Construction material manufacturer to provide equitable indemnity for defects under state Right to Repair Act

A defendant sued for construction defects under the state's Right to Repair Act can bring a cross claim under equitable indemnity against the manufacturer of defective materials used. That's the ruling December 9 by the state Fourth District Court of Appeal in the case of Greystone Homes, Inc. v. Midtec, Inc.,(Cal.App. 4 Dist.)

A home builder was able to pursue an action against a manufacturer of plumbing fittings under the Right to Repair Act, to recover the cost of replacing allegedly faulty fittings that had not yet failed. The action was one for equitable indemnity, based on the builder's obligation to homeowners under the Right to Repair Act to the extent that any flaw in the fittings caused the homes to fall below the standards of the Act. The builder's total cost to replace all of the fittings was approximately $1,494,904, but the Court of Appeal did not resolve the issue of the manufacturer's actual liability to indemnify the builder.

New jurisdictional trap: subdivision act litigation service of process applies to CEQA litigation

It's been called a trap for the unwary. Now the trap is even bigger... In Friends of Riverside's Hills v. City of Riverside ,(Cal.App. 4 Dist.) , a case of first impression, an objector's petition for a writ of mandate challenging a city's approval of subdivision tract maps under the California Environmental Quality Act (CEQA) was properly dismissed for noncompliance with the Subdivision Map Act (SMA) requirement of service of the summons within 90 days, even though the objector had met CEQA's requirements by providing notice of its intent to sue, and personally serving the city with a copy of its petition and a request to prepare the administrative record. Because the CEQA cause of action was a challenge to a decision concerning a subdivision, it was subject to the SMA service scheme as well as to CEQA.

A private benefit can still be condemnation's "public use."

Even though the federal government would get only 10 percent of the power transmitted from a public-private power line in Central California, that is still a "public use" for the purpose of allowing a taking under the Fifth Amendment. That's the ruling of the Ninth Circuit Court of Appeal in the case of U.S. v. 14.02 Acres of Land More or Less in Fresno County 2008 WL 4684092. Relying primarily upon Kelo v. City of New London (2005) 545 U.S. 469 and Haw. Hous. Auth. v. Midkiff (1984) 467 U.S. 229 the Court acknowledged that it is unconstitutional under Kelo for the government to take private property simply to transfer it directly to another private party. But in this case the Court was following the principal from those cases that: “It is only the taking's purpose, and not its mechanics that matters in determining public use.” The taking of the land here was to provide power transmission by the federal Western Area Power Administration. The Court declined to step into the legislative decisionmaking that authorized the transmission line improvements, but reference was made to California's power blackouts in recent years as motivating the project. The decision notes that the WAPA will retain ownership of both the land from the taking as well as transmission improvements constructed... This is unlikely to be the case that will one day be before the U.S. Supreme Court that addresses Kelo's outstanding question: then what exactly is a "private-to-private" transfer by taking that would be prohibited?

Foreclosure forbearance must be signed

In the case of Secrest v. Security Nat. Mortg. Loan Trust (Cal.App. 4 Dist.), a foreclosure forbearance agreement drafted but not signed by the creditor on a deed of trust was unenforceable under the statute of frauds. The statute of frauds generally requires that a conveyance of real estate be signed by the party against which it is to be enforced. The agreement in this case attempted to modify the note and deed of trust by substituting a new monthly payment for the monthly payment required under the note, and altering the lender's ability to foreclose. Even if the borrowers fully performed their obligations under the agreement by wire-transferring a $13,422.51 downpayment, such performance did not prevent the new transferee of the note and deed of trust from asserting the statute of frauds defense. The borrowers had an adequate remedy at law to vindicate any right to recover the $13,422.51.

Fraternal order isn't protected religious land use

In the case of Los Angeles Scottish Rite Center, LLC v. City of Los Angeles the United States Supreme Court has declined to review a case in which a California appellate court held that a city did not impermissibly burden a nonprofit fraternal order's religious beliefs, in violation of the Religious Land Use and Institutionalized Persons Act (RLUIPA), in placing restrictions on the use of a cathedral and eventually revoking its certificate of occupancy after several years of public nuisance abatement proceedings over commercial use of the cathedral's auditorium for entertainment events by a related entity to which the order leased the premises. The California court held that a burden on a commercial enterprise used to fund a religious organization did not constitute a substantial burden on religious exercise within the meaning of RLUIPA. The restrictions initially placed on the use of the cathedral, prompted by inadequate parking facilities, restricted its use to charitable and nonprofit organizations only. The petition asked whether the forced closure of a facility used for religious exercise presented a "substantial burden" on religious exercise, absent a demonstration that such closure is the least restrictive means of achieving a compelling governmental interest. (Case below: Scottish Rite Cathedral Ass'n of Los Angeles v. City of Los Angeles (2007) 156 Cal.App.4th 108.

When a taking is a nuisance

A local government cannot ban a private property use without just compensation, unless the local government can prove an unreasonable and substantial nuisance from the development. In the case of Monks v. City of Rancho Palos Verdes, 2008 WL 4416188 (October 1, 2008), the California city of Rancho Palos Verdes contended that ancient landslides in the area of the property justified a moratorium on property development. The trial judge ruled for the City, deferring to the City’s requirement, that before being exempted from the moratorium, a lot-owner prove the entire area will be safe despite the individual property’s development,.

In a 34-page opinion that surveyed inverse condemnation law, revisited the statute of limitations and exhaustion ruling of its prior “Monks I” ruling, reviewed in detail the expert evidence and then honed in on the nuisance background of the City’s justification, the appeal court reversed. Employing the “categorical” taking analysis of the U.S. Supreme Court’s seminal Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003, the Monks court ruled that the building moratorium had deprived Monks of “all economically beneficial use” of his property.

The burden then shifted to the city “to prove that the moratorium is justified by state nuisance law.” Applying California public and private nuisance law required an evaluation of the nuisance created by the specific property, not the generalized area, the appeal court held. The nuisance must be “substantial and unreasonable.” Plaintiff Monks’ case featured considerable evidence that another house on the “block slide” area would not be a danger. The trial court’s “uncertainty” based upon the City’s findings in its moratorium ordinance improperly discounted the burden placed on the City to show the “substantial and unreasonable” nuisance.

The result: before restricting property use for the “common good” government must make a solid case that the specific restriction is based upon “substantial and unreasonable” dangers or interference with the greater good. Otherwise, a permanent taking occurs and just compensation must be paid.

Subcontractor has a duty to defend

Rights of indemnity were discussed in the recent case of Crawford v. Weather Shield Mfg. Inc. The case holds that a subcontractor's contractual duty to defend developer covered suit that only alleged a covered claim. Under a subcontractor's indemnity agreement with its general contractor, the subcontractor had a duty to defend the general contractor against a homeowners' construction defect action, because the action alleged negligence by the subcontractor that would have brought the claim within the subcontractor's contractual duty to indemnify. The duty to defend arose as soon as the homeowners brought the action, and regardless of the fact that the subcontractor was eventually found not negligent. The agreement was not affected by a statute, effective in 2006, voiding contract terms obliging subcontractors to indemnify certain other project participants.