Romero v. Shih

15 Cal.5th 680

541 P.3d 1112

317 Cal.Rptr.3d 478

Tatana Spicakova ROMERO et al., Plaintiffs, Cross-defendants and Appellants,

v.Li-Chuan SHIH et al., Defendants, Cross-complainants and Respondents;

U.S. Bank National Association, Cross-defendant and Respondent.

S275023

Supreme Court of California.

February 1, 2024

McCormick, Barstow, Sheppard, Wayte & Carruth and Scott M. Reddie, Fresno, for Plaintiffs, Cross-defendants and Appellants.

Songstad Randall Coffee & Humphrey, Janet E. Humphrey, Costa Mesa, and Elyn C. Holt, Irvine, for Defendants, Cross-complainants and Respondents.

No appearance for Cross-defendant and Respondent.

Opinion of the Court by Kruger, J.

This dispute over a residential driveway in Sierra Madre raises a significant question about the law of easements. Under California law, the parties to a sale of real property may grant or reserve easements as part of the transaction. This may be done expressly, in a written instrument, or impliedly, based on clear evidence of the parties’ intent. In this case, the trial court concluded that the parties to a 1986 division and sale of two adjacent residential properties intended to create an implied easement over an eight-foot-wide strip of land that belonged to one parcel, but that had been used as the driveway to the home on the neighboring parcel. As a consequence, the current owners of the neighboring parcel may continue to use that strip of land as a driveway.

The Court of Appeal reversed. The court concluded that regardless of what the parties to the 1986 sale might have intended, the law prohibits a court from recognizing an implied easement that precludes the property owners from making all or most practical uses of the easement area. Because recognizing the neighbors’ nonpossessory right to use the land as a driveway would effectively prevent the property owners from using the land for their own purposes, the Court of Appeal concluded that the easement could have been created only in a written instrument and not by implication.

We took this case to decide whether the law imposes such a limitation on the recognition of implied easements. We now conclude that it does not. The evidentiary standard for recognizing an implied easement is a high one, and that standard will naturally be more difficult to meet where, as here, the nature of the easement effectively precludes the property owners from making most practical uses of the easement area. But if there is clear evidence that the parties to the 1986 sale intended for the neighboring parcel's preexisting use of the area to continue after separation of title, the law obligates courts to give effect to that intent.

We reverse and remand for the Court of Appeal to consider whether substantial evidence supports the trial court's finding that an implied easement existed under the circumstances of this case.

I.

In the early 1940's, Edwin and Ann Cutler (the Cutlers) purchased adjacent parcels of property on West Alegria Avenue in Sierra Madre. Soon after, the Cutlers built a home on the parcel lying to the east, at 643 West Alegria Avenue (the 643 Property). In the years that followed, the Cutlers built a brick garden planter in the front left corner of the yard and next to it, a driveway running along the western edge of the property for its entire length. The planter and driveway encroached by about eight feet onto the Cutler's other parcel, which lay directly to the west at 651 West Alegria Avenue (the 651 Property). A chain-link fence marked the western edge of the driveway and planter, separating the 643 Property and the encroachments from the remainder of the 651 Property. The encroaching area consisted of a strip of land measuring about 8 feet wide by about 157 feet long, for a total area of almost 1,300 square feet, or about 13 percent of the 651 Property's 10,000-square-foot lot.

Aside from the encroachments, the 651 Property remained undeveloped for several decades. In 1985, the Cutlers allowed their son Bevon and a family friend, David Shewmake, to build a house on the 651 Property so that it could be sold for profit. According to their arrangement, once the house was built and sold, Bevon and Shewmake would use the proceeds from the sale to pay the Cutlers for the land and would retain the profits on the house for themselves.

In furtherance of this project, Edwin Cutler applied to the city to adjust the boundary between the 643 Property and the 651 Property to the line marked by the chain-link fence. The Sierra Madre Planning Commission approved his request, subject to a city engineer's review of the parcel map and boundary line adjustment. But for reasons that are not clear from the record, the process was never completed and the legal boundary line remained as before.

Although the lot line adjustment had not been completed, the Cutlers, Bevon, and Shewmake proceeded much as if it had been. They obtained building permits from the city and completed construction on the house, and the chain-link fence separating the 651 Property from the 643 Property was replaced with a concrete block wall.

In 1986, the Cutlers conveyed the 651 Property to Bevon and Shewmake, and on the same day, Bevon and Shewmake sold the property to another family. Both grant deeds described the 651 Property according to the original boundary lines, without mentioning or accounting for the encroachments on the strip of land along the property's eastern edge. In the years that followed, the Cutlers executed several grant deeds for the 643 Property that included a legal description of the eight-foot-wide strip. Because the lot line adjustment had not been completed, the Cutlers did not actually own that strip of land; those grant deeds were therefore "wild deeds," outside the chain of title and ineffective to convey title to the area. (See 3 Miller & Starr, Cal. Real Estate (4th ed. 2023) § 8:58, p. 8-175 ["If a deed purports to convey property that is not owned by the grantor, it is ineffective to convey the property, and it is a ‘wild deed’ that can have no effect on title of the person who holds real title to the property"] fn. omitted.)

The properties remained in this configuration, with the 643 Property making use of the encroaching area as a garden planter and driveway, during the next three decades. The 651 Property was sold once during this period, in 2005. Plaintiffs Cesar and Tatana Spicakova Romero (the Romeros) then purchased the 651 Property in 2014. That same year, defendants Li-Chuan Shih and Tun-Jen Ko (the Shih-Kos) purchased the 643 Property from Ann Cutler's estate.

At the time they purchased their respective properties, neither the Romeros nor the Shih-Kos were aware of any easements, encroachments, or boundary disputes. None had been disclosed by the sellers in the respective purchase agreements or advertising materials, and neither party had taken steps to verify that the concrete block wall separating the properties conformed to the true boundary line. The Romeros did not discover that anything was amiss until about a year after purchasing the 651 Property, when Cesar Romero was taking measurements in his front yard for a landscaping project and realized that the yard was not as wide as he expected. The Romeros commissioned a survey, which confirmed that the 643 Property's garden planter and driveway were encroaching on the 651 Property.

The Romeros filed a lawsuit against the Shih-Kos, requesting that the Shih-Kos be ordered to remove all encroachments and pay damages. The Shih-Kos filed a crosscomplaint alleging that when the Cutlers separated the 643 and 651 Properties in 1986, they created an implied easement over the disputed area in favor of the 643 Property. In the alternative, the Shih-Kos asked the court to create an equitable easement in favor of the 643 Property over the disputed area, which would entitle the Romeros to compensation for the burden imposed on their property.

The matter proceeded to a bench trial focusing on the easement issue. The parties presented evidence regarding the history of the two properties and the circumstances surrounding their separation in 1986, discussed above, as well as evidence of the effect that the alleged easement would have on each property. As relevant here, the Shih-Kos’ appraisal expert, Daniel Poyourow, testified about the uses of the disputed area that would remain to the Romeros’ 651 Property if the trial court were to award an easement in favor of the 643 Property. Poyourow explained that the Romeros could continue to use the easement area for "setback purposes" — i.e., to calculate how far any structure must be set back from the true property line — and for "FAR uses" — apparently referring to the "floor area ratio," or the permissible floor area of a building in relation to the size of the lot where the building is located. He also testified that certain subsurface uses remained to the 651 Property — e.g., for the running of underground pipes or cables. On cross-examination, however, Poyourow acknowledged that his appraisal report had characterized the easement as "effectively exclusive" and that the potential for the 651 Property to take advantage of any remaining uses was "remote." Overall, Poyourow estimated that the "residual value" of the uses of the property to the 651 property represented approximately 2 percent of the value of the disputed area.

After the bench trial, the trial court entered judgment for the Shih-Kos, concluding that they possessed an implied easement over the disputed strip of land. The court found that it was "clear under the circumstances" that when the Cutlers separated and sold the two properties in 1986, "the parties to the transaction intended the 643 Property's encroachment on the 651 Property would continue after the division." Specifically, the court noted that "all the Cutlers, the Shewmakes, and every successive owner of either property (until now) [have] allowed for and/or behaved as if the 643 Property has the right to...