By Glen C. Hansen
In Hill v. San Jose Family Housing Partners (2011) __Cal.App.4th __, 2011 Cal. App. LEXIS 1101, the Court of Appeal for the Sixth Appellate District held (1) that a written easement for a billboard was enforceable, even if the billboard was constructed in an illegal manner; and (2) the servient owners’ development that unreasonably interfered with the visibility of the billboard could be grounds for lost profits damages owed to the owners of the billboard.
In Hill, Plaintiffs James C. Hill and Dawn L. Hill (the “Hills”) and Defendants San Jose Family Housing Partners, LLC (“LLC”) own adjacent parcels of land located along U.S. Highway 101 in San Jose, California. Since the 1970s, the Hills have owned and operated a two-sided commercial billboard on a section of LLC’s parcel, near the joint property line. In 2000, the Hills and LLC’s predecessors in interest entered into a written easement agreement relating to the Hills’s use of the billboard. The purpose of that easement was “[t]o do all things necessary and incidental to the operation of the business of a billboard, including but not limited to, placement, construction, reconstruction, maintenance and repair of the billboard … all to facilitate the billboard business or any other lawful purpose associated with the use of the Dominant Tenement.” The easement also expressly provided: “No structures, vegetation, or other objects will be allowed to interfere with or encroach on the easements in the above described Grant Deed and as herein referenced.” In or about 2007, the Hills learned that LLC planned to construct a multi-unit residential development on its property, which would obstruct the view of the billboard’s north face. The Hills brought a lawsuit against LLC in 2007 for injunctive relief and damages.
In that lawsuit, LLC raised an affirmative defense that the easement is unenforceable because the billboard was constructed and maintained in violation of county and city building codes and ordinances. The trial court rejected that defense. The trial court also held that the easement agreement must be interpreted “to allow viewing of the billboard,” and that LLC’s development interfered with the Hills’ easement by obstructing the billboard’s visibility. The trial court therefore awarded damages in the amount of $778,539, which included lost future profits through 2037. After trial, the City of San Jose (“City”) issued a compliance order that directed removal of the “illegally constructed billboard.” LLC moved for a new trial on the ground that this newly-discovered evidence of the City’s actions would substantially reduce or eliminate the lost profits portion of the Hills’ damages award. The trial court denied the motion. LLC appealed.
On appeal, the court affirmed the trial court’s determination as to the illegality defense. LLC argued that if the billboard is itself illegal, its use for advertising is also illegal, and therefore the easement agreement is unenforceable. The court disagreed. This was not a case where the parties entered into an easement agreement that allowed for an illegal use of the property. The court explained: “The Hills’s action to enforce the easement is entirely legitimate because the property’s use for advertising purposes is not illegal in and of itself. Although the instrumentality of that use, i.e., the billboard, may be illegal, that is not a bar to the enforcement of the agreement.”
The court also affirmed the trial court’s interpretation of the easement agreement. LLC argued that the easement did not prohibit LLC from developing its property since such development does not restrict the Hills from operating, maintaining or accessing the billboard (even if that development reduced the profitability of that billboard business). The court disagreed. Instead of seeking an impermissible easement for light, air or view, the Hills were seeking enforcement of an easement that expressly provided that its purpose is to allow for the operation of a billboard business. The court explained: “Since the point of a billboard is that it be visible to potential consumers, it is clear the intent of the easement was to prohibit unreasonable interference with the structure’s visibility. Such interference would necessarily impinge on the Hills’ operation of the billboard business.” “[I]t is clear the parties to the easement agreement necessarily intended that the billboard must be visible to passing motorists.”
However, the court reversed the trial court’s judgment and order denying the motion for new trial, in light of the evidence regarding the City’s post-trial efforts to remove the billboard. The court remanded the matter for retrial on the issue of damages, and directed the trial court to stay the retrial pending a final resolution of the City’s removal actions.
Glen C. Hansen is an attorney 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, or 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.