Highland Springs Conference & Training Ctr. v. City of Banning

• Citation: 199 Cal.Rptr.3d 226,244 Cal.App.4th 267
• Decision Date: 26 January 2016
• Docket Number: E060915
• Court: California Court of Appeals
• Parties: HIGHLAND SPRINGS CONFERENCE AND TRAINING CENTER et al., Plaintiffs and Appellants, v. CITY OF BANNING, Defendant and Respondent; SCC Acquisitions, Inc. et al., Real Parties in Interest and Respondents.

244 Cal.App.4th 267

199 Cal.Rptr.3d 226

HIGHLAND SPRINGS CONFERENCE AND TRAINING CENTER et al., Plaintiffs and Appellants,

v.CITY OF BANNING, Defendant and Respondent;

SCC Acquisitions, Inc. et al., Real Parties in Interest and Respondents.

E060915

Court of Appeal, Fourth District, Division 2, California.

Filed January 26, 2016

Chatten–Brown & Carstens, Joshua R. Chatten–Brown, Jan Chatten–Brown, and Douglas P. Carstens, Santa Monica, for Plaintiff and Appellant Highland Springs Conference and Training Center.

Leibold McClendon & Mann and John G. McClendon, Irvine, for Plaintiff and Appellant Banning Bench Community of Interest Association.

Aleshire & Wynder, Anthony R. Taylor, Irvine, and James J. McGrath for Defendant and Respondent.

Voss, Cook & Thel, Francis T. Donohue III, Newport Beach; Bruce V. Cook and Andrew P. Cook, Irvine, for Real Party in Interest and Respondent SCC Acquisitions, Inc.

No appearance for Real Party in Interest and Respondent SCC/Black Bench, LLC.

OPINION

KING

, J.

I. INTRODUCTION

In these consolidated California Environmental Quality Act (CEQA) actions, several plaintiffs, including plaintiffs and appellants Highland Springs Conference and Training Center (Highland Springs) and Banning Bench Community of Interest Association (Banning Bench) successfully challenged the certification by defendant and respondent, City of Banning (the City), of an environmental impact report (EIR) for a 1,500–acre real estate development project known as the Black Bench project. (Pub. Resources Code, § 21000 et seq.

) In their writ petitions, filed in November 2006, Highland Springs and Banning Bench named "SCC/Black Bench, LLC, dba SunCal Companies" (SCC/BB), as the only real party in interest. (Pub. Resources Code, § 21167.6.5.)

SCC/BB appealed the April 2008 judgments entered in favor of plaintiffs on their writ petitions, but its appeal was dismissed in September 2008 after it failed to deposit the costs of preparing the record on appeal. (Cal. Rules of Court, rule 8.140

.) By that time, SCC/BB was in default on two purchase money loans for the Black Bench property, and by the end of 2008 SCC/BB lost the property in foreclosure.

In August 2008, Highland Springs and Banning Bench, along with two other plaintiffs, jointly moved to recover their attorney fees and costs incurred in the CEQA litigation from SCC/BB. In October 2008, the trial court awarded the moving plaintiffs over $1 million in attorney fees and costs. (

Code Civ. Proc., § 1021.5

.)¹ SCC/BB did not oppose the motion. In October 2012, the four plaintiffs, including Highland Springs and Banning Bench, jointly moved to amend the judgments to add SCC Acquisitions, Inc. (SCCA) as an additional judgment debtor (§ 187), and make SCCA liable for paying the attorney fees and costs awards. The plaintiffs claimed that SCCA was the alter ego of SCC/BB, it would be unjust not to hold SCCA liable for paying the attorney fees and costs awards, and plaintiffs did not discover until 2012 that SCC/BB had been dissolved in 2010.

Following initial and supplemental briefing, three hearings, and several rounds of evidentiary submissions, the trial court, relying on Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 47–48, 163 Cal.Rptr. 377

(Alexander ), denied the motion to amend the judgments on the sole basis that plaintiffs failed to act with due diligence in bringing the motion. The court reasoned plaintiffs knew, or reasonably should have known, of SCCA's alleged alter ego relationship to SCC/BB long before plaintiffs moved to amend the judgments in October 2012. Still, the court indicated the equities favored granting the motion and the court "likely" would have granted it had it been filed earlier.

In this appeal, Highland Springs and Banning Bench claim the motion to amend their judgments was erroneously denied. They claim SCCA failed to demonstrate that it was prejudiced by plaintiffs' over four-year delay in filing the motion; they presented ample evidence that SCCA controlled the CEQA litigation against SCC/BB; SCCA was the alter ego of SCC/BB, and it would be unjust not to hold SCCA liable for paying their attorney fees and costs awards against SCC/BB.

We agree the motion to amend was erroneously denied based solely on plaintiffs' delay in filing the motion, because SCCA made an insufficient evidentiary showing that it was prejudiced by the delay. SCCA did not meet its burden of proving the motion was barred by laches. (Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624, 166 Cal.Rptr. 826, 614 P.2d 258

(Miller ).) We therefore reverse the order denying the motion and remand the matter to the trial court for further proceedings. On remand, the trial court must determine whether the judgments in favor of Highland Springs and Banning Bench should be amended to add SCCA as an additional judgment debtor.

II. BACKGROUND

A. The CEQA Litigation and the Attorney Fees and Costs Awards

In 2006, the City certified an EIR, approved a general plan amendment and a specific plan, and took other actions in approving the development of an approximate 1,500–acre property known as the Black Bench Ranch, located in the City and just south of the San Bernardino National Forest. In November 2006, Highland Springs, Banning Bench, and three other plaintiffs filed four separate CEQA actions challenging the City's certification of the EIR and other project approvals. The actions were later consolidated, apparently for all purposes.

In April 2008, the trial court issued judgments and peremptory writs of mandate, setting aside and vacating the City's certification of the EIR and related project approvals. As noted, SCC/BB appealed, but its appeal was dismissed in September 2008 after it failed to deposit the costs of preparing the record on appeal. (Cal. Rules of Court, rule 8.140

.) The remittitur in SCC/BB's appeal was issued in November 2008.

Meanwhile, in August 2008, Highland Springs, Banning Bench, and two of the three other plaintiffs, namely the two Cherry Valley entities,² filed motions to recover, solely from SCC/BB, their attorney fees and costs incurred in challenging the EIR and related project approvals. SCC/BB did not oppose the motion, and the City joined the motion.

By September 2008, it was apparent to all of the parties to the CEQA litigation that SCC/BB was having financial difficulties. In a notice of nonopposition to the attorney fees motions, filed in September 2008, the City represented that, while the City was engaged in discussions with SCC/BB to resolve the matter of SCC/BB's contractual obligation to reimburse the City for the City's attorney fees and costs incurred in the CEQA litigation, "[i ] t became readily apparent ... that the Real Party [SCC/BB ] was in financial distress. Real Party defaulted on both its loans for the property where the proposed project was to [be ] built, and on its agreement to defend and indemnify the City in this litigation. " (Italics added.) The City explained it was supporting plaintiffs' motion for attorney fees and costs because a settlement agreement between the City and plaintiffs allowed the City to be reimbursed by Banning Bench for certain attorney fees and costs the City paid to Banning Bench, providing that Banning Bench was able to recover those amounts from SCC/BB.

In October 2008, the trial court awarded $1,081,545.97 in attorney fees to the four moving plaintiffs and against SCC/BB: Highland Springs was awarded $412,819.96; Banning Bench was awarded $288,920.01; and the two Cherry Valley entities were awarded $379,806.

B. The Motion to Amend the Judgments

In October 2012, Highland Springs, Banning Bench, and the two Cherry Valley entities moved to add SCCA to the judgments as an additional judgment debtor and render SCCA liable for paying their attorney fees and costs awards. (§ 187.) By October 2012, no part of the awards had been paid. The trial court denied the motion and later denied plaintiffs' motion for a new trial. Only Highland Springs and Banning Bench appealed. (§ 904.1, subd. (a)(2).)

In their motion to amend, plaintiffs claimed SCCA was the alter ego of SCC/BB and it would be unjust not to hold SCCA liable for paying plaintiffs' attorney fees and costs awards. Plaintiffs presented evidence that both SCCA and SCC/BB conducted business under the names "SunCal" and "The SunCal Companies," in connection with procuring the Black Bench property, obtaining the project approvals, and in the CEQA litigation. Plaintiffs adduced a fictitious business name statement, recorded in Orange County on June 1, 2006, showing that "SCC Acquisitions, Inc.," or SCCA, conducted business as "SunCal Companies," and claimed that "[r]eview of documents regarding the history of the project" showed that "SunCal" was the entity that applied to the City to develop the property; "SunCal" was identified as the property owner in the City's notice of scoping meeting preceding the City's preparation of the EIR; and reports prepared for the EIR were prepared for "SunCal," not SCC/BB.

Plaintiffs also adduced letters and correspondence indicating that SunCal or SCCA was involved in negotiating the project approvals with the City and in attempting to settle the matter of plaintiffs' attorney fees claims and awards. For example, in September 2006, Edward J. Casey, counsel for SCCA and the attorney of record in the CEQA litigation for SCC/BB, wrote a letter to the City, " ‘on behalf of [the] Suncal Companies ("Suncal"),’ " whom Mr. Casey identified as " ‘the project applicant for the Black Bench Specific Plan,’ " urging the city council to approve the project. Plaintiffs presented additional evidence that SCC/BB and SCCA had the same chief executive officer, agent for service of process, and principal executive office. Over 70 other business entities, many with "SCC" in their names, also had the same office address and agent for service of process as SCCA and SCC/BB.

Plaintiffs argued that common representatives of SCCA and SCC/BB, including...