California Court of Appeal Nov 23, 2015 No. D067263Unpublished
Filed 11/23/15 Syverson v. Kuhn CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
KORTNEY SYVERSON, D067263
Plaintiff, Cross-defendant and Respondent, (Super. Ct. No. 37-2011-00102504- v. CU-OR-CTL)
R. DAVID KUHN, Individually and as Trustee, etc.,
Defendant, Cross-complainant and Appellant;
MICHAEL B. EMERY, Individually and as Trustee, etc. et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of San Diego County, Randa
Trapp, Judge. Affirmed.
Vantage Law Group and Michael H. Riney for Defendant, Cross-complainant and
Appellant R. David Kuhn and for Defendants and Appellants Michael B. Emery and
Linda G. Emery.
Steven J. Roberts and Steve J. Roberts for Plaintiff, Cross-defendant and
Respondent.
This case involves four northern and four southern neighboring hillside properties.
Grant deeds on the southern properties contained restrictions limiting residences thereon
to a single story. We conclude the use restrictions, which were enforceable by a power of
termination, expired due to the northern property owners' failure to record a notice of
intent to preserve their interest under the Marketable Record Title Act (Civil Code,
judgment was properly granted on any ground, we must affirm regardless of whether the
court's reasoning was correct." (Jackson v. Ryder Truck Rental, Inc. (1993) 16
Cal.App.4th 1830, 1836.)
III. Marketable Record Title
A. The Act
In 1982, the Legislature passed the Act, which was a comprehensive statutory
scheme "to simplify and facilitate real property title transactions in furtherance of public 8
policy by enabling persons to rely on record title." (Civ. Code, § 880.020, subd. (b).)
The Legislature declared that "real property is a basic resource of the people of the state
and should be made freely alienable and marketable." (§ 880.020, subd. (a)(1).)
"Interests in real property and defects in title created at remote times, whether or not of
record, often constitute unreasonable restraints on alienation and marketability of real
property because the interests are no longer valid or have been abandoned or otherwise
become obsolete." (§ 880.020, subd. (a)(2).)
As part of the statutory scheme, the Legislature abolished fees simple
determinable and possibilities of reverter. (§ 885.020.) "Every estate that would be at
common law a fee simple determinable is deemed to be a fee simple subject to a
restriction in the form of a condition subsequent. Every interest that would be at common
law a possibility of reverter is deemed to be and is enforceable as a power of
termination." (Ibid.) As a result, a person entitled to take advantage of a breach of
condition does not have an immediate right to the property; instead, "the grantee's estate
does not terminate unless the power [of termination] is exercised in a timely manner by
the person holding the power." (3 Miller & Starr, Cal. Real Estate (3d ed. 2011) Estates;
Restraints; Perpetuities, § 9:5, pp. 9-12; see also § 885.010 [defining "power of
termination"].)
"To achieve [the public policy] goals, the Legislature adopted a recordation
requirement for certain types of interests, including powers of termination. (§ 885.010 et
seq.) Failure to record interests within a given period of time results in expiration of the
interest. These times for expiration 'are absolute and apply notwithstanding any disability
or lack of knowledge of any person. . . .' (§ 880.250, subd. (a).)" (Walton v. City of Red 9
Bluff (1991) 2 Cal.App.4th 117, 128 (Walton).) " 'The recordation provisions of the [A]ct
provide for a simple and easy method by which the owner of an existing old interest may
preserve it. If he fails to take the step of filing the notice as provided, he has only himself
to blame if his interest is extinguished.' " (Severns v. Union Pacific Railroad Co. (2002)
101 Cal.App.4th 1209, 1227 (Severns).)
"An interest may be preserved by the timely recordation of a notice of intent to
preserve the interest and these notices may be given consecutively: Perpetuity of interest
is not prohibited. [Citation.] Any person who claims an interest may record the notice, a
form of which is provided in the statute. (§§ 880.320, 880.340.) [¶] . . . A power of
termination expires at the later of: (1) 30 years after recordation of the instrument
evidencing the power, (2) 30 years after recordation of the last notice of intent to preserve
the power. (§ 885.030.)" (Walton, supra, 2 Cal.App.4th at p. 128, fn. omitted.) If the
period to record the notice expires before, on, or within five years after the operative date
of the statute, the period is extended until five years after the operative date. (§ 880.370.)
"When a future estate in real property is subject to a power of termination, the
power becomes unenforceable when it expires." (3 Miller & Starr, supra, § 9:8, p. 9-23.)
In that regard, section 885.060 provides:
"(a) Expiration of a power of termination pursuant to this chapter makes the power unenforceable and is equivalent for all purposes to a termination of the power of record and a quitclaim of the power to the owner of the fee simple estate, and execution and recording of a termination and quitclaim is not necessary to terminate or evidence the termination of the power.
"(b) Expiration of a power of termination pursuant to this chapter terminates the restriction to which the fee simple estate is subject and makes the restriction unenforceable by any other means, including, but not limited to, injunction and damages. 10
"(c) However, subdivision (b) does not apply to a restriction for which a power of termination has expired under this chapter if the restriction is also an equitable servitude alternatively enforceable by injunction. Such an equitable servitude shall remain enforceable by injunction and any other available remedies, but shall not be enforceable by a power of termination." (Italics added.)
B. Analysis
The Use Restrictions in this case were drafted in the form of conditions
subsequent with right of re-entry. Under the Act, the right of re-entry was transformed
into a power of termination. (§ 885.020.) In order to preserve the power of termination,
Appellants were required to record a notice of intent to preserve their interest.
(§ 880.350.) Generally, a notice of intent must be recorded within 30 years of the date
the instrument evidencing the power of termination was recorded or after the date a
notice of intent was recorded. (§§ 880.030, 885.030.) However, for interests that had
already expired or would expire within five years of the Act's effective date, January 1,
1983, the Act provides a five-year grace period. (§ 880.370; Cal. Const., art. IV, § 8,
subd. (c)(1); Severns, supra, 101 Cal.App.4th at p. 1220.)
The Union/Wurzell Restrictions are set forth in deeds recorded in 1949. The
Rotner Restrictions are set forth in a deed recorded in 1955. Thus, the 30-year recording
period expired in 1979 for the Union/Wurzell Restrictions and 1985 for the Rotner
Restrictions. Allowing for the Act's five-year grace period, Appellants were required to
record their notice of intent to preserve their interest in the Use Restrictions by 1988.
Appellants did not dispute that they failed to record a notice of intent under the Act to
preserve their interest in the Use Restrictions. They assert, however, that they were not
required to record a notice of intent to preserve their property interest because the Use
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Restrictions were alternatively enforceable as an equitable servitude and thus fall within
the exception set forth in section 885.060, subdivision (c). Accordingly, we consider
whether the Use Restrictions were alternatively enforceable as an equitable servitude.
IV. Equitable Servitudes
A. General Principles of Equitable Servitudes
"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.] The doctrine is useful chiefly to enforce
uniform building restrictions under a general plan for an entire tract of land or for a
subdivision." (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361,
379 (Nahrstedt).) Although the doctrine of equitable servitudes is often invoked in cases
involving restrictions imposed pursuant to a general plan for improving an entire tract or
real estate subdivision, it is not limited to restrictions imposed in common interest
developments. (Marra v. Aetna Construction Co. (1940) 15 Cal.2d 375, 378 (Marra).)
There are several requirements that must be met before a covenant will be
enforced as an equitable servitude. First, the covenant must be stated in a written
Compliance v. Anderson (1995) 12 Cal.4th 345, 358 (Citizens).) Second, the contracting
parties must have expressed their intent to bind their successors. (Citizens, at pp. 357-
358.) Third, the agreement must describe the property to be affected thereby. (Wing v.
Forest Lawn Cemetery Ass'n (1940) 15 Cal.2d 472, 483; Martin v. Ray (1946) 76 12
Cal.App.2d 471, 479.) Fourth, the covenantor's successor must have had actual or
constructive notice of the covenant at the time it acquired the covenantor's property.
(Citizens, at p. 363.) Finally, the equities must support the issuance of relief. (Marra,
supra, 15 Cal.2d at p. 378.)
B. Analysis
To support their equitable servitude argument, Appellants primarily rely on
MacDonald Properties, Inc. v. Bel-Air Country Club (1977) 72 Cal.App.3d 693
(MacDonald). In that case, a prior owner of a golf course conveyed a strip of land along
its sixth fairway to the predecessor of an adjacent land owner. (Id. at p. 696.) The
property served as a rough for the sixth fairway and golf balls fell on it every day. (Ibid.)
Thus, to prevent interference with the property's use for golfing purposes, the deed of
conveyance contained building restrictions. (Id. at p. 696.) The plaintiffs argued the
deed restrictions were not enforceable against subsequent purchasers because the original
deed did not describe the benefited property. (Id. at p. 699.) Recognizing the argument
was technically correct, the court nevertheless held that deed restrictions drafted as
conditions subsequent with right of reentry "may be enforced . . . as equitable servitudes
against transferees acquiring the property with actual or constructive notice of the
restrictions, when failure to enforce the restrictions would produce an inequitable result."
(Id. at pp. 699-700.)
Notably, McDonald differs in a significant respect in that it did not involve a
power of termination and the Act as the Act did not exist at the time the court decided the
case. Regardless, Appellants argue that based on MacDonald, the Use Restrictions were
enforceable as an equitable servitude so long as Syverson had actual or constructive 13
notice of the restrictions, they were assigns of a grantor, and Syverson could not show
enforcement would produce an inequitable result.
Appellants are correct in that notice is an essential requirement for an equitable
servitude. (Citizens, supra, 12 Cal.4th at p. 365-366; McDonald, supra, 72 Cal.App.3d
at p. 699-700.) They claim Syverson had constructive notice based on the recorded deed
restrictions and a triable issue of fact existed as to actual notice because Syverson stated
in his original complaint that he learned of the grant deed containing the Use Restrictions
during the course of the purchase of his property.
Appellants' argument that Syverson had notice of the Use Restrictions, which is
based solely on the deeds containing the restrictions, is flawed because the Use
Restrictions expired in 1988. In general, "[a] 'duly recorded' document gives constructive
notice unless the interests described in the recorded document are released, discharged, or
conveyed to the property owner by another recorded document. It remains in the public
records, and imparts constructive notice, even though it may be unenforceable." (5
Miller & Starr, Cal. Real Estate (3d ed. 2011) Recording and Priorities, § 11:67, p. 11-
121.) However, an exception exists where the interest expired by statute. (Id. at § 11:67,
pp. 11-121 to 11-122.) Under the Act, "certain interests reflected by a recorded
document become unenforceable and no longer impart constructive notice after the
passage of certain prescribed periods of time." (Id. at § 11:68, p. 11-213.)
As relevant here, the Act provides that the "[e]xpiration of a power of
termination . . . makes the power unenforceable and is equivalent for all purposes to a
termination of the power of record and a quitclaim of the power to the owner of the fee
simple estate, and execution and recording of a termination and quitclaim is not 14
necessary to terminate or evidence the termination of the power." (§ 885.060, subd. (a),
italics added.) Thus, once Appellants' power of termination expired in 1988, it resulted in
a termination of the power of record and quitclaim of the interest to Syverson. As such,
recordation of the Use Restrictions no longer imparted constructive notice after
expiration of the power of termination as provided under the Act.
Similarly, even if Syverson had actual notice of the deeds containing the Use
Restrictions, he only had notice that his chain of title included expired Use Restrictions.
In the event that the deeds triggered a duty of inquiry to determine the validity of the
restrictions, such duty only extended to what he could have discovered based on a
reasonable investigation. (See Walgren v. Dolan (1990) 226 Cal.App.3d 572, 579;
American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1020.)
Assuming without deciding that a reasonable investigation included uncovering the Prior
Action, Syverson would have learned that the trial court had previously concluded the
Use Restrictions constituted conditions subsequent with a right of re-entry, which
subsequently became a power of termination under the Act and required recordation of a
notice to preserve the interest. Syverson would have further learned that Michael Emery,
the defendant in the Prior Action, expressly argued that the Use Restrictions were not
restrictive covenants or equitable servitudes. Indeed, Michael Emery had argued the
deeds could not "reasonably be construed as creating covenants or servitudes."
Accordingly, an investigation would have reinforced that the Use Restrictions constituted
a power of termination under the Act requiring a notice of intent to preserve the interest
and would not have put Syverson on notice of an interest based on an equitable servitude.
15
The parties have not pointed to anything in the record of title, other than the deeds
containing the expired Use Restrictions, that would have put Syverson on constructive
notice of Appellants' claimed interest in Syverson's property. Likewise, Appellants have
not shown or argued that Syverson had actual notice prior to his purchase based on
anything other than the deeds containing the expired Use Restrictions.
We recognize that the notice requirement is somewhat circular in that the analysis
leads us back to the expiration of the Use Restrictions under the Act. We also
acknowledge that we should not construe a statute to render any provision therein useless.
(Williams v. Superior Court (1993) 5 Cal.4th 337, 354.) Thus, we must consider whether
our conclusion that Syverson's lack of notice despite the recorded deeds in his chain of
title was fatal to Appellants' claim of an equitable servitude renders subdivision (c) of
section 885.060 meaningless. Based on our review of the legislative history, we conclude
it does not.
The Legislature added subdivision (c) to section 885.060 in 1990. (Stats. 1990, c.
1114 (A.B. 3220), § 1.) The purpose of adding that subdivision was "to prevent [section
885.060] from being applied to nullify property restrictions in the covenants, conditions,
and restrictions (CCRs) of numerous homeowner associations." (Sen. Com. on Judiciary,
Analysis of Sen. Bill No. 3220 (1989-1990 Reg. Sess.) as amended May 15, 1990
(Judiciary Committee Report).) The Judiciary Committee Report explained that a
homeowners association sponsored the bill because hundreds of homeowners
associations had failed to record notices of intent to preserve their interests in their CCRs
and, as a result, lost their ability to enforce their CCRs. (Ibid.) Thus, proponents of the
bill sought to "reaffirm the right of homeowner associations to continue to enforce 16
reasonable CCR restrictions by deeming the restrictions as equitable servitudes rather
than as a condition giving rise to a power of termination." (Ibid.)
In the case of homeowners associations, the Legislature chose equitable servitude
law as the standard for enforcing CCRs. (Nahrstedt, supra, 8 Cal.4th at p. 380.) Section
885.060, as originally enacted, "removed the ability of homeowners associations to
enforce longstanding . . . [CCRs] unless the association affirmatively preserved its
interest." (Judiciary Committee Report, supra.) By adding subdivision (c) to section
885.060, the Legislature rectified the problem and reinforced the ability of homeowners
associations to enforce their CCRs without a notice of intent to preserve their interest
therein. Nothing in our analysis of this case changes that solution or result. Although
not necessarily limited to the context of homeowners associations' CCRs, we see nothing
in the legislative history suggesting that subdivision (c) applies to situations as in this
case where landowners are attempting to escape the requirements of the Act by seeking to
alternatively enforce deed restrictions as equitable servitudes.
In any event, even if the notice requirement was not fatal to Appellants' claim of
an equitable servitude, the Use Restrictions do not meet other requirements of equitable
servitudes.
In order to establish an equitable servitude, the deed containing the restrictions
must contain "a proper expression of intent to create an equitable [servitude]; that is,
reference to a common plan of restriction or indication of an agreement between the
grantor and grantee that the conveyed lot to be taken subject to some such plan, but
also . . . 'some designation or description of what is an essential factor, namely, the
dominant tenement.' " (Wing v. Forest Lawn Cemetery Ass'n, supra, 15 Cal.2d at p. 480.) 17
" 'There should be some written evidence, either in the form of a plat [or] otherwise,
delineating or pointing out the extent of the property affected by the restrictions.' " (Ibid.)
" '[P]rovisions of an instrument creating or claimed to create such a servitude will be
strictly construed, any doubt being resolved in favor of free use of the land.' " (Friesen v.
City of Glendale (1930) 209 Cal. 524, 529.)
In this case, the Union/Wurzell Restrictions neither described the dominant
tenement nor stated that the restrictions were for the benefit of other parcels pursuant to a
common plan. To the contrary, the Union/Wurzell Restrictions stated they were
"operative as covenants running only with the land covered by each separate and
particular lot of parcel hereby demised, but shall not inure to the benefit or detriment of
any owner or owners of adjoining or adjacent lots, lands, or parcels in anywise or
manner whatsoever." (Italics added.) Similarly, the Rotner Restrictions did not identify
a dominant tenement and common plan.
If we were to accept Appellants' argument that the Use Restrictions are
alternatively enforceable as equitable servitudes, we would run afoul of the purpose of
the Act. The Legislature enacted the Act to clear "interests in property and defects in
titles created at remote times, whether or not of record" because such interests and defects
"constitute unreasonable restraints on alienation and marketability of real property," often
resulting in delays and litigation to clear titles. (§ 880.020, subd. (a)(2)-(3).) The
Legislature declared that "titles should be determinable to the extent practicable from an
examination of recent records only." (§ 880.020, subd. (a)(4).) "The burden on holders
of old interests of recording a notice of intent to preserve or an extension of time is
outweighed by the public good of more secure land transactions." (Cal. Law Revision 18
Com. com., 7 West's Ann. Civ. Code (2007 ed.) foll. § 880.020, p. 422.) If landowners
who allowed their interest to lapse, such as Appellants in this case, could run to court to
seek an injunction to alternatively enforce the interest as an equitable servitude, it would
render the Act's purpose nugatory. Instead, we conclude the exception set forth in
subdivision (c) of section 885.060 only applies to restrictions which comply with the
requirements of equitable servitudes and is not a savings clause for landowners who
through inadvertence, neglect, or otherwise allowed their power to termination to expire.
Because the Use Restrictions expired based on Appellants' failure to record a
notice of intent to preserve their interest and Appellants failed to show a triable issue of
fact exists as to whether the Use Restrictions are equitable servitudes, the trial court
properly granted summary adjudication in Syverson's favor.
DISPOSITION
The judgment is affirmed. Respondent is entitled to costs on appeal.
McINTYRE, J.
WE CONCUR:
BENKE, Acting P. J.
O'ROURKE, J.
19
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Holding. The court held that the use restrictions on the respondent's property, which were drafted as conditions subsequent with a power of termination, expired due to the appellants' failure to record a notice of intent to preserve their interest under the Marketable Record Title Act. Furthermore, the court held that these restrictions were not alternatively enforceable as equitable servitudes because they did not provide the respondent with notice of an enforceable interest.
Issues
Whether the use restrictions expired under the Marketable Record Title Act due to the appellants' failure to record a notice of intent to preserve their interest.
Whether the use restrictions were alternatively enforceable as equitable servitudes.
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“We conclude the use restrictions, which were enforceable by a power of termination, expired due to the northern property owners' failure to record a notice of intent to preserve their interest under the Marketable Record Title Act”
“We also conclude the use restrictions were not alternatively enforceable as equitable servitudes.”