Recent Case Decisions written by Ai M. Kelley:
No attorney fees awarded on voluntarily dismissed UD action
A nonresidential landlord and commercial tenant entered into a lease which included an attorney fees provision which stated the prevailing party would be entitled to reasonable attorney fees. The tenant set up an outdoor firepit without proper permits in breach of the lease. The landlord served the tenant a notice to cure or quit, and the tenant cured the breach. The landlord then filed an unlawful detainer (UD) action against the tenant. The tenant requested a summary judgment against the landlord’s UD action, and the landlord voluntarily dismissed the UD action. The tenant sought to recover his attorney fees claiming he was the prevailing party under the attorney fees provision in the lease. The landlord claimed attorney fees could not be awarded to the tenant even though he was the prevailing party under the lease’s attorney fees provision since an award of attorney fees when an action on a contract has been voluntarily dismissed is prohibited by statute. A California appeals court held attorney fees could not be awarded to the tenant as the prevailing party since, by statute, there is no prevailing party and contractual provisions for attorney fees are unenforceable when an action based on a lease agreement has been voluntarily dismissed.
Also at issue in this case:
UD action in instant case is “on the contract”
A nonresidential landlord and commercial tenant entered into a lease which included an attorney fees provision which stated the prevailing party would be entitled to reasonable attorney fees on any action, whether founded in tort or on the contract. The landlord later filed an unlawful detainer (UD) action against the tenant, and then voluntarily dismissed the UD action. The tenant sought attorney fees as the prevailing party under the lease’s attorney fees provision. The landlord claimed the tenant was not entitled to attorney fees since this UD action was based on the tenant’s breach of the written lease agreement, and being an action on the contract which was voluntarily dismissed, there was no prevailing party or award of attorney fees by statute. The tenant claimed he was entitled to attorney fees since UD actions are always an action in tort and not an action on the contract because UD actions are a statutory proceeding. A California appeals court held the tenant, by statute, was not the prevailing party and was not entitled to attorney fees since not all UD actions are actions in tort and this UD action was on the contract and voluntarily dismissed by the landlord. [Mitchell Land and Improvement Co. v. Ristorante Ferrantelli, Inc. (November 26, 2007) __ CA4th __]
Editor’s note: The question of whether a specific UD action is an action in tort or on the contract depends on whether the UD action is based on a breach of an unexpired term or conduct after the expiration of the lease. If the UD action is based on the nonpayment of rent or a breach of specific provisions, then it is an action on the contract. However, if the UD action is to remove a holdover tenant, then the action is in tort. Had the landlord in the above case brought an action against the tenant to remove him after the lease had expired, and then voluntarily dismissed the action, then, under the terms of the lease’s attorney fees provision, the tenant would have both been the prevailing party and entitled to an award of attorney fees.
Recent Case Decisions written by Connor P. Wallmark:
Mall policy restricting opinion unenforceable
A group of protestors handed out leaflets in a mall urging customers to boycott a particular mall tenant. The owner of the mall established a policy preventing protestors from encouraging customers to boycott mall tenants. The protestors claimed the mall policy was unenforceable since, by prohibiting them from encouraging the boycott of a mall tenant, the policy was a restriction that violated their free-speech rights. The owner of the mall claimed the regulation was enforceable since it was designed only to insure free-expression activities did not interfere with mall operations. The California Supreme Court held the mall policy was unenforceable since, in prohibiting protestors from passing out leaflets encouraging the boycott of a mall tenant, the policy was content based and not content neutral as to the time, place or manner of the protestors’ activities. [Fashion Valley Mall, LLC. v. National Labor Relations Board (December 24, 2007) __ CA4th__]
Editor’s note: The mall owner may establish and enforce policies controlling the time, place and manner in which free-speech activities may be conducted to insure these activities do not interfere with normal mall operations, but management may not enforce policies which specifically prohibit free-speech expressive of opinion.
Equity purchase bond requirements for investor’s broker void
The Home Equity Sales Contracts Act (HESCA) requires any real estate broker representing an equity purchaser (investor) to provide proof to the seller-in-foreclosure they are bonded by a surety insurer. The act does not address the amount, beneficiaries, obligees, terms, conditions, delivery or acceptance requirements of the mandated bond. The broker of an investor who entered into a purchase agreement on a principal residence in foreclosure did not provide the seller-in-foreclosure with evidence the broker was bonded. After the sale closed, the seller-in-foreclosure sought to void the purchase agreement and retake title, claiming the purchase agreement was voidable since the broker representing the investor did not provide proof he was bonded. The investor claimed the vagueness of the bonding statute rendered it void since it did not provide information on what was required to comply. A California appeals court held the purchase agreement was enforceable and not voidable, and the investor could retain title to the property since the ambiguity of the statutory bond requirement rendered it void. [Schweitzer v. Westminster Investments (December 13, 2007) __CA4th__]
Two percent penalty improper on wrongful withholding of final construction payment
A homeowner entered into a construction agreement with a contractor to redecorate his home. The agreement called for the homeowner to pay half of the price on signing and pay the balance after satisfactory completion of the redecoration. Upon completion, the homeowner gave the contractor a punch list of corrections needed to be made. The contractor satisfied the punch list but the homeowner withheld the balance. The contractor claimed he was entitled to a two percent penalty for the wrongful withholding of payment under the progress payment statutes. The homeowner claimed the contractor was not entitled to the penalty since the statutes only apply to contracts involving progress payments, whereas the payment in question was a final payment to be made on completion of the project. A California appeals court held the contractor was not entitled to the two percent penalty since the payment involved was a final payment, not a progress payment that was to be made prior to completion of the project. [Murray’s Iron Works, Inc. v. Phillip Boyce (January 15, 2008) __CA4th __]
Editor’s note: While the contractor did not receive the two percent penalty applicable to progress payments since the dispute was over a final payment due after completion, he did receive the balance due from the homeowner for breach of contract, but not his attorney fees or costs of litigation.
Zoning restrictions not avoided by entering into a development agreement with the county
An owner of property in an exclusive agricultural zone submitted an application to the county for a conditional use to conduct a commercial venture on his property. The county did not amend the zoning ordinance but entered into a development agreement to create a special exception to the ordinance. The county issued a conditional use permit to the property owner which, though contradictory to current zoning, allowed him to conduct the commercial venture. A group sought to prevent the commercial venture, claiming the county could not use a development agreement to grant an exception to the zoning ordinance since it violated the uniformity requirement of zoning laws. The county claimed the development agreement is an authorized statutory option to avoid zoning restrictions. A California appeals court held the county cannot use a development agreement to exempt a single property owner from zoning regulations since doing so would violate the uniformity requirement imposed on zoning laws. [Neighbors in Support of Appropriate Land Use v. County of Tuolumne (December 7, 2007) __ CA4th__]
Editor’s note: Had the county rezoned the property, it would have adhered to the uniformity requirement since the neighbors of the property owner would then be able to apply for and benefit from similar rezoning.
Recent Case Decisions written by Giang Hoang:
Coastal Commission has no authority to amend city’s local coastal program
A developer applied to a city for a coastal development permit (CDP) for a project to be located in a coastal area. The city’s existing local coastal program (LCP) under the California Coastal Act did not designate the project area an environmentally sensitive habitat area (ESHA).The city found the project to be in keeping with the LCP and approved the developer’s CDP. An environmental group appealed the approval of the CDP to the Coastal Commission (the commission). The commission denied the CDP, declared the project area an ESHA and claimed the CDP violated the LCP and the Coastal Act since the developer’s project would not adequately protect the ESHA. The developer sought to have the denial set aside, claiming the commission did not have the authority to amend the city’s LCP and designate an ESHA since the commission’s authority on appeal is limited to ensuring the CDP adheres to the existing LCP. A California appeals court set the denial of the developer’s CDP aside, holding the denial of the CDP based on the commission’s newly designated ESHA was improper since the Coastal Commission did not have the authority to amend the city’s LCP. [Security National Guaranty, Inc. v. California Coastal Commission (January 25, 2008) __CA4th___]
Fair rent for a mobile home park adequately set by ordinance
The owner of a mobilehome park subject to a city’s mobile home park rent control ordinance submitted an application for a rent increase in order to receive a fair return on his investment. The owner submitted three different methods of calculating the value of the mobilehome park units that supported his need for the special adjustment. The city evaluated the owner’s application using the method of calculation specified in the rent control ordinance, found the owner was currently receiving a fair return on his investment, and denied the application. The owner claimed the ordinance denied him the right to a fair return on his investment and was invalid since it did not allow for the substantial evidence given by the owner that a rent increase was necessary. The city claimed the ordinance was adequate for determining the owner’s need for a rent increase since the owner merely proposed alternate calculations for the rent increase in his favor without first showing the method specified in the ordinance was inadequate. A California appeals court held the city’s use of the methods specified in the rent control ordinance were adequate since the owner had not provided any evidence to show the ordinance was not. [TG Oceanside, L.P. v. City of Oceanside (2007) __CA4th___]