Ranch at the Falls LLC v. O’Neal (2019) 38 Cal.App.5th 155

In Ranch at the Falls LLC v. O’Neal (2019) 38 Cal.App.5th 155, a plaintiff ranch owner sought to quiet title to two claimed easements within residential gated communities in which plaintiff had no ownership interest. Among other things, the trial court held that plaintiff was entitled to an equitable easement over all the private streets in an adjacent gated community (Indian Springs).  Plaintiff had access by a different route from the east that included an undisputed right to travel over one now-private street (Iverson Road) in Indian Springs and other now-private streets in a third gated community (Indian Falls).  However, plaintiff found that route to the ranch from the east as unacceptable because it requires use of an old and narrow bridge on Fern Ann Hills Road.  While that bridge is not part of the three gated communities, the plaintiff considered the bridge too dangerous. The Court of Appeal for the Second Appellate District held that the trial court erred and reversed the judgment, including the determination regarding the 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.)

Of those three factors, the “willful or negligent” factor is “paramount” (Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749, 769) and “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.) “While the resolution of factual disputes is left to the trial court, appellate courts may determine whether the elements of an equitable easement have been established by the facts as a matter of law.” (Ibid.)  “‘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.’”  (Hinrichs v. Melton (2017) 11 Cal.App.5th 516, 523.)

In Ranch at the Falls, the trial court failed to discuss any of the three factors in its statement of decision. In a subsequent ruling denying third party movants’ motion to vacate the judgment, the trial court stated that its finding of an equitable easement was proper because “the parties’ relative hardships were balanced.”  Specifically, the trial court stated that plaintiff “ha[d] shown that due to the condition of a certain bridge in the project, it would have been inequitable to Plaintiffs to not find an easement.” The trial court added that the homeowners associations for the adjacent gated communities did not demonstrate “any comparable hardship” at trial, “given that their right to use the Private Streets has not been diminished.”  However, that is not the proper balancing test to apply in the equitable easement context (see Shoen v. Zacarias (2015) 237 Cal.App.4th 16, 19), and it completely failed to evaluate whether plaintiff’s conduct was innocent, rather than willful or negligent.

Plaintiff’s claim to innocence is that she “worked two years and sought to expand the Fern Ann Falls bridge by seeking to have a bond measure passed so that money could be raised in order to allow for the bridge to be improved.”  Thus, plaintiff contended that she “attempted to do equity,” but was prevented from doing so, because after she had collected enough signatures, the County of Los Angeles told her that “it’s no longer eligible, because the community has been privatized.”  However, that evidence did not establish plaintiff’s innocent use of the private streets of Indian Springs.  Plaintiff knew when she purchased the ranch property that her access involved use of the old bridge on Fern Ann Falls Road.  Plaintiff testified that “[w]hen I bought the property in 1996, the realtor told me that everybody wanted to chip in to fix that bridge. Because I wasn’t going to buy it because of the bridge. But then he assured me, we have two accesses and everyone wants to fix that bridge. And I quickly found out that nobody wanted to fix the bridge.” Plaintiff testified at trial that she “started using a back route as soon as [she] purchased the ranch property,” but she testified at her deposition that, when she bought the ranch property, she “didn’t realize there was another way [other than over the bridge]. So once I found the other way to go, I stopped using the bridge.” She testified it was “only when [she] discovered the back route that delivery companies stopped using the bridge.”  The Court of Appeal concluded that plaintiff did not establish the “innocence” factor that is required for an equitable easement.  Plaintiff knew from the day she purchased the ranch – at a time when Indian Oaks (over which she must pass to reach the ranch over her preferred route) was completely undeveloped – about the nature of the Iverson Road access and the shortcomings of the bridge.

Accordingly, the court held that “[t]here can be no equitable easement in these circumstances.”

Glen Hansen is a 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.