Justia California Supreme Court Opinion Summaries

Articles Posted in Real Estate & Property Law

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The Supreme Court reversed the judgment of the court of appeal finding the City of Oroville liable in inverse condemnation for property damage suffered by a dental practice when raw sewage began spewing from the toilets, sinks, and drains of its building, holding that where the dentists did not install a legally required backwater valve on their premises the City was not liable for the property damage. The dentists argued that the City was legally responsible for the property damage because it was caused by the sewer system's failure to function as intended. The City argued in response that the damage occurred because the dentists failed to install the backwater valve that would have prevented sewage from entering their building in the event of a sewer main backup. The trial court concluded that an inverse condemnation had occurred. The court of appeal affirmed. The Supreme Court reversed, holding that the damage was not substantially caused by the sewer system when the dentists failed to fulfill a responsibility to install a backwater valve that would have prevented or substantially diminished the risk of the mishap that occurred in this case. View "City of Oroville v. Superior Court of Butte County" on Justia Law

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The Supreme Court held that when an agency considers increasing a property-related fee, the fee payor challenging the method of fee allocation need not exhaust administrative remedies by participating in a Proposition 218 hearing that addresses only a proposed rate increase. Cal. Const. art. XIII D, 6, which was added in 1996 by Proposition 218, requires that before a local governmental agency may impose or increase property-related fees and charges it must notify affected property owners and hold a public hearing. The representative plaintiffs in this class action sought to invalidate a wastewater service charge imposed by a water district, claiming that the district's method for calculating the charge violated one of the substantive requirements of Proposition 218. The trial court concluded that the suit was barred because the plaintiffs failed to exhaust administrative remedies by raising their challenge at public hearings on proposed increases to the rate charged for services. The court of appeal reversed. The Supreme Court affirmed, holding that a Proposition 218 rate hearing was not an administrative remedy that the plaintiffs were required to exhaust under these particular circumstances. View "Plantier v. Ramona Municipal Water District" on Justia Law

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In this real property dispute, the Supreme Court held that Cal. Code Civ. Proc. 580d does not preclude a creditor holding two deeds of trust on the same property from recovering a deficiency judgment on the junior lien extinguished by a nonjudicial foreclosure sale on the senior. In two separate transactions, Defendants borrowed sums of money by executing promissory notes secured by deeds of trust on the same parcel of commercial property. Plaintiff eventually acquired both loans and then purchased the property at a public auction. Plaintiff filed a lawsuit to recover the amount still owed on the second deed of trust extinguished by the foreclosure sale. The trial court concluded that section 580d barred the monetary judgment sought by Plaintiff. The court of appeal reversed, concluding that section 580d did not apply to preclude Plaintiff from suing for the balance due on the junior note in this case. The Supreme Court affirmed, holding that section 580d does not bar a deficiency judgment on a junior lien held by a senior lien holder that sold the property comprising the security for both liens. View "Black Sky Capital, LLC v. Cobb" on Justia Law

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At issue was the timing of the notice that must precede an unlawful detainer action where the action is not brought by a landlord but by a new owner who has acquired title to the property under a power of sale contained in a deed of trust. The Supreme Court held that perfection of title, which includes recording the trustee’s deed, is necessary before the new owner serves a three-day written notice to quit on the possessor of the property. The Court thus reversed the judgment of the Court of Appeal concluding that perfection of title need only precede the filing of the unlawful detainer action and that the new owner may serve the notice to quit immediately after acquiring ownership. View "Dr. Leevil, LLC v. Westlake Health Care Center" on Justia Law

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At issue was whether this common law action alleging construction defects resulting in both economic loss and property damage was subject to the prelitigation notice and cure procedures set forth in the Right to Repair Act, Cal. Civ. Code 895-945.5. After noting that the answer depended on the extent to which the Act was intended to alter the common law, the Supreme Court held that the Legislature intended that the Act was to supplant the common law with new rules governing the method of recovery in actions alleging property damage rather than to supplement common law remedies with a statutory claim for purely economic loss. Thus, the court held that the present suit for property damage was subject to the Act’s prelitigation procedures, and the court of appeal properly ordered a stay until those procedures were followed. View "McMillin Albany LLC v. Superior Court of Kern County" on Justia Law

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The Supreme Court affirmed in part and reversed and remanded in part the decision of the court of appeal in this case concerning the application of constitutional limitations to a statutorily authorized ground water charge imposed on well operators by a local water conservation district to fund certain conservation activities. The City of San Buenaventura argued (1) the charges violate article XIII D of the California Constitution; and (2) alternatively, the charges violate article XIII C of the California Constitution, as amended by Proposition 26. The Supreme Court held (1) the court of appeal properly concluded that article XIII C, as amended by Proposition 26, rather than article XIII D, supplies the proper framework for evaluating the constitutionality of the groundwater pumping charges at issue in this case; but (2) because the court of appeal did not address the City’s argument that the charges do not bear a fair or reasonable relationship to the payor’s burdens or on benefits from the United Water Conservation District’s conservation activities, as required by article XIII C, this case must be remanded for consideration of that question. View "City of San Buenaventura v. United Water Conservation District" on Justia Law

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In this real estate purchase transaction the Supreme Court affirmed the court of appeal’s judgment reversing the trial court’s denial of an award of attorney fees. Here Seller brought a breach of contract action against Buyers for failing to purchase the subject property. The trial court concluded that Buyers were not liable under the purchase agreement because it had been superseded by the parties’ option agreement that granted Buyers the exclusive right, but not the obligation, to purchase the property. At issue before the Supreme Court was whether Buyers were entitled to attorney fees under the attorney fees provision in the option agreement. The Supreme Court held (1) Buyers’ assertion of the option agreement as an affirmative defense did not trigger the attorney fees provision in that agreement; but (2) under the circumstances of this case Buyers were nevertheless entitled to attorney fees under the attorney fees provision in the option agreement. View "Mountain Air Enterprises, LLC v. Sundowner Towers, LLC" on Justia Law

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Homeowners who sought and were granted a permit from the California Coastal Commission to build a new seawall and repair their beach access stairway, subject to several mitigation conditions, forfeited their challenge objecting to two conditions because they accepted the benefits that the permit conferred. When winter storms damaged the seawall protecting their blufftop properties, Plaintiffs sought a new permit to demolish the old structure, construct a new seawall across their properties, and rebuild the stairway. The Commission approved a coastal development permit allowing seawall demolition and reconstruction subject to several conditions. Plaintiffs filed a petition for writ of administrative mandate challenging certain conditions. While the litigation proceeded, Plaintiffs obtained the permit and built the seawall. The trial court issued a writ directing the Commission to remove the challenged conditions. The court of appeals reversed. The Supreme Court affirmed, holding that Plaintiffs forfeited their objections by constructing the project. View "Lynch v. California Coastal Commission" on Justia Law

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Charges that constitute compensation for the use of government property are not subject to Proposition 218’s voter approval requirements. To constitute compensation for a property interest, however, the amount of the charge must bear a reasonable relationship to the value of the property interest, and to the extent the charge exceeds any reasonable value of the interest, it is a tax and requires voter approval. Plaintiffs contended that a one percent charge that was separately stated on electricity bills issued by Southern California Edison (SCE) was not compensation for the privilege of using property owned by the City of Santa Barbara but was instead a tax imposed without voter approval, in violation of Proposition 218. The City argued that this separate charge was the fee paid by SCE to the City for the privilege of using City property in connection with the delivery of electricity. The Supreme Court held that the complaint and stipulated facts adequately alleged the basis for a claim that the surcharge bore no reasonable relationship to the value of the property interest and was therefore a tax requiring voter approval under Proposition 218. The court remanded the case for further proceedings. View "Jacks v. City of Santa Barbara" on Justia Law

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The County of Los Angeles can impose a documentary transfer tax on a written instrument that transfers beneficial ownership of real property from one person to two others if the document reflects an actual transfer of legal beneficial ownership made for consideration. This action arose from a series of transactions among trusts maintained for the benefit of Averbook family members. At issue on appeal was the transfer of a particular building. In 2011, the Los Angeles County registrar-recorder demanded payment of the county’s documentary transfer tax, explaining that the transfer tax was due because the Building had undergone a change in ownership. Plaintiff filed this refund action, arguing that no tax was due. The trial court denied the claim. The Court of Appeal affirmed. The Supreme Court affirmed, holding that, under the circumstances of this case, Plaintiff’s refund claim was properly rejected because transfer of a beneficial interest in the Building was a sale, accompanied by consideration and effected by a document of transfer. View "926 North Ardmore Avenue, LLC v. County of Los Angeles" on Justia Law