California Litigation Attorney Blog

Landlord Tenant LeaseAs a real estate partition attorney in California, the most common question I receive is whether a co-owner has a right to partition a property by sale, meaning a court-ordered sale of the entire property to the highest bidder after the property is marketed to third parties. The rule in this area of law is absolute: the right to partition the property by sale is available to any co-owner of real property, known in the law as a co-tenant (tenant-in-common or joint-tenant).

One treatise on California law explains the issue as follows: “Ordinarily, therefore, if a party seeking partition is shown to be a tenant in common or a joint tenant, the right [to partition] is absolute and cannot be denied, either because of any supposed difficulty or on the suggestion that the interests of the cotenants will be promoted by refusing the application or temporarily postponing the action. The only indispensable requirement is that a clear title be shown, and in no event is a partition to be denied because it might result in financial loss to the cotenants.” 48 Ca Jur Partition § 36.

One case explained that: “The action for partition may be brought by one or more of the persons described in section 752 of the Code of Civil Procedure. It is a special proceeding regulated by the provisions of the statute and ordinarily, if the party seeking partition is shown to be a  tenant in common, and as such entitled to the possession of the land sought to be partitioned, the right is absolute.” Bacon v. Wahrhaftig (1950) 97 Cal.App. 2d 599, 603.

Yet another case set forth that: “Ordinarily, if the party seeking partition is shown to be a tenant in common, and as such entitled to the possession of the land sought to be partitioned, the right to partition is absolute, and cannot be denied, ‘either because of any supposed difficulty, nor on the suggestion that the interest of the cotenants will be promoted by refusing the application or temporarily postponing action, . . .’” Priddel v. Shankie (1945) 69 Cal.App. 2d 319, 325.

This means that the right to partition does not depend upon the fractional interest of the co-tenant. For example, a co-tenant holding only a small fractional interest could file a partition action. One reason the law allows this is that it may be very hard, if not impossible, to market a fractional ownership of real estate, as few parties will be interested in becoming a co-owner with the remaining co-owner(s).

Moreover, the right to partition does not requiring infighting among the co-owners. For example, an ex-husband can file a partition action even if he has an entirely-amicable relationship with his ex-wife, so long as they are co-owners of the property. Generally, partition actions involve parties who are or were very close, such as family (or former family), intimate partners (or formerly-intimate partners), and close friends (or formerly close friends). Indeed, parties would rarely end up as co-owners unless they did so voluntarily, based on trust existing at the time, or involuntarily, based on a trust, will, divorce decree or otherwise creating the co-ownership.

Further, the right to partition does not depend upon the hardship that a partition may cause to the tenant-in-possession (co-owner-in-possession). For example, an ex-wife can file a partition action that may cause the sale of the house occupied by her ex-husband, a co-owner of the property, even if the ex-husband may have no where else to live. One reason for this is that the ex-husband is welcome to be the highest bidder for the property. To the extent the tenant-in-possession is not the highest bidder, the tenant-out-of-possession should not receive diminished profits from the sale because of the hardship it may cause the tenant-in-possession, who can only offer a diminished sum. To prevent problems caused by a tenant-in-possession who would prefer that the property not be marketed for sale, an experienced partition attorney should request that the court take appropriate action if the tenant-in-possession fails to fully cooperate with an orderly sale of the property.

There are many ways to become a co-owner of real estate, but unless all co-owners agree to sell, there is only one remedy under the law: a complaint in state court for partition by sale. To ensure that a partition action proceeds smoothly given the unique complications in every case, co-owners should seek the advice of an experienced partition attorney in California.

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Scales of JusticeCourts begin to recognize that a lawyer need not hire outside counsel for advice.

Almost every lawyer will encounter at least one unhappy client who may sue for malpractice, whether the “claim” is legitimate or not.

With whom may the lawyer confer about the beef (before suit and representation by insurance counsel)?

Several resources are available, including state bar ethics hotlines and other lawyers.

Until recently, if a lawyer who received a client complaint was in a firm, it was an open question if communications with another lawyer in the firm were protected Attorney/Client communications.

Thankfully, the courts have started to publish written opinions that affirm the right of a firm to have an in-house general counsel, sometimes called an ethics counsel.  When a whiff of a dissatisfaction claim arises, the “offending” lawyer should immediately alert the firm’s general counsel, who would provide advice about ethical duties to the client and advice to the lawyer about how to proceed in other regards, as well.

One illustrative case from California is Edwards Wildman Palmer LLP v. Superior Court (2014) 231 Cal. App. 4th 1214Palmer (as it’s called) sets forth conditions for preserving from discovery by the client intra-firm communications between the “offending” lawyer and the firm’s general counsel as being attorney-client confidential communications.  Just as communications with an outside lawyer hired by the firm would be privileged, so would in-house communications with a lawyer whose job it is to advise the firm in such matters and who had had no involvement with the client.

However, the Palmer court did point out that certain conditions must be met to claim the privilege successfully.  One has to avoid the “prairie fire” communications within a firm among those who have no business communicating about the client, the file and the claim (other than necessary reports from the in-house general counsel re: status).  In other words, the general counsel needs to behave as an outside lawyer would who had been hired by the firm to represent it.

Other states whose courts have recognized the right to have an in-house general counsel include Georgia and Massachusetts.  Check with your state bar association for pertinent information.

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ConstructionIn 2002, the California Legislature enacted SB 800 to cover residential construction defect claims…or so most thought.  Its intent was to give developers, builders and contractors the right to repair alleged defects before homeowners filed suit.  It required the homeowners to give notice and an opportunity to repair.

In 2013, the California intermediate appellate court in Orange County upset the apple cart in Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App. 4th 98, an insurance subrogation case.  A Los Angeles County District Court of Appeal (Burch v. Superior Court (2014) 223 Cal.App. 4th 1411) agreed with the Liberty Mutual court that the Right to Repair Act (as SB 800 is known) is not the exclusive remedy available to homeowners, i.e., they could sue without giving notice of defects and an opportunity to repair.

In 2015, California’s Fifth District Court of Appeal went the other way, citing the language in Civil Code sections 896, 897, 931, 943 and 944, as well as the Legislative History in concluding that homeowners must give notice and allow repairs to be attempted before suing.

Now that there is a conflict among the intermediate appellate panels, will the California Supreme Court right the wrong of Liberty Mutual/Burch and enshrine McMillan as the law of the state?

Stay tuned.  One may assume that if the Supreme Court takes up McMillan, there would be a plethora of amici curiae briefs.  Should be fun to watch!

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Scales of JusticeCo-ownership of real estate in California can be expensive when one co-owner, known in the law as a co-tenant, does not cooperate in the sale of the property. This often occurs when the uncooperative co-tenant is enjoying the benefits of a property without contributing to the expenses of the property. When a partition action (lawsuit) is filed, California courts are empowered to partition the property by sale, whereby the property will be sold to the highest bidder. Sometimes the highest bidder is a third-party, while other times the highest bidder is one of the co-owners.

In connection with the sale, the court will enter a judgment as to how the proceeds of sale are to be distributed. Code Civ. Proc. § 873.810. Notably, before the proceeds are distributed to the co-owners, the costs of partition must be paid. Code Civ. Proc. § 873.820(b). In turn, the cost of partition include “Reasonable attorney’s fees incurred or paid by a party for the common benefit.” Code Civ. Proc. § 874.010(a). While generally “the court shall apportion the costs of partition among the parties in proportion to their interests,” the court may “make such other apportionment as may be equitable.” Code Civ. Proc. § 874.040. In other words, the court can order attorney’s fees to be recouped entirely by the plaintiff who paid an attorney to file the partition action from the net proceeds that would have been distributed to the uncooperative defendant.

The cases have repeatedly clarified that a deviation from the normal apportionment in proportion to the interests of the parties “must be supported by substantial evidence in the record.” Charco Ventures v. Sandoval, No. C060305, 2010 WL 227647, 2010 Cal. App. Unpub. LEXIS 448, *22 (Cal. App. 3d Dist. Jan. 22, 2010); see Finney v. Gomez (2003) 111 Cal.App.4th 527, 545; Stutz v. Davis (1981) 122 Cal.App.3d 1, 5. “The statute’s broad language does not limit the trial court’s equitable discretion . . . .” Lin v. Jeng (2012) 203 Cal.App.4th 1008, 1025.

Plaintiffs seeking to recover attorney’s fees should document the record that the partition action was filed due to the lack of cooperation of the co-tenant. Plaintiffs should provide this information to the court. As such, the court’s ruling can specify the basis of the equitable apportionment of attorney’s fees. Indeed, if a partition action is filed solely because a co-tenant refuses to cooperate in employing a real estate broker to list and sell the property just as the court will do, how could the partition action be for the benefit of anyone other than the uncooperative co-tenant? Apparently, the co-tenant believes their rights were not being protected outside of court.

Such lack of cooperation is all too common. To the extent the uncooperative co-tenant does not appear or otherwise raise legitimate issues in the partition action, courts should consider assessing the fees entirely against those who forced their co-tenants into litigation to reach the same goal that could have been reached without the involvement of attorneys.

If you own property as a tenant-in-common or joint-tenant in California, contact a California partition attorney to discuss your rights.

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BankruptcyBankruptcy is often the court of last resort when bad actors have tried to perpetrate financial schemes to avoid paying their debts. For example, some debtors attempt to transfer their assets or those of an entity they control with the intent to delay or hinder a creditor in collecting on a debt. In legal parlance, this is known as a fraudulent transfer.

When an fraudulent transfer occurs before a debtor files for protection under the United States Bankruptcy Code, creditors should promptly protect their rights to ensure that the bankruptcy does not discharge the debtor’s liability for their fraudulent transfer or the underlying debt. Specifically, creditors should consult with counsel to consider filing a timely adversary complaint for non-dischargeability under 11 U.S.C. § 523(a)(6) or (a)(4)- two differing theories to obtain a finding that the bankruptcy discharge will not impact the debt owed to the creditor.

1. Willful and Malicious Injury to the Property of Another 11 U.S.C. § 523(a)(6)

One way to obtain a non-dischargeability judgment is to establish the elements of Section 523(a)(6) of the Bankruptcy Code, which provides that a debtor cannot discharge a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”

a.  Willful Injury Requirement

In the Ninth Circuit, “§ 523(a)(6)’s willful injury requirement is met only when the debtor has a subjective motive to inflict injury or when the debtor believes that injury is substantially certain to result from his own conduct.” Carrillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002). Both aspects of the willfulness standard inquire into the debtor’s subjective state of mind, and both can be proven by circumstantial evidence. Id. at 1144-47 & n.6. “The Debtor is charged with the knowledge of the natural consequences of his actions.” Ormsby v. First Am. Title Co. (In re Ormsby), 591 F.3d 1199, 1206 (9th Cir. 2010); see Su, 290 F.3d at 1146 (“In addition to what a debtor may admit to knowing, the bankruptcy court may consider circumstantial evidence that tends to establish what the debtor must have actually known when taking the injury-producing action.”).

In 2013, the Ninth Circuit Bankruptcy Appellate Panel (“BAP”) affirmed a case where “the state court explicitly determined that Vazquez . . . fraudulently transferred Alliance’s assets, ‘virtually the entire business,’ to All Blueprint ‘for the sole purpose of hindering [AAA’s] efforts to collect its judgment.’” Vazquez v. AAA Blueprint & Digital Reprographics (In re Vazquez), 2013 WL 6571693, at *4-6 (9th Cir. BAP Dec. 13, 2013) (unpublished). The BAP “agree[d] with the bankruptcy court that the state court’s finding regarding Vazquez’s subjective motive for transferring Alliance’s assets meets § 523(a)(6)’s willfulness requirement. In other words, the state court’s finding that Vazquez sought to hinder AAA’s collection efforts is tantamount to a finding that Vazquez intended to harm AAA by transferring all of Alliance’s assets to All Blueprint.” Id.

In 2014, the BAP found that, with the state court “finding of actual fraudulent transfer, it follows that Gould intended to cause injury to Red Hill or believed that injury was substantially certain to occur with his conduct of transferring Learning Tree’s funds to LTU Extension to prevent Red Hill from levying on its 1998 Judgment.” Gould v. Red Hill Enters. (In re Gould), BAP No. CC-13-1437-KiLaPa (B.A.P. 9th Cir. Aug. 25, 2014) (unpublished). Thus, tracking the required state law elements of an actual (intentional) fraudulent transfer in the state where the transfer occurred should be sufficient to meet the willful injury element.

b. Malicious Injury Requirement

With respect to malice, a debtor’s conduct is malicious for purposes of § 523(a)(6) when the conduct “involves (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse.” Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1209 (9th Cir. 2001). “Malice may be inferred based on the nature of the wrongful act.” Ormsby v. First Am. Title Co. (In re Ormsby), 591 F.3d 1199, 1207 (9th Cir. 2010). “To infer malice, however, it must first be established that the conversion was willful.” Id.

In 2013, the BAP addressed a debtor where the state court, in ruling on the fraudulent transfer claim, “explicitly found that Vazquez’s conduct was wrongful. This wrongfulness, furthermore, is self-evident given the very nature of Vazquez’s conduct in transferring Alliance’s assets for the purpose of hindering AAA. The state court also found his conduct intentional. The intentional nature of Vazquez’s conduct is reflected in the state court’s account of Vazquez conspiring and plotting with Huerta to interfere with AAA’s collection efforts. That the act of hindering AAA’s collection efforts necessarily harmed AAA also is self-evident.” Vazquez v. AAA Blueprint & Digital Reprographics (In re Vazquez), 2013 WL 6571693 (B.A.P. 9th Cir. Dec. 13, 2013) (unpublished).

The BAP continued that there was no “genuine doubt that Vazquez had no just cause or excuse for his conduct. He apparently asserted in the state court that he transferred Alliance’s assets to All Blueprint because he desired to set up Huerta in a reprographics business separate and independent from Alliance, but the state court in its findings unequivocally rejected this assertion. In any event, even if there had been any truth to this assertion, it would not as a matter of law constitute just cause or excuse for Vazquez’s wrongful acts, given Vazquez’s specific intent to harm AAA.” Id.; see Gould v. Red Hill Enters. (In re Gould), BAP No. CC-13-1437-KiLaPa (B.A.P. 9th Cir. Aug. 25, 2014) (unpublished; cited only for persuasive value, if any) (“As for the ‘malicious’ prong, a wrongful act is self-evident given the nature of Gould’s conduct in transferring Learning Tree’s funds to LTU Extension for the purposes of hindering Red Hill’s collection efforts”).

c.  Alternative: State Court Preclusion

It is sometimes the case that the creditor has already obtained a state court finding of actual fraudulent transfer. In those cases, the creditor is well positioned to apply preclusion. In 2014, the BAP, in an unpublished opinion, found that “[a] judgment for ‘actual’ fraudulent transfer can satisfy the elements for a willful and malicious injury.” Correia-Sasser v. Rogone (In re Correia-Sasser), BAP No. AZ-13-1461-KiTaPa (B.A.P. 9th Cir. Aug. 19, 2014).

The BAP cited to another unpublished opinion in Vazquez v. AAA Blueprint & Digital Reprographics (In re Vazquez), 2013 WL 6571693, at *4-6 (9th Cir. BAP Dec. 13, 2013) as “affirming [the] bankruptcy court’s ruling that creditor’s judgment for actual fraudulent transfer under Cal. Civ. Code § 3439.04(a)(1) satisfied the elements for a willful and malicious injury under § 523(a)(6), so issue preclusion was properly applied.” Just days after Correia-Sasser, the BAP affirmed that a fraudulent transfer finding was preclusive of liability under § 523(a)(6). Gould v. Red Hill Enters. (In re Gould), BAP No. CC-13-1437-KiLaPa (B.A.P. 9th Cir. Aug. 25, 2014).

This case law in the Ninth Circuit establishes that the requirements of § 523(a)(6) should apply to most actual (intentional) fraudulent transfers.

2. Embezzlement Under § 523(a)(4)

In certain circumstances, the facts giving rise to a fraudulent transfer may also meet the requirements for non-dischargeability under Section 523(a)(4), which excepts from discharge any debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”

As the Ninth Circuit held, “[c]learly, a debt can be nondischargeable for embezzlement under 523(a)(4) without the existence of a fiduciary relationship.” In re Littleton, 942 F.2d 551, 555 (9th Cir. 1991); see 4-523 Collier on Bankruptcy P 523.10 (“[t]he phrase ‘while acting in a fiduciary capacity’ clearly qualifies the words ‘fraud or defalcation’ and not ‘embezzlement’ or ‘larceny’”).

The Ninth Circuit case of In re Littleton, 942 F.2d 551, 555-56 (9th Cir. 1991) found that, “[u]nder federal law, embezzlement in the context of nondischargeability has often been defined as ‘the fraudulent appropriation of property by a person to whom such property has been entrusted or into whose hands it has lawfully come.’” Id. (citing Moore v. United States, 160 U.S. 268, 269 (1885)).

Littleton found that “[e]mbezzlement, thus, requires three elements: (1) property rightfully in the possession of a nonowner; (2) nonowner’s appropriation of the property to a use other than which [it] was entrusted; and (3) circumstances indicating fraud.” In Littleton, the creditor “contend[ed] that when the individual debtors did not segregate the proceeds and did not pay [creditor], they intended to defraud [creditor], and therefore the debtors embezzled the proceeds.” Littleton found that “[w]hether the debtors intended to defraud [creditor] is a question of fact.”

In Littleton, the “bankruptcy court held that [the creditor] did not meet its burden of proof on the embezzlement claim.” The BAP affirmed, finding that “at all times the debtors acted with the intent to benefit the corporation by securing financing so that the company could pay all its debts . . . negates any contention that the debtors intended to defraud [the creditor]. The Ninth Circuit in Littleton affirmed, stating that, “[g]iven the bankruptcy court’s finding that the debtors applied their entire effort and resources to make the business survive and that this was their dominant motivation, it was not clearly erroneous for the BAP to hold that the debtors did not act with the intent to defraud [the creditor].”

The application of Littleton may be helpful if the debtor took all of the funds from a defunct business. However, if the business had a potential future that might repay the funds, Littleton may not be very helpful as it is difficult for courts to determine whether a debt is a run of the mill breach of contract, or an embezzlement of funds.

These cases establish that creditors with a debt owed by an individual or corporation where a fraudulent transfer occurred should promptly consult a bankruptcy attorney if their debtor files for bankruptcy protection.

Special thanks for Bankruptcy Debtor’s Counsel Ori Blumenfeld for inspiring this blog post.

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As a general rule, California malicious prosecution actions are dicey propositions insofar as they always subject the plaintiff to a potential Anti-SLAPP motion from the defendant pursuant to California Code of Civil Procedure section 425.16.   At a minimum, such a motion requires the plaintiff to immediately produce admissible evidence establishing the malicious prosecution claim.  The failure to produce such evidence causes the dismissal of the case and may result in the plaintiff having to pay the defendant’s reasonable attorney fees for bringing the motion.   Malicious prosecution cases arising out of family law court matters are even more problematic.

As a general rule, for public policy reasons plaintiffs are not entitled to bring malicious prosecution actions stemming from matters originating in the family law courts. Bidna v. Rosen (1993) 19 Cal.App.4th 27.  A very narrow exception to the Bidna rule was carved out by Nicholson v. Fazeli (2003) 113 Cal.App.4th 1091, wherein a wife was permitted to maintain a malicious prosecution complaint against a Trust (which had previously filed a cross-complaint in the wife marital dissolution action) because the Trust’s cross-complaint did not implicate any family law issues (i.e., it did not specifically involve allegations related to marital status, child custody, spousal support, or the division of community property).  Because the Trust’s cross-complaint was a fairly rare animal (the vast majority of all family law court pleadings will involve some family law issue), parties contemplating filing a malicious prosecution action arising out of a family law court are strongly advised to consult with an attorney to obtain advice before filing a complaint that might be immediately dismissed and, even worse, might subject the party to paying the other side’s attorney fees.

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Some seem to think that a creditor plaintiff always has to sue to collect a debt in the debtor defendant’s county of domicile.  While the latter’s county is proper venue, it may not be the only proper venue.  There may be more than one county in which one properly may file suit.

Often, contract documents will specify that venue is proper in one specific county.  Generally, that would control.

However, improper venue is a waivable defect.  The plaintiff may sue in the “wrong” county.  However, if the defendant does not file a motion to change venue to the proper county, the defendant would be stuck with the “wrong” county.

What happens if no venue is specified in the contract documents?

Generally, that means the county in which the creditor plaintiff is situated would be the proper county in which to sue.  This is because performance under the contract, e.g. payment, is due where the creditor is.  So, even if the debtor defendant is in another county, the plaintiff can sue in his/her/its home county.  (See Hale v. Bohannon (1952) 38 Cal. 2d 458, 467 [9].)

Venue (and jurisdiction) rules can be tricky.  As with most aspects of the law these days, one needs to hit the books (or the computer, as the case may be).

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Some seem to think that merely depositing a Notice of Pending Action [fn] is sufficient to give constructive notice of the contents of the law suit to which it refers.


Not so, as the court in Dyer v. Martinez (2007) 147 Cal. App. 4th 1240 reminds us.  In order to impart constructive notice, the lis pendens must be properly indexed so that it may impart notice via a diligent title search.  If it is not indexed at the time of recordation of a subsequent recording (e.g., of a deed) or is improperly indexed so that it could not be “located”, it is a nullity as to a third party for value without actual or inquiry notice.


For well over 100 years, this has been the long-standing rule for a number of policy reasons, as discussed in the Dyer case and in others.  In this way, a Notice of Pendency of Action differs from the automatic bankruptcy stay of which notice need not be given to be effective.


Obviously, this rule can be trumped if the third party is not innocent, or should have known of the pending claim, or actually did know.  That’s another discussion for another day.


Moral of the story:  record the notice ASAP and make sure it’s properly indexed ASAP.  Also, if one has notice that a property may be conveyed away (e.g., there’s a For Sale sign on it), file suit, record the lis pendens and give notice to the owner and the realtor(s), immediately.


[fn] (The terms lis pendens, notice of pendency of action and notice of pending action are used interchangeably.)

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California’s Proposition 13 is well known to real property owners.  It generally caps property taxes at about 1% of the property’s purchase price, which the County Tax Assessor terms its “base year value.”  Property taxes typically only increase 2% per year over the base year value. But what happens when a property’s value drops below the base year value? Fortunately, the California legislature enacted Proposition 8, codified in Revenue & Taxation Code § 51, to allow for temporary property tax reductions when a property’s value falls.

Proposition 8 (“Prop. 8”) requires the County Assessor to tax property based upon the lower of the base year value or the current market value. Unfortunately, after allowing a one year reduction following an assessment appeal, some Assessors would allow a property’s Prop. 8 reduced value to revert to the higher base year value the next year unless an owner filed annual appeals.

To address this problem, Rev. & Tax. Code § 51(e) was amended in 1996 to require Assessors to annually reappraise and reassess after a Prop. 8 reduction. This duty continues until the fair market value recovers to the base year value.  Additionally, an Assessor may not condition the annual reappraisals upon the filing of annual assessment appeals.

Despite this change to Rev. & Tax. Code § 51(e), Assessors often ignored it. Assessment appeals can take several years. Some Assessors would refuse to retroactively reappraise a property’s value for the years the Assessment Appeals Board appeal had been pending. Some did not conduct annual reappraisals of any kind, thereby taking the position that property owners must file annual appeals which are explicitly not required by Rev. & Tax. Code § 51(e).

It was inevitable that this would lead to a lawsuit.  And, so we have a detailed examination of Rev. & Tax. Code § 51(e) and its legislative history in El Dorado Palm Springs v. Riverside County Board of Supervisors (2002) 104 Cal.App.4th 1262.

In the El Dorado case, the owner appealed for a value reduction for a particular year. It took four years before the appeal was granted. The owner had not filed appeals for the years after the initial appeal had been filed.  When the owner asked the Assessor for a similar reduction for all four years before the decision, the Assessor refused, arguing that the owner was required to file annual appeals (which the El Dorado court terms “protective appeals”) while the first application was pending.

On appeal, the California District Court of Appeal ruled that the Assessor was wrong and that it had a mandatory duty to retroactively reappraise the property for the intervening and subsequent years under Rev. & Tax. Code § 51(e) without requiring annual appeals. The court stated that “…after a property owner has been granted a Proposition 8 reduction for a prior tax year, section 51 dispenses with the usual requirement to file an assessment appeal.El Dorado Palm Springs v. Riverside County Board of Supervisors, supra,104 Cal.App.4th at 1268.

Twelve years after the El Dorado court clarified an Assessor’s duties under Rev. & Tax. Code § 51(e), some Assessors are still not in compliance. Some continue to neglect their mandatory duty to conduct retroactive reappraisals for the years the initial appeal was pending and some appear to be ignoring the requirements of Rev. & Tax. Code § 51(e) entirely by refusing to consider the reduced Prop. 8 value for any years after the reduction without the filing of unnecessary and costly annual appeals.

Once property owners discover that the Assessor will not comply with the reappraisal requirement, many attempt to file appeals for the years between the first year a reduction was requested and when the reduction was granted. Owners will often then discover that their local Assessment Appeals Board dismisses such appeals as untimely, even though they were not required to file any appeals after the first appeal under Rev. & Tax. Code § 51(e). The only way to resolve the situation is to challenge the Assessment Appeals Board’s decision to dismiss the “untimely” appeals and the Assessor’s refusal to comply with its mandatory reappraisal and reassessment duty after a Prop. 8 reduction.

While contesting this matter likely requires a California tax assessment appeals attorney, property owners may find that their reduced taxes exceed the cost of an attorney. Since each case is different and timeliness is important, contact an attorney promptly to learn whether legal action may be to your benefit.

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Scales of JusticeOnce again, I have a cautionary tale about the perils of NOT mediating a dispute.

Recently, I served on the “mandatory fee arbitration” panel for a county bar association.  That’s a body that handles disputes between clients and their lawyers over the latter’s charges to the former.  

In this recent case, the client did not want to meet with the other side to discuss settlement informally.  And, he did not want to mediate.  Instead, he wanted to litigate fully.

The problem was his claim against the other side was far from certain.  And, the other side had a significant claim against him. 

The client did not prevail on his claim.  While he did defense the other side’s counterclaim against him, he was ordered to pay a significant portion of the other side’s attorneys fees and costs. 

Naturally, the client did not want to pay his lawyers what he owed them.  In other words, he wanted to convert the matter into a de facto contingency, thereby making his lawyers his partners on the downside, after the fact.

What should the lawyers have done, for both the client’s sake and for their own? 

They should have insisted that the client meet with the other side to explore settlement and, if he did not want to, send written confirmation of their strong advice and the client’s decision not to follow it (i.e., a CYA letter).  Later, it became clear that the matter had exploded in its scope.  At that point, they again should have insisted that the client mediate.  If he still did not want to, a CYA letter should have been sent along with a demand for a large retainer– that focuses the client every time.

The lawyers were not confrontational enough with the client, who was a “one off” – the kind that often proves problematic for a lawyer.  Such clients have hidden expectations and are not above rewriting history.  More to the point, they often don’t have the money to pay for full-blown litigation.  So, the lawyer who early and often insists on attempts to settle a matter does the client and himself a big favor.

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Deed Record - Real Estate - Real PropertyCalifornia escrows perform an important role in modern real estate and business transactions. While escrow holders are not exempt from negligence, many escrows have made such an argument, contending that they cannot commit negligence so long as they follow the escrow instructions.

One court summarily rejected the arguments of a “malfeasant escrow holder [that attempted] to dictate the nature of the litigation . . . and to claim immunity from tort liability . . . .” Virtanen v. O’Connell (2006) 140 Cal.App. 4th 688, 699.

This ruling reflects that escrow holders have two, separate duties: “It is elemental that the duty of an escrow holder is [1] to comply strictly with the instructions of its principal and [2] to exercise reasonable skill and ordinary diligence with respect to the employment. If the escrow holder fails to follow his instructions or acts negligently, he may be liable for any loss occasioned thereby.” Diaz v. United Cal. Bank (1977) 71 Cal.App. 3d 161, 166.

Indeed, these independent (though potentially overlapping) duties are highlighted by Kirk Corp. v. First Am. Title Co. (1990) 220 Cal.App. 3d 785, 806, which explained that there are two duties: “An escrow holder . . . must comply strictly with the instructions of the principals . . . . Similarly, it is the duty of the escrow holder to exercise ordinary skill and diligence in his employment and if he acts negligently, he is liable for any loss proximately occasioned by such negligence.”

The California Supreme Court explained that “[i]t is the duty of an agent to obey the instructions of his principal and exercise in his employment reasonable skill and ordinary diligence, and, if defendant violated instructions or acted negligently . . . , it would ordinarily be liable for any loss occasioned by its breach of duty.” Rianda v. San Benito Title Guarantee Co. (1950) 35 Cal. 2d 170, 173.

The California Supreme Court also found that, “[u]pon the escrow holder’s breach of an instruction that it has contracted to perform or of an implied promise arising out of the agreement with the buyer or seller, the injured party acquires a cause of action for breach of contract. Similarly, if the escrow holder acts negligently, it would ordinarily be liable for any loss occasioned by its breach of duty.” Amen v. Merced Cnty. Title Co. (1962) 58 Cal. 2d 528, 532.

Other cases have explained the two duties of an escrow holder: “It is the duty of an escrow holder to comply strictly with the instructions of his principal . . . . Likewise, it is the duty of an escrow holder to exercise ordinary skill and diligence in his employment, and if he acts negligently he is responsible for any loss occasioned thereby . . . .” Colonial Sav. & Loan Asso. v. Redwood Empire Title Co. (1965) 236 Cal.App. 2d 186, 190-91; see Common Wealth Ins. Systems, Inc. v. Kersten (1974) 40 Cal.App. 3d 1014, 1030 (“[a]n escrow holder . . . must comply strictly with the instructions of the principals . . . . Similarly, it is the duty of the escrow holder to exercise ordinary skill and diligence in his employment and if he acts negligently, he is liable for any loss proximately occasioned by such negligence”); Wade v. Lake Cnty. Title Co. (1970) 6 Cal.App. 3d 824, 828 (“The duty of an escrow holder is to comply strictly with the instructions of his principal. . . . It is also the duty of an escrow holder to exercise reasonable skill and ordinary diligence in his employment, and if the escrow holder acts negligently, it is ordinarily liable for any loss occasioned by its breach of duty”); Hannon v. Western Title Ins. Co. (1989) 211 Cal.App. 3d 1122, 1127 (“if the escrow holder acts negligently, it would ordinarily be liable for any loss occasioned by its breach of duty”)

These dual responsibilities are illustrated by an appeal where summary judgment in favor of an escrow holder was affirmed, finding that the evidence in support of the motion “demonstrate[s] an absence of an essential element of [plaintiff’s] case, namely, failure of [the escrow holder] to follow instructions or that [escrow holder] acted negligently.” Axley v. Transamerica Title Ins. Co. (1978) 88 Cal.App. 3d 1, 10.

While escrow holders may cite to Lee v. Title Ins. & Trust Co. (1968) 264 Cal.App. 2d 160, 163, which found that “no liability attaches to the escrow holder for his failure to do something not required by the terms of the escrow or for a loss incurred while obediently following his escrow instructions,” this sentence begins with “it is generally held that . . . .”

In fact, this same quote from Lee appears in Axley v. Transamerica Title Ins. Co. (1978) 88 Cal.App. 3d 1, 9, immediately preceded by the proposition that “[i]t is also the duty of an escrow holder to exercise reasonable skill and ordinary diligence in its employment, and if the escrow holder acts negligently, it is ordinarily liable for any loss occasioned by its breach of duty.”

This area of law is stated plainly by California Jurisprudence: “An escrow holder must exercise reasonable skill and ordinary diligence in its employment; if the escrow holder acts negligently, it is liable for any loss proximately occasioned by that negligence.” 30 Ca. Jur. Escrows (3rd. ed. 2014) § 17; see 12 Witkin Sum. Cal. Law Real Property § 305 (an “escrow holder, like any agent, is liable to either principal (vendor or purchaser) for negligent performance”).

Litigants should encourage the California Court of Appeal to make clear that an escrow holder can be held liable for negligence and other tortious conduct, even while following escrow instructions.

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Too often, potential clients lack the ability to determine how they should select an attorney. Here are some guideposts to help clients select a California attorney.

1. Attorney Discipline

The California State Bar has an easy to use attorney search to research attorneys. This search will reveal any attorney discipline issues, which should be a red flag to potential clients. It will also show where the attorney attended law school and where they obtained their undergraduate degree. It will also reveal their years of experience as well as their official address. This may be helpful to determine if the attorney is meeting you at a satellite or shared office.

2.  Practice Areas

Another important consideration is whether the attorney you might hire is knowledgeable in the practice area in which the client seeks legal advice. There are many attorneys who will take whatever comes in the door. Unfortunately for the clients, this means that the attorney may be learning a new area of law at the client’s expense. Be wary of attorneys that appear to be practicing in numerous, unrelated practice areas, or who have no website to help you understand where their strengths may be.

3. Attorney Referrals

Be careful of asking friends for an attorney referral. These friends may have been their attorney’s only successful case, or may simply represent a personal connection between the friend and the attorney.

More stock should be placed in attorney referrals, as the attorney is likely a better judge of their fellow attorney. However, some attorney referrals may simply represent a referral relationship. Asking multiple attorneys for referrals may be a wise idea.

4. Reviews

Reviews on the Internet can be a dangerous source of information. Sometimes, these reviews are fake, or may simply represent an attorney who has expended extra time to ask clients to leave positive reviews, perhaps because they are not busy with existing clients.

Slightly more stock should be placed in reviews that come from other attorneys. These reviews can show a potential client the primary practice areas of the attorney, which can be helpful for the client to evaluate the attorney’s qualifications.

5. Attorney Web Site

Attorney web sites are an excellent source of information to help you understand the attorney’s practice areas. The quality of the web site may also be a reflection of the law practice. Attorneys without web sites can leave the client guessing about that attorney’s history and practice areas.

In short, there are many ways to determine whether an attorney is the right fit for you and your case. Use all available methods to make sure you have made the right decision. If you’re ever unsure if you hired the right attorney, seek independent counsel.

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