The Real News

January, 2018
SB 2 Implementation Challenges

We're hearing lots of interesting stories about implementation of SB 2.

We've got documents from all 58 Counties available on our website as well as Coversheets for the Counties that have produced them to date.  To access our SB 2 info please go to the SB 2 page on our Website at:

New PACE Licensing and Regulatory Program

On October 4, 2017, California Governor Jerry Brown signed AB 1284.  This bill changes the name of the California Finance Lenders Law to the California Financing Law.  Effective January 01, 2019, this bill also enables the Department of Business Oversight (DBO) to license Property Assessed Clean Energy (PACE) program administrators and to regulate the PACE industry.

A PACE "program administrator" is defined as a person administering a PACE program on behalf of a public agency.  The PACE programs provide financing for energy-efficient home improvements, such as a rebate for replacing your old (still working) refrigerator with a new, energy-efficient one.  The new law sets requirements for the licensing of PACE program administrators.  PACE funding is financed through property tax assessments, which was authorized by specified laws.

The DBO held a workshop with interested persons on December 01, 2017.  The workshop's goal was to gather information on needed PACE regulations as well as effective oversight of the PACE program administrators. 

The DBO is in the process of drafting regulations in order to implement the new law.  The DBO is seeking comments from interested parties prior to initiating a formal rulemaking action with the Office of Administrative Law.  If interested, you can find the Invitation for Comments notice here .  Please note, the deadline to submit comments is January 5, 2018. You can submit comments to .
Case of the Month
TDY Holdings, LLC et al. v. United States of America et al.
The Comprehensive Environmental Response Compensation and Liability Act ("CERCLA") imposes strict liability on potentially responsible parties ("PRP") for the cleanup costs of an environmental hazard.  Plaintiffs-Appellants TDY Holdings, LLC, TDY Industries, LLC, and its predecessor, the Ryan Aeronautical Company (collectively, "TDY"), operated a forty-four acre aeronautical manufacturing facility in San Diego, California, from 1939 to 1999.  During operations, TDY's business for this location was 90-99 percent from military contracts with the United States Government.  During the six decades of manufacturing operations, certain chemical substances were released.  This contaminated both the soil and the groundwater in and around the plant.  Under CERCLA, TDY was facing substantial remediation expenses.  TDY turned to the U.S. Government to pay for a large portion of the cost.  The US Government denied the claims.  This lead TDY to sue the U.S. Government.

In 2007, TDY filed a complaint under CERCLA seeking the U.S. Government pay its equitable share of the cleanup costs.  After a twelve-day bench trial, the district court granted judgment favoring the U.S. Government.  The district court allocated 100% of the costs to TDY and zero percent to the U.S. Government.  Since this court decision left TDY still holding the total bill for remediation, TDY appealed the decision.

In 1939, the Ryan Aeronautical Company, which later became known as TDY, opened the manufacturing facility near the San Diego Airport.  During World War II, the facility manufactured aircraft and aircraft parts to support the war effort.  In more recent times, the facility was tasked with manufacturing aeronautical products including drones, Apache helicopter components, and avionics systems for the U.S. military.  The facility was closed in 1999 after Northrop Grumman purchased the facility.  The assets and operations were moved to a different location and the factory was shut down.

During the 60 years of operations, three hazardous substances were found to be released, contaminating the soil and groundwater (1. chromium compounds, 2. chlorinated solvents, and 3. polychlorinated biphenyls (PCBs)).  Some of the military contracts required the use of the chromium compounds and/or the chlorinated solvents, but not the PCBs.  The substances were not listed as "hazardous substances", until declared as such by the Clean Water Act and other environmental laws passed during the 1970s.  All of these elements lead to arguments from TDY that the U.S. Government is liable to pay a major portion of the remediation costs, which had already exceeded $11 million in response costs for TDY.

Another factor is that the U.S. Government had paid nearly all the remediation costs for cleaning up other substances released at the facility.  This had laid a foundation that the U.S. Government would work with TDY to clean up all hazardous materials used at the facility over the years.  The fact that the U.S. Government completely denied this claim was a change in recent dealings between TDY and the U.S. Government.

The Appellant Court reversed the Trial Court's decision that TDY is responsible for 100% of the costs.  Initially, this would seem like a big win for TDY.  However, the Appellant Court remanded the case back to the Trial Court for them to determine what the U.S. Government should pay.  The U.S. Government did not operate any equipment nor store any hazardous materials.  So TDY is responsible for the lack of care in properly maintaining and storing the hazardous materials.  The U.S. Government did not require TDY to use PCBs, so again, the U.S. Government is not responsible for any contamination from lack of care in handling the PCBs.  Since the U.S. Government did contractually require TDY to use chromium and chlorinated solvents, the Trial Court has to allocate some portion of the clean-up costs to the U.S. Government.  This doesn't need to be a 50% allocation; the Trial Court only needs to arrive at an equitable cost allocation.
Katy Perry Wins Lawsuit Against Convent

Katy Perry attempted to purchase a convent located in the Los Feliz area of Los Angeles.  There are reportedly only five remaining members of The Sisters of the Most Holy and Immaculate Heart of the Blessed Virgin Mary order.  They decided to sell their convent to Perry, who in turn wanted to turn it into a home. 

Before Perry could complete the sale, a real estate developer named Dana Hollister convinced the nuns of the convent to sell the property to her instead.  However, the archdiocese claimed ownership of the property.  Once that claim was upheld, it opened the doors for both Perry and the archdiocese to sue Hollister.

A jury found that the developer acted with malice to interfere in the sale to Perry.  Perry was awarded $5 million in both actual and punitive damages.  The archdiocese was awarded approximately $10 million.

Upcoming Speaking Engagements

January 6 - Escrow Training Institute - SB2
January 10 - Ventura County Escrow Association Dinner Meeting
January 17 - Downey Association of Realtors
January 20 - Escrow Training Institute - RESPA

February 20 - Riverside County Escrow Association Dinner Meeting




Jennifer Felten, Esq., Principal & Editor
(805) 265-1031 
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