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Frank Marler et al v. E. M. Johansing

October 19, 2011


Mark S. Borrell, Judge Superior Court County of Ventura (Super. Ct. No. 56-2009-00361106- CU-FR-VTA) (Ventura County)

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


Courts deciding whether to certify that a lawsuit qualifies for a class action must determine which obstacles create insuperable barriers to class relief and which do not. This can be a daunting task, but not here.

Plaintiffs Frank Marler, Sandra Marler and the Hollywood Beach Acquisition Association, Inc. (HBAA) (plaintiffs) filed a class action complaint on behalf of the Hollywood Beach Mobilehome Park (Park) residents against the Park owners. They appeal an order denying their motion to certify a class action for breach of contract and fraud against defendants E.M. Johansing, LLC, J.D. McGrath Farms, Philip H. McGrath, Maureen McGrath Aggeler, Terence McGrath Aggeler, Sheila Aggeler Barnes and Anne Aggeler Will (defendants).

Plaintiffs allege that the Park is a senior citizens mobilehome park subject to rent control; that Park owners induced them to convert the Park to a condominium development through false promises about the purchase price they would pay for their lots; after Park residents approved the conversion, Park owners raised the lots prices so high that the majority of Park residents could not afford them.

We conclude, among other things, that: 1) there is an ascertainable class of Park residents, 2) the trial court should have allowed plaintiffs leave to amend their class descriptions to more concisely identify class and sub-class members, 3) the court erred in its analysis of the community of interest element of class certification, 4) defendants have not shown that plaintiffs lack standing to represent the class, and 5) a HBAA non-class action representative suit would not be an adequate substitute for class action relief. We reverse and remand.


The facts in our opening summary are derived from the motion for class certification and documents that are not in dispute. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 478 [reviewing courts may look to plaintiffs' declarations].) The trial court prepared a six-page order, but it did not contain a statement of facts.

In 2003, the Park was a "seniors" park with 96 mobilehomes. The average age of the Park residents was 70. Forty percent have low to moderate income, and many rely on government assistance.

Frank Marler and his wife purchased a mobilehome in the Park in 1999.

In 2003, the Park owners "began soliciting" Marler and other Park residents to convert the Park from a mobilehome "rental park" to a "resident-owned" mobilehome condominium development. Marler was concerned about the consequences. As a rental park, it was subject to local government rent control.

Marler and other Park residents felt the conversion "might displace [them] from [their] homes and undermine the security . . . that existed in the rent-controlled park." The Park owners assured them the conversion "would put [them] in control." The Park residents would "become owners of the individual lots on which [their] mobilehomes rest," and a "residents' association" would become the new management.

On September 11, 2003, Frances Keesler, the Park's manager, wrote to all Park residents requesting them to complete a survey concerning the Park conversion to "resident ownership." She said, "At the Homeowners' Association meeting in May, Mr. Aggeler (one of the Park owners) advised that the lot prices would be $110,000 to $125,000 per lot."

The Park residents formed the HBAA "to represent the residents of the [Park]" with the conversion and facilitate "their individual purchases of their individual lots once the Conversion was approved."

The HBAA retained attorney Sue Loftin to assist it with the conversion. In 2005, Loftin prepared a Memorandum of Agreement (MOA) and a subsequent Cooperation Agreement (COA), which the Park owners and the HBAA officers signed.

The MOA provided that the parties had agreed "to subdivide the [Park] and to sell individual condominium unit interests of the [Park] to the resident occupants . . . ." It specified, "The price per Lot shall be determined by averaging the price determined pursuant to two (2) appraisals done on the Property by MT Associates, Inc. on April 25, 2003 with a Lot Price range of $110,000 to $125,000 and on August 18, 2004 with a Lot Price range of $120,000 to $150,000."

In an application to the state's Mobilehome Park Resident Ownership Program (MPROP) for financial assistance to the Park residents, Loftin said the lot price will be "the average between the 2003 and the 2004 appraised lot price, and that price will remain fixed until the subdivision is completed." (Italics added.)

The COA required the Park owners to "offer for sale Lots in fee simple to all Residents" so that the Park could be converted to a "manufactured housing condominium project." The COA included a list of "estimated lot prices" showing that all the lots in the Park fell within a price range of $109,915 to $142,044. The list had five categories of lots based on size; and each lot in each category had a specific purchase price, e.g., category (1) $109,915; category (2) $142,044; (3) $129,970.26; (4) $135,110.90; and (5) $124,085.58. The COA also provided that Loftin would represent the Park owners and the HBAA, and the Park owners would pay her fees.

P.J. Szewzuk, the 2005 HBAA president, said the Park owners promised that "if [the Park residents] supported [the Park owners'] application for the Conversion," and if it was approved, they could purchase their lots "within an established price range--from $110,000 to $150,000." The factor motivating the Park residents to agree to a conversion was that lot prices were fixed "within the agreed price range."

The COA required the conversion to be approved by a majority of the HBAA members. All HBAA members were Park residents. Loftin prepared survey forms for the Park residents to sign with financial information for the purchase of their lots. The forms reflect that all the lots in the Park fell within a $110,000 to $143,000 price range. The Marlers' form listed the estimated purchase price for their lot as $126,500, loan closing costs of $3,500, a $250 park acquisition fee, and a $691 monthly payment.

Park residents from 82 of the 96 Park spaces elected to support the conversion. They also wrote letters and appeared before the city council to urge its approval.

In 2007, the Park owners informed the HBAA that, based on a new appraisal, the lot price range would be $198,875 to $240,800. Because of this increase, many Park residents now were unable to purchase their lots. The Marlers' lot price increased from $126,500 to $215,000, a price they could not afford. They were notified that if they did not purchase their lot at the increased price by December 29, 2009, it would be sold to a third party. The Marlers feared they would be evicted and their mobilehome would become "worthless" if they lacked the funds to move it.

Marler and Szewzuk later discovered that while the Park residents were relying on a fixed lot price range, Loftin was "secretly advising" the Park owners that they could raise it. Szewzuk said, "The HBAA . . . did not know . . . that [the Park owners] intentionally misrepresented the price range . . . ; nor could we have known that Attorney Loftin, was secretly advising [them] to undermine and defraud us."

The COA listed lot prices by categories, but Loftin added a clause making these prices subject to a "final allocation price" when the City of Oxnard approved the conversion. This provision was not in the MOA she prepared.


Plaintiffs contend: 1) Loftin knew the Park owners would control the appraisal for the final allocation price, 2) she advised them they could achieve higher lot prices by using a different appraisal method, and 3) the Park owners changed the method to increase the prices when it was too late for the Park residents to contest the conversion. They rely on an e-mail from Terry Aggeler, a Park owner, to Loftin, where Aggeler said, "[T]he first appraisals were based upon the park purchasing it. The last appraisal was based upon them buying the individual lots and they were appraised according to size, etc. You told me all along that the prices would be higher once they were appraised this way and you were right." (Italics added.) He added, "Sue, you told me that they could not block the conversion several months ago." (Italics added.) MT Associates, Inc. prepared the 2007 appraisal. In a cover letter, it said Aggeler selected the appraisal method.

Defendants contend their actions were appropriate. But we are not deciding the facts or the merits of the underlying case. (Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966, 974) "The certification question is 'essentially a procedural one that does not ask whether an action is legally or factually meritorious.'" (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.) Our focus is on the correctness of the class certification ruling. We will be "touching aspects of the merits" only to determine whether the case plaintiffs claim they will prove at trial is a candidate for class relief. (Wal-Mart Stores, Inc. v. Dukes (2011) __U.S.__ [131 S.Ct. 2541, 2552].) ...

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