Ranch at the Falls LLC v. O’Neal (Second Appellate Dist., Div. 8 B283986)

By Norm Chernin

This Court of Appeal decision is 51 pages long;  but the best way to read it is to start with the map attached as an exhibit on page 52 [The map needs to be seen in color. Try justia.com if you only have access to a black and white version.] It is a classic case of a trial judge trying to overcome poor legal draftsmanship exacerbated by less than stellar civil procedure practice by plaintiff’s counsel to reach an “equitable” result.  But the appellate court did not buy it.

The gist of the action is the attempt by a working horse ranch to quiet title to easements across the private streets of a gated common interest single family residential development so that large trucks can deliver hay to the ranch and remove manure as needed, along with horse trailers moving horses in and out.

As the opinion states:  “The trial court visited the site on February 14, 2017, before testimony began. Nineteen witnesses testified at a trial that lasted for seven days.” However, the action was doomed to failure because the plaintiff named only the homeowners association (“HOA”) as owner of the streets, overlooking the fact that the tract map showed the streets as easements with abutting lot owners owning the underlying fee to the center of the street. Ironically, the trial court denied defendant’s motion to name such lot owners as indispensable parties at the outset.

The plaintiff relied on a grant of easement from the HOA to support an express easement.  However, as Footnote #22 points out, “Mr. Hillshafer, who was responsible for preparation of the easement declarations, was questioned about the quoted language and said this: ‘Well, I don’t think it was really intended to indicate that the association owned the private streets, but it sort of implies that in here, so it could have been worded more accurately.’”.  Further, there is the question of the authority of the person executing the document.  In Footnote #23, the court quotes the person who signed:  “Mr. Eberhard testified he believed he had authority to bind Indian Springs HOA without all 57 lot owners’ signatures, ‘[u]nderstanding that [the grantee/owner of Indian Oaks] at that time controlled a major part of the 57 lots [in Indian Springs] and having had discussions and meetings with the rest of the homeowners, yes, I felt I was authorized.’”.  In essence, the person signing the easement deed did not have the authority to act on behalf of the HOA which did not legally own the fee anyway.

So if an express easement was not created, how about a prescriptive easement? Although the defendant requested  a statement of decision, it did not contain a determination that a prescriptive easement existed (The plaintiff did not object to the statement of decision).  Therefore, the appellate court concluded that the doctrine of implied findings did not apply.  In other words, there is no need for findings of fact if there is no conclusion of law for them to support.  On top of that, the appellate court concluded that there were not sufficient facts to support the creation of a prescriptive easement anyway.

When all else fails in trying to get a court to find an easement, try for an equitable easement.  The appellate court pointed out that the most important element is innocence.  The facts were replete with evidence of the plaintiff’s lack of innocence.  In addition, the plaintiff has the burden of proving it would suffer “greatly disproportionate hardship“ from denial of the equitable easement. The court concluded that the showing was not adequate.

Altogether, a sobering experience for a real estate lawyer (whether a transactional lawyer or a litigator) to read this decision for four reasons:

1. The need to review underlying documents (such as tract maps) to be sure which party owns the affected interest.
2. The need to carefully draft documents to clearly state what is intended and to properly implement such intent. 
3. The need to be sure that the proper party is signing the document and that the person executing it is properly authorized to do so.
4. The need to carefully review applicable civil procedure with respect to pleadings and other documents filed with the court.