Irvine Partition Lawyers

Irvine is located in Orange County, 45 miles south of Los Angeles and is well known for its beautiful parks, friendly people, and low crime rate. As a growing city, Irvine residents often own and share a property with others. When differences emerge between parties, however, then separation may result and leave in question what one does with the jointly owned property. Partition actions are commonly initiated by people who are intimately close to each other. Irvine Partition Lawyers often find there to be at least four broad categories where joint owners seek partition of real estate;

• Dad-Son house ownership;
• Brother-Sister house ownership;
• Boyfriend-Girlfriend house ownership; and
• 50/50 house ownership

Partitions are lawsuits that split up the property between multiple co-owners so that each can take their equity out of the home. The prototypical partition are between siblings, former romantic partners, or business partners. Both own parts of the property, but only one wants to end the relationship and take their money out. Partitions enable this to happen, usually ending with a court-ordered sale of the subject property. 

Basically, any person who is an owner of real estate can bring a partition action in California. Code of Civil Procedure section 872.710, subdivision (a), states "A partition action may be commenced and maintained by any…owner of…such property." California Civil Code section 872.210 provides a property owner with the "absolute right to partition" absent a valid waiver. Thus, a partition action can be brought by anyone who no longer wants to own jointly owned real estate, other than spousal property.

Generally, a partition action cannot be stopped absent a valid waiver. The instances in which a court has found a valid waiver have generally involved some sort of written contract or adverse possession of property. As such, many parties try to stop a partition action through mediation, or a buy-out agreement. In most instances, the parties to a partition action can benefit from creative lawyering by those who are familiar with the different options for resolving real estate disputes. The best Irvine Partition Lawyer will be able to share information on this process with you.

Under the Partition of Real Property Act, the court instead appoints an appraiser to do the heavy lifting. The new statute states that the court “shall determine the fair market value of the property by ordering an appraisal.” (CCP § 874.316.) The court doesn’t have to be the one to order the appraisal, but this is only if all the co-owners agree to a different method of valuation. 

If, however, an appraisal occurs, it shall be conducted by a disinterested third-party real estate appraiser licensed to determine the fair market value of properties. After the appraisal is conducted, parties may file objections to the value and can even offer additional evidence of value to the court. 

After the valuation is complete, parties will be introduced to the key feature of the new statute: the buy-out option. If a co-owner requests a partition by sale, then the court will notify the other co-owners that they may buy all the interests of the cotenant that requested the partition. (CCP § 874.317.) 

This is, essentially, a right of first refusal. The co-owners who don’t want the property sold now have the option to simply buy out the requesting party. Additionally, the buy-out price will be based on the property’s valuation, determined earlier in the litigation. And if one or more parties exercise the buy-out, then the court will reapportion ownership percentages based on the price paid. A top Irvine Partition lawyer will be familiar with the process.

A partition action can always be resolved informally at any time prior to the first day of trial, or entry of judgment. In fact, in numerous instances, just filing the partition itself leads the other party to seek a resolution between them. We always encourage the parties to talk throughout every phase of the process, as that can lead to the best outcomes for everyone.

From our perspective, every piece of litigation is just part of a larger “negotiation.” In any negotiation, the party who has the best leverage is usually able to achieve a more favorable outcome. The lawsuit provides the client with more leverage because they have more options available to them than without the prospect of a resolution from a judge. As such, all that a lawsuit does is provide one party with more leverage in the negotiation about how to resolve the dispute. For this reason, the best way to informally resolve a dispute is to combine discussions with active litigation, so that the matter can be quickly resolved without unnecessary expense. Throughout the process, our attorneys are in touch with our clients about their options and the prospects for informal resolution through mediation or negotiation. A knowledgeable Irvine Partition Attorney will be able to give you good advice on these issues.

Under the law, a property owner can make a claim for contribution for anything that they have expended for the common benefit of all the parties as it relates to their jointly-owned property. Code of Civil Procedure section 874.410 states that “the court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” For example, the credits can include expenditure in excess of the co-tenants fractional share for necessary repairs and improvements that enhance the value of the property. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035-1036.) Similarly, payments for interest, taxes, and insurance made by any co-tenant could be the subject of a reimbursement claim. (Hunterv. Schultz (1966) 240 Cal.App.2d 24.) An experienced Irvine Partition Attorney will be intimately familiar with these matters.

After settlement of a partition action on the first day of trial, how may the court decide to award attorney fees among the parties to the partition action? The answer largely depends on the particular facts of the case in question. The following paragraphs discuss how such circumstances affected the court’s judgment in Goldenwest (2016) 4434793.

In Goldenwest, (“Plaintiff” or “Respondent”) sued The Frank M. and Gertrude R. Doyle Foundation, Inc. (Defendant Foundation) and Goldenwest/Edinger, LP (Defendant G/E) (collectively the “Defendants” or “Appellants”) for partition of a 185,000-square-foot retail shopping center in Huntington Beach, California known as Goldenwest Plaza (the “Shopping Center”).

As to the Parties’ interests, Plaintiff owned an undivided 7.5 percent ownership interest; Defendant Foundation owned an undivided 37.5 percent ownership interest; Defendant G/E owned an undivided 30 percent ownership interest; and Busby Family, LLC, owned an undivided 25 percent ownership interest in the Shopping Center. Plaintiff, Defendant Foundation, Defendant G/E, and Busby Family, LLC, owned their respective interests in the Shopping Center as tenants in common.

In May 1977, a declaration with a 55-year term (the “Declaration”) was recorded including the provision, “Declarant plans to develop the Shopping Center as an integrated retail sales area for the mutual benefit of all real property in the Shopping Center and, for such purposes, does hereby fix and establish easements, covenants, restrictions, liens and charges (hereinafter collectively referred to as ‘Restrictions’), upon and subject to which all of said Shopping Center, or any part thereof, shall be improved, held, leased, sold and/or conveyed.”

Section 10.10 of the Declaration contained an attorney fees provision stating: “In the event that suit is brought for the enforcement of this Declaration or as a result of any alleged breach thereof, the successful litigant or litigants in such suit ... shall be entitled to be paid reasonable attorneys’ fees by the losing litigant or litigants, and any judgment or decree rendered shall include an award thereof.”

In February 2009, Plaintiff acquired its interest in the Shopping Center for $970,000. Youseff Ibrahim, the Plaintiff’s managing member, managed the Shopping Center for 17 years starting in 1996. F. Patrick Doyle was also an officer of Defendant Foundation and an owner of Defendant G/E. From 2009, the relationship between Ibrahim and Doyle deteriorated due to disagreements about prospective tenants, rental terms, contractors, vendors, remodeling, management, operations, direction, and disposition of the Shopping Center. Doyle and his sister, Molly Glen, accused Ibrahim of dishonesty, mismanagement, and incompetence. In this litigation, Defendants accused Ibrahim of being a sexual predator and an embezzler.

In March 2013, Plaintiff filed a Complaint for partition by sale. Defendants answered the Partition Complaint and filed a Cross-Complaint seeking partition in kind and requesting injunctive relief barring partition by sale. In March 2014, all parties signed a settlement agreement (the Settlement Agreement). Under its terms, Plaintiff sold its 7.5 percent co-tenancy interest in the Shopping Center to Defendants for $2,017,500. The Parties also mutually agreed to a “Release of Claims.” Under Section 2.3 of the Settlement Agreement, however, the parties reserved the right to seek attorney fees.

Subsequently, all parties filed motions to recover attorney fees. Defendants’ motion sought attorney fees based on two grounds: (1) section 10.10 of the Declaration and Civil Code section 1717 (attorney fees incurred in an action on a contract), and (2) Code of Civil Procedure sections 874.010 and 874.040 (attorney fees incurred in a partition action for the common benefit). Defendants requested an award of about $203,000 in attorney fees and about $118,000 in costs and expenses.

The trial court denied all motions for attorney fees. The trial court explained, “The court in its discretion finds there is no prevailing party in this action. The parties reached a mutual, global settlement on the first day of trial on their own accord. No rulings were made by the court and no preliminary issues were decided.”

The trial court also held, “Whether defendants’ motives and actions were for the common benefit of the co-tenants or primarily for their own benefit with potential reciprocal benefits to the co-tenants need not be decided because in balancing the principal litigation objectives achieved by all parties on both sides, this is a case where the court finds the parties’ realization of their litigation objectives is split down the middle.” Defendants appealed.

On appeal before the California Fourth District Court of Appeal, the Defendants argued that the trial court had erred by finding that no party prevailed and denying their request for contract-based attorney fees. Defendants made two arguments based on contract law and the partition statutes. The Court disagreed with both arguments, however, holding that the trial court had not erred.

Regarding Defendants’ argument based on contract law, the Court explained that attorney fees, when authorized by contract, are allowable as costs. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Code of Civil Procedure section 1021 leaves the “measure and mode of compensation” for attorney fees to the agreement of the parties. Civil Code section 1717 governs attorney fee awards for enforcing contracts that include fee-shifting clauses. Section 1717, subdivision (a) awards attorney fees to the “party prevailing on the contract, whether he or she is the party specified in the contract or not.” Section 1717, subdivision (b)(1) defines prevailing party as “the party who recovered greater relief in the action on the contract.”

To recover attorney fees based on contract, a party must (1) prevail (2) in an action (3) on a contract (4) with an attorney fees provision. (Hyduke’s Valley Motors v. Lobel Financial Corp. (2010) 189 Cal.App.4th 430, 435–436.) In determining whether an action is on a contract, the court considers the pleaded theories of recovery, the theories asserted, and the evidence produced at trial, if any, and any additional evidence submitted on the motion. (Id. at p. 435.) As the Court of Appeal had concluded that the trial court did not err by finding that no party prevailed, the Defendants’ argument based on contract law failed.

Regarding Defendants’ argument based on the partition statutes, the Court of Appeal explained that “[t]he costs of partition include: (a) Reasonable attorney’s fees incurred or paid by a party for the common benefit.” (Code Civ. Proc, § 874.010, subd. (a).) Under section 874.040, “the court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.”

In the present case, the trial court had stated, “[w]hether defendants’ motives and actions were for the common benefit of the co-tenants or primarily for their own benefit with potential reciprocal benefits to the co-tenants need not be decided because in balancing the principal litigation objectives achieved by all parties on both sides, this is a case where the court finds the parties’ realization of their litigation objectives is split down the middle.” Thus, the parties had reached a compromise settlement agreement and no party had achieved its main litigation objective.

Because the Settlement Agreement plainly stated that the parties had agreed to give the trial court “the right to decide that no party is entitled to an award of attorneys’ fees,” and because the trial court had validly decided that no party could recover attorney fees pursuant to the Settlement Agreement, the Court of Appeal held that the trial court did not abuse its discretion.

The Court of Appeal affirmed the trial court’s order denying the Defendants’ motion for attorney fees. Respondent recovered costs on appeal.

As we’ve seen, in partition actions, how a court decides to award attorney fees among the parties to the partition action may depend on the specific terms of a settlement agreement as well as the court’s construal of whether such terms were met under various legal theories.

Our knowledgeable attorneys are available to help you navigate the complex web of case law and statutes surrounding partitions. As there are many different ways to waive the right of partition, you may benefit from good legal advice on the topic. If you find yourself contemplating a partition, or if you are faced with defending against a partition lawsuit, then please contact Underwood Law Firm, P.C. for an initial consultation.

Learn more here.