Volume 4, Number 11

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  Oct. 2009 


Special Message

        Dear Members,

The section's Executive Committee members have begun to prepare for the Crocker Symposium
to be held next Spring. This is the opportunity for your firm to get in at the beginning and help plan
the programs by becoming a sponsor. Contact Brant Dveirin at bdveirin@bbklaw.com for more information.

In case you missed the informative Real Property event, Real Property Subsection and Publications Fair, on Tuesday, June 30, 2009, you can view the presentations here in video-clip format:

These videos are also available on the Real Property's Section Publications page.

Sincerely,

Norm Chernin, co-editor, Real Property Newsletter
E-mail address: nchernin@firstam.com

Real Property Scheduled Events 
View All Real Property Events


October 21 through November 4: Real Property Community Outreach Program.
Especially if you are a relatively new practitioner or not a regular attendee at our seminars, you may find the upcoming Outreach Programs of particular interest.

October 21: 
Federal Bailout and Stimulus Affect on Real Estate.
Discussion of the new Federal housing regulations; loan restructuring; new regulatory restrictions upon banks and other financial institutions; what to do when a bank fails, impact of defaults, workouts and foreclosures on credit.

October 28: 
Bankruptcy. 
Explore the use of Federal Bankruptcy Law in the context of real estate transactions, including what counsel needs to know to advise clients considering whether to file bankruptcy, the benefits and burdens of filing pursuant to Chapters 11 and 13.

November 4, 2009: 
Loan Remedies and Restructuring.
Discussion of the foreclosure process and foreclosure defenses, including one-action and anti-deficiency rules; impact of overleveraging, the reality of no financing available at loan maturity, lender remedies and legal strategies; guarantor liability and defenses; and purchasing at a foreclosure sale.

November 17, 2009:  Thorny Real Property Issues in Probate Litigation.
The program will address real property issues that arise in probate including, but not limited to, Probate Section 852 petitions and how to litigate them, unique procedural issues in probate and settlements involving real property, among other topics.

Recent Cases
Cases from September 1 through September 30

CEQA
CEQA
Construction Law
Construction Law
Covenants, Conditions & Restrictions
Eminent Domain

Inverse Condemnation
Land Use
Real Estate Brokers
Real Property Taxation
Recording
Rent Control
Tax-Free Exchanges

CEQA
California Environmental Quality Act did not impose mandatory duty on city to complete and consider an environmental impact report before rejecting a proposed development project. Act also did not establish a statutorily conferred benefit for purposes of due process. Developer’s ownership interest in project site was an insufficient property interest to merit due process protection. A land use application invokes procedural due process only if that owner has a legitimate claim of entitlement to approval. Councilmember’s vigorous opposition to project and alleged procedural errors in connection with the city council vote did not amount to an outrageous or egregious abuse of power of constitutional dimension or a factual basis to conclude that city’s decision was wholly irrational.
      Las Lomas Land Company, LLC v. City of Los Angeles - filed September 17, 2009, Second District, Div. Three
     Cite as 2009 SOS 5640
     Full text                                                                                                                               Back to Top

CEQA
An environmental impact report will be found legally inadequate--and subject to independent review for procedural error--if it omits information that is both required by the California Environmental Quality Act and necessary to informed discussion. Omission of required information constitutes a failure to proceed in the manner required by law where it precludes informed decision-making by the agency or informed participation by the public. Such procedural violations are reviewed de novo, but an agency’s substantive factual or policy determinations are subject to substantial evidence review. Consideration of project alternatives in EIR was legally sufficient where EIR alerted public and decision-making body to potential for trail alignments other than those shown in proposed project, stated that other alignments were considered in prior review processes, and provided enough information to compare proposed project’s merits with a reasonable body of current alternatives. Alternatives discussed in an EIR need not satisfy every key objective of a proposed project, and an EIR need not explore off-site project alternatives in every case. City’s infeasibility findings are reviewed under substantial evidence standard. It does not subvert CEQA environmental review process for ultimate decision-maker to reject as infeasible alternatives identified in EIR. City was legally justified in rejecting environmentally superior alternatives as infeasible on the basis that those alternatives were undesirable from a policy standpoint because they failed to achieve what city council regarded as the primary objectives of project, and substantial evidence supported city’s infeasibility findings. Inclusion of potentially feasible alternatives in EIR did not preclude city’s subsequent finding of infeasibility.
     California Native Plant Society v. City of Santa Cruz - filed August 20, 2009, publication ordered September 18, 2009, Sixth District
     Cite as 2009 SOS 5670
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Construction Law
Point at which a contractor has completed its work and whether a building is complete are both questions of fact, so issue of whether homeowner’s moving into home triggered "completed operations" coverage under contractor’s primary policy was a question of fact to which a substantial evidence standard applied. Substantial evidence supported trial court’s findings regarding project completion date even though homeowner took occupancy prior to that date because owner did not yet have full use of facilities at that time. Trial court did not err in finding contractor’s warranty endorsements were enforceable preconditions for coverage as those endorsements were conspicuous, plain, and clear. Terms "will receive" and "will obtain" in contractors warranty endorsement for umbrella policy meant those warranties would apply any time contractor sought coverage for operations performed or to be performed on its behalf by an independent contractor whether or not those subcontracts were already in existence at policy’s inception. Trial court did not err in ruling that umbrella policy did not "drop down" to cover losses for which there was no coverage under primary policy. Expert opinion regarding relative percentages of responsibility of subcontractors was admissible and did not usurp trial court’s role as trier of fact. Substantial evidence supported trial court’s allocation of relative responsibility to insurers based on duration of each insurer’s responsibility for the risk as well as contractor’s failure to comply with contractors warranty endorsement precondition in one of the policies.
      North American Capacity Insurance Company v. Claremont Liability Insurance Company - filed August 4, 2009, publication ordered September 2, 2009, Second District, Div. Eight
     Cite as 2009 SOS 5443
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Construction Law
Triable issue existed as to whether action was timely under Code of Civil Procedure Sec. 337.1--setting forth a statute of limitations of four years for a patent construction defect, which starts running when the construction is substantially completed--where defendant contended that alleged roof defect was patent when plaintiff homeowners’ association discovered one roof-related water moisture problem in one unit of large complex seven years prior to filing suit, while defendant countered with declaration from its roofing consultant, who was hired in response to multiple leaks occurring during the year prior to suit being filed, finding multiple defects that consultant said "would not be readily apparent to a lay person." Where single unit had a window water moisture problem as a result of tile roofs, owner of that unit reported several broken concrete roof tiles, and no repairs had been observed, trial court erred in finding that plaintiff had, as a matter of law, discovered latent defect, triggering three-year limitations period under Sec. 338.
      Creekridge Townhome Owners Association, Inc. v. C. Scott Whitten, Inc. - filed September 1, 2009, Third District
     Cite as 2009 SOS 5337
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Covenants, Conditions & Restrictions
Where covenants, conditions, and restrictions governing real property assigned a homeowners association the responsibility for landscape maintenance areas, and a drainage ditch crossed homeowner’s property at a location within a landscape maintenance area, trial court erred in granting homeowner summary judgment by assigning responsibility for maintaining the ditch to the homeowner’s association since the circumstances of creation of those CC&R’s indicated that maintenance of drainage was of fundamental importance while landscape maintenance was primarily an aesthetic concern, and undisputed evidence showed that the obligation to maintain drainage ditches had always been undertaken by individual property owners.
     Starlight Ridge South Homeowners Association v. Hunter-Bloor - filed August 14, 2009, publication ordered September 3, 2009, Fourth District, Div. Two
     Cite as 2009 SOS 5503
     Full text                                                                                                                             Back to Top

Eminent Domain
A governmental entity or official may receive immunity for petitioning involved in an eminent domain proceeding. Agents of that litigation may benefit from that immunity as well. Where litigation was protected by the Noerr-Pennington doctrine--which provides that those who petition any department of the government for redress are generally immune from statutory liability for their petitioning conduct--alleged misconduct in discovery communications surrounding that litigation and the trial advocacy of that litigation was likewise protected. District court erred in holding that an exception to the Noerr-Pennington doctrine for sham litigation did not apply where plaintiff alleged that intentional misrepresentations had been made to the district court and fraud upon the district court through the suppression of evidence. District court did not err in finding that California’s litigation privilege barred plaintiff’s state claims where such claims were based on misconduct reasonably related to the eminent domain proceeding.
     Kearney v. Foley & Lardner, LLP - filed May 12, 2009, amended September 18, 2009
     Cite as 07-55566
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Inverse Condemnation
Where owners of mobile home park purchased their property after county had adopted rent control ordinance that was subsequently adopted by city, owners had standing to raise facial challenge to city’s use of ordinance since they had purchased park before city adopted ordinance. Where a takings plaintiff has presented a genuine case or controversy sufficient to satisfy standing, questions of whether a plaintiff has "received a final decision regarding the application of the challenged regulations to the property at issue" and whether plaintiff has "sought compensation through the procedures the State has provided for doing so" are merely "prudential ripeness requirements." Proper inquiry in a facial challenge is not whether property owners can demonstrate that property has been taken without providing evidence beyond the regulation’s text, but whether "mere enactment" of that regulation constitutes a taking, and so a trial court may consider evidence related to an individual property owner that illustrates the economic impact that statute’s enactment had on that owner and proves that owner has suffered injury. Fact that plaintiffs purchased park while park was subject to regulation did not mean that city had not effected a taking or that plaintiffs could not bring such a claim. Since challenged regulation caused substantial economic hardship to plaintiffs and singled out mobile home park owners to bear a burden of providing affordable housing, ordinance constituted a regulatory taking for which just compensation must be paid; however, ordinance did not violate due process or equal protection clause because it was rationally related to the legitimate public interest of promoting affordable housing.
     Guggenheim v. City of Goleta - filed September 28, 2009
     Cite as 06-56306
     Full text 
                                                                                                                            Back to Top

Land Use
California Environmental Quality Act did not impose mandatory duty on city to complete and consider an environmental impact report before rejecting a proposed development project. Act also did not establish a statutorily conferred benefit for purposes of due process. Developer’s ownership interest in project site was an insufficient property interest to merit due process protection. A land use application invokes procedural due process only if that owner has a legitimate claim of entitlement to approval. Councilmember’s vigorous opposition to project and alleged procedural errors in connection with the city council vote did not amount to an outrageous or egregious abuse of power of constitutional dimension or a factual basis to conclude that city’s decision was wholly irrational.
     Las Lomas Land Company, LLC v. City of Los Angeles - filed September 17, 2009, Second District, Div. Three
     Cite as 2009 SOS 5640
     
Full text                                                                                                                             Back to Top

Real Estate Brokers
Where brokerage contract provided that broker would be entitled to a commission if buyer "purchased" the property and specifically defined "purchase" as "any and all acquisitions of any direct or indirect beneficial interest," broker was entitled to commission when buyer entered into a buy-sell contract; close of escrow was not a condition precedent to broker’s entitlement to its commission.
     RC Royal Development and Realty Corporation v. Standard Pacific Corporation - filed September 29, 2009, Second District, Div. Three
     Cite as 2009 SOS 5830
     
Full text                                                                                                                             Back to Top

Real Property Taxation
Existence of pending causes of action between parties does not invariably render non-appealable an order directing an assessment appeals board to re-determine value applying a different valuation method since finality of such an order is dependent on substance of the remaining causes of action. Where resolution of remaining claims will require additional findings of fact, writ order is not appealable. A determination of the base year value for certain property does not automatically determine the assessable value for subsequent years.
     Canandaigua Wine Company, Inc. v. County of Madera (Madera County Assessor) - filed September 2, 2009, Fifth District
     Cite as 2009 SOS 5457
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Recording
Civil Code Sec. 2941(c)'s requirement that a county recorder "stamp and record" a full reconveyance within two business days requires recorder to process that reconveyance but does not include an additional and separate obligation to index document in appropriate databases within two business days.
     Ricketts v. McCormack - filed September 24, 2009, Second District, Div. Seven
     Cite as 2009 SOS 5789
     
Full text  
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Rent Control
Where owners of mobile home park purchased their property after county had adopted rent control ordinance that was subsequently adopted by city, owners had standing to raise facial challenge to city’s use of ordinance since they had purchased park before city adopted ordinance. Where a takings plaintiff has presented a genuine case or controversy sufficient to satisfy standing, questions of whether a plaintiff has "received a final decision regarding the application of the challenged regulations to the property at issue" and whether plaintiff has "sought compensation through the procedures the State has provided for doing so" are merely "prudential ripeness requirements." Proper inquiry in a facial challenge is not whether property owners can demonstrate that property has been taken without providing evidence beyond the regulation’s text, but whether "mere enactment" of that regulation constitutes a taking, and so a trial court may consider evidence related to an individual property owner that illustrates the economic impact that statute’s enactment had on that owner and proves that owner has suffered injury. Fact that plaintiffs purchased park while park was subject to regulation did not mean that city had not effected a taking or that plaintiffs could not bring such a claim. Since challenged regulation caused substantial economic hardship to plaintiffs and singled out mobile home park owners to bear a burden of providing affordable housing, ordinance constituted a regulatory taking for which just compensation must be paid; however, ordinance did not violate due process or equal protection clause because it was rationally related to the legitimate public interest of promoting affordable housing.
     Guggenheim v. City of Goleta - filed September 28, 2009
     Cite as 06-56306
     
Full text                                                                                                                               Back to Top

Tax-Free Exchanges
Tax Court correctly determined that two like-kind exchanges involving related parties were structured to avoid the purposes of 26 U.S.C. Sec. 1031(f)(4), and thus did not qualify for non-recognition treatment under Sec. 1031, where parties' changed economic positions readily showed that they used the exchanges to cash out of an investment in low-basis real property, and that they could have exchanged properties directly but instead employed a paid intermediary without apparent purpose other than to structure the transactions so as to avoid the statute.
     Teruya Brothers, Ltd. v. Commissioner of Internal Revenue - filed September 8, 2009
     Cite as 05-73779
     
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Los Angeles County Bar Association
2009 Real Property Section Newsletter
REAL PROPERTY SECTION REVIEW
Daniel L. Goodkin, Editor    *   Norman A. Chernin, Co-Editor

SECTION OFFICERS
Chair
Michael S. Klein

First Vice-Chair
Pamela L. Westhoff

Second Vice-Chair
Gregg J. Loubier

Treasurer
Theresa C. Tate

Secretary
Sarah V. J. Spyksma

Immediate Past-Chair
Donald C. Nanney


Section Administrator
Terrina Scott

EXECUTIVE COMMITTEE MEMBERS

Eric Altoon
Nedra E. Austin
Babak B. Baradaran
Susan J. Booth
James L. Brat
Norman A. Chernin
Brant Dveirin
Robert T. Flick
Daniel L. Goodkin
Brian Richard Hochleutner
Linda S. Koffman
Rebecca H. Lessley

Peter J. Niemiec
Robert C. Pearman
Leslie D. Reed
D. Eric Remensperger
David C. Sampson
Michael G. Smooke
Linda E. Spiegel
Andrew J. Yamamoto


SUB-SECTION CHAIRS
Commercial Development & Leasing, Marcia Z. Gordon
Construction Law, Richard Mah
Land Use Planning & Environmental Law, Claire Hervey Collins
Real Estate Finance, Caroline Dreyfus
General Real Estate Law, Nadav Ravid
Title Insurance, Gytis L. Nefas

 

Readers are advised that changes in the law may affect the accuracy of this publication or the functionality of links after the publication date.