DIRT DEVELOPMENT for June 2, 2009
Daniel B. Bogart
Donley and Marjorie Bollinger Chair in Real Estate Law
Chapman University School of Law, Orange, California
EASEMENTS; SERVIENT’S RIGHT’S; “EXCLUSIVE” ACCESS:    Owner of landlocked dominant Lot described in easement in residential subdivision may  enjoin neighbor from using easement for purposes of horse trails and manure hauling.

Gray v. McCormick, 167 Cal. App. 4th 1019 (Cal. Ct. App. 2009)
Very upscale Hatfields and McCoys battled here over the right of the servient tract owner to use as area specifically identified as an exclusive easement, which use was detrimental  to  the owner of the dominant tract.

The McCormicks owned Lot 3 and the Grays owned Lot 6 in Coto de Caza, in Orange County, California.  As this reporter can attest (having driven by the front gate but never having been invited in), Coto de Caza is a pricey and very exclusive subdivision.  As is the case with all such property in Orange County, Coto de Caza is subject to a set of Covenants, Conditions and Restrictions, and these are duly recorded and applicable to the Lots in the subdivision. 

In a Supplemental Declaration of Covenants, Conditions and Restrictions and Reservation of Easements, the developer subjected property in the subdivision to both exclusive and non exclusive easements. The streets are private, and therefore the tract map referenced in the CC&Rs gave non exclusive appurtenant access easements over private streets and sidewalks.  One such easement right is associated with Olympic Way, a street serving the McCormick’s Lot. Unfortunately, Olympic Way did not directly serve Lot 6, owned by Grays, and neither did any other street.  The Grays’ Lot was effectively landlocked. 

To solve this problem, the CC&Rs granted “an exclusive easement of access, ingress and egress (“Easement”) over that portion of Lot 3 … more fully described as Exhibit G on the Final Subdivision Tract Map … (“Easement Area.”) The Easement is created for the benefit of the Owner of Lot 6 for the purposes of (a) access, ingress and egress to and from Lot 6 to the private street [Olympic Way] ...; and (b) construction, installation, maintenance and repair of access drive improvements on the Easement Area ….” 

The McCormicks were apparently first to use and occupy their Lot (Lot 3), and rode and kept horses on their property.  This involved riding the horses and hauling manure along the Easement Area. 

According to the case opinion, the Grays paid $2,995,000 for their unimproved Lot (Lot 6), and planned to “spend several times that amount on the construction of the residence and improvements.” (Emphasis added.)  In the course of building their home, the Grays planned to build their driveway on the Easement area to obtain access to Olympic Way. They further intended to surround the driveway with “perimeter walls and landscaping.” The McCormicks’ horses did not fit into the Grays’ plans, and one can imagine that even without perimeter walls, the Grays did not wish to dodge either horses or horse manure when driving to and from their stately home.

The trial court entered judgment for the McCormicks, stating the McCormicks “have the right to use the Easement Area in any way that does not interfere with the [Grays’] uses.  The court of appeals reversed holding that “any use of the surface of the easement area by owners of Lot 3 is inconsistent with the exclusive use granted to the owners of Lot 6.”

The court of appeals primarily focused on the meaning of the word “exclusive” in the context of this kind of easement right, and whether exclusive easements are legal, valid and  constitutional.  As to the first issue, the court suggested that the word “exclusive” means what it says.  As to the latter, the court holds that exclusive easements are valid in California.

That easement rights may be exclusive is well settled.  The question is whether the use of this word excludes only other non owners of the servient tract, or the fee owners of the servient tract as well.  The McCormicks argued that the grant of an exclusive easement gave the Grays the right to exclude other non fee parties but not the fee owner of the servient tract.

Absent the use of language specifically giving the dominant tract owner exclusive rights, the owner of the servient tract retains the right to use the easement land. California courts have hewed to this rule consistently. This is in keeping with the general idea that the grant of an easement is a grant of something less than fee; the right to exclude the owner of the servient tract is a very valuable right and a more significant limitation on the rights of the servient tract owner.  It is incumbent on the drafter of the easement to make it clear that the easement includes this right.

The court rightly points out that however, that cases setting out this general rule do not interpret easements that give exclusive rights to the owner of the dominant tract.

The easement in Gray also gave the owners of Lot 6 the right to improve the Easement Area, and build a driveway.  The easement did not limit this right, and the construction of an elaborate drive with perimeter walls would seem to be in keeping with the exclusive nature of the subdivision.   According to the court “it is inconceivable that the owners of a multi-million dollar property who build out 90 feet of access drive improvements would be expected to share that drive with a neighbor whose property abuts the street and to bear the costs of cleaning up the horse droppings and hay scatterings associated with that neighbor’s use of the easement area.”  The easement not only granted the owner of Lot 6 rights; it also subjected the owner (the Grays) to liability.  The owners of the dominant tract are required to indemnify and hold harmless from liability or loss the owners of Lot 3 (the McCormicks) for any damage resulting from use of the easement. 

Together, these facts and expectations suggest that the Grays could use the Easement Area and exclude the McCormicks and their horses.

The McCormicks attempted to deflect the Grays attack on their use of the Easement Area primarily by looking at the use of the word “exclusive” in other California cases.  They argued that the Grays’ exclusive easement gave the McCormicks “the right to all uses of the easement area that are not inconsistent with the Grays’ access rights.” (Emphasis added.) The McCormicks cited City of Los Angeles v. Igna, 208 Cal. App. 2d 338 (1962).  In that case, the city and its water department held power transmission rights pursuant to two “exclusive” deeds/easements. The owner of the servient tract operated a trailer park and used some of the easement area.  The trial court required the trailer park owner to remove all structures and to refrain from conducting business in the easement property.  But the appellate court modified the order to exclude only those uses inconsistent with the easement. 

The court of appeals in Gray distinguished Igna by noting that, unlike the power transmission easement, the language of the Coto de Caza eaement “also specifically states that the use of the easement by the owners of Lot 6 “shall be exclusive.””  The Igna easement was not qualified in this manner. In other words, the court of appeals was satisfied that the drafter intended to confer a more exclusive right on the owner of the easement in Gray.

The court also held that exclusive easements are valid in California, and that they do not “in effect grant fee ownership over the easement area.” This is not fee simple in disguise. The court points out that the owner of the servient estate does not have unfettered right to use the Easement Area – the owner may only use it for access and to construct a driveway.

Reporter’s Comment 1:  Assume initially that the McCormicks were correct on their basic legal proposition – that they have the right to uses that are not inconsistent with Grays’ use of the easement area.  Just on the facts, the author thinks that the McCormicks’ use of the sole private driveway that connects a multi million dollar estate to the road for a horse trail would seem to be patently inconsistent with the purpose of the easement.  If the lawyer for the McCormicks could demonstrate that the Grays planned to ride horses on the driveway to reach the road, then the use would be consistent, but short of this, it seems to be a stretch. 

Reporter’s Comment 2:  Our colleague Roger Bernhardt discusses Gray in California Real Property Law Reporter in January 2009.  He makes many fine points and sees case as being fairly close.  Among other things, Roger states:

 From the dominant owners (Grays’) point of view, since the word “exclusive means no one else, it should naturally exclude the servient owners as well.  But from the servient perspective, a fee interest normally entitles those owners to make any use of the property that they want as long as it does not unreasonably interfere with the dominant tenants’ activity.  This would equally naturally lead the McCormicks to believe that they could also use the driveway whenever their activity did not get in the way of the Grays – including “exclusive” as a modifier in the document only meant that they, the McCormicks, could not grant any third parties similar privileges on the driveway. (After all, if a dominant tenant is only protected against unreasonable interference with his easement, why should nonharmful use by the servient tenants matter? The trouble with this logic, however, is that while protecting a dominant tenant against nonharmful uses sounds like a silly outcome, it is no silli

er than allowing a fee owner to prohibit trespasses even when they do not hurt her – which is what property law is all about, and which is why the McCormicks lost.)

Reporter’s Comment 3:   Roger also asks “So, why did counsel for the subdivider fail to make clearer just what was intended?” He suggests that it is unfair to blame the lawyers, even though “there is often a temptation” to do so.  “The world keeps on changing, and no amount of worrying or extensiveness of drafting is going to anticipate everything.” As Roger points out, the Restatement of Servitudes does not help here.  It states that “exclusive” easements grant “the right to exclude others.” As Roger points out, this phrasing minimizes the daylight between the meaning of the words “exclude” and “exclusive.” Asking the attorney for the subdivider to state that the dominant tenant had the “right to exclude” (which arguably would be clearer) is perhaps redundant when the Restatement defines exclusive as providing this right.

Editor’s Comment:  The editor has long maintained that easements and options are the most underdrafted instruments in real estate practice.  Frequently they fail to anticipate what happens when situations change in the future. 

That being said, the editor not only agrees with Professor Bogart’s reasoning in Comment 1 but disagrees with Roger Bernhardt’s argument that this is a close case on the interpretation of the easement rights.  If one made a study of a broader range of easement cases, one could discover a myriad of applications for the term “exclusive.”  In some cases, it confers upon the dominant tenant the right to license additional uses.  In others, it gives the dominant tenant the right to exclude all others.  In many other cases, due to the facts and circumstances, and “exclusive” right may confer one or both of the above rights but will not permit exclusion of non-invasive activities of the servient tenant. 

Frankly, in light of the circumstances, the editor believes it would be a close case as to whether the servient could conduct the activities it was conducting even if the declaration did not state the dominant right to be “exclusive.”  Horse manure can raise hell on the undercarriage of a Rolls Royce. 

The court is incorrect in assuming that permitting the servient some use would require that the dominant keep the driveway clean.  This would clearly be the servient’s duty in any event.   But this is meaningless dicta here, since the court properly found that “exclusive” is what the dominant tenants bought and what they get.

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