Occidental Land, Inc. v. Superior Court

Citation18 Cal.3d 355,556 P.2d 750,134 Cal.Rptr. 388
CourtUnited States State Supreme Court (California)
Decision Date29 November 1976
Parties, 556 P.2d 750 OCCIDENTAL LAND, INC., Petitioner, v. The SUPERIOR COURT OF ORANGE COUNTY, Respondent; Fred FAHNESTOCK, Real Party in Interest. L.A. 30556. In Bank

O'Melveny & Myers, Allyn O. Kreps, Robert J. White and Matthew T. Kirby, Los Angeles, for petitioner.

No appearance for respondent.

Wenke, Burge & Taylor, John R. Schilling and Daniel Nishiyama, Santa Ana, for real party in interest.

MOSK, Justice.

We consider whether the trial court abused its discretion in ruling that a group of homeowners in a planned development subdivision may maintain a class action against the developer for fraudulently misrepresenting the cost and extent of maintenance of the project. Applying the principles enunciated in Vasquez v. Superior Court (1971) 4 Cal.3d 800, 94 Cal.Rptr. 796, 484 P.2d 964, we conclude that the trial court did not err in certifying the action as a class action.

Plaintiffs 1 are the approximately 155 homeowners in the 'Garden Homes' portion of the Lake Forest subdivision in Orange County, who purchased their homes prior to August 1, 1971. The subdivision was built as a planned development, and defendant developer was required to file a subdivision public report with the state in order to offer the homes for sale. Each purchaser was obligated to read the report and state in writing that he had done so.

The report, filed in 1968, provided that each homeowner must become a member of the community association, that the association would operate and maintain certain common areas and facilities, and that each owner would be initially assessed $12.99 per lot for this maintenance. 2 The report also declared that expenses of operation were difficult to estimate initially and even if accurately estimated tend to increase with inflation and the age of the subdivision. In a separate section of the report entitled 'Restrictions,' maintenance duties of the individual homeowner were set out, including a provision requiring him to assume responsibility for all landscaping on his property and for common areas less than 25 feet in width located between the boundary line of his property and the adjacent street. Maintenance of common areas wider than 25 feet was made the responsibility of the association.

The complaint alleges that defendant developer fraudulently represented to each plaintiff, orally and in writing, that the association would maintain all grass and planted areas within the cul-de-sacs of the development and along the major streets, that the monthly assessment for maintenance of these areas was to be $12.99, that this figure represented the actual proportionate maintenance cost, and that the assessment would be increased only as a result of inflation or age of the facilities. It is alleged that plaintiffs relied upon these representations in purchasing their homes, that defendant knew the actual maintenance cost to be approximately $40 per lot, and that it concealed the true costs by secretly subsidizing the maintenance expenses in order to induce plaintiffs to purchase their property.

The allegations continue: Before 1971 defendant maintained the landscaped areas along major streets and the grass and planted areas within each cul-de-sac. In August 1971 defendant revealed to plaintiffs that it had been subsidizing the maintenance costs, and presented plaintiffs with an option: either they could receive the same level of services for approximately $40--more than three times the former cost--or they could accept sharply reduced services limited to maintenance of the landscaped areas along major streets at a monthly charge of $20, a 55 percent increase over the prior $12.99 fee. Plaintiffs chose the latter alternative. Consequently, in August 1971 plaintiffs' maintenance fees rose to approximately $20 while services were curtailed.

After a hearing in October 1973, the court certified the action as a proper class action. Defendant's motion for reconsideration was denied several days later. Thereafter, discovery was undertaken by both sides, and in March 1975, defendant filed a motion for an order determining that the action is not a proper class action. In May a second trial judge denied the motion without prejudice. Defendant seeks a writ of mandate to overturn the court's order refusing to decertify the case as a class action.

At the outset we face plaintiffs' argument that defendant was guilty of laches in making the motion to decertify almost 18 months after the initial ruling. This contention is without merit.

Our decisions clearly contemplate the possibility of successive motions concerning certification. In Vasquez, we recognized that the courts should retain flexibility in the trial of a class action, for 'even after an initial determination of the propriety of such an action the trial court may discover subsequently that it is not appropriate.' Vasquez authorized the courts to utilize the procedures in rule 23 of the Federal Rules of Civil Procedure, and observed that a certification order issued under rule 23 'may be conditional and may be altered or amended before a decision on the merits.' (Vasquez v. Superior Court, supra, 4 Cal.3d 800, 821, 94 Cal.Rptr. 796, 809, 484 P.2d 964, 977.)

During the months following the court's certification order, defendant conducted discovery proceedings in order to support a motion to decertify the action. It then filed its motion based on evidence not before the court in the prior proceeding. This type of procedure is authorized by Vasquez.

We now turn to the merits of defendant's claim that the court's denial of the motion to decertify constituted an abuse of discretion.

It is well established that the two basic requirements necessary to sustain a class action are the existence of an ascertainable class and a well-defined community of interest in the questions of law and fact involved. (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 704, 63 Cal.Rptr. 724, 433 P.2d 732; Vasquez v. Superior Court, supra, 4 Cal.3d 800, 809, 94 Cal.Rptr. 796, 484 P.2d 964.) It must be shown that a substantial benefit both to the litigants and to the court will result, and the burden of that showing falls on the plaintiff. (City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 460, 115 Cal.Rptr. 797, 525 P.2d 701.) Defendant does not dispute that the class herein is ascertainable. 3 The class consists of all homeowners who purchased homes in a specific development prior to August 1, 1971, and class members can be readily identified by a search of public records. However, defendant contends that uncontroverted evidence indicates that questions of law and fact susceptible to common proof do not predominate.

In reviewing the ruling of the trial court, we are guided by the principle that the showing required for certification of a class is within the trial court's discretion provided that correct criteria are employed. (Petherbridge v. Altadena Fed. Sav. & Loan Assn. (1974) 37 Cal.App.3d 193, 199, 112 Cal.Rptr. 144.) Because defendant does not claim that the trial judge used improper criteria in denying its motion, the sole question is whether the court abused its discretion. We find no such abuse.

If plaintiffs' complaint had relied exclusively on the alleged oral misrepresentations of defendant to each homeowner, defendant's challenge to the certification would be arguably meritorious. Unlike the circumstances in Vasquez, the present record reveals no standardized, rehearsed sales presentation made to prospective buyers. Nor does the complaint assert that a uniform oral presentation was made to each class member. Therefore, based on the information offered to the trial court, it can be contended that the oral representations alone are not susceptible to proof on a class basis.

But the trial court also had before it the written representations contained in the Final Subdivision Public Report provided to each purchaser of a home. As we have seen, each purchaser was required to sign this report before completing the sales transaction with defendant.

Defendant insists that the report does not contain the misrepresentations alleged in the complaint. It first asserts that plaintiffs incorrectly allege the report recites that assessments will be increased only because of inflation or the increased age of the facilities. Defendant emphasizes in this connection that the report refers to the assessment as an 'estimate' and warns that expenses are difficult to determine initially.

The foregoing does not fully and accurately characterize the allegations of the complaint. Although it is true that the complaint avers that defendant had stated only inflation and age would justify an increase, it is also alleged that defendant represented that the $12.99 figure was the 'actual maintenance cost of each lot,' that this representation was false, and that defendant concealed the fact that it subsidized maintenance costs in order to induce plaintiffs to purchase their homes. Despite the qualification in the report as to the accuracy of the $12.99 fee, the report must be construed to mean that this sum reflected an honest estimate of the actual...

To continue reading

Request your trial
100 cases
  • Dean Witter Reynolds, Inc. v. Superior Court
    • United States
    • California Court of Appeals
    • June 22, 1989
    ......Citinational-Buckeye Inv. Co., supra, 72 Cal.App.3d at p. 472, 140 Cal.Rptr. 215, citing Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355, 361, 134 Cal.Rptr. 388, 556 P.2d 750.) .         The propriety of class action treatment ......
  • Hefczyc v. Rady Children's Hospital-San Diego
    • United States
    • California Court of Appeals
    • November 17, 2017
    ...(1974) 12 Cal.3d 447, 459, 115 Cal.Rptr. 797, 525 P.2d 701 ( City of San Jose ); Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355, 360, 134 Cal.Rptr. 388, 556 P.2d 750 ( Occidental Land ); Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470, 174 Cal.Rptr. 515, 629 P.2d 2......
  • Hogya v. Superior Court
    • United States
    • California Court of Appeals
    • November 16, 1977
    ...Blue Chip Stamps v. Superior Court, supra, 18 Cal.3d 381, 391, 134 Cal.Rptr. 393, 556 P.2d 755; Occidental Land, Inc. v. Superior Court, 18 Cal.3d 355, 361, 134 Cal.Rptr. 388, 556 P.2d 750; Petherbridge v. Altadena Fed. Sav. & Loan Assn., 37 Cal.App.3d 193, 199, 112 Cal.Rptr. In apparent re......
  • Green v. Obledo
    • United States
    • United States State Supreme Court (California)
    • March 5, 1981
    ...(Vasquez v. Superior Court (1971) 4 Cal.3d 800, 821, 94 Cal.Rptr. 796, 484 P.2d 964; accord, Occidental Land, Inc. v. Superior Court (1976) 18 Cal.3d 355, 360, 134 Cal.Rptr. 388, 556 P.2d 750; City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 453, 115 Cal.Rptr. 797, 525 P.2d 701; La ......
  • Request a trial to view additional results
1 firm's commentaries
  • Sotelo Decision Is Packed With Class Action Goodness
    • United States
    • Mondaq United States
    • July 11, 2012
    ...section stating that they were being treated as ICs rather than employees. The Court contrasted Occidental Land, Inc. v. Superior Court 18 Cal. 3d 355 (1976) where everyone had read a fraudulent report and was required to state in writing that he had done so. Again, this seems to raise a hu......
5 books & journal articles
  • Fraud and Deceit
    • United States
    • James Publishing Practical Law Books Discovery Collection. James' Best Materials - Volume 1 Model Interrogatories
    • April 29, 2015
    ...is not actionable in the absence of some relationship giving rise to an affirmative duty of disclosure. See, e.g., Goodman v. Kennedy , 18 Cal.3d 355 (1976); RESTATEMENT OF LAW (SECOND), TORTS, §551. Notwithstanding this general rule, it is now quite settled that when a defendant’s conduct ......
  • Fraud and Deceit
    • United States
    • James Publishing Practical Law Books Archive Model Interrogatories. Volume 2 - 2014 Contents
    • August 14, 2014
    ...is not actionable in the absence of some relationship giving rise to an affirmative duty of disclosure. See, e.g., Goodman v. Kennedy , 18 Cal.3d 355 (1976); restateMent of law (second), torts, §551. Notwithstanding this general rule, it is now quite settled that when a defendant’s *For int......
  • Fraud and Deceit
    • United States
    • James Publishing Practical Law Books Model Interrogatories - Volume 1
    • April 1, 2016
    ...is not actionable in the absence of some relationship giving rise to an affirmative duty of disclosure. See, e.g., Goodman v. Kennedy , 18 Cal.3d 355 (1976); Restatement of Law (Second), Torts, §551. Notwithstanding this general rule, it is now quite settled that when a defendant’s *For int......
  • Using conflict of law analyses to oppose certification of consumer fraud class actions.
    • United States
    • Defense Counsel Journal Vol. 67 No. 2, April 2000
    • April 1, 2000
    ...290 N.W.2d 467, 470 (S.D. 1980). (19.) UTAH CODE ANN. [sections] 13-11-4(2). (20.) Occidental Land Inc. v. Superior Court (Fahnestock), 556 P.2d 750 (Cal. 1976), vacating 125 Cal. Rptr. 101 (Cal. App. 1975). (21.) Forbes v. Par Ten Group, Inc., 394 S.E.2d 643 (N.C. Ct. App. 1990). (22.) Dix......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT