Canyon Vineyard Estates I, LLC v. DeJoria

• Decision Date: 21 April 2022
• Docket Number: B307176,B310861,B308607
• Parties: CANYON VINEYARD ESTATES I, LLC, Plaintiff and Appellant, v. JOHN PAUL DeJORIA et al., Defendants and Respondents.
• Court: California Court of Appeals

CANYON VINEYARD ESTATES I, LLC, Plaintiff and Appellant,
v.
JOHN PAUL DeJORIA et al., Defendants and Respondents.

B307176, B308607, B310861

California Court of Appeals, Second District, Third Division

April 21, 2022

NOT TO BE PUBLISHED

Appeals from judgments and orders of the Superior Court of Los Angeles County, No. SC128181 Mark A. Young, Judge. Affirmed in part and reversed in part with directions.

Garrett & Tully, Robert Garrett, Ryan C. Squire, Zi C. Lin, Scott B. Mahler; McCormick, Barstow, Sheppard, Wayte & Carruth and Scott M. Reddie for Plaintiff and Appellant.

Gibson, Dunn & Crutcher, Heather L. Richardson, Thomas F. Cochrane, Danielle Hesse and Virginia L. Smith for Defendant and Respondent Mountains Restoration Trust.

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Ervin Cohen & Jessup, Peter S. Selvin and Pooja S. Nair for Defendant and Respondent John Paul DeJoria.

Rob Bonta, Attorney General, Tania M. Ibanez, Assistant Attorney General, Joseph N. Zimring, Sandra I. Barrientos and Caroline H. Hughes, Deputy Attorneys General, for Defendant and Respondent California State Attorney General.

Rodrigo A. Castro-Silva, County Counsel, Scott Kuhn, Assistant County Counsel, and Sangkee Peter Lee, Deputy County Counsel, for Defendant and Respondent County of Los Angeles.

LIPNER, J. ^[*]

Canyon Vineyard Estates I, LLC (CVE) appeals from a grant of summary judgment in favor of Mountains Restoration Trust (MRT), John Paul DeJoria, the County of Los Angeles, and the California State Attorney General. CVE also appeals from an injunction in favor of MRT and from an award of attorney fees and costs in favor of MRT and the Attorney General.

This case concerns over 400 acres of undeveloped land along the Pacific coastline in Malibu. The trial court, in a ruling challenged on appeal by CVE, determined that the land is subject to a conservation easement that prohibits development. The trial court enjoined CVE from violating the easement.

We conclude that there is no genuine issue of material fact that the property is subject to a valid conservation easement and therefore affirm the judgment. However, we conclude that the injunction is overbroad in that it improperly bars CVE from filing further litigation to challenge the conservation easement without regard to the potential merits of a future claim. We therefore reverse the injunction and remand the matter to the trial court to enter a new injunction that is more narrowly tailored so that it

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does not enjoin future lawful actions by CVE. We affirm the award of attorney fees and costs.

BACKGROUND

A. Tuna Canyon

The property at issue on appeal consists of 417 acres of undeveloped land along the southerly slope of the Santa Monica Mountains and the Pacific coastline, located in the City of Malibu and unincorporated areas of Los Angeles County (Tuna Canyon). DeJoria purchased Tuna Canyon in 1990, intending to develop the property into 12 or more 20-acre estates. However, after walking the land, DeJoria changed course and decided to donate Tuna Canyon to preserve it as open space for the enjoyment of the public.

B. DeJoria's transfer of Tuna Canyon to MRT

In 2000, DeJoria approached MRT, a nonprofit land trust dedicated to preserving land in the Santa Monica Mountains, with a proposal to sell and gift Tuna Canyon to MRT. DeJoria and MRT executed a purchase agreement that required Tuna Canyon to "be held as [o]pen [s]pace in [p]erpetuity and that no development of any kind shall take place on the [p]roperty." DeJoria agreed to sell Tuna Canyon to MRT for $1, 060, 000 and donate the remainder of the appraised value of $13 million as part of the purchase. For his charitable donation, DeJoria received a tax deduction of $11, 400, 000.

DeJoria executed a grant deed conveying Tuna Canyon to MRT. The grant deed was subject to covenants, conditions, restrictions, reservations, and easements of record. The grant deed required that Tuna Canyon be held "in perpetuity as natural open space" with the exception that the grantee or its successors could "construct[ ] trails, trail heads, erosion control

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devices[, ] and incidental buildings related to the use of the property as natural open space." The grant deed deemed this condition a covenant running with the land and binding upon the real property and any successive owners. If MRT or any of its successors in interest breached the grant deed's use restrictions, DeJoria was entitled to specific performance, injunctive relief, and return of the property. The grant deed also prohibited MRT or any successor in interest from selling or transferring the property for monetary profit or consideration of any type with the exception that, in the event that Tuna Canyon reverted back to DeJoria, he could transfer the property to a governmental agency or another nonprofit and recoup the costs of facilitating the transfer.

C. MRT's loan from Centennial

MRT took out a loan in the amount of $1, 060, 000 from Centennial Bank (Centennial) that was secured by a deed of trust. Centennial required a subordination agreement that its deed of trust would remain a lien or charge upon the property prior and superior to the deed restrictions, specifically identifying DeJoria's right to termination. Under the subordination agreement, DeJoria waived his rights under the deed restrictions set forth in the grant deed. Thus, if MRT defaulted on the loan, Centennial would be able to foreclose on the property without the risk that its collateral would revert to DeJoria. The grant deed, deed of trust, and subordination agreement were recorded at the same time.

In 2006, Centennial sold the note securing the deed of trust to Southern California Seconds, Inc. (SCS). SCS later initiated foreclosure proceedings when MRT was unable to repay the outstanding balance of the loan. Malibu Horizon Trust

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purchased the note securing the deed of trust from SCS for approximately $1, 300, 000. CVE's manager represented Malibu Horizon Trust in connection with the foreclosure and purchase of Tuna Canyon. CVE's manager drafted the foreclosure statement that was provided to potential bidders, which notified them that Tuna Canyon was subject to "significant" deed restrictions, including terms in the grant deed that the land was to be held in perpetuity as natural open space. Malibu Horizon Trust acquired Tuna Canyon at a trustee's nonjudicial foreclosure sale for approximately $1, 300, 000. CVE purchased Tuna Canyon from Malibu Horizon.

In 2008, CVE entered into preliminary agreements to sell Tuna Canyon to developers. CVE also entertained two offers for approximately $5 million and $7 million from prospective buyers who were interested in preserving Tuna Canyon in its natural open-space condition. However, CVE rejected these offers as too low. In 2016, CVE entered into an exclusive authorization to sell agreement with a company to market and sell Tuna Canyon. The company marketed Tuna Canyon as an opportunity to develop ultra-luxury residential estates situated on several acres of private ocean view land. The marketing materials noted that potential buyers could profit from donating excess land into a conservation easement to reap federal and state tax benefits.

D. Proceedings in the trial court

In 2017, CVE filed a quiet title action that sought to extinguish the use restrictions contained in the grant deed. CVE moved for judgment on the pleadings. The trial court denied the motion, finding that the grant deed was sufficient to create a conservation easement and that it conveyed two separate interests to MRT-a fee title and a conservation easement. CVE

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filed a motion for summary judgment on similar grounds, which the trial court denied. The trial court found that the language in the grant deed requiring Tuna Canyon to be held in perpetuity as natural open space was sufficient to create a conservation easement. However, the trial court concluded that there remained triable issues of fact as to whether the parties intended to create a conservation easement and subordinate that easement to Centennial's lien. Thereafter, MRT, the Attorney General, Los Angeles County, and DeJoria filed a joint motion for summary judgment, arguing that there was no triable issues of material fact that the grant deed created a conservation easement that continued to restrict the use of Tuna Canyon for the purpose of keeping the property in its open-space condition in perpetuity.

The trial court granted the summary judgment motion and entered judgment against CVE, leaving the issue of attorney fees and costs to be determined later. After further briefing, the trial court issued a judgment that enjoined CVE from exploring, pursuing, developing, or marketing any uses of Tuna Canyon inconsistent with the terms of the conservation easement. This judgment, too, left attorney fees and costs for later determination. After motions on the fee and cost issues, the trial court awarded MRT $1, 371, 962.20 in attorney fees and $5, 424.55 in costs. The trial court awarded the Attorney General $189, 675 in attorney fees and $5, 552.88 in costs.

CVE appealed the court's grant of summary judgment, the injunction, and the award of attorney fees and costs.^[1]

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DISCUSSION I. The trial court properly granted summary judgment because a valid conservation easement protects Tuna Canyon.

A. Applicable law concerning summary judgment and contract interpretation

Summary judgment is proper when there are no triable issues of material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) "The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)

"A defendant who moves for...