By Glen C. Hansen

In Windsor Pacific LLC v. Samwood Co. (January 30,2013, B233514) ___ Cal.App.4th ____, the Court of Appeal for the Second Appellate District held (1) that a prescriptive easement could not be established over two roads, where the facts in the case demonstrate that the party alleging the prescriptive use was equitably estopped from denying that its use of the roads was by permission; and (2) that a proceeding to interpret a written easement agreement in order to determine whether a party to the agreement is equitably estopped from claiming that its use of the subject property was permissive is an action to ‘enforce or interpret’ the agreement, for which an attorneys’ fees provision in the agreement applies, regardless of whether that interpretation was sought by the allegations of the complaint or by affirmative defenses in the answer.

In Windsor, a property owner, Windsor Pacific, LLC (Windsor) sought to establish a prescriptive easement over two access roads on adjacent undeveloped land owned by Samwood Co., Inc. (Samwood), and on nearby undeveloped land owned by Shadow Pines, LLC (Shadow). Windsor used the roads for several years with Shadow’s permission and pursuant to a written easement with Shadow. Windsor then used the two access roads on the Samwood property with the express permission of Shadow under the terms of another written easement beginning in August 2006 at the latest. The second easement agreement stated that Shadow owned an interest in both the Shadow property and the Samwood property and granted Windsor a nonexclusive easement to use the access roads on the two properties. However, beginning in 2009, Windsor claimed a prescriptive easement over the two access roads on the Samwood property. Windsor brought an action seeking quiet title to a prescriptive easement over the two roads, seeking ejectment of defendants’ obstruction of the two roads for Windsor’s use; and seeking a declaration as to the rights and obligations of the parties with respect to the two roads.

The trial court held that Windsor’s use of the roads did not create a prescriptive easement over either the Samwood property or the Shadow property because Windsor’s use of those roads was expressly authorized by the permissive easement granted to Windsor. However, the trial court denied Shadow’s motion for an award of attorney fees pursuant to a contractual attorney fee provision included in the first written agreement that had led to creation of the permissive easement. Windsor appealed the trial court’s denial of the prescriptive easement; Shadow appealed the trial court’s order denying its attorneys’ fees motion.

The Court of Appeal agreed with the trial court that Windsor’s permissive use of the roads precluded the creation of a prescriptive easement. However, Windsor argued on appeal that the permissive easement granted by its written agreement with Shadow applied only to use of the access roads on Shadow’s property, and did not apply to use of the access roads on Samwood’s property, because Shadow did not have the authority to grant such an easement to Windsor. The Court rejected that argument. The Court held that the particular facts in the case demonstrated that Windsor was equitably estopped to deny or question Shadow’s authority to grant an easement over the Samwood property.

The Court also held on appeal that the trial court erred in denying attorneys’ fees to Shadow. The written attorneys fee clause provided for a fee award to the prevailing party in "any action or proceeding to enforce or interpret" the provisions of the easement agreement. The court concluded that this provision applied not only where the plaintiff’s allegations in the complaint seek to enforce or interpret the contract, but also where the defendant seeks to do so by asserting an affirmative defense raised in its answer. In reaching that conclusion, the Court distinguished and disagreed with the majority opinions in Exxess Electronixx v. Heger Realty Corp. (1998) 64 Cal.App.4th 698 and Gil v. Mansano (2004) 121 Cal.App.4th 739. Exxess and Gil held that whether the attorney fee clauses at issue in those cases authorized a fee award in favor of the prevailing party depended on the nature of the claims alleged in the complaint or cross-complaint, irrespective of the defenses raised. The Court in Windsor rejected that conclusion: “To the extent that either Exxess or Gil suggests, or can be read to support the proposition, that the word ‘action’ does not encompass a defense, we disagree. As did Justice Armstrong in his dissenting opinion in Gil, we regard the word ‘action’ used in this context as encompassing the entire judicial proceeding, including any defenses asserted.” 

Therefore, the Court affirmed the trial court’s judgment denying the prescriptive easement. However, the trial court’s post-judgment order denying the attorneys’ fee award was reversed and the matter was remanded to the trial court with directions to (1) grant Shadow’s motion for an award of attorney fees; and (2) conduct further proceedings to determine the reasonable amount of fees to be awarded.

Glen 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, 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.