Opinion
H034985 H035252
12-06-2011
FRANCIS FREENOR III, Plaintiff, Cross-defendant and Respondent, v. ED BUTLER, Defendant, Cross-complainant and Appellant; PARADISE PARK MASONIC CLUB, INC., Cross-defendant and Respondent. ED BUTLER, Cross-complainant and Appellant, v. PARADISE PARK MASONIC CLUB, INC., Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Cruz County Super. Ct. No. CV156239)
(Santa Cruz County Super. Ct. No. CV156239)
I. INTRODUCTION
Plaintiff and cross-defendant Francis Freenor III (Freenor) and defendant and cross-complainant Edward Butler (Butler) are members of Paradise Park Masonic Club, Inc. (PPMC). Cross-defendant PPMC owns a large parcel of land in the unincorporated area of Santa Cruz County (County). PPMC members purchase the exclusive right to occupy defined portions of the land known as "allotments." Members are deemed to own the improvements erected upon their allotments but title to the land remains in PPMC.
This dispute concerns a carport that sits between the Butler and Freenor allotments. Butler claims he owns the carport and that his allotment includes all the land underneath. Freenor claims that, pursuant to a 1963 oral agreement between the previous allotment owners, he owns half the carport and his allotment includes the land underlying his half. The dispute was tried to the court and the court found in favor of Freenor.
On appeal Butler argues that the parties' predecessors in interest could not, as a matter of law, have agreed to place the carport over the line between the two allotments because such a configuration would have violated County zoning ordinances. We reject the argument. The dispute presents a factual issue, namely, what was the nature of the 1963 agreement between the prior owners of the Butler and Freenor allotments? There is substantial evidence to support the trial court's finding that the neighbors agreed in 1963 to share equally in building and owning the carport and that they intended the carport would be built half upon one allotment and half upon the other. There is also substantial evidence to support the trial court's finding that Butler took his allotment with notice that it included only half the carport. And finally, the record before us does not support Butler's assertion that the arrangement, which effectively results in side-yard setbacks of zero, is "illegal." Accordingly we shall affirm.
II. FACTS
PPMC is a residential community formed as a nonprofit mutual benefit corporation in 1924. Pursuant to its bylaws, the PPMC board of directors (Board) divides the PPMC land into allotments, the exclusive use of which it grants only to PPMC members, all of whom are either members of the Lodge of Free and Accepted Masons or the Order of the Eastern Star. Allotment boundaries are determined by the Board's staking committee. The member owns the improvements and pays his or her taxes, assessments and dues (TADs) directly to the Board. PPMC retains title to the land.
The Board is authorized by its bylaws to draw allotment lines and resolve disputes concerning their location. Bylaw No. 19 of the PPMC bylaws states: "Boundary lines for allotments are shown on the officially adopted maps of PPMC. If any dispute occurs between Members relative to a boundary line, the Board has the authority to determine the location of all boundary lines of the allotments on the real property of PPMC. . . ."
The County's exercise of authority over PPMC allotments has varied over the years. The PPMC land ownership model is unique in the county, having been established well before the Subdivision Map Act (Gov. Code, § 66410 et seq.). Although the allotments are referred to by parcel numbers, the land is not subdivided. The only survey of the property is the survey of the perimeter done in 1924. At one point the County expected the Board to obtain official lot line adjustments when it desired to change allotment boundaries. Later, the County ceded that authority to the Board. County building permits have always been required. In 1978, the County adopted a planned unit development (PUD) designation for PPMC. The PUD liberalized some building and setback restrictions and validated the allotment boundaries that were in place when it was adopted.
Butler's allotment (159 St. Victor) is located northwest of the Freenor allotment. Butler acquired his allotment from Florence Phillips in 2001 who, along with her husband Frank, had held the allotment since the 1950s. Freenor is the successor in interest to his parents Francis Freenor II and Donna Freenor, who acquired their allotment (161 St. Bernard) in 1958.
Donna Freenor later became Donna Hansen. To avoid confusion, we shall refer to her throughout as Donna Freenor.
In 1963, the two allotments had no common borders. The lower end of the Phillips's eastern border was separated from the upper end of the Freenors' western border by an abandoned roadway about 20 feet in width. Minutes of a March 1963 meeting of the Board state that the Board passed a motion to sell "the strip of abandoned roadway in Section 6, between Frank Phillips and Francis Freenor this strip to be divided equally between them." There was no map or other drawing showing how the road was to be divided.
On September 1, 1963, Frank Phillips submitted a request to the County seeking a zoning variance to build a "Double car port." In the request he notes, "We have required [sic] the 20 ft. of property the Planning Commission requested for the permit applied for in February 1963. This plan has the approval of the Board of Directors of Paradise Park. The property as acquired for this purpose, to build a double car port." The County issued a variance allowing Phillips to "Reduce the front setback requirement so that a detached carport may be constructed to within eight (8) feet of the front property line, as per plot plan on file." There is no record of a variance granted for the side of the property where the abandoned road was located. The carport was constructed so that it sat half on the southeastern corner of the original Phillips allotment and half on the abandoned roadway between the two allotments.
The Phillips and Freenor families shared the carport peaceably for the next 37 years. The Phillipses paid the taxes on the structure. The Freenors insured it and maintained it. In or about 1980, Donna Freenor built a storage shed on the side of the carport she used. Sometime in early 2000, the PPMC manager wrote to Donna Freenor noting that, although PPMC records showed that she was "enjoying the exclusive rights of 1/2 of the Blind Road" she had not been paying TADs on her half. The Board asked that the allotment be restaked. That process was completed on March 16, 2000. The restaking showed that Donna Freenor had exclusive rights to "1/2 of dead end road" described as eight by 16 feet in size. The completed restaking request document contains a notation confirming Donna Freenor's ownership of half the carport: "It appears that 1/2 of a 2 car carport belongs to the owner of Lots 1 & 4 at 161 St. Bernard."
Meanwhile, in 1997, Butler acquired the allotment next door to Florence Phillips. During the time he lived there Butler observed that Donna Freenor parked her car in the carport and stored her belongings in the attached shed. There were numbers corresponding to the street addresses of the two allotments affixed above the two stalls in the carport. The number 159 designated the slot Phillips used; 161 designated the slot Donna Freenor used.
In April 2001, Florence Phillips advertised her allotment for sale in the PPMC bulletin. The allotment was described as having a "one car carport." The Phillips's adopted son, Keith Johnson, worked with PPMC to develop the listing for the allotment. He testified that the listing described the allotment as including only a one-car carport because Florence had always said that Donna Freenor owned half of the carport and Donna Freenor had always used it.
Butler agreed to purchase the Phillips's allotment in May 2001. He testified that in reading the listing, he thought it advertised the allotment as having "one carport." In August 2001, around the time he was completing his installment payments to Florence Phillips, Butler received a letter from her in which she stated, "The carport is jointly owned by Donna [Freenor], as they paid for half when it was built and this year did the work of replacing the posts." Butler never questioned Freenor about the letter. Donna Freenor continued to park her car in the carport and to store her belongings in the shed until her death in 2003. The day after Donna Freenor died Butler approached Freenor claiming the entire carport as his own and demanding that he remove the car from the carport.
Freenor refused to vacate, believing that he owned half the carport. The parties turned to the Board to resolve the dispute. In 2004, the Board concluded that the Freenors and the Phillipses had intended that the carport be owned half by each. The
Board recognized that Frank Phillips was the one who applied for the variance and building permit in 1963 and that he, and later Butler, had been paying the TADs for the entire carport. The Board noted, however, "It would be impossible to get the necessary permits and or variances to build a carport which was in two names, each of whom owned use of part of the land and part of the carport itself. Therefore to keep things simple all the permits, variances, etc. were put in Mr. Phillips' name, and he was billed and paid the taxes on the improvement, and Mrs. Freenor-Hansen was responsible for the maintenance of the carport. [¶] In view of the foregoing, we believe it would not be in anybody's best interests to get the County Planning Department involved." The Board encouraged the parties to work out an agreement. The Board prepared a staking map that showed the side-yard boundary between the two allotments running right down the middle of the carport.
Butler disputed the Board's conclusion and took his claim to the County. If the carport straddled the boundary between the two allotments there would be no setback on either side. A 2006 letter from the County to the Board indicated that such a configuration was a zoning violation and demanded that the Board redraw the line to conform to "the configuration presented to the County in 1963." In 2006, PPMC manager Bill Lind signed a letter to the County indicating that the Board would rescind its 2004 decision. Evidently, the Board dragged its feet on the rescission because subsequent letters from the County threatened to post a notice of violation, which would have halted all building at PPMC if the Board did not promptly revise the allotment boundary.
Freenor sued Butler in January 2007, seeking a determination of his rights in the carport and a judicial declaration allowing him to continue to use it. Later that year, on August 8, 2007, County planning director Tom Burns wrote to Butler: "Apparently, at some time subsequent to 1963, the Paradise Park Board of Directors revised the boundaries of the allotment for this parcel, resulting in a situation whereby the setbacks no longer met those established by the approved Variance. For a number of years, the Planning Department, at your request, has been actively engaged in an effort to get the Board of Directors to correct this situation. [¶] From my review of the facts in this case, it is my opinion that the County should never have become involved in this dispute, as it is a private matter between two parties. From my understanding, there have been numerous lot boundary changes made by the Board of Directors over the years; likely others of them have resulted in setback questions. We do not have the resources to be involved in such issues. Therefore, any further efforts to resolve this matter must be limited to discussions between yourself and the Paradise Park Board of Directors. Therefore, I have instructed our staff to suspend any further actions in this matter." Five days later, Butler filed a cross-complaint against Freenor and added PPMC as a cross-defendant on causes of action for breach of contract and breach of fiduciary duty.
Following Burns's letter, the County's code compliance investigator clarified that the County's "sole concern" had been the front-yard setback. The 1963 variance request and building permit related only to the front yard. "The [PUD] was approved on September 24, 1978. Therefore the requirement of the side yard setback is not at issue. The carport was finaled in 1964, well before the PUD was approved, and therefore the side yard setback at that time would be considered non-conforming. [¶] The last staking shows an eight-foot [front yard] setback from St. Victor. As such, that resolved the County's involvement in this matter."
In March 2008, the Board informed Butler and Freenor that it was reaffirming its 2004 decision and the allotment lines described therein. A few months later, apparently in response to an inquiry from the Board, Burns wrote that because the allotments "are not deeded properties" the Board did not need to obtain "lot line adjustments" from the County. "Instead, we will leave the issue of allotment lines entirely to the [Board]" subject to the requirement that all buildings "on any new allotments must meet the required setbacks."
In September 2008, assistant planning director Mark Deming wrote to the park manager and to Butler stating his conclusion that "the allotment line dividing the carport between the Butler and Freenor allotments is appropriate and not in conflict with the Planned Unit Development or other County regulations. No further code compliance action will be taken regarding this matter." Shortly thereafter, Deming learned that this suit was being litigated. He therefore, "rescind[ed]" the September opinion, "pending the resolution of the lawsuit." In his deposition, he explained that the County had grappled with many complaints about allotment lines in PPMC. Deming confirmed that the County did not challenge allotment configurations existing at the time the PUD was adopted in 1978, which was the basis for his conclusion that the Butler/Freenor boundary was not a violation. After learning of the lawsuit and talking to Butler's lawyer, Deming "thought it prudent to just step back and let the lawsuit have its way. And then wherever it falls, it falls, and we will go from there."
Following a four-day trial, the trial court issued a statement of decision, which was incorporated into the amended judgment. The trial court found that the Board's records "memorialized the transfer of rights from the Park to Phillips and Freenor in the 'abandoned roadway' and that it was to be granted one-half to each of them." The court found that Frank Phillips and Francis Freenor II "each agreed to acquire one-half of the abandoned roadway and to share in the joint venture of building and maintaining the carport." The court also found that Butler was on notice that Florence Phillips claimed only one-half of the carport. The statute of frauds did not apply to the oral agreement between Frank Phillips and Francis Freenor II for several reasons, including that the 1963 agreement had been fully performed and the carport was constructed on the roadway acquired by the Freenors. The court "acknowledged" that the land use situation in the park was unique and that the Board had the power to draw its own allotment lines. Although the Board "engaged in some gamesmanship with the County" to avoid a notice of violation, the Board's actions were intended "to protect the interests of the Park as a whole." There was no breach of contract by the Board. The court adopted the Board's 2004 decision, which placed the allotment line down the middle of the carport, and concluded, "Both Plaintiff Freenor and Defendant/Cross-Complainant Butler are entitled to one half of the carport." In so concluding, the court noted that "the County's position or statements at various timeframes about lack of compliance with setback requirements did not enter into the Court's decision making. The laws at the time of the acts by the parties['] predecessors in interest and in place at the time of construction govern, but also determinative was the underlying intent of the parties['] predecessors in construction of the carport." In an order after judgment the trial court awarded attorney fees to PPMC in the amount of $78,837.
Butler has timely appealed from the judgment and from the postjudgment order for attorney fees. We have ordered the two cases considered together for purposes of briefing, oral argument, and decision.
III. DISCUSSION
A. The 1963 Phillips-Freenor Agreement
Butler's first challenge is to the trial court's interpretation of the 1963 agreement between Frank Phillips and Francis Freenor II. Butler acknowledges that the Board transferred the abandoned road to both of them. He maintains, however, that Frank Phillips and Francis Freenor II could not have agreed to divide the road the way the Board decided it was divided because that would have been illegal. According to Butler, the rules for interpreting contracts require a court to interpret an agreement to make it "lawful, operative, definite, reasonable, and capable of being carried into effect . . . ." (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 800.) Butler maintains, therefore, that the trial court was required to interpret the Board's 1963 action and the oral agreement between Frank Phillips and Francis Freenor II so that placement of the carport would have allowed for the setbacks required in 1963. Citing Schaffter v. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745, 751 and Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, Butler maintains that the issue is one of law calling for our independent review. Freenor and PPMC argue that the issues presented are equitable and, therefore, that the standard of review is abuse of discretion. (Blank v. Kirwan (1985) 39 Cal.3d 311, 331.) Neither side is correct.
This case concerns a dispute about the terms of an oral agreement between Frank Phillips and Francis Freenor II and the unwritten intent of the Board when it transferred its interest in the abandoned road to them in 1963. The trial court, sitting as the finder of fact, heard the testimony of numerous witnesses, considered the documentary evidence, such as it was, and visited the site to observe the layout of the allotments and the location of the carport. The trial court judged the credibility of the witnesses, weighed the evidence, and drew inferences from the evidence. The principal question on appeal-- what was the extent of the interest conveyed to Butler in 2001--can only be resolved by deciding what the terms of the oral agreement between Frank Phillips and Francis Freenor II were and what the intent of the Board was in transferring the abandoned road to them in 1963. On the evidence presented, the trial court could have drawn more than one reasonable inference. In such a case the substantial evidence standard of review applies. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888.) We defer to the trial court's factual determinations so long as there is substantial evidence to support them. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479.)
As to Butler's argument pertaining to the court's interpretation of the contract, we note that we are not concerned with a written contract that requires interpretation. The existence and terms of an oral agreement, when the actual words of the parties are not in evidence is not so much a question of interpretation as it is a question of the parties' unwritten intent. Indeed, the overriding rule is that we are bound to give effect to the intent of the parties to the extent that intent may be ascertained. True, the court must favor an interpretation of a contract that would make the contract legal, but only "if it can be done without violating the intent of the parties." (Civ. Code, § 1643.) Thus, our first task is to determine not what would have been legal, but what the individuals intended when they obtained their interests in the abandoned road nearly 50 years ago.
The trial court found that Frank Phillips and Francis Freenor II agreed to the joint venture of building and maintaining the carport and that the carport would be constructed on land that had been added to the Freenor allotment. Butler argues that there was some other agreement, such as one in which the Phillips family acquired the north half of the road upon which the carport was constructed and the Freenors took the southern half. In that scenario Phillips would have owned the structure and the Freenors would have had a revocable license to use it. The argument is unavailing because there is substantial evidence to support the trial court's findings. The Board's March 1963 minutes show the abandoned road "between" the allotments was transferred to the Phillipses and the Freenors, half to each. The only part of the road that is "between" the two allotments is the part that separated the southeast corner of Phillips's allotment from the northwest corner of the Freenor allotment, namely, the part where the carport was constructed. Phillips's variance request indicated that "we" obtained the land needed to build the planned carport, which could reasonably have referred to the Freenor family. In addition, there is the evidence of long-term use and maintenance of the structure by the Freenors, the numbers over the stalls corresponding to the street addresses of the two allotments, the Board's conclusion following the restaking in 2000 that Donna Freenor owned half the carport, and Florence Phillips's representations to the same effect. This is ample evidence in support of the conclusion that the Freenors' interest was more than a mere license to use the carport. Accordingly, we defer to the trial court's conclusion that Frank Phillips and Francis Freenor II agreed in 1963 that each family would own half of the carport and that the carport would sit half on one allotment and half on the other.
Butler's contention that the agreement, as found by the court, would have been "illegal" in 1963 does not mean the trial court's findings are wrong. The facts are the facts. If the agreement was illegal, then, absent special circumstances, it is not enforceable. (Civ. Code, §§ 1598, 1608; Rosenberg v. Raskin (1947) 80 Cal.App.2d 335, 338; McIntosh v. Mills (2004) 121 Cal.App.4th 333, 344; Strong, The Enforceability of Illegal Contracts (1961) 12 Hastings L.J. 347.) Butler does not urge us to find the agreement to be unenforceable. He maintains simply that there was some other agreement that was, in his view, legal and more favorable to him. But we are not authorized to rewrite the agreement to conform to Butler's view of what would have been legal. "[W]e do not rewrite any provision of any contract, for any purpose." (Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 968.)
Nor is Butler's evidence of illegality so clear cut that we are in any position to decide, sua sponte, that the agreement cannot be enforced. As a general rule, "a contract made in violation of a regulatory statute is void. [Citation.] Normally, courts will not ' "lend their aid to the enforcement of an illegal agreement or one against public policy . . . ." ' [Citations.] This rule is based on the rationale that 'the public importance of discouraging such prohibited transactions outweighs equitable considerations of possible injustice between the parties.' " (Asdourian v. Araj (1985) 38 Cal.3d 276, 291.) But the rule is not inflexible. In compelling cases, illegal contracts may be enforced depending upon a variety of factors, including the policy of the law violated, the kind of illegality and the particular facts of the case. (Id. at p. 292.) Even if the absence of a side-yard setback would have violated County zoning laws in 1963, equitable considerations—the unique nature of the PPMC land use model, the passage of so much time, and the County's decision not to require a change--support a conclusion that enforcement is not improper.
Freenor and PPMC argue that the trial court properly found against Butler based upon the doctrine of unclean hands or because Butler could not prove the element of damages. The trial court did not rely upon either point nor do we need to consider them since we find substantial evidence to support the trial court's actual findings, which support the judgment on their own.
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B. The Board's 2004 Decision
Butler contends that the trial court erred in adopting the Board's 2004 decision because the decision results in an illegal structure. He maintains, too, that because the resulting configuration is illegal, the Board's action was illegal or ultra vires. The parties argue over the degree of deference to which the Board's decision is entitled. Freenor and PPMC cite the rule of Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249, 253 (Lamden), which is that courts must defer to the decisions of homeowners' associations made in good faith after a reasonable investigation. Butler maintains that Lamden is inapplicable. He argues that, because the Board's decision created an illegal structure, this court has no choice but to invalidate it.
The Lamden rule is, arguably, inapplicable, since Lamden made clear that judicial deference is due only to the ordinary maintenance decisions of homeowners' associations. (Lamden, supra, 21 Cal.4th at p. 253.) The decision at issue is hardly an ordinary maintenance decision. In any event, even if the trial court improperly invoked the Lamden rule, the result withstands more intense, substantial evidence scrutiny.
The Board's breach, according to Butler, involved the Board's "redrawing" the allotment lines to make the carport illegal and "modifying or changing" boundaries of the allotment he thought he had purchased. But there is substantial evidence to support the trial court's implicit finding that the Board's 2004 decision did neither. The Board's 2004 decision was based upon the same evidence the trial court relied upon in determining the nature of the 1963 agreement. The Board, like the trial court, determined that the parties had intended in 1963 to split the carport down the middle. Thus, in resolving the dispute between the two members the Board made official the line that had existed in fact since 1963.
The evidence also supports the conclusion that the Board did not take away something Butler thought he bought in 2001. Butler was on notice before he bought the allotment from Florence Phillips that it included only a one-car carport. He had acquired the allotment next door to Phillips four years before he bought the Phillips allotment and had seen that Phillips used only half the carport and Donna Freenor used the other half. It is reasonable to infer that he saw the house numbers posted over the two stalls. And he admitted reading the listing that represented the allotment as having a "one-car carport." Although Butler claims he misread the listing as describing "one carport," the trial court was not required to accept his testimony. Butler was also directly advised by Florence Phillips in 2001 that Donna Freenor owned half the carport.
Finally, there is ample evidence to support the trial court's implicit conclusion that the Board did not act without authority or in disregard of the law. Board bylaws clearly authorize the Board to resolve boundary disputes between members and to set allotment lines within PPMC. County planning director Tom Burns decided that the County should not be involved in the dispute, considering it a "private matter between two parties." In other correspondence responding to the Board's request for guidance Burns stated that the County would "leave the issue of allotment lines entirely to the [Board]" subject only to the requirement that buildings on "new allotments" meet the County's setback requirements. And the assistant planning director Mark Deming determined that the Board's 2004 the allotment line "is appropriate and not in conflict with" the 1978 PUD or other County regulations.
Butler argues that Deming "rescinded" his opinion that the line down the middle of the carport was appropriate. Deming did not actually reverse his opinion. Indeed, he confirmed that if the line down the middle of the carport existed at the time the PUD was adopted then it was legal. This lawsuit attacked the assumption that the boundary preexisted the 1978 PUD and, therefore, Deming decided to withdraw his opinion pending resolution of the lawsuit. Whether our decision today affects that opinion remains to be seen. It is not our role to decide. The County has the right to control land use by making and enforcing zoning regulations. (Gov. Code, § 65850.) If Butler desires judicial review of the County's decisions, Butler may obtain that by way of a petition for writ of mandate. (Code Civ. Proc., §§ 1085, 1094.5; cf. Viso v. State of California (1979) 92 Cal.App.3d 15, 21; O'Hagen v. Board of Zoning Adjustment (1971) 19 Cal.App.3d 151, 161.) But that is not what Butler has done here. As it stands, the County's most recent decision is that there is no violation. The correctness of that decision is not an issue before us.
C. Laches
Butler argues that even if the agreement between Frank Phillips and Francis Freenor II was as the trial court found it to be, by failing to challenge Phillips's representation to the County in the 1963 variance request that "he had acquired the extra 20 feet of land" needed to build the carport, PPMC and Freenor are barred by the statute of limitations or the doctrine of laches from claiming any right in that land. The first problem with the argument is that it misrepresents the facts. Phillips did not represent that he had acquired the land; he said that we had acquired it, implicitly referring to his joint venturer, Francis Freenor II. The second problem is that the building permit had no effect upon the boundary lines. The PPMC board has exclusive authority for adjusting allotment lines. Whatever Phillips's variance request did, it did not affect the allotment lines or any interest in the land.
D. Attorney Fees
Butler challenges the attorney fees order based solely upon his contention that the judgment must be reversed. Because we affirm the judgment, we do not reach this point.
IV. DISPOSITION
In case No. H034985, the judgment is affirmed.
In case No. H035252, the trial court's order awarding attorney fees in favor of cross-defendant PPMC is affirmed.
Premo, J. WE CONCUR: Rushing, P.J. Elia, J.