Can an employer’s name change affect a court case against it?

The California Court of Appeal recently handled a case arising from an employee’s class action complaint in 2007 against her employer, a California corporation formerly known as North American Title Company, Inc. and now known as Lennar Title, Inc.

The class action alleged various wage and hour violations. In 2010, the trial court certified two classes: an “exempt” subclass for salaried employees and a “non-exempt” subclass for hourly-wage employees. Later, the class representatives dismissed their wage and hour claims under California’s Labor Code and chose to proceed solely under the unfair competition law.

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In September 2015, the trial started. In October 2016, the trial judge decertified the non-exempt class but found the employer liable in relation to the exempt class. For several years afterward, a referee held individual hearings and obtained testimonies from almost 250 class members.

In 2018 and 2019, a series of business transactions occurred. This led to the employer, North American Title Company, Inc., adopting the name “CalAtlantic Title, Inc.” States Title FTS Title Company changed its name to “North American Title Company, Inc.” after acquiring the right to do so.

In February 2021, CalAtlantic Title, Inc. adopted “Lennar Title, Inc.” as its current name. In May 2021, States Title FTS Title Company abandoned the name “North American Title Company, Inc.” and took the name “Doma Title of California, Inc.”

In June 2021, the trial judge discussed the corporate restructuring of the North American Title entities in court. He made comments accusing them of participating in a “name change shell game,” in a “corporate game of three-card monte,” and in “trickery” and “scheming” to evade payment.

In October 2021, based on these comments, Doma Title filed a challenge to disqualify the trial judge under section 170.6 of California’s Code of Civil Procedure. The trial judge denied the challenge as untimely.

In August 2022, citing the same comments, Lennar Title filed a statement for disqualification for cause. The trial judge struck this as untimely, as insufficient to support a basis for disqualification, and as successive because Lennar Title was inextricably intertwined with Doma Title, which earlier asked for disqualification.

Employer to pay $43.5 million

The trial judge issued a judgment ultimately ruling that Lennar Title should pay around $43.5 million. Lennar Title appealed.

In the case of North American Title Company et al v. Superior Court of Fresno County, the California Court of Appeal for the Fifth District disagreed with and found flaws in the trial judge’s decision to strike Lennar Title’s statement of disqualification.

First, the appellate court ruled that a statement of disqualification for bias, prejudice, or appearance of impartiality could not be impliedly waived as untimely under section 170.3(b)(2) of the Code of Civil Procedure. Next, the appellate court held that Lennar Title’s statement of disqualification was not insufficient on its face.

Lastly, the appellate court found no legal basis to strike the statement of disqualification as successive or repetitive because Lennar Title never filed a prior statement of disqualification.

The trial judge should not have attributed Doma Title’s actions in filing an earlier disqualification challenge to Lennar Title, given that they were different parties for the purposes of section 170.4(c)(3) of the Code of Civil Procedure, the appellate court said.

The facts relevant to this case involved whether Lennar Title properly compensated class members that it employed under wage and hour laws over a time period ending in 2012, the appellate court noted. Doma Title, which was incorporated in January 2018, was nonexistent and was not involved in the employment of class members during the relevant time period, the appellate court added.