News and publications

Peterson, Martin, & Reynolds LLP Celebrates 25 Years Practicing in the Bay Area

At Peterson, Martin & Reynolds, we are celebrating the 25th anniversary of our founding on November 19th. Since 1997, we have been honored to serve numerous clients in the Bay Area and throughout Northern California. Our fearless, vigorous, and effective approach has helped us establish a successful track record both in litigation and with alternative forms of dispute resolution. We have tried countless cases to verdict and judgment in state and federal courts, and we have consistently achieved successful results for our clients.

Over the past two and a half decades, our firm has thrived not only because of the favorable outcomes we have secured for our clients; but also because of our commitment to providing exceptional client service.

We believe that those we represent deserve to have strong legal advocates who are responsive to their needs. We have always worked closely with our clients, taking the time to thoroughly understand their goals and customizing solutions that are designed to achieve their goals in the most efficient and cost-effective manner possible. This is why so many of our clients are referred to us by those whom we have worked with in the past.

We thank you for trusting us with your legal needs during the past 25 years, and we look forward to serving our community for many years to come.

Court Grants Equitable Easement Giving Exclusive Use of Property to Neighbor

The recent Romero v. Shih case provides a keen reminder of the risks to home buyers unaware of lot lines and historical uses of real property.

The Court of Appeal, Second District, reversed in part and affirmed in part the trial court’s ruling granting an implied easement and an equitable easement for exclusive use of property containing a fence and driveway.

Two adjacent property owners sued each other over the right to use an 8-foot-wide strip of land between them. Years earlier, the owner of both properties had applied for a lot line adjustment, which was conditionally approved by the City of Sierra Madre but never finalized or recorded by the owner. The owner obtained a survey, built a fence on the intended lot line and used the strip as a driveway. After both lots had been transferred several times to separate owners over the years, it was discovered that the fence and driveway on Lot A were encroaching on Lot B.

Romero, the owner of Lot B, sued for trespass and to quiet title to the strip of land. Shih, the owner of Lot A, cross-complained seeking an easement to use the land. There was no dispute that Romero owned the land at issue. The evidence showed that removal of the encroachment would have severely limited Shih’s use of the driveway and parking area on Lot A, and that alternatives such as moving one side of the residence were expensive and unreasonable. The trial court ruled that Shih had an exclusive implied easement and an equitable easement to use the strip as it had been used historically.

The Court of Appeal reversed in part and affirmed in part.

An easement gives a nonpossessory and restricted right to a specific use or activity upon another’s property. When there is no writing confirming the easement, an implied easement can arise in limited circumstances. An implied easement gives effect to the intent of the original parties to grant use of real property in the same manner and to the same extent as it was being used at the time of the transfer of property. Exclusive implied easements, which in effect strip the servient tenement owner of the right of use, are disfavored and rare.

In this case of first impression, the Court held that an exclusive implied easement, which for all practical purposes amounted to fee title, was not justified because Shih’s encroachment did not meet the requirements of being either de minimis or necessary for safety or public utility purposes.

On the other hand, the Court affirmed the grant of an equitable easement, which gives a court discretion to protect the encroacher’s continued use and award damages where there has been no legal right to encroach. This remedy requires factual findings of (1) innocent trespass by the encroacher; (2) no irreparable injury to the property owner; and (3) disproportionate hardship to the trespasser. Here, Romero had never used the strip and provided no evidence of actual plans to do so. The actual harm to Shih if the encroachment were removed far outweighed the hardship to Romero from keeping it in place.

PMR Webinar – DRE Complaints, Investigations & Outcomes: What Brokers Need to Know

Peterson Martin & Reynolds LLP’s 22nd Annual Managing Brokers Program!

This essential webinar presentation on the California Department of Real Estate’s complaint process includes topics such as how licensees get onto the DRE’s radar, the anatomy of DRE investigations, options available to the DRE when addressing violations of the laws they enforce, addressing rules violations, best practices to protect against DRE complaints, being familiar with and prepared for potential corresponding civil litigation, and more.

April 20, 2022

12-1:30pm

Peterson, Martin & Reynolds LLP Successfully Defends Residential Homeowner Clients from Meritless Nondisclosure Claims

In January 2022, Peterson, Martin & Reynolds LLP obtained a judgment affirming an arbitration award on behalf of its clients finding in their favor and awarding PMR’s clients $240,953 in attorney fees and costs.  The case involved home buyers’ allegations that PMR’s clients had concealed dry rot throughout the framing of an extensively renovated hillside home when they sold the Point Richmond, California home to the buyers.  Although the buyers did in fact discover extensive dry rot when they attempted to remodel the home, PMR’s clients denied they had any actual knowledge of the dry rot condition when they sold the home to the buyers.  After a 4-day arbitration hearing, the Arbitrator ruled in favor of PMR’s clients, denied the buyers’ claims and awarded PMR’s clients $240,953 in attorney fees and costs for having to defend the claims.

Peterson, Martin & Reynolds LLP Wins $2,159,692 Arbitration Award for Residential Homeowner Clients

In April 2022, Peterson, Martin & Reynolds LLP obtained a Final Arbitration Award for residential real estate clients in the amount of $2,159,692.  In 2016, PMR’s clients had purchased a 3,139 square foot home in an upscale neighborhood in Lafayette, California. The home was built in 1947, and was sold as being on a private, secluded and secure 1.4 acre lot.  The seller of the lot failed to disclose that a pathway that ran through the property had served for decades as a popular, well-travelled trail to the surrounding community. The purchase contract called for arbitration of any disputes. PMR’s lawyers filed for arbitration on behalf of the clients, alleging non-disclosure by the seller. After an 8-day arbitration hearing, the Arbitrator found the seller had intentionally failed to disclose the public’s historical use of the pathway through the property, and awarded $2,159,692 to PMR’s clients, including compensation for diminution in value, loss of use and enjoyment, out-of-pocket remodeling expenses, and attorney fees and costs.

Peterson, Martin & Reynolds LLP Obtains $2+ Million Settlement for Commercial Landlord Client

In January, 2020, Peterson, Martin & Reynolds LLP obtained a settlement for a commercial real estate client for $2,103,745.  PMR’s client had leased a 31,320 square foot biotech facility in Foster City, CA for 10 years to a leading international biotech company.  When the biotech company moved out, it failed to properly restore the premises, which delayed and interfered with the client’s ability to re-lease the premises.  The lawyers of  Peterson, Martin & Reynolds LLP sued on behalf of their commercial landlord client.  After protracted litigation, including two unsuccessful appeals by the biotech company lawyers, the biotech company settled the case before the scheduled February, 2020 trial.

Second District Court of Appeal Holds that Easement by Necessity Need Not Be over Previously Established Route, or the Most Accessible One

By M. Henry Walker

This case involves the appeal of a trial court’s judgment granting an equitable easement over rural property in Ventura County. Plaintiff Hinrichs originally owned two large parcels which he inherited from his mother. He grew up in a home located on the southern parcel but hadn’t lived there since moving to Alaska in the 1980s. He sold the southern parcel to a third party based on the belief that he still had access to the only public road servicing the area via an historic trail which first appeared on a federal survey map in 1868 and which traversed several neighboring parcels. He was wrong in this regard; the owners of the neighboring parcels denied him access over the historic trail meaning his northern parcel was actually landlocked.

Hinrichs sued several neighbors, claiming he had an easement which was appurtenant to the original land patent, that he had acquired a prescriptive easement, and that he was entitled to an equitable easement by necessity. The trial court rejected the first two theories but entered judgment in favor of Hinrichs on the third, creating an equitable easement by necessity. The location of the created easement, however, was not over the historical trail area previously used for ingress and egress but rather over a new indirect route which was less accessible due to the terrain. While portions of the newly created easement had existing driveways, in order for Hinrichs to use the judicially created easement he would be required to grade two new roadways to connect to the existing portions. The trial court applied the “balancing of hardships” test and determined this to be the best location because this location would only minimally interfere with the servient parcels.

Hinrichs appealed, arguing the trial court erred in denying him an easement over the historic trail. The other parties appealed as well, claiming among other things that the trial court erred in creating a new easement where none had ever existed. The appellate court focused on the issue of whether a court can create an equitable easement by necessity where the party claiming the easement has made no prior use of the easement. On the latter issue, the appellate court affirmed the trial court’s judgment, holding that “the court may grant an equitable easement without there being a preexisting use by the landowner seeking the easement.” The appellate court reasoned that despite the holdings of several cases which recognize the imposition of an easement by necessity in the case of a “long-standing encroachment,” such an encroachment is not an absolute requirement for an equitable easement. Moreover, the court found no evidence that Hinrichs was negligent in creating the landlocked parcel because he had a reasonable belief that he had a right of way over the trail.

This residential real estate case serves as a reminder that while the law recognizes a strong interest in preventing land-locked parcels, a trial court sitting in equity must balance the rights of all parties rather than focus solely on the rights of the party claiming the equitable easement. In other words, Hinrichs got his easement but can’t be heard to complain that the location was not over the best access route. Perhaps that’s why it’s called an easement by necessity rather than an easement by convenience.

Hinrichs v. Melton (2017) 17 C.D.O.S. 4217.

Under Right to Repair Act, Builder Must Timely Respond to Homeowner’s Notice of Claim Despite Inadequate Specificity of Alleged Defects

In California, the Right to Repair Act, codified at Civil Code sections 895 et seq., was established with the goal of resolving construction defect claims in an expeditious and non-adversarial manner. The Act requires that, prior to filing a lawsuit, a homeowner must provide the builder with a notice of claim. The notice must contain the claimant’s name, address, and preferred method of contact. The notice must also state that claimant is alleging a violation pursuant to section 910 of the Act, and describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the alleged defects.

Once such a claim is delivered via overnight mail, certified mail, or personal delivery to the builder, the statutory timelines go into effect. The builder must acknowledge receipt of the claim within 14 days, may elect to conduct an initial inspection of the property within the following 14 days, and may offer to repair the violation and compensate the owner within 30 days of the initial or second inspection. The owner then has 30 days to authorize the builder to proceed with the repair or request alternative contractors. If the builder fails to strictly comply with any of the requirements or timelines, the owner is released from the requirements of the Act and may proceed with filing a lawsuit.

In a recent case, Blanchette, the owner of one of 28 homes constructed by GHA Enterprises, served GHA with a notice of claim under the Act. GHA did not respond to the notice until 21 days later. GHA’s response asserted that Blanchette had not alleged the defects with sufficient detail as required by the Act. Because the response took 21 days, Blanchette took the position that it was untimely and filed a construction defect class action against GHA. GHA moved to stay the lawsuit, and the trial court granted the motion, agreeing that Blanchette’s notice of claim lacked sufficient detail to trigger GHA’s obligations under the Act.

The Court of Appeal reversed the trial court decision, finding that the timelines under the Act are to be strictly construed. Although the Court agreed that Blanchette’s notice of claim lacked sufficient detail of the alleged defects, the Act nonetheless requires that the builder respond and acknowledge the claim within 14 days. Here, the builder should have raised any objection to the sufficiency of the notice within the 14 day time period rather than relying on that defect as a basis to delay the response. Because GHA did not timely acknowledge receipt of the claim and set forth its objections, Blanchette was released from the requirements of the Act and could proceed with the lawsuit.

This case serves as a reminder to builders in California to make sure and strictly comply with all provisions of the Right to Repair Act, or risk becoming embroiled in what may become much more lengthy and expensive civil litigation.

Blanchette v. Superior Court (GHA Enterprises) (Feb. 10, 2017) 17 C.D.O.S. 1302

(2/17)

Broker Denied Commission Is Allowed to Proceed With Case Against Non-Signing Owners

Jacobs, a licensed real estate broker, signed a vacant land listing agreement granting her the exclusive right to sell a parcel of property in Marin County. The listing agreement was signed by one of the property owners, Locatelli, as trustee for the Locatelli trust. There were signature lines on the listing agreement for five additional owners, but they did not sign. However, the term “owner” was defined in the agreement as the Locatelli trust “et al.”, which means “and others”. Locatelli told Jacobs he was authorized to act on behalf of all owners.

Jacobs marketed the property and found a potential buyer, The Trust For Public Land (TPL). When Jacobs informed Locatelli, he claimed that he had already been speaking with TPL for 3 years and would deal with them directly. He instructed Jacobs to cease all communications with TPL. The owners later sold the property to TPL, and refused to pay Jacobs a commission.

Jacobs filed a complaint against the owners and TPL to recover the commission. The owners who had not signed the listing agreement moved to dismiss the case against them, and the trial court granted their demurrer. The court of appeal reversed the decision, thus keeping all the owners in the case.

The non-signing owners argued that Jacobs’ complaint was barred by the statute of frauds, which provides that a broker’s commission agreement is invalid unless some form of it is in writing and signed by the party to be charged or the party’s agent. The court, however, found the statute inapplicable because Jacobs alleged there was a written agency agreement between Locatelli and the owners allowing him to act on their behalf, and he signed the listing agreement. In addition, Jacobs alleged that at least two of the other owners had acknowledged her as the listing broker during the marketing of the property. As such, the court of appeal held that the trial court should have allowed extrinsic evidence on these claims rather than dismissing the complaint.

The owners also argued that the parol evidence rule barred introduction of extrinsic evidence to dispute the listing agreement because it was a fully integrated and thus a final agreement. The court of appeal also found this rule inapplicable, because there was no apparent contradiction between the terms of the listing agreement and Jacobs’ allegations, i.e., that all owners had retained her through their agent, Locatelli.

This case was decided correctly under the facts and circumstances involved. It is nonetheless an important warning and reminder to brokers and agents to ensure that all necessary parties sign listing agreements and other transaction documents, so as to avoid unnecessary litigation and problems down the line.

Jacobs v. Locatelli (Feb. 9, 2017) 17 C.D.O.S. 1232

(2/17)

Where Broker Acts as Dual Agent, Listing Agent Owes Equivalent Fiduciary Duty to Buyer

It is settled law in California that a real estate broker representing both seller and buyer has fiduciary duties to both parties. In a recent decision, the California Supreme Court has now confirmed that, when there is such dual agency by the broker, the associate licensee acting solely as the listing agent under the broker’s license also has a fiduciary duty to the buyer.

In this case, seller retained Coldwell Banker to list a luxury residence for sale. The listing agent marketed the home as having approximately 15,000 square feet, which was more than reflected in public records. Buyer was also represented by Coldwell Banker, but by a different salesperson in a separate office. As required by law, buyer had knowledge of and consented to the dual agency. The listing agent provided copies of public records and the marketing flyer, but did not advise buyer to verify the square footage. After the purchase, buyer discovered the discrepancy and sued for breach of fiduciary duty.

Initially, the trial court decided that listing agent had no fiduciary duty to buyer. After the Court of Appeal reversed that decision in 2014, the California Supreme Court agreed to hear the case. The court first examined the history of dual agency in California, noting many developments since the early 1980s. At issue was interpretation of the final two sentences of Civil Code section 2079.13(b), in which the term “agent” refers to the broker and contemplates a real property transaction: “The agent…bears responsibility for his or her associate licensees who perform as agents of the agent. When an associate licensee owes a duty to any prinicipal, or to any buyer or seller who is not a principal,…that duty is equivalent to the duty owed to that party by the broker for whom the associate licensee functions.”

The listing agent argued that, taken in context, the “equivalent” language merely clarifies that the broker assumes duties owed by its agents, not the other way around. The court, however, agreed with buyer’s contrary position that because the agent’s authority derives solely from that of the employing broker, the second sentence imposes on the agent the same responsibility as held by the broker. This reading of the statute is supported by its full legislative history.

As such, the court affirmed that listing agents, when their brokers act as dual agents, owe buyers a duty to learn and disclose all information materially affecting the value or desirability of the property being purchased. In this instance, that included a duty by the listing agent to the buyer to investigate and disclose everything he could learn about the square footage. Here, the duty to investigate arose because there was a known discrepancy regarding square footage.  This decision further clarifies and strengthens protection afforded to real estate buyers in California.

Horiike v. Coldwell Banker Residential Brokerage Company (Nov. 21, 2016) 16 C.D.O.S. 12228

(12/16)