BUSINESS LITIGATION
Mr. Kirkman has had several cases with large dollars at stake, where he obtained final judgements after a long jury trial or won pretrial rulings which established contract or documents which his clients had executed could not be enforced by the adverse party.
BANKING LAW
Mr. Kirkman has extensive experience litigating against banks or other lending institutions in a wide variety of matters, including foreclosures, guarantees, receiverships, interest rate “swaps”, “pre-negotiation” agreements, and other matters. Mr. Kirkman has achieved great results in this area: in one case he proved that the banking industry’s standard Pre-Negotiation Agreement was illegal. In another he proved that one bank is habitually breaching the terms of its own interest rate swap agreement when charging early termination fees when the borrower wanted to terminate the agreement to refinance in a declining interest rate market.
PATENT LITIGATION
Mr. Kirkman and WKBK&Y have been embroiled in complex patent litigation for years. Our expertise includes one of the most complex patent litigation disputes in Minnesota history, involving products licensed over 20 years and including 40 separate patents.
ATTORNEY'S FEES
Over the course of Mr. Kirkman's career, he has gained extensive experience at prosecuting and defending attorney’s fee claims.
ARBITRATION LAW
Frequently litigants are forced into arbitration because they signed documents, sometimes unknowingly, whereby they agreed that any dispute will be resolved by binding arbitration. Bank loan documents typically contain such provisions. Being forced into binding arbitration can be detrimental because of perceived bias in favor of institutions such as banks, which may account for a large portion of a professional arbitrators’ income. Mr. Kirkman has extensive experience in arbitration law, including cases where the Moncharsh v. Heily & Blaise decision has been challenged thanks to his efforts.
REAL ESTATE LITIGATION
Mr. Kirkman has been involved in some of the largest real estate litigation cases in the Northern California area. He brought an extremely rapid and successful conclusion to a dispute involving one of Sacramento’s largest home builders, and two of Sacramento’s largest companies by forcing the matter into binding arbitration over the developer’s objection. This caused a “class III” case (rated very complicated by the courts) which would otherwise have taken years to get to trial, to be successfully concluded within a few months, at a costs savings of hundreds of thousands to the client. The firm was able to maximize the expertise from its transactional side by using our own tax expert partners’ to counter the adverse party’s in-house genius CPA who had helped his client dupe the firm’s clients out of large sums of money based on hidden ambiguities, which were contained in the parties governing agreements drafted by another law firm. This is just one of many examples of how the firm’s dual capability, that is a strong “transactional” and strong “litigation” section complement one another.
PERSONAL INJURY
Mr. Kirkman obtained one of the largest if not the largest swimming pool accident recoveries in history against a city. The case illustrates Mr. Kirkman's broad range of legal expertise, and displays how WKBK&Y is uniquely positioned to handle legal matters of all varieties, for clients of any size, against corporations or government institutions.
CONSTRUCTION LITIGATION
Mr. Kirkman has litigated many very difficult construction disputes and construction product disputes. This includes the dismissal of a potentially catastrophic case for one client, and
EXPERIENCE
Douglas E. Kirkman is a Partner in the firm’s General Civil Litigation Department. Mr. Kirkman has been recognized in Sacramento Magazine’s Top Lawyers articles as a top Sacramento area lawyer in the following categories: Business Litigation; Commercial Law; General Litigation; Litigation-Commercial. Mr. Kirkman has litigated some of the toughest complex business litigation cases in our region, as well as in federal court in Minnesota, and other states. Some of the representative cases Kirkman has handled includes the following: construction defect/construction product litigation – successfully defended claims against the manufacturer of pavers installed on the deck at the Port of Oakland; product defect cases – successfully defended manufacturer of clay sewer pipe against all claims; insurance coverage disputes – forced insurers to provide coverage despite pollution clause; arbitration cases – overcame multi-million dollar arbitration award (arbitration defended by others) by demonstrating, post-award, that the plaintiff didn’t have the requisite contractor’s license; this case had a dramatic impact on the law regarding the supposed non-reviewability of arbitration awards (under the Supreme Court’s decision in Moncharsh); contract litigation – obtained jury verdict which held that our sophisticated client had signed a detailed 30 page contract drafted by the other side’s lawyer “under the gun” of “economic coercion” – as a result, the court determined that the contract was unenforceable; successful representation of lawyers in law firm dissolution disputes; recent successful defense (via summary judgment) of landlord in wrongful death suit where commercial tenant’s machinery was arguably defective and dangerous in case which provides new clarity to murky area of law regarding potential for commercial landlord liability for tenant’s negligence; successful prosecution of legal malpractice claims; successful representation in real estate and broker liability cases; extensive experience successfully prosecuting cases against banks and in defending clients against foreclosure actions; successful defense of franchise and patent infringement claims in federal court; successful representation in personal injury prosecution and insurance defense; and much more.
EDUCATION
University of California, Davis, Bachelors of Science, 1968
University of California, Davis, J.D., 1972
ADMISSIONS
California Bar, 1972
United States District Court, 1974
United States Tax Court, 1998
HONORS AND AFFILIATIONS
California State Bar
Sacramento County Bar
Consumer Attorneys of California
AV® Preeminent™ 4.9 Peer Review Rated™ by Martindale-Hubbell®
ACADEMIC ACTIVITIES
Mediator
Settlement Conference Judge
RESULTS
Business Litigation
After an 8 week jury trial we achieved a result which everyone, including the trial judge at the outset, thought was impossible. We got a formal contract which had been executed by 15 partners on our side, one of which was a lawyer, declared “void” on the ground that our clients had been “economically coerced” into executing the contract.
Details
Our client made a “paper napkin” deal with its neighbor to trade some legal rights to use of the other’s property in exchange for some parking rights on our client’s property. The adverse party hired renowned real estate counsel to formalize the agreement. He added provisions to the formal contract which had not been discussed or agreed upon, so our managing partner refused to sign, and the parties never came to terms on how the paper napkin deal should be finalized. Months later, our managing partner noted that his loan commitment was about to expire, that he had to sign or he would lose a pending loan facility which he had to have. In order to satisfy the lender, he obtained the signatures of his other partners, and turned the executed document over to the adverse party. Then he came to Mr. Kirkman with an impossible request—he wanted Kirkman to get him out of the contract on “economic coercion” grounds. The jury determined the other side had acted improperly, that our clients had executed the contract under “economic duress”, that the contract should be declared void, and that we were entitled to substantial damages.
We obtained a pretrial ruling that a Consent Resolution giving the law corporation’s president “final authority” to determine shareholder compensation did not allow him to allocate firm proceeds without disclosing total firm income to the board of directors.
Details
Pursuant to his demand, the directors and shareholders of a law corporation all executed a formal “Consent Resolution” which specifically gave the president the “final authority” to determine shareholder compensation. This president and another of the firm’s director/members then obtained a record-breaking jury verdict in a catastrophic injury case, but the defendant appealed.
These firm members eventually negotiated a settlement which we later learned was by far the largest the firm had ever obtained in its 40 year history. However, these two shareholders used the alleged “confidential” nature of the settlement, which they claimed the settlor had demanded, as justification for refusing to disclose the terms of the settlement, or even the amount the firm had earned for its fees, to the other shareholders/directors of the firm. We later discovered these two shareholders had caused a large portion of the fees earned by the firm to bypass the firm’s books by instructing the settling tortfeasor to purchase annuities payable directly to them.
Throughout the litigation the defendants were confident they could prove the Consent Resolutions, by giving the president the “final” authority to determine compensation allowed him to do exactly what he did. Our trial judge held a month’s worth of pretrial hearings to decide dozens of in-limine motions and jury instructions. During these proceedings defendants had vigorously asserted that extensive discussions which led up to the execution of the Consent Resolution (referred to as “extrinsic evidence”) supported their interpretation that the president’s authority to determine shareholder compensation was meant to be totally unfettered, and that the jury had to be allowed to hear all this evidence in order to determine exactly how the contract should be interpreted. Mr. Kirkman responded with a brief which asserted that none of this extrinsic evidence was relevant because, at best, it supported a construction of the delegation of management authority to the president which was illegal, because, the delegation, as interpreted, would deprived the board of directors of any “oversight” over the president’s exercise of such authority. It turns out that the precise scope of permissible delegation under applicable statutes is not clear, and that even respected California authorities do not even agree on how to interpret applicable statutes.
We were able to convince the judge that our interpretation of the law was the correct one, and he ruled one day before jury selection was to commence that he would instruct the jury that the delegation of “final” authority to determine compensation did NOT allow the president to withhold information from the other board members about the total distributable income the firm had earned. The case settled immediately after this game breaking ruling was issued. Due to the confidential nature of the settlement, we can’t disclose the terms, however we are allowed to say that the case was settled to the satisfaction of all concerned. ☺
Mr. Kirkman successfully defended sellers of a nursing home who were accused by the buyers of fraudulently misrepresenting material facts concerning the business, including its historical income, and the use of undocumented immigrants as workers.
Although a settlement conference judge had predicted a verdict in favor of the buyers in the multimillion-dollar range, after lengthy jury trial the purchasers received nothing on their complaint, and instead, our client received a very large award on its cross-complaint.
This case was remarkable for several reasons: One, because the lawyer for the purchaser had previously obtained a large verdict against these same clients involving the same nursing home years earlier in another case, (when they were defended by other counsel), and the nursing home’s license had been suspended as a result, yet we were able to convince the court that Plaintiffs should not be allowed introduce this evidence during our trial. Two, Mr. Kirkman was able to use the appellate court’s decision in the Oakland Raiders lawsuit to establish that the alleged misrepresentations of historical income Plaintiffs claimed had occurred were not actionable because the Plaintiffs had obtained documents prior to the purchase which revealed exactly what the historical income had been.
We were able to convince our judge that as a matter of law therefore, the Plaintiffs could not prove any “reliance” on the alleged misrepresentations. This was the same defense the city had raised against the Raider’s misrepresentation claim, and which the appellate court determined required reversal of the $33 million judgment the Raiders had obtained for the city’s alleged misrepresentation.
We are currently defending a wrongful death claim that presents cutting-edge issues that have not yet been directly decided by the California Supreme Court. We are insurance defense counsel for a landlord whose commercial tenant owned and operated dangerous machinery on the landlord’s premises which decedents’ heirs claim violated Cal OSHA regulations. The case presents issues such as the following-what effect does the availability of worker’s compensation benefits have on potential premises liability exposure of landlords whose tenants’ activities constitute a dangerous condition?
We were able to win a summary judgment despite the Portillo case. In Portillo the landlord leased his premises to a liquor store whose owner kept a dangerous guard dog on the premises. After the guard dog attacked a delivery man, the appellate court held that a cause of action could be stated against the landowner for failing to conduct an inspection of his premises which would have revealed the existence of the dangerous guard dog. We contended that the presence of conditions of compensation, and the fact that our premises were not open to the public distinguished our case from Portillo. Our law and motion judge found that Portillo was distinguishable. Plaintiffs have filed an appeal. The status of the law in California on duties, if any, of landlords to inspect their tenant’s machinery, in order to protect their tenants’ employees, is not as clear as it should be given the Portillo case. We anticipate that our case will provide badly needed clarification.
Banking Law | Lender Liability Litigation | Swap Contracts
Our client’s loan was supposed to be “assumable”. When he asked the bank to consider whether the prospective purchaser of his shopping center could assume the loan, the lender demanded that our client execute a “Pre-Negotiation Agreement” (“PNA”) before it would even look at the buyer’s credit.
Our lawsuit claimed the bank had acted unreasonably in refusing to even consider approving the proposed assumptor unless we would first execute this PNA. The bank’s expert, a Boalt Hall professor who taught lender liability, testified that the bank’s PNA was a “typical” document used throughout the banking industry. The bank was so sure of its position that it filed for summary judgement.
The bank clearly was taken aback when it received our summary adjudication motion which we had filed the same day, which asserted that the PNA should be declared void as a matter of law–because it purported to release the bank for its future conduct, (including intentional torts such as fraud, for example). It had apparently never occurred to the bank or the banking industry or its fancy lender-liability expert that their PNA agreement expressly violated California laws which regulate the scope of permissible releases for future conduct. The bank coughed up a very substantial sum of money to settle the case immediately after receiving our summary judgment motion.
Banks love to serve “Ex Parte” Applications for Appointment of a Receiver. Such applications give banks extreme advantage because ex parte applications only require 24 hours’ notice, thereby depriving the borrower of the standard notice of motion period to which they’re normally entitled. The bank can serve 20 pounds of paper on the borrower who must prepare some opposition by the next morning.
Due to our extensive experience in defending commercial litigants against overreaching by lenders, we’ve achieved a very high rate of success resisting these ex parte applications. We’ve had as many as 30 cases going at one time representing debtors who were resisting efforts by banks to foreclose or collect upwards of $750 million in total.
The firm has substantial experience litigating the “sham” guaranty defense, which may call into question the validity of a guaranty where the lender seeks to hold the true obligor liable for greater amounts on a guarantee than would be attainable directly against the primary borrower, who is entitled to the benefits of anti-deficiency legislation. In one case we settled a $4.75 million obligation on a guaranty for $400,000.
Our recent discovery may turn out to be a blockbuster revelation for extensive interest-rate-swap contract litigation in the U.S., which is currently mired down.
For some years banks have been selling interest rate “swap” contracts as a “hedge” against rising interest rates. These “swap” contracts have been the subject of extensive litigation in the United Kingdom and elsewhere, with borrowers claiming there was large-scale “miss-selling” of these swap contracts because banks failed to adequately disclose the potential downside for the borrower in a declining interest rate market. In other countries litigants have recovered billions of dollars litigating these swaps.
Currently, cities across the US (including the City of Sacramento) as well as other institutional borrowers have been attempting to obtain recovery on the same basis. However, few of these litigants have achieved any success thus far. This may be largely because banks use the standardized Interest Rate Master Agreement (“IRMA”) developed in New York by which borrowers have agreed to resolve all disputes concerning the swap contract by binding arbitration in accordance with New York law, which is very bank-oriented.
This usually dooms the borrower to failure because arbitrators are notoriously biased in favor of the banks who supply arbitrators with much of their business. During our discovery proceedings we got the bank’s swap desk manager to admit that Wells Fargo was routinely, as a matter of policy, breaching the express terms of its own contract. See details regarding this issue under the Arbitration section below.
Arbitration | Arbitration Law | Petitions to Confirm Awards | Petitions to Vacate Awards | Expertise on “Reviewability” of Awards
Binding arbitration award outcomes are extremely difficult to overcome, whether or not they’re a product of inherent bias, because inherent bias is usually impossible to prove, and arbitration awards generally are nearly impossible to overturn due to the California Supreme Court’s decision in Moncharsh v. Heily & Blaise (1992) 3 Cal. 4th 1. In that case our High Court held that, with very limited exceptions, arbitrator’s awards are not subject to “review”—meaning they can’t be overturned or “vacated” by superior court judges who are asked to either “vacate” or “confirm” such awards–even when arbitrators commit egregious legal errors that would easily cause similar rulings by trial judges to be overturned on appeal.
The bottom line means that in return for “quicker” resolution, you’re probably giving up your right to have a blatantly-incorrect decision overturned even if a biased arbitrator totally ignores the law, the facts, and the parties’ contract–in order to find some way to issue a ruling that favors the party which is most likely to provide him with a steady stream of future employment!
Despite such constraints, Mr. Kirkman was able to settle one case for a small fraction of a $4 million arbitration decision which had been suffered by a litigant when defended at the arbitration proceeding by predecessor counsel. Additionally, Mr. Kirkman has an appeal pending which he predicts will become the biggest blockbuster exception to the Moncharsh rule since that decision was handed down.
After being assessed with a $4 million award following binding arbitration conducted by other counsel, the client asked Mr.Kirkman whether anything could be done. At first it looked impossible simply because of the difficulty in obtaining any kind of judicial review of arbitration awards due to the California Supreme Court’s decision in Moncharsh described above. However our investigation revealed a startling new fact—namely that while the negotiations for the construction contract which was the subject of the arbitration were going on, the plaintiff contractor modified the form of the entity which would enter into the construction contract; however he failed to move his contractor’s license to that entity before executing the construction contract.
Then, he prosecuted his claim for breach of the construction contract in the name of the new entity. While this would have been a strong defense had the lack of the requisite license been brought to the attention of the arbitrator, we were handicapped by the fact that the arbitration had been completed and a final award made without the issue having been brought up until time for motions to confirm or vacate the award. We countered the prevailing party’s motion to confirm the award with our own motion to vacate based on our claim that the prevailing party lacked the required contractor’s license, and therefore he was not entitled to enforce his claim.
The superior court judge who heard the respective motions to confirm or vacate stated she thought the question was one of first impression, but when she stated she was leaning our way, we were able to settle the case for a modest sum. A subsequent appellate decision in another matter, which was considered to be a “landmark” decision, validated that we were indeed correct–that the doctrine of non-recoverability due to lack of a required contractor’s license supported by such strong public policy tenants that the issue is one that could trump the strong policy favoring finality of arbitration awards.
One court of appeal decision issued shortly after Moncharsh opined that an arbitrator who engages in a completely irrational construction of the terms of the contract could be overturned. The rationale is that the arbitrator obtains his power to decide the dispute from the parties’ contract, therefore he should have to follow the terms of the contract which gave him that power in the first place. The California Supreme Court has commented repeatedly on this case without stating whether it did or did not approve of that “completely irrational construction” criteria. Mr. Kirkman’s case, discussed below, will likely test the limits of this exception.
Details
The financial industry’s standardized Interest Rate Master Agreement (“IRMA”) for interest rate “swap” contracts required the bank to obtain three independent third party quotes for the fees such institutions would charge for “early termination” of a swap contract as a condition precedent to the lender’s ability to charge any early termination fee. We discovered the lender had not obtained any third party quotes in our case—rather, the bank had simply made its own “internal” determination of the fee it thought would be appropriate, based on “market” data. The bank’s own Swap Desk Manager testified that Wells didn’t have to obtain the third party quotes because it was the borrower, not the bank, who wanted the early termination. This manager attempted to justify Wells’ conduct by stating that it was the bank’s “standard policy” to notseek third party quotes when the borrower “voluntarily” requested early termination. We contend the “voluntary” nature of the borrower’s request for early termination is irrelevant simply because the IRMA contract expressly contemplates early repayment, which necessarily contemplates “voluntary” action on the part of the borrower, as one of the only two events (early termination or borrower default) which allows the bank to charge an early termination fee.
Unfortunately for our client, he had agreed to binding arbitration. In granting summary adjudication of our clients’ breach of contract claim against the bank, our arbitration panel held that the bank’s obligation to obtain the third party quotes was somehow excused because it was the “borrower” and not the bank who had sought the early termination. On hearing the parties’ respective motions to confirm or vacate, our superior court judge, who was undoubtedly feeling constrained by the Supreme Court’s Moncharsh decision, ruled that the arbitrator’s interpretation of the swap contract was at least “plausible”, and that the award therefor had to be confirmed. We believe that our Third District’s upcoming decision on our appeal will be a blockbuster on arbitration law. Here’s why: In Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal. App. 4th 576, 591, (“PG&E”), in a case that was decided shortly after Moncharsh was published, our Third District Court of Appeal suggested that despite Moncharsh an arbitration award might still be subject to review and vacature by the superior court if the arbitrator’s interpretation of the contract was so “completely irrational as to amount to an arbitrary remaking of the contract”. [The Court did say that if the arbitrator’s decision was, due to some contract “ambiguity” within some “reasonable” realm of interpretation of the contract terms, that it should not be overturned]. Our Supreme Court has repeatedly observed the Third District’s “completely irrational” exception mentioned above, without expressly stating whether it would or would not approve of vacature of an award on such grounds. We believe that our case will trigger application of the Third District’s criteria in PG&E and require reversal of the Superior Court’s decision to confirm the award.
If the award is ultimately ordered to be vacated by our Third District Court of Appeal as we predict, it will be a blockbuster in that it will test the “completely irrational” threshold. If we win our case will also establish that Wells Fargo’s standard “policy” to habitually breach its own contract whenever the borrower sought early termination due to falling interest is actionable. As Wells’ attorney told the court at the hearing on the motions to confirm or vacate the award, “If Mr. Kirkman is right” [about the reach of the PG&E Court’s “completely irrational” exception], “everyone will be in here attacking arbitration awards.” We suspect that Wells Fargo is probably not the only lender that’s been habitually breaching this industry wide swap contact condition precedent on the same basis, and that the Third Districts’ decision may become a blockbuster which opens the door to more successful attacks on swap contract in the US.
Discovery Disputes | Protective Orders | Attorney’s Eyes Only Demands
It’s now commonplace that litigants demand other litigants agree, as a condition to their responding to requests for production of documents, to stipulated “protective orders” which allow the producing party to designate documents as “Confidential”. However, what happens when a party demands that he be able to mark documents as “Attorney’s Eyes Only” as a condition to production? That means that only the attorney may review the document, e.g. that the attorney can’t show the document to his client.
We see this “AEO” demand quite frequently. In some cases this may not be objectionable. But what happens when you need to have your client review the documents that are being produced in order to determine their relevance, or to assist you in processing the documents if the quantity is large, or to assist you in evaluating what follow-up production request are required?
We recently litigated a protective order demand where the defendant was accused of unlawfully opening a competing business and stealing thousands of the plaintiff entity’s customers, licensing rights, and other business opportunities. When we demanded copies of all electronic communications the defendant entities had had with customers of the joint entity, we were met with a myriad of objections, including the claim that the responding party had reasonably offered to produce subject to the demanding party stipulating to a protective order that would give the responding party the right to mark documents with the AEO designation.
It was our view that such designation would severely handicap our ability to prepare, because it was our client (a computer scientist) who had the expertise which was necessary to process and evaluate the documents which we estimated could be in the millions which were responsive. Therefore we refused to execute the defendants’ proposed protective order.
Despite extensive meet and confer efforts defendants remained confident that their insistence on their right to mark documents AEO would be upheld by the court. We won our motion to compel, and defendants were ordered to give us virtually all the documents we requested. We also were given a large sanctions award. It’s very rare that substantial sanctions are awarded.
Attorney's Fees
We have pending a request for a very large attorney’s fee award where we successfully defended our client (World Asphalt) against contractual and implied indemnity claims by the Henry Company who purchased World’s asphalt coatings business many years ago.
Details
We recently took over litigation from a prominent San Francisco law firm that had obtained summary adjudication of Henry Company’s claim for contractual indemnification. However, because they failed to present certain admittedly undisputed facts in support of their motion for adjudication of the remaining two causes of action, they failed to obtain summary adjudication of plaintiffs’ implied indemnity and declaratory relief causes of action. This left our clients to face an expensive trial on the remaining claims, with the prospect that Henry Company might also obtain “reconsideration” of the original ruling on the contract claim. After our exasperated client substituted Mr. Kirkman into the case, he contended that due to the “preemption” doctrine, plaintiff could not prevail on the implied indemnity and declaratory relief claims without first obtaining reconsideration and reversal of the original summary adjudication of the contract cause of action.
When we appeared for trial no courtroom was available, but we asserted that the plaintiffs’ plan to request reconsideration from the trial judge was procedurally improper. Plaintiffs then asked the presiding judge to wait to reset the trial until after he had returned to the law and motion judge to obtain reconsideration. After realizing it was too late to file a valid reconsideration motion before the law and motion judge that had granted summary adjudication of the contract cause of action, Plaintiff waited until the five year statute was about to run, and then dismissed the case. Plaintiff obviously hoped that we would just go away, or that if we sought to recover attorney’s fees that we’d be limited to recovery on the contract cause of action.
The case involves a very substantial attorneys’ fee claim, because our client incurred over $230,000 in fees with his prior high priced San Francisco firm alone. The normal rule is that one cannot obtain “prevailing party” attorney’s fees when an action is voluntarily dismissed before the court determines who prevailed on those claims. We’re arguing that this “normal” rule doesn’t apply because, due to the “preemption” doctrine, Henry couldn’t have prevailed on its implied indemnity and declaratory relief claims without obtaining reconsideration and reversal of the court’s earlier ruling which dismissed the contractual indemnity claims. As far as we know our case is the first of its kind to test this question.
Insurance Coverage
Mr. Kirkman recently prosecuted a coverage dispute, again for one of his lawyer clients, who suffered a major fire loss, but then discovered that he didn’t have the full replacement cost he thought he had obtained. The check written by his fire insurance company fell far short of the amount he needed to rebuild. After extensive litigation, we obtained a substantial recovery from our client’s insurance agent—for the full amount of the agent’s E and O policy.
We have substantial experience in forcing insurance companies to defend or indemnify our client. In one remarkable case after the insurer’s coverage counsel had sent several rejection letters, we convinced the insurer it had to defend. Then we built a fire under insurance defense counsel and convinced them they should file for summary judgment. Then we showed the insurance defense counsel exactly how to go about winning that very complicated motion. The summary judgement motion was successful and the insured avoided a potentially catastrophic claim against him.
One of Mr. Kirkman’s most notable cases involved construction of the insurance industry’s then standard “Pollution Exclusion” clause. While this case occurred some years ago, and the clause has been revised to remove the ambiguity, the case illustrates our capacity to take insurance companies to task.
Our client had client purchased land from a company that had operated a motor oil reclamation facility on the site for over 25 years. Our client then leveled the site, and began operating its own facility on the site. The client eventually sold this property to a local developer who purchased it without conducting soils testing. After such testing was conducted, it was determined that the client’s predecessor-in-interest had dumped vast quantities of used motor oil by-product into the dredger tailings, which contaminated the aquifer. The estimated cost of clean- up was in the tens of millions. The purchaser immediately sued our client for rescission.
We filed suit for indemnity against the insurer, which in turn defended on the “pollution exclusion” clause. This clause excluded from coverage any “release” of pollutants into the environment which was not “sudden” or “accidental”. The insurer claimed that because the predecessor had deliberately dumped the pollutants into the aquifer that the exclusionary clause applied. The insurer won summary judgment at the trial court level. We recommended an appeal.
Our appeal brief claimed that the words “sudden” and “accidental” were ambiguous, that the word “sudden” could have more than temporal significance, (e.g. that it could simply mean “unexpected” or “surprise”). We argued that from our client’s point of view, discovery that as a landowner who had not actually participated in the polluting activity, the “release” of polluting wastes into the aquifer, for which he was now liable as a landowner, was “unexpected” and surprising. We lobbied the insurance company hard and argued that it couldn’t afford to let this case be decided by the court of appeal because there were much bigger claims right behind ours by other gross polluters who would love to have our case open the door to this potentially landmark interpretation of the pollution exclusion clause. The insurer had such great concern about the probable success of our appeal that the day before the hearing on the appeal, the insurer paid sufficient money on the policy that the client was able to tender those funds to the purchaser, who in turn agreed to drop his rescission action, and who also agreed to defend and indemnify our client from all responsibility for the pollution. This saved the client potentially tens of millions in exposure for clean-up costs.
This case eventually served as the roadmap which allowed one of the area’s largest polluters to obtain a defense at its insurer’s expense, based upon our arguments. Using the strategy employed by us in defense of the firm’s client, this case significantly changed the landscape of insurance law in the pollution exclusion area.
Many of our institutional clients who are aware of our track record in representing their interests demand or request that their insurers hire our firm to defend their cases when they are sued and the suit is covered by insurance. We are presently representing such a client in defense of a wrongful death action.
Legal Malpractice
We obtained a large settlement against a California lawyer who tried to dupe his cable television company client out of millions of dollars in recoveries obtained in successful lawsuits against governmental entities. That happy client referred one of the Cayman Islands largest private landowners who had been subjected to a similar scheme by its lawyer. These two suits alone resulted in the settlements valued at in excess of $20 million. On the eve of trial in the second matter, we obtained signed acknowledgments by the lawyer that he had tried to defraud the clients.
Patent Litigation | Franchise Litigation
Recently we successfully defended our client against a patent infringement claim in a Minnesota federal court venue where the patent holder filed suit. Our client had been manufacturing product licensed by this licensor for over 20 years using 40 different patents.
When the building industry slowed, our client sought a modification of the royalty payment schedule, to which our client thought the licensor had agreed. A dispute ensured with the licensor claiming our client was in breach of the license by failing to pay full royalties, and abruptly terminated all license agreements with only 30 days notice.
This was potentially disastrous for our clients who, due to the abrupt termination, would be unable to fulfill pending multimillion dollar supply contract commitments, and who would then be vulnerable to competition by the licensor for our clients’ own customer base from the licensor who wanted those customers. Our only choice was to keep manufacturing the licensed product and to claim that the abrupt termination notice was unlawful, and to try to buy time to develop our own licensed product.
Through great effort and a vigorous defense, and many flights to Minneapolis, we were able to extricate our client from this very precarious situation. First, we defeated the licensor’s initial application for injunctive relief. After an arduous hearing we convinced the District Court Judge that the licensor hadn’t met his burden of establishing a sufficient likelihood of prevailing on the merits such that he was entitled to the injunction. However the Court denied the application without prejudice to the licensor’s right to reapply.
On the second attempt we were able to limit the scope of the injunction to a couple of minor patents that didn’t matter, and as to the one that did, we were able to exclude a key attribute of one of the licensor’s patents from application of the injunction by convincing the Court that part of the patent had been “on sale” by the licensor for more than a year prior to the licensor making application for the patent. This critical “carve out” enabled our client to utilize that feature of the licensor’s patent in its own product it had quickly developed to take the place of the licensor’s product.
Later on we were able to defeat the licensor’s attempt to delay the trial date. The plaintiff had sought a two year delay– claiming the case was far too complicated for the parties or the court to complete within the time constraints which the original trial date permitted. We believed that such protracted delay was designed to allow Plaintiff to make the case so expensive we’d be forced to settle due to the defense costs.
We were successful in defeating this effort. We proffered suggestions how the Court could streamline the case and achieve early resolution via summary adjudication proceedings of discreet issues which would be decisive. Ultimately we won every battle and forced the Plaintiff to accept a small settlement.
Even after the settlement was entered on the record, the licensor’s attorney bitterly complained that he should be allowed to insert key items into the formal settlement agreement which he asserted had been “understood” though not specifically articulated. However, the Court ultimately determined that the Plaintiffs were not entitled to these add-ons. The final result was a great resolution for one of our firm’s most valued clients. The federal District Judge who has adjudicated hundreds of patent cases stated that ours was the most complicated patent litigation dispute he had ever seen.
Real Estate Broker Liability
A prominent real estate broker was hit with a multi-million dollar judgment due to poor representation by another law firm, who failed to even answer requests for admission on time. As a result the court announced an intention to award punitive damages against the broker for most likely in excess of $3 million. We were asked to substitute in just days before the trial on the punitive damages phase. We kept the punitive damages award down to $100,000.
Personal Injury
Our client was seriously injured when he hit his head on the side of a city swimming pool as he was jumping off the side doing “can openers”. We turned down a settlement that would have paid several million dollars to the injured party. Our settlement conference judge opined that this was a no-liability case, and that no recovery would be obtained. After turning the city’s expert into our own, we were able to obtain a structured settlement that will ultimately pay the child about $45 million. In other cases we’ve obtained recoveries as high as 15 times the actual policy limits.
Construction Disputes | Construction Defect | Construction Product Litigation
The installer of pavers for the Port of Oakland blamed his inability to complete the machine installation of pavers on the manufacturer of the pavers, our client. He claimed that the pavers failed to meet industry standards for limits on the amount of “bellying” that was permitted, and that this “bellying” interfered with the installation process.
This installer retained a renowned Florida attorney who had recovered many multimillion-dollar judgments from nationally known product manufactures, and had published several books on product and construction litigation. The exposure to the client was estimated at $8 to 10 million. Over 60 days of depositions were taken, including plaintiff’s experts who were reportedly among the world’s top “paver” experts.
The client had significant exposure because of difficult ambiguities contained in the contract documents and because of the way the national “paver” institute technical manufacturing specifications had historically been written to determine whether pavers were within tolerance for “bellies” or “settling” during the manufacturing process. This litigation was watched closely by the entire industry, and it ultimately changed the way the national paver instituted wrote their specification for ASTM tolerances for pavers, which are mass-produced.
We filed a motion on the eve of trial asking the case be dismissed because the plaintiff had failed to comply with his person-most-knowledgeable duties by claiming “I don’t know” or “I don’t recall”, or words to that effect, repeatedly, in two days of deposition testimony after he got caught in a lie. The case settled after the court announced an intention to grant the motion.
The plaintiff received nothing on his multi-million dollar claim against the firm’s client. Instead, the plaintiff had to pay money to the firm’s client on its cross complaint. The defense was considered to be a tremendous success for this important firm client, whose products and reputation were totally vindicated.
A Northern California city needed to reconfigure its entire city sewer system. It specified clay pipe, the big ones, which are manufactured by one of the firm’s clients. Immediately after installation of several miles of this pipe it was found to be leaking severely. This was causing an influx of thousands of gallons of underground water into the system daily, which intolerable for a sewer system. The city filed suit against everyone involved, including manufacturer of the clay pipe.
We asserted that the clay pipe was not defective, and that the leakage was due to improper installation. While clay pipe can be compromised and cracked if not properly installed, (if not imbedded and supported properly) it will last forever, and always outlasts concrete pipe, if installed properly. Our investigation led us to believe that tremendous amounts of water intrusion at several locations, including those which were proximate to several manholes, would prove that the large cracks in the “bell” end of the pipe had been caused by improper installation. We recommended that our client spend the money to have several of the manhole installations forensically exhumed.
This expenditure proved that the cracking had been caused by improper installation of the manhole, which had allowed the entire manhole to tilt, which caused the failure. This totally vindicated the pipe manufacturer, and demonstrated that the installer was totally responsible, and that the pipe was free of defects. This enabled our client to get out for a small token contribution to a multi million dollar settlement whose cost had to be born almost exclusively by the installer and others.
We have successfully defended numerous other similar construction product defect claims. Our product manufacturing clients have never been successfully prosecuted for construction product defect claims when we defended.
We have successfully defended, or obtained our clients insurance coverage or defense at the expense of the clients’ insurers in cases involving numerous construction defect claims. These have involved claims asserting liability as high as $100 million in exposure, all of which have been resolved in a fashion that was favorable to the client.
CHOOSE A LEGAL PARTNER THAT'S COMMITTED TO YOUR SUCCESS.
To find out how we can help you through the complexities of today’s legal issues, call (916) 920-5286 or click below.
CONTACT
SACRAMENTO
10640 Mather Blvd., Suite 200
Mather, CA 95655
WALNUT CREEK
1350 Treat Blvd., Suite 400
Walnut Creek, CA 94597
Copyright © 2025 WKBK&Y Attorneys at Law | Disclaimer