Procedural Posture

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Appellant bank sought review of a decision of the Superior Court of San Diego County (California), which entered judgment in favor of appellee borrower, based on a jury verdict, and denied appellant’s motion for judgment notwithstanding the verdict, in appellant’s action for damages for the balance due on a promissory note.

Overview

Appellee borrower financed a motor home with appellant bank. He executed a promissory note and an agreement to provide insurance. Appellee allowed the insurance to lapse, but obtained some insurance when his father began using the vehicle. A fire destroyed the vehicle, which was substantially underinsured. Appellee refused to pay the loan balance, and appellant brought suit to collect it. The trial court entered judgment for appellee, based on a jury verdict, and denied appellant’s motions for new trial and judgment notwithstanding the verdict. Appellant sought review. The court reversed the judgment of the trial court. The court held that the trial court erred in allowing the jury to consider and apply the doctrine of mitigation of damages to defeat appellant’s recovery, because at the time the insurance lapsed and was renewed in an inadequate amount there was no damage to mitigate and appellant had the option, not an obligation, to secure its own coverage.

Outcome

The court reversed the judgment of the trial court in favor of appellee borrower, and directed the entry of judgment for appellant bank, in appellant’s action to collect the unpaid balance of a loan, because appellant had no duty to mitigate its damages by insuring the motor home that was collateral for the loan. A critical issue was undetermined because one party’s employment attorney San Diego was not present during evidentiary hearing.

Procedural Posture

Appellant medical doctor challenged a judgment from the Superior Court, San Diego County (California), in an action on a contract, where the trial court had granted respondent hospital’s motion for summary judgment.

Overview

Respondent hospital contracted with appellant doctor to manage a department for one year beginning July 1, 1983. The contract allowed either party to terminate the agreement without cause with 90 days notice. In June of 1984, the parties agreed to an extension of the contract and to continue to do business under the terms of the contract until a new contract was prepared for signature, in no event later than November of 1984. On November 30, 1984, the hospital served the doctor a 90-day notice of termination without cause. The doctor sued the hospital for breach of contract and for breach of the covenant of good faith and fair dealing. The court granted the hospital’s motion for summary judgment. The court affirmed. The agreement was not breached by the hospital when it followed the 90-day notice of termination procedures. Appellant was engaged as an independent contractor for one year under a contract terminable without cause on 90 days written notice. He was not an employee and was not discharged from employee status, unlike the employment status involved in wrongful discharge cases. The court declined to find any suggestion of violation of fundamental public policy or of law.

Outcome

In appellant doctor’s action on a contract, the court held that the trial court properly granted summary judgment because respondent hospital had complied with the 90-day notice requirements of the agreement.