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Laguna Terrace Park, LLC v. Kenneth Cummins As Successor Trustee Etc

December 7, 2010

LAGUNA TERRACE PARK, LLC, PLAINTIFF AND APPELLANT,
v.
KENNETH CUMMINS AS SUCCESSOR TRUSTEE ETC., DEFENDANT AND APPELLANT.



Appeal from a judgment of the Superior Court of Orange County, James J. Di Cesare, Judge. Reversed and remanded. (Super. Ct. No. 04CC10304)

The opinion of the court was delivered by: Rylaarsdam, Acting P. J.

Laguna Terrace Park v. Cummins CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

In Neary v. Regents of University of California (1992) 3 Cal.4th 273, 284 (Neary), a majority of the Supreme Court held that appellate courts should grant requests for stipulated reversals, unless there are "extraordinary circumstances."

But sometimes dissents carry the day. Justice Kennard, in her dissenting opinion in Neary, argued that stipulated reversals could encourage "parties to try cases rather than settle them," or otherwise erode "public confidence in the judiciary by fostering the perception that litigants having sufficient wealth may buy their way out of the ordinary collateral consequences of public adjudications." (Neary, supra, 3 Cal.4th at p. 294 (dis. opn. of Kennard, J.).)

In response to Justice Kennard's dissent, the Legislature enacted subdivision (a)(8) of section 128 of the Code of Civil Procedure. (All further statutory references are to this code.) The statute changed the Neary rule of presumptive approval of stipulated reversals into a new rule where the onus is on the parties to justify the reversal. Justice Anthony Kline, in Hardisty v. Hinton & Alfert (2004) 124 Cal.App.4th 999, 1005 (Hardisty), styles the statute as a "presumption against stipulated reversals."

Specifically, section 128 subdivision (a)(8) sets up two criteria that must be met before an appellate court may accept a stipulated reversal: There must be (A) "no reasonable possibility that the interests of nonparties or the public will be adversely affected by the reversal" and (B) the reasons for the reversal must "outweigh" whatever "erosion of public trust" that might result from nullification of the judgment and the "risk" that the "availability of stipulated reversal will reduce the incentive for pretrial settlement."

The present case arises out of a long term dispute over which of two sets of landowners bears responsibility for a drainage pipe that sticks out of a hillside, and, during heavy rains, pours runoff and sludge from upslope land onto a street in a downslope mobile home park. The trial court entered a judgment of about $750,000 in favor of the park owner against the prior owners of the upslope property. Now the parties have stipulated to the reversal of that judgment in return for the upslope owners paying $500,000 in settlement of all claims.

Since this stipulated reversal at first appeared to pose the problem of adverse effects on nonparties -- specifically the tenants of the mobile home park and the new owners of the upslope property -- we scheduled oral argument to consider the matter. After such consideration, we accept the stipulation and direct the reversal of the trial court's judgment. The mobile home tenants and new upslope owners are not nonparties whose interests will be "adversely" affected by the stipulated reversal.

FACTS

In the 1960's, Paul H. Esslinger ("Grandfather") owned canyon land in Laguna Beach which included a relatively large upslope parcel of about 228 acres of raw land, and a comparatively smaller adjacent downslope parcel of about 33 acres. The land is on the inland side of Pacific Coast Highway across from what is now the Montage Hotel and Resort.

In the 1960's, Grandfather and son Paul Jr. (who we will sometimes also refer to as Dad) developed the downslope parcel into a mobile home park.

In the process of building the park, Grandfather and Dad created a two-to-three foot deep catch basin on the upslope parcel at the top of the slope overlooking the mobile home park. The idea was to prevent runoff from draining directly onto the park property. As originally constructed, when the catch basin was full (which does not happen often, only during heavy rains), the water would flow into a "chimney" in the middle of the catch basin and from that chimney into a 12-inch diameter pipe. The 12-inch diameter pipe was originally connected to a 30-inch diameter pipe that was intended to flow to the ocean.

(To jump ahead of ourselves for the moment, the upslope-downslope arrangement of these drainage pipes would lead to trouble in the mid-1990's, when it was discovered that the 30-inch diameter pipe had eroded, meaning that the water was essentially being pumped into the ground underneath the trailer park, thus causing sinkholes.)

In 1976, Grandfather had put the land into the "Esslinger Family Trust" (the Trust). Six years later, in 1982, Grandfather died. Under the terms of his estate plan his wife Marie received the land in trust.

In 1987, the Trust leased the downslope parcel and mobile home business to a corporation, Laguna Terrace Park, Inc. (the Park), which was owned by grandson Steve Esslinger, child of Paul Jr.

When Marie died in 1990, Grandfather's two children, Paul Jr. (Dad) and Marilyn Smith (Aunt Marilyn) received beneficial interests in the trust, with the trustees being Paul Jr.'s three children, Darren, Cheryl and Steve.

In 1995, it was discovered that the 30-inch diameter pipe had eroded, and the resulting water going into the ...


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