Volume 5, Number 8

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July 2010

Special Message

Due to recent changes in LACBA staffing, this month's edition of the Real Property Section Newsletter experienced a delay in distribution. We regret any inconvenience.


Sincerely,

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


Real Property Scheduled Events 
View All Real Property Events

September 1, 2010: September 1, 2010: Loan Mod 101 - Everything You Wanted to Know about the Ethics of Loan Modifications but were Afraid to Ask (12:00 PM)

Recent Cases
Cases from June 1 through June 30

Bankruptcy
Brokers and Finders
Building and Safety
CEQA
CEQA
CERCLA
Construction Law
Deeds
Eminent Domain
Environmental Law
Environmental Law

Land Use
Land Use
Landlord and Tenant
Mortgage Lending
Nonjudicial Foreclosures
Real Property Sales
Redevelopment Law
Rent Control
Title Insurance
Unlawful Detainer


Bankruptcy 
Sufficient evidence supported bankruptcy court's order denying debtor a discharge under 11 U.S.C. Sec. 727(a)(4)(A) where the debtor knowingly and fraudulently made a false oath in connection with the case, which related to a material fact, in his schedules and statement of affairs; debtor's purported reliance on counsel did not demonstrate a lack of fraudulent intent where it was not in good faith. Where debtor transferred a house to his brother for $60,000 less than the market value within one year before filing his petition, and several badges of fraud were present, sufficient evidence supported denial of discharge under Sec. 727(a)(2)(A) for transferring property to hinder, delay, or defraud a creditor. Sufficient evidence supported denial of discharge under Sec. 727(a)(2)(B) over debtor's participation in the transfer of his portion of family-owned assets belonging to the bankruptcy estate without notice to the trustee, with the intent to hinder, delay and defraud creditors, regardless of whether estate lost value as a result. Sufficient evidence supported denial of discharge under Sec. 727(a)(5) for failing to explain satisfactorily loss or deficiency of assets where debtor's schedules and statement of affairs remained inadequate despite his production of over 28,000 pages of records.
     In re Retz - filed June 4, 2010
     Cite as 08-60023
     
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Brokers and Finders
Trial court erred in ruling on summary judgment that plaintiff’s lack of real estate broker’s license was fatal to its claim for agreed-upon fee for identifying and procuring a credit facility for defendant, where triable issues of fact existed as to whether plaintiff provided services for which a license was required or merely provided a structure for defendant to obtain loans, and as to whether, assuming some of plaintiff’s services fell within the licensing requirement, plaintiff was entitled to recover a fee for other services falling outside the requirement.
     GreenLake Capital, LLC v. Bingo Investments, LLC - filed June 14, 2010, Second District, Div. Seven
     Cite as 2010 S.O.S. 3216
     
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Building and Safety
City ordinance requiring hazardous buildings to be retrofitted by a certain date does not insulate owners of unreinforced masonry buildings from negligence causing death or injuries prior to the compliance date. 
     Myrick v. Mastagni - filed June 21, 2010, Second District, Div. Six
     Cite as 2010 S.O.S. 3317
    
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CEQA
City was not required to prepare a subsequent or supplemental EIR regarding the potential impact of a redevelopment on global climate change where city did not grant a discretionary approval that would provide it with the authority to address the project’s impact on that issue. Assuming that, as contended by challenging party, development agreement required nonprofit group to exercise discretionary authority on city’s behalf with respect to various issues on the project, CEQA did not require SEIR with respect to global climate change absent showing that was one of those issues.
     San Diego Navy Broadway Complex Coalition v. City of San Diego (Manchester Pacific Gateway LLC) - filed June 17, 2010, Fourth District, Div. One
     Cite as D055699
    
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CEQA
County abused its discretion in deeming proposed subdivision exempt from California Environmental Quality Act under categorical exemption for in-fill development where subdivision would have been located entirely within unincorporated territory.
     Tomlinson v. County of Alameda (Wong) - filed June 18, 2010, First District, Div. Five
     Cite as 2010 S.O.S. 3311
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CERCLA
Under the Comprehensive Environmental Response, Compensation, and Liability Act, which provides an incentive to parties potentially responsible for cleaning up contaminated sites to settle with the government by leaving non-settling potentially responsible parties liable for all of the response costs not paid by the settling parties, a non-settling party may intervene in litigation to oppose a consent decree incorporating a settlement that, if approved, would bar contribution from the settling party.
     United States v. Aerojet General Corp. - filed June 2, 2010
     Cite as 08-55996
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Construction Law
Where framing subcontractor on a construction project was insured under a commercial general liability insurance policy issued by first insurer and, while insured, entered into a subcontract to perform work on a project and completed that work, and subsequently became insured by second insurer, and first insurer sued second insurer after it declined to defend or indemnify subcontractor in construction defect litigation related to subcontract, second policy was reasonably susceptible to the interpretation that the trigger of coverage was damage to property, not the causal conduct. Trial court erred in granting summary judgment in favor of the second insurer in the first insurer's request for contribution for indemnity payments and the defense it provided.
     Pennsylvania General Insurance Company v. American Safety Indemnity Company - filed June 3, 2010, publication ordered June 28, 2010, Fourth District, Div. One
     Cite as 2010 S.O.S. 3611
     
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Deeds
Quitclaim deed transferring real property to the trustee of a trust that had not yet been formed was not void, and was delivered as of the date the trust was formed, where the deed was executed in anticipation of the creation of the trust.
     Luna v. Brownell - filed June 11, 2010, Second District, Div. Three
     Cite as 2010 S.O.S. 3211
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Eminent Domain
Where city condemned roadway easements over railroad tracks so as to widen a road already traversing the tracks, trial court correctly awarded railroad nominal compensation for the taking insofar as the easements traversed the property within the track corridor, and trial court correctly awarded fair-market-value compensation for the taking insofar as the easements traversed the property outside the track corridor, City of Oakland v. Schenck (1925) 197 Cal. 456, denying fair-use compensation to railroad companies when the opening of a street across railroad did not unduly interfere with the companies’ use for legitimate railroad purposes remains controlling under Eminent Domain Law.
     City of San Jose v. Union Pacific Railroad Company - filed May 20, 2010; publication ordered June 11, 2010, Sixth District
     Cite as H033503
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Environmental Law 
Decision by U.S. Army Corps of Engineers approving the construction of a business park on protected wetlands was not arbitrary and capricious where Corps stated a rational connection between facts found and conclusion that proposed site was the least environmentally damaging practicable alternative. U.S. Fish and Wildlife Service’s biological opinion that proposed project "would not result in the adverse modification or destruction of critical habitat" for certain species was not arbitrary and capricious because agency’s definition of "adverse modification" did not ignore the value of critical habitat for the recovery of the affected species, agency’s finding of no "adverse modification" did not conflict with its determination that project would destroy certain amounts of affected species’ critical habitat, and agency was not required to address the rate of loss of critical habitat for the species in question.
     Butte Environmental Council v. U.S. Army Corps of Engineers - filed June 1, 2010
     Cite as 09-15363
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Environmental Law
Water Code Sec. 13350(b) plainly provides that any person who "causes or permits" a discharge is "strictly liable" "without regard to intent or negligence," and regional water board did not misapply the statute when it imposed a $25,000 fine based on chemical spill on landowner's property that infiltrated the groundwater because there was substantial evidence that landowner caused or permitted the discharge to occur by engaging contractors to perform demolition activity that resulted in the discharge. Substantial evidence also supported board's determination that landowner violated Sec. 13264 by failing to file a report required by Sec. 13260 before initiating a new discharge of waste.
     TWC Storage, LLC v. State Water Resources Control Board - filed June 3, 2010, Sixth District
     Cite as 2010 S.O.S. 3034
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Land Use
In establishing a community/recreation facility impact fee under the Mitigation Fee Act, city is not required to identify specific public improvements; it may instead cite examples of future facilities. Quimby Act, which permits a city or county to enact an ordinance requiring the dedication of land--or the payment of fees in lieu thereof--for park and recreational purposes as a condition of the approval of a subdivision, does not preempt city from imposing fees under other legal provisions, such as the Mitigation Fee Act, to build unique facilities intended to serve the entire population of city or county as opposed to a particular subdivision. In determining that parkland impact fee had to be sufficient to establish five acres of parkland per 1,000 residents--the highest standard allowed by Quimby Act--rather than rely on general plan standard of three acres per 1,000 residents, city did not abuse its discretion because plan proposed acreage standards as "policies" and expressly recognized that circumstances could change. City properly calculated police impact fee based on consultant’s report citing need to expand police department to accommodate future development. Consultant’s report, which noted that some city services are impacted only indirectly by residential development and thus allocated costs between residential and nonresidential development, provided sufficient basis for municipal facilities impact fee. Fire impact fee plan that divided city into two areas was invalid to the extent that it imposed impact fees for development in older area of city where existing services were adequate to provide same level of service to residents of new housing--but lawfully included area of potential annexation in calculating fees for newer area in which future development would require new fire station.
     Homebuilders Association of Tulare/Kings Counties, Inc. v. City of Lemoore - filed June 9, 2010, Fifth District
     Cite as 2010 S.O.S. 3146
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Land Use
Where city denied plaintiff’s application for a permit to operate an adult-oriented cabaret on the basis that it was within 300 feet of a planned church, the issue of whether plaintiff’s permit application was presented to, and should have been accepted by, the city prior to the date the church filed its own application was relevant to determining whether the church’s application was legitimately entitled to priority, even under the city’s own interpretation of its sensitive use ordinance, and city council abused its discretion by failing to address it.
     Madain v. City of Stanton - filed June 23, 2010, Fourth District, Div. Three
     Cite as G042218
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Landlord and Tenant
Where lease provided that “[i]f, for any reason (other than delays caused by Tenant) the Lease Term has not commenced by June 30, 2008, Tenant and Landlord shall each have the right to terminate this Lease by giving written notice to the other,” landlord had right to terminate lease as a matter of law. Tenant’s claim that there was no intent to allow landlord to terminate without cause was untenable, and could not be proven by extrinsic evidence under the parol evidence rule and because the language was not reasonably susceptible to that interpretation.
     Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC - filed June 21, 2010, Fourth District, Div. Three
     Cite as G041414
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Mortgage Lending
Claim that federally chartered lender failed to credit borrowers’ payments to their account, despite having settled an earlier dispute by entering into a written agreement requiring it to do so, was a matter of ordinary contract law, rather than of regulating lending practices, and not preempted by the Home Owners’ Loan Act.
     Harris v. Wachovia Mortgage, FSB - filed May 21, 2010, publication ordered June 18, 2010, Fourth District, Div. Two
     Cite as 2010 S.O.S. 3307
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Nonjudicial Foreclosures
Civil Code Sec. 2923.5--which requires, before a notice of default may be filed, that a lender contact the borrower in person or by phone to "assess" the borrower’s financial situation and "explore" options to prevent foreclosure--may be enforced by a private right of action, and borrower need not tender full amount due to bring such an action. Because the sole remedy under Sec. 2923.5 is a postponement of foreclosure sale, the statute is not preempted by federal home lending laws. Lender’s declaration of compliance with Sec. 2923.5 need not be under penalty of perjury and need not delineate precisely which one of the three categories of compliance applies. Failure to comply with Sec. 2923.5 has no impact on title to property once the foreclosure sale takes place. Action alleging noncompliance with Sec. 2923.5 will generally not be certified as a class action, as individual issues--such as whether lender did or did not attempt to contact a particular borrower, whether lender’s efforts to contact a particular borrower were adequate, whether borrower willfully avoided lender’s efforts to discuss foreclosure avoidance, or truth of lender’s claim that it attempted to work out an agreement with borrower’s attorney--will generally take precedence over common issues.
     Mabry v. Superior Court (Aurora Loan Services) - filed June 2, 2010, Fourth District, Div Three
     Cite as 2010 S.O.S. 3019
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Real Property Sales
Pest inspection company--which allegedly failed to discover and disclose a specified area of dry rot damage, causing plaintiff to fall from a balcony--owed no duty of care to plaintiff, a guest of the property owners to whom the property had been transferred by the previous owner who, in turn, had contracted with defendant to provide report. Since primary purpose of pest inspection was to determine the need to contract for fumigation services, report was for the benefit of property owner, and the inspection company owed no duty of reasonable care to third parties under Civil Code Sec. 1714. Departure from Sec. 1714’s general reasonableness standard was not required by circumstances of plaintiff’s injury where defendant had no way of knowing whether property owner to whom it provided report would make recommended repairs, defendant had no direct control over plaintiff’s fall, defendant bore no moral blame for the fact that property owner did not make recommended repairs, defendant could not compel property owner to make repairs and thus could not prevent future harm, imposition of liability would harm the community by increasing the cost of inspections, and there was no evidence as to the availability of insurance for pest inspectors in this situation.
     Formet v. The Lloyd Termite Control Co. - filed June 10, 2010, Fourth District, Div. Three
     Cite as G042436
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Redevelopment Law
Where trial court ruled for county in validation action under Community Redevelopment Law (“CRL”), invalidating city’s plan on ground that findings of blight were unsupported by sufficient evidence, appellate court could not consider factual findings attached to state legislation that was enacted after trial court ruled. Presence of building code violations within project area did not establish blight where city failed to distinguish between serious and minor code violations, and failed to demonstrate requisite connection between code violations and unsafe buildings. City failed to establish physical blight based on "deterioration" where it relied on an overbroad definition of the term and lacked data showing how deterioration results in unsafe or unhealthy buildings. City failed to establish blight based on "defective design or physical construction" where its purported showing relied largely on assumptions and conclusory findings, its finding of seismic problems was unsupported by evidence that lack of compliance with current building standards rendered any affected structures unsafe, and its presumption of the presence of hazardous materials such as lead-based paint and asbestos was not linked to any proposed remediation. City’s evidence of physical blight based on incompatible uses was inadequate where city failed to link incompatible uses to lowered property values or to show that those uses precluded economic development. Evidence that project area contained smaller parcels, some irregularly shaped, many unbuildable at the time, did not establish blight where city did not address statutory criteria of proper usefulness and development. City could not declare area blighted based on inadequacy of infrastructure where it could not establish physical blight as defined by CRL.
     County of Los Angeles v. Glendora Redevelopment Project - filed June 15, 2010, Sixth District
     Cite as 2010 S.O.S. 3234
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Rent Control
The Ellis Act--which gives landlords "the unfettered right," as outlined in the statute, to remove their residential units from the rental market, and means that cities cannot prevent residential landlords from going out of the landlord business--prohibits public entities from enforcing contractual Ellis Act waivers in all circumstances except those specified in the statute.
     Embassy LLC v. City of Santa Monica - filed June 14, 2010, Second District, Div. Five
     Cite as 2010 S.O.S. 3224
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Title Insurance
Plaintiff who alleged insurer improperly paid millions of dollars to individual title companies to enter into exclusive referral agreements with them had standing because the Real Estate Settlement Procedures Act prohibited the defendants’ conduct and gave plaintiff a statutory cause of action.
     Edwards v. The First American Corporation - filed June 21, 2010
     Cite as 08-56536
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Unlawful Detainer
Where lease authorized electronic service of notices, as well as service by personal delivery and certified mail, but did not identify an individual to whom notice should be directed or provide an e-mail address at which tenant agreed to accept service, service by e-mail of notice to pay rent or quit was inadequate where tenant actually received the notice but landlord failed to present any evidence the e-mail had been delivered to the street address specified in the lease.
     Culver Center Partners East #1, L.P. v. Baja Fresh Westlake Village, Inc. - filed June 14, 2010, Second District, Div. Seven
     Cite as 2010 S.O.S. 3221
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Los Angeles County Bar Association
2010 Real Property Section Newsletter
REAL PROPERTY SECTION PUBLICATIONS
Daniel L. Goodkin, Editor, Real Property Section Review
Norman A. Chernin, Editor, Real Property Section Newsletter

SECTION OFFICERS
Chair
Pamela L. Westhoff

First Vice Chair
Gregg J. Loubier

Second Vice Chair
Theresa C. Tate

Treasurer/Crocker Chair
Sarah V. J. Spyksma

Secretary
Norman A. Chernin


Immediate Past Chair
Michael S. Klein


Section Administrator
Terrina Scott

EXECUTIVE COMMITTEE MEMBERS

Eric Altoon
Nedra E. Austin
Babak B. Baradaran
Susan J. Booth
Claire Hervey Collins
Caroline Dreyfus
Brant Dveirin
Robert T. Flick
Daniel L. Goodkin
Marcia Z. Gordon

Linda S. Koffman
Trudi J. Lesser
Peter J. Niemiec
Robert C. Pearman
Leslie D. Reed
D. Eric Remensperger
Michael G. Smooke
Linda E. Spiegel
Andrew J. Yamamoto


SUBSECTION CHAIRS
Commercial Development and Leasing, Nadav Ravid
Construction Law, Richard Mah
Land Use Planning and Environmental Law, Laurence L. Hummer
Real Estate Finance, Owen P. Gross
General Real Estate Law, Brian R. Hochleutner
Title Insurance, Vanessa A. Widener

 

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