In Zanelli v. McGrath, (— Cal.Rptr.3d —, 2008 WL 4051032, September 2, 2008), a California Court of Appeal considered whether a view easement was extinguished by merger between two contiguous pieces of property when two individuals acquired ownership of both pieces of property; and whether the view easement was revived following the sale of each piece of property to two separate owners. The Court of Appeal concluded that the view easement was extinguished by merger when the two parcels of land were unified under singular owners, and that the view easement was not revived upon the sale of each piece of property to two separate owners.
In 1981, Ted Horsely and Dennis Sunderhaus owned the adjacent residential properties located at 60 and 66 Clarendon Avenue in San Francisco, California. Horsely and Sunderhaus conveyed the 66 Clarendon parcel to Mr. and Mrs. Soffer, and also granted the Soffers an easement “for receiving light, air, and view” over the 60 Clarendon parcel. In 1992, Jeffrey Dunham and Richard Sommer purchased 66 Clarendon, as joint tenants, and the deed referenced the view easement benefiting 66 Clarendon. In 1994, Dunham and Sommer purchased 60 Clarendon as tenants in common (each holding an undivided 50 percent interest); Dunham held his interest in a revocable trust.
In 2002, Sommer and Dunham sold 60 Clarendon to Thomas McGrath. At trial, Sommer testified that he and Dunham took the view easement that burdened the property into consideration when they priced the property for sale. However, the property was marketed as having panoramic views, and never mentioned the existence of a view easement. Apparently, McGrath was not apprised of the possible view easement until he already made an offer on 60 Clarendon. McGrath learned of the view easement in a preliminary title report provided by Sommer and Dunham’s real estate agent. McGrath chose to remove contingencies in the purchase agreement thereby waiving his right to cancel the contract based on the information in the preliminary title report. After a year of negotiations, McGrath’s purchase of 60 Clarendon finally closed with McGrath aware that 60 Clarendon could be burdened with a view easement benefiting 66 Clarendon. However, the deed from Sommer and Dunham to McGrath did not contain a reference to the view easement, nor did it expressly reserve the view easement.
In 2003, 66 Clarendon was sold to Gaetano Zanelli with full disclosure of the dispute regarding the view easement. Zanelli’s agent informed him that the view easement could be invalid because of merger. The purchase price was discounted for Zanelli as a result, and Zanelli understood that it would be his burden to enforce the easement. In June, 2005, Zanelli filed a complaint for declaratory relief and injunctive relief. In August, 2005, McGrath filed a cross-complaint to quiet title. The trial court found that the view easement was extinguished because of merger under the common ownership of the two properties by Sommer and Dunham in 1994.
The Court of Appeal began with a discussion of easements and the applicable statutory provisions necessary for the court’s analysis of the issues. The court explained that “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.” The easement at dispute here would limit McGrath from building on his property in such a way that would obscure the “light, air, and view” from Zanelli’s property. The court also cited California Civil Code Section 811 which states that “a servitude is extinguished by the vesting of the right to the servitude and the right to the servient tenement in the same person.” In other words, in this case, when there is an easement benefiting one property and burdening another, and those two properties are united under the ownership of one person, the easement is extinguished.
Zanelli first argued that Sommer and Dunham’s common ownership of 60 and 66 Clarendon did not extinguish the view easement by merger because unity of ownership needs to be in “one person;” whereas the interest here was united under two people. Zanelli cites the use of the singular “person” in the language of the Section 811 to support his contention. The court disagreed and pointed to another section of the civil code which explicitly provides that the singular also includes the plural. The court also said that the easement is extinguished because it is “superfluous” under united ownership, and that upon sale of one or both parcels, the singular owner(s) could include a new easement. Zanelli countered, stating that despite common ownership, multiple owners may not agree on the use of the properties and the easement can serve as protection to one of the cotenants. The court rejected this argument noting that there are a number of other remedies available to cotenants without reliance on extinguished easements.
Next, Zanelli argued that because Sommer and Dunham owned 66 Clarendon as joint tenants and 60 Clarendon as tenants in common, merger could not be applied. For the doctrine of merger to apply, there must be “unity of title.” Ownership should be “permanent and enduring” and “an estate in fee, in both the dominant and servient estate.” Also, “ownership of the two estates should be coextensive and equal in validity, quality, and all other circumstances of right.” Zanelli pointed to the right of survivorship that results from joint tenancy as creating an estate of lesser duration. The court disagreed and pointed out that the right of survivorship can be defeated by the unilateral act of a joint tenant, and therefore the right of survivorship is really only an expectancy. The court found that whether Sommer and Dunham held title as joint tenants or tenants in common, their interests were equal consisting of undivided half interests.
Zanelli also argued that because Dunham held his interest in 60 Clarendon in a revocable trust, merger was precluded because Dunham only held the property in a representative capacity, and did not actually own the property. The court noted that revocable trusts are widely recognized as probate avoidance devices. As a result, property held in revocable trust is deemed to be property of the settlor (Dunham is the settlor here). Consequently, the court found that Dunham had the equivalent of full ownership and merger was still applicable.
Zanelli contended that even if the easement was extinguished by merger, it was revived when 60 Clarendon was sold to McGrath. The court explained that easements do not come into existence again “merely by severance of the united estates,” but instead must be “newly created by express stipulation” or by “implication of the severance.” The court was quick to point out that the easement was not expressly created anew upon the sale of 60 Clarendon to McGrath because the deed contained no reference of the view easement. Next, the court reasoned that there was no implied reservation of the easement because that requires “ongoing use that is reasonably necessary to the enjoyment of the land granted.” The Court of Appeal agreed with the trial court that there was no evidence of ongoing use contemplated for the implied reservation of the easement. As a result, the court concluded that the easement was not revived upon the sale of 60 Clarendon to McGrath.
Finally, the Court of Appeal addressed Zanelli’s contention that there was not sufficient evidence to support the trial court’s finding that Sommer and Dunham intended to extinguish the view easement. Zanelli argued that merger can only be found where it would be equitable and it serves the interest of the person(s) holding the two estates. The court disagreed that intent is necessary, but nevertheless found that based on all of Sommer and Dunham’s actions, the trial court could find that they intended to extinguish the easement. The court reasoned that equity was served because McGrath entered into his purchase agreement without knowledge of the easement, and paid a purchase price reflecting unburdened land. On the other hand, Zanelli purchased his property while fully appraised of the easement problem, and his purchase price was reduced accordingly.
The Court of Appeal concluded that the view easement was extinguished by merger and was not revived expressly or impliedly, and that there was sufficient evidence to find that the view easement was intended to be extinguished.