Articles Posted in California Courts of Appeal

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A commercial developer lost a parcel of real property in a trustee’s sale following a nonjudicial foreclosure. It sued the title company that conducted the sale as a trustee. The Court of Appeal concluded upon review of this matter that a trustee in such a sale is subject to tort liability only for the violation of duties established by the deed of trust and governing statutes, unless the trustee has effectively taken on a different or modified duty by its actions. Here, the developer, plaintiff-appellant Citrus El Dorado, LLC, sued in part for failure to verify certain matters that the trustee, defendant-respondent Chicago Title Company, had no contractual or statutory duty to verify. The Court determined neither the deed of trust nor the governing statutes expressly created a duty on the part of Chicago Title to verify that the beneficiary received a valid assignment of the loan or to verify the authority of the person who signed the substitution of trustee. "Citrus has not cited, and we have not discovered, any authority holding a trustee liable for wrongful foreclosure or any other cause of action based on similar purported failures to investigate. To the contrary, the trustee generally 'has no duty to take any action except on the express instruction of the parties or as expressly provided in the deed of trust and the applicable statutes.'" The Court therefore affirmed the trial court's order sustaining without leave to amend Chicago Title's demurrer to Citrus' second amended complaint. View "Citrus El Dorado v. Chicago Title Co." on Justia Law

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MTA filed suit against Yum Yum in eminent domain to take one of Yum Yum's donut shops that was in the path of a proposed rail line. The trial court determined that Yum Yum was not entitled to compensation for goodwill under Code of Civil Procedure section 1263.510, because Yum Yum unreasonably refused to relocate the shop to one of three sites MTA proposed at the entitlement trial. Based on section 1263.510's legislative history, accompanying Law Review Commission Comments, case law, and the general principles governing mitigation of damages, the Court of Appeal held that a condemnee is entitled to compensation for lost goodwill if any portion of that loss is unavoidable. The court held that a condemnee need only prove some or any unavoidable loss of goodwill to satisfy the condemnee's burden to demonstrate entitlement to compensation for goodwill under section 1263.510. In this case, the court held that the trial court erred in finding that Yum Yum's failure to mitigate some of its loss of goodwill precluded compensation for any loss of goodwill. Accordingly, the court reversed and remanded for a jury trial on the value of the lost goodwill. View "Los Angeles County Metropolitan Transportation Authority v. Yum Yum Donut Shops" on Justia Law

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The City brought an action against homeowners and their mortgage lender, SunTrust, and sought the appointment of a receiver to undertake the remediation of a public nuisance created by the homeowners on their residential property. Determining that the appeal was not moot, the Court of Appeal held that the trial court did not abuse its discretion in authorizing a super-priority lien to secure the loan taken by the receiver to fund remediation of the homeowners' property. In this case, because neither the homeowners nor SunTrust was willing to fund the costly remediation and the property did not produce any income, the receiver had to borrow money in order to proceed with the remediation. Because no lender would loan money to the receiver unless the loan was secured with a super-priority lien on the property, the only way to effect the remediation was to authorize the receiver's request to issue such a receiver's certificate. The court held that SunTrust's contention that it should remain the senior lienholder—and benefit from the increased property value provided by the remediation while bearing none of the cost—was simply untenable. View "City of Sierra Madre v. SunTrust Mortgage" on Justia Law

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Real Estate of the Pacific, Inc., doing business as Pacific Sotheby's International Realty (Sotheby's), David Schroedl, and David Schroedl & Associates (DSA) (collectively, Defendants) successfully moved for summary judgment against Daniel Ryan and Patricia Ryan, individually and as trustees of the Ryan Family Trust Dated August 25, 2006 (the Ryans). This matter arose over the sale of the Ryans' house in La Jolla. During an open house hosted by Schroedl, the Ryans' next door neighbor, Hany Girgis, informed Schroedl that he intended to remodel his home, which would permanently obstruct the Property's westerly ocean view. Ney and Luciana Marinho (the Marinhos) purchased the Property for $3.86 million. Defendants received $96,5000 at the close of escrow as their commission for the sale. At no time prior or during escrow, in the real estate disclosures, or in conversation, did Defendants disclose Girgis's extensive remodeling plans or their impact on the westerly ocean view and privacy of the Property. After learning this information, the Marinhos immediately attempted to rescind the real estate sales contract for several reasons, including the magnitude and scope of the Girgis remodel, the proximity of the new structure to the property line, the loss of privacy, the elimination of any possibility of a westerly ocean view, and a potential two-year construction project. The Ryans, based in part on Defendants' advice, refused to rescind the purchase real estate sales contract. The Marinhos then demanded arbitration per the terms of the real estate sales contract and sought rescission of the contract or, in the alternative, damages. The Marinhos alleged Defendants knew about Girgis's construction plans and failed to disclose this information. The Ryans sued Defendants for negligence. The crux of Defendants' argument was that the Ryans could not establish the existence of any cause of action without an expert witness. Because the Ryans did not designate an expert witness, Defendants argued summary judgment was warranted. The superior court agreed, granting Defendants' motion. The Ryans appealed the judgment following Defendants' successful motion, contending they did not need an expert witness to establish the elements of their causes of action against Defendants. The Court of Appeal agreed and reversed the judgment. View "Ryan v. Real Estate of the Pacific" on Justia Law

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Orchard Estate Homes, Inc., a planned residential development governed by covenants, conditions, and restrictions (CC&R’s), supplemented by rules and regulations, prohibited short term rentals of units for durations of less than 30 days. When Orchard’s homeowners association attempted to enforce this rule against an owner who used a unit for such purpose, a lower court ruled the rule was unenforceable because it was not contained in the CC&R’s. Orchard put the issue to a vote to amend the CC&R’s. After balloting was completed, approximately 62 percent of the owner-members of the homeowners association voted to prohibit short term rentals, but the percentage was less than the super-majority required to accomplish the amendment. Orchard then filed a petition pursuant to Civil Code section 4275 seeking authorization to reduce the percentage of affirmative votes to adopt the amendment, which was opposed by the Orchard Homeowner Alliance (Alliance), an unincorporated association of owner members, who purchased units for short term rental purposes. The trial court granted the petition and the Alliance appealed, arguing that the trial court erred in ruling that voter apathy was not an element of Civil Code section 4275. Finding no abuse of discretion in granting the HOA's petition, the Court of Appeal affirmed. View "Orchard Estate Homes v. Orchard Homeowners Alliance" on Justia Law

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In 2011, Richmond issued the city's first medical marijuana collective permit to RCCC. Other permits were later issued to the defendants. The ordinance governing the permits was amended in 2014, to reduce the number of dispensary permits from six to three, and to provide that if a permitted dispensary did not open within six months after the issuance of a permit, the permit would become void. RCCC lost its permit. RCCC sued, claiming that defendants, acting in concert, encouraged and paid for community opposition to RCCC’s applications and purchased a favorably zoned property. Defendants filed an anti-SLAPP motion to strike, Code of Civil Procedure section 425.16, which provides that a claim 'arising from any act of that person in furtherance of the person’s right of petition or free speech ... in connection with a public issue shall be subject to a special motion to strike," unless the court determines that the plaintiff has established a probability of success on the merits. One defendant admitted: “Our group declared war on RCCC. We conspired to prevent RCCC from getting any property in Richmond.“ The court ultimately determined that the defendants failed to show how the allegations were protected activity and denied the anti-SLAPP motion. The court of appeal affirmed, stating that the appeal had no merit and will delay the plaintiff’s case and cause him to incur unnecessary attorney fees. View "Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation, Inc." on Justia Law

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Plaintiffs challenged a Monterey County ordinance limiting to four the number of roosters that can be kept on a property without a permit. A permit application must include a plan describing the “method and frequency of manure and other solid waste removal,” and “such other information that the Animal Control Officer may deem necessary.” A permit cannot be issued to anyone who has a criminal conviction for illegal cockfighting or other crime of animal cruelty. The ordinance includes standards, such as maintaining structurally sound pens that protect roosters from cold and are properly cleaned and ventilated and includes exemptions for poultry operations; members of a recognized organization that promotes the breeding of poultry for show or sale; minors who keep roosters for an educational purpose; and minors who keep roosters for a Future Farmers of America project or 4-H project. The court of appeal upheld the ordinance, rejecting arguments that it takes property without compensation in violation of the Fifth Amendment; infringes on Congress’ authority to regulate interstate commerce; violates the Equal Protection Clause; is a prohibited bill of attainder; and violates the rights to privacy and to possess property guaranteed by the California Constitution. View "Perez v. County of Monterey" on Justia Law

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The city approved the agreement with Pacific Gas and Electric Company (PG&E), authorizing the removal of up to 272 trees within its local natural gas pipeline rights-of-way. The staff report explains that this is a Major Tree Removal Project, requiring a tree removal permit and mitigation for the removed trees. PG&E was willing to provide requested information and mitigation but claimed to be exempt from obtaining any discretionary permits. “To ensure that the [community pipeline safety initiative] can move forward and to protect the public safety, PG&E and City staff have agreed to process the ... project under [Code] section 6-1705(b)(S). This section allows the city to allow removal of a protected tree ‘to protect the health, safety and general welfare of the community.’“ Opponents sued, alleging violation of the California Environmental Quality Act (CEQA) (Pub. Resources Code 21000), the planning and zoning law, the general plan, and the tree ordinance, and the due process rights of the petitioners by failing to provide sufficient notice of the hearing. PG&E argued that the suit was barred by Government Code 65009(c)(1)(E), which requires an action challenging a decision regarding a zoning permit to be filed and served within 90 days of the decision. The original petition was timely filed but not served until after the deadline. The trial court dismissed without leave to amend. The court of appeal affirmed as to the ordinance claims but reversed with respect to CEQA. View "Save Lafayette Trees v. City of Lafayette" on Justia Law

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DFS is in the business of duty-free sales at airports and holds an exclusive lease and concession to sell merchandise duty-free in the San Francisco International Airport (SFO) international terminal. AN extension of DFS’s lease agreement triggered a reassessment; the Assessor valued DFS’s possessory interest in the leased properties using the income approach. The parties disputed the income stream used by the Assessor in applying that methodology, which was the full amount of the Minimum Annual Guaranteed rent (MAG). For 2011 this was $26.4 million. Capitalizing that entire amount, and after deducting certain expenses and applying a discount factor, the Assessor arrived at a present value for the possessory interest of $59 million. DFS challenged the assessment under Revenue and Taxation Code provisions that bar the taxation of intangible rights. Section 110(d)(3) expressly exempts from taxation the exclusive right to operate a concession. DFS argued that the MAG was consideration not only for its taxable use and occupancy of space but also for the valuable but non-taxable exclusive concession rights it obtained under the agreement to sell merchandise on a duty-free basis. The court of appeal agreed and reversed. Exclusivity is essential to the business and DFS was willing to pay extra money for it and would have no interest in being at SFO without it. View "DFS Group, L.P. v. County of San Mateo" on Justia Law

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Berkeley approved the construction of three houses on adjacent parcels in the Berkeley Hills, citing the California Environmental Quality Act (CEQA), Pub. Resources Code, 21000 exemption for “up to three single-family residences” in urbanized areas. Plaintiffs opposed the approval, citing the “location” exception: “a project that is ordinarily insignificant in its impact ... may in a particularly sensitive environment be significant … where the project may impact on an environmental resource of hazardous or critical concern where designated.” The projects were within the Alquist-Priolo Earthquake Fault Zone and in a potential earthquake-induced landslide area mapped by the California Geologic Survey. The court of appeal affirmed the denial of the petition for writ of mandate. Giving meaning to the phrase “environmental resource,” the location exception was not intended to cover all areas subject to such potential natural disasters as a matter of law; it applies “where the project may impact on an environmental resource.” The exception reflects a concern with the effect of the project on the environment, not the impact of existing environmental conditions (such as seismic and landslide risks) on the project or future residents Plaintiffs produced no evidence that construction of the three proposed residences would exacerbate existing hazardous conditions or harm the environment View "Berkeley Hills Watershed Coalition v. Berkeley" on Justia Law