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Alfaro v. Community Housing Improvement System & Planning Assn., Inc.

Court of Appeal of California, Sixth Appellate District

February 19, 2009, Filed



 [**280]  RUSHING, P. J.

I. Introduction

Plaintiffs are the owners of 23 single-family residences 1 in the Moro Cojo inclusionary housing development projects (sometimes “the Projects”) out- [*1364]  side of Castroville in the County of Monterey. With two exceptions, they obtained their grant deeds directly from either defendant Community Housing Improvement System & Planning Association, Inc. (CHISPA), or defendant South County Housing, Inc. (South County), both nonprofit corporations (sometimes collectively defendants). They acquired their properties through a special program aimed at creating affordable housing for households with very low to moderate incomes. In lieu of a cash downpayment, plaintiffs invested time and labor in helping to build their own residences and those of their neighbors. The Projects were developed subject to a deed restriction that requires the properties to remain affordable to buyers with very low to moderate incomes.

In this lawsuit, plaintiffs claim they were surprised to learn of this deed restriction after they had invested their time and labor. They seek either to invalidate it or to recover damages on a variety of theories, including inadequate recording, unreasonable restraint on alienation, fraudulent nondisclosure of the restriction, breach of an implied contract, waiver and estoppel. After the trial court sustained demurrers to three successive complaints, plaintiffs declined leave to amend their remaining cause of action for constructive fraud, and the trial court dismissed the action. For the reasons stated below, we will dismiss the appeal as to the County of Monterey and will reverse the judgment after concluding that plaintiffs' properties are subject to a valid affordable housing deed restriction, that the statutes of limitations  [***5] have lapsed as to claims by 24 plaintiffs of fraudulent and negligent nondisclosure and breach of implied contract mostly against CHISPA, and that the same claims by the other 16 plaintiffs against South County remain viable.

II. The Alleged Facts

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171 Cal. App. 4th 1356 *; 89 Cal. Rptr. 3d 659 **; 2009 Cal. App. LEXIS 379 ***

PATRICIA GONZALEZ ALFARO et al., Plaintiffs and Appellants, v. COMMUNITY HOUSING IMPROVEMENT SYSTEM & PLANNING ASSOCIATION, INC., et al., Defendants and Respondents.

Subsequent History: Review denied by Alfaro (Patricia Gonzalez) v. Community Housing Improvement System & Planning Association, Inc., 2009 Cal. LEXIS 4875 (Cal., May 13, 2009)

Prior History:  [***1] Superior Court of Monterey County, Nos. M75546 & M78858, Robert A. O'Farrell, Judge.

Alfaro v. Community Housing Improvement System & Planning Assn., Inc., 171 Cal. App. 4th 263, 2009 Cal. App. LEXIS 184 (Cal. App. 6th Dist., 2009)


deed restriction, deeds, cause of action, recorded, buyer, properties, disclose, constructive notice, covenant, seller, real property, demurrer, statute of limitations, moderate income, actual knowledge, notice, restrictions, alienation, first amended complaint, nondisclosure, plaintiffs', Projects, terms, preliminary title report, misrepresentations, households, cases, second amended complaint, refinancing, sustain a demurrer

Civil Procedure, Responses, Defenses, Demurrers & Objections, Demurrers, Appeals, Appellate Jurisdiction, Final Judgment Rule, Reviewability of Lower Court Decisions, Preservation for Review, Pleadings, Complaints, Requirements for Complaint, Standards of Review, General Overview, Real Property Law, Encumbrances, Restrictive Covenants, Enforcement of Restrictive Covenants, Subdivisions, Priorities & Recording, Recording Acts, Public Health & Welfare Law, Housing & Public Buildings, Low Income Housing, Creation of Restrictive Covenants, Covenants Running With Land, Business & Corporate Compliance, Contract Formation, Offers, Definite Terms, Deeds, Validity Requirements, Enforceability, Contracts Law, Estoppel, Equitable Estoppel, Elements of Equitable Estoppel, Evidence, Judicial Notice, Adjudicative Facts, Purchase & Sale, Remedies, Duty to Disclose, Torts, Fraud & Misrepresentation, Nondisclosure, Remedies, Heightened Pleading Requirements, Fraud Claims, Contracts of Sale, Enforceability, Fraud & Misrepresentation, Business Torts, Insurance Law, Types of Insurance, Property Insurance, Title Insurance, Governments, Legislation, Statute of Limitations, Pleadings & Proof, Tolling, Discovery Rule, Time Limitations, Statute of Frauds