Developments of Interest

New Cases of Interest - August 18, 2014

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Ocean Avenue, LLC v. County of Los Angeles (2014) 227 Cal.App.4th 344.  This case involved a tax reassessment issue on a change in ownership.  A hotel was owned by an entity which in turn was owned by a limited liability company.  The parent LLC sold its membership interest to three purchasers who acquired respectively a 49% interest, a 42.5% interest and an 8.5% interest.  One individual owned 99.9% of the entity which had acquired the 42.5% interest.  The holder of the 8.5% interest had four separate owners.  The assessor's office concluded that overall a 47.82% interest had been sold and no one had an interest that exceeded 50%, but nonetheless that reassessment was appropriate under Proposition 13.

The Court of Appeal held there had been no change in ownership for the purposes of property tax reassessment because the exception for the sale of an interest exceeding 50% did not apply.  See CCR Title 18 Section 462.180(d)(1)(B).

Old Republic Construction Program Group v. The Boccardo Law Firm, Inc. (2014) 227 Cal.App.4th 554.  This is a SLAPP case.  Defendant brought a motion to strike causes of action asserted against them for wrongfully withdrawing settlement funds.  The trial court denied the motion.  The trial court's action was affirmed by the Court of Appeal.  The court found that in determining whether the causes of action are protected by the SLAPP statute, the focus is on the conduct identified in the Complaint and whether that conduct as alleged comes within the scope of the statute's protected conduct.  Unless the wrongful conduct is communicative in character, it is protected by the SLAPP statute only if it is in connection with an issue of public importance.  The court concluded that the withdrawal of funds at issue was neither a communicative activity, nor one related to an issue of public interest.

Decon Group, Inc. v. Prudential Mortgage Capital Company, LLC (2014) 227 Cal.App.4th 665.  This is a case in which there was a mechanics lien on property that was junior to a trust deed, and the trust deed beneficiary accepted a deed in lieu of foreclosure from the property owner and later conducted a foreclosure sale.  The trial court determined that the mechanics lien had priority and was not extinguished by a sale of the property by the deed in lieu beneficiary to a third party.  The Court of Appeal, however reversed, finding that the senior beneficiary's lien under California law and title ordinarily would not merge when a deed in lieu of foreclosure is given if there are junior lienholders of record.  The deed in lieu in this case expressly provided that the parties intended that the trustee's beneficiary's interest would not merge and that the trustee beneficiary retained the power to foreclose.  The foreclosure after acceptance of the deed in lieu was valid, and that was what eliminated all junior liens, including the mechanics lien.

Beacon Residential Community Association v. Skidmore, Owings & Merrill, LLP (2014) 59 Cal.4th 568.  This was an action brought by a homeowners' association on behalf of its members against two architectural firms on the theory that the architectural firms had designed homes in a negligent manner.  The architectural firms had contracted with a general contractor, not the homeowners' association.

The defendants contended they owed no duty of care to the association or its members.  The Supreme Court determined otherwise, finding that an architect does owe a duty of care to future homeowners with respect to the design of a residential building when the architect is the principal architect on the project, and the duty of care extends even when the architect does not actually build the project or exercise ultimate control over the construction.

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