What Remedies Are Available for Trespass By Encroachment?
In the recent decision in Little Rock Ranch, LLC v. Premier Valley, LLC, the California Court of Appeal discussed the remedies available in a trespass and encroachment case concerning a dispute over the property line.
Little Rock Ranch, LLC, the defendant in this matter, bought 677 acres of land in 2012, for the purpose of developing a walnut orchard.
The plaintiffs, the Johnson family, own a 210-acre property adjacent to, and to the south of, the property acquired by Little Rock Ranch.
The Johnsons filed their lawsuit in 2014, alleging that Little Rock Ranch, which had proceeded to develop and plant an irrigated walnut orchard, was trespassing on 3.44 acres of the Johnsons’ property.
The Johnsons alleged Little Rock Ranch’s walnut orchard encroached on their property’s northern edge, specifically on a 3.44-acre strip adjoining Little Rock Ranch’s property.
The Johnsons alleged that Little Rock Ranch had excavated a hillside, leveled land, planted walnut trees, and laid irrigation and sprinkler systems on the disputed strip.
The Johnsons sought injunctive relief to end the encroachment and restore the hillside strip to its original condition, among other remedies.
After a bench trial, the trial court found Little Rock Ranch was trespassing by encroachment on the Johnsons’ property.
However, applying the defense of laches and the “relative hardship” doctrine, the court denied the injunctive relief sought by the Johnsons.
The court fashioned an alternative equitable remedy: Little Rock Ranch was required to pay damages to the Johnsons and undertake corrective action to limit erosion of the now-excavated hillside, while the Johnsons were required to deed the strip of land at issue to Little Rock Ranch.
In a parallel analysis, the trial court found the trespass by Little Rock Ranch was permanent such that the appropriate measure of damages was “diminution in value” damages, rather than other alternative measures.
The Johnsons challenged the trial court’s ruling in multiple respects, and the appellate court affirmed the judgment.
The events leading to the sale of the Roen property to Little Rock Ranch took place in the fall of 2011, when the Roens ran into a local real estate agent named Jim Booth, whom they had known for approximately 50 years. Albert Roen told Booth that his property on Tim Bell Road was in escrow but was in danger of falling out of escrow.
Booth subsequently contacted Roen and determined the property had fallen out of escrow. Booth eventually found a buyer for the Roen property. The buyer, Little Rock Ranch, was represented by its principal, Raymond Brian Greer.
In connection with Little Rock’s purchase of the Roen property, Booth went to see the property; he met up with Albert Roen there. As Albert Roen and Booth looked out over the property from a knoll, a canal as well as the barbed-wire fence could be seen crossing the property.
Booth asked Albert Roen whether the canal marked the property line; Albert Roen answered the fence marked the property line. Booth in turn told Greer that the fence marked the property’s southern boundary.
Greer began the process of purchasing the Roen property for Little Rock Ranch in late 2011.
During the process, various documents were generated. Booth ended up representing both sides to the transaction, i.e., the Roens as the sellers, and Little Rock Ranch (via Greer) as the buyer.
The Roens provided sellers’ disclosures, including a sellers’ vacant land questionnaire, which was completed and signed by the Roens under penalty of perjury. One of the questions on the questionnaire was whether the sellers were using any neighboring property; the Roens answered this question in the negative.
At trial, the Roens testified they answered these questions in the negative at Booth’s direction; however, in his deposition Booth denied directing the Roens to provide false information in the questionnaire.
Another document generated for purposes of the transaction was a preliminary title report. The report noted that “the fence line encroaches onto adjoining land in multiple areas,” but did not specify the extent of divergence between the fence lines and property lines.
The preliminary title report referenced a survey of the property conducted in 2008 as the basis for its conclusion. The survey, which mapped the divergence between the property line and fence line, was not attached to the report.
Greer received and signed off on the preliminary title report but did not delve into it deeply; he did not receive or obtain a copy of the 2008 survey referenced in the report.
Greer took possession of the Roen property on March 1, 2012. He immediately set about preparing a walnut orchard on the entire parcel, operating on his understanding that the southern boundary of his property ran along the barbed-wire fence, beyond which lay the neighboring farmer’s almond orchard.
Right around the time escrow closed, Greer ordered thousands of trees for his orchard. The trees were “special bud trees”; it typically took a long time to generate the requisite “rootstock” and obtain the “special bud wood,” and to complete the grafting process. The entire process could consume two years.
Greer had the southern 130 acres of the property graded, rendering all of it farmable. Dirt was moved and leveled in various parts of the property, including in the area immediately to the north of the barbed-wire fence.
In December 2012, Greer received a letter from an attorney representing the Johnsons that stated that the fence line was not the true boundary between the Roen and Johnson parcels; rather, the boundary lay 45 feet from the fence line.
Greer tried to ascertain how he reasonably could proceed, given he had preordered all the trees for the orchard, the irrigation system design was already completed, and costly excavation and leveling work had been done, all on the assumption his property extended to the fence line.
In March 2013, the Johnsons’ attorney provided Greer with a survey from 1950 that showed the boundary between the Roen and Johnson parcels was approximately 50 feet north of the barbed-wire fence.
Greer continued to try to resolve the situation with the Johnsons, even offering to buy the disputed land, without success. Greer ended up installing the irrigation and sprinkler systems for the property as, like the trees, these systems had been previously ordered and paid for.
Also, when the preordered, special-variety walnut trees were delivered, Greer planted them, including in the disputed strip, because the trees must be planted quickly; they cannot “sit in cold storage.” Greer testified the trees were not marketable; they were a specially-ordered variety that was unique to Little Rock Ranch’s orchards and did not move on the market.
Greer incurred substantial costs in developing his orchard. The tractor and dirt work in preparing the land cost approximately $1.3 million. Four wells were constructed—none on the disputed strip—at a cost of approximately $1 million.
The Johnsons initiated the action on February 28, 2014, suing Little Rock Ranch to quiet title to the disputed strip and for trespass, conversion, and injunctive relief, among other claims.
Little Rock Ranch cross-complained against the Johnsons seeking to quiet title to the disputed strip based on adverse possession.
Little Rock Ranch also cross-complained against the Roens for intentional misrepresentation and indemnity, and against Premier Valley, Inc., dba Century 21 M&M and Associates, Little Rock Ranch’s real estate broker, for breach of fiduciary duty, negligent misrepresentation, and indemnity (Jim Booth worked at Century 21 M&M and Associates in Turlock).
The matter proceeded to bench trial and the judgment was eventually entered in 2018.
The court noted that both the Roens and Jim Booth were partially at fault for Greer and Little Rock’s understanding that the boundary between the Roen and Johnson properties was demarcated by the barbed-wire fence.
The court found that Roen made intentional misrepresentations regarding boundary lines, that Booth represented to Little Rock where the property lines were, and that Little Rock relied on those representations and developed the Disputed Property because it was within the fence lines.
The court also found that Premier Valley incurred liability to the extent Booth did not examine and explain to Greer the discrepancy between the seller vacant land questionnaire completed by the Roens and the preliminary title report.
The court addressed the question of remedies for Little Rock Ranch’s trespass. The court denied the Johnsons’ request for equitable relief in the form of injunctions requiring Little Rock Ranch to end the trespass on the disputed property (between the fence and the true boundary line to the north) and to restore the land to its original state.
Preliminarily, the court concluded that the equitable defense of laches applied in the case to bar the equitable remedy of injunctive relief. Laches may bar equitable relief where the party seeking relief has delayed enforcing a right and there is prejudice arising from the delay.
Equitable defense of laches applies where unjustified delay has operated to the injury of another. In determining whether laches apply, the court should weigh the competing equities and grant or deny relief depending on the balance of those equities.
The doctrine of laches bars a cause of action when the plaintiff unreasonably delays in asserting or diligently pursuing the cause and the plaintiff has acquiesced in the act about which the plaintiff complains, or the delay has prejudiced defendant.
It is not so much a question of the lapse of time as it is to determine whether prejudice has resulted. If the delay has caused no material change in statu quo, ante, i.e., no detriment suffered by the party pleading the laches, his plea is in vain.
The court also correctly set forth the elements of the defense of laches, as follows: The basic elements of laches are: (1) an omission to assert a right; (2) a delay in the assertion of the right for some appreciable period; and (3) circumstances which would cause prejudice to an adverse party if assertion of the right is permitted.
The court noted that the Johnsons had taken no action whatsoever to move the fence to the proper boundary line over the course of multiple decades, and never used the disputed property for any significant purpose of their own.
The court further noted that the Johnsons had “delayed” asserting their rights to the disputed property until well after Little Rock had completed the grading and groundwork of the disputed property.
Here, the problem was not that there was no fence on the boundary line separating the properties. Rather, the problem was that there was an actual fence on the Johnson property just a short distance from the boundary line.
The “relative hardship” doctrine is applied by California courts in encroachment cases to determine whether to grant an injunction requiring removal of the encroachment or to resolve the issue by fashioning an alternative, equitable remedy and awarding damages.
California Courts have long applied the relative hardship doctrine in determining whether to grant an injunction to enjoin a trespass by encroachment on another’s land.
Pursuant to the “relative hardship” doctrine, which involves balancing the equities that bear on the situation at issue, courts have power in equity to create a protective interest in favor of an encroacher. Courts may exercise their equity powers to affirmatively fashion an interest in the owner’s land which will protect the encroacher’s use.
In other words, under the relative hardship doctrine, once the court determines that a trespass has occurred, the court conducts an equitable balancing to determine whether to grant an injunction prohibiting the trespass or whether to award damages instead.
Under the relative hardship test, the trial court must identify the competing equities underlying each party’s position. It then must balance the relative hardships of granting or denying an injunction to remove encroachments from the plaintiff’s property.
Where the encroachment does not irreparably injure the plaintiff, was innocently made, and where the cost of removal would be great compared to the inconvenience caused plaintiff by the continuance of the encroachment, the equity court may, in its discretion, deny the injunction and compel the plaintiff to accept damages.
The trial court has the authority to fashion an equitable remedy appropriate to the circumstances of each case. It is well established that a court called upon to afford relief historically or analytically equitable in its nature has broad powers to fashion a remedy. It may create new remedies to deal with novel factual situations.
It has always been the pride of courts of equity that they will so mold and adjust their decrees as to award substantial justice according to the requirements of the varying complications that may be presented to them for adjudication.
The powers of a court of equity, dealing with the subject-matters within its jurisdiction, are not cribbed or confined by the rigid rules of law. From the very nature of equity, a wide play is left to the conscience of the chancellor in formulating his decrees.
It is of the very essence of equity that its powers should be so broad as to be capable of dealing with novel conditions. Equity acts in order to meet the requirements of every case.
The grant or denial of a permanent injunction rests within the trial court’s sound discretion and will not be disturbed on appeal absent a showing of a clear abuse of discretion.
The exercise of discretion must be supported by the evidence, and a trial court’s discretionary ruling will be sustained on review unless it falls outside the bounds of reason.
Here, the trial court effectively applied the “relative hardship doctrine” in denying injunctive relief, awarding damages, and fashioning an alternative equitable remedy to
trees. The trial court found Little Rock Ranch was trespassing, by encroachment, on a strip of the Johnsons’ property, having physically leveled the land and integrated it into
The trial court found that while Greer committed the trespass, he (1) had operated on the understanding that his property extended to the barbed-wire fence, and (2) had taken multiple steps towards designing and developing his walnut orchard before the Johnsons made any move to inform him that the fence line was not the property line.
The court also concluded that Little Rock Ranch’s trespass on the Johnsons’ property was permanent, such that an award of damages based on the diminution in value of plaintiffs’ overall property in light of the loss of the disputed property, rather than injunctive relief or damages pursuant to Civil Code section 3334, was the appropriate remedy.
In determining whether injunctive relief and/or a damages award is an appropriate remedy and in identifying the proper measure of damages, courts consider whether the underlying trespass is permanent or can be abated. The law regarding private nuisances is also instructive in this context.
California cases have recognized that invasions of property, otherwise amounting to a trespass, may also constitute a nuisance. Generally the principles governing the permanent or continuing nature of a trespass or nuisance are the same and the cases discuss the two causes of action without distinction.
The nature of the trespass— i.e., whether it is permanent or continuing—affects the proper measure of damages. For example, when a trespass is continuing, a permanent measure of damages is not an appropriate choice, as future harm is not ascertainable to a certainty.
In an action on a permanent nuisance, the plaintiff will be permitted to recover both past and prospective damages while in an action on a continuing nuisance prospective damages are unavailable and recovery is limited to actual injury suffered prior to commencement of each action.
Pursuant to Civil Code section 3334, damages allowed for continuing trespass include the value of the use of the property, reasonable cost of repair or restoration to the property’s original condition, and the costs of recovering possession.
However, general principles of damages in trespass cases require that the damages bear a reasonable relationship to the harm caused by the trespass.
The general rule is that if the cost of repairing the injury and restoring the premises to their original condition amounts to less than the diminution in value of the property, such cost is the proper measure of damages; and if the cost of restoration will exceed such diminution in value, then the diminution in value of the property is the proper measure.
Continuing trespasses are essentially a series of successive injuries. In order to recover for all harm inflicted by a continuing trespass, the plaintiff is required to bring periodic successive actions.
In any trespass case, the proper measure of damages is the one that will fully compensate the plaintiff for damages that have occurred or can with certainty be expected to occur.
Courts retain flexibility in identifying and applying a theory of damages that is appropriate to the circumstances at issue.
Since the trespass was permanent, the court concluded the Johnsons were entitled to damages based on the the decrease in market value of their property.
The court stated that the appropriate compensatory damages for the Johnsons being deprived of the 3.44 acres of their property was the diminution in the market value of their overall property on account of the loss of 3.44 acres. The court elected to calculate the compensatory damages based on the present value of the land, that is, $35,000 per acre, instead of the value of undeveloped farm land in that area, that is, $8,000 per acre. The court thus awarded damages in the amount of 3.44 acres x $35,000, for a total of $120,400.
The court concluded the Johnsons’ theory of conversion damages—based on the value of over 60 acres of Little Rock Ranch’s own property—amounted to a request for “astronomic damages,” and denied the request.
Significantly, damages are an element of the tort of conversion, and are generally based on the value of the thing converted; at trial the Johnsons failed to present competent evidence as to the amount of dirt removed from the disputed property and the dirt’s value.
The appellate court detected no error in the court’s analysis and ruling rejecting the Johnsons’ theory of additional conversion damages.
LESSONS:
1. Always consider obtaining a survey to determine property lines because the first rule is know what is being purchased.
2. The trial court has the authority to fashion an equitable remedy appropriate to the circumstances of each case, and it is well established that a court called upon to afford relief historically or analytically equitable in its nature has broad powers to fashion a remedy, and it may create new remedies to deal with novel factual situations.
3. If litigation is based on non-disclosure by the seller, or misrepresentations, a dual broker will likely be sued by one or both parties, and the broker should carefully document the advice given to both parties.