On November 3, 2014, the Third District California Court of Appeal announced official publication of its decision in a case that should serve as a cautionary tale for private real estate developers throughout California. Building on California legal precedent that primarily dates to the 1960’s and earlier, the Court validated the concept that property owners should not be forced to accept an invasion of their property rights simply to “serve the convenience or necessities of another private party.”
A Stoel Rives legal team led by partners Mike Brown and Tami Boeck represented the Aspen Grove Condominium Association (Aspen Grove), a 180 unit condominium development, that prevailed at trial and in the appellate decision. Stoel Rives partner Christopher Pooser also provided significant assistance in the briefing on the winning appeal.
The decision in Aspen Grove Condominium Association v. CNL Income Northstar LLC centered on the property impacts of a water retention basin that was dug in 2004 as part of the $200 million expansion project for Northstar Village, a Lake Tahoe ski resort. Construction of the basin was considered by the then developer, East West Partners, to be more “optimal” than the original design submitted in the Draft EIR that was located downhill and away from Aspen Grove. The expansion project changed and expanded the storm water drainage system that diverted storm and snow runoff from approximately 149 acres of Northstar Village developed property to a new location directly above Aspen Grove. Water from the retention basin began to overflow and seep onto Aspen Grove’s property starting immediately following construction in December 2004 and continued thereafter despite multiple demands by Aspen Grove, and ineffective remediation efforts by the Northstar Village developers, owner and operator (“Northstar Village”).
In 2008, Northstar Village refused to implement any further remediation or remove the drainage basin, stating to homeowners that “if this [latest remediation effort] doesn’t work then sue us.” In November 2008, the Aspen Grove homeowners - consisting mainly of retirees - did just that, seeking injunctive and equitable relief along with claims for damages.
As documented during the 14 court day phase I trial for injunctive relief and subsequent court decision, the ongoing effects of extensive water seepage from the retention basin on the Aspen Grove property and infrastructure have been severe. Hundreds of trees, many between 80 and 100 years old, died as a result of the elevated water table and non-stop flooding. Parking lots crumbled, housing foundations eroded, and weeds and grasses have overgrown the property where previously a native fir and aspen forest habitat had existed. In the bifurcated trial, the trial court granted Aspen Grove’s request for a permanent injunction requiring the Northstar Village owner and operator to remove the improperly placed retention basin, concluding that “continuing water seepage and invasion of [Aspen Grove’s] down gradient real property from the basin and resulting damages” established the required irreparable harm standard.
The Court of Appeal upheld the trial court’s grant of the permanent injunction. In doing so, it rejected Northstar Village’s suggestion that the “benefits of the pond to Northstar Village outweigh the toll on Aspen Grove” stating bluntly that “whatever its benefits, the retention basin is located in the wrong place.”
With the trial court’s injunction upheld, Northstar Village must remove the retention basin in its entirety. The trial now moves to a second phase, with a jury to decide on Aspen Grove’s damage claims resulting from the substantial water intrusion caused by the Northstar Village retention basin since 2004.