Tuesday, December 9, 2014
C.A. Quickly Pulls Publication Order on Opinion
Decision, Which Finds Particular Accord Not Binding, Delineates Rules for ‘Electronic Signatures’; Is Certified for Publication in the Morning, Then Ordered Not to Be Published in Late Afternoon
By a MetNews Staff Writer
The Court of Appeal has given a strong indication—in an opinion certified for publication in the morning, and decertified late in the afternoon—that, under appropriate circumstances, an enforceable settlement agreement may be formed where the offeree agrees to proposed terms by the simple means of an e-mail with his or her name typed at the bottom.
However, the decision by the First District’s Div. Two reverses a judgment enforcing a settlement agreement, pursuant to Code of Civil Procedure §664.6, because, as the appeals court saw it, requisites for electronic signatures were not met in the particular case before it.
There was no explanation by the panel for its unusual turn-about, occurring on Friday only hours after it filed its opinion for publication. It merely said in an end-of-the-day order:
“Since this court’s December 5, 2014 opinion does not meet the standard for publication as set forth in rule 8.1105(c) of the California Rules of Court, it is hereby ordered that the opinion should not be published in the Official Reports….”
An order by the Court of Appeal for publication of an opinion which it originally designated as being “not certified for publication” occurs regularly, usually following a request by a party or a person or entity with an interest in the point of law that would be established. Stripping a decision of its precedential value by the panel that rendered—as opposed to the Supreme Court doing so—is rare.
The online docket reflects no e-mailed request to the appeals court for depublication.
The reversed trial judge, Gerald J. Buchwald of the San Mateo Superior Court, did view the case as particularly significant. In his Nov. 1, 2013 order granting a motion to enforce the settlement agreement, he urged that there be appellate review even before resolution of the remaining issues in the case, declaring:
“[T]he Court is of the opinion that there are ‘substantial grounds for difference of opinion’ regarding the Court’s resolution of this motion pursuant to Code of Civil Procedure § 166.1, there is no California case law to guide the Court’s opinion, and the Appellate Court should look into this matter.”
Buchwald noted under §166.1, “at the judge’s discretion, a judge may indicate in any interlocutory order a belief that there is a controlling question of law as to which there are substantial grounds for difference of opinion, appellate resolution of which may materially advance the conclusion of the litigation.”
(As it happened, a final judgment, adding costs, was filed just six days after the ruling on the motion.)
Interpreting the California’s Uniform Electronic Transactions Act (“UETA”), as well as common law contract principles, Presiding Justice J. Anthony Kline declared that the prime defendant in the case at bar, who accepted proposed settlement terms in a July 5, 2013 e-mail (and in follow-up e-mails and a voicemail), was not bound by those terms, in light of the facts.
Kline initially recognized:
“We agree that a printed name or some other symbol might, under specific circumstances, be a signature under UETA and might satisfy the even more rigorous requirements under Code of Civil Procedure section 664.6. Courts in other jurisdictions that have adopted a version of UETA have concluded that names typed at the end of e-mails can be electronic signatures.”
He noted that under a provision of the UETA, embodied in Civil Procedure §1633.2(h), an “electronic signature” is “an electronic sound, symbol, or process attached to or logically associated with an electronic record….”
It was the balance of that sentence that led to Kline pronounce the accord in the present case to be unenforceable: “and executed or adopted by a person with the intent to sign the electronic record.” (The emphasis is Kline’s.)
He said the record does not show that the defendant “printed his name at the end of his e-mail with any intent to formalize an electronic transaction.”
The presiding justice also noted that the UETA is applicable, under §1633.5(b), “only when the parties consent to conduct the transaction by electronic means.” The July 4 settlement offer, he said, “did not contain any statement indicating that the parties agreed to enter into a final settlement by electronic means.”
Kline pointed to facts indicating an intent that an e-mailed not create a contract, including the plaintiffs’ expressed expectation that a formal settlement agreement would be executed.
Buchwald, at a hearing, had indicated a concern that the plaintiffs were asserting enforceability of an agreement which they had, themselves, treated as non-final, by virtue of calling for execution of a formal agreement, but said in his written ruling:
“Informal writings, even on the back of a napkin, can suffice to form a contract. Therefore, the fact of later and more formal writings is not dispositive of whether a settlement agreement was reached on July 5.”
Buchwald found that “with or without the UETA,” the defendant’s e-mails “satisfy the signed writing requirement of Code of Civil Procedure § 664.6.” That section provides:
“If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.”
The trial judge ruled that “under contract common law,” the defendant’s communications “constitute acceptances of Plaintiffs’ offer to settle.”
He relied on a 2005 Federal Circuit decision in Lamle v. Mattel, Inc., 394 F.3d 1355, “as well as prior California cases finding typed names on telegrams sufficient to form a contract.”
The majority opinion in Lamle said:
“California law does provide…that typed names appearing on the end of telegrams are sufficient to be writings under the Statute of Frauds….California law also provides that a typewritten name is sufficient to be a signature….We can see no meaningful difference between a typewritten signature on a telegram and an email.”
“[A] typed name at the end of an e-mail is not, by itself, a signature under case law. Courts have held that typed names appearing on the end of telegrams or names typewritten are, in certain circumstances, sufficient to be a signature to satisfy the California statute of frauds….But none of these cases involved Code of Civil Procedure section 664.6, and thus far no court has held that a printed name satisfies the strict signature requirements of this statute.”
Kline specified in a footnote that no opinion was being expressed as to whether the accord could be enforced “by another method, such as a motion for summary judgment for breach of contract.”
The opinion affirms denial of attorney fees to the plaintiffs.
The case is J.B.B. Partners Investments Ltd. v. Fair. It appears in yesterday’s Slip Opinion Supplement, which was printed Friday afternoon prior to the opinion being decertified, at 5521. It is also accessible on the Internet at http://www.metnews.com/sos.cgi?1214//A140232.
Palo Alto attorney Giacomo A. “Jack” Russo, who represented the plaintiffs, asserted in an e-mail, in response to a request by the MetNews for comment, that “[t]he appellate court’s now depublished decision is completely at odds with ALL the decisions issued under the UETA.”
He charged that the decision “adds a new requirement to e-signatures in California which the UETA does not even suggest and which federal law prohibits under the superseding Federal E-Sign Act, which means the ruling itself is preempted by federal law.”
Neither Buchwald’s ruling nor Kline’s opinion addresses the 2000 “E-Sign Act”—the Electronic Signatures in Global and National Commerce Act—which recognizes the validity of electronic signatures in certain transactions which implicate interstate or foreign commerce.
In response to follow-up questions, Buchwald pinpointed the requirement which he alleges that Kline’s opinion engrafts on the statute:
“It requires a written notice of the binding effect of the e-signature which is nowhere stated in either UETA or in (federal) E-Sign.”
With respect to the applicability of the E-Sign Act, he pointed out:
“The underlying case is about a failed Arizona real estate syndication and the securities claims arising from that interstate offering from Arizona to California investors.”
In his initial e-mail, Russo wrote:
“Most fundamentally, the decision ignores the fact-finding function of the Trial Court under CCP 664.6.”
Buchwald found that an e-mail sent by the prime defendant on July 5, 2013, in which he said, “I agree” to the proposed settlement terms, “confirmed by later emails and voice mails,” constituted a valid acceptance.
Russo noted that the prime defendant (who apparently controlled the two business entities that were also sued) was “someone the Trial Court expressly found was a ‘sophisticated party.’ ”
Defendant R. Thomas Fair was admitted to law practice in 1974; was on inactive bar status from 2003-2009; and resumed inactive status in 2012.
The attorney argued that “the California Supreme Court should grant hearing and reverse; otherwise, California will be a complete outlier to uniformity under the UETA and entirely inconsistent with the Federal E-Sign Act!”
Menlo Park attorneys Patrick Baldwin and Christopher Paul Mader represented the plaintiffs. They did not respond to a request for comment.
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