California Court of Appeals, Second District, Eighth Division
MARINA PACIFICA HOMEOWNERS ASSOCIATION, Plaintiff and Appellant,
SOUTHERN CALIFORNIA FINANCIAL CORPORATION, Defendant and Respondent.
from a judgment of the Superior Court of Los Angeles County
Super. Ct. No. NC052700. Michael P. Vicencia, Judge.
Lord, Christopher J. Bakes, Daniel A. Solitro, Susan Kidwell;
Morrison & Foerster and Miriam A. Vogel for Plaintiff and
Greenberg Traurig, Scott D. Bertzyk, Adam Siegler and Matthew
R. Gershman for Defendant and Respondent.
January 1, 2008, Civil Code sections 1098 and 1098.5 have
governed the circumstances under which certain fee payments,
imposed when real property is transferred, may or may not be
collected. In Marina Pacifica Homeowners
Assn. v. Southern California Financial Corp. (2014) 232
Cal.App.4th 494 (Marina Pacifica I), this court
determined that a monthly “assignment fee, ”
payable by individual condominium unit owners to the
developers of the condominium project, was properly
collectible under those statutory provisions. The Supreme
Court denied review. Our remittitur issued on April 22, 2015,
remanding the case to the trial court for “further
proceedings as necessary to enter an amended judgment
consistent with [our] opinion, ” including
“amended amounts due and owing for the assignment
fee.” (Id. at p. 513.)
Pacifica Homeowners Association (plaintiff) now appeals from
the trial court's judgment determining the amended
amounts owing from unit owners to the developers'
successor in interest, Southern California Financial
Corporation (defendant), for the assignment fee. Plaintiff
does not contend the trial court erred in its calculations,
but contends we erred in our earlier construction of the
statute, and should now correct that error and declare the
assignment fee uncollectible. Our error is demonstrated,
plaintiff maintains, by the Legislature's clarifying
amendment of sections 1098 and 1098.5, effective January 1,
2016, an amendment intended to overrule our decision in
Marina Pacifica I.
affirm the judgment. We need not decide whether we could
properly reconsider our decision in Marina Pacifica
I, because the amended statute and its legislative
history demonstrate the Legislature intended in any event to
permit the Marina Pacifica I assignment fees to
remain in place.
the fourth appeal in litigation over the assignment fee that
began in 2006. Only two appeals are significant here: the
appeal before us and our decision in Marina Pacifica
I upholding the collectibility of the assignment
fee. The history of the dispute is
described in detail in Marina Pacifica I, supra, 232
Cal.App.4th at pages 497-504. We summarize here the facts
necessary to an understanding of our opinion in this appeal.
unit owners purchased their units in the Marina Pacifica
complex, they bought an ownership interest in their
individual units and a share of an undivided leasehold
interest in the land on which the complex was built. That
leasehold interest included the obligation to pay monthly
rent to the landowner and an assignment fee to the
developers. These two obligations were to continue until
2041. Both payments were to be nominal until 2006, when the
rent and assignment fee would be recalculated so that
together they would equal 10 percent (on an annual basis) of
the fair market value of the land underlying the units.
(Marina Pacifica I, supra, 232 Cal.App.4th at pp.
497-498.) Another recalculation would occur as of October 1,
2021. These assignment fee provisions were described in the
unit lease, and an information sheet plaintiff gave to each
purchaser of a unit in the complex stated that the fee would
be readjusted in 2006 and 2021. The parties stipulated at
trial that “each purchaser of a Marina Pacifica unit
had notice of the unit lease and its contents, including the
specific paragraph setting forth the assignment fee.”
(Id. at p. 499.)
1999, plaintiff bought the land underlying the development
and sold pro rata shares to the individual unit owners, thus
terminating rent payments under the unit leases. The
assignment fee, however, was separate and independent from
the other lease provisions, and created a separate
contractual obligation from the unit owner to the developers.
(Marina Pacifica I, supra, 232 Cal.App.4th at pp.
2000, plaintiff bought out the assignment fee rights of two
of the three development partners. But the remaining partner,
William Lansdale, retained his 43.75 percent interest in
those fees. In 2005, Mr. Lansdale and plaintiff began to
litigate disputes over the appraisal process that would
determine the fair market value of the property for purposes
of readjustment of the assignment fee. (Marina Pacifica
I, supra, 232 Cal.App.4th at p. 499.)
2007, the Legislature enacted sections 1098 and 1098.5 to
regulate “transfer fees.” A transfer fee was
defined broadly to include fees imposed in any document
affecting the transfer of an interest in real property. For
transfer fees imposed before January 1, 2008, the recipient
of the fee was required to record a separate document meeting
specified requirements, including a title (“Payment of
Transfer Fee Required”) and certain items of
information about the fee. In order to continue collecting
transfer fees on and after January 1, 2009, this separate
document had to be recorded on or before December 31, 2008.
(§ 1098.5, subd. (a).)
were, however, nine exceptions to the definition of a
transfer fee. One of the fees not included in the statutory
definition was “[a]ny fee reflected in a document
recorded against the property on or before December 31, 2007,
that is separate and apart from any covenants, conditions,
and restrictions, and that substantially complies with
subdivision (a) of Section 1098.5 [recited just above] by
providing a prospective transferee notice” that payment
of a transfer fee was required, the amount or method of
calculation of the fee and several other items. (Former
§ 1098, subd. (i).)
January 2008, Mr. Lansdale transferred his right to the
assignment fees to defendant. By December 2008, the appraisal
litigation had been concluded, an arbitration had been held,
and the fair market value of the property for purposes of
calculating the assignment fee was set at $60, 615, 500 (as
of October 1, 2006). Defendant then began billing the unit
owners for their respective shares of the readjusted
assignment fee. (Marina Pacifica I, supra, 232
Cal.App.4th at p. 500.) Defendant did not record the separate
document described in section 1098.5.
instructed unit owners not to pay the assignment fee bills
defendant sent, and in March 2009 plaintiff sued defendant.
Along with other allegations, plaintiff asserted the
assignment fee was a transfer fee as defined by section 1098,
and could not be collected after December 31, 2008, because
defendant did not comply with the recording requirements in
section 1098.5. The trial court agreed, and also held that
the fees imposed before that date should have been calculated
under a four-percent formula advocated by plaintiff, rather
than the higher 10-percent formula sought by defendant.
parties appealed. In Marina Pacifica I, we
concludedthe assignment fee came within the general
definition of a transfer fee as described in the first
sentence of section 1098, but was excluded from that
definition by the “substantial compliance”
exception described in then-section 1098, subdivision (i).
(Marina Pacifica I, supra, 232 Cal.App.4th at p.
509.) We observed that the unit lease contained all the
required information and, while the unit lease itself was not
recorded, numerous documents that were recorded against the
property incorporated the unit lease by reference.
(Id. at p. 510.) These included lease assignments
and resale assignments that contained provisions in which the
unit owners promised to pay the assignment fee set forth in
paragraph 4 of the unit lease, and acknowledged they had
received and reviewed the unit lease. (Id. at pp.
511-512.) We observed the evidence showed that “far
from being hidden, the assignment fee was clearly disclosed
to purchasers, ” who had both constructive notice and
actual notice of the assignment fee. (Id. at p.
we reversed the trial court's judgment to the extent it
held the assignment fee was an uncollectible transfer fee
after December 31, 2008. (We agreed with the trial court that
the four percent formulation should have been used to
calculate the fees.) As already noted, we remanded the case
to the trial court for “further proceedings as
necessary to enter an amended judgment consistent with [our]
opinion, ” including “amended amounts due and
owing for the assignment fee.” (Marina Pacifica I,
supra, 232 Cal.App.4th at p. 513.)
opinion in Marina Pacifica I was filed December 16,
2014. Plaintiff did not seek rehearing in this court, but
petitioned for review in the California Supreme Court. The
Supreme Court denied the petition on March 11, 2015, and the
remittitur issued on April 22, 2015.
2015, legislation was enacted to amend section 1098,
effective January 1, 2016. Among the changes were the
addition of a new subdivision (b). Subdivision (b) provides,
with respect to the substantial compliance exception to the
definition of a transfer fee, that the specified information
“shall be set forth in a single document and shall not
be incorporated by reference from any other document.”
(§ 1098, subd. (b).) The bill as enacted included a
legislative finding that “the addition of subdivision
(b) to Section 1098... and [other specified amendments]...
made by this act are clarifying and declaratory of existing
law.” (Stats. 2015, ch. 634.)
amendments as enacted also added a new subparagraph to the
substantial compliance exception. (§ 1098, subd.
(a)(9)(B).) We will refer to it as ...