Welcome to Abbott & Kindermann, Inc.’s August Real Estate Law Action News. This summary provides brief updates on recent real estate cases, legislation, and administrative actions in 2021.
- PREVIOUS UPDATE
To read the April 2021 Real Estate Action News post, click here:
A. GENERAL REAL ESTATE
*There are no new cases in this section at this time.*
B. COMMON INTEREST DEVELOPMENTS
- Smart Corner Owners Assn. v. CJUF Smart Corner LLC (2021) 64 Cal.App.5th 439.
Plaintiff Smart Corner Owners Association (“Association”), a nonprofit mutual benefit corporation, filed a construction defect suit against the developers of the Smart Corner condominium tower (“Developers”). The trial court held that because the Association did not receive a 50 percent majority approval before filing the suit, as required by the governing declaration of covenants, conditions, and restrictions (“CC&Rs”), summary judgment was proper in favor of the Developers. After the Association filed their appeal, the California Legislature enacted Civil Code section 5986. This section renders prelitigation member vote requirements, like the one at issue in this case, null and void and therefore abrogates the defense that noncompliance with such conditions defeats a construction defect claim. The court of appeal ruled that the provisions on retroactively applying the statute apply to this case and therefore overruled the trial court’s decision. The court of appeal also held that the prelitigation vote requirement violates fundamental state public policy as an independent ground for reversal.
C. REAL ESTATE CONTRACTS & TRANSACTIONS
- Stancil v. Superior Court (2021) 11 Cal.5th 381.
In a case involving an unlawful detainer complaint, the California Supreme Court held that a defendant may not use a motion to quash service of summons to dispute the truth of the allegations contained in the complaint. Defendant, a tenant of the Docktown marina area of the City of Redwood City (“City”), filed a motion to quash after receiving an unlawful detainer complaint from the City. The defendant asserted that the City was not a proper plaintiff and that only the port department had jurisdiction over Docktown and the authority to sue him in unlawful detainer. A motion to quash service of summons permits a defendant to challenge personal jurisdiction where the summons is improper or the statutory requirements for service of process are not fulfilled without waiving the right to defend on the merits or risking entry of default. Following a hearing on the motion, the superior court denied Defendant’s motion to quash and concluded his challenge to the City’s complaint had to be raised on demurrer. The Court of Appeal denied his challenge of the superior court’s order and defendant filed petition of review with the California Supreme Court. The Supreme Court granted defendant’s petition but limited the issue to whether a motion to quash service of summons is the proper remedy to test whether a complaint states a cause of action for unlawful detainer.
The Supreme Court affirmed the lower court decision, concluding that a motion to quash is not the proper procedure to litigate the merits of an unlawful detainer claim. The court explained that, given society’s interest in swiftly resolving the balance between a tenant’s right to enjoy leased real property without disturbance and a landlord’s right to ownership income, proceedings under the unlawful detainer statutes are limited in scope and demand strict adherence to the statutes’ procedural requirements. The court explained that rather than expanding the limited scope of motions to quash in the unlawful detainer context, the purpose and rationale of these statutes reinforces the need for such limitations. Therefore, a motion to quash under the unlawful detainer act is a limited procedural tool to contest personal jurisdiction over the defendant where the statutory requirements for service of process are not fulfilled. The court emphasized that Defendants may use a variety of other procedural tools instead of a motion to quash to challenge the complaint as inadequate or contest the truth of the complaint’s allegations, such as a demurrer, a motion to strike, an answer, a motion for judgment on the pleadings, or a motion for summary judgment.
- Vera v. REL-BC, LLC (2021) 66 Cal.App.5th 57.
In a case involving a breach of contract claim, the appellate court affirmed the trial court’s decision to hold that the claim was barred due to the expiration of the statute of limitations and denied Plaintiff’s appeal of the awards of attorney fees. On appeal, Plaintiff argued that the trial court improperly characterized her cause of action and ignored disputes of material fact concerning when the limitations period began to run. Plaintiff also alleged that the trial court abused its discretion in awarding fees relating to a defendant’s cross-complaint against the Plaintiff’s broker and real estate agent. Defendant REL-BC, a limited liability corporation (“LLC”), also appealed the trial court’s decision to deny its request for fees because the LLC had been dissolved by the time of trial. The appellate court found that the trial court correctly concluded that the Plaintiff’s breach of contract claims was based on fraud and were therefore subject to the three-year statute of limitations prescribed by California Code of Civil Procedure § 338(d) and that the undisputed facts demonstrate that Plaintiff’s claims accrued more than three years before she filed suit. The appellate court also affirmed all fees disputed by the Plaintiff but reversed the trial court’s decision to deny REL-BC their requested attorney fees. The appellate court held that the dissolution of an LLC does not bar an award of attorney fees because the LLC continues to exist while winding up its affairs.
D. EASEMENTS, ADVERSE POSSESSION, DEDICATIONS, & BOUNDARY DISPUTES
- Village Communities v. County of San Diego, 2021 U.S. Dist. LEXIS 20794 (S.D. CA).
Plaintiff, a real estate development company, filed suit against the County of San Diego for denying Plaintiff’s modifications to its proposed development project located in an unincorporated area of San Diego County. The County denied Plaintiff’s modified proposal after the County Planning Department determined that the modifications “substantially revised the proposed project and that staff had various concerns about its scope.” The area is in a high wildfire risk area and the modifications to the project proposal were over whether or not the County had legal authority to require fuel modification easement rights to allow for entry onto properties and control vegetation on 50 adjacent lots.
Plaintiff sought an administrative mandamus action against the County alleging four causes of action: (1) Takings; (2) Due Process; (3) Equal Protection; and (4) an Administrative Mandamus claim directing the County to approve the Project. The County moved to dismiss each claim. On the Takings claims, the Court found that Plaintiff’s claims, “plausibly state prima facie inverse condemnation and temporary takings claims based on the unconstitutional conditions doctrine.” As such, the Court denied the County’s attempt to dismiss the Takings Claims. On the Due Process claim, the Court held that Plaintiff had a viable claim for substantive due process because Plaintiff presented a reasonable claim as to whether the easements were “needless and redundant under existing authority.” The Court then held that Plaintiff had a viable Equal Protection claim because Plaintiff provided the Court with a list of other projects the County approved where there were no additional easements requested. On the Administrative Mandamus claim, the Court granted the County’s request for dismissal. The Court held that recently the Supreme Court held that a plaintiff no longer has an obligation to also seek mandamus relief in order to prosecute its takings claim. The Court further reasoned that because the sought after mandamus would infringe on the separation of powers by directing the County how to exercise its discretion over the Project, the Court must deny the request for an administrative mandamus.
- Anniversary Mining Claims, LLC v. United States (9th Cir. June 2, 2021, No. 20-15643) 2021 U.S. App. LEXIS 16409.
Plaintiff Anniversary Mining Claims (“AMC”) appealed the trial court’s decision to dismiss their complaint under the Quiet Title Act (“QTA”) with prejudice for lack of subject matter jurisdiction. The appellate court affirmed in part, reversed in part, and remanded the case to the trial court by affirming the dismissal without prejudice. The parcel in question (“Property”) contained 221 acres of patented mining claims and was landlocked by federal land. The original owners of the Property constructed a road over federal land to connect the Property to a railroad and highway, but the government condemned a portion of that road in 1952 to build what is now Nellis Air Force Base. Following that taking, the owners of the Property began using the Anniversary Mine/Narrows Road (“Anniversary Mine Road”) as a means of ingress and egress to the Property. In 2014 and 2015, the federal government prohibited AMC from using or improving the Anniversary Mine Road for commercial purposes.
The appellate court affirmed the dismissal of the complaint because the trial court correctly construed the complaint as asserting AMC’s right to access the Anniversary Mine Road as a member of the public. Under the QTA, the United States waives its sovereign immunity only if the complaint “set[s] forth with particularity the nature of the right, title, or interest which the plaintiff claims in the real property . . . .” 28 U.S.C. § 2409a(d). Because the right asserted by AMC in their complaint is vested in the public generally, it does not give AMC a property interest to which title can be quieted. In reversing the decision to dismiss with prejudice, the appellate court explained that an easement by necessity is an interest in real property that can be asserted under the QTA and that despite the deficient pleading, the court could imagine circumstances in which the condemnation could create an easement by necessity. The appellate court directed that on remand, AMC must plead with specificity how the 1952 condemnation satisfies all the elements required to create an easement by necessity over the Anniversary Mine Road.
- Husain v. California Pacific Bank (2021) 61 Cal.App.5th 717.
On appeal from a decision granting California Pacific Bank (“Bank”) a prescriptive easement over Plaintiff Husain’s property, the appellate court upheld the trial court’s decision on the grounds that the Bank’s use of the burdened property was open, notorious, continuous, and hostile for more than five years. Plaintiff’s main contention on appeal was that the Bank’s use of the burdened property permissive and remained permissive unless and until the previous owner of the burdened property, JPMorgan, repudiated or revoked that permission. The appellate court rejected this argument and stated that the facts undisputedly established that the Bank never requested or received permission from JPMorgan to use the burdened property. The court emphasized that a clear, express repudiation is required to make a formerly permissive use hostile. Additionally, the appellate court denied any claim to equitable relief because Husain was put on notice of the potential prescriptive easement over the property through receipt of initial disclosure of the Bank’s claim to the easement and his signing of an indemnification agreement with JPMorgan over potential liability from said easement.
- Self v. Cher-Ae Heights Indian Community of Trinidad Rancheria (2021) 60 Cal.App.5th 209.
In a case involving tribal sovereign immunity to establish a public easement for coastal access, The Court of Appeal affirmed the trial court’s dismissal of the tribe’s quiet title action to establish a public easement for coastal access. The question before the Court was whether sovereign immunity barred quiet title actions for public easements pertaining to coastal rights of access on properties owned by Indian tribes. The Court of Appeal held that Congress did not extend the common law exception for state sovereign immunity to tribal immunity for land acquisition. As such, the Court found that tribal sovereign immunity bars quiet title actions such as those found in the facts of this case. The Court held that Plaintiffs’ arguments for a common law exception for “immovable property” was unmoving and unpersuasive. The Court stated that consistent with the decades of Supreme Court precedent before this Court, the Panel will defer to Congress to determine the limits of sovereign immunity. The Court found that Congress did not extend such a limit to tribal communities for the purposes of land acquisition under federal tribal policy. As such, the Court of Appeal affirmed the trial court’s dismissal of the tribe’s quiet title action.
William Abbott, Diane Kindermann, Glen Hansen, and Daniel Cucchi are attorneys at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.