An E-Publication of the Los Angeles County Bar Association

Vol. III, No. 4 Join the Real Property Section Contact Us
February 2008


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Recent Cases

-Bankruptcy-
-Construction Law-

-Covenants, Conditions & Restrictions-
-Homeowners Association-
-Inverse Condemnation-
-Land Use-
-Limited Liability Companies-
-Loan Agreements-
-Purchase and Sale Agreements-
-Real Property Taxation-
-Zoning-



-Bankruptcy-

District court did not err in affirming bankruptcy judgment in which trustee received funds held as collateral to lender to pay trust expenses. The firm representing debtor in loan agreements had waived any claim to these funds since it had not previously provided for a carve-out in the loan agreements to waiver of surcharge or assessment against debtor’s collateral.
     In re Cooper Commons LLC - filed January 3, 2008
     Cite as 06-55624
     Full text                                                                                                                          

-Construction Law-
Payment made after construction is completed is not a "progress payment" for purpose of statute requiring that a penalty be paid if payment is wrongfully withheld.
     Murray's Iron Works, Inc. v. Boyce - filed January 15, 2008, Sixth District
     Cite as 2008 SOS 292
     Full text

-Construction Law-
Where codefendants insurance company and contractors appealed judgment against them and insurance company obtained supersedeas bond from plaintiff, bond secured judgment only against insurance company because it was only principal identified in surety contract; contractors were not party to contract; and nothing in bond stated that insurance company was liable for contractors' portion of judgment.
     United Coastal Insurance Company v. Bechtel Hanford, Inc. - filed January 24, 2008
     Cite as 06-35310
     Full text

-Construction Law-
Statutory prompt payment charges imposed under subdivision (f) of Public Contract Code Sec. 7107 cease to accrue upon entry of judgment and are not compounded on a monthly basis.
     S&S Cummins Corporation v. West Bay Builders, Inc. - filed January 31, 2008, First District, Div. Three
     Cite as 2008 SOS 729
     Full text

-Covenants, Conditions & Restrictions-
Homeowner's association election, pursuant to Civil Code Sec. 1356, on proposal to reduce the number of votes needed to amend CC&Rs may be conducted by mail ballot unless CC&Rs specify otherwise. Failure to conduct vote by secret ballot does not render election invalid where it took place prior to Jan. 1, 2006, the effective date of legislation requiring a secret ballot. Mailing of ballots to all homeowners constituted sufficient effort to permit all owners to vote, even if additional members might have voted if they had also been notified by telephone. Evidence of lender acquiescence to amendment of CC&Rs was sufficient where association averred it "mailed letters and ballots to the holders of the Mortgages as required [by]...the CC&Rs," that "letters were sent via Certified Mail, Return Receipt Requested ('RRR') and the letter informed the mortgagees that the signature on the RRR would be deemed consent of the proposed [amended] CC&Rs, unless a ballot was returned within thirty...days" and that "over 75 [percent] of the mortgagees had signed the RRR." Trial court did not exceed its statutory authority by approving amendment reducing required vote to amend CC&Rs from 75 percent to a simple majority. Statute limiting extensions of CC&Rs to 20 years does not apply where original CC&Rs had an automatic renewal provision; it applies only to CC&Rs that have a termination date and do not provide for an extension. Burden of proof is on owner challenging CC&Rs to show lack of reasonableness; a CC&R is unreasonable if it is arbitrary and capricious, violates the law or a fundamental public policy or imposes an undue burden on property, and it is reasonable unless it meets those criteria.
     Fourth La Costa Condominium Owners Association v. Seith - filed January 4, 2008, publication ordered January 30, 2008, Fourth District, Div. One
     Cite as 2008 SOS 680
     Full text                                                                                                                         Back to Top

-Homeowners Association-
Homeowner's association election, pursuant to Civil Code Sec. 1356, on proposal to reduce the number of votes needed to amend CC&Rs may be conducted by mail ballot unless CC&Rs specify otherwise. Failure to conduct vote by secret ballot does not render election invalid where it took place prior to Jan. 1, 2006, the effective date of legislation requiring a secret ballot. Mailing of ballots to all homeowners constituted sufficient effort to permit all owners to vote, even if additional members might have voted if they had also been notified by telephone. Evidence of lender acquiescence to amendment of CC&Rs was sufficient where association averred it "mailed letters and ballots to the holders of the Mortgages as required [by]...the CC&Rs," that "letters were sent via Certified Mail, Return Receipt Requested ('RRR') and the letter informed the mortgagees that the signature on the RRR would be deemed consent of the proposed [amended] CC&Rs, unless a ballot was returned within thirty...days" and that "over 75 [percent] of the mortgagees had signed the RRR." Trial court did not exceed its statutory authority by approving amendment reducing required vote to amend CC&Rs from 75 percent to a simple majority. Statute limiting extensions of CC&Rs to 20 years does not apply where original CC&Rs had an automatic renewal provision; it applies only to CC&Rs that have a termination date and do not provide for an extension. Burden of proof is on owner challenging CC&Rs to show lack of reasonableness; a CC&R is unreasonable if it is arbitrary and capricious, violates the law or a fundamental public policy or imposes an undue burden on property, and it is reasonable unless it meets those criteria.
     Fourth La Costa Condominium Owners Association v. Seith - filed January 4, 2008, publication ordered January 30, 2008, Fourth District, Div. One
     Cite as 2008 SOS 680
      Full text

-Inverse Condemnation-
County’s refusal to allow lessee of county land from removing improvements at end of lease term did not amount to inverse condemnation even if such refusal was a breach of lease. County’s breach of lease did not entitle plaintiff to value of in-place improvements as damages where Coastal Commission regulations would have prevented removal of improvements even if county had consented.
     County of Ventura v. Channel Islands Marina, Inc. - filed January 30, 2008, Second District, Div. Six
     Cite as 2008 SOS 752
     Full text                                                                                                                       Back to Top

-Land Use-
California Coastal Act of 1976 does not empower the California Coastal Commission to declare that property is an "environmentally sensitive habitat area" during an administrative appeal from a local government’s grant of a coastal development permit.
     Security National Guaranty, Inc. v. California Coastal Commission - filed January 25, 2008, First District, Div. Five
     Cite as 2008 SOS 627
     Full text

-Limited Liability Companies-
Where defendant limited liability company entered into contract to sell real property to partnership, and partnership subsequently assigned rights under contract to plaintiff limited liability company that did not exist at time of contract formation, plaintiff could enforce any pre-organization contract made on its behalf if plaintiff adopted or ratified such agreement, and trial court erred in granting summary judgment to defendant. Defendant could not argue that plaintiff failed to adopt or ratify agreement where defendant did not raise argument below. Where defendant contended that plaintiff was required to present admissible evidence that it would have been financially able to close transaction, but presented no evidence that plaintiff could not arrange for necessary funding to close transaction on time, burden of production never shifted to plaintiff to present contrary evidence, and summary judgment for defendant was improper.
     02 Development, LLC v. 607 South Park, LLC - filed January 30, 2008, Second District Div. One
     Cite as 2008 SOS 698
     Full text

-Loan Agreements-
District court did not err in affirming bankruptcy judgment in which trustee received funds held as collateral to lender to pay trust expenses. The firm representing debtor in loan agreements had waived any claim to these funds since it had not previously provided for a carve-out in the loan agreements to waiver of surcharge or assessment against debtor’s collateral.
     In re Cooper Commons LLC - filed January 3, 2008
     Cite as 06-55624
     Full text                                                                                                                       Back to Top

-Purchase and Sale Agreements-
Where defendant limited liability company entered into contract to sell real property to partnership, and partnership subsequently assigned rights under contract to plaintiff limited liability company that did not exist at time of contract formation, plaintiff could enforce any pre-organization contract made on its behalf if plaintiff adopted or ratified such agreement, and trial court erred in granting summary judgment to defendant. Defendant could not argue that plaintiff failed to adopt or ratify agreement where defendant did not raise argument below. Where defendant contended that plaintiff was required to present admissible evidence that it would have been financially able to close transaction, but presented no evidence that plaintiff could not arrange for necessary funding to close transaction on time, burden of production never shifted to plaintiff to present contrary evidence, and summary judgment for defendant was improper.
     02 Development, LLC v. 607 South Park, LLC - filed January 30, 2008, Second District Div. One
     Cite as 2008 SOS 698
     Full text

-Purchase and Sale Agreements-
Where one provision of arbitration agreement stated that issues of enforceability or voidability were to be decided by arbitrator, but another provision indicated that a court might find a provision unenforceable, trial court did not err in determining that agreement was unenforceable because it did not "clearly and unmistakably" reserve issue of enforceability to arbitrator. Trial court’s determination that agreement, which was referred to in contract between home builder/seller and purchasers, was procedurally unconscionable for surprise and oppression because it was not readily available to purchasers was not error where agreement was not provided to purchasers at same time as referring document, and was presented for signature only just before close of escrow. Trial court’s determination that agreement was substantively unconscionable as one-sided was not error where builder would have no reason to institute legal proceedings against purchasers after escrow closed, but virtually every claim purchasers might raise against anyone involved in construction would be subject to agreement.
     Baker v. Osborne Development Corporation - filed January 31, 2008, Fourth District, Div Two
     Cite as 2008 SOS 700
     Full text

-Real Property Taxation-
Tenant or its successors in interest have standing to seek a refund of property tax levied on parcels occupied by tenant under long-term leases requiring tenant to pay the real property taxes where the term of the lease exceeded 35 years, making tenant the beneficial owner for tax purposes, and it was tenant or its successors in interest who actually paid the taxes.
     County of Los Angeles v. Raytheon Company - filed January 18, 2008, Second District, Div. Seven
     Cite as 2008 SOS 440
     Full text                                                                                                                        Back to Top

-Zoning-
Streamlined zoning process--in which county gives notice of hearing before board of supervisors before planning commission has made its recommendation on proposed zoning ordinance or amendment to zoning ordinance--does not comport with state Planning and Zoning Law.
     Environmental Defense Project of Sierra County v. County of Sierra - filed January 9, 2008, Third District
     Cite as 2008 SOS 112
     Full text


               

Upcoming Events

2/20/08
Sponsoring Subsection: Real Estate Finance
Real Estate Finance Update
An overview of recent developments in real estate finance, including a review of significant cases and legislation and a discussion on selected topics of current interest in real estate finance.      
Speaker: Ira J. Waldman, Cox Castle & Nicholson LLP
Information / Online Registration

2/26/08
Sponsoring Subsection: Construction Law
Acret Award and Annual Construction Law Update
If there is one MCLE seminar that is a mandatory for all construction lawyers it is this one. The attorneys from Sheppard Mullin’s construction group will update you on all of the latest developments over the past year in construction law. This includes an in-depth handout that contains case summaries and new legislation. We will also honor an attorney with the Acret Award for their outstanding contribution to the construction law practice area. 
Speakers: Harold E. Hamersmith, Sheppard, Mullin, Richter & Hampton LLP; Helen J. Lauderdale, Sheppard, Mullin, Richter & Hampton LLP; Candace L. Matson, Sheppard, Mullin, Richter & Hampton LLP 

Information / Online Registration

4/9/2008 - Note Date Change
Benjamin S. Crocker Symposium on Real Estate Law and Business 2008
For more information please visit
www.crocker2008.com
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For more information visit the  LACBA Calendar


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Los Angeles County Bar Association
2008 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)