Judge: Mark H. Epstein, Case: 22SMCV01481, Date: 2023-08-30 Tentative Ruling

Case Number: 22SMCV01481    Hearing Date: August 30, 2023    Dept: I

This is an action by plaintiff against others to quiet title and for slander of title.  The gist of the case is this.  Plaintiff bought “Lot 7,” of a subdivided parcel.  Plaintiff would like to develop the property to build a single family home thereon and sell it at a profit.  Defendants, however, contend that plaintiff cannot do so because they have an unrecorded easement or equitable servitude (for ease of writing, the court refers only to the easement; the court recognizes that an easement and an equitable servitude are different things, but the analysis below is the same either way) requiring that the property remain in its natural state.  Defendants demur primarily on statute of limitations grounds.  They claim that plaintiff was put on inquiry notice way back in 2016 by virtue of a letter sent by the California Coastal Commission that was copied to plaintiff.  More on that later.

To understand the current state of play, one must go back a bit in time.  Before it was divided, this was part of the “Triangle Lot,” which was situated below the Saddle Peak Restaurant in Calabasas.  The Saddle Peak had (and has) an outdoor dining patio.  Defendant Monte Nido, a homeowners association operating in the vicinity, had concerns.  As part of a purported settlement (which the court will assume to be in good faith for these purposes, although there are hints that plaintiff might feel otherwise), in 1997 the then-pertinent parties agreed to prohibit some development on the Triangle property, specifically there was an agreement that no home would be built on Lot 7.  However, no record of that agreement was ever recorded, even though the agreement stated that Saddle Peak was to record the restriction.  What happened instead was that the property was sold to West Pointe.  West Pointe built six homes on the property, leaving Lot 7 vacant as had been agreed.  In 2016, West Pointe sold Lot 7 to plaintiff.  Plaintiff’s review of title did not disclose the unrecorded restriction barring development of the lot, and plaintiff alleges that no notice was provided.  Plaintiff bought the lot intending to improve it and sell it.  Plaintiff started marketing the lot in May 2022 and was obtaining offers.  At that point, plaintiff claims that Monte Nido’s former attorney stated that there was a cloud on title, and so stated in such a way that all prospective buyers would know.  Although plaintiff had secured a prospective buyer, that buyer allegedly withdrew upon hearing of the restriction.  Plaintiff now sues, seeking to quiet title, for slander of title, and for fraud.  Both Monte Nido and West Pointe have demurred.  Because the demurs are similar, the court addresses them together.

At the heart of the demurrers is a letter dated November 2016 from the California Coastal Commission on which plaintiff was allegedly copied.  Defendants seek judicial notice of the document.  Judicial notice is DENIED.  First, the court is not clear that this letter is the sort of official document of which the court can take judicial notice.  At a minimum, it does not seem to be adequately authenticated as an official government record.  Second, the court would have to take judicial notice of the truth of the statements in the letter, not just of the letter’s existence—but not in the way defendants think.

But to back up for a moment, what the letter states is that the Commission has “been contacted by Donald Reith, the current owner of the subject property.  We were asked to give our opinion on the existence of any open space or other restrictions applied to the property through past Coastal Development Permits (CDP) approved by the Commission.  We have reviewed the permit history of the subject lot and found the following information. . . .  The Commission later granted CDP 4-95-035 for the construction of a single family residence . . . .  Later Amendment 4-95-035-A1 was approved to change the approved project description to delete the construction of a SFR, and to add the restoration and revegetation of the previously graded pad.  A review of the project casefiles and all other available information indicates that the Commission’s approval of [the amendment] did not require the recordation of any restriction or easement to maintain the subject lot as open space in perpetuity.  [¶]  The owner of the property has elected to abandon CDP 4-95-035 and CDP Amendment 4-95-035-A1 in order to pursue a new CDP for development of the subject lot.  Because our review showed no restrictions prohibiting the development of Lot 7, it is our opinion that it is appropriate for the applicant to pursue a new CDP with the County.”

Again, an unauthenticated letter from the CCC is not necessarily the sort of document of which the court can take judicial notice.  And even if it were, the court could not take judicial notice of the truth of what is in the letter.  Defendants contend that they are not seeking judicial notice for the truth of the above-recited language.  And the court agrees insofar as defendants’ explanation goes.  Defendants’ point is that the language was enough to put plaintiff on notice of the problem, whether the assertion was true or false.  And that is precisely correct; the court need not take judicial notice of truth of the letter’s text for theoe purposes.  But what the court does have to notice is that the letter was copied to plaintiff.  There is a “cc” designation so stating, but that does not mean that it was actually copied unless the “cc” is true, and that requires more than the court can do.  After all, if the letter was never sent to plaintiff, then it can provide him no notice.  The complaint makes no reference to the letter, and plaintiff does not admit receipt.  Judicial notice is therefore inappropriate.

But even were the court to take judicial notice of the letter, it would not suffice.  That is so for two reasons.  First, while it would put plaintiff on inquiry notice (at least arguably), the inquiry might have been satisfied by looking at the title history.  It discloses what it discloses, but plaintiff is not necessarily on notice of any hidden or other restrictions.  The letter might have required plaintiff to look again and carefully, but the court cannot say as a matter of pleading that anything more was required.

But secondly, and more importantly, it would not put plaintiff even on inquiry notice of the real issue.  It could well be that Lot 7 was designated as open space only.  But that restriction can be overcome by applying for a Development Permit and a request to remove the restriction.  The restriction articulated in the letter implies no special third party rights or easements; if anything it disclaims them.  It states only that the property had been designated as open space in perpetuity.  That could be a hurdle that must be overcome—perhaps even a difficult one.  But overcoming it is far from impossible.  It does not imply that others have an easement or independent right to demand that the restriction remain in place, which is a different sort of thing.  Just by way of example, a hypothetical lot might be zoned for a single family residence.  The owner ought to know that there would therefore be no right to build a triplex on the lot; that would require a variance.  And, as with all variances, the neighboring community would have the right to be heard.  But at the end of the day, the decision whether or not to grant the variance would lie with the appropriate administrative agency or elected body.  While the community can be heard, it has no veto power.  On the other hand, if there is an easement or some other formal restriction in which a third party has a right, that is a horse of a different color.  At that point, a variance will not do; the dominant estate would have to agree to allow the development.  Nothing in the November 2016 letter purports to put plaintiff on notice of any easement or third party right.

Monte Nido also claims that the complaint cannot survive the common interest privilege set forth in Civil Code section 47.  That privilege is a qualified privilege; the court cannot ascertain on this pleading motion whether the privilege (assuming it applies) has been overcome.

The rest of the arguments are without merit.  Reliance and intent are sufficiently alleged to survive demurrer.

The demurrers are OVERRULED.  Defendants have 30 days to answer.