ZANELLI v. McGRATH

• Decision Date: 02 September 2008
• Docket Number: No. A117111.,A117111.
• Citation: 82 Cal.Rptr.3d 835,166 Cal.App.4th 615
• Court: California Court of Appeals Court of Appeals
• Parties: Gaetano ZANELLI, Plaintiff, Cross-Defendant, and Appellant, v. Thomas McGRATH, Defendant, Cross-Complainant, and Respondent.

166 Cal.App.4th 615

82 Cal.Rptr.3d 835

Gaetano ZANELLI, Plaintiff, Cross-Defendant, and Appellant,

v.Thomas McGRATH, Defendant, Cross-Complainant, and Respondent.

No. A117111.

Court of Appeal, First District, Division 1, California.

Sept. 2, 2008.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Zacks Utrecht & Leadbetter, Andrew M. Zacks, James B. Kraus, San Francisco, for Plaintiff, Cross-Defendant and Appellant.

Wiegel & Fried, John P. Baba, San Francisco, for Defendant, Cross-Complainant and Respondent.

MARCHIANO, P.J.

Gaetano Zanelli (Zanelli), the owner of property commonly known as 66 Clarendon Avenue, appeals from a judgment quieting title to an adjacent property owned by Thomas McGrath (McGrath) commonly known as 60 Clarendon Avenue. After a court trial, the court found that Zanelli has no enforceable view easement burdening McGrath's property, either because the easement was extinguished by merger, or was released to McGrath when Richard Sommer (Sommer), Zanelli's predecessor in interest, who then owned both 66 and 60 Clarendon, conveyed to McGrath all his interest in 60 Clarendon without reserving the easement.

We affirm the judgment on the ground that the easement was extinguished by merger, and therefore will not reach the merits of the court's alternative holding that the easement was conveyed to McGrath when Sommer failed to reserve it in the deed.

Facts

In April of 2002, McGrath entered into a vacant land purchase agreement to purchase 60 Clarendon Avenue from Sommer and Jeffrey Dunham (Dunham). McGrath is a contractor, and he intends to build a residence on the property. For several years, Sommer and Dunham also owned the adjacent property at 66 Clarendon, but in July of 1998, Dunham deeded his interest in 66 Clarendon to Sommer. At the time of the sale of 60 Clarendon to McGrath, Sommer also owned 66 Clarendon. A dispute arose between Sommer and McGrath as to whether a view easement benefiting 66 Clarendon and burdening 60 Clarendon had been extinguished by merger, and escrow ultimately closed without resolution of the dispute.

In September 2003, Sommer sold 66 Clarendon to Zanelli with full disclosure of the dispute. Zanelli's agent advised him that the view easement could be invalid “due to merger.” Sommer discounted the price of the property in recognition of the risk Zanelli undertook, and Zanelli knew that it would be his burden to enforce the easement.

Zanelli filed his complaint for declaratory and injunctive relief on June 14, 2005, and McGrath filed a cross-complaint to quiet title in August 2005. The trial court entered a stipulated preliminary injunction prohibiting McGrath from building a structure that would violate the disputed view easement until a final decision was rendered. The parties stipulated to a private reference before Judge David Garcia. After a trial, Judge Garcia rendered a statement of decision in McGrath's favor. ¹ The court found as follows:

In 1981, Ted J. Horsely and Dennis L. Sunderhaus owned 60 and 66 Clarendon. They conveyed the 66 Clarendon parcel to Mr. and Mrs. Soffer. At the same time, they granted the Soffers an easement “for receiving light, air, and view” over the 60 Clarendon parcel, described as follows:

“GRANTOR WILL LIMIT any construction on said Lot 44 for the roofline to be at an approximate angle of 30 [degrees] not to exceed 5 feet in height above the deck railing. Roof extending to crossing at a point not more tha[n] 8 feet northward on the same railing at 66 Clarendon Avenue and continuing to slope beneath deck.

“The foregoing covenants shall run with the land and be binding upon the Grantor, his successors and assigns and said covenant shall inure to the benefit and be enforceable by Grantee, his successors and assigns in ownership.” ² Sommer and Dunham purchased 66 Clarendon as joint tenants on February 14, 1992. The deed referenced the 1981 view easement benefiting 66 Clarendon. In 1994 Sommer and Dunham purchased 60 Clarendon from Horsely. They each purchased an undivided 50 percent interest, as tenants in common, but Dunham held his interest as trustee for the Jeffrey S. Dunham Revocable Trust. This deed did not refer to a view easement burdening 60 Clarendon.

Sommer and Dunham owned both 66 Clarendon and 60 Clarendon until June 30, 1998, when Dunham transferred his interest in 66 Clarendon to Sommer by grant deed. This deed referenced an easement “for receiving light, air, and view” burdening 60 Clarendon, and benefiting 66 Clarendon, but did not include the specific description and limitations of the 1981 view easement. ³

Sommer and Dunham decided to sell 60 Clarendon in 2002. Although Sommer testified that he and Dunham considered the effect of a view easement benefiting 66 Clarendon and burdening 60 Clarendon in pricing the property, ⁴ they marketed 60 Clarendon as a buildable site with panoramic views, and the multiple listing did not mention the existence of a “ ‘view’ easement.”

McGrath made a bid, and entered into an agreement to purchase 60 Clarendon on April 4, 2002. Although there was conflicting evidence on the issue, the court found that “it was not until after [McGrath] made his offer to purchase the property that there was any mention of the [1981 view] easement” benefiting 66 Clarendon. Sommer and Dunham's real estate agent, Janet Schindler, transmitted to McGrath a preliminary title report with exceptions in paragraphs 4 and 6, referencing two view easements affecting the property. ⁵ When he first learned of the 1981 view easement benefiting 66 Clarendon during the contingency removal period, McGrath turned the matter over to his legal advisor, Brett Gladstone. After discussing the pros and cons of removing the contingencies under the contract, McGrath decided to remove the contingencies, understanding that by doing so he gave up the right to cancel the contract based upon information contained in the preliminary title report.

After a year of negotiations, McGrath was unable to resolve the dispute with Sommer and Dunham. McGrath, through his lawyer, insisted that the sellers could not evade closing escrow based upon this dispute without breaching the contract. McGrath also understood that if he closed escrow he was buying 60 Clarendon potentially burdened by the 1981 view easement. Ultimately, the deed from Sommer and Dunham to McGrath did not contain any reference to the 1981 view easement or expressly reserve an easement, and the 1981 view easement was excluded from insurance coverage.

Based upon the foregoing, the trial court framed the issue as whether “as a matter of law [Sommer and Dunham's] common ownership [of 60 and 66 Clarendon was] of the type necessary to effect the merger of the parcels for purposes of extinguishment of the ‘view’ easement.” It concluded that the 1981 view easement was extinguished by merger when Sommer and Dunham owned both 66 Clarendon and 60 Clarendon. On the issue whether Sommer and Dunham intended the easement to be extinguished, the court stated it would not credit Sommer's testimony because it was self-interested in light of the dispute. Instead the court inferred an intent to extinguish the easement from the fact that Sommer and Dunham did not develop 60 Clarendon, a fact the court found more consistent with intent to extinguish. The court reasoned that leaving the property undeveloped preserved their unrestricted view, yet provided them with the option of later selling to a developer interested in the highest and best use without the restriction of the easement. The court also denied Zanelli's request that the easement nonetheless be enforced on equitable grounds, because it found that the equities “favor McGrath.”

As an alternative ground for entering judgment in McGrath's favor, the court ruled that even if the 1981 view easement had not been extinguished by merger, Sommer's grant deed to McGrath “conveyed all of the interests which he held in 60 Clarendon, including any interest in a claimed easement,” because Sommer also owned 66 Clarendon and made an unqualified grant of all his interest in 60 Clarendon without expressly reserving the easement benefiting 66 Clarendon in the grant deed to McGrath.

Analysis

I.

Extinguishment by Merger

An appurtenant easement is “a nonpossessory ‘ “interest in the land of another that gives its owner the right to use the land of another or to prevent the property owner from using his land.” ’ ” ( Kazi v. State Farm Fire and Casualty Co. (2001) 24 Cal.4th 871, 880, 103 Cal.Rptr.2d 1, 15 P.3d 223.) Civil Code section 811 ⁶ provides that a servitude is extinguished “[b]y the vesting of the right to the servitude and the right to the servient tenement in the same person” ⁷ Section 805 provides: “A servitude thereon cannot be held by the owner of the servient tenement.” “Section 497 of the Restatement of Property states the rule as follows: ‘An easement appurtenant is extinguished by unity of ownership of estates in the dominant and servient tenements to the extent to which the uses which could have been made prior to the unity by virtue of ownership of the estate in the dominant tenement can be made after the unity by virtue [of] ownership of the estate in the servient tenement.’ ” ( Renden v. Geneva Development Corp. (1967) 253 Cal.App.2d 578, 587, 61 Cal.Rptr. 463, fn. 7 ( Renden ).) The rationale underlying sections 805 and 811 is “to avoid nonsensical easements-where they are without doubt unnecessary because the owner owns the estate.”

( Beyer v. Tahoe Sands Resort (2005) 129 Cal.App.4th 1458, 1475, 29 Cal.Rptr.3d 561 ( Beyer ).)

The facts relevant to the question whether the 1981 view easement was extinguished when Sommer and Dunham acquired title to 60 Clarendon in 1994 are not disputed: Sommer and Dunham acquired title to 66 Clarendon as joint tenants on February 14, 1992. In 1994 Sommer and Dunham acquired title to 60 Clarendon as tenants in common. Each held an undivided 50 percent interest, but Dunham held...