Business Law Journal

What happens when a judge issues a decision based on legal authority that does not exist?  And what happens if the party adversely affected by that phony decision was oblivious to that fact until after the order was issued?  In what feels like a sign of the times, the California Court of Appeal recently confronted an issue that would have been unthinkable a few years ago: a court order based, in part, on case law that was entirely fabricated by a computer program and no one blinked an eye—at least until it was too late.

Every insurance policy has a maximum limit on the dollar amount that the policy will pay for a covered claim.  Some policies also contain sublimits that apply to specific types of losses.  Policyholders may mistakenly believe that these sublimits are in addition to the primary coverage limits that are available under the policy.  In reality, sublimits restrict or cap the maximum dollar amount that a policy will pay for a risk that is subject to the sublimit, regardless of the total primary coverage amount listed in the policy. 

In Haun v. Pagano (Cal.App.4th, Feb. 18, 2026, No. D084385) 2026 WL 455372 (“Haun”), a California Court of Appeal recently analyzed the impact of a unilateral fee-shifting provision involving competing claims for financial elder abuse brought under the Elder Abuse and Dependent Adult Child Protection Act (codified as Welfare and Institutions Code §§ 15600, et seq.) In Haun, the Court of Appeal held that section 15657.5(a) does not bar an award of attorneys’ fees for defense work that overlaps entirely with the successful prosecution of the prevailing petitioner’s own financial elder abuse claim.

The California Court of Appeal recently affirmed a trial court’s decision to award costs to a prevailing defendant in a member derivative action, even though the derivative plaintiff defeated a bond motion under Cal. Corp. Code §17709.02 at the outset of the case. In Barrios v. Chraghchian, No. B341773, 2026 WL 145207, *1 (Cal. Ct. of Appeal, Jan. 20, 2026), the plaintiff, Mr. Barrios, was an investor in the limited liability company and brought derivative claims against the company's managers, including the named defendant, Mr. Chraghchian, alleging that under their direction the company engaged in unauthorized transactions.

Why This Case Matters: This case alters the normal rules of priority. Recorded agreements that say they are covenants or equitable servitudes can be deemed to be permit conditions that survive foreclosures of prior liens.