Vol. II, No. 10 Join the Real Property Section Contact Us
August, 2007
Recent Cases

-CEQA-
-Commercial Finance-
-Condemnation-
-Construction Law-
-Easements-
-Homeowners Associations-
-Homesteads-
-Inverse Condemnation-
-Landlord and Tenant-
-Land Use-
-Real Estate Litigation-
-Trespass to Land-
-Trust Deed Foreclosure-
-Water Law-


-CEQA-
County violated California Environmental Quality Act by approving development project without ensuring an adequate water supply and where a critical component of the project, a new well field, would have significant environmental impacts such as spreading perchlorate and drying up wetlands. Trial court’s finding that county did not violate CEQA by rejecting proposed mitigation measures was supported by substantial evidence, including an analysis by a qualified expert who explained in detail why proposed on-site wetlands preserve was not biologically superior to developer’s plan, together with testimony by real estate experts that development with the proposed preserve would not be marketable.
     Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (Sunrise Douglas Property Owners Assn.) - filed June 13, 2007, publication ordered July 13, 2007, Third District
     Cite as 2007 SOS 4541
     
Full text

-Commercial Finance-
Where the liabilities of an applicant of a letter of credit, on the one hand, and the guarantors, on the other, were not equal, land developer was not entitled to contribution from the guarantors for monies it paid pursuant to the letter of credit. Plaintiff was not entitled to equitable subrogation to any rights of lender against guarantors to obtain pro rata contribution where guarantors were not primarily liable on the loan obligation.
     Morgan Creek Residential v. Kemp - filed July 24, 2007, Third District
     Cite as 2007 SOS 4546
     
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-Condemnation-
A commercial tenant’s loss of goodwill after condemnation in furtherance of a redevelopment plan may be valued by a "cost to create" approach where a nascent business has not yet experienced excess profits but clearly has goodwill within the meaning of the applicable statute. Trial court did not err in admitting expert testimony regarding tenant’s potential for increased patronage and profit--"cost to create"--as opposed to "excess profits."
     Inglewood Redevelopment Agency v. Aklilu - filed July 30, 2007, Second District, Div. Three
     Cite as 2007 SOS 4804
     
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-Condemnation-
In condemnation action, when presented with a proffer that there is a highest and best use that is not permitted by the property’s current zoning, trial court should examine whether the proffer supplies sufficient evidence to permit the jury to find that there was a reasonable probability of rezoning to permit that use in the near future and then instruct jury that it may consider the change in use, provided that it first finds a reasonable probability the property could be rezoned in the near future. Prior to trial on issue of just compensation, court usurped jury’s role by deciding there was no reasonable probability the property would be rezoned as anything other than resource conservation and therefore barring landowner’s appraisal experts from presenting evidence that the highest and best use of the property was comprehensive development for residential, commercial, industrial, and recreational uses. Landowner failed to present evidence supporting temporary severance damages for the allegedly adverse impact of pipeline construction project on its ability to use, develop, and market its property during the seven-year period of construction where landowner based claim on mere fact of delay due to construction rather than identifying any intended use of the property during the relevant period or any specific loss attributable to the delay in construction.
     Metropolitan Water District of Southern California v. Campus Crusade for Christ, Inc. - filed July 23, 2007
     Cite as 2007 SOS 4521
     
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-Construction Law-
Where property owner sued subcontractor for breaching its contract with general contractor, owner was entitled to attorney fee award as a third-party beneficiary of contract between subcontractor and general contractor where contract contained no limitation by subcontractor on any rights that owner could derive from the contract, broad language of attorney fee clause in contract extended to any court action on the contract without reference to who could bring it, and owner paid subcontractor directly so that subcontractor understood owner was the party most likely to bring a claim.
     Loduca v. Polyzos - filed July 16, 2007, Third District
     Cite as 2007 SOS 4564
     
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-Construction Law-
Where settlement agreements between contractor and subcontractor stated that "Subcontractor and its insurers" were released and discharged from all claims relevant to instant construction defect action at bar, subcontractor’s insurer had standing to sue contractor under the agreements. Insurer also had standing to sue under a settlement agreement reached at a conference where insurer made clear it was appearing on its own behalf and not on behalf of subcontractor.
     Performance Plastering v. Richmond American Homes of California Inc. - filed July 24, 2007, Third District
     Cite as 2007 SOS 4533
     
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-Construction Law-
Where contractor sues to recover compensation for work requiring a contractor’s license, a defendant’s answer containing a general denial of the material allegations of the contractor’s claim is sufficient to "controvert" the contractor’s allegation of licensure and thus invokes the requirement of Business and Professions Code Sec. 7031(d) that the contractor prove licensure by producing a verified certificate.
     Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc. - filed July 23, 2007, Second District, Div. Four
     Cite as 2007 SOS 4538
     
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-Easements-
In suit over whether easement existed across lot in favor of homeowner in adjacent subdivision, substantial evidence supported court's finding that easement was extinguished under former Civil Code Sec. 812, which provides that the abandonment of streets and highways extinguishes all private easements claimed therein by virtue of a recorded map, where record contained 1970 resolution by county board declaring the easement vacated, discontinued, and abandoned, and neither homeowner nor any of his predecessors in interest ever recorded a notice of claim of easement over the lot after the resolution was recorded.
     Kinney v. Overton - filed July 18, 2007, Fourth District, Div. Three
     Cite as 2007 SOS 4611
     
Full text 

-Homeowners Associations-
Members of homeowners association managed by company alleging that company--which contracted with association to provide services--charged document and transfer fees upon the sale of their residence and retained the fees rather then remitting them to the association failed to state cause of action for violation of Sec. 1368 of Davis-Stirling Common Interest Development Act, which limits fees association may charge but does not place similar restriction on third-party managing agent. Members failed to state violation of Unfair Competition Law, based on company’s allegedly fraudulent nondisclosure of document and transfer fees received, where company only had duty to disclose association’s financial status in reports provided to board of directors and no duty to disclose its own financial status. Consumer Legal Remedies Act does not provide cause of action for transactions such as obtaining documents and transferring title. Where company’s relationship with individual homeowners was not contractual but rather commercial, with company performing a service and charging a fee, association members had no breach of fiduciary duty claim against company.
     Berryman v. Merit Property Management, Inc. - filed May 31, 2007, publication ordered June 25, 2007, Fourth District, Div. Three
     Cite as 2007 SOS 4406
     
Full text 

-Homeowners Associations-
Member’s claim that nonprofit property owners association improperly opined on a dispute that arose between the member and another homeowner after the member constructed a structure blocking the view of the other homeowner was not based on the association’s involvement in the design or construction of a structure and thus fell outside scope of an exclusion of coverage of claims for wrongful acts based on the design or construction of any structure.
     Marquez Knolls Property Owners Association, Inc. v. Executive Risk Indemnity, Inc. - filed July 12, 2007, Second District, Div. Eight
     Cite as 2007 SOS 4507
     
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-Homeowners Associations-
Unit owner was not entitled to declaratory or injunctive relief with regard to encroachments that owner sought to remove from common area or to maintain a nuisance cause of action where substantial evidence supported judge’s findings that unit owners approved an amendment to covenants, conditions, and restrictions giving homeowners’ association discretion to allow such encroachments and that most owners removed their encroachments when asked to do so by association. Entry of judgment, not rendering of verdict, triggers time in which to file memorandum of costs, but prematurely filed memorandum will be treated as timely filed.
     Haley v. Casa Del Rey Homeowners Association - filed July 2, 2007, publication ordered July 26, 2007, Fourth District, Div. One
     Cite as 2007 SOS 4664
     
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-Homesteads-
In distributing proceeds of trust deed sale, trustee properly disbursed surplus proceeds to county to satisfy debtor’s child and spousal support arrearages. County’s authority to record abstract of judgment to collect support is not limited to cases involving welfare payments and is not dependent on assignment of rights by payee. Trial court erred in distributing proceeds to debtor’s former wife to satisfy her claims for a community property equalization payment and for attorney fees ordered in the dissolution proceeding where no recorded lien or encumbrance secured those claims, and where the claims were discharged in the debtor’s bankruptcy proceeding. Trial court erred in distributing proceeds to debtor’s former lawyer, who was retained to assist the debtor in the collection of proceeds from the trustee’s sale, because an attorney’s lien on the prospective recovery of a client must be enforced in a separate action. Debtor failed to produce sufficient evidence to support his claim that he was entitled to $150,000 homestead exemption applicable when a debtor is physically disabled and unable to engage in substantial gainful employment where debtor testified that he was not working due to disability at time of sale but could not recall specific dates on which he worked or didn’t work, and county’s attorney told trial court that county had been receiving wage assignment payments during that period, indicating that debtor was in fact employed.
     Cal-Western Reconveyance Corporation v. Reed - filed July 29, 2007, Second District, Div. Eight
     Cite as 2007 SOS 4302
     
Full text 

-Inverse Condemnation-
Inverse condemnation and nuisance action for damages to residential property allegedly caused by an inadequate drainage system, which allowed flooding of the property during a rainstorm, was time-barred where brought more than three years after flooding occurred and plaintiffs observed damage, regardless of when plaintiffs learned that defendant may have been at fault. Discovery rule does not toll limitations period where plaintiffs’ knowledge that their property has been damaged is sufficient to place them on notice of the need to inquire as to its cause. One-time flooding is not a "continuing" nuisance such as to extend time in which to sue.
     Lyles v. State of California - filed June 29, 2007, publication ordered July 13, 2007, Sixth District
     Cite as 2007 SOS 4511
     
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-Inverse Condemnation-
District court had jurisdiction over state law inverse condemnation claims where claims pertained to property listed as part of an estate subject to federal bankruptcy proceedings. Where landowners claimed that a county ordinance imposing height restrictions on structures surrounding airport runway effected a taking of airspace under the Nevada Constitution as applied to their property, federal court was bound by Nevada Supreme Court’s decision in McCarran International Airport v. Sisolak, 137 P.3d 1110, holding that the owner of property near an airport had a valid property interest in the airspace above the land up to 500 feet and that the height restriction constituted a regulatory taking under both the Nevada and U.S. constitutions. Under Sisolak, ordinance amounted to taking as applied to landowners’ property, and landowners did not waive taking claim by granting county an avigation easement. Landowners failed to show that another county ordinance designating 1.25 acres of their property as a "runway protection zone," which could be used only as a parking lot, a water area, or landscaping, amounted to regulatory taking where landowners failed to allege that the designation constituted either a permanent physical invasion or a complete deprivation of all economically beneficial use of that property, and where the property falling within the designated zone accounted for only 5 percent of landowners’ entire property.
     Vacation Village, Inc. v. Clark County, Nevada - filed July 23, 2007
     Cite as No. 0516173
     
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-Landlord and Tenant-
Under lease agreement giving tenant right of first refusal to purchase property in the event that landlord obtained a "bona fide offer to purchase from a third party" that it was willing to accept, landlord’s intrafamily transfer of the property to grandchildren without giving tenant an opportunity to purchase it did not trigger the right of first refusal.
     Hartzheim v. Valley Land & Cattle Company - filed July 17, 2007, Sixth District
     Cite as 2007 SOS 4589
     
Full text 

-Landlord and Tenant-
Assignee for benefit of creditors does not assume debtor’s liabilities, so landlord, who prevailed in litigation with tenant and tenant’s assignee over security deposit, was not entitled to an award of attorney fees against assignee based on terms of the lease.
     Sherwood Partners, Inc. v. EOP-Marina Business Center, L.L.C. - filed July 27, 2007, Second District, Div. Three
     Cite as 2007 SOS 4677
     
Full text 

-Landlord and Tenant-
Owner of mobilehome park is not liable as a landlord for injuries sustained to plaintiff bystander in a gang shooting that resulted in injury to plaintiff. Landlords ordinarily have no duty to reject tenants who are or may be gang members. Landlord is not obliged to take measures to remove tenant from the premises or bear a portion of the legal responsibility for injuries tenant subsequently causes in absence of showing that violence by that tenant or his or her guests was highly foreseeable. Landlord’s awareness of agent’s belief that one or more members of the tenant family were in a gang did not create the necessary level of foreseeability of violence.
     Castaneda v. Olsher - filed July 30, 2007
     Cite as 2007 SOS 4750
     
Full text 

-Land Use-
Landowner's conduct of submitting a tract map to city planning commission and city council constituted protected activity falling within anti-SLAPP statute, but developer suing landowner for fraud and breach of contract based on its tract map presentation made a sufficient showing to defeat landowner's motion to strike its claims under anti-SLAPP law where developer alleged that landowners agreed in sales contract to use their best efforts to obtain the city's approval of a low density tract map, but instead submitted and obtained preliminary approval for a high density tract map; and that landowner falsely represented that the city required the high density map for approval.
     Midland Pacific Building Corporation v. King - filed July 18, 2007, Second District, Div. Six
     Cite as 2007 SOS 4593
     
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-Real Estate Litigation-
Landowner's conduct of submitting a tract map to city planning commission and city council constituted protected activity falling within anti-SLAPP statute, but developer suing landowner for fraud and breach of contract based on its tract map presentation made a sufficient showing to defeat landowner's motion to strike its claims under anti-SLAPP law where developer alleged that landowners agreed in sales contract to use their best efforts to obtain the city's approval of a low density tract map, but instead submitted and obtained preliminary approval for a high density tract map; and that landowner falsely represented that the city required the high density map for approval.
     Midland Pacific Building Corporation v. King - filed July 18, 2007, Second District, Div. Six
     Cite as 2007 SOS 4593
     
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-Real Estate Litigation-
Trial court erred in applying anti-SLAPP statute to suit resulting from private real estate transactions, to which the alleged petitioning activity--applying for and receiving development permits from city--was merely incidental.
     Wang v. Wal-Mart Real Estate Business Trust - filed July 25, 2007, Fourth District, Div. One
     Cite as 2007 SOS 4575
     
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-Real Estate Litigation-
Assignee for benefit of creditors does not assume debtor’s liabilities, so landlord, who prevailed in litigation with tenant and tenant’s assignee over security deposit, was not entitled to an award of attorney fees against assignee based on terms of the lease.
     Sherwood Partners, Inc. v. EOP-Marina Business Center, L.L.C. - filed July 27, 2007, Second District, Div. Three
     Cite as 2007 SOS 4677
     
Full text 

-Trespass to Land-
Subsurface trespass resulting from migration of waste water produced from oil production activities when naturally occurring water high in salts and other minerals pumped out of the deep ground in conjunction with the extracted oil was disposed of by discharge into unlined percolation ponds and then percolated down, moved into the underlying aquifers, and over time migrated into the aquifer underlying neighboring property, reducing the quality of the subsurface water, was a continuing trespass rather than a permanent nuisance, since abatement by means of a change in defendant's water discharge practices was possible. Jury considering restoration damages should have been instructed, at a minimum, that if it determined damages should be awarded it must decide how much it would cost to restore the groundwater under the neighboring property to its original state; whether the restoration costs were reasonable in light of all the competing interests; that it could deny damages if it concluded the restoration costs would be unreasonable; and that diminution in value may be a legitimate measure of damages where restoration costs are unreasonable. Profits from oil production can be considered benefits obtained within meaning of statute providing for recovery of such benefits in an action for continuing trespass. Statute providing for the recovery of attorney fees in successful action for trespass to land under cultivation applies to subsurface trespass to a right that runs appurtenant to cultivated land.
     Starrh and Starrh Cotton Growers v. Aera Energy LLC - filed July 20, 2007, Fifth District
     Cite as 2007 SOS 4477
     
Full text 

-Trust Deed Foreclosure-
In distributing proceeds of trust deed sale, trustee properly disbursed surplus proceeds to county to satisfy debtor’s child and spousal support arrearages. County’s authority to record abstract of judgment to collect support is not limited to cases involving welfare payments and is not dependent on assignment of rights by payee. Trial court erred in distributing proceeds to debtor’s former wife to satisfy her claims for a community property equalization payment and for attorney fees ordered in the dissolution proceeding where no recorded lien or encumbrance secured those claims, and where the claims were discharged in the debtor’s bankruptcy proceeding. Trial court erred in distributing proceeds to debtor’s former lawyer, who was retained to assist the debtor in the collection of proceeds from the trustee’s sale, because an attorney’s lien on the prospective recovery of a client must be enforced in a separate action. Debtor failed to produce sufficient evidence to support his claim that he was entitled to $150,000 homestead exemption applicable when a debtor is physically disabled and unable to engage in substantial gainful employment where debtor testified that he was not working due to disability at time of sale but could not recall specific dates on which he worked or didn’t work, and county’s attorney told trial court that county had been receiving wage assignment payments during that period, indicating that debtor was in fact employed.
     Cal-Western Reconveyance Corporation v. Reed - filed July 29, 2007, Second District, Div. Eight
     Cite as 2007 SOS 4302
     
Full text 

-Water Law-
Subsurface trespass resulting from migration of waste water produced from oil production activities when naturally occurring water high in salts and other minerals pumped out of the deep ground in conjunction with the extracted oil was disposed of by discharge into unlined percolation ponds and then percolated down, moved into the underlying aquifers, and over time migrated into the aquifer underlying neighboring property, reducing the quality of the subsurface water, was a continuing trespass rather than a permanent nuisance, since abatement by means of a change in defendant's water discharge practices was possible. Jury considering restoration damages should have been instructed, at a minimum, that if it determined damages should be awarded it must decide how much it would cost to restore the groundwater under the neighboring property to its original state; whether the restoration costs were reasonable in light of all the competing interests; that it could deny damages if it concluded the restoration costs would be unreasonable; and that diminution in value may be a legitimate measure of damages where restoration costs are unreasonable. Profits from oil production can be considered benefits obtained within meaning of statute providing for recovery of such benefits in an action for continuing trespass. Statute providing for the recovery of attorney fees in successful action for trespass to land under cultivation applies to subsurface trespass to a right that runs appurtenant to cultivated land.
     Starrh and Starrh Cotton Growers v. Aera Energy LLC - filed July 20, 2007, Fifth District
     Cite as 2007 SOS 4477
     
Full text 



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Los Angeles County Bar Association
2007 Real Property Section Newsletter
REAL PROPERTY SECTION REVIEW
Daniel L. Goodkin, Editor    *   Norman A. Chernin, Co-Editor

SECTION OFFICERS
Chair
Timothy M. Truax

First Vice-Chair
Donald C. Nanney

Second Vice-Chair
Michael S. Klein

Treasurer
Pamela L. Westhoff

Secretary
Gregg J. Loubier

Immediate Past-Chair
Norma J. Williams

Paula Reddish K.
Zinnemann,
Chair Emeritus

Terrina Scott
Section Administrator

EXECUTIVE COMMITTEE MEMBERS
Eric Altoon
Nedra E. Austin
Susan J. Booth
Norman A. Chernin
Brant H. Dveirin
Daniel L. Goodkin
Marcia Z. Gordon
John E. Hatherley
William R. Larr
Trudi J. Lesser
Rebecca H. Lessley
Gregg J. Loubier
Phillip G. Nichols
Peter J. Niemiec
Thomas F. Quilling
D. Eric Remensperger
Michael G. Smooke
Linda E. Spiegel
Sarah J. Spyksma
Theresa C. Tate
Valerie Wisot
Andrew J. Yamamoto
Sharon Yarber

David D. Fu
State Bar Liaison

SUB-SECTION CHAIRS
Commercial Development & Leasing, Marcia Z. Gordon
Construction Law, Brian Ostler
Land Use Planning & Environmental Law, Peter J. Niemiec
Real Estate Finance, Susan Booth
General Real Estate Law, Eric A. Altoon
Title Insurance, William R. Larr (Chair) and David Marcus, (Co-Chair)