Judge: Jon R. Takasugi, Case: 20STCV10093, Date: 2022-12-08 Tentative Ruling

Case Number: 20STCV10093    Hearing Date: December 8, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiff’s motion for summary judgment is GRANTED.

On March 12, 2020, Plaintiff M&H Capital, Inc. filed suit against Yi Mei Investment, LLC, Citigroup, Inc., June-Chih Jesse Liu Md, Inc, Green Grace USA, and Time Education Center, Inc., alleging: (1) trespass; (2) conversion; and (3) declaratory relief.

            On May 29, 2020, Cross-Complainant Yi Mei Investment, LLC (Yi Mei Investment) filed a cross-complaint (XC) against Cross-Defendant M&H Capital, Inc., alleging: (1) adverse possession; and (2) prescriptive easement.

            Now, Plaintiff/Cross-Defendant M&H Capital (Plaintiff) moves for summary adjudication of its first cause of action, as well as for summary judgment against Defendant/Cross-Complainant, Yi Mei Investment, LLC, (Yi Mei) on all claims under the Cross-Complaint. 

Factual Background

            Plaintiff/Cross-Defendant owns 660 East Duarte Avenue, and Defendant/Cross-Complainant owns 650 East Duarte Avenue, the property immediately to the west of Plaintiff/Cross-Defendant’s. This action concerns a dispute over a 30 foot tall monument with four advertising signs (Sign). (See photo in XC, ¶ 9.)

Discussion

I.                   Standing

In opposition, Defendant submitted evidence that Plaintiff transferred all of its ownership interest in the 650 Duarte Property to Amblix, LLC. (DSS ¶ 1.) Code of Civil Procedure § 367 states that, “[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute”; see also Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004. The real party in interest is the person who has the right to sue under the substantive law. It is the person who owns or holds title to the claim or property involved, as opposed to others who may be interested or benefited by the litigation. (Gantman v. United Pac. Ins. Co. (1991) 232 Cal.App.3d 1560, 1566.) Lack of standing is not waived by failure to object. (Pillsbury v. Karmgard (1994) 22 Cal.App.4th 743, 757-758.)

            In reply, Plaintiff argues that the alleged lack of standing does not prevent summary judgment because First Arcadia owns the subject property, and joined this motion. Moreover, because the transfer did not take place until May 2022, Plaintiff had standing as of the date of filing, up and until May 2022:

Even looking at the standing issue, all Defendants present is a transfer of title from one entity to another, effective May 2022; both entities are controlled and owned by the same principles, as acknowledged by Defendants in opposition. Defendants present no evidence to dispute that M&H was the owner from the date the Complaint was filed through May 2022. Nothing in the opposition suggests M&H did not have standing as of the date of filing, up and until May 2022. Accordingly, even if the Court found that Plaintiff changing the entity under which it held title temporarily lost standing, it would merely be an issue of calculating the period for which damages accrue. To that end, even if required to amend the complaint and add the new entity as an additional plaintiff, M&H would nevertheless need to remain a plaintiff to the action as it would be the proper party to claim the damages for the period between filing and May 2022.

(Reply, 2: 1-3.)

            The Court agrees that based on Plaintiff’s ownership up until May 2022, and First Acadia’s joinder to the motion, the requisite standing is present to adjudicate this motion.

II.               Plaintiff’s Complaint

“The elements of a common law trespass are (1) the plaintiff’s ownership or control of the property; (2) the defendant’s intentional, reckless, or negligent entry on the property; (3) lack of permission to enter the property, or acts in excess of the permission; (4) actual harm; and (5) the defendant’s conduct as a substantial factor in causing the harm.” (Ralphs Grocery Co. v. United Food and Commercial Workers Union Local 8 (2010) 113 Cal.Rptr.3d 88, 93, reversed on other grounds by 55 Cal.4th 1083 (2012).)  

Plaintiff argues that the undisputed elements establish trespass.

More specifically, as for the first element, Plaintiff submitted evidence that the Sign is on Plaintiff’s property. The survey obtained by Plaintiff’s property management company confirms this. (SS ¶ 7.) Moreover, Citi’s own lease agreement with Yi Mei recognizes the Sign is “located approximately one foot west of the 600 property [owned by Yi Mei] on the 650 Duarte property which is not owned by [Yi Mei]” but rather is owned by Plaintiff. (SS ¶ 10.) Finally, prior to litigation, Yi Mei’s property manager confirmed to Plaintiff’s counsel that he conducted an investigation with the City of Arcadia’s building and planning department, and confirmed the Sign is in fact located on Plaintiff’s property. (SS ¶ 11.)

As for the second element, “[t]he intent of a trespasser is simply an intent to be at the place on the land where the trespass allegedly occurred, and a defendant ‘is liable for an intentional entry although he has acted in good faith, under the mistaken belief, however reasonable, that he is committing no wrong.’” (Hensley v. San Diego Gas & Elec. Co. (2017) 7 Cal. App. 5th 1337, 1356.) Here, it is undisputed that Defendants, and each of them, are making current and continuing use of the Sign. (SS  ¶ 9.) Yi Mei collects rent from Citi for monthly display of Citi’s logo on the Sign. (SS ¶ 12.) Citi, Liu MD, Green Grace, and Time Education all use the sign to display their logos and market their respective businesses. (SS ¶ 9.)  As such, whether or not they believed such use to be permissive, for the purposes of this element, Plaintiff contends that Defendants’ use of the Sign was intentional.

As for the third element, it is similarly undisputed that Defendants’ continued use of the Sign is without Plaintiff’s permission. On November 8, 2019, prior to the Complaint’s filing, counsel for Plaintiff wrote to Yi Mei, cc-ing Citi, and making clear the Sign was considered an encroachment and would soon be removed. (SS ¶ 8.) In light of this letter, there can be no doubt Plaintiff did not consent to the continued use. Moreover, the very act of filing the Complaint, with the allegations contained within, make clear the use is not permissive.

As to the fourth and fifth elements, the Sign is the only sign on Plaintiff’s property. Section 9103.11.050 of the City of Arcadia’s Development Code limits properties to one such sign per street frontage. Plaintiff’s property only has the one street frontage along Duarte Road, where the Sign is located. (See RJN in Support of Summary Judgment.) Accordingly, Plaintiff is unable to construct another sign on its property. Plaintiff frequently receives requests from its tenants for use of a sign. (SS ¶ 13.) If Plaintiff was able to make use of the Sign, Plaintiff would be able to allow its tenants to use the Sign in exchange for monthly sign rent.

Finally, as to the damages owed, upon proving trespass, “[t]here is no fixed, inflexible rule for determining the measure of damages for injury to, or destruction of, property; whatever formula is most appropriate to compensate the injured party for the loss sustained in the particular case will be adopted.” (Armitage v. Decker (1990) 218 Cal. App. 3d 887, 904.) (quotations omitted). Here, under such standard, Plaintiff argues that it should be awarded the lost use of the Sign, by requiring Defendant disgorge its own profits from the trespass. Plaintiff sets forth the following calculation:

As stated, Yi Mei currently collects $281 from Citi every month for use of its portion of the Sign. SUF, ¶ 12. That is approximately a daily rate of $9.36. There are four rentable signs on the Sign, each which could be used by a different tenant of Plaintiff, just as Yi Mei currently makes use. From the day of Plaintiff’s letter to Yi Mei and Citi demanding the encroachment stop to the hearing on this motion yields 1,127 days. This means Plaintiff has lost no less than $10,548.72 per sign, which is presumably the same amount Yi Mei has recovered in the same period. For all four spaces on the Sign available, Plaintiff has lost no less than $42,194.88. Accordingly, Plaintiff is now entitled to $42,194.88 in damages as a result of the trespass.

            (MSJ, 9: 18-26.)

            Plaintiff’s evidence supports a reasonable inference that it has established each of the elements of trespass, and is entitled to use of the Sign, and a disgorgement of profits from Defendant from the trespass. The burden shifts to Defendant to disclose a triable issue of material fact as to this issue.

            In opposition, Defendant argues that Plaintiff is barred by the three-year statute of limitations. More specifically, Defendant argues that the sign constitutes a permanent, rather than continuous, trespass. Given that the statute of limitations for permanent trespass begins to run when the trespass was created, and the sign here was erected as early as 1961, Defendant argues that the claim is barred.

            However, Defendant itself concedes that the "crucial test of the permanency of a trespass or nuisance is whether the trespass or nuisance can be discontinued or abated.’ [Citation]." (Mangini v. Aero-Jet General, Inc. (1996) 12 Cal.4th 1087, 1097.) A trespass will not be considered permanent is it “could have been removed at any time.” (Phillips v. City of Pasadena (1945) 27 Cal. 2d 104, 108.)

            As such, the only reasonable inference supported by the evidence is that the sign here is a continuing trespass. There is no evidence that the sign could not be removed, and, importantly, the law provides no condition that the trespass needs to be removed easily or without any amount of cost. Given that Defendants’ use of the sign can be “discontinued at any time” it is therefore “considered continuing in character.” (Phillips, supra, 27 Cal. 2d at p. 107.) As such the three-year statute of limitations is not applicable here.

            Defendants also argue that Plaintiff has failed to provide admissible evidence that the Sign is on its property. However, the land survey submitted by Defendants is a proper business record developed in the normal course of James Hong’s management of Plaintiff’s property. Moreover, Plaintiff’s own pleadings which seek adverse possession and equitable easement implicitly concede that the sign is on Plaintiff’s property. (See e.g. XC ¶¶ 10, 37, 11, 40, 23-32.) Tellingly, Defendants did not submit any evidence to show that the sign is not on Plaintiff’s property.

            Finally, Defendants argue that the signage is privileged because of its easement rights. However, Plaintiff submitted evidence that they revoked any permission on 11/8/2019, and that Defendants continued to use the property. Moreover, as set forth below, the Court concluded that Plaintiff has not disclosed a triable issue as to an equitable easement.

III.            Cross-Complaint

A.    Adverse Possession

To establish title by adverse possession, the claimant must establish the following five requirements: 1) Possession under claim of right or color of title (which exists when possession is founded on a written instrument, judgment, or decree, but for some reason defective); 2) actual, open, and notorious occupation of the premises in such a manner as to constitute reasonable notice to the true owner; 3) possession which is adverse and hostile to the true owner; 4) possession which is uninterrupted and continuous for at least five years; and 5) payment of all taxes assessed against the property during the five-year period. (Buic v. Buic (1992) 5 Cal.App.4th 1600, 1604.)

Plaintiff argues that Defendants cannot establish this claim because the “failure to pay taxes bars the claim of title by adverse possession.” (See, e.g., Gilardi v. Hallam (1981) 30 Cal. 3d 317, 327. Plaintiff further argues that it is undisputed that none of Defendants have ever paid any of the property taxes related to the land in which the Sign is constructed, and Defendants will be unable to prove anything to the contrary; rather, Plaintiff pays all property taxes for the entirety of the 650 Duarte Road property, including the portion where the Sign is located. (SS ¶ 15.)

In opposition, Defendants argue that Plaintiff has not met its burden because “[a]s the moving party, Plaintiff has failed to submit undisputed and admissible evidence that Plaintiff has paid the property taxes for the strip of land where the Signage is located. Accordingly, Plaintiff's summary judgment with respect to the adverse possession claim must be denied.” (Opp., 11: 21-25.)

However, as noted by Plaintiff in reply, on summary judgment, it need not disprove every element of the cross-complaint’s claims. Rather, Plaintiff needs only to show Defendant cannot prove one of any of the elements: (See, e.g., Aguilar v. Atl. Richfield Co. (2001) 25 Cal. 4th 826, 849 (“all that the [cross-]defendant need do is to show that the [cross-complainant] cannot establish at least one element of the cause of action.”). As such, Plaintiff can meet its “initial burden as the moving party of presenting prima facie evidence that [Defendant] would not be able to establish [a required element of a claim.]” (Leyva v. Garcia (2018) 20 Cal. App. 5th 1095, 1105.)

As applied here, Plaintiff submitted evidence that Defendant did not pay any property taxes. Moreover, it submitted evidence that it paid the relevant property taxes. This evidence is admissible, as it was submitted in a declaration from James Hong, who was testifying to acts he took as property manager. (Hong Decl., ¶ 10.) As such, the burden switches to Defendant to show that it could establish a required element of its cross-claim, i.e., that it paid property taxes. Defendant submitted no such evidence.

B.    Prescriptive Easement

To claim a prescriptive easement, the plaintiff must “show use of the property which has been open, notorious, continuous and adverse for an uninterrupted period of five years.” (Warsaw v. Chicago Metallic Ceilings, Inc. (1984) 35 Cal.3d 564, 570.)  

Plaintiff argues that Defendant cannot establish this claim because California law refuses to award a prescriptive easement where the easement would be exclusive in nature, and no exception applies here.

Plaintiff argues that Defendants’ prescriptive easement is an attempt to skirt the requirements, a common tactic for litigant. (See e.g., Kapner v. Meadowlark Ranch Assn. (2004) 116 Cal. App. 4th 1182, 1187 (“To escape the tax requirement for adverse possession, some claimants who have exercised what amounts to possessory rights over parts of neighboring parcels, have claimed a prescriptive easement.”). However, for the reasons outlined below, “Courts have uniformly rejected the claim.” Id. (citing Mesnick v. Caton (1986) 183 Cal.App.3d 1248, 1261; Silacci v. Abramson (1996) 45 Cal.App.4th 558 (1996); Mehdizadeh v. Mincer (1996) 46 Cal.App.4th 1296, 1304–1308); see also id. at 1188 (‘the requirement for paying taxes in order to obtain title by adverse possession is statutory. The law does not allow parties who have possessed land to ignore the statutory requirement for paying taxes by claiming a prescriptive easement.”)

There is only one exception to the “long standing rule” barring exclusive prescriptive easements like the one sought by the Cross-Complaint. An exclusive prescriptive easement may issue where “public health and safety” requires it (the so-called “Otay Water District exception”).  (See Mehdizadeh, supra, 46 Cal. App. 4th at p. 1307.) (“Otay Water District has no application to a dispute between residential property owners which involves no socially important duty such as that imposed upon a utility... Otay Water District must be limited to its facts. The present appeal contains no public health or safety basis for granting an exclusive easement”) (discussing Otay Water Dist. v. Beckwith (1991) 1 Cal. App. 4th 1041); see also Silacci, 45 Cal. App. 4th at p. 564 (“Otay Water Dist. case must be limited to its difficult and peculiar facts. A public water company’s right to keep drinking water safe from contamination must be given precedence.”).

Here, Plaintiff argues that there “is absolutely no imaginable public health or safety considerations that would even begin to suggest Defendants deserve an exception to the general rule prohibiting exclusive prescriptive easements. Defendant seeks the prescriptive easement for sole purpose of continuing to collect rent from its tenants for use of the Sign. Such private, pecuniary motivations are insufficient to evade the law’s requirement to prove payment of taxes in order to obtain adverse possession.” (Motion, 13: 7-12.)

In opposition, Defendant does not dispute this characterization of the law but rather argues that “…even if the Signage is on the 650 Duarte Property, it does not completely prohibit Plaintiff from using that small portion of land. As seen in the photographs, there is vegetation grown in that area. Plaintiff has not provided sufficient evidence to show it has been completely deprived of use of that area no [sic] has Plaintiff even suggested what that small strip of square footage could be used for.” (Opp., 13: 25-14:2)

However, as noted by Plaintiff, this argument is somewhat disingenuous—in the same opposition, Defendant “suggest[s] the sign is a permanent trespass for purposes of the statute of limitations, but simultaneously not having the effect of denying use of the underlying land.” (Reply, 9: 14-16.) Moreover, the fact that vegetation grows in the area does not create a triable issue of material fact as to whether or not Plaintiff would be denied total use of the land that the Sign actually sits on. 

As such, the only reasonable inference supported by the evidence is that Plaintiff is presently unable to use the land upon which the Sign sits. As such, Defendants’ tenants continued use of the land denies Plaintiff’s ability to use a feature of its own property. Plaintiff did not submit any evidence, or raise any argument, to show that it is entitled to any exemption from the rule barring exclusive prescriptive easements.

C.    Equitable Easement

To establish an equitable easement, a party must show: (1) the trespass was “innocent rather than willful or negligent,” (2) the public or the property owner will not be “irreparably injured by the easement,” and (3) the “hardship to the trespasser from having to cease the trespass is greatly disproportionate to the hardship caused the owner by the continuance of the encroachment.” (Shoen v. Zacarias (2015) 237 Cal. App. 4th 16, 19 (2015) (citing Tashakori v. Lakis (2011)196 Cal. App. 4th 1003, 1009.)

Here, Plaintiff argues that Defendant cannot establish this claim because:

-         As outlined above, Defendants’ trespass is willful. The continued use of the Sign, through the display of Defendants’ businesses and the monthly collection of rent therefor, is done with intent and with knowledge of Plaintiff’s claim of right to the sign. Making an encroachment onto a neighboring property “after knowledge of [the owner’s] claim,” the encroaching party “should be barred from invoking the doctrine” of equitable easement. (Christensen, 114 Cal. App. 2d at p. 564; see also Linthicum v. Butterfield (2009) 175 Cal. App. 4th 259, 266.)

-         An equitable easement simply may not issue where the property owner will be “irreparably injured” by the easement. (E.g., Shoen, 237 Cal. App. 4th at p. 19.) As stated above, Section 9103.11.050 of the City of Arcadia’s Development Code limits properties to one such sign per street frontage. Plaintiff’s property only has the one street frontage along Duarte Road, where the Sign is located. (See RJN in Support of Summary Judgment.) Accordingly, Plaintiff is unable to construct another sign on its property. An equitable easement allowing Defendants to continue making their (exclusive) use of the Sign, deprives Plaintiff any right to use a similar sign anywhere else on their property. Plaintiff is entitled to one such sign on its frontage under city code, but an equitable easement would deprive Plaintiff of that right under law.)

-         The third and final element is a balancing of hardship is not simply a test to see if ‘the conveniences or hardships merely favor the trespasser, [rather] the doctrine actually requires that they tip disproportionately in favor of the trespasser.’ (Shoen, 237 Cal. App. 4th at 20 (emphasis added).” (Motion, 16: 13-16.) Plaintiff argues that there is no necessity for Defendants’ use, other than pure pecuniary gain and advantage.

In opposition, Defendant argues that its trespass was not willful, would not irreparably injure Plaintiff, and that the harm to Defendant from removal would not be minimal. More specifically, Defendant contends that its trespass is not willful because its predecessor’s predecessor had acquired an easement right dating back to 1961 when it installed and obtained a permit for the sign. Defendant contends that an equitable easement would not irreparably injure Plaintiff because the sign has been used in the existing manner for several decades and the inability to generate sign income is not an irreparable injury.

However, as to the first point, the “innocent” element does not speak to ill-will or malice, but rather refers to a requirement that the trespasser needs to have mistakenly believed the structure was on their property. Here, Plaintiff has not submitted evidence that the encroachment was an innocent mistake. Rather, the only inference supported by the evidence is that, as set forth above, Defendants clearly knew and know that the Sign was on Plaintiff’s property.

As to the second point, the evidence that Plaintiff would be permanently denied use of a portion of its property clearly supports a reasonable inference of irreparable injury. As noted by Plaintiff in reply, “further irreparable injury is imposed by way of the City of Arcadia Development Code Section 9103.11. That code limits Plaintiff’s property to just one such sign, which already exists; so long as Defendants continue to make use of it, Plaintiff is denied its entitlement to a monument sign on its property. Defendants suggest the code imposes no such limitation, but that is simply false. The opposition submits part of that code section, but conveniently omits Table 3-13 of Section 9103.11, which unequivocally limits 1 double face sign - monument or pylon - to each property.” (Reply, 18-24.) In opposition, the crux of Defendant’s argument that there is no irreparable injury is that “Plaintiff does not provide any evidence that but for the existence of the Signage, Plaintiff would be able to erect its own pylon sign at the same location. As the Court will see from the photographs submitted by the parties, this area contains nothing but vegetation.” (Opp., 17: 18-20.)  As such, even Defendant’s opposition suggest that the inability to erect a sign of one’s own due to code limitations would constitute an irreparable injury.

As to the third point, Defendant misstates the standard. Defendant argues that the harm it would experience if the sign is removed is more than minimal. However, the correct standard is a showing of “greatly disproportionate harm.” (Shoen, supra, 237 Cal. App. 4th at p. 19.) While this determination would typically be a triable issue, Defendant has not any submitted evidence which could support a reasonable inference that it would face greatly disproportionate harm if the sign was removed. Rather, the only reasonable inference supported by the evidence is that the harm suffered by Defendant would be equal to that suffered by Plaintiff: they are unable to collect sign rent, too, and their tenants lose that street side exposure as well. Because the evidence does not support any reasonable inference that Defendant could suffer greatly disproportionate harm, this issue may be appropriately determined at the summary judgment stage.

Based on the foregoing, Plaintiff’s motion for summary judgment is granted.

It is so ordered.

Dated:  December    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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