**Exhibit10.1**

**FIFTHEXTENSION AND MODIFICATIONOFEMPLOYMENT AGREEMENT**

THIS FIFTH EXTENSION AND MODIFICATION OF EMPLOYMENT AGREEMENT (the “Extension”)is entered into as of April 30, 2007 by and between California CoastalCommunities, Inc., a Delaware corporation (“Employer”), and RAYMOND J. PACINI (“Executive”).

WITNESSETH:

WHEREAS, Executive and Employer have entered into an EmploymentAgreement dated as of May 1, 1998, an Extension and Modification ofEmployment Agreement dated December 7, 1999,  a Second Extension and Modification ofEmployment Agreement dated April 30, 2001, a Third Extension andModification of Employment Agreement dated March 17, 2003, and a FourthExtension and Modification of Employment Agreement dated March 14, 2005 (collectively,the “Employment Agreement”), through which Executive has provided variousexecutive capacities to Employer and Employer has obtained various executiveservices by Executive; and

WHEREAS, Employer desires to obtain the benefit of continued service fromExecutive by extending the Employment Agreement, and Executive desires torender continued services to Employer by extending the Employment Agreementpursuant to the terms and conditions of this Extension;

NOW, THEREFORE, in consideration of the foregoing recitals and themutual promises and covenants herein contained, the parties agree as follows:

# SECTION 1.           CONTINUING EFFECTIVENESS OFEMPLOYMENT AGREEMENT.  Except to theextent of any modification made pursuant to the terms of this Extension, theEmployment Agreement shall continue to remain in full force and effectfollowing the date hereof.

# SECTION 2.           EXTENSION OF TERM.  Employer and Executive hereby agree to extendthe term of the Employment Agreement until April 30, 2009.

# SECTION 3.           BASE SALARY.  Effective January 1, 2005 and until theexpiration of the term set forth in Section 2 above, Employer agrees topay Executive a base salary of at least Three Hundred and Fifty ThousandDollars ($350,000) per year in semi-monthly installments on the same datesthe other senior officers of Employer are paid.

### (i)            PaidTime Off.  Executive shall beentitled to five (5) weeks of paid time off (“PTO”) each twelve-month period,in accordance with the terms and provisions set forth in that certainHearthside Homes/California Coastal Communities Employee Handbook Addendum

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### dated December 4, 2006 (the “Addendum”) a copy of which has beendelivered to Executive; and Executive hereby represents and warrants that (i)the Addendum has been fully read and understood, and (ii) Executive agrees tobe bound by the Addendum with respect to all matters of PTO.

## SECTION 4.  OUTSIDE CONSULTING.  Subject to the prior approval of theCompensation Committee of Employer’s Board of Directors, Executive may bepermitted to act as an outside consultant or director to companies andbusinesses that are not in competition with Employer.   There shall be no reduction in thecompensation to be paid to Executive under the Employment Agreement, providedthat the consulting services rendered by Executive do not have a materialadverse effect on Executive’s ability to render services to Employer under theEmployment Agreement.

IN WITNESS WHEREOF, the parties have executed thisExtension as of the date first above written.
|   | “EMPLOYER”                  |
|--------|---------------------------------------|
|   |                                  |
|   | CALIFORNIA  COASTAL COMMUNITIES, INC. |
|   |                                  |
|   | By                                    | /s/ SANDRA G. SCIUTTO |   |
|   |                                  | Sandra G.  Sciutto |
|   |                                  | Chief Financial  Officer |
|   |                                  |
|   | “EXECUTIVE”                 |
|   |                                  |
|   |                                  | /s/ RAYMOND J. PACINI |   |
|   |                                  | Raymond J. Pacini |

 

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