A. Earle Law Offices would like to wish everyone a happy holiday season. Like most others this time of year, we will be taking some time away from work so that we, too, can celebrate and spend time with family and friends.

However, because we at Earle Law Offices realize that clients sometimes experience legal emergencies in their personal lives this time of year, we want you to know that we will be available in the event you need to contact a lawyer. Regardless of whether a legal emergency involves a matter of criminal or civil law, we will be available to provide whatever legal assistance might be possible.

Hopefully, however, you and yours will have a safe and enjoyable holiday season. We look forward to continuing to provide you with legal services and to be your source for legal information.

P.S. To those business owners who are still operating a business as a sole proprietorship, please take a moment to consider forming a business entity now – before the end of 2011 – so that you will be ready to continue (or start) growing your business on January 1, while enjoying the protection from personal liability and tax benefits that a business entity can provide.

Happy Holidays!

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California.  He can be reached at: anthony.earle@earlelaw.com.  This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

Would I be violating any law if I told the real estate broker that a registered sex offender lives across the street?

A.    The situation you described recently was litigated in the appellate case Cross v. Cooper (California Court of Appeal, Sixth Appellate District, July 11, 2011).  In that case, Stephan and Laura Cooper rented a house from Sandra Cross.  Ms. Cross entered into a purchase contract with potential buyers, but the buyers cancelled the transaction.

Ms. Cross then sued the Coopers, asserted several claims relating to the Coopers’ disclosure or threats to disclose, the presence in the neighborhood of a registered sex offender.  The Coopers responded to the lawsuit by asking the trial court to dismiss the case as a “Strategic Lawsuit Against Public Participation (SLAPP).

In their anti-SLAPP motion, the Coopers’ argued that Ms. Cross’s lawsuit was intended primarily to chill the exercise of the Coopers’ First Amendment Rights and that Ms. Cross could not demonstrate a probability of prevailing at trial.  The trial court disagreed, declined to dismiss the lawsuit as an anti-SLAPP case, and ordered the Coopers to go to trial on Ms. Cross’s claims.

The Coopers appealed the trial court’s denial of their anti-SLAPP motion.  The California Court of Appeal, unlike the trial court, held that disclosure by the Coopers, if any, of the proximity in the neighborhood of a registered sex offender was a “matter of public concern” and, as such, constitutes protected First Amendment activity.  The Court of Appeal then concluded the trial court had erred in denying the Coopers’ anti-SLAPP motion and remanded the case for further proceedings.

Cross v. Cooper demonstrates how the exercise of First Amendment speech rights, in the context of a real estate transaction, can result in a lawsuit.  Even though the Coopers alleged conduct was eventually deemed to have been protected under the First Amendment, the Coopers nevertheless had to go through trial court and appellate court proceedings in order to vindicate those rights.  Even assuming the Coopers recovered their attorney fees, the fact remains that they had to endure litigation.  Also, although apparently not a determining factor in the ultimate resolution of this case, one might reasonably wonder what the Coopers’ true motivation was in making the alleged disclosure.  Were they primarily concerned about the safety of children in the neighborhood, or were they merely using that as a pretext to retaliate against their landlord who had decided to sell the property rather than renew the Coopers’ residential lease?

The case of Cross v. Cooper raises other legal issues which were not the subject of appellate litigation.  As always, it is best to consult with your attorney before taking action which might lead to litigation.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California.  He can be reached at: anthony.earle@earlelaw.com.  This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A.  There are two types of foreclosure actions in California: judicial and non-judicial.  The vast majority of California foreclosure actions proceed as non-judicial foreclosures because judicial foreclosures take much longer to complete and to become final than do non-judicial foreclosures and, therefore, generally are more expensive for lenders.

California’s anti-deficiency statutes preclude or limit lenders’ ability to obtain personal judgments against defaulting borrowers in many situations where proceeds from the sale of a property which has been foreclosed upon fail to extinguish the outstanding debt which was secured by the property.  See, California Code of Civil Procedure §§ 580a, 580b, 580d, 726(a).

C.C.P. § 580d generally prohibits deficiency judgments after any foreclosure sale, judicial or non-judicial, of property that is secured by a third-party purchase money trust deed or mortgage on owner-occupied residential property, or on a seller-held purchase money trust deed or mortgage on any kind of property.  All standard purchase-money transactions are subject to the C.C.P. § 580b bar to deficiency judgments.  Spangler v. Memel, 7 Cal.3d 603, 610 (1972).

Non-Judicial Foreclosure
By choosing non-judicial foreclosure, the creditor waives the right to a deficiency judgment.  Roseleaf Corp. v. Chierighino, 59 Cal.2d 35, 43-44 (1963).  When a deficiency judgment is barred following a non-judicial foreclosure under a deed of trust, the trustee has a duty to cancel the underlying note.  Kerivan v. Title Ins. & Trust Co., 147 C.A.3d 225, 230-231.

Section 580d does not, however, bar recovery on a debt by a sold-out junior lienholder whose security has been rendered worthless by non-judicial foreclosure of a senior lienholder.  Roseleaf Corp. v. Chierighino, 59 Cal.2d at 43.

Judicial Foreclosure
A creditor may generally obtain a deficiency judgment following a judicial foreclosure, except where the purchase-money rule would bar such a judgment.  C.C.P. § 580b.  When recovery of a deficiency judgment is allowed, recovery is limited to the amount by which the outstanding debt exceeds either the fair market value of the property at the time of sale or, if less, the sale price.  C.C.P. § 580a.

The purchase-money rule does not apply in cases where the property has been refinanced and the purchase-money loan replaced with a different loan which also is secured by the subject property.  Union Bank v. Wendland, 54 C.A.3d. 393, 399-400 (1976).

Deficiency Judgments Generally
The “One-Form-of-Action” rule provides that foreclosure is the only form of action to recover any debt or enforce any right secured by a deed of trust or mortgage.  C.C.P. § 726(a).  The rule has two purposes: to compel a secured creditor to resort first to the security and to protect the debtor from multiple suits when a creditor holds multiple security interests.  Savings Bank v. Central Market Co., 122 Cal. 28 (1898).

The security-first requirement of the One-Form-of-Action rule does not preclude, as mentioned above, an action on a debt by a creditor whose security has been rendered worthless without any fault on the part of the creditor.  Id., at 33-36.  The most common example is the sold-out junior lienholder, whose security has been rendered worthless by foreclosure of a senior lien.  Roseleaf Corp. v. Chierighino, 59 Cal.2d at 39-44.

This article is published in both print and electronic formats.  You may register at http://earlelaw.com/newsletters to begin receiving future articles via a free email subscription to the EarleLaw Newsletter.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible.  For details, please visit: http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California.  He can be reached at: anthony.earle@earlelaw.com.  This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A. It has been argued that the American legal system unduly promotes and encourages a litigious society, with California often cited as evidence for the validity of this argument. Other states, in turn, often consult – and frequently follow – California legal precedent when addressing for themselves legal issues which California has previously considered. For this reason, it is important for real estate investors – whether they invest in California or other states – to be aware of the conflicting and sometimes inconsistent rulings by California courts on the issue of whether to recognize or disregard the asset protection qualities of business entities used to hold real estate assets.

Long before Limited Liability Companies (LLC’s) and other legal entities were commonly used to hold real estate for the purpose of asset protection, the “alter ego” legal doctrine arose in the law to “pierce the corporate veil” in cases where the “corporate-separateness” of legal entities had been used to commit fraud or to otherwise shield an entity’s owners from the entity’s violation of law. When a court uses the alter ego doctrine to pierce a corporate veil, the legal protections of an LLC or other legal entity are disregarded and the owners of real property held by the entity are treated as individuals for the purpose of civil litigation.

In addition to using the alter ego doctrine to pierce the corporate veil in cases where the owners of an LLC or other entity have committed fraud – which constitutes a legitimate and uncontroversial use of the doctrine – several California courts have applied the doctrine to cases where no law was violated nor fraud committed. The justification courts have given for this expansion of the doctrine is that invoking the court’s “equitable” powers as a means to apply the doctrine is necessary to prevent an “unfair” result.

In one such case, Mesler v. Bragg Management Co., 39 Cal.3d 290, 300-301 (1985), the California Supreme Court held that a group of affiliated real estate entities that were technically exempt from a local rent control ordinance because each entity held title to four rental units or less, could nonetheless be treated as a single entity for purposes of the rent control ordinance. The court found no evidence of fraud or bad faith on the part of the defendant entities or their managers, and the defendants produced an expert declaration stating that the use of separate entities to own individual properties is exceedingly common in the real estate industry. In justifying this result, the court said that even though “there are legitimate purposes for the way Defendants are organized does not preclude a finding that with respect to the [rent control ordinance] it would be inequitable to recognize Defendants’ separate existence. Id, at 300-301.

By disregarding the legal distinctions between the entities and their owners, the court in Mesler effectively substituted its notion of “fairness” for the law as enacted by the California legislature.

Judicial change in the law, like many other types of change, is usually incremental and gradual. Given recent trends in the law, it seems more likely than not that California courts will continue to decide cases based on what lawyers in black robes consider “fair” and “unfair”, rather than on the actual text of laws. Thus, it is entirely foreseeable that many California courts will further expand the use of the alter ego doctrine, so as to apply the doctrine in new, different, and more far-reaching contexts.

This article is published in both print and electronic formats. You may register at http://earlelaw.com/newsletters to begin receiving future articles via a free email subscription to the EarleLaw Newsletter.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A. It is not unusual for marital difficulties to be preceded by financial difficulties. It also is not uncommon for one spouse to take more responsibility for financial matters than does the other spouse. Ideally, spouses should be able to effectively communicate with each other and agree on issues concerning the management of financial and other marital issues. But such is not always reality.

A decision to stop making mortgage payments is sometimes a sound financial decision, given a certain set of facts. Other times, that same decision, in addition to simply being foolish, creates potential legal liability.

Whether to stop making monthly payments on a home mortgage involves consideration of numerous issues, as well as the interplay between those issues. Some of the legal issues relate to state contract, property, and foreclosure law, as well as federal and state tax law. Other issues include credit ratings and potential adverse affect on current or prospective employment, especially government employment which may require a national security clearance or where personal finances may be the subject of pre-employment or post-employment screening or monitoring.

In addition to the foregoing, a California Court of Appeal recently reminded married couples that a spouse who manages marital assets owes the non-managing spouse a fiduciary duty to preserve those marital assets. In re: Marriage of Kochan, No. B215355, Second Appellate District, California Court of Appeal (March 9, 2011).

In Kochan, one of the spouses had exclusive temporary use, possession, and control of the family residence during the divorce proceedings, and failed to make mortgage payments notwithstanding the financial ability to have done so. The Court of Appeal upheld the trial court’s finding that the marital fiduciary duty to preserve community assets had been breached, and left it to the trial court to determine, on remand, whether that breach of duty had caused any actual damage.

The appellate court also upheld the trial court’s order requiring the spouse who breached the fiduciary duty to pay $120,000 of the other spouse’s attorney fees. (The breach of fiduciary duty was only one of several issues which were litigated.)

There are certain procedures which might be appropriate for your case and which may help prevent this problem before it occurs, or at least minimize the possibility of it occurring. Thus, it is important that – at the outset of your case – you consult an attorney knowledgeable in family law matters.

This article is published in both print and electronic formats. You may register at http://earlelaw.com/newsletters to begin receiving future articles via a free email subscription to the EarleLaw Newsletter.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

” ‘[A] party who chooses to litigate an issue against the Government is not only representing his or her own vested interest, but is also refining and formulating public policy.’ INS v. Jean, 496 U.S. 154, 165 n. 14 (quoting H.R. Rep. No. 96-1418, at 10 (1980). For this reason, our legal system has adapted to ensure that, in certain circumstances, every citizen is able to defend himself against unjustified government action, free from the financial disincentives associated with litigation. [26 U.S.C. § 7430] provides such assurance to taxpayers.” Morrison v. Commissioner of Internal Revenue, 2009 WL 1312855 (C.A.9).

“The U.S. Tax Code permits a discretionary award of litigation costs, including attorneys’ fees, to the prevailing party in any civil tax proceeding brought by or against the United States. 26 U.S .C. § 7430(a). A ‘prevailing party’ is a party that ‘has substantially prevailed with respect to the amount in controversy’ or ‘with respect to the most significant issue or set of issues presented.’ § 7430(c)(4)(A)(i).” Id.

Section 7430 reads, in relevant part: “In any administrative or court proceeding which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, the prevailing party may be awarded a judgment or a settlement for . . . reasonable litigation costs incurred in connection with such court proceeding.”

The issue in Morrison was whether a taxpayer may recover attorney fees after successfully challenging an IRS audit where a third party, instead of the taxpayer, advanced the taxpayer’s attorney fees to litigate against the IRS.

The fee controversy in Morrison arose after Morrison, a shareholder and officer in Caspian, a corporation, sold his interest in Caspian to Nariman Teymourian, another Caspian shareholder. Before Morrison resigned as an officer of Caspian, the IRS initiated audits of Morrison, Caspian, and Teymourian.

The IRS issued Notices of Deficiency to Morrison, Caspian and Teymourian. Morrison and Caspian each petitioned the United States Tax Court for redetermination. The tax court cases were consolidated and both parties retained the same law firm to represent them. After Morrison and Caspian both prevailed on their Tax Court petitions, both filed section 7430 motions seeking an award of attorney fees.

The Tax Court denied Morrison’s fee request on the ground that Morrison had not actually paid or “incurred” such fees, as Caspian had advanced Morrison’s fees under an agreement requiring Morrison to reimburse Caspian in the event Morrison was successful in obtaining a fee order against the IRS.

The IRS argued that Morrison had not “incurred” any attorney fees within the meaning of section 7430, arguing that a contrary interpretation of the term “incurred” would give rise to the so-called “stand-in” litigant problem. A stand-in litigant is one who seeks an award of attorney fees and then passes those fees on to an ineligible litigant.

This article is published in both print and electronic formats. You may register at http://earlelaw.com/newsletters to begin receiving future articles via a free email subscription to the EarleLaw Newsletter.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

Now, I would like to use my LLC to purchase a California home that I can use as my personal residence. Are there any potential legal issues associated with using an LLC to purchase one’s home?

A. First, let me congratulate you on what appears to be your apparent success with initiating the process of becoming financially independent by starting a real estate investing business.

Your statements that you used your LLC to purchase “distressed residential investment properties” and that you now want to use you LLC to purchase a California property to use as your personal residence, suggest that you purchased the investment properties during some phase of a foreclosure process and that you also want to purchase a property in foreclosure for use as your personal residence.

It is not clear in what state your investment properties are located, but if you purchased those properties in a state other than California, you may be unfamiliar with California’s Home Equity Sales Contract Purchase Act (HESCPA), which is codified at California Civil Code § 1695, et seq.

The HECSA requires that contracts for the purchase of California homes in foreclosure comply with certain, detailed requirements. The HECSA contains several exemptions to its application, one of which is for purchases by persons who intend to use the property as their principal residence. In the recent case Capon v. Monopoly Game, LLC, A124964, California Court of Appeal, First Appellate District (March 4, 2011), the court held that the personal residence exemption contained in the HESCA does not apply where the identity of the purchaser of the property and the intended resident/occupant are not identical, such as where an LLC purchases a residential property for use by the LLC’s sole member/manager.

For more information regarding the HESCA, please visit: http://earlelaw.com/newsletters and download your free copy of EarleLaw Newsletters, The California Home Equity Sales Contract Purchase Act (2009-01), Buying and Selling California Foreclosure Properties (2009-27), and General Release Insufficient to Overcome Non-Compliance with Home Equity Contract Purchase Act (2009-29). You may also register at http://earlelaw.com/newsletters to begin receiving your free email subscription to the EarleLaw Newsletter.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A. There are two types of foreclosure actions in California: judicial and non-judicial. The vast majority of California foreclosure actions proceed as non-judicial foreclosures because judicial foreclosures take much longer to complete and to become final than do non-judicial foreclosures and, therefore, generally are more expensive for lenders.

California’s anti-deficiency statutes preclude or limit lenders’ ability to obtain personal judgments against defaulting borrowers in many situations where proceeds from the sale of a property which has been foreclosed upon fail to extinguish the outstanding debt which was secured by the property. See, California Code of Civil Procedure §§ 580a, 580b, 580d, 726(a).

C.C.P. § 580d generally prohibits deficiency judgments after any foreclosure sale, judicial or non-judicial, of property that is secured by a third-party purchase money trust deed or mortgage on owner-occupied residential property, or on a seller-held purchase money trust deed or mortgage on any kind of property. All standard purchase-money transactions are subject to the C.C.P. § 580b bar to deficiency judgments. Spangler v. Memel, 7 Cal.3d 603, 610 (1972).

Non-Judicial Foreclosure

By choosing non-judicial foreclosure, the creditor waives the right to a deficiency judgment. Roseleaf Corp. v. Chierighino, 59 Cal.2d 35, 43-44 (1963). When a deficiency judgment is barred following a non-judicial foreclosure under a deed of trust, the trustee has a duty to cancel the underlying note. Kerivan v. Title Ins. & Trust Co., 147 C.A.3d 225, 230-231.

Section 580d does not, however, bar recovery on a debt by a sold-out junior lienholder whose security has been rendered worthless by non-judicial foreclosure of a senior lienholder. Roseleaf Corp. v. Chierighino, 59 Cal.2d at 43.

Judicial Foreclosure

A creditor may generally obtain a deficiency judgment following a judicial foreclosure, except where the purchase-money rule would bar such a judgment. C.C.P. § 580b. When recovery of a deficiency judgment is allowed, recovery is limited to the amount by which the outstanding debt exceeds either the fair market value of the property at the time of sale or, if less, the sale price. C.C.P. § 580a.

The purchase-money rule does not apply in cases where the property has been refinanced and the purchase-money loan replaced with a different loan which also is secured by the subject property. Union Bank v. Wendland, 54 C.A.3d. 393, 399-400 (1976).

Deficiency Judgments Generally

The “One-Form-of-Action” rule provides that foreclosure is the only form of action to recover any debt or enforce any right secured by a deed of trust or mortgage. C.C.P. § 726(a). The rule has two purposes: to compel a secured creditor to resort first to the security and to protect the debtor from multiple suits when a creditor holds multiple security interests. Savings Bank v. Central Market Co., 122 Cal. 28 (1898).

The security-first requirement of the One-Form-of-Action rule does not preclude, as mentioned above, an action on a debt by a creditor whose security has been rendered worthless without any fault on the part of the creditor. Id., at 33-36. The most common example is the sold-out junior lienholder, whose security has been rendered worthless by foreclosure of a senior lien. Roseleaf Corp. v. Chierighino, 59 Cal.2d at 39-44.

Legislative Update

Senate Bill 931 (SB931), which, effective January 1, 2011, created and added section 580e to the California Code of Civil Procedure. The purpose of Section 580e appears to have been to prevent mortgage lenders from obtaining deficiency judgments where the lender accepts an amount less than the loan payoff when releasing its security interest in a residential property. This new statute may not, however, accomplish its intended objective. For further discussion of Section 580e, see: http://earlelaw.com/Newsletters-2011/EarleLaw-Newsletter-2011-06.pdf.

Earle Law Offices offers the LAW (Lawyer Available Whenever) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A. There currently are many California foreclosure cases similar to your case. One such case, Gomes v. Countrywide Home Loans, Inc, California Court of Appeal No. D057005 (Fourth District, February 18, 2011), addresses the issue you have raised.

In Gomes, the borrower executed a promissory noted secured by a deed of trust that identified the lender and MERS “acting as nominee for Lender” as beneficiaries thereunder. MERS became the mortgagee of record. Countrywide Home Loans (Countrywide) retained the promissory notes, as well as the right to service the mortgages.

Gomes defaulted on the loans and MERS initiated non-judicial foreclosure proceedings. Gomes then filed suit against both MERS and Countrywide, alleging that MERS did not have the legal right to foreclose. The trial court dismissed Gomes’ lawsuit.

The California Court of Appeal affirmed the trial court’s dismissal, explaining that the California legislature, when enacting the comprehensive statutory scheme found in California Civil Code § 2924, intended to provide a creditor or beneficiary with a quick, efficient remedy against a defaulting borrower. Under this statute, the Court explained, a trustee, mortgagee, or beneficiary – or any of their authorized agents – may initiate foreclosure proceedings . The Court further held that Gomes’ lawsuit constituted an improper attempt to interject the courts into the non-judicial foreclosure process.

Gomes was decided in a California state court, which was applying California state law. The result may have been different if this same challenge to MERS’ right to foreclose had been brought in the context of a bankruptcy proceeding in federal court. Federal courts have exclusive jurisdiction over bankruptcy cases; bankruptcy cases may not be brought in state courts. For a discussion concerning why the result might be different depending on whether a case is litigated in a California state court, as opposed to a federal bankruptcy court, please see: Must Foreclosing Lenders “Show the Note”, http://earlelaw.com/Newsletters-2010/EarleLaw-Newsletter-2010-37.pdf.

Before you make any decisions concerning your case, and certainly well before any deadlines for you to take action have passed, you should consult with an attorney who handles California foreclosure cases.

Earle Law Offices offers the LAW (Lawyer Available Whenver) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.

A. Housing discrimination claims are claims for violation of a specific type of civil right. However, unlike most claims which allege violation of a civil right (e.g., claims brought to enforce rights protected, for example, by the First Amendment or Fourth Amendment to the Constitution), which typically are brought by individuals against the government, housing discrimination claims often are prosecuted by the government against individuals (owners/landlords) or businesses (third-party property managers).

In cases where an individual prevails in a civil rights lawsuit brought by that individual against the government, the individual usually may obtain an award of attorney fees in addition to any money judgment which is entered against the government. Thus, when an individual wins this type of civil rights lawsuit against the government, the government usually will have to pay, in addition to civil damages, some or all of the attorney fees incurred by the individual whose rights were violated.

However, according to one California Court of Appeal, landlords and property managers may not recover from the State of California attorney fees incurred by the landlord or property manager to defend against a frivolous housing discrimination lawsuit brought by California’s Department of Fair Employment and Housing (DFEJH). DFEH v. Mayr, H034935 (Sixth District, February 9, 2011). A copy of the court’s opinion in Mayr is available without charge at: http://earlelaw.com/news_real_estate.html.

Even though there is a long-standing principle in American law that one is innocent until proven guilty, the defacto assumption when the government brings a housing discrimination claim against a residential landlord orproperty manager seems to be that the landlord or property manager is [of course] guilty as charged. This defacto presumption pervades popular culture and, apparently (and more troubling), is also ingrained in the institutional thought of the California legislature and at least one California state appellate court.

In order to protect yourself, to the extent possible, from having to defend against frivolous housing discrimination claims (as well as against claims which may arise from unintentional violation of housing law) best practices suggest that landlords and property managers have an ongoing relationship with a real estate attorney whom they can regularly confer with, as needed. To assist landlords and property managers in this regard, Earle Law Offices offers the LAW (Lawyer Available Whenver) Plan, which provides a cost-effective means of obtaining legal advice when such advice is most-needed: before a legal problem arises, or as soon thereafter as possible. For details, please visit: http://earlelaw.com/lawplan.html.

*Anthony F. Earle, Esquire is a California attorney and real estate broker who maintains a practice in the Silicon Valley area of northern California. He can be reached at: anthony.earle@earlelaw.com. This article is intended for information and educational purposes only, and is not intended to constitute legal advice.