By Glen Hansen

In Schmidt v. Bank of America (2014) 223 Cal.App.4th 1489, the Court of Appeal for the Fourth Appellate District held that a trial court erred in granting summary judgment against claims by a servient property owner that alleged that the dominant property owner went beyond the scope of the reserved private easement for ingress and egress when it graded the easement and installed subsurface infrastructure on the easement area for the benefit of the adjacent condominium project that was built on the dominant property.

Two adjacent parcels in the City of La Mesa were under common ownership. In 1941, the parcel on the west (referred to by the court as the “Schmidt parcel”) was conveyed with the grantor keeping ownership of the parcel on the east (referred to by the court as the “Aragon parcel”) and reserving an easement over the Schmidt parcel. That reserved easement read: “RESERVING to the grantor, her successors, assigns and/or heirs, the right of ingress and egress for public road purposes over, along and across the Easterly 40 feet thereof.” Through the years, the various deeds that transferred the separate parcels recited that reserved easement.

Eventually, a property developer, Barratt American Incorporated, planned to develop a condominium project on the Aragon parcel in three phases, corresponding to three condominium buildings. The three condominium buildings would share certain common areas and amenities and be governed by a single homeowners association. Barratt financed the project through a revolving credit agreement with Bank of America, as administrative agent for a group of lenders.

Barratt began construction on the project and, within four years, had completed two of the three planned condominium buildings. As part of that development, Barratt graded and paved the easement area for a private roadway, named “Troy Lane,” which facilitates access from El Cajon Boulevard on the north to a parking garage for the project.

At the end of the roadway, on the Schmidt parcel, Barratt erected a locked gate. The gate prevents traffic from using Troy Lane as a throughway between El Cajon Boulevard and the public street on the south. Underneath Troy Lane (within the easement area), Barratt placed or improved subsurface infrastructure for the project, including sewer pipes, storm drains, oil and sand separators, and construction nails designed to hold steep dirt slopes in place.

After phases 1 and 2 of the condominium project was completed, Barratt deeded portions of the Aragon parcel to the Aragon Homeowners Association, reserving the “building envelope” that comprised condominiums to be sold to individual owners. Barratt did not complete phase 3 of the project, and defaulted on its credit agreement with Bank of America. Eventually, Bank of America took title to various portions of the project in two trustee’s sales.

The owners of the Schmidt parcel filed a lawsuit again the Aragon Homeowners’ Association, Bank of America, and others. The Schmidts alleged that construction of the project violated the scope of the easement, and trespassed upon and/or created and maintained nuisances affecting the Schmidt parcel by (1) improperly installing oil and sand separators, storm drains, fire lanes, fire gates, and tiebacks in and along the easement; (2) improperly constructing and maintaining a driveway apron and a similarly improper garage entryway along the easement; and (3) failing to put in place a road maintenance agreement for the roadway on the easement. The Schmidts sought damages for loss of reasonable use and enjoyment of their property, diminished market value of the property, and other compensatory and punitive damages; and they demanded that the structures and improvements at issue be removed.

The defendants filed motions for summary judgment on the ground that the structures and improvements at issue do not violate the reserved easement. The trial court granted the motions. The Court of Appeal reversed, finding that triable issue of material fact prevented summary judgment.

The primary issue on appeal was whether the scope of the reserved easement covered the structures and improvements that are challenged in the lawsuit. That key to that issue was this question: Did the phrase “for public road purposes” in the language of the reserved easement create a public right-of-way over the easement? The reason that question was important is because if it a public right-of-way was intended by the grantor, then the easement may be used for any infrastructure that accompanies normal development, including the various structures and improvements that the Schmidts challenged in the complaint. However, if that language was akin to a private road easement, and created only a “right of ingress and egress” that entitles the dominant Aragon parcel to use only the surface of the easement, and not any non-roadway purpose, then the various structures and improvements may constitute a nuisance and trespass.

The Court of Appeal’s analyzed the issue of the scope of the easement by applying several basic rules of easement law.

First, the court explained that an easement “is a restricted right to specific, limited, definable use or activity upon another’s property.” That right “must be less than the right of ownership.” Therefore, it is fundamental that “the language of a grant of an easement determines the scope of the easement.” Easements are interpreted like contracts; and so the court places itself in the position of the contracting parties in order to ascertain their intent at the time of the grant.

Second, the phrase “right of ingress and egress” has been used to describe one of the easements that a landowner has over a public street that his land abuts. As one 1907 decision stated: “These private easements are, [first,] [t]he right of ingress and egress to and from the lot over and by means of the adjacent portion of the street.”

Using those general principles of easement law, the court in this case found that the easement reserved in 1941 “is limited to a ‘right of ingress and egress … over, along and across’ a portion of the Schmidt parcel. The phrase ‘for public road purposes’ reflects the impetus for the reservation and the reason for the right of ingress and egress. It is a qualification of, and limitation on, the right of ingress and egress reserved in the grant. It does not expand the right to include activities other than ingress and egress.” The court continued: “Just as an abutting landowner has ‘[t]he right of ingress and egress to and from [his] lot over and by means of the adjacent portion of the street,’ [the] reservation established the right of ingress and egress to and from the reserved (Aragon) parcel over and by means of the specified portion of the Schmidt parcel “for public road purposes,” that is, in order to reach a public road.

In light of that analysis, the court held that the phrase “for public road purposes” did not create a public right-of-way over the reserved easement. The court stated: “Here, the reserved easement exists purely between private parties. There is no evidence that the public at large has any rights to the reserved easement or that the use of the easement is regulated by any governmental entity as a public right-of-way. The mere inclusion of the phrase ‘for public road purposes’ does not transform an otherwise private easement into a public right-of-way…The phrase ‘for public road purposes’ is qualified both by the right granted (‘ingress and egress’) and by its application to the Schmidt parcel (‘over, along and across’). The grant here was not simply ‘for public road purposes’; that phrase must be read in context with the remainder of the grant language.”

The third general easement concept that the court applied was the difference between private and public easements. While “[t]he establishment of a public highway practically divests the owner of a fee to the land upon which it is laid out,” private easements are different.  The court explained:

“Bank of America and the Aragon HOA have provided no grounds for the application of the public right-of-way cases where, as here, a public resource is not at issue. Rather, a private party reserved the easement under consideration here, and it continues to benefit private, rather than public, interests. [Citations.] Contrary to the Aragon HOA’s suggestion, the fact that the public may use the easement to gain access to the Aragon project does not create a ‘public benefit’ or create a public right-of-way. Just like any private driveway, the easement is used only for traffic to and from the Aragon project. No broader transportation purpose is served by the easement that would benefit the public at large.”

The fourth point is that, a private easement for ingress and egress does not include the right to use the easement for any other purpose. “The owner of a dominant estate may do that which is reasonably necessary to enjoy the easement and, as an incident thereto, keep it in repair and fit for use. [Citation.] But the easement may not be substantially altered without the consent of the owner of the servient estate.”

Bank of America and the Aragon HOA did not meet their burden of showing that no triable issues of material fact exist regarding whether these structures and improvements fall within the scope of the reserved private easement. Whether and to what extent these structures and improvements are consistent with “the right of ingress and egress for public road purposes over, along and across” a portion of the Schmidt parcel; whether they are “reasonably necessary to enjoy the easement and, as an incident thereto, keep it in repair and fit for use”; or whether the easement was “substantially altered” by Barratt; are material questions of fact that cannot be answered as a matter of law on the current record.

The Court of Appeal also rejected each of Bank of America’s alternative arguments (a) that it did not own the structures and improvements at issue; (b) that it did not maintain or control the structures and improvements at issue; (c) that as an owner of individual condominium units, it cannot be held liable for tort actions under former Civil Code section 1365.9; and (d) that it merely acted as a lender to Barratt on the project and so it cannot be held liable under Civil Code section 3434.

The lesson to be learned from the Schmidt case is that an easement does not constitute a public right-of-way even if the easement is for “the right of ingress and egress for public road purposes.”

Glen C. Hansen is Senior Counsel at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.