The recent case of City of Pasadena v. Superior Court dealt with a situation whereby a city-owned tree fell on a private residence during a windstorm, causing damage.  The insurer for the homeowner paid benefits to the homeowner, and then sued the City for inverse condemnation and nuisance based on the damages caused by the tree.

The City filed a motion for summary adjudication, arguing that the tree was not a work of public improvement and that the insurer failed to submit evidence establishing negligence by the City.  The trial court denied the motion, and the City sought a writ of mandate.

THE DECISION

The appellate court denied the City’s petition for a writ of mandate.  The Court concluded that there were triable issues of material fact as to whether the tree was a part of work of public improvement.  The was evidence that showed that the tree was a street tree that was part of a city program to enhance its residents’ and visitors’ quality of life.  Moreover, the Court held that the city failed to meet its burden on summary adjudication to establish that it had fulfilled its duty of care.  As a result, the burden never shifted to the insurer to raise a triable issue of fact as to whether the City had been negligent in its maintenance of the tree.

WHY THIS DECISION IS IMPORTANT

Article I, Section 19 of the California Constitution provides that private property “may be taken or damaged for a public use and only when just compensation . . . has first been paid to the . . . owner”.  Therefore, this case clarifies that it is possible for a homeowner (or its assign, as here, the insurer) to seek to recover damages under an inverse condemnation theory when a home is substantially damaged.  Typically, we think of inverse condemnation cases being limited to some sort of explicit taking, such as taking land for the construction of public transportation or roads.

COMMENT

The most interesting take-away from this case may be the fact that the prevailing party in an inverse condemnation action may be awarded their attorney fees (C.C.P. § 1036).  Therefore, by filing suit under an inverse condemnation theory, the plaintiffs here have given themselves an additional sword to wield in negotiating a settlement.  One would assume that the legislature did not envision that a homeowner would prevail on an inverse condemnation case when damage occurred because of a broken tree, however this decision suggests such a result is possible.

City of Pasadena v. Superior Court, 228 Cal. App. 4th 1228

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Larry and Cheryle Jesinoski (“Jesinoskis”) refinanced their loan on February 23, 2007 with Countrywide Home Loans, Inc. (“Countrywide”).  Three years later, they sent a written letter to rescind the loan pursuant the Truth in Lending Act (“TILA”).  A year later, after Countrywide refused to rescind the loan, the Jesinoskis filed suit to rescind.  Under TILA, a borrower has the right to rescind their loan within 3 days for any reason.  After that, they have three years to rescind the loan if the lender failed to provide required disclosures.

At the trial court level, the court agreed with Countrywide’s argument that the Jesinoskis were required to file suit to rescind the loan within three years, not just send a written notice.  Accordingly, the trial court dismissed the law suit.  On appeal, the Eight Circuit Court of Appeals concurred with the trial court noting that although there was a split in authorities at the appellate level, their previous decision required a borrower to file a lawsuit within three years also.  The case was then appealed to the United States Supreme Court.

THE DECISION:

The United States Supreme Court overturned the lower court’s decision and remanded the matter back to the appellate court.  In Jesinoski v. Countrywide Home Loans, Inc., the Supreme Court held that TILA required only written notice of rescission to be given within three years of obtaining the loan.  The Court reasoned that the plain reading of the statute only requires notice, not a lawsuit.

WHY THIS DECISION IS IMPORTANT:

Prior to this decision, it was unclear just how much time a borrower had to rescind a loan.  Depending on the state, borrowers could have had substantially more time.  However, this case resolves the split.  The ruling was largely unsurprising as the statute seemed clear that only written notice was required.  In fact, even in the Eight Circuit, two of the judges noted that if they had a clean slate, they would have ruled the other way.  However, since a previous holding had required a lawsuit to be filed, they were required to rule in favor of Countrywide.  In the shortest opinion of the year, the Supreme Court unanimously overturned the lower court’s decision and resolved the dispute.

COMMENT:

This decision could pave the way towards substantial liability for lenders who fail to provide the required disclosures.  While a rescission under TILA requires a borrower to return the money received, that requirement triggers only after the lender reconveys the deed of trust.  It will be interesting to see if any creative borrowers attempt to circumvent the repayment by filing for bankruptcy protection when the lender is an unsecured creditor, resulting in borrowers owning the property free and clear.

Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015)

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The recent case of Huntington v. Miller confirmed again that a HOAs must accept partial payments and are limited in their ability to foreclose on an assessment lien when such lien is for less than $1,800.00.

In Huntington, an owner of a unit in an HOA became delinquent in payment of their regular assessments.  The HOA recorded an assessment lien for all delinquent payments, late charges etc.  The owner established a payment plan with the HOA to cure the delinquency, on which the owner later defaulted. The owner made a partial payment which brought the amount of delinquent assessments, exclusive of fees and charges, to less than $1,800—the threshold for collecting delinquent assessments through judicial or nonjudicial foreclosure. The HOA rejected the partial payment and moved to foreclose on the owner’s property.

THE DECISION

The Appellate Court held that an association must accept partial payment made by an owner and must apply that payment in the order prescribed by statute.  This obligation continues after a lien has been recorded.   The Court reasoned that the plain language of Civil Code § 5655(a) permits partial payments and requires the association to accept such payments.  Moreover, nothing in the statute states that these requirements end upon the recordation of a lien.  As Civil Code § 5720 protects owners from foreclosure for delinquent assessments of $1,800 or less, and the rejected partial payments would have brought to amount owed under $1,800, judicial foreclosure was not allowed.

WHY THIS DECISION IS IMPORTANT

This decision makes clear that an HOA must accept partial payments of delinquent assessments even after a lien has been recorded, and affirms the prior decision made.  The purpose of such rule is to follow the Legislature’s goal of preventing foreclosures and loss of one’s home over a small overdue assessment.

COMMENT

The interesting take away from this case is that an owner can delay judicial foreclosure if he or she continues to make partial payments that keep the amount owing under $1,800.  Therefore, HOAs need to be cognizant of their other remedies.  The Civil Code allows the HOA to pursue a small claims action to recover the debt while maintaining the lien.  Moreover, an association may foreclose a lien securing assessments in any amount that are over 12 months delinquent.  Thus, although a clever owner may be able to dodge foreclosure by keeping the delinquent assessments under $1,800 and less than 12 months in age, the Court’s interpretation of the Code was that the Legislature chose to accept that risk in order to protect owners from foreclosure.

You can read the full decision by clicking the link below:

Huntington Continental Town House Association, Inc. v. Miner (2014) 230 Cal.App. 4th 590

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The recent case of Belle Terre Ranch, Inc. v. Wilson clarified that in order to recover attorney fees in a trespass on land for “cultivation” or raising livestock under Code of Civil Procedure § 1021.9, you must obtain an award for property damages.

In Belle Terre, both Plaintiff Belle Terre and Defendant Wilson were using a road. After Wilson began some renovations, Belle Terre complained that trucks using the road were becoming disruptive and damaging grapes on Belle Terre’s land. Belle Terre sued to quiet title to the road and for trespass. Belle Terre did not allege any actual injury to its property and did not present evidence on damages at trial. In addition, Belle Terre sought attorney fees under Code of Civil Procedure § 1021.9.

After hearing testimony from surveyor-expert witnesses, the Trial Court quieted title in favor of Belle Terre and granted a permanent injunction. The Trial Court also awarded $1 in nominal damages, and in turn awarded Belle Terre $116,920.00 in attorney fees. Wilson appealed, arguing that since there was no proof on property damage, the attorney fee provision in Code of Civil Procedure § 1021.9 did not apply.

THE DECISION
The Appellate Court reversed the Trial Court’s award of attorney fees. The Court determined that the dispute was primarily one over property lines, not truly “an action to recover damages to personal or real property resulting from [trespass],” for which the law was intended. As there was no evidence of property damages, the Court refused to award attorney fees.

WHY THIS DECISION IS IMPORTANT
This decision clarified that Code of Civil Procedure § 1021.9 requires property damage in order to recover attorney fees. Nominal damages alone were not sufficient to invoke the award of attorney fees. The Court determined that the statutory language required the damages to be explicitly awarded for damages to property, not “symbolic” nominal damages. Thus, in order to recover fees, the litigants must prove some actual tangible harm to property.

COMMENT
I have always wanted to bring an action under this code section as it is one of the few non-contractual ways a real estate attorney can add leverage by seeking recovery of fees. However, this case proves it is critical for attorneys to understand the statutes under which they are filing suit. A review of the case suggests there may have been some property damage, and thus had Belle Terre presented evidence of such damage, the result may have been different.

Belle Terre Ranch, Inc. v. Kenneth C. Wilson (2015) 232 Cal. App. 4th 1468

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In March, 2009, Sally DaVincenzo (“Sally”) and John DeVincenzo (“John”) were borrowers on a promissory note (“Note”) secured against a property in Wasco, California (“Wasco Property”) and a property in Shafter, California (“Shafter Property”).  The Wasco Property was community property while the Shafter Property was the sole and separate property of Sally.  At some point in time, Sally sold the Shafter Property with First California’s (the beneficiary of the Note) permission.  First California’s approval was based on its understanding that it would receive the net proceeds from the sale and the borrowers would remain liable on the Note.

Later that year, John passed away and the Note went into default.  Eventually, First California moved for a judicial foreclosure on the Note.  In that lawsuit, the trial court ruled in favor of First California by requiring the sale of the Wasco Property and finding that Sally and John were responsible for any deficiency.  John’s estate appealed the decision on the theory that a deficiency judgment was barred.

THE DECISION:

The Fifth Appellate District overturned the trial court’s judgment and remanded the case back to the trial court.  In First California Bank v. Mary McDonald, the appellate court reaffirmed earlier case law finding that a lender must get consent from all borrowers for any private sale or it will lose its claim for a deficiency.  The Appellate Court notes that California has a strong policy in favor of lenders pursuing any claims against the security and against a deficiency.  Accordingly, any requirements under the statute are strictly construed.  Here, Section 726 essentially requires that a lender must judicially foreclose on all of the secured property before it can get a personal judgment against a borrower.  The exception to this is if all borrowers waive the protections under Section 726 or consent to the lender’s action.  Here, First California only got the consent of Sally and did not get the consent of John.

WHY THIS DECISION IS IMPORTANT:

The Court reaffirmed the holding in a previous case, Pacific Valley Bank v. Schwenke.  On appeal, the lender explicitly contended that Schwenke was bad law and should have been overturned.  However, the Court went out of its way to reaffirm Schwenke’s holding – that a lender must get the consent of all borrowers even if one of the borrowers was not a party to the deed of trust.  Even though John had no interest in the Shafter Property, the fact that the Shafter Property was additional collateral was sufficient to protect John from a deficiency judgment.

COMMENT:

It is interesting to note that the Court found against the lender in this case even though it appeared that the lender’s actions most likely benefited John.  Presumably, the private sale of the property netted more funds than any foreclosure sale would have and would have reduced the amount owed on the loan.  In its decision, the Court did not address this issue and instead strictly interpreted the statute.

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California has had a spite fence law since 1885, and until very recently, the courts did not consider whether trees could be a “fence”.

841.4.  Any fence or other structure in the nature of a fence unnecessarily exceeding 10 feet in height maliciously erected or maintained for the purpose of annoying the owner or occupant of adjoining property is a private nuisance. Any owner or occupant of adjoining property injured either in his comfort or the enjoyment of his estate by such nuisance may enforce the remedies against its continuance prescribed in Title 3, Part 3, Division 4 of this code.

In a case of first impression, Wilson v. Handley involved neighbors in Yreka County.  Wilson was concerned that the row of evergreen trees the Handley’s planted would block the property’s view of Mount Shasta.  The Court found that yes, the row of trees could be considered a fence.  [Wilson v. Handley 119 Cal. Rptr. 2d 263. (2002).]The decision went no further, and so whether or not Ms. Handley’s testimony about needing more privacy would be found credible or whether the element of maliciousness required by the statute was satisfied went unanswered in the appellate decision.

California’s spite fence statute has a number of elements in it.  The fence has to be “unnecessarily” taller than 10 feet.  It’s unclear what would meet that standard.  Trees are inherently problematic because without trimming, they can obviously grow beyond 10 feet tall.

Also, the fence has to be “maliciously erected” or with “the purpose of annoying the owner”.  However, what facts would rise to the level of this type of willful intent?

Some years after the Wilson decision, California saw its second spite fence case involving trees.  In Vanderpol v. Starr, the neighbors had a tree trimming arrangement that worked for many years.  Vanderpol was to use a licensed and bonded service and Starr consented to the trimming of the eucalyptus trees to a height Ms. Starr dictated.   At some point in 2004, Starr refused to allow Vanderpol to trim the offending trees (on Starr property) and Starr planted 20 pine trees and 65 Italian cypresses, ostensibly for privacy reasons.  At trial, Vanderpol prevailed and on appeal, the court spent more of the analysis on whether Vanderpol suffered injury “either in his comfort or the enjoyment of his estate” as required by the spite fence statute.  Instead, the trial court had found he suffered economic injury to the tune of $57k, but had made no finding on his loss of comfort or enjoyment, which on appeal, was identified as a separate and necessary element in order to prevail under the spite fence statute.   [Vanderpol v. Starr, 194 Cal. App. 4th 385 (2011).] For further details on this case, see also http://bayarearealestatelawyers.com/neighbor-issues/do-trees-qualify-as-a-fence-under-the-california-spite-fence-statute

Once again, the court did NOT address the malicious requirement at all, because the issue in that case was about whether there was injury.  However, one could infer that the subsequent planting of 85 trees could rise to the level of either maliciousness or the intent to annoy the neighbor.

 

CONCLUSION:   As a practical matter, it is always difficult to prove intent or ill will and would be heavily fact based.  Only discovery would reveal if a neighbor’s conduct was malicious or based on the intent to annoy a neighbor.   Certainly, most parties are likely to cite increased privacy as their reason for wanting to have taller rows of trees.  In some cases, municipal ordinances may govern the height of fences, and so the conduct of the planter may also be subject to scrutiny from the city or county.


 

If you are involved in a dispute over a boundary line or you believe the neighbor’s “privacy screening” has gone too far, please contact the Law Offices of Peter N. Brewer at 650.327.2900 or on the web at www.brewerfirm.com.

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The Law Offices of Peter N. Brewer put together an “Investment Property Blog Series.” We hope you find the information in this series to be informative as it covers important infomation surrounding investment properties. If you find yourself needing real estate legal counsel, don’t hesitate to contact our office at (650) 327- 2900 x 10 or on the web at www.BrewerFirm.com. Our team of knowledgeable and seasoned attorneys have extensive experience in litigation, representing their clients in various real estate matters in California.

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Henry Chuang, Esq.
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Court Limits Class Action Suits Against Landlords HC

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Court Clarifies that an Eviction is not a Protected Activity

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Realtor Liability Blog Series

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Law Offices of Peter N. Brewer put together a “Realtor Liability Blog Series.” We hope you find the information in this series to be informative as it covers a few common liability pitfalls for Realtors®. If you find yourself needing real estate legal counsel, don’t hesitate to contact our office at (650) 327- 2900 x […]

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