Opinion
E032364.
10-21-2003
CARL BRANDSTETTER, Plaintiff and Respondent, v. HOLIDAY RETREATS, INC. et al., Defendants and Appellants.
Jeffrey W. Virden for Defendants and Appellants. Reid & Hellyer, Dan G. McKinney and Daniel E. Katz for Plaintiff and Respondent.
Defendants and appellants Holiday Retreats, Inc., and Daniel Paul Derebery, Jr. appeal a judgment in favor of plaintiff and respondent Carl Brandstetter. The defendants and their predecessors in interest had provided water to certain property, under a contract to provide water, since the 1920s. Plaintiff acquired one of the lots to which such water service had been provided. A dispute arose between plaintiff and defendants, as a result of which defendants shut off water service to plaintiffs lot. Plaintiff sued to restore the water service; judgment, including punitive damages, was given in plaintiffs favor. It is this judgment which is the subject of the appeal.
Although defendants raise numerous contentions on appeal, we find none of them meritorious. Accordingly, we shall affirm the judgment.
FACTS AND PROCEDURAL HISTORY
The dispute involves water service to a property, known as Lot 7, located in a recreational area of Riverside County. The area has several campsites and lakes for fishing. Some lots have been developed with cabins or houses; others remain undeveloped.
In 1925, Daniel Gerster executed a written contract with F.C. Hendrix, and recorded that contract (the Gerster contract). The contract called for Gerster to construct three lakes in the area, and to stock them with fish, so that they would be suitable for fishing and other recreational uses. Under the Gerster contract, Gerster was to supply water to various of the lots, which were intended to be subdivided into cabin spaces, accessible to the lakes, and which eventually became commonly known as "Fishermans Retreat."
The Gerster contract covered an area of about 335 acres. A part of those lands included the Chain Lakes Cabin Sites Tract No. 2, the tract map for which was recorded in 1927. An amended subdivision map was recorded in 1941. The amended subdivision map showed that some of the original lots had been resubdivided into larger parcels. Lot 7, the parcel at issue here, was part of the Cabin Lakes tract.
Historically, Gersters successors in interest to the water facilities have always supplied water to the owners of the subdivided lots, including lot 7.
The history of transfers of the Fishermans Retreat property showed that Chana Garcia bought the bulk of the Gerster property, 335 acres, from Carl and Phyllis Gustafsson in 1979. Garcia, together with other partners, purchased Fishermans Retreat as an operating campground. In approximately 1981, the partners created a corporation, Holiday Retreats, to operate the Fishermans Retreat campground. The partners became shareholders in Holiday Retreats. Somewhat later, the partners acquired a second campground in San Bernardino County, and formed Oak Glen, Limited (Oak Glen).
The exact relationships among the entities are somewhat unclear; some documents indicated, for example, that Oak Glen had acquired one-half of the Fishermans Retreat property in 1984. Nonetheless, both Holiday Retreats and Oak Glen were sold to Ralph Graham, who then sold to Surinder S. Dang. In July 1996, the Oak Glen and Fishermans Retreat properties were sold to defendant Derebery.
Defendant Derebery leased the land to Holiday Retreats. Derebery had begun working for Holiday Retreats as its financial controller in 1989. He became president of Holiday Retreats in 1993 and, as of the time of trial, was the only officer of Holiday Retreats. The Holiday Retreats corporation stock was wholly owned by J.G. & Associates; J.G. & Associates, in turn, was owned by Gurinder Singh, a relative of Surinder S. Dang.
The history of transfers of Lot 7 showed that Daniel Gerster sold the property to J.W. Moore in 1932. Moore sold to James H. Toft and, in 1946, Toft sold to John F. and Helena Blanchard. The Blanchards sold to James E. and Ethel J. McGinnis. The husband died, and the surviving spouse remained in the property until her death in 1985. Mrs. McGinnis owned Lot 7 when Garcias partnership, and subsequently Holiday Retreats and Oak Glen, operated the campground.
After the distribution of Mrs. McGinniss estate, Lot 7 was transferred to Thomas and Lyla Vaught. In 1986, long after Holiday Retreats and Oak Glen had been operating the campground, the Vaughts deeded the property to Oak Glen.
Ten years later, in 1996, plaintiff Brandstetter bought Lot 7 at a tax sale. He waited out the one-year redemption period, and then, in 1997, approached the tenant who was living in the house on Lot 7. The tenant agreed to execute a new lease, and to send the rental payments to plaintiff. At that time, Holiday Retreats supplied water to the house on Lot 7, as it had done for many years.
Because Lot 7 had at one time been transferred to Oak Glen, a sister entity to Holiday Retreats, Holiday Retreats was collecting rent from the tenant. The transfers of the Fishermans Retreat and Oak Glen campgrounds, however, from Garcia to Graham, from Graham to Dang, and from Dang to defendant Derebery, evidently failed to include Lot 7, the after-acquired property, in the conveyances.
Defendant Derebery first became aware in 1997 that he had never had title to Lot 7. He also learned that he could not contest the tax lien sale. He demanded that plaintiff sell Lot 7 to him for the tax lien sale price, a price which was considerably under market value. Plaintiff refused. Derebery thereupon decided that he had no obligation to supply water to Lot 7, and shut off the water supply. The house was uninhabitable without water; Derebery arranged to move the tenant to another property owned by Holiday Retreat.
All plaintiffs entreaties to restore the water service fell on deaf ears. Brandstetters requests for water service to Lot 6, a neighboring lot that he had purchased in 1990, were also refused. Without water service, it was impossible to maintain or repair the house on Lot 7. It was also infeasible to build on Lot 6. Plaintiff Brandstetter was unable to drill for water on his lands, and testified he had no other source of water aside from the historic Gerster water system, now operated by Holiday Retreats.
Derebery refused to accept Brandstetters checks for water service, refused to restore the water service, and admitted that he did not care whether Brandstetter had any access to water for Lot 7.
Brandstetter eventually filed suit against Derebery and Holiday Retreats. He alleged causes of action for declaratory relief, for nuisance, for breach of contract, for intentional interference with contractual relations, and for unfair business practices. The jury returned a special verdict, finding that an easement for water from Dereberys water system existed in favor of Lot 7; that Derebery and Holiday Retreats interfered with the easement; and that damages for interference with the easement totaled $158,770. The jury further found that defendants had breached the Gerster contract, causing damage to plaintiff in the amount of $33,770. The jury also found in Brandstetters favor on the nuisance cause of action, finding that defendants had wrongfully interfered with plaintiffs quiet enjoyment of his property, and fixed the nuisance damages at $125,000. Finally, with respect to the nuisance cause of action, the jury found that defendants had acted with malice, and assessed punitive damages of $75,000 against Derebery, and $250,000 against Holiday Retreats.
The court accordingly gave judgment for Brandstetter, including a decree that Brandstetter was entitled to water service to Lots 6 and 7 from the Gerster water supply, both under the Gerster contract, and by virtue of an easement.
Defendants Derebery and Holiday Retreats moved for a new trial. The court denied the motion. On September 9, 2002, defendants filed their notice of appeal from the judgment. Also on September 9, 2002, plaintiff filed a motion for an award of attorney fees, pursuant to Code of Civil Procedure sections 998 (statutory offer to compromise) and 1021.1. The court awarded attorney fees of $55,631. Defendants filed a second notice of appeal from the attorney fees award.
ANALYSIS
I. "Contract" Issues
Defendants raise numerous contentions attacking the judgment below. Several of the initial contentions relate to the Gerster contract. Specifically, defendants argue that the Gerster contract did not obligate anyone other than Gerster and Hendrix, that defendants are not successors in interest to Gerster, and that the trial court erred in refusing to interpret the Gerster contract itself, and instead in allowing the jury to determine the assertedly legal issue whether the contract had created an easement. In a related vein, defendants urge that, if the Gerster contract did not create a valid easement or covenant running with the land, there could have been no duty or obligation to supply water to Lot 7, and thus no nuisance could have arisen.
Defendants contentions are founded on the premise that the Gerster contract was the sole source of any right to water. This thesis is not borne out by the record. The jury found that an easement for water existed in favor of Brandstetter. The special verdict did not specify, however, whether the easement was found to be express or implied. The jury was instructed on all applicable easement theories, including a theory of implied easement.
An implied easement may arise when, "at the time of conveyance of property, the following conditions exist: 1) the owner of property conveys or transfers a portion of that property to another; 2) the owners prior existing use of the property," here, supplying water to the Chain Lakes cabin sites, "was of a nature that the parties must have intended or believed that the use would continue; meaning that the existing use must either have been known to the grantor and the grantee, or have been so obviously and apparently permanent that the parties should have known of the use; and 3) the easement is reasonably necessary to the use and benefit of the quasi-dominant tenement." The jury was so instructed.
Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 141.
Construing defendants contention as a claim that the evidence does not support the judgment, we reject it. When we review a judgment for sufficiency of the evidence, we "must view the whole record in a light most favorable to the judgment, resolving all evidentiary conflicts and drawing all reasonable inferences in favor of the decision of the trial court."
Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1203.
The evidence was more than sufficient to support a finding of implied easement. Here, Gerster was the original owner of the entire parcel. He developed the recreational lakes referenced in the Gerster contract, and constructed the water system for delivery of domestic water to the proposed cabin lots. Historically, the water system created by Gerster has been used to supply the Chain Lakes cabin sites, including Lot 7, for many decades. The supply of the water to Lot 7 and other lots was open, obvious, and clearly intended to be permanent. No other supply is available, and the property is not habitable without the water. Substantial evidence supports all the required elements.
As noted, defendants initial challenges to the judgment are dependent upon the notion that the Gerster contract was the sole source of any obligation to supply water. Because the initial premise is false, we need not further address defendants claims that the Gerster contract is not, e.g., a covenant running with the land.
II. The Court Did Not Abuse Its Discretion in Granting Plaintiffs Motion in Limine to Exclude Reference to the Public Utilities Commission Proceedings
Defendants next contend that the trial court erred in granting plaintiffs motion in limine, excluding reference to proceedings held before the Public Utilities Commission (PUC).
After defendants had shut off the water to Lot 7, plaintiff filed a claim with the PUC, asking it to declare Holiday Retreats a water company subject to PUC regulation. Ultimately, the PUC decided that Holiday Retreats was not a water company, and not within the jurisdiction of the PUC to regulate.
Defendants urged that, in the course of its decision, the PUC reviewed and decided certain issues adversely to plaintiff. Defendants argued that the PUCs pronouncements should be given res judicata or collateral estoppel effect in the present action. Plaintiff argued, however, that the ultimate result of the PUC decision was to decline jurisdiction. Inasmuch as the PUC had no jurisdiction over the matter, its other incidental pronouncements should not be given res judicata effect.
Rulings admitting or excluding evidence are reviewed for abuse of discretion. We find none here.
Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1431-1432; Evidence Code section 352.
"[F]inal orders and decisions of the commission are generally conclusive in all collateral actions and proceedings," but "only . . . as to determinations within the commissions jurisdiction." Here, the PUC ultimately "decided" that it did not have jurisdiction over the dispute. This was a procedural disposition by the administrative agency, and manifestly not a decision on the merits of plaintiffs current causes of action.
Stepak v. American Tel. & Tel. Co. (1986) 186 Cal.App.3d 633, 647.
See Merry v. Coast Community College Dist. (1979) 97 Cal.App.3d 214, 227 [plaintiff failed to state a claim on which relief could be granted under federal law; summary judgment granted in federal court on insubstantial federal claim did not preclude state claim]; Musick v. Burke (9th Cir. 1990) 913 F.3d 1390, 1399 [no precedential or res judicata effect where basis of federal summary judgment is lack of jurisdiction].
The workers compensation cases cited by defendants are inapposite. In Jones v. Brown, for example, the question was whether an injured workers claim should be pursued in one of two mutually exclusive fora: the superior court or the Workers Compensation Appeals Board. Each tribunal had concurrent jurisdiction to determine the question of jurisdiction, but once the jurisdictional question was decided, by whichever tribunal acted first, that issue was settled and res judicata as to the other.
Jones v. Brown (1970) 13 Cal.App.3d 513.
Jones v. Brown, supra, 13 Cal.App.3d 513, 521-522.
In Azadigian v. Workers Comp. Appeals Bd., the Board denied the employees application for benefits and dismissed the application. The court held that "conclusive orders and awards of the WCAB are final for purposes of the doctrine of res judicata, notwithstanding the boards continuing jurisdiction under Labor Code section 5803." Thus, even though the Board retains jurisdiction to supervise any order or award for five years after a decision is rendered, the Boards orders are nonetheless final for purposes of precluding successive petitions relating to the same claim on the same facts. "Good cause" is required to reopen any workers compensation case or award. The dismissal of the employees application was a final disposition on the merits of the claim.
Azadigian v. Workers Comp. Appeals Bd. (1992) 7 Cal.App.4th 372.
Azadigian v. Workers Comp. Appeals Bd., supra, 7 Cal.App.4th 372, 374, footnote omitted.
Azadigian v. Workers Comp. Appeals Bd., supra, 7 Cal.App.4th 372, 380.
Here, the PUC declined jurisdiction. Its decision as to that matter — that defendants were not a utility subject to PUC regulation — is res judicata, but the decision to decline jurisdiction was not an adjudication of the merits of any other claims, such as contractual, nuisance, easement, or other potential bases of rights and liabilities between the parties.
The court did not abuse its discretion in determining that evidence of the PUC proceedings should be excluded at trial.
III. Defendants Fail to Show an Easement Was Extinguished by Common Ownership
Defendants next claim that, "if an easement was created, it was extinguished when Oak Glen Ltd. and Dr. Grah[a]m acquired the properties involved."
We reject the contention.
First, defendants have failed to properly brief the issue, with reasoned argument and citation to appropriate authorities. "[U]nless a partys brief contains a legal argument with citation of authorities on the point made, the court may treat it as waived and pass on it without consideration."
Trinkle v. California State Lottery (2003) 105 Cal.App.4th 1401, 1413.
Second, it is by no means certain on this record that the Fishermans Retreat property and Lot 7 were owned in common, so as to extinguish an easement. Chana Garcia testified that she and her partners created Holiday Retreats, a corporation, to operate the Fishermans Retreat recreation area, and formed Oak Glen, a limited partnership, to operate a separate campground in San Bernardino County. Lot 7 was owned briefly by Oak Glen, but it is unclear whether Oak Glen, ever owned any other of the Fishermans Retreat land. Garcia testified that she sold the corporation and the partnership to Dr. Graham, but Lot 7 was not included in the sale.
We do not further consider defendants inadequate and undeveloped "common ownership" argument.
IV. The Damages Award for Nuisance Was Proper
Defendants urge that the award of damages for nuisance was excessive. Plaintiff was awarded $125,000 in damages for nuisance. Defendants assert that the jury determined plaintiffs out-of-pocket losses at $33,770, in fixing the damages for breach of contract or lease. Then, they simply assume that the remainder must have been for emotional distress.
Specifically, defendants claim that the "award to [plaintiff] of $91,230 in `pain and suffering for nuisance is outrageous," because plaintiff planned to rent out the property, he never lived in the home, he was not personally forced to vacate the property, and, they argue, "[h]e did not testify to major upset, no medical bills, or testimony as to lost sleep was introduced. He testified as a businessman. His loss should only be what his out of pocket losses [$33,770] demonstrated."
Again, the paucity of authority and reasoned argument militates against consideration of this contention.
The argument is also without substantive merit. The special verdict form did not require the jury to specify separate amounts for pecuniary and non-pecuniary damage for the nuisance cause of action. Defendants have failed to show any basis upon which the damage award is erroneous. It is not the award, but defendants conduct which was "outrageous." Defendants willfully shut off the water service to Lot 7, and went so far as to cap the pipe. Defendants, and especially Derebery, adamantly refused to restore the service. When Derebery discovered that a neighbor was allowing plaintiff to connect a hose to the neighbors water, Derebery threatened to shut off the neighbors service as well. Dereberys actions forced the tenant to evacuate the premises; Derebery moved the tenant to a different property owned by Holiday Retreats, and continued to collect the rent. The employees of Holiday Retreats who helped the tenant with this move, at Dereberys direction, took fixtures from the property. After the water service was shut off, the property was vandalized, and a number of trees were lost. Derebery scarcely bothered to deny that the entire episode arose from his pique at plaintiffs successful tax lien purchase, and was a naked attempt to coerce plaintiff into selling the property to Derebery for under $5,000, and to punish plaintiff when he refused.
Mental distress caused by a nuisance is a recoverable element of loss of enjoyment of property. The evidence was more than sufficient to support a substantial award for interference with the use and enjoyment of plaintiffs property.
Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 287-288.
V. The Punitive Damages Award Was Proper
Defendants argue that no competent evidence was submitted to the jury to determine their "net assets"; thus, the punitive damages award was without factual foundation and, therefore, excessive.
"The amount of punitive damages is determined in the discretion of the jury. An appellate court will not reverse the jurys determination unless the award as a matter of law is excessive or appears so grossly disproportionate to the relevant factors that it raises a presumption it was the result of passion or prejudice. . . ." In assessing punitive damages, three factors or "guideposts" frame the courts review: (1) the degree of reprehensibility of the act; (2) the harm suffered by the victim, usually indicated by amount of compensatory damages awarded; and (3) the wealth of the defendant.
Rufo v. Simpson (2001) 86 Cal.App.4th 573, 623.
Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928.
Defendants argument that the damages are excessive is not well taken. Defendants conduct was egregious. The punitive damages assessed to Holiday Retreats was twice the compensatory damages ($250,000 and $125,000, respectively). The punitive damages awarded against Derebery, $75,000, were less than the compensatory damage award. The damages were well within acceptable proportions.
See State Farm Mut. Auto. Ins. Co. v. Campbell (2003) ___ U.S. ___, ___ [123 S.Ct. 1513, 1524, 155 L.Ed.2d 585] [suggesting that "few awards [of punitive damages] exceeding a single-digit ratio between punitive and compensatory damages . . . will satisfy due process"].
The record also provided sufficient indicia of defendants wealth to permit appropriate assessment of punitive damages. Derebery testified that he purchased the Fishermans Retreat property for a cash payment of $100,000. Other evidence indicated that defendants received $8,400 per month in income from rental of storage units alone. In 1997, defendant Derebery wrote checks from the Holiday Retreats account to Dr. Dang for $100,000. He wrote an additional $500,000 to Dr. Singh, the sole shareholder of J.G. & Associates, which in turn was the sole shareholder of Holiday Retreats. Derebery claimed the payments to Dr. Singh were for a note, but never produced the note.
Holiday Retreatss financial statements for 1999 and 2000 showed net sales of over $1.8 million and $1.5 million, respectively, with corresponding expenditures of $724,247 and $638,203.
Defendant Derebery owned the Fishermans Retreat property and leased it to Holiday Retreats. Under the lease agreement, Holiday Retreats was to pay $50,000 per month to Derebery.
Between November of 2000 and October of 2001, Derebery wrote $ 529,000 in further checks to J.G. & Associates, Holiday Retreatss sole shareholder. Although Derebery claimed these checks were for payroll, he produced no records to substantiate this claim. Other testimony indicated that the payroll expenditures were actually $170,000 less than the amount Derebery claimed.
Plaintiff introduced evidence that Derebery wrote himself checks for "petty cash" totaling $137,000. Derebery wrote checks from Holiday Retreatss account, one of which was payable to Derebery in the amount of $46,000. Three other checks made out to Derebery totaled $42,000.
While plaintiff was required to show evidence of defendants "financial condition," so as to support an award of punitive damages, evidence of "net worth" is not the exclusive means of proving financial condition. Evidence of gross income is relevant, and some of plaintiffs inability to prove defendants net worth was attributable to defendants failure to produce requested documents in discovery.
Vossler v. Richards Manufacturing Co. (1983) 143 Cal.App.3d 952, 967, 968, disapproved on other grounds by Adams v. Murakami (1991) 54 Cal.3d 105, 115-116 [although net income is the best yardstick, figures on gross sales, gross income, or gross wealth are relevant].
See StreetScenes v. ITC Entertainment Group, Inc. (2002) 103 Cal.App.4th 233, 243 [defendant who did not comply with requested attempts to obtain financial information is "in no position to complain" about punitive damage award].
The evidence of defendants financial condition was sufficient to support the award of punitive damages.
VI. The Attorney Fees Award Was Proper
Plaintiff elected to take judgment on the nuisance cause of action. After trial, plaintiff moved for an award of attorney fees for defendants refusal to accept his pretrial offer of compromise. Defendants contend that the award of attorney fees was improper because Code of Civil Procedure section 1021.1, subdivision (f), specifically excludes actions for injunctive relief or personal injury from its scope. That is, defendants argue that the gravamen of the nuisance cause of action was for injunctive relief (to restore water service) and for personal injury.
Code of Civil Procedure section 1021.1, subdivision (f), provides in relevant part that, "No attorneys fees shall be awarded pursuant to this section in any of the following instances:
". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"(5) For or against any party as to any cause of action the gravamen of which is personal injury, wrongful death, or injunctive relief." (Italics added.)
The "gravamen," or "essence of a private nuisance is its interference with the use and enjoyment of land." It is not a personal injury action.
Oliver v. AT&T Wireless Services (1999) 76 Cal.App.4th 521, 534 (italics added, original italics omitted).
Neither is the essence of the action one for injunctive relief. McDowell v. Watson, on which defendants rely, is inapposite. There, plaintiffs challenged certain approvals under the California Environmental Quality Act (CEQA). They brought a writ petition seeking to restrain the County from implementing a proposed project until certain procedural requirements were met. This court held that the "gravamen" of the mandamus action was essentially for injunctive relief. Obviously, the entire point of the CEQA action was to halt, or enjoin, further processing of the project at issue. The CEQA action did not involve a claim for damages. Here, by contrast, plaintiff sought and received a substantial damages award for the defendants interference with his property rights.
McDowell v. Watson (1997) 59 Cal.App.4th 1155.
The award of attorney fees was not barred by Code of Civil Procedure section 1021.1, subdivision (f)(5).
DISPOSITION
For the reasons stated, the judgment is affirmed. Plaintiff shall recover costs on appeal.
We concur: Ramirez P.J. and Hollenhorst J.