Hansen v. Sandridge Partners, L.P. (2018) 22 Cal.App.5th 1020

A.  An Equitable Easement Is Often Sought Where A Prescriptive Easement And Adverse Possession Are Not Available.

An oft-repeated scenario in boundary disputes goes like this:  A property owner encroaches upon a neighbor’s land and then uses that land in a manner that is akin to owning the land. It could be fencing off the neighbor’s land and then possessing that land as if it actually was the owner’s property. It could be building on, planting or otherwise using the neighbor’s land in a manner that dispossesses the neighbor from the land, or prevents the neighbor from using the land for any practical purpose, or even prevents the neighbor from determining how her land will be used. The encroacher’s usual next step is to allege that he is entitled to a court judgment for either a prescriptive easement or for adverse possession in order to maintain the encroachment or to maintain the use on the neighbor’s land. However, prescriptive easements are generally not available in that scenario because the use that the property owner seeks to make of the neighbor’s land is exclusive or “so comprehensive as to supply the equivalent of an estate.”  (Raab v. Casper (1975) 51 Cal.Ap.3d 866, 876-877.)  Having failed to obtain a prescriptive easement, the property owner alternatively seeks an award of adverse possession, which would allow for such exclusive use and possessory interest. However, that alternative litigation tactic often fails because adverse possession requires the payment of property taxes that are “assessed upon the land for the period of five years during which the land has been occupied and claimed” (Code Civ. Proc. §325, subd. (b)), and because the property owner almost never pays such property taxes. Thus, the property owner invariably pursues yet another litigation strategy, an equitable easement.

B.  The Mindset Of The Encroacher Can Determine Whether An Equitable Easement Is Granted.

The Court of Appeal of California recently issued several opinions that addressed the mindset of the encroaching property owner in order to determine whether that owner is entitled to an equitable easement. For a trial court to exercise its discretion to grant an equitable easement, three factors must be present.

“First, the [encroacher] must be innocent. That is, his or her encroachment must not be willful or negligent. The court should consider the parties’ conduct to determine who is responsible for the dispute. Second, unless the rights of the public would be harmed, the court should [stop the encroachment] if the [burdened landowner] ‘will suffer irreparable injury … regardless of the injury to [the encroacher].’ Third, the hardship to the [encroacher] from [ordering removal of the encroachment] [‘]must be greatly disproportionate to the hardship caused plaintiff by the continuance of the encroachment and this fact must clearly appear in the evidence and must be proved by the defendant.’”  “Unless all three prerequisites are established, a court lacks the discretion to grant an equitable easement.”‘” [Hansen v. Sandridge Partners, L.P. (2018) 22 Cal.App.5th 1020, 1027-1028 (citations omitted) (emphasis added).]

While all three elements of an equitable easement are necessary, the “willful or negligent” element is “paramount.” (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 769.)  Recently, the Court of Appeal has addressed that element in three different factual contexts. Collectively, those cases illustrate that the mindset of the encroacher often determines whether a court will grant an equitable easement.

C.  No Equitable Easement For The “Willful” Encroacher.

In Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 Cal.App.5th 982, the Court of Appeal affirmed a trial court judgment that denied property owners’ (“McMullins”) request for an equitable easement to maintain a retaining wall and other improvements that the property owners constructed over more than 6,000 square feet of adjacent common area owned by the neighborhood homeowners’ association (“HOA”).

The HOA’s CC&R’s and its architectural review committee guidelines required homeowners to obtain written approval from the architectural review committee (“Review Committee”) before constructing or making significant alterations to any improvements on their property. In January 2008, the McMullins applied to the Review Committee to replaster their swimming pool, redo the pool deck, construct a bar area near the pool, install a solar heater for the pool, replace the wrought iron fence with an eight-foot retaining wall, backfill behind that new wall, install a large patio slab or sports court and garden in the flat area created, and build a staircase from the pool area down to the flat area behind a new retaining wall. The application included a site plan Mr. McMullin prepared which showed the location of the proposed improvements, including a new retaining wall to be constructed in the same location as the existing wrought iron fence that was on the property line between the McMullins’ property and the adjacent HOA common area. The plan identified the property lines between the McMullins’ property and their neighbors on either side, but did not identify the rear property line between the McMullins’ property and the HOA common area. The plan included two dashed lines that extended from the existing six-foot retaining wall that surrounded the backyard to the side property lines, but did not explain what those lines represented. The HOA later discovered these unlabeled dashed lines reflected the rear property line’s location.

In February 2008, the Review Committee sent the McMullins a letter denying their application and explaining how it failed to comply with the CC&R’s and the committee’s guidelines. The letter also informed the McMullins that “a fully dimensioned site plan showing property lines, easement areas, setbacks and fully-defined landscaping and drainage will be needed [for any future applications].”

Two weeks later, Mr. McMullin prepared and submitted a new application with a revised, more detailed site plan. That plan again represented the new retaining wall would be constructed in the same location as the existing wrought iron fence, and also identified the property lines between the McMullins’ property and their neighbors, but not the property line between the McMullins’ property and the HOA’s common area. The plan also included the same dashed lines extending from the end of the existing six-foot retaining wall without explaining what those lines represented. In March 2008, the Review Committee sent the McMullins a letter denying the revised application and explaining the reasons for the denial. This letter again notified the McMullins that any future application must be accompanied by “a fully dimensioned site plan showing property lines” and other necessary information “from a licensed Civil Engineer.” The committee’s letter also suggested the McMullins submit a new application limited to just the pool-related improvements if they wanted to get started on their project.

The McMullins followed the Review Committee’s suggestion and submitted a new application limited to the pool-related improvements only, which included a staircase from the pool area down to the slope behind the existing six-foot retaining wall. In April 2008, the Review Committee sent the McMullins a letter approving this application subject to a few conditions, including one that prohibited the McMullins from modifying the grade on the slope behind their existing retaining wall.

Almost a year later, Mrs. McMullin went to the Review Committee’s office to submit a new application and plans for the retaining wall and sports court. She spoke with the Review Committee’s community relations person. Mrs. McMullin testified that the relations person said the plans were not necessary because the McMullins’ application already was approved. The McMullins did not obtain written confirmation of this conversation or the Review Committee’s alleged approval of the retaining wall.

In May 2009, the McMullins obtained a building permit for the retaining wall from the City of Laguna Hills and began construction. By the time the HOA discovered the unauthorized construction work, it was nearly completed. In October 2009, the Review Committee sent the McMullins a letter denying their application for the retaining wall as constructed. The letter explained why the application was denied and what additional information the committee needed from the McMullins before it would approve the wall, including a dimensioned site plan by a licensed surveyor. The McMullins therefore hired a surveyor to conduct a survey and prepare a plan showing the relationship between the horse trail and the retaining wall. Mr. McMullin told the surveyor not to include the rear property line on this plan. The McMullins submitted this plan to the HOA, which tried to work things out with the McMullins.

However, in July 2010, the city sent a letter to both the McMullins and the HOA explaining the retaining wall was constructed entirely on the HOA property and did not fully comply with the city’s requirements regarding the wall’s height and the slope adjacent to the wall. The city further informed the parties the wall could not remain in its current condition. In March 2011 a formal survey determined that the new retaining wall and improvements were built almost entirely on HOA property, which increased the total size of the McMullins’ lot from approximately 16,400 square feet to more than 22,500 square feet. Contrary to the McMullins’ repeated representations in their applications, the surveyor determined that the retaining wall was built well outside the location of the original wrought iron fence on the property line and enclosed more than 2,000 square feet of the HOA common area.

Litigation eventually ensued. The trial court entered judgment that declared that the McMullins breached the CC&R’s by failing to accurately depict their property lines on the plans they submitted to the Review Committee, they constructed the retaining wall and other improvements without the Review Committee’s approval or the city’s permission, and they constructed the retaining wall and improvements on the HOA’s property. Among other things, the judgment also held that the McMullins failed to establish the requisite elements of an equitable easement. The Court of Appeal agreed. In its general analysis of the equitable easement claim, the court recognized that “‘“doubtful cases should be decided in favor of the plaintiff,”‘” “‘courts approach the issuance of equitable easements with “[a]n abundance of caution,”‘” and “[w]hen courts compare the hardships or conveniences, the scales ‘being tipped in favor of the property owner [over whom the easement is sought] due to the owner’s substantial interest in exclusive use of her property arising solely from her ownership of her land.’” (4 Cal.App.5th at p. 1004.)  In this case, substantial evidence supported the trial court’s finding that the McMullins were not innocent in constructing the wall on the HOA property, and therefore did not satisfy the first of the three requirements for an equitable easement claim. One of the factual issues that the trial court had to consider in support of that judgment was the extent of the parties’ knowledge about the location of the McMullins’ rear property line, and whether the McMullins deliberately failed to identify their rear property line on their submissions to the HOA. The trial court found the McMullins were not “innocent” in their construction of the wall because:  (1) they intentionally failed to identify their rear property line in each of the many plans they submitted despite HOA’s repeated request for them to identify property lines; (2) they knew where the property line was located because all of their plans included an unlabeled, dashed line that approximated the rear property line’s location; and (3) they started construction based on an ambiguous oral statement from an HOA employee about the approval of their plans when they knew written approval from the Review Committee was required before construction could begin. In short, substantial evidence supported the trial court’s conclusion that the McMullins were not innocent encroachers and therefore the trial court properly denied the equitable easement claim.  The trial court properly granted the HOA an injunction that authorized the HOA to do the following at the McMullins’ expense:  (1) remove the sports court; (2) cut down and remove the retaining wall to the existing grade in a manner that meets the city’s approval; and (3) address the grade of the ground on the entirety of the HOA common area in order to restore the area to a gradual open space slope and to restore the plantings on the HOA common area to native California vegetation.

Thus, the Nellie Gail case provides an example of a “willful” encroacher who should be denied an equitable easement.

D.  No Equitable Easement For The “Negligent” Encroacher.

In Hansen v. Sandridge Partners, L.P., supra, Erik Hansen and his relatives (the “Hansens” and “Hansen Ranches”)[1] were owners of farmland in Tulare County. In 2011, they found out that the owners of an adjacent parcel of farmland (the “Valovs”) were about to sell the adjacent parcel to Sandridge Partners, L.P. (“Sandridge”). Erik’s father “remembered that there was a lot line adjustment issue” with the adjacent parcel and “explained that there was a discrepancy in the line in what we have been farming” and that “we need to talk to Valov and make sure we straighten out the line before they close.” Erik’s father did not explain why Hansen Ranches was farming on approximately 10 acres of the Valov’s adjacent property (the “Disputed Land”). Erik’s “assumption is that’s just the way it was done … for the whole time.” Erik contacted Valov. Valov had a “vague recollection” of the lot line issue but did not discuss specifics. Erik “asked him what stage of the game his deal is, and that we need to straighten out any discrepancies in the lot line before they close.” Valov said he thought they would be able to resolve the issue before closing. Valov and Erik made arrangements to speak again later. However, Valov eventually stopped returning Erik’s calls.

At some point “prior to planting [the pistachio trees] and prior to putting a drip system in” Erik spoke with an employee of Sandridge. The “outcome” of the conversation “was that we would take care of this [lot line issue] some way, if it didn’t get handled prior to closing through Valovs.”

In the spring of 2012, the Hansens took several steps to prepare 160 acres of land—including the Disputed Land—for pistachio trees, including deep ripping the land and installing a drip irrigation system. When the irrigation system was installed, Erik knew from his father “that a lot line adjustment needed to happen” but still claims he did not know “the specifics” of the issue. Nonetheless, the Hansens planted the pistachio trees in June 2012. Erik did not receive any complaints from any neighbors concerning the installation of the irrigation system or the planting of the pistachio trees. Valov’s sale to Sandridge closed in December 2012.

Erik finally spoke with Valov again after the sale closed. Erik said he wished they could have fixed the lot line issue before the close of the sale. Valov apologized, said his father was dying and “that he thought it might have created a problem for dealing with his dad’s estate.” Sandridge, the Hansens, and their representatives negotiated to potentially resolve the Disputed Land issue, but those negotiations were unsuccessful, and litigation ensued.

The trial court denied the Hansen’s request for a prescriptive easement. The Court of Appeal agreed with that ruling. The Hansens had sought a prescriptive easement establishing their right to farm the Disputed Land “to the exclusion of Defendants and all other persons,” which the Court of Appeal described as “the practical equivalent of an estate” and “functionally equivalent to ownership.”  Since the Hansens essentially sought adverse possession, without having met the requirement of adverse possession that taxes be paid on the Disputed Land, “the Hansens cannot obtain the exclusive prescriptive easement they seek.”

Alternatively, the trial court granted the Hansens an equitable easement for such use of the Disputed Land. The Court of Appeal reversed that portion of the judgment because the Hansens’ conduct was negligent, which precluded an equitable easement.  The court explained:

Given that Erik knew there was a lot line issue at least by early/mid-2011, it strains credulity that he still did not know the “specifics” of the lot issue by the time the irrigation system was installed in the Spring of 2012. But, we must indulge every inference in favor of the judgment. Under that standard, Erik’s claim he did not know the “specifics” of the lot line issue in 2012 supports the trial court’s finding the Hansens did not knowingly and intentionally plant the pistachio trees on Sandridge’s land.

However, even accepting Erik’s version of events and the favorable inferences arising therefrom, we conclude it was undoubtedly negligent to plant trees on the land without first learning the location of a known, unspecified lot line issue. Indeed, if that conduct does not constitute a negligent encroachment, it is hard to imagine what would. While growers do not have a general duty to survey or otherwise confirm boundaries before planting, it is negligent to plant permanent crops on a swath of land, knowing that some unspecified part of that land is in need of a “lot line adjustment.” Moreover, a contrary rule would encourage trespassers who are aware of an unspecified boundary issue to quickly build or plant something that is difficult to remove, rather than act responsibly and learn more about the issue. In equity, such willful ignorance should not be condoned, and certainly not rewarded.

The Hansens insist that “‘innocent’ does not mean literally at no fault whatsoever.” We agree. And if the Hansens had no reason to doubt they owned all of what they thought was [their own] parcel, it likely would not have been negligent to rely on factors like the purported lack of objection from Valov—or visual cues like the irrigation ditch. But by early to mid‑2011, the Hansens did have reason to doubt their prior assumptions were wrong. Nonetheless, they planted the pistachio trees in the area after becoming aware that there was a lot line issue concerning the border between their parcel and Valov’s.

The Hansens insist that Erik did not know the lot line issue involved the Disputed Land. That factor suggests the encroachment was not intentional, but it does not settle the issue of negligence. To the contrary, the fact that Erik did not know where the lot line adjustment was needed, is precisely why it was negligent to plant a permanent crop in the area without determining where the correct lot line was located.

Accordingly, the Court of Appeal held that an equitable easement was not available because “the Hansens’ encroachment on Sandridge’s land was negligent as a matter of law.”

E.  Equitable Easement Granted To The “Innocent” Encroacher.

In Hinrichs v. Melton (2017) 11 Cal.App.5th 516, the Court of Appeal affirmed a trial court’s grant of an equitable easement for a property owner who had innocently created a landlocked parcel. In 1993, Leslie Witherspoon Hinrichs inherited two contiguous parcels of real property from his mother. The southern parcel is improved with a residence. The northern parcel is unimproved. When he was growing up, Hinrichs lived in the residence on the southern parcel, but has lived in Alaska since the 1980s. In 1999, Hinrichs sold the southern parcel to the Asquith Family Limited Partnership (Asquith). Hinrichs reserved an easement over the Asquith parcel in the 1999 deed. The easement was intended to connect with an “historic trail” consisting of an unpaved path over neighboring parcels that Hinrichs claims was documented in a federal survey map as far back as 1868. But Hinrichs actually had no easement over those neighboring parcels, and so the 1999 conveyance left the northern parcel landlocked. The trial court rejected Hinrichs’s claim of an easement as appurtenant to a federal patent over the historic trail. The trial court found that if Hinrichs ever had an easement over the trail as it crosses the neighboring parcel, it had been extinguished by adverse possession. The trial court granted Hinrichs an easement by necessity over the Asquith parcel and an equitable easement over a small portion of another neighboring parcel under the doctrine of balancing of the hardships.

The Court of Appeal agreed and explained that, among other criteria, a court should “consider whether the need for the easement is the result of the willful act of the party seeking the easement.” After rejecting the neighboring property owners’ argument that a “preexisting use” or a “long-standing encroachment” is an element of an equitable easement, the court also rejected the additional argument that Hinrichs was not innocent or nonnegligent. “‘The question whether the defendant’s conduct is so egregious as to be willful or whether the quantum of the defendant’s negligence is so great as to justify an injunction is a matter best left to the sound discretion of the trial court.’” (112 Cal.App.5th at p. 523 (citation omitted).) Here, “the trial court found that Hinrichs is innocent because he believed long after the Asquith parcel was sold that he had a right of way over the trail. The court did not abuse its discretion in determining Hinrichs’s actions do not bar equitable relief.” (Ibid.)

In summary, recent case law illustrates that the “willful or negligent” element is often “the most important” factor that will determine whether a court will grant an equitable easement. (Hansen v. Sandridge Partners, supra, 22 Cal.App.5th at p. 1028.)

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

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., 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.

[1] No relation to the author.