Highland Springs Conference etc. v. City of Banning

In consolidated California Environmental Quality Act (CEQA) actions, several plaintiffs, including Highland Springs Conference and Training Center (Highland Springs) and Banning Bench Community of Interest Association (Banning Bench) successfully challenged the certification by defendant-respondent, City of Banning of an environmental impact report (EIR) for a 1,500-acre real estate development project known as the Black Bench project. 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. 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. 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. 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, 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 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 claimed the motion to amend their judgments was erroneously denied. After review, the Court of Appeal agreed 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. The Court therefore reversed 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. View "Highland Springs Conference etc. v. City of Banning" on Justia Law