Sierra Palms Homeowners Assoc. v. Metro Gold Line etc. ( 2018 )

Filed 1/29/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
SIERRA PALMS B275241
HOMEOWNERS
ASSOCIATION, (Los Angeles County
Super. Ct. No. BC580891)
Plaintiff and Appellant,
v.
METRO GOLD LINE
FOOTHILL EXTENSION
CONSTRUCTION
AUTHORITY et al.,
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Gail Ruderman Feuer, Judge. Reversed and
remanded as to Metro Gold Line Foothill Extension Construction
Authority. Affirmed as to Foothill Transit Constructors.
Law Offices of Wayne Kreger and Wayne S. Kreger for
Plaintiff and Appellant Sierra Palms Homeowners Association.
Nossaman, David Graeler and Bradford B. Kuhn for
Defendant and Respondent Metro Gold Line Foothill Extension
Construction Authority.
Murphy & Evertz, Douglas J. Evertz and Jennifer McClure
for Defendant and Respondent Foothill Transit Constructors.
_________________
Sierra Palms Homeowners Association sued Metro Gold
Line Foothill Extension Construction Authority (Metro) and
Foothill Transit Constructors for inverse condemnation and other
torts arising from the construction and maintenance of part of the
Metro Gold Line railway that runs adjacent to the condominium
complex Sierra Palms manages. The trial court sustained
Metro’s and Foothill Transit’s demurrers to Sierra Palms’s
inverse condemnation claim in the second amended complaint
without leave to amend, finding Sierra Palms lacked standing to
bring that claim. The court also granted Metro’s and Foothill
Transit’s motions to strike the remainder of the second amended
complaint on the ground Sierra Palms had failed to comply with a
stipulated court order granting it leave to file the amended
complaint. On appeal from the judgment in favor of Metro and
Foothill Transit, Sierra Palms challenges only the order denying
it leave to amend its second amended complaint.
We reverse the judgment as to Metro. Despite its failure to
do so below, Sierra Palms has demonstrated on appeal that it can
amend its complaint to allege facts sufficient to support standing
for an inverse condemnation claim against Metro. However,
Sierra Palms has not shown it can amend its complaint to assert
an inverse condemnation claim against Foothill Transit and has
not challenged on appeal the trial court’s order striking its other
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claims against that entity. Accordingly, we affirm the judgment
as to Foothill Transit.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Parties
Sierra Palms is a homeowner association created for the
purpose of managing a common interest development consisting
of 113 condominium units and common areas of property located
in Azusa. Metro, a municipal entity, and Foothill Transit, a
private company, planned, constructed and/or maintained the
Los Angeles Gold Line transit route, part of which runs adjacent
to the Azusa property Sierra Palms manages.
2. Sierra Palms’s Lawsuit
On May 5, 2015 Sierra Palms filed its original complaint
against Metro and Foothill Transit alleging against each of them
causes of action for negligence, inverse condemnation and
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nuisance (private and public). The gravamen of each claim was
that these entities had constructed and/or maintained the Gold
Line railway in a manner that interfered with the condominium
owners’ quiet enjoyment of their property and caused property
damage, including damage to the condominium complex’s block
boundary wall, in a manner that, among other things, resulted in
a government taking of property without just compensation.
1
The original complaint also named the Los Angeles County
Metropolitan Transportation Authority (MTA) as a defendant.
Sierra Palms later voluntarily dismissed the MTA. (See fn. 2,
below.)
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3. Metro’s Demurrer
Metro demurred to the complaint arguing Sierra Palms had
failed to timely comply with the requirements of the Government
Claims Act (Gov. Code, § 900 et seq.), barring the negligence and
nuisance claims. As to the inverse condemnation claim, Metro
argued Sierra Palms lacked any ownership interest in the
property and thus lacked standing to proceed on that claim.
Instead of opposing Metro’s demurrer, Sierra Palms entered into
a stipulation with Metro: Sierra Palms agreed it would file an
amended complaint on or before August 22, 2015 asserting only a
single cause of action for inverse condemnation against Metro
based on property damage to a block boundary wall. Although
Foothill Transit had not yet appeared in the action, the
stipulation provided that any claim against Foothill Transit
would also be limited to damage to the block boundary wall.2
Metro and Foothill Transit were given 30 days from the date the
first amended complaint was filed to file a responsive pleading.
Finding good cause to approve the terms of the stipulation, the
court entered the stipulation terms as a court order on
July 28, 2015.
Sierra Palms filed its first amended complaint on
September 10, 2015, nearly three weeks after the deadline
imposed by the court’s stipulated order. The first amended
complaint improperly named the Los Angeles County
Metropolitan Transit Authority (MTA), which had been dismissed
from the case, and included claims for property damage broader
than the block boundary wall. On September 18, 2015, without
2
The stipulation also provided that MTA, represented by
Metro’s counsel, would be dismissed from the action without
prejudice.
4
requesting leave from court and prior to any responsive pleading
from Metro or Foothill Transit, Sierra Palms filed a second
amended complaint that removed MTA from the complaint, but
in all other respects, remained identical to the untimely filed first
amended complaint.
Metro and Foothill Transit filed separate demurrers to the
second amended complaint. Both argued, among other things,
Sierra Palms lacked standing to proceed on the inverse
condemnation claims against them because it had no ownership
interest in the property. They also moved to strike the remainder
of the second amended complaint as untimely and in violation of
the court’s stipulated order. Sierra Palms did not file an
opposition to the demurrers or to the motions to strike. It did
appear at the hearing telephonically. (In a subsequent filing,
Sierra Palms’s counsel explained he did not oppose the demurrers
or the motions to strike because he had intended to cure the
deficiencies in a third amended complaint and believed he would
3
be granted leave of court to do so.)
The trial court sustained Metro’s and Foothill Transit’s
demurrers without leave to amend, finding Sierra Palms had not
alleged an ownership interest in the property that was the
subject of the inverse condemnation claims and, having filed no
opposition, had not demonstrated how the complaint could be
amended to show the requisite ownership interest necessary to
support its standing to proceed on that claim. The court also
granted Metro’s and Foothill Transit’s motions to strike the
3
The record on appeal does not include a transcript of the
hearing or otherwise indicate the arguments, if any, Sierra
Palms’s counsel made at that hearing.
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remainder of the complaint because it had been filed, without
good cause, outside the time specified in the stipulated order and
included claims broader than those authorized by that order.
Sierra Palms then filed a noticed motion for leave to file a
third amended complaint. Based on its prior rulings sustaining
the demurrers without leave to amend and striking the
remaining causes of action in the complaint, the court entered
judgment for Metro and Foothill Transit. Sierra Palms’s motion
for leave to file a third amended complaint was taken off calendar
as moot. Sierra Palms filed a timely notice of appeal from the
judgment.
DISCUSSION
1. Standard of Review
A demurrer tests the legal sufficiency of the factual
allegations in a complaint. When the court’s ruling sustaining a
demurrer is challenged on appeal, we independently review the
allegations on the face of the complaint and matters subject to
judicial notice to determine whether the complaint alleges facts
sufficient to state a cause of action or discloses a complete
defense. (Loeffler v. Target Corp. (2014) 58 Cal. 4th 1081, 1100;
McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal. 4th 412, 415.)
However, when, as here, the only the aspect of the court’s
ruling challenged on appeal is its denial of leave to amend, our
review is limited to determining whether the court erred in
denying the plaintiff an opportunity to cure the deficiency.
(Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 971;
Goodman v. Kennedy (1976) 18 Cal. 3d 335, 349; Daniels v. Select
Portfolio Servicing, Inc. (2016) 246 Cal. App. 4th 1162-1163
[describing two standards of review for order sustaining
demurrer and denial of leave].) The question whether the trial
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court “abused its discretion” in denying leave to amend “is open
on appeal even though no request to amend such pleading was
made.” (Code Civ. Proc., § 472c, subd. (a).) “The plaintiff has the
burden of proving that an amendment would cure the legal
defect, and may [even] meet this burden [for the first time] on
appeal.” (Cansino v. Bank of America (2014) 224 Cal. App. 4th
1462, 1468; accord, Aubry, at p. 971.)
2. Sierra Palms Has Demonstrated on Appeal the
Complaint Can Be Amended To State an Inverse
Condemnation Claim Against Metro
“Article I, section 19 of the California Constitution permits
private property to be ‘taken or damaged for public use only when
just compensation . . . has first been paid to, or into court for, the
owner.’ When there is incidental damage to private property
caused by governmental action, but the governmental entity has
not reimbursed the owner, a suit in ‘inverse condemnation’ may
be brought to recover monetary damages for any ‘special injury,’
i.e., one not shared in common by the general public.” (Locklin v.
City of Lafayette (1994) 7 Cal. 4th 327, 362; accord, California
State Automobile Assn. v. City of Palo Alto (2006)
138 Cal. App. 4th 474, 479.)
An action may be maintained only by the real party in
interest, that is, the person aggrieved by the alleged conduct or
otherwise “beneficially interested” in the controversy. (Code Civ.
Proc., § 367 [“[e]very action must be prosecuted in the name of
the real party in interest except as otherwise provided by
statute”]; see Carsten v. Psychology Examining Com. (1980)
27 Cal. 3d 793, 796; Tepper v. Wilkins (2017) 10 Cal.App.5th 1198,
1204.) Ordinarily, in an inverse condemnation claim the real
party is one with an ownership interest in the property damaged
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or taken. (See Selby Realty Co. v. City of San Buenaventura
(1973) 10 Cal. 3d 110, 119-120 [“[i]n order to state a cause of
action for inverse condemnation, there must be an invasion or an
appropriation of some valuable property right which the landlord
possesses and the invasion or appropriation must directly and
specially affect the landowner to his injury”]; see generally Yue v.
City of Auburn (1992) 3 Cal. App. 4th 751, 760 [discussing owner
of private property’s right to assert inverse condemnation
action].)
However, multidwelling condominium projects present a
special concern. Frequently, the common areas of the complex
are owned, as they are alleged to be in this case, in fractional
shares by the unit owners, making ordinary standing
requirements an obstacle to recovering damage to common areas.
(See Windham at Carmel Mountain Ranch Assn. v. Superior
Court (2003) 109 Cal. App. 4th 1162, 1173-1174 (Windham).) For
this reason, Civil Code section 5980 (section 5980) specially
affords homeowners associations standing to sue for property
damage to common areas or to a qualifying “separate interest”
the association is obliged to maintain or repair. (See § 5980 [“An
association has standing to institute, defend, settle, or intervene
in litigation, arbitration, mediation, or administrative
proceedings in its own name as the real party in interest and
without joining with it the members, in matters pertaining to the
following: [¶] . . . [¶] (b) Damage to the common area. [¶]
(c) Damage to a separate interest that the association is
obligated to maintain or repair.”].)
Addressing section 5980’s predecessor, former Code of Civil
Procedure section 383 (repealed and recodified twice without
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4
substantive change), the court in Windham found the
authorization granted to homeowners associations to litigate
claims for damage to common areas was clear from the language
of the statute, and the public policy reasons for such an
authorization, obvious: “‘The rationale for allowing homeowners’
associations to bring suit . . . is that “if the association does not
have standing, the costs of prosecution of the case would not be a
common expense, thus greatly increasing the difficulty of
individual owners seeking redress against a corporate defendant
[citation].’ [Citation.] Furthermore, it would be a waste of
resources of the courts and litigants if each individual owner
were required to join in an action for damage to common areas
arising out of an alleged breach of implied warranty. Because
associations generally are required to manage, maintain and
repair a project’s common areas [citation], it would be illogical to
deprive associations of the ability to sue to recover for damage to
common areas they are obligated to repair. Because individual
owners generally do not have the right to repair common areas, it
would be inefficient to require or allow only those owners, rather
than their association, to sue . . . to recover for damage to
common areas. . . . Furthermore, to require individual owners to
be named plaintiffs in an action for damage to common areas
4
The text in current section 5980 is substantively identical
to that in its predecessor statutes, former Code of Civil Procedure
section 383, subdivision (a), repealed in 2004 and recodified the
same year without substantive change in Civil Code
section 1368.3 (see Stats. 2004, ch. 754, § 7) and former Civil
Code section 1368.3, repealed in 2012 and recodified the same
year without substantive change in section 5980, effective
January 1, 2014 (Stats. 2012, ch. 180, § 2).
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would be contrary to [former] section 383’s express provision that
the association may sue ‘in its own name as the real party in
interest and without joining with it the individual owners.’”
(Windham, supra, 109 Cal.App.4th at pp. 1173-1174, fn. omitted.)
Seizing on a specific phrase in the discussion in Windham
of the public policy reasons for affording standing to homeowners
associations—the costs of suit to individual owners would greatly
increase the difficulty of seeking redress “against a corporate
defendant” (Windham, supra, 109 Cal.App.4th at p. 1174)—Metro
contends section 5980’s authorization to homeowner associations
is limited to property damage claims asserted against private
entities and does not include inverse condemnation claims
against a government entity. However, nothing in the language
of section 5980 supports that cramped interpretation of the
statute, which confers standing on homeowners associations to
litigate regarding certain matters without using the term
“corporate defendants” or distinguishing in any other way
between actions involving public or private defendants. (See
generally In re D.B. (2014) 58 Cal. 4th 941, 945-946 [statutory
interpretation begins with examination of the statutory language;
when the language is “clear and unambiguous,” that is the end of
the inquiry unless a literal meaning would result in absurd
consequences the Legislature could not have intended]; Murphy
v. Kenneth Cole Productions, Inc. (2007) 40 Cal. 4th 1094, 1103.)
Indeed, contrary to Sierra Palms’s reading of Windham,
that case suggests section 5980 should be read expansively.
Confronted with the contention the legislative authorization to
bring a claim for property damage to a common area did not
include a cause of action premised on a breach of warranty, the
Windham court rejected the argument as too narrow a
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construction of the statutory language and contrary to the
statutory purpose. By giving the homeowners association
standing to sue for property damage to common areas as the real
party in interest, the court explained, the Legislature necessarily
intended that the association stand in the shoes of the property
owner and be able to bring a claim for damage to the common
area, regardless of theory. (See Windham, supra,
109 Cal.App.4th at p. 1174 [the Legislature intended “to allow
associations to sue as real parties in interest for damage to
common areas whether for breach of implied warranty or on any
other theory of liability”].)
At oral argument Metro narrowed its challenge to Sierra
Palms’s standing under section 5980, contending, because an
inverse condemnation claim is rooted in article I, section 19 of the
California Constitution, which refers to payment of just
compensation to the “owner” of private property taken for a
public use, the Legislature is without jurisdiction to expand the
standing requirements for such a claim to include a homeowners
association. Although we have not found a California case
addressing, much less applying, section 5980 (or its predecessor
statutes) in an inverse condemnation context, Metro’s suggestion
that application of section 5980 would impermissibly enlarge the
scope of the constitutional claim is incorrect. Section 5980 does
not confer on a homeowners association an additional substantive
right to recover in inverse condemnation along with the property
owners. It merely makes it easier (and, in many situations,
possible) for owners of fractional property interests in common
areas to obtain redress by permitting their homeowners
association in limited circumstances to bring the action on their
behalf in a representative capacity. The Legislature’s authority
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to regulate civil proceedings in this manner is broad. (See Briggs.
v. Brown (2017) 3 Cal.5th 808, 846 [“‘“[T]he mere procedure by
which jurisdiction is to be exercised may be prescribed by the
Legislature, unless . . . such regulations should be found to
substantially impair the constitutional powers of the courts, or
practically defeat their exercise.” [Citations.]’”]; see also
Le Francois v. Goel (2005) 35 Cal. 4th 1094, 1104.)
Here, in its proposed third amended complaint and on
appeal, Sierra Palms has demonstrated it can amend its
complaint to show standing under section 5980 to state a claim
against Metro for inverse condemnation based on damage to a
common boundary wall. No allegation it owned the common area
is needed. While it certainly would have been better practice for
Sierra Palms to have presented its argument for standing under
section 5980 to the trial court in direct response to Metro’s
demurrer, our task at this point is simply to determine whether it
has demonstrated on appeal the complaint can be amended to
state an inverse condemnation claim. (Aubry v. Tri-City Hospital
Dist., supra, 2 Cal.4th at p. 971.) It has.
3. Sierra Palms Has Forfeited Its Challenge to the
Judgment in Favor of Foothill Transit
Sierra Palms does not contend in its brief on appeal that it
can amend its complaint to state a cause of action for inverse
condemnation against Foothill Transit, a private entity.
Furthermore, although it contends generally that it could have
amended its complaint to state a negligence action against
Foothill Transit limited to the block boundary wall, it has not
argued the trial court abused its discretion in granting Foothill
Transit’s motion to strike the second amended complaint (after
sustaining the demurrer to the inverse condemnation claim) for
12
its willful failure to comply with the court’s stipulated order.
Accordingly, Sierra Palms has forfeited any challenge to that
decision and necessarily, by extension, to the properly entered
judgment in Foothill Transit’s favor. (See Tiernan v. Trustees of
Cal. State University & Colleges (1982) 33 Cal. 3d 211, 216, fn. 4
[issue not raised on appeal deemed forfeited or waived]; Ivanoff v.
Bank of America, N.A. (2017) 9 Cal.App.5th 719, 729, fn. 1
[same]; Wall Street Network, Ltd v. New York Times Co. (2008)
164 Cal. App. 4th 1171, 1177-1178 [“[g]enerally, appellants forfeit
or abandon contentions of error regarding the dismissal of a
cause of action by failing to raise or address the contentions in
their briefs on appeal”].)
DISPOSITION
The judgment is reversed as to Metro Gold Line Foothill
Extension Construction Authority, and the matter is remanded
for further proceedings in accordance with the views expressed in
this opinion. In all other respects, and as to Foothill Transit
Constructors, the judgment is affirmed. Each party is to bear its
own costs on appeal.
PERLUSS, P. J.
We concur:
ZELON, J.
SEGAL, J.
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