Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIN048064, Jacqueline M. Stern, Judge.
IRION, J.
Daniel J. Barry and Catherine E. Barry (the Barrys), as cotrustees of the Daniel J. Barry and Catherine E. Barry Family Living Trust (the Trust) appeal from a judgment, entered after a bench trial, awarding an equitable easement in favor of Gerald Block and Josephine Block (the Blocks), which permits the Blocks to keep in place a boundary wall between the Barrys' real property and the Blocks' real property that encroaches approximately two and half feet onto the Barrys' lot.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. The History of the Wall
In 2002, the Barrys, who are real estate agents specializing in Rancho Santa Fe properties, bought a two-acre residential property in Rancho Santa Fe (the Barry property), which they use as an income property.
A concrete wall (the Wall) runs parallel to the boundary separating the Barry property and the property to the south, which is owned and occupied by the Blocks (the Block property). The Wall is approximately 380 feet long and ranges in height from approximately five to seven feet. Instead of sitting on the property line between the two properties, the Wall encroaches between 2.4 and 2.7 feet onto the Barrys' property and, as a practical matter, prevents the Barrys from using 930 square feet of their property. Trees and shrubs are planted along the Wall on both sides.
The Wall was constructed in 1990 and 1991 by the Considines, who were the owners of the Block property at the time. The Wall provides privacy to the residents of both properties. Further, because both properties contain swimming pools located near the Wall, the Wall enhances the safety of each home.
The Considines built the Wall where a wooden fence had stood. Mr. Considine assumed that the wooden fence marked the boundary between his property and the Barry property. In 1990 and 1991, when the Considines were building the Wall, the Barry property was owned by Joseph and Gigi Fenley (the Fenleys). While construction of the Wall was underway, the Fenleys learned through a property survey that the Wall was encroaching onto their property. Mr. Considine allowed the Fenleys to decide what to do with the partially completed Wall. The Fenleys decided that the Wall should be completed and should stay in its current location.
Around the time the Wall was built, the Rancho Santa Fe Association Art Jury objected to the height of the Wall. The Fenleys wrote to the Art Jury on March 21, 1991, to indicate their approval of the height of the Wall. Pointing out that a survey had shown the Wall to be located three feet inside their property, the Fenleys stated the Wall "is a welcome addition in order to maintain privacy and quiet enjoyment by both property owners." The Fenleys stated, "We wish to go on record, as owners of the adjoining property to Mr. Considine, that we do not object to the height of the existing wall. In addition, Suzanne McKellar and Warren Densley, who will become the new owners of our property on May 1, also wish to state their desire that the wall remain unchanged."
The Blocks purchased the Block property in 1994 and have lived in it ever since. When they purchased their property, the Blocks were not aware that the Wall encroached onto the Barry property. Instead, they assumed that the Wall was built on the property line.
Along the western boundary of the Block property, there is another concrete wall that intersects with the Wall at an angle. That wall (the Kelley wall) separates the Block property from property owned by Susan Kelley (the Kelley property). The Kelley wall was built by the Considines under the same building permit as the Wall. When the Blocks were in escrow to buy their property in 1994, they were informed that the Kelley wall encroached on the Kelley property, and they were required to enter into a license agreement concerning the Kelley wall (the Kelley license agreement).
When the Barrys bought the Barry property in 2002, they were aware that the Wall encroached onto their property. Mr. Barry found out about the encroachment in 1999 through a survey of the property boundaries when he acted as the real estate agent for the previous buyer of the Barry property. The Barrys confirmed the encroachment when they had another survey performed before they bought the property in 2002. The Barrys did not talk to the Blocks about the encroachment before buying the property. Instead, they assumed that the Blocks would, upon request, sign a license agreement concerning the Wall. In 2005, the Barrys asked the Blocks to sign a license agreement regarding the Wall, and the Blocks refused to do so.
After the Barrys purchased the Barry property, they never lived in it, and instead have leased it out to a tenant. The Barrys are considering building a new and larger house on the Barry property, a tennis court and perhaps a barn for horses, but they have not developed any specific plans. According to applicable Rancho Santa Fe rules, construction of a tennis court on a property is not allowed unless the lot size is at least two acres. In Mr. Barry's opinion, if the Blocks were to obtain ownership over the portion of the Barry property to the south of the Wall, the value of the Barry property would go down in value by "about" $500,000 because it would be less than two acres, and the construction of a tennis court or the keeping of horses would not be allowed.
No expert testimony in the record explains the acreage restrictions for keeping horses on a Rancho Santa Fe property, but Mr. Barry's testimony assumes that a minimum two-acre parcel is required.
The cost to remove the Wall would be at least $14,280. Rebuilding a wall in a nearby location would cost at least $54,000, although current Rancho Santa Fe Association rules would not allow for the construction of a concrete wall, and would instead permit only a five-foot high wood rail fence. In addition, unless neighboring property owners agree otherwise, a fence is required to be set back five feet from the property line. Accordingly, if the Barrys were to build their own fence after the Wall was torn down, and the Blocks did not agree to locate the fence closer to the property line, more of the Barrys' property would be made unusable by the new fence than by the Wall's two- to three-foot encroachment onto their property.
When the Blocks submitted plans to remodel their house in 2006, they learned from the County of San Diego (the County) that there had never been a final inspection of the Wall after it was built in 1991, so that the Wall was an "open item." To obtain a renewal of the building permit for the Wall as a step toward getting a final approval, the County requested that the Blocks resubmit a site plan from the time period when the Wall was being constructed. While this litigation was pending, the Blocks obtained the Considines' site plan concerning the Wall from the files of the Rancho Santa Fe Association and submitted it to the County. That site plan incorrectly showed the Wall to be located on the Block property, not the Barry property. The County renewed the building permit concerning the Wall and issued a final approval, but it rescinded that approval the next day after the County found out that litigation was pending to determine whether the Wall was encroaching onto the Barry property.
B. The Lawsuit
The Barrys, as cotrustees of the Trust, filed a complaint against the Blocks in October 2005, followed shortly by an amended complaint filed by Daniel Barry alone on behalf of the Trust. The amended complaint sought (1) a mandatory injunction requiring the Blocks to remove the encroachment caused by the Wall; and (2) declaratory relief (a) that the Barrys are the true owners of the Barry property and (b) that the Blocks have no right, title or interest to the Wall and the portion of the Barry property to the north of the Wall.
The Blocks filed an answer to the amended complaint. In the affirmative defense labeled "Equitable Easement," the Blocks alleged that "there exists an equitable easement to maintain the status quo between the parties and their successors by way of the existing divisional fence between the properties."
The Blocks also filed a verified cross-complaint against the Barrys as trustees of the Trust, which sought: (1) to quiet title with respect to the Wall under the theory of easement by grant; (2) to quiet title with respect to the Wall under the theory of prescriptive easement; and (3) declaratory relief (a) that the Blocks are the true owners of the Wall and the real property that it encloses and (b) that the Barrys have no right, title or interest to the Wall and the real property to the north of the Wall.
As we have noted, the cross-complaint contains claims against both Daniel Barry and Catherine Barry as cotrustees of the Trust, although the amended cross-complaint was brought by Daniel Barry alone, on behalf of the Trust. For the sake of convenience we will refer to the "Barrys" collectively in setting forth the position of the plaintiff/cross-defendants in this litigation.
The litigation proceeded to a four-day bench trial, which included a site visit by the trial court to view the Wall. At trial, the Barrys argued, among other things, that they are entitled to injunctive relief in the form of an order that the Wall be removed. The Blocks argued that if the trial court did not rule in their favor on a theory of prescriptive easement or easement by grant, the trial court should at least craft an equitable solution, allowing the Wall to remain in place.
Certain evidentiary rulings were made during trial that are relevant to the issues presented on appeal.
First, during trial, the trial court did not admit into evidence the Kelley license agreement that the Blocks entered into in 1994, concluding that it was not relevant. However, the trial court did allow extensive testimony on the topic. During the examination of Ms. Block concerning the Kelley wall, counsel read at length from the Kelley license agreement. Mr. Block testified briefly on the subject, and Mr. Barry testified about his knowledge of the Kelley license agreement.
Second, the trial court sustained an objection, on foundational grounds, to a question asking Ms. Block whether she knew, at the time she provided the site plan to the County, that the site plan depicted the Wall as being on the Block property.
Third, over the Barrys' objection, the trial court heard evidence that the Barrys filed a claim with their title insurance company concerning the encroachment by the Wall after receiving the Blocks' cross-complaint, and that they received an insurance settlement in the amount of $20,000.
C. The Trial Court's Statement of Decision
In its statement of decision, the trial court denied the relief requested by the Barrys and ordered an equitable remedy. Specifically, the trial court granted the Blocks an equitable easement over the land that the Wall encompasses, which will terminate upon the Blocks' sale or transfer of their real property. The trial court expressly stated that the Blocks "may not add to this encroachment and may only do routine and necessary maintenance on the [W]all."
Citing Hirshfield v. Schwartz (2001) 91 Cal.App.4th 749 (Hirshfield), the trial court explained that it had "done an equitable balancing to determine whether [the Blocks] will suffer substantial hardship if [the Barrys'] relief is granted, as compared to a lesser hardship to the [Barrys]." Referring to the three factors that Hirshfield directs a court to consider in fashioning an equitable remedy concerning an encroachment onto real property, the trial court found (1) that the Blocks were innocent parties because they bought the property without knowing of the encroachment; (2) the Barrys will not suffer irreparable injury if the Wall remains in place under the terms of the court's equitable remedy; and (3) the Blocks would suffer irreparable injury if the Wall were ordered to be removed.
The judgment specifies the following equitable relief: "Using its equitable powers and applying the relative hardship doctrine, the Court finds for [the Blocks] on their Cross-Complaint and grants them an easement over the land encompassed by the block wall and real property enclosed therein. [¶] . . . This equitable easement will terminate upon [the Blocks'] sale or transfer of the subject residence. [¶] . . . [The Blocks] may not add to the encroachment, but may perform routine and necessary maintenance on the wall. [¶] . . . The scope and duration of the easement is limited. [The Blocks] only have a right to use the property for the defined period and have not been granted any type of ownership or prescriptive rights in the land."
The trial court entered judgment awarding the equitable relief set forth in the statement of decision, and awarded costs to the Blocks. The Barrys appeal from the judgment.
The amount of the costs was to be determined based on a later-filed memorandum of costs. The appellate record contains the memorandum of costs but does not reflect whether costs were ultimately awarded in the amount set forth therein.
II
DISCUSSION
A. The Trial Court Properly Granted an Equitable Easement in Favor of the Blocks
Based on several distinct arguments, the Barrys challenge the trial court's decision granting equitable relief to the Blocks in the form of an equitable easement under the authority set forth Hirshfield, supra, 91 Cal.App.4th 749. As we will explain, we conclude that the Barrys' arguments lack merit.
1. Standard of Review
We apply an abuse of discretion standard of review to the trial court's decision to grant an equitable easement to the Blocks. (Hirshfield, supra, 91 Cal.App.4th at p. 771.) "Under that standard, we resolve all evidentiary conflicts in favor of the judgment and determine whether the court's decision ' "falls within the permissible range of options set by the legal criteria." ' " (Ibid.) With respect to the trial court's factual findings, "[t]he substantial evidence standard applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial." (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462.)
2. Applicable Legal Standards
We first review the legal principles that apply to the trial court's decision to deny the injunctive relief sought by the Barrys and instead grant equitable relief, in the form of an equitable easement, in favor of the Blocks under the authority set forth in Hirshfield, supra, 91 Cal.App.4th 749.
As established by Hirshfield, when a plaintiff seeks the removal of encroachment from its land and "the trial court properly denies such an injunction, it has the power in equity to grant the encroacher affirmative relief by fashioning an interest to protect the encroacher's use of the disputed land." (Hirshfield, supra, 91 Cal.App.4th at pp. 754-755.)
"To deny an injunction, three factors must be present. First, the defendant 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 grant the injunction if the plaintiff 'will suffer irreparable injury . . . regardless of the injury to defendant.' Third, the hardship to the defendant from granting the injunction '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. . . .' " (Hirshfield, supra, 91 Cal.App.4th at p. 759.) Put another way, "the trial court must identify the competing equities underlying each party's position. It then must balance the relative hardships of granting or denying an injunction to remove encroachments from the plaintiff's property." (Id. at p. 761.) This doctrine is commonly referred to as the relative hardship doctrine, although case law and commentaries use various other labels, such as balancing of equities, balancing conveniences and comparative injury. (Id. at p. 754 & fn. 1.)
Hirshfield relies on Christensen v. Tucker (1952) 114 Cal.App.2d 554, 562-563 (Christensen) for its formulation of the relative hardship doctrine. Christensen states, "In order to deny the injunction, certain factors must be present: 1. Defendant must be innocent -- the encroachment must not be the result of defendant's willful act, and perhaps not the result of defendant's negligence. In this same connection the court should weigh plaintiff's conduct to ascertain if he is in any way responsible for the situation. 2. If plaintiff will suffer irreparable injury by the encroachment, the injunction should be granted regardless of the injury to defendant, except, perhaps, where the rights of the public will be adversely affected. 3. The hardship to defendant by the granting of the injunction 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." (Ibid.) As explained in Christensen, in exercising its discretion, the trial court must start "with the premise that defendant is a wrongdoer, and that plaintiff's property has been occupied" and it must resolve "doubtful cases . . . in favor of the plaintiff." (Id. at p. 562.)
In determining whether the trial court abused its discretion in granting an equitable easement, the law governing prescriptive easements is not relevant. (Hirshfield, supra, 91 Cal.App.4th at p. 771.) Instead, the inquiry is whether the equitable interest granted by the trial court "fell within the trial court's permissible range of options." (Ibid.)
3. The Trial Court Properly Concluded that the Encroachment Was Innocent
In challenging the trial court's decision, the Barrys first focus on the rule that to deny an injunction to remove an encroachment onto real property "the defendant must be innocent," or put another way, "his or her encroachment must not be willful or negligent." (Hirshfield, supra, 91 Cal.App.4th at p. 759.) Hirshfield explained that in applying this factor, "[t]he court should consider the parties' conduct to determine who is responsible for the dispute." (Ibid.)
On the issue of the Blocks' status as innocent encroachers, the trial court stated, "Here, the evidence shows that the [W]all has been in place for at least 15 years. [The Blocks] have owned and lived on their property for 12 years. They purchased the property not knowing that the [W]all encroached on the adjoining property and just learned of it when this litigation was commenced. On the other hand, Mr. Barry was aware of the encroachment since 1991. Indeed, his testimony was that the known encroachment was not an impediment to his purchase in 2002 of [the Barry property]."
The Barrys argue that the focus of the trial court's analysis on the state of mind of the Blocks was flawed because, according to the Barrys, the trial court should have focused on whether the individuals who originally created the encroachment, i.e., the Considines, were innocent encroachers. According to the Barrys, the Considines were not innocent in that they had knowledge that the Wall encroached before it was completed, and the encroachment by the Considines was, at the least, negligent because they did not confirm the property boundaries before starting construction of the Wall. The Barrys also argue that the Considines did not have an innocent state of mind because they failed to obtain final approval from the County for the Wall.
In support of their argument that the proper inquiry focuses on the state of mind of the party who constructed the encroachment, the Barrys cite Dolske v. Gormley (1962) 58 Cal.2d 513, 521 (Dolske). In Dolske, our Supreme Court stated that "a court, in determining whether a mandatory injunction should issue ordering removal of encroachments, must consider various factors including the good faith of the party who constructed the encroachments." (Id. at pp. 520-521.)
For this principle Dolske cited Blackfield v. Thomas Allec Corp. (1932) 128 Cal.App. 348. Blackfield explained that the encroaching wall at issue "was erected, not by respondent, but by its immediate predecessor in interest, and that the said encroachment was the result of excusable mistake, and without knowledge or intent on the part of the builder." (Blackfield, at p. 349.) Although Blackfield recited this fact as part of the balancing of the equities, it did not state that, as a general principle, the state of mind of the party who constructed the encroachment, rather than the state of mind of the current property owner, would always be the determinative fact in deciding whether equity favors an injunction.
We note that although Dolske states that the good faith of the party who constructed the encroachments is the relevant inquiry, the statement of the rule in other cases, including Hirshfield and Christensen, is that the court should inquire regarding the defendant's state of mind. (See, e.g., Christensen, supra, 114 Cal.App.2d at pp. 562-563 ["In order to deny the injunction . . . [d]efendant must be innocent"]; Hirshfield, supra, 91 Cal.App.4th at p. 759 ["To deny an injunction . . . the defendant must be innocent"].) As we will explain, because the result would have been the same even if the trial court were to have focused on the state of mind of the Considines during the construction of the Wall, we need not resolve whether it was error for the trial court to focus solely on the Blocks' state of mind.
A more recent summary of the relative hardship doctrine by our Supreme Court does not clearly address the issue, stating only that the inquiry is whether the encroachment "was innocently made." (Warsaw v. Chicago Metallic Ceilings, Inc. (1984) 35 Cal.3d 564, 575-576 (Warsaw) ["a court has discretion to balance the hardships and deny removal of an encroachment if it was innocently made and does not irreparably injure the plaintiff, and where the cost of removal would greatly exceed the inconvenience to the plaintiff by its continuance"].)
Our Supreme Court has explained that a party "is not innocent if he wilfully encroaches on the plaintiff's land. [Citations.] To be wilful the [encroaching party] must not only know that he is building on the plaintiff's land, but act without a good faith belief that he has a right to do so." (Brown Derby Hollywood Corp. v. Hatton (1964) 61 Cal.2d 855, 859, italics added (Brown Derby).) Thus, an "[encroaching party's] action can be intentional and yet be innocent if he acted in good faith." (Ibid., italics added.) In Brown Derby, our Supreme Court remanded for a determination as to the good faith of the encroaching party and noted that if the "plaintiff . . . induced [the encroaching party] to believe that he had a right to act, [the encroaching party's] claim of good faith is supported," but that "[o]n the other hand, continuation of construction after objection by plaintiff suggests a lack of good faith." (Brown Derby, supra, 61 Cal.2d at p. 859.)
The Barrys contend that because the Fenleys allowed the Wall to be constructed, the Considines in effect received a "license" to encroach on the Barry property. According to the Barrys, the existence of that license operates to prevent the Blocks from claiming that the Considines acted innocently. We disagree. As Brown Derby explains, when a party erects an encroaching structure with the belief that he has the right to do so (such as with permission from the neighboring landowner), he acts innocently and in good faith. (Brown Derby, supra, 61 Cal.2d at p. 859.)
Here, the uncontroverted evidence shows that the Considines acted innocently and in good faith as those terms are explained in Brown Derby. (Brown Derby, supra, 61 Cal.2d at p. 859.) As established at trial, the Fenleys gave the Considines permission to finish constructing the Wall on what was then the Fenleys' property. Accordingly, the Wall was constructed by Mr. Considine with "good faith belief that he ha[d] a right to do so." (Ibid.) Further, through the Fenleys' statements, Mr. Considine was "induced . . . to believe that he had a right to act." (Ibid.) Thus, the Considines acted in good faith and with an innocent state of mind as defined in the case law.
The Barrys argue that the Considines did not have an innocent state of mind because they never received the County's final sign-off on the Wall after it was constructed. The Barrys speculate that this was because the Considines had a guilty state of mind in that they knew the Wall was on the Barry property. We reject this argument on two grounds. First, there was no evidence at trial as to the reason that the County did not issue a final approval of the Wall in 1991. Second, the applicable authority does not direct us to focus on whether the encroaching structure is properly permitted. Instead, following the approach in Brown Derby, supra, 61 Cal.2d 855, 859, we focus on the fact that the Considines built the Wall with the permission of the Fenleys.
In an alternative argument, the Barrys focus on the Blocks' state of mind rather than that of the Considines. They present two arguments as to why the Blocks did not have an innocent state of mind.
First, the Barrys argue that because the Blocks were on notice that the Kelley wall encroached onto the Kelley property, the Blocks were also on notice that the Wall encroached onto the Barry property. The Barrys argue that the wall comprising the Kelley wall and the Wall is "a continuous wall" and "having signed a written acknowledgement that one part of the wall encroached, the Blocks had no basis to believe any other part of the wall, including that part that separated them from the Barrys, was not also encroaching, and any belief to the contrary was either not in good faith or simply negligent." As we will explain, we reject this argument.
It is clear from the evidence that the Kelley wall intersects the Wall at an angle, and it runs along the western border of the Block property. The Wall, in contrast, runs along the northern border of the Block property. Because the two walls intersect each other at an angle, rather than continuing in a straight line, there was no reason for the Blocks to conclude that because the Kelley wall encroached onto the Kelley property, the Wall must encroach onto the Barry property. Indeed, because the Blocks were notified while closing escrow that the Kelley wall encroached, but they were not notified while closing escrow that there was any problem with the Wall, they may reasonably have assumed that the Wall, in contrast, was properly situated on the property line.
Second, the Barrys argue that the Blocks are not innocent parties because of their conduct while attempting obtain final approval of the Wall from the County so that they could proceed with their home remodeling project. The Barrys argue that by submitting the original site plan to the County in 2006 (after this litigation was filed), the Blocks "knowingly misrepresented to the County that the wall was on their own property" and "acted in bad faith by misrepresenting the facts to the Building Department." We disagree.
Assuming (contrary to the Barrys' own position) that that the state of mind of the current property owner is relevant, the applicable inquiry is whether the Blocks willfully or negligently encroached on the Barry property. (Hirshfield, supra, 91 Cal.App.4th at p. 759.) The Wall has been in place since 1991, and the Blocks bought the Block property in 1994 without knowledge that the Wall encroached. The Blocks did not find out about the encroachment until the Barrys notified them in 2005. The Blocks' submission of an original site plan to the County at the County's request, after the commencement of this litigation, does not impact the Blocks' state of mind with respect to the encroachment. The evidence shows that the Blocks were merely complying with the County's request for an original site plan. Submission of the site plan to the County by the Blocks in 2006 neither impacted the placement of the Wall nor demonstrated that the Blocks had any preexisting knowledge of the encroachment.
4. The Trial Court Properly Concluded that Removal of the Wall Would Cause Substantial Hardship to the Blocks
The Barrys next take issue with the trial court's ruling concerning the third factor set forth in Hirshfield for denying an injunction to remove an encroachment. Under the third factor, "the hardship to the defendant from granting the injunction '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.' " (Hirshfield, supra, 91 Cal.App.4th at p. 759, italics omitted.) As Hirshfield explains, the term "substantial hardship" is also often referred to in the case law as " 'irreparable injury' " to the encroacher. (Id. at p. 761.)
The trial court considered the third factor, stating "the evidence showed that [the Blocks] would suffer irreparable injury if the [W]all were ordered removed. It is clear that they bought the property with the innocent belief it was on their property and was the boundary between the two lots. They have relied on that belief for the past 12 years, all the time caring for the area up to and including their side of the [W]all. The [W]all affords them privacy and safety, especially since the swimming pools of both properties are fairly close in proximity and the pools and the backyards could be seen if the [W]all was not there. The cost to remove the [W]all varied from $14,280 to $20,500. The cost to rebuild a similar wall ranged from $54,000 to $87,000. While these sums do not carry much weight in the Court's decision, under existing Rancho Santa Fe regulations, the only type of wall that could be constructed would be wooden rail fence and it would not afford any degree of privacy or security."
The Barrys argue that in making this determination, the trial court improperly focused on the "deprivation of benefits" to the Blocks that would occur were the Wall to be removed, "as opposed to substantial hardship." The Barrys rely on Fairrington v. Dyke Water Co. (1958) 50 Cal.2d 198, 200. There, our Supreme Court explained that the lower court erred when it concluded that removal of an encroaching business sign would create a substantial hardship based solely on the fact that the "sign is a 'substantial benefit to the defendant in the carrying on of its business.' " (Ibid.) Fairrington explained that "[d]eprivation of a substantial benefit . . . falls short of the imposition of substantial hardship." (Ibid.)
Here, however, the trial court did not premise its ruling solely on the fact that the Wall provides a valuable benefit to the Blocks. Significantly, the trial court noted that it would cost at least $14,280 to remove the Wall and an additional amount to rebuild it. This hardship would be coupled by the Blocks' inability to preserve the current privacy and safety of the property because of current restrictions on the type of fence that can be built. Our Supreme Court has been clear that the expense of removing an encroachment, along with the harm that the removal would create to the property, will establish substantial hardship. Specifically, in Dolske, supra, 58 Cal.2d 513, 520, our Supreme Court concluded that irreparable injury would occur to the defendant if it were required to remove certain encroachments from an overhanging structure because of the "considerable expense" involved and the "disfigurement" of the structure. Thus, applying this precedent, we determine that the trial court properly concluded that the removal of the Wall would cause substantial hardship to the Blocks by focusing on both the associated cost and the Blocks' inability to otherwise preserve the privacy and safety of their property.
Similarly, Warsaw, supra, 35 Cal.3d 564, 575-576, focused on the "cost of removal" in determining whether the relative hardship test favored the denial of an injunction to remove an encroachment. Also, in Hirshfield, premised solely on expense to remove the encroachments, the court concluded that the defendant had established substantial hardship. (Hirshfield, supra, 91 Cal.App.4th at pp. 762-763.)
5. The Trial Court Did Not Err in Failing to Require the Blocks to Pay Damages to the Barrys
The Barrys argue that the trial court erred because it did not award them any amount to compensate for their loss of use of a portion of their property. The Barrys point out that case law generally states that when an injunction to remove an encroachment is denied under the relative hardship doctrine, the plaintiff is required instead to accept damages as a remedy for the encroachment. (See Hirshfield, supra, 91 Cal.App.4th at p. 759 ["Under this doctrine, once the court determines that a trespass has occurred, the court conducts an equitable balancing to determine whether to grant an injunction prohibiting the trespass, or whether to award damages instead" (italics added)]; Brown Derby, supra, 61 Cal.2d at p. 858 [" 'where the encroachment does not irreparably injure the plaintiff, was innocently made, and where the cost of removal would be great compared to the inconvenience caused plaintiff by the continuance of the encroachment, that the equity court may, in its discretion, deny the injunction and compel the plaintiff to accept damages,' " quoting Christensen, supra, 114 Cal.App.2d at p. 559].) Thus, for example, in Hirshfield, the court denied an injunction that would have required the defendant to remove an encroaching fence and other structures, but it ruled that the plaintiffs were to recover damages in a sum equal to the fair market purchase price of the parcels that the defendant was encroaching upon. (Hirshfield, at p. 772.) In Hirshfield, the court's award of the fair market purchase price of the parcels was based on evidence at trial in the form of an appraisal of those parcels. (Id. at p. 758.)
In this case, the Barrys objected to the statement of decision on the ground that it "does not discuss the compensation to be paid to the Barrys for the value of the equitable interest in the land taken by the Blocks by court order or the damages caused to the Barry property as a result of the court order." The trial court responded that the objection was "not relevant since there was not any evidence at trial on this specific issue of compensation or damages."
The Barrys argue that it was not their burden, but rather the burden of the Blocks, to submit evidence of the value of the property encroached upon by the Wall. They argue that because the Blocks raised the issue of equitable relief by their answer to the amended complaint, the Blocks should have the burden on the issue of damages as well. We disagree.
The award of damages to the Barrys for the encroachment onto their property is affirmative relief in favor of the Barrys based on a legal theory rather than an equitable theory. The applicable authorities make clear that when the court denies the equitable remedy of removing the encroachment, the plaintiff is left to his legal remedies, i.e., receiving an award based on any damages caused by the encroachment. (Hirshfield, supra, 91 Cal.App.4th at p. 759; Christensen, supra, 114 Cal.App.2d at p. 559.) In order to obtain a legal remedy in the form of damages, the Barrys have the burden to submit evidence as to the amount of damages they have incurred. (See Carpenter Foundation v. Oakes (1972) 26 Cal.App.3d 784, 799 ["It is elementary that a party claiming damage must prove that he has suffered damage and prove the elements thereof with reasonable certainty"].)
The Barrys did not meet their burden. The amended complaint did not seek monetary damages to compensate for the encroachment; instead, it sought only an injunction to remove the Wall and declaratory relief concerning ownership of the Barry property. Consistent with the lack of focus on recovering damages in the amended complaint, at trial the Barrys did not attempt to show that any damages resulted from the encroachment.
In contrast, in Hirshfield the plaintiffs pled a cause of action for trespass, which likely would have included a claim for compensatory damages. (Hirshfield, supra, 91 Cal.App.4th at p. 756, fn. 6.)
The only testimony relating to the issue of damages was Mr. Barry's statement that he believed the value of the Barry property would be diminished by "about" $500,000 if the parcel was less than two acres because in that event a property owner could not build a tennis court or keep horses. However, as the trial court specifically pointed out in its statement of decision, the equitable relief granted by the trial court did not reduce the size of the Barry property to less than two acres. Instead, the trial court merely issued an equitable order allowing the Blocks to keep the Wall in place during their ownership of the Block property and have access to the land on their side of the Wall. The trial court made clear that the Blocks "have not been granted any type of ownership or prescriptive rights in the land." Thus, the Barry property still comprises at least two acres, and Mr. Barry's opinion as to the $500,000 diminution in value of the Barry property does not apply.
In sum, because the Barrys submitted no evidence establishing any damages caused by the encroachment, the trial court properly omitted an award of damages from the statement of decision and the judgment. (See D'Andrea v. Pringle (1966) 243 Cal.App.2d 689, 698-699 [the trial court erred in awarding damages after denying an injunctive relief to remove an encroachment, because "[n]o evidence was introduced as to the value of plaintiffs' land or the reasonable value of the use thereof upon which to predicate an award"].)
B. Evidentiary Issues
The Barrys challenge three of the trial court's evidentiary rulings. As we will explain, none of the alleged errors present a ground for reversal.
1. Admission of the Kelley License Agreement
During trial, the Barrys attempted to move into evidence the Kelley license agreement. The trial court declined to admit the Kelley license agreement, ruling that it was not relevant. The Barrys claim that this ruling was in error because the Kelley license agreement was relevant to show that the Blocks were on notice that the Wall encroached onto the Barry property.
We review "for abuse of discretion a decision on admissibility that turns on the relevance of the evidence in question." (People v. Waidla (2000) 22 Cal.4th 690, 717.)
We conclude that the trial court was within its discretion to conclude that the Kelley license agreement was not relevant to the issues presented. As we have explained, because the Kelley wall intersects the Wall at an angle and forms the western boundary of the Block property, and the Wall, in contrast, forms the northern boundary of the Block property, the Blocks' prior knowledge that the Kelley wall encroaches on the Kelley property is not relevant to show the Blocks' knowledge that the Wall encroaches on the Barry property.
As we have discussed, the Barrys contend the state of mind of the Considines, rather than the state of mind of the Blocks, is the proper focus of the first factor in the relative hardship analysis. According to the Barrys' own approach to the relative hardship doctrine, the outcome of the analysis should not depend on proving (through the Kelley license agreement) that the Blocks knew the Wall encroached onto the Barry property.
2. Testimony Concerning Submission of the Site Plan to the County
The trial court sustained an objection on foundational grounds to a question asking Ms. Block whether she knew, at the time she provided the site plan to the County, that the site plan depicted the Wall as encroaching onto the Block property. Misreading the record, the Barrys argue that the question was sustained on relevancy grounds, and argue that the trial court's ruling was in error because the question called for relevant information.
Because the record does not support the Barrys' contention, we reject it. The objection was sustained on foundational grounds. The record shows that the same question was asked and answered after a proper foundation was established.
3. Admission of Evidence that the Barrys Received a $20,000 Title Insurance Settlement
During the trial, Mr. Barry testified on cross-examination that he had filed a claim with his title insurance company concerning the encroachment by the Wall and that he had received an insurance settlement in the amount of $20,000. The Barrys objected that evidence of the $20,000 insurance settlement was barred under the collateral source rule. The trial court overruled the objection.
"The 'collateral source rule' provides that where a person 'suffers personal injury or property damage by reason of the wrongful act of another, an action against the wrongdoer for the damages suffered is not precluded nor is the amount of damages reduced by the receipt by him of payment for his loss from a source wholly independent of the wrongdoer. . . .' " (Pacific Gas & Electric Co. v. Superior Court (1994) 28 Cal.App.4th 174, 176.) With respect to the issue of whether evidence of a collateral source of payment is admissible at trial, "California has adopted the closely related principle that, as a general rule, jurors should not be told that the plaintiff can recover compensation from a collateral source," because such evidence would generally be unduly prejudicial under Evidence Code section 352. (Lund v. San Joaquin Valley Railroad (2003) 31 Cal.4th 1, 10; see also Hrnjak v. Graymar, Inc. (1971) 4 Cal.3d 725, 731.)
Here, the collateral source doctrine is not applicable because the Barrys were not seeking an award of damages. As we have explained, the operative pleading sought only injunctive relief requiring removal of the Wall and declaratory relief regarding ownership of the Barry property. Further, the Barrys did not submit evidence at trial to establish that they incurred any damages. Accordingly, there was no opportunity for the trier of fact to attempt to offset any damages sought by the Barrys by using evidence of the $20,000 insurance settlement, and the collateral source rule was thus not implicated.
Further, even if the collateral source doctrine was applicable and required the exclusion of the evidence, the Barrys fail to present any argument as to how the admission of the evidence prejudiced them by impacting the outcome of the trial. We note that the trial court explained its reasoning in its statement of decision, and although it mentioned the insurance settlement in its summary of Mr. Barry's testimony, it did not rely on the fact of the insurance settlement in reaching its decision.
C. Reversal Is Not Warranted Based on the Trial Court's Statement that It Was Finding for the Blocks on Their Cross-complaint
The Barrys' final argument focuses on the trial court's statement in the judgment that it "finds for the [Blocks] on their Cross-Complaint." The Barrys point out that the only types of easements sought in the cross-complaint were a prescriptive easement and an easement by grant, not an equitable easement. According to the Barrys, the record does not support a finding in favor of the Blocks on a theory of prescriptive easement or easement by grant, and thus the trial court erred in stating that it "finds for the [Blocks] on their Cross-Complaint."
In addressing the Barrys' argument, we need not determine whether the evidence supports a finding in favor of the Blocks on the theory of prescriptive easement or easement by grant. The trial court clearly did not premise its ruling on those theories. Instead, the trial court expressly based its ruling on its equitable powers as set forth in Hirshfield, supra, 91 Cal.App.4th 749, and granted an "equitable easement." As Hirshfield explains, "[I]n a proper case, the courts may exercise their equity powers to affirmatively fashion an interest in the owner's land which will protect the encroacher's use." (Id. at p. 765, italics added.) Such equitable relief is distinct from relief under the law of prescriptive easements or other legal remedies. (Id. at pp. 764-765, 771.) Because the trial court did not grant relief on the legal theory of prescriptive easement or easement by grant, we have no occasion to review whether the evidence supports a finding that the Blocks hold a property right under those theories.
As we will explain, even if we accept for purposes of our analysis that trial court erred in finding in favor of the Blocks "on their Cross-Complaint" when the Blocks' cross-complaint sought a prescriptive easement or easement by grant, but did not seek an equitable easement, the trial court's error does not require us to reverse the judgment.
Arguably, the cross-complaint's cause of action for declaratory relief might be broadly construed to encompass a request for the equitable easement that the trial court afforded to the Blocks. The cause of action for declaratory relief (1) describes the dispute among the parties as including, among other things, the Barrys' claim that they are "entitled to maintain [the Wall]"; (2) states that the Blocks "seek to quiet title" regarding the Wall, and (3) requests a judicial determination that the Blocks "are the true owners of [the Wall] and real property enclosed therein." The trial court may have been referring to the cause of action for declaratory relief in the cross-complaint when it stated that it was finding for the Blocks on their cross-complaint. However, because we reject the Barrys' argument for reversal on the ground that they have not established prejudice, we need not, and do not, decide whether the trial court erred by stating that it was finding in favor of the Blocks on their cross-complaint.
First, based on the pleadings and the scope of the issues presented at trial, the trial court had the authority to resolve the action by granting an equitable easement rather than a prescriptive easement or easement by grant. Specifically, the Blocks alleged as an affirmative defense to the amended complaint that "there exists an equitable easement to maintain the status quo between the parties and their successors by way of the existing divisional fence between the properties." The Blocks also plainly sought such relief at trial, arguing in both their trial brief and their closing brief that if the trial court did not find a prescriptive easement or easement by grant, the trial court should at least craft an equitable solution, allowing the Wall to encroach on the Barry property. As established by Hirshfield, a court is within its authority to grant an equitable easement where, as here, it is faced with (1) a complaint seeking to remove an encroachment and obtain declaratory relief regarding a claimed encroachment, and (2) an answer to that complaint asserting an equitable easement as an affirmative defense. (Hirshfield, supra,91 Cal.App.4th at p. 756 [court properly granted an equitable easement in an action to quiet title, for declaratory relief and for trespass concerning an encroachment, which included an answer alleging "the existence of an easement by prescription 'or otherwise' "].) Thus, even if the trial court erred in stating that it was finding in favor of the Blocks on their cross-complaint, that error does not call into question the propriety of the equitable relief granted by the trial court, which was permissible regardless of the existence of the Blocks' cross-complaint.
Second, the Barrys have not established that they were prejudiced by the trial court's statement that it was finding for the Blocks on their cross-complaint. As appellants, the Barrys have the burden to show that they were prejudiced as a result of any error committed by the trial court. (Red Mountain, LLC v. Fallbrook Public Utility Dist. (2006) 143 Cal.App.4th 333, 347 ["an appellant has the burden to show not only that the trial court erred but also that the error was prejudicial"].) "Error is prejudicial if it is reasonably probable that a result more favorable to the appellant would have been reached absent the error." (Id. at p. 348.) The Barrys "bear[] the duty of spelling out in [their] brief exactly how the error caused a miscarriage of justice." (Paterno v. State of California (1999) 74 Cal.App.4th 68, 106.)
Here, the only prejudice that the Barrys identify from the trial court's finding in favor of the Blocks on their cross-complaint is the impact on the Blocks' entitlement to recover their court costs. The Barrys argue that "reversal on this issue is particularly significant for the purpose of determining the identity of the prevailing party for the purposes of an award of costs." However, the Barrys do not explain how the trial court's statement impacts the Blocks' status as prevailing parties entitled to recover their costs. As we will explain, we conclude that under the applicable rules, even if the trial court had found that the Blocks did not prevail on their cross-complaint, the Blocks would still be prevailing parties entitled to recover their costs.
Under Code of Civil Procedure section 1032, "a prevailing party is entitled as a matter of right to recover costs in any action or proceeding," with certain exceptions that are not relevant here. (Id., subd. (b).) The statutory definition of " '[p]revailing party' " includes "a defendant where neither plaintiff nor defendant obtains any relief." (Id., subd. (a)(4).) Case law establishes how this provision applies in instances where, as here, the litigation involves both a complaint and a cross-complaint. "[A] defendant who defeats the plaintiff's claim on a complaint, but who recovers nothing on his cross-complaint against the plaintiff, is nevertheless a prevailing party entitled to its costs." (Building Maintenance Service Co. v. AIL Systems, Inc. (1997) 55 Cal.App.4th 1014, 1025; see also McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1455; 7 Witkin, Cal Procedure (4th ed. 1997) Judgment, § 93, p. 625 ["The defendant is the prevailing party in a case in which the defendant files a cross-complaint, and plaintiff and defendant both fail to recover on their respective claims"].) Accordingly, because the Barrys also failed to recover on the amended complaint, the Blocks would still be considered the prevailing parties and would be entitled to recover their costs, even if the trial court were to have ruled that Blocks did not prevail on their cross-complaint. The Barrys have thus failed to establish they were prejudiced by the trial court's statement that it was finding in favor of the Blocks on their cross-complaint.
DISPOSITION
The judgment is affirmed.
WE CONCUR: McINTYRE, Acting P. J., O'ROURKE, J.