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Just because a party prevails on their expungement motion does not mean an attorneys’ fees award is automatic. California courts utilize the “practical approach” when deciding whether to award attorney fees upon successfully bringing an expungement motion. Under the practical approach, a trial court must determine whether the moving party is the prevailing party under section 405.38 by analyzing the extent to which each party has realized its litigation objectives. To determine litigation objectives, it is not enough simply to consider that the lis pendens has been withdrawn; the court must consider and decide whether the moving party would have prevailed on the motion. See Castro v. Superior Court, (2004) 116 Cal. App. 4th 1010, 1022-23.

Contact our Los Angeles Lis Pendens Attorneys today for a free consultation and case evaluation.

Enforcing Land Covenants as Intended Beneficiaries

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Our Los Angeles Real Estate Attorneys recently litigated the issue of whether claimants could enforce land covenants upon a property owner wherein there were no express provisions granting claimants the right to enforce the covenants.

California courts have held that Plaintiffs who did not own any land benefited by a particular covenant they sought to enforce, nevertheless had standing to bring a declaratory relief action because the Court found that the Plaintiffs were intended beneficiaries of the land covenant and therefore interested parties within the meaning of C.C.P. § 1060. See Monterey/Santa Cruz County Bldg. and Const. Trades Council v. Cypress Marina Heights LP, (2011) 191 Cal. App. 4th 1500, 1521-22.

In the Cypress Marina Heights LP case, the plaintiffs, who consisted of labor organizations, an association of contractors and two taxpayers, sought a declaration and injunction enforcing prevailing wage requirements found in property deeds. Id. at 1504. The trial court granted plaintiffs’ summary adjudication motion. Id. The developer defendants appealed the trial court’s judgment and challenged plaintiffs’ standing to bring declaratory relief since the plaintiffs did not own any land subject to the covenants. Id. at 1521.

In holding that the plaintiffs had standing and affirming the trial court’s ruling, the California Court of Appeal for the Sixth District held that the plaintiffs “had a beneficial interest in the enforcement of the prevailing wage requirement because it was intended to benefit them.” Id. at 1521. The plaintiffs in Cypress Marina Heights LP were not landowners or owners of benefited lands, but were benefited parties to the deed covenants sought to be enforced. In affirming the trial court’s judgment, the Court of Appeal held that these plaintiffs had standing pursuant to C.C.P. § 1060. Id

Nuisance Actions – Damages for Diminution in Rental Value

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Under California law, where the damages caused by a nuisance are shown to be temporary in character, the measure of damages is the difference in the rental value or use value of the property before and after the injury caused by the nuisance.  See Qualls v. Smyth, (1957) 148 Cal. App. 2d 635, 637; see also Guttinger v. Calaveras Cement Co., (1951) 105 Cal. App. 2d 382, 387.  The diminution in rental value is also the proper measure of damages wherein the property is not directly affected or depreciated by physical injury.  See Ingram v. City of Gridley, (1950) 100 Cal. App. 2d 815, 821.

Nuisance Actions – Damages for Discomfort, Annoyance and Mental Distress

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Under California law, Damages for discomfort, annoyance, and mental distress suffered by a homeowner as the result of a nuisance are recoverable, and not merely as an alternative to or to the exclusion of damages for depreciation of the rental value. See Spaulding v. Cameron, (1954) 127 Cal. App. 2d 698, 706. California courts have held that Annoyance and discomfort damages are intended to compensate a plaintiff for the loss of his or her peaceful occupation and enjoyment of the property. See Kelly v. CB & I Constructors, Inc., (2009) 179 Cal. App. 4th 442, 456. Other courts have held the same. See Webster v. Boone (Colo.App.1999) 992 P.2d 1183, 1185, “We recognize that annoyance and discomfort by their very nature include a mental or emotional component, and that some dictionary definitions of these terms include the concept of distress. Nevertheless, the ‘annoyance and discomfort’ for which damages may be recovered on nuisance and trespass claims generally refers to distress arising out of physical discomfort, irritation, or inconvenience caused by odors, pests, noise, and the like. See also the California Supreme Court’s holding in Kornoff v. Kingsburg Cotton Oil Co., (1955) 45 Cal. 2d 265. In that case, the plaintiffs were the owners and occupants of a property on which they both resided and operated a planting mill ( Id. at p. 266, 288 P.2d 507.) The defendant operated a cotton ginning mill, which caused the “lawns, flowers, shrubs, window screens, hedges and furniture” on the plaintiffs’ property to be “for approximately six months of each year, covered with a thick coating of dust and lint and ginning waste.” ( Id. at p. 273, 288 P.2d 507.) The defendant’s trespass, the court noted, was not of “the type to cause fright or shock or even physical illness,” but it nevertheless caused the plaintiffs “much discomfort.” ( Ibid.) Because such annoyance and discomfort was the natural and proximate result of the defendant’s trespass, the plaintiffs were entitled to compensation, even though they had suffered no physical injury. ( Id. at pp. 272–273, 288 P.2d 507.) The determination of the amount of compensation for personal discomfort and annoyance to which a person has been subjected by a nuisance on adjoining property is a question for the trial court. See Griffin v. Northridge, (1944) 67 Cal. App. 2d 69, 76.

Thus, annoyance and discomfort damages are intended to compensate a plaintiff for the loss of his or her peaceful occupation and enjoyment of the property.

Commercial Leases and Properties – CA Rules on Assignments & Subleases

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Starting with Cal. Civ. Code § 1995.010, California has codified the rules with respect to a tenant’s transfer of interest in a commercial lease, i.e., an assignment or sublease. For purposes of the rules regarding assignments and subleases of commercial property, a “lease” would include a lease or sublease of real property for other than residential purposes, and includes modifications and other agreements affecting a lease. A “tenant” includes a subtenant or assignee. A “transfer” of a tenant’s interest includes an assignment, sublease, or other voluntary or involuntary transfer or encumbrance of all or part of a tenant’s interest in the lease, and a “restriction on transfers includes a provision in a lease that restricts the right of transfer of the tenant’s interest in the lease. See Cal. Civ. Code § 1995.020. These rules apply to all commercial leases except to leases with restrictions on transfers executed before September 23, 1983 wherein the lease does not provide a standard for a landlord giving or withholding consent. See Cal. Civ. Code § 1995.270.

Legislative Findings and Declarations:

Until the case of Kendall v. Ernest Pestana, Inc., 40 Cal.3d 488 (1985), and its predecessor, Cohen v. Ratinoff, 147 Cal.App.3d 321 (1983), the parties to commercial real property leases could reasonably rely on the law of the state to provide that if a lease restriction requires the landlord’s consent for transfer of the tenant’s interest in the lease but provides no standard for giving or withholding consent, the landlord’s consent may be unreasonably withheld. (Emphasis added.)

The California Legislature found that the Kendall and Cohen decisions reversed the law on which parties to commercial real property leases executed before September 23, 1983, the date of the Cohen decision, could reasonably rely, thereby frustrating the expectations of the parties, with the result of impairing commerce and economic development.

Restrictions on Transfers in a Commercial Lease:

Most commercial leases contain restrictions on the tenant’s ability to freely transfer or assign his/her/its interest in the lease. If the lease does not include a restriction on the tenant’s ability to transfer, then the tenant retains an unrestricted right to transfer the interest in the lease. See Cal. Civ. Code § 1995.210. Any ambiguity in a restriction on transfer of a tenant’s interest in a lease shall be construed in favor of transferability. See Cal. Civ. Code § 1995.220. A landlord may restrict a tenant’s right to transfer by absolutely prohibiting transfers. See Cal. Civ. Code § 1995.230.

Standards, Conditions and Consent:

A restriction on transfer of a tenant’s interest in a lease may provide that the transfer is subject to any express standard or condition, including, but not limited to, a provision that the landlord is entitled to some or all of any consideration the tenant receives from a transferee in excess of the rent under the lease. See Cal. Civ. Code § 1995.240.

A restriction on transfer of a tenant’s interest in a lease may require the landlord’s consent for transfer subject to any express standard or condition for giving or withholding consent, including, but not limited to, either of the following: (a) The landlord’s consent may not be unreasonably withheld. (b) The landlord’s consent may be withheld subject to express standards or conditions. See Cal. Civ. Code § 1995.250.

Tenant’s Burden Of Proof For Unreasonably Withholding Consent:

If a restriction on transfer of the tenant’s interest in a lease requires the landlord’s consent for transfer but provides no standard for giving or withholding consent, the restriction on transfer shall be construed to include an implied standard that the landlord’s consent may not be unreasonably withheld. Whether the landlord’s consent has been unreasonably withheld in a particular case is a question of fact on which the tenant has the burden of proof. The tenant may satisfy the burden of proof by showing that, in response to the tenant’s written request for a statement of reasons for withholding consent, the landlord has failed, within a reasonable time, to state in writing a reasonable objection to the transfer. See Cal. Civ. Code § 1995.260.

Tenant Remedies For Unreasonable Withholding Of Consent:

Restrictions – A remedy provided by law for violation of the rights of the tenant or of the landlord concerning transfer of a tenant’s interest in a lease, including a remedy provided in this article, is (a) subject to an express provision in the lease that affects the remedy and (b) subject to any applicable defense, whether legal or equitable, including, but not limited to, waiver and estoppel. See Cal. Civ. Code § 1995.300.

Remedies – If a restriction on transfer of a tenant’s interest in a lease requires the landlord’s consent for transfer subject to an express or implied standard that the landlord’s consent may not be unreasonably withheld, and the landlord unreasonably withholds consent to a transfer in violation of the tenant’s rights under the lease, in addition to any other remedies provided by law for breach of a lease, the tenant has all the remedies provided for breach of contract, including, but not limited to, either or both of the following: (a) The right to contract damages caused by the landlord’s breach; and (b) The right to terminate the lease. See Cal. Civ. Code § 1995.310.

If you have questions regarding your Commercial Lease, contact one of our Los Angeles Commercial Lease Attorneys for a free consultation and case evaluation.

Commercial Evictions – Relief From Automatic Stay Upon Tenant’s Bankruptcy Filing

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When a commercial tenant who is (or is going to be )a defendant in an unlawful detainer action files a petition for bankruptcy, upon the filing of the petition, an automatic stay takes effect and the state court eviction action is stayed until the stay is lifted.

In a commercial lease setting there is one exception to the automatic stay and that is where the commercial lease term has terminated by expiration of its stated term before the bankruptcy filing. See 11 U.S.C. § 541(b)(2). Thus, there would be no stay in proceedings if an eviction action was commenced to regain possession of a commercial space wherein the lease term has already expired.

If the lease term has not expired and the eviction proceedings have commenced, then the commercial landlord’s attorney would be required to go into bankruptcy court and seek relief from the automatic stay by filing a Motion For Relief From Automatic Stay. The conditions for relief requires a showing that the landlord’s interests are not adequately protected through the bankruptcy action, or that the tenant debtor has no equity in the property and the property itself is not necessary for an effective reorganization. See 11 U.S.C. § 362(d).

Once the bankruptcy court has granted relief from the automatic stay, the landlord may go back into state court and complete the eviction action.

If you’re a commercial landlord seeking possession of the commercial premises and have a tenant in bankruptcy, contact us for a free consultation and case evaluation.

HOA Disputes – Scope of Injunctive Relief Against HOA

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Many of our HOA Dispute cases consist of an association member (i.e., homeowner) seeking to compel an HOA Board to enforce its own rules as against another homeowner. If the dispute cannot be resolved through mediation and litigation ensues, one option for the homeowner seeking to enforce rules is to move the court for a preliminary injunction order compelling the HOA to enforce its own rules. California courts have upheld injunctions requiring HOAs to utilize every enforcement mechanism available to it under the CC&Rs and the law in order to obtain the relief sought. See Ekstrom v. Marquesa at Monarch Beach Homeowners Ass’n (2008) 168 Cal. App. 4th 1111, 1125.

In the Ekstrom case, a homeowner sought an injunction to compel the HOA to essentially enforce its rules regarding a particular nuisance complained of. The trial court issued an injunction directing the HOA to utilize all enforcement mechanisms available to it under the CC&Rs. The HOA argued on appeal that such an injunction is vague and ambiguous and therefore unenforceable and also that the injunction impermissibly interferes with its discretion to determine how to enforce the CC&Rs. Id. The California Court of Appeals disagreed and upheld the trial court’s directives in the injunction issued. The Court of Appeal held that the judgment was “sufficiently clear as to what the Association must do. It must comply with its obligations by exercising its discretion ‘in good faith…’” Thus, injunctions directing an HOA to do everything in its power to enforce its own rules, can issue and would seemingly be upheld by California courts.

If you have an HOA dispute, contact one of our HOA Dispute Attorneys in Los Angeles for a free consultation and case evaluation.

Real Estate Nondisclosure – Specifically Required Disclosures Do Not Limit The Obligation To Disclose

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Cal. Civ. Code § 1102 et. seq. codified the required disclosures found in the Transfer Disclosure Statement (“TDS”) that is executed as part of residential real estate purchases. The TDS contains several specific disclosures regarding the property that must be made. The list of disclosures may not cover every component of the property or every material fact affecting the value or the desirability of the property. Thus, if there is a material fact affecting the value or desirability of the property not already covered by the TDS, the seller of real estate must still disclose what is not covered by the TDS. See Cal. Civ. Code § 1102.8 (“The specification of items for disclosure in this article does not limit or abridge any obligation for disclosure created by any other provision of law or which may exist in order to avoid fraud, misrepresentation, or deceit in the transfer transaction.”) Sellers are obligated under California law to disclose all material facts within their knowledge affecting the value or desirability of the property even if the material fact is not specifically covered by the form disclosures executed in typical residential real estate transactions.

If you have a real estate nondisclosure question, contact one of our Los Angeles Nondisclosure Attorneys today for a free consultation and case evaluation.

Los Angeles Landlords – Rule Re Interest Payments On Security Deposits

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Landlords in Los Angeles renting units subject to LA’s Rent Stabilization Ordinance are required to pay interest on all security deposits held for at least one year. See L.A.M.C. § 151.06.02. Although state law does not require the payment of interest payments on security deposits, local rent ordinances do.

To determine the interest rate, landlords may simply refer to the Rent Adjustment Commission’s (RAC) established annual rate of interest which is published by LAHD. The interest rate set by the RAC for 2013 is 0.15%. During the tenancy, landlords may choose to pay out the interest either monthly or annually in the form of either a direct payment or a credit against rent. Landlords must notify the tenant in writing of their choice. Upon termination of the tenancy, payment must be made at the same time as required for the return of the security deposit pursuant to Cal. Civ. Code § 1950.5.

Keep in mind that only rental units subject to LA’s rent stabilization ordinance must pay interest on security deposits. Jurisdictions not subject to LA’s rent stabilization ordinance are not obligated to pay interest. See Korens v. R.W. Zukin Corp., (1989) 212 Cal.App.3d 1054 (There is no obligation implied by law for a landlord to pay interest on a tenant’s security deposit.)

If you have a question regarding your tenant’s security deposit, contact one of our Los Angeles Landlord/Tenant Attorneys for a free consultation and case evaluation.

Commercial Evictions – Medical Marijuana Dispensaries

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Proposition D, which proposed to limit the number of “medical marijuana businesses” to no more than 135 that have operated since September 2007, passed and has been voted into law. What this means for numerous dispensaries in and around Los Angeles is that they are now presumably operating illegally and their commercial landlords may be contemplating terminating the lease and initiating evictions.

It’s common knowledge that marijuana is still an illegal drug as far as the Federal Government is concerned and the sale and/or distribution of marijuana is a federal crime. Additionally, most standard commercial leases (AIR Form and CAR form) contain language expressly stating that the tenant “accepts the Premises subject to all local, state and federal laws, regulations and ordinances” and that the tenant agrees not to us the Premises “for any unlawful purposes….”

However, when the use of the Premises is expressly stated as a “California Medical Marijuana Dispensary”, landlord and tenant may find themselves in a conflict between the intended purpose of the commercial lease and the lease’s boilerplate provisions regarding local, state and federal laws.

Furthermore, medical marijuana dispensary operators are seeing an increase in the enforcement activities by local and federal law enforcement. In the recent weeks, letters have gone out to dispensaries in Los Angeles requesting the immediate closure of medical marijuana dispensaries, putting a lot of pressure on commercial landlords.

The question for commercial landlords with medical marijuana dispensary tenants then becomes, what is the appropriate course of conduct in completing an eviction under these circumstances. C.C.P. § 1161(4) provides the authority for a landlord to terminate a tenancy wherein the premises is used for an “unlawful purpose.” Presumably, a medical marijuana dispensary, not one of the 135 contemplated by Proposition D, would fall under this category. The next question for the landlord is, how much of a notice period would the tenant be entitled to. (e.g., 3-day, 30-day, etc.)

A landlord may argue that a 3-day notice to cure or quit the premises is sufficient since there are clear violations of local, state and federal laws. However, if the commercial lease expressly states that the use is for a medical marijuana dispensary, a landlord will be hard pressed to argue that the eviction action is based on a breach of covenant as contemplated by C.C.P. § 1161(4). Moreover, a tenant may argue that the intended purpose of the landlord’s eviction action is simply to terminate the lease as all parties may have been aware of the legal issues with operating a dispensary.

Cal. Civ. Code § 1946 mandates a 30 day notice prior to the termination of a commercial lease if the termination is sought prior to the natural expiration of the contract. Even if the lease has not expired, a commercial landlord likely would prevail evicting his/her medical marijuana dispensary tenant upon a 30 day notice of termination given that Proposition D now makes illegal what federal law has always deemed illegal.

Thus, commercial landlords with medical marijuana dispensary tenants may consider initiating an eviction action pursuant to a 30 day notice of termination of tenancy under Cal. Civ. Code § 1946 in order to eliminate potential defenses claiming a defective notice.

If you are a commercial landlord or if you are a commercial tenant facing an eviction, contact one of our commercial lease attorneys today for a free consultation and case evaluation.