Real Property Law
Ranch at the Falls LLC: Three Lessons in Quiet Title Claims
The Second Appellate District’s recent decision in Ranch at the Falls LLC v. O’Neal (2019 WL 3453201) offers a great tutorial on the do’s and don’ts when seeking to perfect an easement. The primary takeaways from Ranch at the Falls are: (1) make sure that you identify and name indispensable parties in a quiet title action, otherwise you risk a defective judgment; (2) a statement of decision must include facts and evidence to support each element of each claim on which judgment was granted; and (3) perhaps most importantly, obtaining an equitable easement is an incredibly difficult endeavor and requires showing a disproportionate harm to the moving party. It is no “balance of hardships” doctrine.
The facts in Ranch at the Falls are complex and involve multiple parties, homeowner and private communities. Perhaps in recognition of this, the Court of Appeal even appended a color-coded map to its opinion. Rather than focus on the facts underlying the 50-page opinion, this article focuses on the conclusions of the case. Readers are encouraged to read the whole opinion.
The basic facts in Ranch at the Falls are as follows. Plaintiff sought to quiet title to two claimed easements in gated communities. The claimed easements provided Plaintiff with a route (although not the exclusive route) to her horse ranch. Plaintiff enjoyed an express easement over a separate route to her ranch, but found this route to be undesirable as it required trucks and other heavy vehicles to use an old and narrow bridge. Plaintiff had a strong preference to use the claimed easements to access her property.
The trial court made five findings, each of which was overturned on appeal. Three of those are discussed in this article. First, even though Plaintiff did not name all individual homeowners who had rights in the claimed easement, the trial court concluded that they were not indispensable parties. Second, the court awarded a prescriptive easement without mentioning or discussing, at all, those elements in its statement of decision. Third, the court granted an equitable easement without applying the proper test or evidentiary burdens.
Lesson 1: Name Your Indispensable Parties
CCP §§ 762.010 and 762.060 provide generally that a plaintiff in a quiet title action must name as parties anyone having adverse claims to the title of plaintiff, including adverse claims that are of record, known or readily apparent from an inspection of the property. Any such person is considered an “indispensable party” per CCP § 389. Simply put, if you file a quiet title claim, make sure to name anyone and everyone with a potentially adverse claim to the property. A failure to do so may make your judgment fatally defective. (Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 667.)
In Ranch at the Falls, Plaintiff failed to name the individual homeowners who owned to the centerline of the streets over which Plaintiff sought an easement. Instead, Plaintiff named the community’s HOA based on the misconception that the HOA granted the easement at issue in the case and therefore “owned” the roads. In a lengthy and interesting analysis, which addressed both contractual interpretation and discussions about subdivision and plat maps, the Court explained that because the individual homeowners owned to the centerline of the street where the claimed easement lay, they were indispensable parties. The lesson here: when in doubt, parties in a quiet title claim should name everyone with a potential interest in the property (and do not forget lienholders).
Lesson 2: Doublecheck the Statement of Decision
Plaintiff sought to establish a prescriptive easement as an alternative to her express easement claims. The statement of decision, which was drafted by plaintiff, entered judgment “[r]egarding plaintiffs’ first cause of action for quiet title based upon an express easement, or, alternatively, a prescriptive easement.” The Court of Appeals took issue with this for the simple reason that the statement of decision “has no findings by the trial court supporting a prescriptive easement.” The statement of decision was devoid of any of the factual or evidentiary bases to support a grant of a prescriptive easement. This was clear error according to the Court of Appeals.
Causes of action are often pled in the alternative and if a statement of decision is requested after prevailing at trial make sure that it adequately addresses the evidence in support of each element of the principal and alternative contentions. A failure to do so may subject your client to reversal on appeal.
Lesson 3: Equitable Easements are No Easy Thing
Perhaps the defining takeaway from Ranch at the Falls is the Court’s analysis of equitable easements. Establishing an equitable easement requires the moving party, aka the “trespasser,” to establish that: (1) her trespass was innocent rather than willful or negligent; (2) the public or the property owner will not be irreparably injured by the easement; and (3) the hardship to the trespasser from having to cease the trespass is greatly disproportionate to the hardship caused to the owner by the continuance of the encroachment. (Schoen v. Zacarias (2015) 237 Cal.App.4th 16, 19.)
The trial court in Ranch at the Falls granted an equitable easement in favor of Plaintiff. This decision was overturned by the Court of Appeal, for abuse of discretion, for two primary reasons. First, as with the prescriptive easement claim, the statement of decision simply did not address the equitable easement elements. Second, and more importantly, the trial court misapplied the equitable easement test because Plaintiff failed to meet her burden of submitting evidence that all three elements of the equitable easementanalysis were satisfied.
In reliance on Schoen, the Ranch at the Falls Court explained that equitable easements should not be granted lightly and trial courts must “resolve all doubts against their issuance.” A trial court does not have discretion to grant an equitable easement unless all three prerequisites are met. There is no discretion here and the fact that an equitable easement analysis is sometimes referred to as the doctrine of “balancing of conveniences” or the doctrine of “relative hardships” is misleading. Citing Schoen, the Ranch on the Falls Court explained: “These labels suggest that an equitable easement may issue if the conveniences or hardships merely favor the trespasser, when the doctrine actually requires that they tip disproportionately in favor of the trespasser. These labels also suggest that the conveniences or hardships between the trespasser and property owner start out in equipoise, when the doctrine actually requires that they begin tipped in favor of the property owner due to the owner’s substantial interest in exclusive use of her property arising solely from her ownership of her land.”
Ranch at the Falls adds further clarity to the burden that must be overcome to establish an equitable easement. It is no easy task and whether your client is moving for or defending against an equitable easement, be sure to focus on the high burden and the fact that all three prerequisites must be satisfied before any judgment can be awarded.