, interfering with more leave, and firing him at the end of the year. In February 2024 he sued in Los Angeles Superior Court for violations of California’s family-leave law, whistleblower retaliation, wrongful termination, and unfair competition. He didn’t plead sexual harassment, even though the one piece of harassing conduct he’d later lean on, a supervisor repeatedly pressing him about when he’d take the rest of his leave, was already sitting in that first complaint.

DoorDash moved to compel arbitration, meaning it asked the court to enforce the agreement and push the dispute out of court. Chin fought the motion, but only by arguing no valid agreement existed. He never mentioned harassment. He never mentioned the EFAA. The court enforced the agreement and sent the whole case to arbitration.

Then Chin changed tack. In arbitration, he amended his demand to add a sexual harassment claim under California’s Fair Employment and Housing Act, the state anti-discrimination statute known as FEHA, built on that same supervisor’s conduct. He asked the arbitrator to route everything back to court under the EFAA. When that stalled, he filed a second lawsuit in April 2025, nearly a year after the arbitration order, seeking a declaration that the agreement was void as to both cases. He later told the trial court, in his own words, that he’d withheld the harassment claim “for strategic purposes” and added it later “specifically to avoid arbitration.”

The trial court sided with Chin, though it plainly didn’t want to. The judge said he was “not happy with the way this has gone” and disliked his own ruling, but believed the law tied his hands. He invalidated the agreement, consolidated the two suits, and denied DoorDash’s renewed motion to compel. DoorDash appealed.

Why the Arbitration Agreement Held Up

Division Eight of the Second District reversed, and the reasoning is where the decision earns its weight. The court held that Chin had waived the EFAA, waiver meaning the intentional giving up of a known right, through the way he litigated the first suit. He knew the harassing conduct from the start, because he’d already pleaded it. He chose not to raise a harassment claim or the statute when he opposed arbitration. He let the court compel arbitration on the merits of the agreement, and then tried to unwind that order a year later. The court called it what it was, a strategic withholding, and ruled that a litigant can’t sandbag the court this way and still claim the statute’s benefit.

The opinion’s sharpest line captures the logic. Raising the harassment claim and the EFAA after the arbitration order did not, the court wrote, hit “the proverbial ‘reset button’” on the choices Chin had already made. The protection has to be elected when the employer first moves to force the case out of court, not saved as a trump card for later.

The court was careful about its limits. It distinguished a recent Ninth Circuit decision where the employee genuinely didn’t know she had a harassment claim until arbitral discovery uncovered it, and then invoked the statute right away. That employee kept her protection. Chin’s problem wasn’t ignorance. It was strategy.

The decision wasn’t unanimous. The dissenting justice saw Chin’s conduct as a blunder rather than calculated waiver, likening it to losing your queen in chess to a move you never saw coming, and warned against reading waiver too aggressively into a statute meant to protect harassment plaintiffs. That split tells you this issue isn’t fully settled, and the reach of the waiver reasoning will get tested again.

What This Means for Employers

Start with the good news. A valid, well-drafted arbitration agreement is more durable than the recent run of California cases might suggest. The EFAA is a genuine exception to arbitration, yet it’s one the employee has to invoke correctly and on time. When a plaintiff holds a harassment claim in reserve to manufacture a later escape hatch, you now have a published California decision saying that move forfeits the protection.

Don’t overread it, though. This is a timing-and-conduct ruling, not a license to ignore the EFAA. An employee who raises harassment and elects the statute at the first opportunity, when you move to compel, sits squarely within its protection, and nothing here changes that. The win came from the plaintiff’s own delay, not from any weakness in the statute. Your agreement still has to be enforceable on its own terms, the kind of enforceability that an earlier wave of California decisions keeps tightening.

If you represent employees, the lesson is the mirror image. The EFAA rewards the lawyer who uses it promptly. Plead the harassment claim when the facts support it, and elect the statute the moment the employer tries to compel arbitration. Treat it as a card to play later and you can lose it.

The Bottom Line

Chin answers a question the last wave of arbitration decisions left open. We knew the EFAA could free an employee from an arbitration agreement. What we didn’t know was how California courts would handle an employee who alleges harassment alongside other claims and plays the timing for advantage. Now there’s a first answer, and it favors the employer who built a valid agreement and insisted on it over the plaintiff who tried to game the sequence. If you’re reviewing your agreements, or facing a motion that turns on the EFAA, the timing of every move matters more than it did a month ago.

Horst Legal Counsel works with both employers and employees on arbitration enforceability and employment disputes. If you’re weighing how Chin affects a pending motion or a set of agreements, we’re glad to talk it through. Contact us here.

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The Case Behind the Reversal

The case is Passport 420, LLC v. Starr Indemnity & Liability Company (Cal. Ct. App., 2d Dist., Oct. 1, 2026). Passport 420 was a company Michael Avenatti and William Parrish formed to buy a private jet. Avenatti was the company’s manager. What Parrish, a successful engineer and pilot, didn’t know, and wouldn’t learn for years, was that Avenatti had funded his share of the purchase with roughly two million dollars he had embezzled from a legal client.

Starr issued an aircraft policy that covered government seizure of the plane. The application asked about the aircraft, the pilots, and maintenance. It said nothing about the source of the purchase money or anyone’s finances. In April 2019, the federal government seized the jet on the same day it indicted Avenatti for fraud. Passport filed a claim for about $3.99 million, Starr denied it and moved to rescind, and the fight was on.

When a Concealed Fact Lets an Insurer Rescind

Here’s the part that surprises people. The trial court sided with Passport, reasoning that Starr couldn’t complain about a fact it never bothered to ask about. It called the carrier’s underwriting “lackadaisical.” But the Court of Appeal read the Insurance Code differently, and it reversed.

Under California law, an applicant for insurance has an affirmative duty to disclose, meaning a legal obligation to volunteer, every fact within the applicant’s knowledge that’s material to the contract. Whether a fact is material doesn’t turn on whether the insurer asked. It turns on whether a truthful answer would have changed the insurer’s decision to issue the policy, set the premium, or write different terms. The court held that no rational insurer would knowingly insure a jet bought with stolen money against the risk of government seizure. The embezzlement was material as a matter of law, so concealing it gave Starr the right to rescind the policy once it learned the truth.

The Manager’s Knowledge Becomes the Company’s

Parrish was innocent, and the court said so plainly. Still, that didn’t save the claim. Avenatti was Passport’s manager when he applied the stolen funds to the purchase and when the company bought the policy, and the general rule is that an agent’s knowledge is imputed to the company he represents. Imputed means the law treats the company as knowing whatever its agent knew.

Passport tried to invoke an exception for a rogue agent who acts purely for himself and against the company. The court rejected it. Avenatti’s crime actually benefited Passport in the moment, because it let the company complete the purchase. An agent who betrays an outsider while helping his own company along the way doesn’t trigger the exception. So his guilty knowledge belonged to Passport, and with it, the concealment that let the insurer walk away.

What This Means for Business Owners

The lesson isn’t about aviation, and it isn’t really about Avenatti. If your company carries any kind of coverage, from property to management liability, the duty to disclose runs to everything material you actually know, not just to the boxes on the form. A blank space where the insurer failed to ask is not a safe harbor. And if a partner, officer, or manager knows something material, your company is usually treated as knowing it too, even if the rest of the leadership is in the dark.

That’s a governance problem as much as an insurance problem. The time to surface a troubling fact about where money came from, or what a co-owner has been doing, is before you sign, not after a loss. Our business litigation and insurance teams regularly help companies think through disclosure and coverage exposure, and you can find more on those practice areas on our resources page.

Bottom Line

Insurance is supposed to be the thing that holds when everything else goes wrong. It only holds if the policy is solid, and a policy built on a concealed material fact can be unwound long after the premiums are paid and the loss has hit. Treat every application as a full-disclosure document, vet what your co-owners and managers know, and don’t assume that an unasked question is a problem you get to keep quiet. The insurer that never asked can still rescind, and by the time you find out, the coverage you counted on may already be gone.

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The decision is VHS Liquidating Trust v. MultiPlan Corp., and while it arises in healthcare, the principle it sets down reaches any business that outsources pricing to a shared algorithm. The court held that payments set through that kind of algorithm can be attacked under California’s antitrust law. It didn’t decide whether the defendant actually broke the law. It decided the claim gets to move forward, and for a company on the receiving end of a lawsuit, that is often the whole ballgame.

The Scheme the Court Was Looking At

The plaintiff was the bankruptcy liquidator for Verity Health System, a group of six nonprofit hospitals that went bankrupt in 2018. It sued MultiPlan, now called Claritev, a data and analytics company that offers insurers a service called “repricing.” Here is how the complaint describes it. Insurers send their out-of-network claims, meaning claims for care from a provider that has no contract with the patient’s insurer, to MultiPlan. MultiPlan runs them through a proprietary algorithm built on a database of one billion claims drawn from more than 700 insurers, then tells each insurer how much to pay. By 2020, it was repricing 370,000 claims a day. Insurers accepted the recommended number 87 percent of the time without any human touch, and for inpatient care providers accepted the repriced amount up to 99.4 percent of the time.

The liquidator’s theory was a classic hub-and-spoke conspiracy, meaning a central player coordinates otherwise-competing businesses. MultiPlan sat at the hub, collected each insurer’s competitively sensitive claims data, and assured every insurer that its rivals were all following the same suppressed rates. The result, the complaint alleged, was reimbursement set by collusion rather than by competition.

Why “It’s Just a Reimbursement” Didn’t Work

The trial court threw the case out on a demurrer, a motion that argues a complaint fails to state a valid claim even if every fact in it is true. Its reasoning was that an out-of-network reimbursement is “part and parcel” of an insurance policy, so there is no standalone price to fix under the Cartwright Act.

The Court of Appeal reversed. Price-fixing is a per se violation, which means it is treated as automatically illegal without a court weighing its competitive effects, and the Cartwright Act reaches services and applies to buyers just as it does to sellers. There is, the court stressed, a heavy presumption against reading exemptions into the statute that the Legislature never wrote. A single payment can be two things at once. It can be an insurance benefit the insurer owes its subscriber, and it can also be a price for medical services that an algorithm is dictating. The court compared it to a general contractor who owes a homeowner a finished house and then hires subcontractors. The duty to the homeowner doesn’t strip the subcontractor deals of antitrust protection. The same logic applied here, and the court noted that even under narrower federal law it would reach the same result.

One more detail matters for the road ahead. The Legislature recently added a provision making it unlawful to use a common pricing algorithm as part of a conspiracy to restrain trade. That statute didn’t control this case, yet it points in the same direction the court did.

What This Means for Businesses That Use Pricing Algorithms

The healthcare facts are almost beside the point. The transferable lesson is that feeding competitor data into a shared pricing tool, and then moving in lockstep with the number it produces, can expose a company to antitrust liability in California. It doesn’t matter whether you are the buyer or the seller. It doesn’t matter that a vendor, not you, runs the model. If the practical effect is that competitors coordinate prices through a common intermediary, the conduct is exposed.

For any business using dynamic pricing software, rent-setting tools, or industry data cooperatives, now is the time to ask how the tool works, what data feeds it, and whether the output reflects independent judgment or coordinated behavior. In-house counsel should be reviewing those vendor relationships before a plaintiff does it for them.

The Bottom Line

VHS Liquidating Trust v. MultiPlan Corp. doesn’t declare anyone guilty. What it does is refuse to let an algorithm launder coordinated pricing into something that sounds harmless. Companies that rely on shared pricing tools should treat this decision as a prompt to audit those arrangements now, while the review is a planning exercise and not a litigation emergency. Antitrust exposure, algorithmic pricing, and the defense of business disputes are central to Horst Legal Counsel’s practice. If you want to understand how this decision affects your pricing practices or your risk, we are glad to talk it through. Contact us here.

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The case is Schneider v. Warner Bros. Discovery, Inc. (Cal. Ct. App., 2d Dist., Sept. 10, 2026). Schneider, the producer behind Nickelodeon shows like All That, Drake & Josh, and iCarly, is one of the main subjects of Quiet on Set: The Dark Side of Kids TV, a five-part documentary about the culture behind those shows. The series also recounts sexual crimes against child actors committed by other Nickelodeon figures, three men who were named in the film and criminally convicted. Schneider sued for defamation, arguing that through editing, voiceovers, and juxtaposition the film implied that he too had abused children. Warner Bros. Discovery and the producers moved to dismiss under California’s anti-SLAPP statute, the fast-track law for ending lawsuits that target protected speech. The trial court refused. The Court of Appeal reversed.

Defamation by Implication Has a Gatekeeper

Schneider did not claim the documentary stated an outright falsehood about him. He relied on defamation by implication, a theory that lets a plaintiff sue when a publisher arranges otherwise true facts so as to suggest a false and defamatory connection between them. It’s a real doctrine in California. But it comes with a threshold. Before any of it reaches a jury, the court decides, as a matter of law, whether the work is even reasonably capable of the defamatory meaning the plaintiff claims. That question is where this case turned.

Angry Comments Are Not Evidence

To show that viewers understood the film as branding him an abuser, Schneider submitted screenshots of online reactions: YouTube comments, posts on X, and comments under his own apology video. The trial court let that evidence in. The Court of Appeal held that was an error of law and an abuse of discretion.

The reasoning is worth keeping. Whether a work is reasonably susceptible to a defamatory meaning is a question for the court, not one answered by taking a poll of the audience. A pile of comments showing that some viewers drew the worst inference does not make that inference reasonable, and it does not manufacture a jury question. The court went further and flagged how unreliable social media evidence tends to be, given fake accounts, anonymity, and the performative nature of online posting. For any content producer, that is real protection. Your exposure is measured by what your work reasonably conveys, not by the hottest takes it provoked.

Context Still Controls, and Sometimes the Trailer Stands Alone

The court also addressed context. A publication is normally judged as a whole, not carved into fragments. Yet the court recognized that audiences often encounter a piece of a work on its own, so it analyzed the separately released trailer as its own unit. Even then, neither the trailer nor the full documentary supported Schneider’s reading. The film pointedly separated the workplace misconduct its participants attributed to Schneider, things like a toxic environment and inappropriate innuendo, from the child sexual abuse it attributed to the three named, convicted men. It also stated plainly that an internal investigation found no evidence Schneider had abused children. Drawing on an older California decision, the court refused to split hairs to find an accusation the work does not make.

Bottom Line

Schneider is a strong result for anyone who publishes hard, newsworthy content. It confirms that defamation by implication has a real threshold, that the judge guards it, and that a plaintiff cannot get past it simply by showing the internet was outraged. If you produce documentaries, journalism, reviews, or any public commentary that names names, the takeaway is to build your record around what the work reasonably says in full context, and to stop treating a viral reaction as your legal problem. It usually isn’t. If you’re weighing the defamation exposure in something you’re about to publish, or defending a claim built on audience reaction, we’re glad to talk it through.

The post What Your Audience Thinks You Meant Isn’t the Test for Defamation appeared first on Horst Legal Counsel.

The case is Velocity Investments, LLC v. Nguyen (Cal. Ct. App., 3d Dist., No. C102846, Aug. 28, 2026), and it turns on two documentation rules that every debt buyer in the state already has to follow.

Two Rules Every Debt Buyer Has to Follow

California’s Fair Debt Buying Practices Act, which lawyers call the Debt Buyers Act, was passed to stop a wave of collection lawsuits built on thin evidence, cases where the person being sued couldn’t tell whether the debt was even theirs. The Act sets two requirements. Before collecting, a debt buyer must have access to a document evidencing the consumer’s agreement to the debt (the access requirement), and it must attach that document to the collection complaint (the attachment requirement). Violate either, and the consumer can recover actual damages plus statutory damages of $100 to $1,000.

The Paperwork Problem

Velocity Investments sued Thong Huu Nguyen in 2019 to collect an unpaid balance of $5,158.61. To its original complaint, Velocity attached a generic borrower agreement between “the borrower” and WebBank, pages of terms plus a blank loan agreement and promissory note, and it referred to a transaction history it never attached. The trouble was that the borrower agreement didn’t tie Nguyen to any debt. It carried no signature, didn’t name him as the borrower, and read as a precursor to a loan rather than proof of one. The blank note inside had empty fields where the loan amount, dates, interest rate, and member ID should have been.

Nguyen cross-complained on behalf of a class. Velocity then tried to clean things up with an amended complaint attaching the executed $8,000 note and the transaction history, and the trial court found the error corrected and granted summary judgment for Velocity.

The Fix Came Too Late

The Court of Appeal reversed. The borrower agreement attached to the original complaint didn’t evidence Nguyen’s agreement to the debt, so the attachment requirement was violated the day the complaint was filed. And here’s the part that matters for anyone collecting debt: the amended complaint did nothing to erase that violation. The court noted that the Rosenthal Act, a related California collection statute, expressly lets collectors cure their mistakes, yet the Debt Buyers Act contains no such provision. When the Legislature leaves a cure option out of one statute while writing it into a sibling statute, that silence is deliberate. A defective complaint stays defective.

Velocity had one more card. It argued any mistake was a “bona fide error,” an honest, unintentional slip made despite reasonable procedures, because it relied on an experienced collection firm that automated its filings and had an attorney check each complaint against a checklist. The court refused to resolve that on summary judgment. Whether those procedures were actually reasonable is a jury question, including whether it’s reasonable to lean entirely on outside counsel for compliance. That goes to trial.

The court also held Nguyen could sue without showing he lost a dime. Unlike federal courts, California courts don’t require a concrete injury, and the Act makes statutory damages available on top of any actual damages, not instead of them.

What This Means for Businesses That Collect Debt

The lesson isn’t subtle. If you file collection complaints in California, the documents have to be right the first time, because an amendment is no longer a reset button. A class cross-complaint can survive even where the consumer suffered no measurable loss.

The bona fide error ruling reaches past debt buyers. Many businesses lean on automation and outside professionals to stay compliant and treat that reliance as a defense. Still, “our system was supposed to catch it” is an argument you make to a jury, not a shield that ends the case early. If your compliance runs on a process, you should be able to explain how it’s built to prevent the exact error that happened.

The Bottom Line

Debt collection in California runs on documentation, and the margin for error just narrowed. A missing or mismatched attachment is a completed violation, not a fixable typo, and statutory damages plus class exposure make it costly. If your business collects consumer debt, or leans on a firm that does, now is the time to audit how your complaints get assembled and reviewed before they’re filed, not after a cross-complaint lands. Horst Legal Counsel works with businesses on collection compliance and consumer finance litigation. If you’d like a second set of eyes on your process, we’re glad to help. Contact us here.

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In Toy v. City and County of San Francisco (Cal. Ct. App., 1st Dist., July 24, 2026), the First District Court of Appeal held that a challenge to municipal water rates has to be brought as a reverse validation action. That’s a specialized procedure, one with its own short deadline and its own strict notice rules, and the court held that failing to follow it is fatal no matter how strong the underlying claim.

Here’s the background in plain terms. California’s validation statutes let a public agency file a lawsuit to confirm, or validate, something it has done, such as adopting a rate. Private parties can bring the mirror image, a reverse validation action, to invalidate that same decision. When these statutes apply, they take over, and they replace whatever other route a private party might have imagined using to challenge the agency. In 2021 the Legislature added Government Code section 53759, which says any action attacking a water or sewer rate adopted after January 1, 2022 must be filed within 120 days and must run through the validation procedures.

The plaintiffs here didn’t do that. In October 2023 they filed an ordinary class action attacking San Francisco’s new water rates under Proposition 218, the voter initiative that bars local governments from charging more for a property-related service than the service actually costs. They styled it as a claim for a refund and related relief. The City answered, asserted its defenses, and then litigated. For roughly fourteen months it filed case management statements, posted jury fees, took depositions, and agreed to consolidate the two related cases. Then, in early 2025, the City moved for judgment on the pleadings, a motion that asks the court to decide the case on the complaint alone, on a single ground: the plaintiffs had used the wrong procedure. The trial court agreed and dismissed the case without leave to amend. The Court of Appeal affirmed.

The most useful part of the opinion for anyone who litigates against a government body is what the court did with the waiver argument. The plaintiffs said the City gave up the validation defense by litigating the case for over a year before raising it. The court disagreed, and the reasoning matters. Waiver means the intentional surrender of a known right, and simply defending a lawsuit isn’t that. A public agency doesn’t give anything up by answering a complaint and fighting it. More to the point, compliance with the reverse validation procedures isn’t an affirmative defense the agency has to raise early or lose. It’s a prerequisite to the court’s jurisdiction. If the plaintiff never satisfies it, the court never had the power to hear the case, and the agency can point that out late.

The plaintiffs also argued that because they really wanted a refund, validation law didn’t apply. The court rejected that too, consistent with earlier decisions holding that a refund label can’t rescue a claim that is, at bottom, an attack on the validity of an agency’s rate. And the court found no good cause to excuse the misstep, noting that the requirements were well established and, in its words, all in the books. The City’s own rate notice had even told ratepayers about the 120-day deadline and the reverse validation procedure.

What This Means for Businesses, Property Owners, and Ratepayers

If you might challenge a municipal water or sewer rate adopted after January 1, 2022, treat it as a validation action from the first day. That means a 120-day clock that starts running at adoption, a summons in the specific form the statute requires, and service by publication to all interested persons, not just service on the agency. Miss any of those, and the strength of your Proposition 218 argument won’t matter.

It also means you can’t read anything into the agency’s conduct. A city can litigate your case for a year and still move to dismiss it as procedurally improper, because the defect goes to the court’s power to act, not to a defense the city can forfeit. Waiting for the government to raise the issue is not a strategy.

The Bottom Line

Challenges to government rates and fees are won or lost on planning as much as on the merits. Before you file, confirm whether the validation statutes apply, calendar the 120-day deadline, and build the notice and publication steps into your plan from the start. A meritorious claim filed the wrong way is still a losing claim. Real estate litigation, disputes with public agencies, and challenges to government fees and assessments are central to our practice at Horst Legal Counsel. If you’re weighing a challenge to a rate or fee, or you’ve received a notice of a new one, we’re glad to talk it through. Contact us here.

The post San Francisco Litigated a Water Rate Class Action for a Year, Then Won by Showing It Was Filed the Wrong Way appeared first on Horst Legal Counsel.

The decision is Tesoro Refining & Marketing Company LLC v. City of Carson (Cal. Supreme Ct., Aug. 10, 2026), and it reaches every business paying a local tax in a city with its own refund ordinance. Chief Justice Guerrero, writing for a unanimous Court, held that the Government Claims Act preempts these local procedures.

How Carson’s Local Tax Refund Detour Worked

Carson voters approved an Oil Industry Business License Tax in 2017, charging refinery and petroleum storage operators a quarterly tax of one-quarter of one percent of their gross receipts from business in the city. Tesoro runs a refinery there. After an audit, Carson decided Tesoro had underpaid for a stretch spanning late 2017 into 2018 and sent a deficiency notice. Tesoro paid under protest, then filed a refund claim with the city clerk on the standard state form, arguing the assessment was untimely and the city’s calculation method was wrong. The city denied it, and Tesoro sued.

Carson’s response was procedural. It argued Tesoro had skipped steps, because the city’s ordinance says a taxpayer must first ask the finance director for a refund, then appeal to the city manager, before going to court. The trial court agreed and dismissed, and so did the Court of Appeal. But the Supreme Court reversed.

One Statewide Rulebook for Claims Against Local Government

The Government Claims Act sets a single, uniform procedure for presenting “all claims for money or damages against local public entities.” It spells out who files, what the claim must say, which form to use, where it goes, and how long the government has to respond, generally 45 days before the claim is deemed rejected and the claimant can sue. The Legislature built that system in the late 1950s and early 1960s to replace a chaotic patchwork of local rules the courts had long called “traps for the unwary.”

The legal engine of the decision is field preemption, the rule that when the Legislature means a statute to occupy an entire subject, a local law regulating in that same area cannot be enforced. Reading the Act’s text, structure, and history, the Court concluded the Legislature occupied the whole field of claim presentation. A city may write its own procedures only for the narrow categories the Act carves out, and local tax refunds are not among them.

A Refund Request Is a Claim, Whatever the City Calls It

Carson’s main move was to relabel its refund process as a separate administrative remedy the taxpayer had to exhaust first. The Court rejected the relabeling. A claim for money or damages is a demand asserting a right to be paid, and a request to recover an allegedly unlawful tax is exactly that. Because the city was imposing extra presentation steps on a claim the Act already governs, those steps fell. And once a procedure is preempted, there’s nothing left to exhaust.

One limit matters. The ruling covers local taxes set by a city’s own ordinance. It doesn’t touch property taxes, sales and use taxes, or other taxes whose refund procedures come from the Revenue and Taxation Code or another state statute.

What This Means for Businesses and Property Owners

If your company pays a local business or gross receipts tax and you think the city miscalculated it or assessed it too late, you no longer have to complete the city’s internal refund-and-appeal process before suing. Pay under protest if you must, file your claim under the state Act, and if the city denies it or misses its deadline, you can go to court. The city can’t add steps, add delay, or set a trap that forfeits your claim over one of its internal deadlines. That’s true even in charter cities, which often assume home rule lets them design their tax machinery end to end. It doesn’t reach how a refund claim gets presented.

The Bottom Line

Tesoro is a win for predictability. Businesses challenging a local tax now follow one clear procedure instead of a city-specific maze. If you’re weighing whether to contest a municipal assessment, the path to court is shorter and surer than the ordinance might suggest, and any local rule demanding extra pre-suit steps for a refund is now vulnerable. Tax disputes with local government, and the strategy around preserving and pursuing a refund, are work Horst Legal Counsel handles for business clients. If a city has assessed your business a tax you believe is wrong, we’re glad to talk it through. Contact us here.

The post Cities Can No Longer Bury Your Local Tax Refund in Red Tape appeared first on Horst Legal Counsel.

The case is Gilead Tenofovir Cases (Cal. Supreme Ct., Aug. 3, 2026), and while the facts are about HIV medication, the principle reaches every manufacturer that has ever kept one product on the shelf while working on the next.

Two Drugs and a Fifteen-Year Gap

Gilead makes tenofovir-based HIV treatments. Its first, TDF, won FDA approval in October 2001 and became a cornerstone of therapies that save millions of lives worldwide each year. (Before these drugs, HIV carried a 95 percent fatality rate.) One month after that approval, Gilead filed to begin human testing of a second compound, TAF, as a potential backup. A small early trial, fourteen days and thirty subjects, suggested TAF could match TDF’s antiviral effect at a much lower dose, which plaintiffs say meant less risk of kidney, bone, and tooth damage. In 2004, Gilead announced it was shelving TAF. It resumed development in 2010, ran its first large-scale clinical trial in 2013, and won FDA approval in November 2015, ahead of the 2017 expiration of its TDF patent.

The plaintiffs took TDF and allege they suffered serious injuries. Here is the key move. They concede TDF was not defective and don’t say Gilead should have pulled it. They say Gilead should have brought TAF to market years earlier, that they would have switched, and that the delay cost them a safer option. They also concede the data Gilead had in 2004 was not enough to get TAF approved.

Why the Court Refused to Require a Safer Alternative

The plaintiffs built their claim on negligence, the failure to use reasonable care, and on Civil Code section 1714, which sets a default rule that everyone must act with reasonable care to avoid harming others. The trial court let the negligence claim proceed. The Court of Appeal agreed that a manufacturer’s duty of care, its legal obligation to act reasonably toward others, could extend beyond simply not selling a defective product.

The Supreme Court reversed. It signaled doubts about whether a manufacturer can ever be liable in negligence for a nondefective product. Still, it did not have to resolve that larger question. Even assuming such a duty could exist, the Court held that the Rowland factors, the considerations California courts weigh when deciding whether to carve out an exception to the default duty of care, compel an exception here.

The reasoning is practical. A manufacturer cannot reliably know during early testing that a drug in development is safer, so it cannot foresee that any delay will harm users of the existing product. The link between a development decision and a later injury is attenuated, running through a chain of uncertain science and choices by regulators, doctors, and patients. And imposing the duty would backfire. It would invite hindsight second-guessing of complex research decisions, and it could push companies to stop investigating backup products, since an early hint of a safety improvement could later be turned into a lawsuit.

What This Means for Manufacturers and In-House Counsel

The holding is written for drug makers, but the logic travels. A manufacturer’s duty stays anchored to the product it actually sold and whether that product was defective. Your internal decisions about what to develop, how to prioritize research, and when to launch are not a separate source of tort liability just because a plaintiff can later point to something better in your pipeline.

Two things follow. First, if you sell a product that is not defective, a “you should have built a safer one faster” claim now runs straight into Gilead. Second, the Court’s willingness to use Rowland to rein in an expanding duty is worth remembering whenever a plaintiff tries to stretch ordinary negligence into new territory.

Bottom Line

Innovation involves timing, and timing involves judgment calls made under uncertainty. After Gilead, those judgment calls are far harder to convert into a negligence case in California, at least where the product you sold was not defective. If your company makes anything, read it before your next product-liability threat letter arrives. Horst Legal Counsel advises manufacturers, product companies, and in-house teams on liability exposure, litigation strategy, and risk management. If you want to talk through how Gilead affects your product line or a pending claim, we’re glad to help. Contact us here

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