Latest 8 Cases This Week: Castillo v. United States (Fed. Cir.), Citizens for South Bay Coastal Access v. City of San Diego (Cal. Ct. App.), ...

The Clients’ Waiver of Their Rights Under Regulation BI of the Securities and Exchange Commission

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

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Castillo v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 19-1158

Opinion Date: February 20, 2020

Judge: Richard Gary Taranto

Areas of Law: Constitutional Law, Real Estate & Property Law, Zoning, Planning & Land Use

The plaintiffs own land abutting a railroad right-of-way that was long ago granted to, and for decades used by, the Railway in Dade County, Florida. When the Railway abandoned the right-of-way for rail use, full rights to the underlying land, unencumbered by the easement, would have reverted to whoever owned such rights, had there been no overriding governmental action. However, the Railway successfully petitioned the Surface Transportation Board to have the railroad corridor turned into a recreational trail under the National Trails System Act Amendments, 16 U.S.C. 1247(d). The landowners sued, alleging that the agency’s conversion of the right-of-way into a recreational trail constituted a taking of their rights in the corridor land abutting their properties and that the government must pay just compensation for that taking. To establish their ownership of the corridor land, the plaintiffs relied on Florida's “centerline presumption,” which provides that when a road or other corridor forms the boundary of a landowner’s parcel, that landowner owns the fee interest in the abutting corridor land up to the corridor’s centerline, absent clear evidence to the contrary. The trial court ruled in favor of the government. The Federal Circuit reversed. The centerline presumption applies to railroad rights-of-way and the plats at issue do not clearly express the intent required to avoid application of the centerline presumption.

Citizens for South Bay Coastal Access v. City of San Diego

Court: California Courts of Appeal

Docket: D075387(Fourth Appellate District)

Opinion Date: February 18, 2020

Judge: Joan Irion

Areas of Law: Government & Administrative Law, Real Estate & Property Law, Zoning, Planning & Land Use

The City of San Diego (the City) appealed a judgment in a lawsuit filed by Citizens for South Bay Coastal Access (Plaintiff), which challenged the City's issuance of a conditional use permit allowing it to convert a motel that it recently purchased into a transitional housing facility for homeless misdemeanor offenders. Specifically, the City contended the trial court erred by ruling that the City was required to obtain a coastal development permit for the project because the motel was located in the Coastal Overlay Zone as defined in the City's municipal code. After review, the Court of Appeal concluded the trial court erred in concluding that a coastal development permit was required under state law regulations promulgated by the California Coastal Commission (the Commission). Because the Commission certified the City's local coastal program, those provisions applied here rather than the Commission's regulations. "Under the City's local coastal program, the project is exempt from the requirement to obtain a coastal development permit because it involves an improvement to an existing structure, and no exceptions to the existing- structure exemption are applicable." Accordingly, the Court reversed the judgment.

Lateef v. City of Madera

Court: California Courts of Appeal

Docket: F076227(Fifth Appellate District)

Opinion Date: February 14, 2020

Judge: Snauffer

Areas of Law: Government & Administrative Law, Zoning, Planning & Land Use

Junaid Lateef appealed a judgment entered in favor of the City of Madera (city) and the Madera City Council (city council) (collectively, respondents), which denied his petition for administrative mandamus and requests for declaratory and injunctive relief. At issue was the meaning of Madera Municipal Code section 10-3.1310(E), which set forth the minimum number of council votes required to overturn the Madera Planning Commission’s (commission) denial of an application for a conditional use permit: “A five-sevenths vote of the whole of the Council shall be required to grant, in whole or in part, any appealed application denied by the Commission.” Lateef appealed the denial of his application to the seven-member city council, which voted four-to-one to grant his appeal; however, one councilmember recused himself and another council seat was vacant. The city council denied Lateef’s appeal, ruling that he needed five votes (five-sevenths times the total membership of the council) to prevail. Arguing to the Court of Appeal, Lateef contended the city council was required to grant his appeal because the ordinance requires a five-sevenths vote of those councilmembers present and voting, and he received five-sevenths of the five votes that were cast, namely four votes. He also contended he was denied a fair trial because the recused councilmember and vacant seat were included as councilmembers when determining the number of votes needed to grant his appeal. Finding no merit to Lateef’s contentions, the Court of Appeal affirmed.

Mook v. Bd. of Cty. Comm’rs

Court: Colorado Supreme Court

Citation: 2020 CO 12

Opinion Date: February 18, 2020

Judge: William W. Hood, III

Areas of Law: Real Estate & Property Law, Tax Law, Zoning, Planning & Land Use

The common issue from three property tax cases presented to the Colorado Supreme Court for review centered on what constituted "residential land" under 39-1-102(14.4)(a), C.R.S. (2019). In Colorado, residential land was taxed as a lower rate than vacant land. The Mooks owned two parcels of land in Summit County, Colorado. One parcel contained the Mooks’ house, classified as residential land. The other parcel was undeveloped, and it was classified as vacant land (“the subject parcel”). The parties agreed that these two parcels didn't physically touch. The Homeowners’ Association (“HOA”) owned an approximately seventeen-foot-wide strip of land that completely separated the two properties (that strip provided other members of the HOA access to adjacent public land). The Mooks petitioned the Board of County Commissioners of Summit County (“BCC”) to reclassify the subject parcel from vacant land to residential land. The BCC denied their petition, and the Mooks appealed to the Board of Assessment Appeals (“BAA”). The BAA upheld the BCC’s decision. Notably, the BAA determined that contiguous parcels are those that are “physically connected.” Here, the residential and subject parcels didn't physically touch, and the BAA “was not persuaded that the use of the subject lot in conjunction with the residential lot was sufficient to defeat the plain meaning of contiguity.” Thus, the BAA concluded that the two parcels aren’t contiguous, and it denied the Mooks’ appeal. Taking the three appeals together, the Colorado Supreme Court concluded: (1) only parcels of land that physically touch qualify as “contiguous parcels of land;” (2) a residential improvement isn’t needed on each contiguous and commonly owned parcel of land and a landowner can satisfy the “used as a unit” requirement by using multiple parcels of land together as a collective unit of residential property; and (3) county records dictate whether parcels are held under “common ownership.”

Ziegler v. Park Cty. Bd. of Cty. Comm'rs

Court: Colorado Supreme Court

Citation: 2020 CO 13

Opinion Date: February 18, 2020

Judge: William W. Hood, III

Areas of Law: Real Estate & Property Law, Tax Law, Zoning, Planning & Land Use

This case asked the Colorado Supreme Court to construe the definition of residential land in section 39-1-102(14.4)(a), C.R.S. (2019). Stephen Ziegler (through the Stephen J. Ziegler Revocable Trust Dated July 17, 2008) owned four parcels of land in Park County, Colorado. One parcel was classified as “residential land” under section 39-1-102(14.4)(a) and taxed accordingly. However, the other three parcels remained “vacant land” and are thus taxed at a higher rate. Ziegler sought to reclassify those vacant parcels as residential land to receive a corresponding tax abatement. As it concluded in Mook v. Summit Cty. Bd. of Cty. Comm'rs, 2020 CO 12 (2020): (1) a residential improvement isn’t needed on each contiguous and commonly owned parcel of land for that parcel to be “used as a unit;” and (2) a landowner can satisfy the “used as a unit” requirement by using multiple parcels of land together as a collective unit of residential property. The BAA here applied the same legal standards that the Court expressly disavowed in Mook. Thus, it reversed the BAA’s order and remanded for the BAA to apply the standards articulated in this case to determine whether the vacant parcels qualified as “residential land.”

DNREC v. McGinnis Auto & Mobile Home Salvage, LLC

Court: Delaware Supreme Court

Docket: 139, 2019

Opinion Date: February 20, 2020

Judge: Seitz

Areas of Law: Environmental Law, Government & Administrative Law, Zoning, Planning & Land Use

McGinnis Auto & Mobile Home Salvage, LLC salvaged discarded and dilapidated mobile homes on its property in Kent County, Delaware. According to the Department of Natural Resources and Environmental Control (DNREC), a large and unsightly waste pile, possibly contaminated with asbestos, had accumulated over time. DNREC cited McGinnis for environmental violations and for operating a reclamation facility without a permit. DNREC gave McGinnis a chance to bring the property into compliance, but McGinnis failed to do so. DNREC responded by issuing a cease and desist order requiring McGinnis to remove the waste pile from the property in an environmentally responsible manner. McGinnis appealed the order to the Environmental Appeals Board, arguing that DNREC could order the illegal activity to stop, but could not order McGinnis to take affirmative action to remove the waste pile from the property. The EAB agreed with McGinnis, finding that the order exceeded the scope of its authority. The Superior Court affirmed the EAB’s decision, finding that DNREC did not have the authority under its cease and desist power to require McGinnis to remove the waste pile, direct how the waste had to be removed, or demand documentation. On appeal, DNREC contended that the EAB and Superior Court took too narrow of a view of DNREC’s cease and desist authority. The Delaware Supreme Court agreed: "it follows that the only way to cease and desist from the violation is to remove the contaminated debris from the site. ... the Secretary can require a violator to cease and desist from continuing the illegal storage of solid waste. If the violator ignores the Secretary’s order, Section 6005 provides the possible remedies for a violation of 'any order of the Secretary.' The Secretary may impose monetary penalties. The Secretary may seek injunctive relief in the Court of Chancery. And, in his discretion, the Secretary may opt for conciliation. None of the possible remedies is mandatory or inconsistent with the Secretary’s authority to enter a cease and desist order."

Bluestein v. Town of Sullivans Island

Court: South Carolina Supreme Court

Docket: 27947

Opinion Date: February 19, 2020

Judge: John W. Kittredge

Areas of Law: Civil Procedure, Real Estate & Property Law, Zoning, Planning & Land Use

This case concerned accreting land along the South Carolina coast that owned by the Town of Sullivan. Petitioners Nathan and Ettaleah Bluestein and Theodore and Karen Albenesius (collectively, Petitioners) bought property in the Town that abutted the accreting land. Petitioners' properties were once considered oceanfront lots only a short distance from the beach, but due to accretion, the properties were now a substantial distance away. The accreting land was subject to a 1991 deed, which set forth certain rights and responsibilities respecting the condition of the property and the Town's duties concerning upkeep of the land. Petitioners were third party beneficiaries of the 1991 deed. Petitioners argued the 1991 deed mandated the Town keep the vegetation on the land in the same condition as existed in 1991, particularly as to the height of shrubs and vegetation. Conversely, the Town contended the 1991 deed granted it unfettered discretion to allow unchecked growth of the vegetation on the accreting land. The South Carolina Supreme Court determined all parties cherrypicked language from the 1991 deed to support their respective interpretations of the deed. But contrary to the holding of the court of appeals and the trial court's findings, the Supreme Court held the deed was “far from unambiguous;” because the 1991 deed is ambiguous in terms of the Town's maintenance responsibilities, the court of appeals erred in affirming the entry of summary judgment for the Town. As a result, the matter was remanded to the trial court for further proceedings.

Preservation Society v. SCDHEC

Court: South Carolina Supreme Court

Docket: 27949

Opinion Date: February 19, 2020

Judge: James

Areas of Law: Civil Procedure, Environmental Law, Government & Administrative Law, Zoning, Planning & Land Use

Petitioners, consisting of several citizens groups and neighborhood associations, sought a contested case hearing in the administrative law court (ALC) to challenge the propriety of state environmental authorizations issued by the South Carolina Department of Health and Environmental Control (DHEC) for a project relocating and expanding the passenger cruise facility at the Union Pier Terminal (the Terminal) in downtown Charleston. Petitioners contended they had standing to seek this hearing as "affected persons" under section 44-1- 60(G) of the South Carolina Code (2018). The ALC concluded Petitioners did not have standing and granted summary judgment to Respondents. The ALC terminated discovery and also sanctioned Petitioners for requesting a remand to the DHEC Board. The court of appeals affirmed. The South Carolina Supreme Court, however, concluded Petitioners did have standing, and thus reversed the grant of summary judgment and remanded the matter to the ALC for a contested case hearing.