Pear v. City and County of San Francisco (No. H045045, Court of Appeals of California, Sixth District. Filed July 28, 2021.)

The Pear case involves a very high traffic area in Mountain View, California—namely the Target shopping center area off El Camino and near San Antonio. Of particular interest, the Pear opinion goes on at some length to parse out what uses are available to the Pear family, who hold the easement rights as the dominant tenement.

HOLDING: The Sixth District Court of Appeals found that the Pear’s easement over the land did not give them the right to have a parking lot for their commercial tenant, Target. The access language did give them the right to have customers drive over and across and (incidentally park) upon the Wheel Works auto bays.

This is the time of year when I sum up big legal milestones in real estate. Unsurprisingly, COVID-19 was the driving force for emergency regulation in 2020 and most of the new law was due to the pandemic. In reviewing the real estate legal landscape in California for 2020, it’s not surprising that I would dub it The Year of the Lease.

Residential Leasing:

The big law of 2019 was AB1482 (the California Tenant Protection Act of 2019) and the big law of 2020 was AB3088, the COVID-19 Tenant Relief Act of 2020, followed closely by Prop 19 and SB1079. Both AB1482 and AB3088 were enacted to protect California’s residential tenants.

Businesses are closed due to government mandate. In the San Francisco Bay area, other than in San Mateo county until it ended up on California’s county watch list, businesses like movie theaters, gyms, and salons have not been able to operate at all. What business can sustain four months to a year of no income?

Other than salary, the next largest operating expense for businesses is often rent. 

These are the evaluations that businesses and landlords are making moving forward:

1. How will backrent be addressed?
2. Can the business continue in a post-Covid world and remain in the leased premises?
3. What are the consequences for terminating the Lease?

California Judicial Council Adopts New Rules to Lower Jail Population, Suspend Evictions and Foreclosures

By Julia M. Wei, Esq.

On April 6, 2020 by teleconference, the Judicial Council issued 11 temporary rules effective immediately. The full text of the emergency rules here.

As our firm’s earlier update regarding eviction moratoriums noted, there has been movement both on the state and local government level to halt or otherwise slow the progression of evictions due to non-payment of rent for COVID-19 related reasons. The practical implications are that any unlawful detainer must be filed in the courts and now the California Rules of Court emergency rules are in effect as to ALL unlawful detainer actions (whether COVID-19 related or not). My reading of the new rules is that it applies to both commercial and residential eviction.

Co-author Josue Uribe Fonseca

We are getting a lot of questions about contract enforcement during this state of emergency. Many people need to be excused from contract performance for reasons entirely out of their control. That means we are throwing around terms like "force majeure" to address whether performance is excused due to COVID-19's' effects such as the State of Emergency and California's Executive Orders, and the various counties' shelter-in-place orders.

Palo Alto City Council voted last night to adopt the Urgency Ordinance to halt residential evictions for COVID-19 related hardship. 

The city's moratorium on evictions will remain in effect until the city's state of emergency expires. After that, residents would have 120 days to make full payment of the back rent.

Looking at the Agenda for the Palo Alto meeting reveals that the council is also evaluating to extend the eviction moratorium to small businesses, non-profits and commercial tenants also impacted by the State of Emergency. Agenda found here.

The San José City Council has enacted a temporary eviction moratorium in response to the COVID-19 pandemic. The moratorium is in effect through April 17, and the City Council may extend it.

The new ordinance is effective immediately.

The moratorium applies to all residential properties in San José, including single-family homes, rooms rented in single-family homes, duplexes, condominiums, income-restricted apartments (i.e., affordable housing), rent-stabilized apartments, market-rate apartments, and mobilehomes.

Please note the moratorium only applies to residential evictions for nonpayment of rent due to impacts of the COVID-19 outbreak. There is no moratorium on lawful evictions for other just causes.

Neighbor disputes are expensive, time consuming, and there is no attorneys’ fees provision. The recent case of Madani v. Rabinowitz is one where the misplaced fence was moved, and the wronged neighbor received no damages.

The Facts:

Mr. Madani sued his neighbor for trespass and nuisance after he had a survey done and learned that the shared fence encroached on his side of the property and that Mr. Rabinowitz was parking cars on his property.

In California, the statute of limitations for bringing a trespass claim is three years. (Code Civ. Proc., § 338, subd. (b).) The same three-year statute of limitations applies to private nuisance claims.

Recently in the news we have seen articles about people traveling with their miniature horses or their pigs. Perhaps you may be wondering why is the airline permitting the miniature horse on the plane? The answer breaks down like this: if it is a miniature horse, it is likely a service animal and if it is a pig, it is likely an emotional support animal.

Here is what the ADA says about Miniature Horses:

“In addition to the provisions about service dogs, the Department’s revised ADA regulations have a new, separate provision about miniature horses that have been individually trained to do work or perform tasks for people with disabilities. (Miniature horses generally range in height from 24 inches to 34 inches measured to the shoulders and generally weigh between 70 and 100 pounds.) Entities covered by the ADA must modify their policies to permit miniature horses where reasonable. The regulations set out four assessment factors to assist entities in determining whether miniature horses can be accommodated in their facility. The assessment factors are (1) whether the miniature horse is housebroken; (2) whether the miniature horse is under the owner’s control; (3) whether the facility can accommodate the miniature horse’s type, size, and weight; and (4) whether the miniature horse’s presence will not compromise legitimate safety requirements necessary for safe operation of the facility.”

In California, a landowner has no enforceable property rights to an unobstructed view. That means, you can’t force your downhill neighbor to trim their trees. However, I have seen the occasional CC&R’s from planned communities that restrict heights of trees, plantings, and structures to ensure that the homeowners can enjoy their view.In those circumstances, the restrictive covenants are strictly construed against the person seeking to enforce them. American jurisprudence favors alienability and free use of land so that will be the default legal view.

In the recent case of Eisen v. Tavangarian, the appellate court evaluated the CC&R language governing lots in the posh Marquez Knolls area in Pacific Palisades, California. The properties are nestled in the hills in this exclusive community overlooking Los Angeles and the Pacific Ocean. The homes are likely valued in excess of $4 million and accordingly the view of the ocean no doubt has some impact on the high property values.

In a recent opinion, the California Court of Appeal found that after foreclosure, all of the borrower’s leases (and its waivers) were assigned to the lender, and therefore unavailable as a defense to the former owner against a creditor. Therefore, the judgment creditor was successfully able to add two new parties to the judgment as the limitation the lease no longer shielded them.

Yolanda’s Inc. owns and operates restaurants. Yolanda entered into a lease to operate a restaurant at the Seabridge shopping center in Oxnard, California. The landlord K&G and Rocklin and its real estate broker KGCRE failed to inform the tenant that they were in negotiations to lease another space in the shopping center to the gym. The gym’s customers used all the parking spaces, resulting in loss of business for Yolanda’s. Yolanda’s prevailed in its lawsuit against the landlord, alleging among other causes of action, fraud and breach of lease. Yolanda obtained a judgment in the amount of almost 2 million dollars, plus another nearly half a million dollars in attorneys’ fees and costs.

In the recent case of Southern California Edison Company v. Severns, the written easement described a 4 foot wide easement for the placement of five electrical power poles. The instrument went on further to provide that the grantee should have “free access” to maintain the electrical equipment. This created dispute between the grantor and the utility company because of the unspecified routes the utility company would take on the grantor’s property to access the easement. The court determined that the easement was in fact a “floating easement”.

California’s Fourth Appellate District came down with an unsurprising opinion that because a real estate broker has a duty to their principal to share information he or she possesses that will adversely affect the value of her property, an expert opinion is not required to establish breach of that duty.

The Ryans listed their La Jolla California property with Sotheby’s. During one of the open houses, the listing agent learned from the neighbor that a major remodel was planned on the neighboring property that would obstruct the Ryan’s ocean view. The Ryan’s agent failed to inform the Ryans and subsequently when the Ryan’s sold the property the listing agent failed to inform the buyers. When the buyers learned that the $3.86 million home that they had just purchased was about to lose its ocean view and be subject to two years of construction next door, they unsurprisingly sought rescission of the purchase. 

Continuing the trend in California caselaw, an appellate court concluded that no, the trustee does not have duties beyond the deed of trust itself and the governing statutes.

California property developer citrus El Dorado LLC owed its lenders over $20 million in late 2014. Unsurprisingly, its lender Stearns Bank instructed the trustee, Chicago Title Company, to conduct a nonjudicial foreclosure sale of the real property secured by the deed of trust.

It is well-settled California law that land owners are required to maintain land in their possession and control in a reasonably safe condition. California courts look to what are called the “Rowland factors” to evaluate if a duty is owed beyond the principles of Civil Code section 1714:

• the foreseeability of harm to the plaintiff
• the degree of certainty that the plaintiff suffered injury
• the closeness of the connection between the defendant’s conduct and injury suffered
• the moral blame attached to the defendant’s conduct
• the policy of preventing future harm
• the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved.[1]

In the recent case of Williams v. Fremont Corners Inc., The Sixth Appellate District found that the defendant shopping center had no duty to take affirmative measures beyond those already found in the record to discover criminal activity on the premises.

In the recent case of RANCH AT THE FALLS, LLC v. Keith O’Neal et al., a ranch owner tried to establish prescriptive or equitable easement rights along private roads to reach her ranch. Ms. Hart prevailed at the trial court level but was not so fortunate on appeal. California’s second Appellate District concluded that Ms. Hart had failed to meet the hostility requirement to establish prescriptive easement.

Ms. Hart use the private roads from 2002 until 2012. However because Ms. Hart also owned several properties within the homeowners associations named in the lawsuit, she was personally entitled to use the private streets of the communities. The court cited Witkin, noting “Prescription cannot be gained if the use is permissive.”

In a case of first impression, the Second Appellate District concluded that assuming fraudulent intent, the UVTA (formerly the Uniform Fraudulent Transfer Act) applies to premarital agreements which treat after marriage earnings and assets as separate property.

In 2005, Judgment Creditor Robert Strum obtained a $600k bankruptcy judgment against debtor Todd Moyer. The creditor renewed the judgment and conducted a number of debtor’s examinations. Upon an OEX in 2016, the creditor learned that the debtor married in 2014 and identified Sturm’s judgment as an exhibit to a premarital agreement.

We are still seeing the effects of the subprime meltdown ripple through the appellate courts. In the case of Taniguchi v. Restoration Homes, what appears on first blush to be a straight forward analysis that under California law borrowers can stop a foreclosure sale by reinstating the loan had a twist.

The Taniguchis own a home in San Mateo County and in 2006, they borrowed $510k. They missed 4 loan payments in 2013, and normally to cure the default with the lender, the borrowers would simply need to reinstate the 4 missed payments and late charges under the promissory note.  Here's the twist back in 2009, the Taniguchis entered into a loan modification that adjusted the principal amount, reduced the interest rate and monthly payments, and deferred until the maturity of the approximately $116k (including accrued and unpaid interest and principal, fees, and foreclosure expenses).

This week the Supreme Court issued their opinion in Obduskey v. McCarthy & Holthus LLP. In 2007, Obduskey bought a house in Colorado, borrowed $330k from a lender and secured repayment of the loan with a mortgage (or deed of trust) against the house. In 2014, Wells Fargo hired the law firm of McCarthy & Holthus LLP to commence foreclosure as the borrower was in default.

The firm sent a letter to borrower as required under state law to commence the foreclosure. The opinion did not publish the text of that initial letter but I suspect it contained a “mini Miranda” which is common in demand letters, ie, that this could be considered an attempt to collect a debt under the Fair Debt Collection Practices Act. (“FDCPA”). The borrower disputed the debt and invoked section 1692g)b of the FDCPA which would require a debt collection to cease collection until it obtains verification of the debt.

A new ruling from California’s 6th Appellate District clarifies what appeared to be a gap in what is permitted for post-judgment document discovery on third parties.

California’s Enforcement of Judgment laws (enumerated in the California Code of Civil Procedure)+ §680.010 et seq.) has very clear code sections on what is allowed for discovery of the judgment debtor:

1. the judgment creditor may propound interrogatories (§708.020), and may seek production of judgment debtor’s financial records (§708.030); and
2. the judgment creditor may take the debtor’s examination (§708.110) “The judgment creditor may apply to the proper court for an order requiring the judgment debtor to appear before the court, or before a referee appointed by the court, at a time and place specified in the order, to furnish information to aid in enforcement of the money judgment.”