Hathaway Duke

Torina Collis filed suit against the United States of America, the Federal Bureau of Investigation, FBI Special Agent Desiree Skinner Smith and Assistant United States Attorney Gina Simms seeking damages for allegedly false and malicious testimony abou…

Nelson Sumpter, 42, Pittsfield Township, Michigan, Omar Sumpter, 35, Sterling Heights, Michigan, and Paul Rhoads, 35, Novi, Michigan, were charged in connection with three deed fraud cases. In all three of the cases the defendants used the same schem…

Laura Zipprich, 40, Bennington, Vermont, appeared in United States District Court and pleaded guilty to Wire Fraud in connection with a fraudulent real estate transfer. Sentencing has been set for December 12, 2007.  According to the indictment …

Justin D. Barker, 31, and Robert W. Hulbert, Jr., 45, both of Jacksonville, Florida, pleaded guilty to conspiracy to commit wire and bank fraud. The maximum penalty faced by both individuals is 30 years imprisonment, a fine in the amount of $1 million,…

James Roy Martin, 36, Mario Fellini, III, 38, Gabriel Richard Viramontes, 44, and Joseph Salvatore Gallo, 34, all from the Sacramento area, California, are charged with a mortgage fraud scheme that involved many Elk Grove, California homes, with loans …

Lincoln Place Tenants Assoc. v. City of Los Angeles (September 19, 2007, B193235 [2^nd Dist. , Div. 7]) ___ Cal. App. 4^th ____; http://www.courtinfo.ca.gov/cgi-bin/opinions

By:  Alexis M. Pelosi

In this case, the Second District Court of Appeal confirmed that the Ellis Act does not preempt CEQA and that cities have a continuing obligation to comply with mitigation measures required under CEQA.

Here, a developer sought to demolish an existing apartment complex and replace it with a combination of market-rate condominiums, town homes, moderate-income town homes and low-income rental units.  Mitigation for the project included an obligation by the developer to relocate existing tenants to other vacant units on the site before various permits or approvals could be obtained.  The developer also further agreed, voluntarily, to phase the project, not involuntarily displace existing tenants and not proceed with any phase of the project unless every tenant in that phase was relocated to an existing unit or new unit.

Almost 10 years after the project was approved, the developer began serving the remaining tenants with eviction notices under the Ellis Act — an act that prohibits public entities from requiring property owners to remain in the rental or leasing business by allowing landlords to withdraw rental units from the market.  The court held that while the Ellis Act protects an owner’s right to control its property, it does not preempt a developer’s obligation to comply with the requirement to mitigate project impacts under CEQA.  Here, the City had imposed relocation obligations on the developer and the developer had agreed to additional relocation benefits, to mitigate impacts under CEQA and obtain project approvals.  The fact that the developer now wants to “go out” of the rental business does not discontinue its obligation to mitigate those impacts.  Accordingly, the Ellis Act does not preempt CEQA and must be applied subject to any conditions required to mitigate impacts under CEQA.

For further information please contact Alexis Pelosi.  Alexis Pelosi is an attorney in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office.

Lincoln Place Tenants Assoc. v. City of Los Angeles (September 19, 2007, B193235 [2^nd Dist. , Div. 7]) ___ Cal. App. 4^th ____; http://www.courtinfo.ca.gov/cgi-bin/opinions

By:  Alexis M. Pelosi

In this case, the Second District Court of Appeal confirmed that the Ellis Act does not preempt CEQA and that cities have a continuing obligation to comply with mitigation measures required under CEQA.

Here, a developer sought to demolish an existing apartment complex and replace it with a combination of market-rate condominiums, town homes, moderate-income town homes and low-income rental units.  Mitigation for the project included an obligation by the developer to relocate existing tenants to other vacant units on the site before various permits or approvals could be obtained.  The developer also further agreed, voluntarily, to phase the project, not involuntarily displace existing tenants and not proceed with any phase of the project unless every tenant in that phase was relocated to an existing unit or new unit.

Almost 10 years after the project was approved, the developer began serving the remaining tenants with eviction notices under the Ellis Act — an act that prohibits public entities from requiring property owners to remain in the rental or leasing business by allowing landlords to withdraw rental units from the market.  The court held that while the Ellis Act protects an owner’s right to control its property, it does not preempt a developer’s obligation to comply with the requirement to mitigate project impacts under CEQA.  Here, the City had imposed relocation obligations on the developer and the developer had agreed to additional relocation benefits, to mitigate impacts under CEQA and obtain project approvals.  The fact that the developer now wants to “go out” of the rental business does not discontinue its obligation to mitigate those impacts.  Accordingly, the Ellis Act does not preempt CEQA and must be applied subject to any conditions required to mitigate impacts under CEQA.

For further information please contact Alexis Pelosi.  Alexis Pelosi is an attorney in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office.

People of the State of California v. General Motors Corporation et al.  (Sept. 17, 2007, C06-05755) ___Cal.App.4^th ___;

By: Maria Gangemi

Introduction/Holding:

In a major case brought by the State of California seeking to hold automakers liable for global warming, District Judge Martin Jenkins in San Francisco granted defendants’ motion to dismiss the State’s nuisance causes of action under federal and state law.  The judge determined that it was a non-justiciable political question. 

Issue:  This case represents California’s effort to hold automakers accountable for climate change.  The State of California brought two causes of action against various automakers for creating, contributing to, and maintaining global warming.  Causes of action for (1) public nuisance under federal common law, and (2) public nuisance under California law were alleged.  Arguing that the State had improperly attempted to create a new global warming tort with no legitimate origins in federal or state law, defendants moved to dismiss the two claims as non-justiciable political questions, for failure to state a claim under federal or California law, and as preempted by federal law. 

Reasoning:      After considering the chronology of relevant environmental policy on global warming, including Congressional, Presidential, and international actions, the court turned to the "threshhold issue"—whether the complaint raises non-justiciable political questions beyond the limits of the court’s jurisdiction.   

Citing Baker v. Carr, 369 U.S. 186, 211 (1962), the court discussed six "formulations" that indicate the existence of a non-justiciable political question in light of the Constitutional doctrine of separation of powers: (1) a textually demonstrable constitutional commitment of the issue to a coordinate political department; (2) a lack of judicially discoverable and manageable standards for resolving it; (3) the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; (4) the impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of the government; (5) an unusual need for unquestioning adherence to a political decision already made; and (6) the potentiality of embarrassment from multifarious pronouncements by various departments on one question.

Noting that the six analyses often overlap or collapse into each other, the court determined that the third was the most relevant.  The court’s resolution of the State’s federal common law nuisance claim would require the court to make an initial policy decision, clearly placing this issue into the non-justiciable category.  The court concluded that precedent affirmed that in order to resolve typical air pollution cases, courts must strike a balance between interests seeking strict schemes to reduce pollution rapidly to eliminate its social costs and interests advancing the economic concern that strict schemes will retard industrial development with attendant social costs.  Balancing these interests, along with other interests involved, was impossible without an "initial policy determination" first having been made by Congress and the President. 

The court further noted the political branches’ actions and deliberate inactions in the area of global warming as supporting a determination that this case was not one for judicial discretion.  Reductions in carbon dioxide emissions was an issue still under active consideration by the political branches of government.  Congress had established a comprehensive state and federal scheme to control air pollution (the Clean Air Act) and a comprehensive response to the energy crisis of the 1970’s (the Energy Policy and Conservation Act).  Although the CAA and EPCA do not directly address the issue of global warming and carbon dioxide emission standards, the court concluded that when read in conjunction with the prevalence of national and international debate and the resulting policy actions and inactions, the two acts indicated that the court would be injecting itself into the debate would require an initial policy determination of the type reserved for the political branches.  Because a comprehensive global warming solution must be achieved by a broad array of domestic and international measures that are yet undefined, it would be premature and inappropriate for the court to make such a determination as the State asked before the elected branches did so. 

Other factors outlined in Baker weighed in favor of the same conclusion.  The court concluded that the State’s claim implicated a textually demonstrable Constitutional commitment to the political branches.  The State argued that its environmental nuisance claim was committed to the federal judiciary and had no import on interstate commerce or foreign policy.  Rejecting the State’s argument, the court reasoned that recognizing such a new and unprecedented federal common law nuisance claim for damages would likely have commerce implications in other states, potentially exposing various entities to damages for doing nothing more than lawfully engaging in their respective spheres of commerce.  As for foreign policy, the political branches had deliberately elected to refrain from any unilateral commitment to reducing such emissions as were at issue domestically in this case, unless developing nations made a reciprocal commitment.  The EPA had also recognized that imposing mandatory unilateral restrictions on domestic manufacturers would impede that diplomatic objective.  Furthermore, awarding the State damages here would punish defendants for lawfully selling their automobiles both in California and abroad. 

Finally, there was a lack of judicially discoverable or manageable standards by which to resolve the State’s claim.  The State had failed to provide convincing legal authority to support its proposition that the legal framework for assessing global warming nuisance damages was well‑established.  The court found itself lacking guidance to determine what was an unreasonable contribution to the sum of carbon dioxide in the Earth’s atmosphere, or who should bear costs associated with the global climate change that admittedly results from multiple sources around the globe. 

For further information please contact Maria Gangemi.  Maria Gangemi is an associate in the Business Trial Practice Group in the firm’s Los Angeles office.

One of the closely watched metrics tracking home prices is the Case-Shiller Home Price Index from Standard & Poors. Detailed description of methodology here, but essentially the index tracks sales prices by using a 10 and 20 city composite. The just published index from July shows the biggest year-over year drop in 16 years. Understanding that national stats may not have much bearing on our local market, the following table, via WSJ, shows that the Twin Cities has seen a 3.4% drop in price, year over year. This data, though only a snapshot, should not surprise anybody who’s been paying attention. Nor does it mean we are in for some sort of real estate price depreciation disaster in the Twin Cities - this is just regression toward the mean (5-6% annual appreciation over the last 30 years or so) after years of above average appreciation.Case-Shiller Price Index Tumbles [WSJ]S&P/Case-Shiller Index [PDF via S&P]

Floyd Irons and John Mineo, Jr., a Missouri restaurant operator, pled guilty to wire and mail fraud charges in connection with a million dollar mortgage fraud scheme. “These defendants both allowed greed to tarnish successful and noteworthy car…