California’s statutes governing LLCs and general partnerships include “safe harbor” provisions making it easier for third parties to rely on the apparent authority of an LLC’s manager or a partnership’s partner. The statutes...more
Under California’s easement “merger” (merger of title) doctrine set forth in Civil Code sections 811 and 805, an easement (or servitude) is “extinguished” by “the vesting of the right of the servitude and the right to the...more
LLC operating agreements frequently provide for indemnity to the LLC’s manager. This is consistent with the statutory default rule embodied by California Corporations Code section 17704.08(a), which provides for indemnity...more
11/21/2022
/ Appeals ,
Arbitration ,
Attorney's Fees ,
Breach of Duty ,
Capital Contributions ,
Fiduciary Duty ,
Indemnity ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Private Equity ,
Reconciliation
Commercial leases sometimes contain an option allowing the tenant to purchase the property. If the option is properly exercised, an enforceable purchase and sale obligation is created, which can be enforced by the courts...more
California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) aims to protect defendants from meritless lawsuits designed to chill “protected activity” — i.e., the exercise of rights of petition or free speech on...more
10/17/2022
/ Anti-SLAPP ,
Appeals ,
Breach of Duty ,
Cal Code of Civil Procedure ,
California ,
Cross-Complaints ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Motion To Strike ,
Operating Agreements ,
Protected Activity ,
Real Estate Investments ,
Reversal
A commercial lease co-tenancy clause conditions a retail tenant’s opening for business or continuing operations at the designated property upon another tenant opening for business or continuing operations at the same...more
Most forms of California business entities have statutory buyout procedures allowing the company or its owners to avoid claims by a disgruntled owner for judicial dissolution by purchasing the disgruntled owner’s interest....more
One of the tools available in the real estate litigation attorney’s toolbox is a lis pendens, also known as a notice of pending action. A lis pendens is a document recorded at the County Recorder’s Office providing...more
Several prior LLC Jungle posts have explored the statutory buyout procedures established by California Corporations Code section 17703.03 and related statutes:
a botched buyout -
“fair value” vs. “fair market value”...more
In a prior post from 2020, Money and Dirt covered an opinion from California’s Fourth Appellate District holding that an Assessor’s Parcel Number (APN), by itself, “does not necessarily demonstrate the actual, physical...more
In a long-awaited opinion — Siry Investment, L.P. v. Farkhondehpour — the California Supreme Court held that California Penal Code section 496 can apply to a business dispute. The opinion resolves a split of authority among...more
7/27/2022
/ Appeals ,
Attorney's Fees ,
Business Disputes ,
CA Supreme Court ,
Compensatory Damages ,
Criminal Prosecution ,
Damages ,
Extortion ,
Fraud ,
Misappropriation ,
Operating Agreements ,
Penal Code ,
Receiving Stolen Property ,
Split of Authority ,
Theft ,
Treble Damages
Owners of real property generally understand that their property rights can be impacted by litigation in which they are a party. However, what’s less clear, but perhaps equally important to understand and guard against, is...more
6/27/2022
/ Action to Quiet Title ,
Appeals ,
Asset Purchaser ,
Criminal Prosecution ,
Due Process ,
Foreclosure ,
Fraudulent Transfers ,
Grant Deed ,
Non-Parties ,
Property Ownership ,
Purchase Agreement ,
Real Estate Transfers ,
Reverse Mortgages ,
Void Contracts
When an LLC suffers primary harm that also indirectly harms the LLC’s members, the cause of action generally belongs to the LLC, not its members. Only if the LLC (through its duly authorized management) fails to pursue the...more
Most easements are created by a recorded instrument. Not so with one of the more exotic species of easement — the “equitable easement.”
A case recently published by California’s Second Appellate District — Romero v. Shih...more
If an LLC’s Operating Agreement contains a sufficiently broad arbitration clause, most disputes raised by the LLC’s members relating to the LLC will be sent to arbitration (instead of the court system) for resolution.
But...more
One of the unresolved issues over the past several years in the realm of lender liability law is whether lenders owe tort duties to borrowers in connection with loan modification applications. Until now, case law has been all...more
4/29/2022
/ Breach of Duty ,
CA Supreme Court ,
Consumer Financial Products ,
Deed of Trust ,
Economic Loss Doctrine ,
Financial Institutions ,
Financial Services Industry ,
Foreclosure ,
Loan Modifications ,
Mortgage Lenders ,
Mortgages ,
Wells Fargo
The statutory right to judicial dissolution in California comes with a hook — the defendants can avoid dissolution by exercising a “buyout” procedure. This is true in both LLCs (Corporations Code section 17703.03) and...more
A trespass by way of encroachment occurs when a building, structure, or other “thing” (as opposed to person or animal), goes beyond the boundaries of the owner’s land onto adjoining land without the permission or consent of...more
A charging order is a device used by a judgment creditor to collect on a judgment against an LLC member. The charging order imposes a lien on the judgment debtor’s economic (or “transferable”) interest in the LLC — the order...more
A right of first refusal is a contractual right to purchase property that arises when the owner decides to sell. The holder of a right of first refusal has a preference to purchase the property over other purchasers....more
Normally, a business entity is considered a legal person separate and apart from its individual owners. But when the entity is used by an owner to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful...more
As a litigator, whenever I am presented with a new contract dispute, one of the first things that I do is check whether the contract contains an arbitration clause or attorney fee clause. More consistently than any others,...more
Under California law, LLCs can either be managed by all of the members (member-managed) or by a designated manager (manager-managed). Manager-managed LLCs are more common for complex, multi-party ventures. The basic idea is...more
Real estate developers are painfully aware of various types of fees imposed by local agencies as a condition for permitting development projects.
A pair of opinions published by California’s Sixth Appellate District —...more
LLC managers owe fiduciary duties of loyalty, care, and good faith and fair dealing to both the LLC and the LLC’s members. (Corp Code §17704.09.) One of the most common claims in LLC litigation is “breach of fiduciary duty”...more