S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3

CourtCalifornia Court of Appeal
DecidedFebruary 29, 2024
DocketA164463
StatusUnpublished

This text of S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3 (S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3, (Cal. Ct. App. 2024).

Opinion

Filed 2/29/24 S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

SAN FRANCSICO FEDERAL CREDIT UNION, Plaintiff and Appellant, A164463

v. (San Francisco City & County SAN FRANCISCO MUNICIPAL Super. Ct. No. CGC-18-565325) TRANSPORTATION AUTHORITY, Defendant and Respondent.

Plaintiff San Francisco Federal Credit Union (SFFCU) appeals from a jury verdict in favor of defendant San Francisco Municipal Transportation Authority (SFMTA), rejecting SFFCU’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing. On appeal, SFFCU asserts various instructional and evidentiary errors. SFFCU further challenges the trial court’s denial of its motion for judgment notwithstanding the verdict and new trial. We affirm the judgment. BACKGROUND I. Factual Background In 1978, voters passed Proposition K, which provided free, non- transferrable taxi medallions distributed pursuant to a waitlist. Due to various problems with the medallion program, including an almost 15-year waitlist, SFMTA created a new class of taxi medallions. This new class created transferrable taxi medallions, which were available for a $250,000 purchase price. SFFUC became one of two qualified lenders with SFMTA to finance the purchase of new medallions. The parties entered into an initial lender agreement in 2010, and a second similar lender agreement in 2013. Section 4, subdivision (a) of the 2013 lender agreement provides that SFMTA “shall not set the Medallion Transfer Price for the Transfer of a Medallion below the highest Medallion Transfer Price paid by a Medallion Holder to whom any Qualified Lender made a loan that is still outstanding to finance the transfer of a Medallion.” In the event of foreclosure, Section 5, subdivision (c) provides “SFMTA and Lender shall use diligent and good faith efforts to re-transfer each foreclosed Medallion as soon as reasonably possible, which efforts shall include, but need not be limited to, ensuring that Foreclosed Medallions are re-transferred prior to authorizing the issuance of transfer or re-transfer of new Medallions.” In the event SFMTA were to terminate transferability of some or all medallions, Section 6, subdivision (a) provides that SFMTA would, “at the request of the Medallion Holder,” repurchase “at the Medallion Transfer Price paid” by the medallion holder “a Transferable Medallion that is no longer transferable or assignable.” In connection with the 2013 lender agreement, SFFCU executed a “Lender’s Acknowledgements and Warranties” stating SFMTA “has made no representations or warranties to Lender with regard to the value or profitability of Medallions, the continued demand for Medallions, or the SFMTA’s ability to Retransfer a Transferrable Medallion . . . .” Between 2010 and 2013, transportation network companies, such as Uber and Lyft, began operating in San Francisco. These companies

2 negatively impacted the profitability and demand for taxi medallions. The value of taxi medallions fell below the set sales price of $250,000, and no sales occurred after April 2016. In May 2016, SFFCU began foreclosing on taxi drivers who had loan agreements with SFFCU to finance the purchase of their medallions. At the time of trial, SFFCU had foreclosed on approximately 285 medallions. II. Procedural Background SFFCU filed a first amended complaint against SFMTA alleging breach of contract and breach of the covenant of good faith and fair dealing.1 Prior to trial, the court asked SFFCU to provide a list of its theories of breach to guide “preliminary instructions and to be able to rule on evidence objections at trial.” SFFCU provided a four-page list containing 16 theories of breach of contract and 10 theories of breach of the covenant of good faith and fair dealing. Because of the length of SFFCU’s list, the court stated it would provide “a simple instruction on breach of contract and a simple instruction on the covenant of good faith and fair dealing.” The court further clarified it did “not intend to specify the breaches that are claimed. That will be, I think, the obligation if any lawyer wishes to address it themselves.” The parties also submitted numerous motions in limine, including one regarding SFMTA’s police powers. The court denied SFMTA’s police powers motion. The court explained it needed to “hear evidence” and would defer the

1 The complaint also alleged causes of action for breach of fiduciary

duty, negligent misrepresentation, promissory estoppel, and breach of mandatory duty. Prior to trial, the court sustained SFMTA’s demurrer without leave to amend on the breach of fiduciary duty, negligent misrepresentation, and promissory estoppel claims, and granted summary adjudication as to the breach of mandatory duty claim.

3 issue “until I see what the jury’s verdict is,” but noted “it’s an incredibly significant issue in the case.” At trial, SFFCU relied on a legal memorandum drafted for the SFMTA, which stated “if the market price of the Medallions falls precipitously, i.e., no one is willing to buy for the price paid previously in a deal that a Qualified Lender loaned on, SFMTA will end up making up the gap.” SFFCU elicited testimony that this memorandum was the “basis for” Section 6, subdivision (a), of the lender agreement and required SFMTA to terminate the medallion transfer program and pay SFFCU for outstanding medallions once there was no longer any meaningful medallion market. In response, SFMTA argued Section 6, subdivision (a), was in fact negotiated to protect SFFCU against regulatory decisions by SFMTA to eliminate the transferable nature of the medallions. The jury returned a verdict in favor of SFMTA, rejecting all of SFFCU’s breach of contract and breach of the implied covenant theories. The trial court entered judgment in favor of SFMTA, and SFFCU timely appealed. DISCUSSION On appeal, SFFCU asserts (1) the jury instructions and special verdict form contained misstatements of law, (2) the trial court erred in excluding Exhibit 613, and (3) the trial court erred in denying its motion for judgment notwithstanding the verdict and new trial. We address each argument in turn. I. Instructional and Special Verdict Form Errors SFFCU contends both CACI 325 and the special verdict form contained misstatements of law regarding the elements of the breach of the implied covenant claim. SFFCU also asserts the trial court erred in giving Special

4 Instruction No. 397 because it created confusion regarding whether SFMTA acted unfairly and without good faith. “Instructional error is subject to a de novo standard of review.” (Suffolk Constr. Co., Inc. v. Los Angeles Unified Sch. Dist. (2023) 90 Cal.App.5th 849, 869 (Suffolk); accord Rodriguez v. Parivar, Inc. (2022) 83 Cal.App.5th 739, 751 [“ ‘We analyze the special verdict form de novo.’ ”].) “However, the giving of an erroneous jury instruction should not be disturbed unless, ‘ “after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice.” ’ [Citation.] Instructional error is prejudicial in a civil case where ‘ “ ‘it seems probable’ that the error ‘prejudicially affected the verdict.’ ” ’ ” (Suffolk, at p. 870.) A.

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Bluebook (online)
S.F. Federal Credit Union v. S.F. Municipal Transportation Auth. CA1/3, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sf-federal-credit-union-v-sf-municipal-transportation-auth-ca13-calctapp-2024.