From Casetext: Smarter Legal Research

Owen v. Allen

California Court of Appeals, First District, Fourth Division
Jul 23, 2008
No. A119427 (Cal. Ct. App. Jul. 23, 2008)

Opinion


EDMUND OWEN et al., Plaintiffs and Respondents, v. SUSAN ALLEN et al., Defendants and Appellants. A119427 California Court of Appeal, First District, Fourth Division July 23, 2008

NOT TO BE PUBLISHED

Mendocino County Super. Ct. No. SCUK CVG 07 99654

Ruvolo, P. J.

I. Introduction

This appeal is from the trial court’s imposition of a preliminary injunction restraining appellants Susan and N. Gail Allen from using their property in violation of a restrictive covenant, duly recorded in 1981 in the official records of Mendocino County, limiting certain parcels, including appellants’ parcel, to one single-family dwelling. Since appellants were not parties to the 1981 agreement to restrict the development of their land, the restrictive covenant is enforceable against them only if it runs with the land or if it creates an equitable servitude. (Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964, 972 (Taormina).) We conclude the restrictive covenant does not meet the requirements of a covenant running with the land or of an equitable servitude because there is nothing in the recorded instrument reflecting the original grantor’s intention that the restrictive covenant bind subsequent purchasers such as appellants. Consequently, we reverse.

“ ‘An order granting or denying a preliminary injunction is appealable, as being within the meaning of the provision for appeals in cases involving injunctions. (Code Civ. Proc., § 904.1, subd. (f); [citation].)’ [Citation.]” (Valley Casework, Inc. v. Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013, 1019, fn. 4.)

II. Facts and Procedural History

This action involves a dispute among neighbors who live in the Bell Tract subdivision along Feliz Creek Road in an unincorporated area of Mendocino County, near Hopland. Appellants are the owners of Lot 29 in the Bell Tract. Respondents are the owners of eight other lots located within the Bell Tract. Appellants’ property consists of approximately 12 acres. The other lots in the Bell Tract, including respondents’ lots, are roughly the same size.

Eight property owners within the Bell Tract have filed this action against appellants. Plaintiff/respondent Edmund Owen owns Lot 30; Josh Piagentini owns Lot 26; Mark Friesen owns Lot 27; Tonya Seivertson owns Lot 42; Stacy White and Mike White, as managing agents of the White Family Trust, own Lot 34; Thomas Sloan, Jr. and Regina Stone own Lot 32; Don Hart owns Lot 39; and Denice Killian owns Lot 31.

Appellants purchased the property in July 2005 with the intent to build a second residence for their daughter, son-in-law and grandchildren. No building restrictions were mentioned in appellants’ deed. Appellants began construction of the second residence around June 2007 after acquiring a building permit from the County of Mendocino. After construction was underway, respondents filed a complaint on July 24, 2007, seeking a temporary restraining order, a preliminary and permanent injunction, and damages to halt construction and to force appellants to remove the portions of the second residence which had already been constructed.

The basis for respondents’ lawsuit is a one-page document entitled “Conditions, Covenants & Restrictions ‘Bell Tract’ ” (CC&Rs), which was recorded in Mendocino County on August 3, 1981. Respondents contend these CC&Rs limit appellants to one single-family residence on their property. The CC&Rs read, in their entirety:

“WHEREAS, Parcels 26, 29, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40,41, 42, & 44 of the Bell Tract as shown on a Map filed in Map Case 1, Drawer 3, Page 58 of the Mendocino County Records are presently contained in Agriculture Preserve Zone, and; “WHEREAS, It is the desire of the owners to limit the use of the property to agricultural and compatible uses;

“The following Conditions, Covenants & Restrictions are hereby created:

“1. Other than that amount of land necessary for a single family residence and out buildings, the remainder of the land on each parcel shall be devoted to agricultural or compatible use.

“2. Agricultural and compatible use are those uses as defined in the Williamson Act contained in the California Government Code Section 51201 et sec.

“3. Upon the construction of a residence, the perimeter of each parcel shall be fenced.

“In the event any of the above conditions are breached the land will revert to the grantor’s [sic].”

At the time the document was executed and the subject portion of the Bell Tract was subdivided, the entire property was owned by Puente Truck Service, and the document contains the notarized signature of Harry W. Otting, the owner of Puente Truck Service. Lot 29 of the Bell Tract, the property now held by appellants, was conveyed to them in July 2005 by Robert Richter, a successor in interest to Puente Truck Service.

An ex parte temporary restraining order stopping construction of the second residence pending further hearing was issued on July 24, 2007, the same day respondents’ complaint was filed. After the court received written and oral argument, a preliminary injunction, which is the subject of this appeal, was entered on September 7, 2007. The preliminary injunction restrains appellants from “continuing to build and/or construct said second single-family residence” on their lot. (Original bolding and underscoring.) In granting the preliminary injunction, Judge LaCasse acknowledged that the CC&R document is “a rather weird duck” and invited appellants to take the issue up on appeal, stating, “Well, I may be wrong and that’s why I think this case ought to go up to the Court of Appeal.” Appellants filed their notice of appeal on October 11, 2007.

III. Discussion

A. Standard of Review

“ ‘The granting of a preliminary injunction does not constitute a final adjudication of the controversy. [Citation.] Its purpose is to preserve the status quo until a final determination following a trial. [Citation.]’. . . .” (White v. Davis (2002) 108 Cal.App.4th 197, 209-210, quoting Scaringe v. J. C. C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1542, disapproved on other grounds by Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345 (Scaringe).)

Because this is an early stage of the proceedings in the trial court, the scope of the inquiry on appeal is narrow. As summarized by the Supreme Court in People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, “We review an order granting a preliminary injunction under an abuse of discretion standard. [Citations.] Review is confined, in other words, to a consideration whether the trial court abused its discretion in ‘ “evaluat[ing] two interrelated factors when deciding whether or not to issue a preliminary injunction. The first is the likelihood that the plaintiff will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm the defendant is likely to suffer if the preliminary injunction were issued.” ’ [Citation.] And although we will not ordinarily disturb the trial court’s ruling absent a showing of abuse, an order granting or denying interlocutory relief reflects nothing more than the superior court’s evaluation of the controversy on the record before it at the time of its ruling; it is not an adjudication of the ultimate merits of the dispute. [Citations.]” (Id. at p. 1109.)

In reviewing an order granting a preliminary injunction, the appellate court will “view the facts favorably to the prevailing party, resolving all conflicts in its favor and drawing all inferences which can reasonably be made in support of the trial court’s order. [Citations.]” (People v. James (1981) 122 Cal.App.3d 25, 28-29.) However, where the issue is one of law only, such as the interpretation of written provisions of the CC&Rs, the court will review the preliminary injunction ruling de novo. (Ironwood Owners Assn. IX v. Solomon (1986) 178 Cal.App.3d 766, 771.)

B. Enforceability of CC&Rs Against Subsequent Purchasers

We first examine whether actual notice of a building restriction by the buyer of a property has any effect on the enforceability of CC&Rs that purportedly run with land. Respondents appear to argue that because they have proffered evidence that appellants actually knew of the recorded CC&Rs before they purchased their property, the CC&Rs are enforceable against them for that reason alone.

The enforceability of recorded restrictions on the use of property was fully explored in Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345 (Citizens). The CC&Rs in Citizens contained a restriction limiting use of subdivision property to residential purposes only. The restrictions were recorded in San Mateo County and contained a provision that they were to be binding upon future successors in interest. (Id. at pp. 350-351.) Plaintiffs, the purchasers of a lot in the subdivision, wanted to plant grapes and operate a winery, and to keep llamas on their land. (Id. at p. 351.) They argued that the CC&Rs never took effect because there was no reference to the CC&Rs in the deeds to their property. (Id. at p. 352.) The Supreme Court held as follows: “[I]f the restrictions are recorded before the sale, the later purchaser is deemed to agree to them. The purchase of property knowing of the restrictions evinces the buyer’s intent to accept their burdens and benefits. Thus, the mutual servitudes are created at the time of the conveyance even if there is no additional reference to them in the deed.” (Citizens, supra, 12 Cal.4th at p. 363.)

Thus, the general holding in Citizens supports the enforceability of otherwise legally valid restrictive covenants where the burdened landowners have constructive notice of the restriction. This conclusion renders superfluous any argument that the CC&Rs here are enforceable because appellants had actual knowledge of them before they commenced construction of the second residence; and we frankly are puzzled as to why respondents place so much emphasis on this point. The Citizens court squarely faced the issue of what occurs in a case, such as this one, when the use restrictions are recorded but not explicitly mentioned in the deed from the grantor.

Under Citizens, the proper recording of the CC&Rs in 1981 gave appellants, as well as all other property owners in the Bell Tract whose parcels were listed, constructive notice of the restriction specifically limiting certain parcels to one single-family dwelling, regardless of appellants’ actual knowledge of the restriction. Therefore, appellants’ declarations that they were unaware of the restriction when the property was initially transferred to them and respondents’ declarations to the contrary are of no moment.

However, the act of recording the CC&Rs did not necessarily make them enforceable against appellants. “The purpose of recording is to protect innocent purchasers and encumbrancers of property by giving notice of potential limitations on title. [Citation.] Recording itself grants no interest in the property . . ., and a void document ‘derives no validity from the mere fact that it is recorded.’ [Citation.]” (Taormina, supra, 140 Cal.App.3d at p. 971.) Therefore, the 1981 CC&Rs were not made binding on appellants simply because it was recorded.

More important is appellants’ contention that the trial court improperly issued a preliminary injunction based on the 1981 restrictive covenant limiting their property to one single-family residence when there is nothing in the written instrument indicating that the building restriction was enforceable against appellants as subsequent purchasers. As appellants put it, “the fundamental flaw . . . is that the purported CC&R document fails to state in any manner that it is intended to bind all purchasers and subsequent purchasers, including appellants.” We agree that the lack of such language renders the document unenforceable pursuant to Citizens. As to this precise point, Citizens reiterated the general rule for interpreting the binding effect of CC&Rs: “[I]f a declaration establishing a common plan for the ownership of property in a subdivision and containing restrictions upon the use of the property as part of the common plan is recorded before the execution of the contract of sale, describes the property it is to govern, and states that it is to bind all purchasers and their successors, subsequent purchasers who have constructive notice of the recorded declaration are deemed to intend and agree to be bound by, and to accept the benefits of, the common plan; the restrictions, therefore, are not unenforceable merely because they are not additionally cited in a deed or other document at the time of the sale.” (Citizens, supra, (12 Cal.4th at p. 349, italics added.)

Therefore, the Citizens court instructs that the instrument creating the covenant must disclose the intention of the parties that the covenant run. Additionally, the recorded document must contain a description of the property to be bound and the restrictions on the use of the property with language in the document indicating “that it is to bind all purchasers and their successors . . . .” (Citizens, supra, 12 Cal.4th at p. 349.) Only when all of these requirements are met will the restrictive covenant benefit or be binding on each successive owner, during his or her ownership, of any portion of the land affected by the covenant.

This passage in Citizens closely mirrors the language of Civil Code section 1468 , which provides the statutory criteria for determining when a covenant “to do or refrain from” some activity runs with the land. The following requirements must be met for the restriction to be enforceable against subsequent purchasers: “(a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants; “(b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee; “(c) Each such act related to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land . . .; “(d) The instrument containing such covenants is recorded . . . .” “In California, only covenants specified by statute run with the land . . . .” (Citizens, supra, 12 Cal.4th at p. 353; Scaringe, supra, 205 Cal.App.3d at p. 1543; § 1461 [“The only covenants which run with the land are those specified in this title, and those which are incidental thereto.”].) Being statutorily required, the restrictions contained in the CC&Rs are not enforceable against appellants under section 1468 because there is nothing in that document that “expressly provides that successors in interest of the covenantor’s land will be bound for the benefit of the covenantee’s land.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, 375 (Nahrstedt); see also In re Snow (Bankr. C.D.Cal. 1996) 201 B.R. 968, 972 [under section 1468 “the instrument must expressly provide that all successive owners of the servient estate are to be bound by the covenant.”].) Consequently, because all of the requirements set out by section 1468 were not met, the CC&Rs at issue were unenforceable as covenants running with the land.

All further undesignated section references are to the Civil Code.

Respondents alternatively argue that even if the restrictions are not enforceable at law as a restrictive covenant, the CC&Rs created equitable servitudes which are binding upon appellants and the other property owners in the Bell Tract. When promises affecting land do not qualify as covenants that run with the land because of the lack of an essential requirement or, though enforceable at law, damages would be an inadequate remedy for breach thereof, courts have exercised their equitable powers to enforce such covenants under certain circumstances. (Citizens, supra, 12 Cal.4th at pp. 353-354; 12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 440, pp. 512-514.) “Under the law of equitable servitudes, courts may enforce a promise about the use of land even though the person who made the promise has transferred the land to another. [Citation.] The underlying idea is that a landowner’s promise to refrain from particular conduct pertaining to land creates in the beneficiary of that promise ‘an equitable interest in the land of the promisor.’ [Citations.]” (Nahrstedt, supra, 8 Cal.4th at p. 379.)

In 1968 and again in 1969, section 1468 was amended to make covenants that run with the land analytically closer to equitable servitudes. As a result of these statutory changes, some commentators have postulated that covenants that run with the land and equitable servitudes should be, or possibly have been, merged into a single doctrine. (Citizens, supra, 12 Cal.4th at pp. 354-355 and articles cited therein.) The California Supreme Court has acknowledged the existence of this issue, but not yet addressed it. (Id. at p. 355.) The parties here assume the continued existence of the doctrine of equitable servitudes and, for the purposes of this appeal, we will do the same.

Nevertheless, because the principles affecting both covenants and servitudes are founded on contract law, the contractual intent of the original covenanting parties plays a predominant role in defining the rights and obligations of third parties, i.e., successors in interest to the parties. This is equally true regardless of whether the agreement qualifies as a real covenant or an equitable servitude. (White v. Dorfman (1981) 116 Cal.App.3d 892, 897; Ezer v. Fuchsloch (1979) 99 Cal.App.3d 849, 860-862.) “Like any promise given in exchange for consideration, an agreement to refrain from a particular use of land is subject to contract principles, under which courts try ‘to effectuate the legitimate desires of the covenanting parties.’ [Citation.]” (Nahrstedt, supra, 8 Cal.4th at pp. 380-381.)

The Citizens court has pointed out that the creation of an equitable servitude enforceable against future purchasers requires a written document reflecting the clear intent that the restrictions remain applicable to successors in title. (Citizens, supra, 12 Cal.4th at p. 366.) Therefore, in Citizens, the CC&Rs could be enforced either as covenants running with the land or as equitable servitudes because they “were recorded before any of the parcels were sold, thus providing constructive notice to subsequent purchasers; they state an intent to establish a general plan for the subdivisions binding on all purchasers and their successors; and they describe the property they are to govern.” (Id. at p. 368, italics added.) As we have seen, no such intention appears in the document before us.

To the contrary, rather than create restrictions on successive owners that might be enforced by the owners of neighboring parcels, the CC&Rs state that the parcels in question are contained in an Agriculture Preserve Zone and appear to relegate the designated parcels to such restricted usage. Also, the CC&Rs specifically state that if “the above conditions are breached the land will revert to the grantor’s [sic].” We believe the foregoing language strongly supports a finding that the original grantor of this land intended that the restrictive covenant inure to his personal benefit rather than benefitting his successors in interest. (See McCaffrey v. Preston (1984) 154 Cal.App.3d 422, 428, [CC&R provision providing that in the event of a breach, “the premises [shall] revert to grantors, their heirs or assigns . . .” construed as a personal covenant to prevent a forfeiture.] (Id. at pp. 428, 435, fn. 5.)

Appellants presented evidence to the trial court that on July 17, 1986, the County of Mendocino executed and recorded a “Notice of Nonrenewal of Agricultural Preserve Contract” regarding what is now appellants’ property. Therefore, the Agricultural Preserve Contract expired long before appellants took title in 2005.

Because the test for an equitable servitude retains the requirement that the intent to bind successive purchasers must be expressed, the outcome of the two tests, legal and equitable, reach identical results. (See Scaringe, supra, 205 Cal.App.3d 1546 [because no written instrument expressed subsequent grantees intent to be bound by the CC&Rs, restrictions were unenforceable as a covenant running with the land (§ 1468) or as an equitable servitude].) Consequently, appellants’ argument that the written document here lacked an essential element of an equitable servitude, and thus was not binding on successors, is well taken. Therefore, the trial court abused its discretion in granting a preliminary injunction.

IV. DISPOSITION

We reverse the order granting the preliminary injunction. Appellants are awarded costs on appeal.

We concur: Reardon, J., Sepulveda, J.


Summaries of

Owen v. Allen

California Court of Appeals, First District, Fourth Division
Jul 23, 2008
No. A119427 (Cal. Ct. App. Jul. 23, 2008)
Case details for

Owen v. Allen

Case Details

Full title:EDMUND OWEN et al., Plaintiffs and Respondents, v. SUSAN ALLEN et al.…

Court:California Court of Appeals, First District, Fourth Division

Date published: Jul 23, 2008

Citations

No. A119427 (Cal. Ct. App. Jul. 23, 2008)