Identity Theft

Victims of identity theft are provided with a measure of protection by California Civil Code §1798.93, which provides a person may bring an action against a creditor to establish that the person has been the victim of identity theft. The victim of identity theft may bring a complaint against a creditor demanding payment of an alleged debt or may assert his claim against the creditor in the form of a cross-complaint to a collection lawsuit. The statute allows for a judicial determination that the victim of identity theft is not liable for the debt and also provides for an award of actual damages, for example, monetary damages sustained by being compelled to pay a greater interest on loans as a result of a negative credit history; and award of attorneys fees and court costs; and equitable relief as the court deems appropriate.

If the victim of identity theft proves in court by clear and convincing evidence that he provided written notice to the creditor, at least 30 days before bringing the lawsuit or the cross-complaint, that he was the victim of identity theft, that the creditor failed to diligently investigate the victim’s notification of possible identity theft, and that the creditor thereafter continued to pursue its claim against the victim after the victim provided facts showing he was in fact the victim of identity theft, then the court may award a civil penalty, in addition to other damages, of up to $30,000.

Additionally, California Penal Code §530.5 provides it is a crime to willfully obtain personal identifying information of another person and use that information for an unlawful purpose, including obtaining or attempting to obtain credit, goods, services, real property, or medical information without consent of the person.

In the event a collection company or creditor makes claim for a purported debt against the victim of identity theft, the victim should promptly contact an attorney to address the claim and not ignore the claim. If a lawsuit by a creditor is ignored, even if it is groundless and even if it is the result of identity theft, it could eventually result in an adverse judgment for monetary damages against the victim.

An attorney-client relationship is not created between the client and the law firm until the attorney and client execute a written retainer agreement describing the legal work to be performed.


The Attorney-Client Privilege

California law provides that certain communications between a client and an attorney are privileged, and disclosure of that confidential communication cannot be compelled. (Evidence Code §§952 & 954) The confidential information must be transmitted between the client and the attorney in the course of that professional relationship, in confidence by which no third persons, other than those necessary to further the interest of the client (e.g. a translator), are present.

The California Supreme Court held in Costco Wholesale Corporation vs. Superior Court (2009) that a report given by an attorney to his client, Costco, on the result of conducting an investigation into employment matters, including the results of interviews conducted with managers of the client, was protected by the attorney-client privilege even though the legal opinion contained the results of interviews with company managers and were not strictly the legal opinions of the attorney. The employees in a class-action lawsuit sought to compel production of the attorney’s opinion letter to the employer. The Supreme Court held that the attorney-client privilege attached to the attorney’s opinion letter in its entirety, because the employer had retained the attorney to provide legal advice, and held the privilege applied even though the communication included unprivileged material, such as the statements made by managers.

In summary, a client seeking the advice of an attorney on a legal matter, who wishes the communication be kept strictly secrete and confidential, should assure that the communications are made in the course of the attorney-client relationship for the purpose of obtaining legal advice and without the presence of any third party, such as a friend or business associate.

An attorney-client relationship is not created between the client and the law firm until the attorney and client execute a written retainer agreement describing the legal work to be performed.


Recent Developments in Contract Law - Oral Evidence Concerning Written Contracts

As a general rule, persons who enter written contracts can expect the terms of the contract to be enforced in court, as long as the contract is for a lawful purpose. In general, a written contract that completely integrates the mutual promises of the parties will be enforced, and its terms cannot be altered or amended by testimony concerning an oral promise made at the same time as the written agreement. This principle is known as the “parol evidence rule.” The parol evidence rule prohibits the introduction of evidence of an oral promise made either prior to or contemporaneously with a written agreement. The rule is codified at California Code of Civil Procedures §1856 and California Civil Code §1625. For many decades the rule was well established by the California Supreme Court decision of Bank of America vs. Pendergrass (1935) 4 C 2d 258, which held that parol evidence of fraud to induce a written contract would only be admissible as evidence if fraud involved some independent fact or representation, or some fraud in the procurement of the contract, or from some breach of a confidential relationship, such as exists between a principal and agent, and not merely some promise that contradicted the terms of the written instrument.

A major change in the law occurred when the California Supreme Court issued its decision in RiverIsland Cold Storage, Inc. vs. Fresno–Madera Prod. Credit Assn. (2013) 55 C 4th 1169. In RiverIsland a borrower executed a loan forbearance agreement without reading it based upon an oral representation by the president of the lender that the lender would delay collecting loan payments if the borrower would put up additional real property as collateral for the loan. However, the forbearance agreement only provided for three months of forbearance. The lender issued a notice of default to enforce its loan. The borrower sued the lender for fraud. The trial court ruled against the plaintiff/borrower. The court of appeal reversed the trial court, and held that the Pendergrass rule did not apply to claims where the defendant mischaracterized the content of the written agreement. The court of appeals also held that, where the failure to read a written agreement is induced by fraud, then the fraud may be a defense even in the absence of some special confidential or fiduciary relationship between the parties. The Supreme Court affirmed the Court of Appeals and held that oral testimony would be admissible to prove fraud in inducing the execution of a written agreement.

A plaintiff seeking to avoid the effect of a written agreement must still prove the written agreement was induced by a fraudulent representation. Good business practice would therefore seem to dictate that a careful record be kept of all communications between the parties, and/or their attorneys or representatives, in negotiating a contract, including emails, letters, telephone conversations, and meetings, and that records be maintained as to any oral promises made between the parties at or near the time of the execution of the written agreement.

If you have questions concerning your particular situation, then please call our Salinas office at 831-757-5426 during business hours to schedule a telephone conference or office visit, or complete the adjacent form and we will contact you.

An attorney-client relationship is not created between the client and the law firm until the attorney and client execute a written retainer agreement describing the legal work to be performed.


Selecting The Type Of Business Entity

The formation of a business entity in California can take one of several forms:

Sole Proprietorship

A sole proprietorship involves one owner who owns, manages, and controls the business. The profits and losses from a sole proprietorship are reported on the owner’s Form 1040 tax return, Schedule C.

Co-Ownership

Co-ownership occurs where two or more persons enter either an oral or written agreement to jointly own property, which is commonly known as tenant-in-common agreements or simply “TIC agreements.” Profits and losses are generally allocated in proportion to the percentage of ownership of each co-owner and reported on each owner’s Form 1040 tax return. Co-ownership may be best suited for a situation in which a small group of people jointly owns an income-producing asset, such as residential rental property, commercial rental property, or other investment that does not require a substantial amount of active management.Read more