Michael S. Pecherer, Esq. (SBN#47053)
24 Rio Vista
Orinda, CA 94563
Attorney for Defendant
SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF BUTTE
Chris E. Kelly, an individual, and
Marina P. Kelly, an individual
Diedre Fernandez, an individual;
Geanee Marie Pike, an individual;
and does 1-10, inclusive
Case No.: 141377
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT
OF DEFENDANT DIEDRE FERNANDEZ’S VERSION
OF THE INTERLOCUTORY JUDGMENT OF PARTITION HEREIN.
Date: April 24, 2009
Time: 9:00 am
Courtroom: Hon. Steven E. Benson
Defendant Diedre Fernandez (hereinafter referred to as “Fernandez”) hereby submits this Memorandum of Points and Authorities in support of her version of the Interlocutory Judgment of Partition submitted herewith. Because the right to partition by a co-tenant is absolute in the absence of equitable defenses (Witkin, Summary, §65-84 (10th ed), Fernandez does not quarrel with the plaintiff’s right to have the co-tenancies severed, which is the Court’s threshold determination in a partition suit. Gray v. Sup. Ct., 52 Cal. App 4th 165, 171 (1997). Where Fernandez parts company with the plaintiff is in the form of the resulting remedy. In particular, plaintiff’s proposed Interlocutory Judgment ignores fundamental principles applicable to partition litigation, is inconsistent with applicable law, and most importantly, invites this Court to wade into a thicket of difficult if not impossible determinations involving planning, zoning, and consistency with the General Plan of Butte County, the creation of egress and ingress easements (and possibly utility easements) and complex and difficult valuation problems. In addition, by intensely lobbying the proposed Referee, the plaintiff has subverted the integrity of the partition process and have proceeded in a fashion thoroughly incompatible with the statutory scheme. Fernandez argues that partition by division of this comparatively small property cannot be achieved in conformity with applicable law, and that there are only two appropriate approaches: (1) partition by sale; and (2) partition by appraisal. Realizing that alternative number 2 can only occur by agreement between the parties, Fernandez hereby offers her agreement to that approach.
THE COURT SHOULD NOT RATIFY PLAINTIFF’S ATTEMPT TO UTILIZE THE PARTITION REMEDY TO EFFECT A PRIVATE CONDEMNATION OF THE PORTION OF THE SUBJECT PROPERTY THAT PLAINTIFF DESIRES
The subject property consists of an irregularly shaped parcel consisting of approximately 1.8 acres of commercially zoned frontage on Highway 99 and approximately 3.4 acres, residentially zoned to the rear. The residentially zoned portion is landlocked with no deeded access to either Highway 99 or to Archer Avenue to the north. There are no utility easements to service the residential portion. The plaintiffs own an immediately adjacent, narrow, rectangular shaped parcel to the south. The commercial frontage of plaintiffs’ parcel along Highway 99 is about 2/3rds the length of the commercial frontage of the subject parcel. The east and west boundaries of the plaintiffs’ parcel are continuous with the east and west boundaries of the subject parcel. From their arguments to the Court and in Mr. Martin’s letters to the proposed Referee, it is apparent that plaintiffs’ objective is to utilize the partition process to enlarge the commercial frontage of their adjacent property along Highway 99 by joining all or most of the commercial portion of the subject property with that of the property they already own. This result would substantially enhance the value of their existing holdings by giving them a large commercial parcel with extensive highway frontage in an area that is exhibiting signs of accelerating commercial development. (An aerial photograph of the area is available on www.zillow.com by entering 1412 Highway 99, Gridley, CA, the address of the subject property, in the appropriate box.) It has long been the law in California that partition cannot be used to effect a “private condemnation”. This is true whether the plaintiff is attempting to force the defendant to “sell” his interest to the plaintiff or is attempting to secure the desired portion by division. See: Butte Creek Island Ranch v. Crim (1982) 136 Cal.App.3rd 360, 369. This is not to say that the plaintiffs would be outside their rights if they purchased the interests of defendants, or overbid a bona fide third party offer as part of the confirmation process, or acquired the whole of the subject property pursuant to an agreed partition by appraisal. However, they are prohibited from using the partition process to cherry pick the subject parcel by achieving a division that enhances the value of their adjacent property at the expense of the defendants.
THE COURT SHOULD DECLINE PLAINTIFFS’ INVITATION TO BECOME INVOLVED IN DETERMINING WHETHER ANY PROPOSED PHYSICAL DIVISION OF THE SUBJECT PROPERTY COMPORTS WITH LOCAL ZONING, LAND USE AND GENERAL PLAN RULES AND REGULATIONS.
Prior to 1976, courts would order partition by sale only when the party opposing physical division could show that “great prejudice.” This reflected the long standing legal preference for partition by division and the long history of partition actions which tended to arise in rural or agricultural areas. (See: III Columbia Law Review No. 5 (1903)). In 1976, the legislature completely revised the partition provisions making the very significant change embodied in CCP § 872.810, that division would be favored except where partition by sale will result in a “more equitable result.” See discussion in Richmond v. Dofflemyer (1980) 105 Cal. App.3rd 745, 757. See also: Butte Creek Island Ranch, supra, at 364. Both Butte Creek and Richmond involved large tracts of agricultural land. (Butte Creek involved a total of 221 acres used for duck hunting (at 362) and Richmond involved a 4700 acre ranch in Tulare County (at 748). Neither case required consideration of the impact of local planning considerations on the division of the properties. Because judgments of partition are rarely appealed, (See: Richmond at 766), there was no appellate guidance as to the resolution of the conflict between local planning considerations and the reduced preference for division in kind. As a consequence, trial courts were confronting demands to physically partition urban and suburban properties in conflict with local planning regulation. This conflict prompted an Opinion by the California Attorney General as follows:
“When a court orders the physical division of real property in a partition action, the division must comply with the requirements of the Subdivision Map Act, local ordinances adopted thereunder, zoning ordinances, and the general plan for the area in which the property is located.” 64 OP. Atty. Gen. 762 (1981) (See also: CCP § 872.040 which codifies these principles.)
The subject parcel is located within the Gridley city limits and is subject to the Butte County General Plan, local zoning ordinances and land use restrictions. It is likely to be subject to the Subdivision Map Act as it will have to be divided into a minimum of three parcels in order to meet the requirement that all existing tenancies be severed (See discussion below). Accordingly, any proposed physical division of the subject property inherently speculates as to approval by the local planning authorities. Moreover, this Court, as a matter of comity to the local planning authorities, and in conformity with the general principle that administrative bodies should not be second guessed by the judiciary, should not undertake to determine whether any physical division proposed by plaintiffs or even by the Referee comports with the Subdivision Map Act, local ordinances adopted thereunder, zoning ordinances, and the Butte County General Plan. In order to obtain such a determination, it would be necessary to submit a formal application to the Gridley Planning Department. This Court should resist plaintiffs’ invitation to become involved in applications for planning and land use determinations which would be time consuming, expensive and uncertain as to result.
IF PROCEEDING BY DIVISION, THE COURT IS REQUIRED TO SEVER ALL TENANCIES IN THIS PROPERTY SUCH THAT PHYSICAL DIVISION WILL RESULT IN THREE DISCRETE PROPERTIES
Plaintiffs’ proposed division of the subject property involves their obtaining 2/3rds of the whole and leaving the defendants with the remaining 1/3rd as tenants in common. This proposal is defective in two ways. As will be discussed below, a partition division is not made on the basis of land area, but rather on the basis of value. Of equal importance, in a partition action, the Court must sever all existing tenancies. Miller and Starr, Calif. Real Estate 3rd at § 12:14 point out that “. . . a partition segregates and terminates the common interests in the property.” “Under California law, the term ‘partition’ signifies ‘the procedure for segregating and terminating common interests in the same parcel of property.’” Moorpark Homeowner’s Assn. v. VRT Corp 63 Cal. App. 4th 1396, 1404 citing Miller and Starr, supra. Indeed, the primary purpose of a partition suit is to sever all unities of possession. Schwartz v. Shapiro 229 Cal. App. 2d 238 (1964) (emphasis added). All co-tenancy interests must be severed unless several of the parties agree otherwise. See: Moorepark Homeowner’s Assn. supra at 1404-1405. For example, in the Richmond case, supra, at 751, the Court awarded a portion of the partitioned ranch to two brothers only after they had consented to the receipt of co-tenancy interests. A partition in kind changes the rights of the co-tenants from common possession of the whole into individual rights of exclusive possession of some portion of the property for each cotenant. Miller and Starr, ibid, at 12:14, and Dabney v Dabney 104 Cal. App. 4th 379 (2002). This rule serves to prevent a multiplicity of actions, resolves the controversy in its entirety, and achieves the fundamental objectives of partition litigation. Schwartz v. Shapiro 229 Cal. App 2d 238, 253 (1964). Its application here is particularly appropriate as there has been a long history of enmity between the two defendants particularly with respect to this property. If the Court grants plaintiffs’ proposal to partition the property in kind, following the above authorities, the result will be that each defendant will end up with a tiny parcel of commercial property (0.30 acres each) and a small parcel of residential property (0.57 acres each). Without appropriate easements for ingress and egress, the residential parcels will be landlocked, and the tiny commercially zoned parcels will, in all likelihood, be too small to develop in any economical fashion whether or not they retain Highway 99 frontage. The Court in Richmond, supra at 760 specifically held that a Court may not divide a property in a manner resulting in small pieces which render it highly unlikely that the land can be utilized to its greatest potential. That forbidden result is inevitable here if the Court accepts the plaintiffs’ proposals simply because each defendant owns but 1/6th of the whole. If the Court seeks to avoid this untoward result by specifying so-called “owelty” payments, there will be very complex and difficult questions of comparative values, appraisals, impacts of the subdivision on values, and the development potentials of the resulting parcels. These elements, like so many other characteristics of this property militate against partition by division. (The character and location of the property is itself evidence from which a court may infer that partition in kind many not be made without great prejudice to the owners. Cunningham v. Frymire 160 Cal. App. 2d 726, 730). Cunningham, decided under the pre-1976 standard is particularly instructive of the caution that a Court should exercise in ordering physical division of small parcels.)
THE COURT IS NOT IN A POSITION TO DETERMINE WHETHER THE JUDICALLY ESTABLISHED GUIDELINES FOR PARTITIONING BY DIVISION AS OPPOSED TO SALE ARE MET HERE
Because a co-tenant’s right to partition is essentially absolute, (Witkin, Summary, §65-84, 10th Ed.), whether the property should be divided or sold is the primary determination of the Court. Gray v. Sup. Ct. 52 Cal. App. 4th 165, 171. Shortly after the 1976 revision, the Court in Butte Creek set forth two tests for favoring a sale over division. The first test is whether the property is so situated that a division into sub-parcels of proportional value cannot be made. The second test is whether a partition in kind would result in a cotenant receiving a portion of the land which would be worth materially less than the share of the money which could be obtained through sale of the land as a whole. Thus, if the portion of the land received through division cannot be sold for a sum equal to the portion of the proceeds of sale of the land, the receiving party is economically prejudiced and partition must proceed by sale. Butte Creek, supra at 366 and 367. Partition by division is inappropriate unless the proposed division passes both tests. There has been no survey. There have been no recent appraisals of either the property as a whole or the parcels that would result from plaintiffs’ proposed subdivision. There has been no evidence that the proposed division comports with the applicable planning statutes as is required by CCP §872.040. Nothing in the partition statutes excuses non-compliance with any applicable laws, regulations or ordinances governing the division, sale or transfer of property. 64 Op. Atty. Gen 762, supra. Thus, the Court is not in a position to evaluate these two tests and the gathering of the evidence and relevant information must be delegated to the Referee. However, as is shown below, that task is so formidable and will be so costly that this Court should not follow this course.
PLAINTIFFS’ ARGUES THAT THE PROPERTY SHOULD BE DIVIDED ESSENTIALLY BY DIVIDING THE LAND AREA BY THE PARTIES’ PROPORTIONAL INTERESTS. THIS IS ENTIRELY INCORRECT AS THE DIVISION MUST BE MADE ON THE BASIS OF PROPORTIONAL VALUE AND NOT PROPORTIONAL LAND AREA
Partitioning in kind must be on the basis of value and not land area. All of the division proposals that plaintiffs have submitted in the form of their proposed interlocutory judgment and in the materials that Mr. Martin has improperly sent to the proposed Referee presume a division of the property primarily based upon the land area. This is an incorrect standard. The division must take into account the quality and quantity of the proposed subunits of the parcel, but the determinative factor is that each party must receive an allotment equal in value to his interest in the whole of the property. Richmond, supra at 759. Indeed, CCP § 873.250 provides that the division must be equalized with the payment of money (termed “owelty”) if necessary to achieve an equitable result. CCP § 872.140 grants the Court the power to order such compensatory adjustment. However, determining the equitable amount of the owelty would be a formidable task in this instance and there is no appellate guidance on making that determination. See: Sting v. Beckham 94 Cal. App. 2d 823 (1949) where the value of the property was determined not by the physical area but rather by the location of a well which proved to be the most significant component of the overall value. Because this characteristic rendered impossible any valuation of the parcels resulting from the proposed division, the property was partitioned by sale under the pre-1976 rules. Also, in Priddel v. Shankie 69 Cal. App. 2nd 319 (1945), again under the pre-1976 rules, the property had been developed such that division in kind would have required the demolition of existing structures and hence it was partitioned by sale. This property presents similar considerations as the bulk of the value is in the Highway 99 frontage and any fraction of the residential portion will be landlocked without complex easements over the commercial portion that will inevitably diminish the value of the latter.
THE REFEREE WILL BE PRESENTED WITH A VERY DIFFICULT, IF NOT IMPOSSIBLE TASK IF ASKED TO EVALUATE A DIVISION IN KIND.
Plaintiffs’ proposed Interlocutory Judgment and its arguments to the Court presuppose a division in kind and request that the Referee recommend to the Court an appropriate division. Bearing in mind that there is no survey of the property and that no civil engineer has determined the nature and kinds of easements, setbacks, boundaries, etc. that would be required to meet applicable planning rules and regulations, the task proposed for the Referee is hugely difficult and will be inordinately expensive. Firstly, any proposed division must comport with all applicable planning rules and regulations and those determinations are to be made in the first instance by the Gridley Planning Department in response to an appropriate application. It is common knowledge that such an application will require a survey and that the proposal must address all of the issues involving utility easements, ingress and egress to otherwise landlocked parcels, driveway widths, compliance with the Butte County General Plan, zoning limitations, access provisions for the fire codes and possible hydrant installation, etc. In order to make such an application, the Referee will be required to commission a survey, invoke the services of a civil engineer to consider various possible divisions, and prepare the necessary applications. If the application is rejected, the Referee will have to start over again. These requirements arise because the property in question is located within an incorporated entity unlike the much larger tracts that were located in unincorporated areas as in both the Butte Creek and Richmond cases cited above. Once an approved subdivision is obtained (assuming that is possible), the Referee will be called upon to commission appraisals of the resulting parcels and to determine whether the resulting parcels have diminished or enhanced values by virtue of the subdivision. The Referee will also be required to install any facilities such as curbs or hydrants that will be conditions of the subdivision. Further, the Referee will be called upon to compare the values of the resulting parcels to the proportional values of the whole property from the standpoints of each of the cotenants. This will, of course require an appraisal of the whole. Finally, assuming that the Court approves the Referee’s recommendations and the proposed division does not result in inequitable consequences to any of the parties, the Referee will be required to engage the services of a civil engineer to draw the appropriate deeds, and to obtain appropriate title insurance as part of the recordation process. This is a hugely complex undertaking that should not be undertaken lightly. The foregoing is a daunting task and it is submitted that the costs that will necessarily be incurred, the inherent delays in the process, and the huge Referee’s fees that will be incurred make the proposed solution, that is, division in kind, both impractical and inequitable especially considering the alternatives. It is submitted that the Referee could spend literally hundreds of hours pursuing these tasks. The value of this property does not warrant such expense.
THE COURT MUST ORDER THE PARTIES AND THEIR COUNSEL TO REFRAIN FROM LOBBYING THE REFEREE.
The function of the Referee is to assist the Court in determining those matters that are difficult or impractical to determine on the basis of an evidentiary presentation. Richmond, supra at 755. The Referee is a quasi judicial officer whose independence is protected by CCP § 873.070 which requires that only the Court may instruct the Referee and that either party can request such instructions by noticed motion. The Court may delegate to the Referee the task of taking evidence on the manner of partition or any other matters involved in the case. CCP Sec. 872.820 (b) and See: Gray v. Sup. Ct. 52 Cal. App. 4th 165, 169 (1997), where the Referee held a two day evidentiary hearing on this issue. In a case such as this, the Referee becomes the fact finding arm of the Court and his independence must be preserved. The plaintiffs’ attorney seems to believe that it is appropriate to argue his case to the Referee outside of the Court, to provide the Referee with materials which are not part of the evidentiary record of the case or the case file, and to seek to persuade the Referee to make recommendations in plaintiffs’ favor. These activities which are outside the judicial supervision mandated by CCP §873.070 threaten the independence of the Referee and subvert the entire process. They are prejudicial to the defendants, are misleading to the Court, and if not prohibited forcefully, will inevitably contaminate this proceeding. The conduct of plaintiffs’ attorney here is particularly egregious. In his first letter to the Referee, Mr. Martin prematurely assured Mr. Hamman that his version of the Interlocutory Judgment would be adopted by the Court, and more significantly sought to convince the Referee that the house located on that portion of the property desired by plaintiffs was a “ramshackle” structure, of no economic value which should not be considered in any proposed division. The Declaration of Michael S. Pecherer contains a photograph of the residence, which plainly shows that the house is far from ramshackle and is a fully functional and valuable residence. Mr. Pecherer’s declaration further shows that www.zillow.com, a widely used website for real property valuations estimates that the value of the residence and accompanying residential property is $285,000. In Mr. Martin’s second letter to the Referee, he makes the statement that “Mr. Pecherer claims the property cannot be physically divided” and seeks to justify his communications to the Referee without even lip service to the applicable statute. Mr. Pecherer’s letter to the Referee, contained no such substantive commentary and only requested that the Referee take no action until the contents of the Interlocutory Judgment were settled. Mr. Martin’s second letter further promised a complete package which “. . . shows that the property can be physically divided. . .” Mr. Martin followed up with a 31 page package sent to the Referee on April 7 which contained mostly materials that were not part of the Court record and which baldly argued for his clients’ position. In those materials, Mr. Martin has fancifully enlarged the acreage of the property from 5.1 to 5.47 in order to justify his evolving scheme for division. The record is clear that Mr. Martin does not respect the independence of the Referee and apparently completely misconceives the role of the Referee as a quasi judicial officer. Unbridled communication on substantive matters with the Referee without judicial supervision as is specifically required by CCP § 873.070 is an egregious violation which must not be repeated. To remedy this situation and to preserve the independence of the Referee, it is necessary that the Interlocutory Judgment contain provisions prohibiting any parties or their counsel from communicating with the Referee on any substantive matters and instructing the Referee to ignore all prior communications by Mr. Martin. Otherwise, the essential independence of the Referee will have been compromised and the Court will be required to appoint another individual to carry out the Referee’s duties.
The plaintiffs have an absolute right to partition the property. The Court must ultimately decide between partition by sale or by division in kind. The character and location of this property militates against partition by division. Because the property is situated within a municipal entity, it is subject to many land use, zoning and General Plan regulations with which any subdivision must comply. Whether a proposed division of the property is compliant is, in the first instance, for the Gridley planning officials and not this Court to determine. This Court is constrained from ignoring these planning considerations or invading the Gridley’s administrative jurisdiction. The plaintiffs, in urging a division of the property in conformity with a “back-of-the envelope” scheme, without a survey, without a proposed division formulated by a licensed civil engineer, without appraisals of the resulting parcels, without any consideration of the kinds, sizes and locations of easements that would have to accompany any division, and without any consideration of compliance with applicable planning regulations, presume that this Court will ignore virtually the entire body of jurisprudence on how to achieve an equitable partition. While, in theory the resolution of all these issues could be delegated to the Referee, it is unavoidable that the Referee would be faced with a hugely time consuming and a profoundly difficult and expensive task, wholly disproportionate to the value of this property. All of this burden could be avoided if the parties either stipulated to partition by appraisal or if the Court were to order partition by sale under the supervision of the Referee. Defendant Fernandez has offered to stipulate to partition by appraisal. Moreover, plaintiffs’ cling to their desire for division only because they perceive an opportunity to enhance the value of their adjacent property by implementing what amounts to an impermissible private condemnation via the partition process. In fact, they could achieve the same end at a much lower expense were they to agree to either a partition by sale or a stipulated sale by appraisal. It is absurd that plaintiffs cling to their proposed remedy when they could achieve the identical end at a much lower cost, with less burden on the Court, and with far more control over the process if they agreed to partition by appraisal. It is submitted that partition of this property by division cannot be practically achieved. If the Court is so disposed, it would be appropriate to have the Referee make preliminary inquiries and report back to the Court as to the burdens and costs associated with a physical division. However, given the character and location of the property, that would be an idle act and would incur expenses which could simply be avoided if the property were sold. The plaintiffs’ interests would be thoroughly protected by the Court confirmation process and as they would be entitled to a credit bid, their tax basis in their 2/3rds of the property would be unaffected. If it is possible to achieve a stipulation for a partition by appraisal, it is submitted that this would be the most efficient and expeditious manner of resolving this controversy. Mr. Pecherer has spoken with defendant Geanee Pike and believes that were the plaintiffs to so stipulate, Ms. Pike’s concurrence would be obtained.