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  1. PMR Webinar – DRE Complaints, Investigations & Outcomes: What Brokers Need to Know

    Maria Tanzillo2022-04-20April 20, 20222:12 amComments Off on PMR Webinar – DRE Complaints, Investigations & Outcomes: What Brokers Need to Know
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    Peterson Martin & Reynolds LLP’s 22nd Annual Managing Brokers Program!

    This essential webinar presentation on the California Department of Real Estate’s complaint process includes topics such as how licensees get onto the DRE’s radar, the anatomy of DRE investigations, options available to the DRE when addressing violations of the laws they enforce, addressing rules violations, best practices to protect against DRE complaints, being familiar with and prepared for potential corresponding civil litigation, and more.

    April 20, 2022

    12-1:30pm

  2. Peterson, Martin & Reynolds LLP Successfully Defends Residential Homeowner Clients from Meritless Nondisclosure Claims

    Maria Tanzillo2022-04-202:01 amComments Off on Peterson, Martin & Reynolds LLP Successfully Defends Residential Homeowner Clients from Meritless Nondisclosure Claims
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    In January 2022, Peterson, Martin & Reynolds LLP obtained a judgment affirming an arbitration award on behalf of its clients finding in their favor and awarding PMR’s clients $240,953 in attorney fees and costs.  The case involved home buyers’ allegations that PMR’s clients had concealed dry rot throughout the framing of an extensively renovated hillside home when they sold the Point Richmond, California home to the buyers.  Although the buyers did in fact discover extensive dry rot when they attempted to remodel the home, PMR’s clients denied they had any actual knowledge of the dry rot condition when they sold the home to the buyers.  After a 4-day arbitration hearing, the Arbitrator ruled in favor of PMR’s clients, denied the buyers’ claims and awarded PMR’s clients $240,953 in attorney fees and costs for having to defend the claims.

  3. Peterson, Martin & Reynolds LLP Wins $2,159,692 Arbitration Award for Residential Homeowner Clients

    Maria Tanzillo2022-04-202:00 amComments Off on Peterson, Martin & Reynolds LLP Wins $2,159,692 Arbitration Award for Residential Homeowner Clients
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    In April 2022, Peterson, Martin & Reynolds LLP obtained a Final Arbitration Award for residential real estate clients in the amount of $2,159,692.  In 2016, PMR’s clients had purchased a 3,139 square foot home in an upscale neighborhood in Lafayette, California. The home was built in 1947, and was sold as being on a private, secluded and secure 1.4 acre lot.  The seller of the lot failed to disclose that a pathway that ran through the property had served for decades as a popular, well-travelled trail to the surrounding community. The purchase contract called for arbitration of any disputes. PMR’s lawyers filed for arbitration on behalf of the clients, alleging non-disclosure by the seller. After an 8-day arbitration hearing, the Arbitrator found the seller had intentionally failed to disclose the public’s historical use of the pathway through the property, and awarded $2,159,692 to PMR’s clients, including compensation for diminution in value, loss of use and enjoyment, out-of-pocket remodeling expenses, and attorney fees and costs.

  4. Peterson, Martin & Reynolds LLP Obtains $2+ Million Settlement for Commercial Landlord Client

    Maria Tanzillo2020-05-29May 29, 20204:52 amComments Off on Peterson, Martin & Reynolds LLP Obtains $2+ Million Settlement for Commercial Landlord Client
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    In January, 2020, Peterson, Martin & Reynolds LLP obtained a settlement for a commercial real estate client for $2,103,745.  PMR’s client had leased a 31,320 square foot biotech facility in Foster City, CA for 10 years to a leading international biotech company.  When the biotech company moved out, it failed to properly restore the premises, which delayed and interfered with the client’s ability to re-lease the premises.  The lawyers of  Peterson, Martin & Reynolds LLP sued on behalf of their commercial landlord client.  After protracted litigation, including two unsuccessful appeals by the biotech company lawyers, the biotech company settled the case before the scheduled February, 2020 trial.

  5. Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One

    Maria Tanzillo2017-06-05June 5, 20175:04 pmComments Off on Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One
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    By M. Henry Walker

    This case involves the appeal of a trial court’s judgment granting an equitable easement over rural property in Ventura County. Plaintiff Hinrichs originally owned two large parcels which he inherited from his mother. He grew up in a home located on the southern parcel but hadn’t lived there since moving to Alaska in the 1980s. He sold the southern parcel to a third party based on the belief that he still had access to the only public road servicing the area via an historic trail which first appeared on a federal survey map in 1868 and which traversed several neighboring parcels. He was wrong in this regard; the owners of the neighboring parcels denied him access over the historic trail meaning his northern parcel was actually landlocked.

    Hinrichs sued several neighbors, claiming he had an easement which was appurtenant to the original land patent, that he had acquired a prescriptive easement, and that he was entitled to an equitable easement by necessity. The trial court rejected the first two theories but entered judgment in favor of Hinrichs on the third, creating an equitable easement by necessity. The location of the created easement, however, was not over the historical trail area previously used for ingress and egress but rather over a new indirect route which was less accessible due to the terrain. While portions of the newly created easement had existing driveways, in order for Hinrichs to use the judicially created easement he would be required to grade two new roadways to connect to the existing portions. The trial court applied the “balancing of hardships” test and determined this to be the best location because this location would only minimally interfere with the servient parcels.

    Hinrichs appealed, arguing the trial court erred in denying him an easement over the historic trail. The other parties appealed as well, claiming among other things that the trial court erred in creating a new easement where none had ever existed. The appellate court focused on the issue of whether a court can create an equitable easement by necessity where the party claiming the easement has made no prior use of the easement. On the latter issue, the appellate court affirmed the trial court’s judgment, holding that “the court may grant an equitable easement without there being a preexisting use by the landowner seeking the easement.” The appellate court reasoned that despite the holdings of several cases which recognize the imposition of an easement by necessity in the case of a “long-standing encroachment,” such an encroachment is not an absolute requirement for an equitable easement. Moreover, the court found no evidence that Hinrichs was negligent in creating the landlocked parcel because he had a reasonable belief that he had a right of way over the trail.

    This case serves as a reminder that while the law recognizes a strong interest in preventing land-locked parcels, a trial court sitting in equity must balance the rights of all parties rather than focus solely on the rights of the party claiming the equitable easement. In other words, Hinrichs got his easement but can’t be heard to complain that the location was not over the best access route. Perhaps that’s why it’s called an easement by necessity rather than an easement by convenience.

    Hinrichs v. Melton (2017) 17 C.D.O.S. 4217.

  6. Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects

    Maria Tanzillo2017-04-20April 20, 20178:46 pmComments Off on Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects
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    In California, the Right to Repair Act, codified at Civil Code sections 895 et seq., was established with the goal of resolving construction defect claims in an expeditious and nonadversarial manner. The Act requires that, prior to filing a lawsuit, a homeowner must provide the builder with a notice of claim. The notice must contain the claimant’s name, address, and preferred method of contact. The notice must also state that claimant is alleging a violation pursuant to section 910 of the Act, and describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the alleged defects.

     

    Once such a claim is delivered via overnight mail, certified mail, or personal delivery to the builder, the statutory timelines go into effect. The builder must acknowledge receipt of the claim within 14 days, may elect to conduct an initial inspection of the property within the following 14 days, and may offer to repair the violation and compensate the owner within 30 days of the initial or second inspection. The owner then has 30 days to authorize the builder to proceed with the repair or request alternative contractors. If the builder fails to strictly comply with any of the requirements or timelines, the owner is released from the requirements of the Act and may proceed with filing a lawsuit.

     

    In a recent case, Blanchette, the owner of one of 28 homes constructed by GHA Enterprises, served GHA with a notice of claim under the Act. GHA did not respond to the notice until 21 days later. GHA’s response asserted that Blanchette had not alleged the defects with sufficient detail as required by the Act. Because the response took 21 days, Blanchette took the position that it was untimely and filed a construction defect class action against GHA. GHA moved to stay the lawsuit, and the trial court granted the motion, agreeing that Blanchette’s notice of claim lacked sufficient detail to trigger GHA’s obligations under the Act.

     

    The Court of Appeal reversed the trial court decision, finding that the timelines under the Act are to be strictly construed. Although the Court agreed that Blanchette’s notice of claim lacked sufficient detail of the alleged defects, the Act nonetheless requires that the builder respond and acknowledge the claim within 14 days. Here, the builder should have raised any objection to the sufficiency of the notice within the 14 day time period rather than relying on that defect as a basis to delay the response. Because GHA did not timely acknowledge receipt of the claim and set forth its objections, Blanchette was released from the requirements of the Act and could proceed with the lawsuit.

     

    This case serves as a reminder to builders in California to make sure and strictly comply with all provisions of the Right to Repair Act, or risk becoming embroiled in what may become much more lengthy and expensive civil litigation.

     

    Blanchette v. Superior Court (GHA Enterprises) (Feb. 10, 2017) 17 C.D.O.S. 1302

    (2/17)

  7. Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners

    Maria Tanzillo2017-04-208:45 pmComments Off on Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners
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    Jacobs, a licensed real estate broker, signed a vacant land listing agreement granting her the exclusive right to sell a parcel of property in Marin County. The listing agreement was signed by one of the property owners, Locatelli, as trustee for the Locatelli trust. There were signature lines on the listing agreement for five additional owners, but they did not sign. However, the term “owner” was defined in the agreement as the Locatelli trust “et al.”, which means “and others”. Locatelli told Jacobs he was authorized to act on behalf of all owners.

     

    Jacobs marketed the property and found a potential buyer, The Trust For Public Land (TPL). When Jacobs informed Locatelli, he claimed that he had already been speaking with TPL for 3 years and would deal with them directly. He instructed Jacobs to cease all communications with TPL. The owners later sold the property to TPL, and refused to pay Jacobs a commission.

     

    Jacobs filed a complaint against the owners and TPL to recover the commission. The owners who had not signed the listing agreement moved to dismiss the case against them, and the trial court granted their demurrer. The court of appeal reversed the decision, thus keeping all the owners in the case.

     

    The non-signing owners argued that Jacobs’ complaint was barred by the statute of frauds, which provides that a broker’s commission agreement is invalid unless some form of it is in writing and signed by the party to be charged or the party’s agent. The court, however, found the statute inapplicable because Jacobs alleged there was a written agency agreement between Locatelli and the owners allowing him to act on their behalf, and he signed the listing agreement. In addition, Jacobs alleged that at least two of the other owners had acknowledged her as the listing broker during the marketing of the property. As such, the court of appeal held that the trial court should have allowed extrinsic evidence on these claims rather than dismissing the complaint.

     

    The owners also argued that the parol evidence rule barred introduction of extrinsic evidence to dispute the listing agreement because it was a fully integrated and thus a final agreement. The court of appeal also found this rule inapplicable, because there was no apparent contradiction between the terms of the listing agreement and Jacobs’ allegations, i.e., that all owners had retained her through their agent, Locatelli.

     

    This case was decided correctly under the facts and circumstances involved. It is nonetheless an important warning and reminder to brokers and agents to ensure that all necessary parties sign listing agreements and other transaction documents, so as to avoid unnecessary litigation and problems down the line.

     

    Jacobs v. Locatelli (Feb. 9, 2017) 17 C.D.O.S. 1232

    (2/17)

  8. Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer

    Maria Tanzillo2017-04-208:42 pmComments Off on Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer
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    It is settled law in California that a real estate broker representing both seller and buyer has fiduciary duties to both parties. In a recent decision, the California Supreme Court has now confirmed that, when there is such dual agency by the broker, the associate licensee acting solely as the listing agent under the broker’s license also has a fiduciary duty to the buyer.

     

    In this case, seller retained Coldwell Banker to list a luxury residence for sale. The listing agent marketed the home as having approximately 15,000 square feet, which was more than reflected in public records. Buyer was also represented by Coldwell Banker, but by a different salesperson in a separate office. As required by law, buyer had knowledge of and consented to the dual agency. The listing agent provided copies of public records and the marketing flyer, but did not advise buyer to verify the square footage. After the purchase, buyer discovered the discrepancy and sued for breach of fiduciary duty.

     

    Initially, the trial court decided that listing agent had no fiduciary duty to buyer. After the Court of Appeal reversed that decision in 2014, the California Supreme Court agreed to hear the case. The court first examined the history of dual agency in California, noting many developments since the early 1980s. At issue was interpretation of the final two sentences of Civil Code section 2079.13(b), in which the term “agent” refers to the broker and contemplates a real property transaction: “The agent…bears responsibility for his or her associate licensees who perform as agents of the agent. When an associate licensee owes a duty to any prinicipal, or to any buyer or seller who is not a principal,…that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions.”

     

    The listing agent argued that, taken in context, the “equivalent” language merely clarifies that the broker assumes duties owed by its agents, not the other way around. The court, however, agreed with buyer’s contrary position that because the agent’s authority derives solely from that of the employing broker, the second sentence imposes on the agent the same responsibility as held by the broker. This reading of the statute is supported by its full legislative history.

     

    As such, the court affirmed that listing agents, when their brokers act as dual agents, owe buyers a duty to learn and disclose all information materially affecting the value or desirability of the property being purchased. In this instance, that included a duty by the listing agent to the buyer to investigate and disclose everything he could learn about the square footage. Here, the duty to investigate arose because there was a known discrepancy regarding square footage.  This decision further clarifies and strengthens protection afforded to real estate buyers in California.

     

    Horiike v. Coldwell Banker Residential Brokerage Company (Nov. 21, 2016) 16 C.D.O.S. 12228

    (12/16)

  9. “Buyer/Tenant” Beware: Purchase Contract May Include Lease Agreement

    Maria Tanzillo2016-06-28June 28, 20164:32 pmComments Off on “Buyer/Tenant” Beware: Purchase Contract May Include Lease Agreement
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    The case of Taylor v. Nu Digital Marketing, Inc. involved an unusual purchase contract for residential property.  The contract set forth payment of the “purchase price,” and also included a provision that Buyer would pay monthly “probationary installments” for 60 months, which would not count toward the purchase price.  Only payments in excess of the monthly probationary amount went toward the purchase price.  The contract also provided that the probationary payments would increase by any increase in the mortgage payments.  Finally, the contract gave Buyer the right to possession only while making the monthly probationary payments, and gave Seller the right to evict Buyer for failure to do so if not cured.

     

    The monthly mortgage increased but Buyer failed to pay the corresponding increase in the monthly probationary amount.  Seller served a five-day Notice to Quit, and Buyer failed to cure.  Seller filed an unlawful detainer action, and the court ruled in favor of Seller, finding that the “purchase contract” also included a lease agreement, with the “probationary installments” as rent.  Seller appealed, arguing that the contract was for purchase and sale, and thus Buyer could not state a claim for unlawful detainer.

     

    The appellate court affirmed.  While unlawful detainer actions are typically not available to a seller to regain possession of property when the buyer defaults on an installment payment on the purchase price, they are available to a landlord when a tenant fails to pay rent or otherwise breaches a lease.  The court recognized that an agreement can be for both a purchase/sale and lease, where possession is achieved through a landlord-tenant relationship.   In determining whether the contract at issue is for purchase and sale, a lease, or a combination thereof, the court looked to the rights and obligations of the parties.

     

    In this case, the contract did not require a down payment and subsequent installment payments to pay off the purchase price.  Rather, it required a down payment plus monthly probationary installment payments for 60 months.  Possession was conditioned on the continued payment of the probationary amounts.  Importantly, only payments in excess of the probationary payments went toward the purchase price.  The court therefore concluded that the probationary installment payment provisions created a 60-month lease, with the monthly payments constituting rent.  This was bolstered by the fact that both parties routinely referred to such payments as “rent.”  As such, an unlawful detainer action for non-payment of rent was appropriate.

     

    Buyers, sellers and brokers should pay careful attention to purchase contract language that may raise lease issues.

    Taylor v. Nu Marketing, Inc. (2016) 16 C.D.O.S. 2284

    (03/16)

  10. Interfere With Your Neighbor’s Trees, Be Prepared to Restore Them And Pay Money Damages Times Three

    Maria Tanzillo2016-06-284:30 pmComments Off on Interfere With Your Neighbor’s Trees, Be Prepared to Restore Them And Pay Money Damages Times Three
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    The Salazar family (“plaintiffs”) lived in San Francisco but owned, since 1982, a 10-acre parcel of rural property in Mendocino County that they visited frequently over the years.  The property, which included many large trees and a spring, was completely undeveloped except for a small cabin, and the family enjoyed it as a respite from city life.  Plaintiffs valued the property and the trees in their undisturbed natural state for aesthetics, recreation and privacy.

     

    Defendant Matejcek purchased the adjacent 20-acre parcel in 2007.  Without first conducting a survey, defendant cleared numerous trees on plaintiffs’ property, and added a road, fence, gate, plastic water tanks and a pool, all of which encroached on plaintiffs’ property.  He also apparently moved markers placed by plaintiffs’ surveyor.

     

    The court awarded money damages for encroachment, treble damages for removal of timber, and an injunction requiring defendant to restore plaintiffs’ land.  Defendant appealed.

     

    The measure of damages for wrongdoing that injures property, including trees, is the amount that will compensate for all the detriment proximately caused thereby.  (Civ. Code § 3333.)  Typically, this is measured by the monetary value of the property before and after the damage.  However, this measure may be insufficient where the aesthetic and personal value of the trees to the owner exceeds their monetary value.  In that case, the court may devise an alternative measure based on a more appropriate formula, such as the cost of restoring the property to its former condition even if the cost exceeds diminution in value.  Plaintiffs here relied on this “personal reason” exception to the standard measure of damages, and their expert estimated a cost of $67,500 to remediate the trees.  The court thus found that a damage award of $67,500 was reasonable even if the entire 10-acre parcel was worth only $75,000.

     

    The court then trebled the restoration damages to $202,500 based on a finding of willful and malicious conduct.  (Civ. Code § 3346; CCP § 733.)  The evidence showed that defendant had pulled records and harassed plaintiffs to sell him their property for years before he purchased the neighboring parcel, did not obtain a survey prior to the work, may have moved or ignored survey markers, and failed to advise plaintiffs of his construction plans.

     

    Defendant also argued that plaintiffs elected to recover money damages and could not also obtain equitable relief.  An injunction provides an equitable remedy as opposed to money damages.  In order to obtain such equitable relief, where the court orders that defendant take or refrain from some action, plaintiff must prove that there is no other adequate remedy.  The court can then fashion the remedy that is most appropriate under the circumstances.

     

    Here, plaintiffs alleged irreparable injury to their property rights because continuance of the encroachments could ripen into a prescriptive easement and give defendant legal rights to use it.  This could not be compensated by an ordinary damage award.  The court thus ordered a permanent injunction compelling defendant to remove the encroachments, return the roadway to its original grade, and to otherwise restore the property, after which plaintiffs could replant the trees for their use and enjoyment.  Had the encroachment been innocently made and not caused irreparable injury, and if cost of removal outweighed inconvenience to plaintiff, the court could have denied the injunction and awarded only money damages, but here both the legal and the monetary remedy were fully warranted.

     

    Salazar v. Matejcek (2016) 16 C.D.O.S 2682

     

    (03/16)