Case of the Day – Thursday, April 18, 2019

LIKE A GOOD NEIGHBOR

Would you rather have your insurance agent appear? Really?

Would you rather have your insurance agent appear? Really?

The Estes, like the rest of us, have probably seen those insipid commercials where the insurance-challenged protagonist sings a major insurance company’s jingle offkey, and his or her local agent magically appears. It never made much sense to us. Meaning no disrespect to insurance – which after all is just a transaction in which you bet something bad’s gonna happen to you, and the insurance company bets it won’t – but if we could warble a stanza and have someone appear, it sure wouldn’t be an insurance agent.

Back to our topic. An article we read about an Indianapolis man having his ear bitten off by his neighbor made us think about truly rotten neighbors, you know, the ones without community relations teams and emergency satisfaction 800 numbers. The Estes probably have less of an idea of what a good neighbor is than most people, except to suspect it sure isn’t the people next door to them, the Gertzes. The Gertzes are a little bit weird, and we don’t mean that in a good way.

A dispute about a suburban boundary line ended up with the Gertzes training a battery of surveillance cameras on their former friends, the Estes. If that wasn’t enough, Mrs. Gertz began using a loudspeaker to hurl insults — rather graphic ones which left the court blushing — at the Estes daughters. And then there was the fence.

Robert Frost said that good fences make good neighbors, but he hardly had this fence in mind: an 8-foot tall monstrosity painted orange and black, studded with thousands of protruding nails and large warnings against climbing and trespassing painted on the Estes’ side like so much gang graffiti. In fact, the whole thing looked rather more like the Berlin Wall come to Hebron, Indiana.

LlamasThe Estes sued under the “spite fence” statute. The Gertzes protested that they hadn’t built a spite fence, but rather just a modest enclosure to protect some delicate saplings they had planted, as well as to permit the raising of alpacas and llamas. After all, they didn’t want any errantly roaming cattle to gnaw on the young trees or, for that matter, to let the llamas and alpacas flee to return to South America. The Court wasn’t convinced. After all, the Gertzes’ permit application called the fence “residential,” not “agricultural.” Second, the fence didn’t enclose the young trees, making it useless as a cattle barrier. Finally, the cameras, the loudspeaker and the studded fence — not to mention the testimony of deteriorating relations between the plaintiff and defendant — made it clear to the Court that the fence was erected maliciously.

Alpacas

The Gertzes could hardly let their alpaca herd hotfoot it back to Bolivia, now, could they?

The Gertzes also tried a creative technical argument that because a permit had been issued for the fence, the Indiana “spite fence” statute had been trumped by local approval. The Court noted that the permit was for a 7-foot fence, not the 8-foot plus fence the Gertzes had put up, and anyway, a local permit did not excuse compliance with the statute.

So the court settled matters, and everyone kissed and made up. There was lemonade toasts all around, right? Lest you think that, stay tuned tomorrow for … [drum roll] … Gertz v. Estes, the sequel.

Gertz v. Estes, 879 N.E.2d 617 (Ct.App. Ind., 2008). Oh, the neighbors from hell! David and Nichelle Gertz started out liking their neighbors, Douglas and Susan Estes, but that fell apart. David and Nichelle had multiple surveillance cameras trained on their neighbors — even when they purported to get along — but after the boundary line was disputed, things got so bad that the Estes notified the Gertzses that they intended to install a fence, but before they could do so, the Gertzses built one of their own. The Gertzses applied for and obtained a local permit to build a 7-foot high fence, but the final fence was 8 feet high, 720 feet long, and with thousands of nails protruding on the Estes’ side up to a half inch. The words “NO CLIMBING” and “NO TRESPASSING” were painted in orange and black on the middle horizontal slat, and two more cameras — for a total of seven surveillance cameras — were installed on top of the fence.

cameras

The Gertzes also used a public address system to aggravate the Estes, including making “lewd comments” to the Estes’ daughters, which the Court blushingly refused to repeat in the opinion. The Gertzes called the sheriff at least eighteen times to report various activities of Douglas and Susan Estes.

The Estes sued under Indiana’s “spite fence” statute for removal of the fence. The Gertzes testified that the fence was necessary to protect eighteen-inch tree seedlings they had planted. The fence did not enclose any area, but the Gertzes said they intended to enclose the fence at some point so that they could raise llamas, alpacas, or sheep. The trial court found that there was “no justifiable or necessary reason for the fence installed by [David and Nichelle] to exceed six (6) feet . . .” Furthermore, it found that “the fence was maliciously erected and now maintained for the purpose of annoying [Douglas and Susan].” The trial court ordered the fence removed, and the Gertzes appealed.

SurveillHeld: The fence had to go. The Court found that the evidence and the reasonable inferences drawn from it fully supported the trial court’s findings. As to the Gertzes’ defense that it was for agricultural purposes, the Court observed that their permit application indicated that the “use” of the fence was “residential” and the fence did not form an enclosure, making it useless for livestock. The Court said that the Gertzes’ conduct and the extraordinary nature of the fence overcame David’s assertion that the 8-foot fence was intended to protect eighteen-inch tree seedlings.

Likewise, the fact that a local permit was granted to build a 7-foot wooden fence parallel to the property line did not trump the “spite fence” statute. That statute defines as a nuisance any fence unnecessarily exceeding a height of six feet and maliciously erected for purpose of annoying neighbors. This fence exceeded six feet unnecessarily, and clearly resulted from a deteriorating, antagonistic relationship between the Gertzes and their neighbors. The nails on fence protruding between quarter- and one-half inch from the fence and the surveillance cameras clearly supported the finding that the fence was built out of malice, and was therefore a nuisance.

The Gertzes wisely didn’t challenge the trial court’s order that the PA system had to go, too.

– Tom Root

TNLBGray140407

Case of the Day – Wednesday, April 17, 2019

STICK IT TO THE MAN …

Tal Mims owned a rental house. He also owned a landscaping company. So when Rosemary Stills, his tenant, called to say a tree had fallen on the house, who better to come over to clean up the mess that Tal’s landscaping crew? It seemed like perfect synergy. It also was a bit redolent of the 60s mantra,stick it to the man.” That is, if the “man” in question is a State Farm agent.

Some would say "disaster." Tal Mims said "opportunity."

     Some would say “disaster.” Tal Mims said “opportunity.”

But things got worse. While the tree was being cut up, a large branch fell on the tenant’s son, breaking his leg. The tenant sued Tal, and then she added his homeowner’s insurance carrier as a defendant. Then both the plaintiff and the defendant Tal ganged up on the insurance company.

The policy pretty plainly excluded bodily injury and property damage “arising out of the rental or holding for rental of any part of any premises by any insured” and “arising out of premises owned or rented to any insured, which is not an insured location.” But Tal and Rosemary argued that while the falling tree related to the rental property, the accident — which occurred while it was being cut up — did not. Tal Mims argued rather disingenuously that he was acting on his own behalf at the time of the accident and that he was not engaged in any business pursuit or employment.

Here’s the problem, the Court said. While throttling insurance companies is something courts do fairly often, the companies still are free to limit coverage so long as the limitations do not conflict with statutory provisions or public policy. The business pursuits exclusion in a homeowner’s policy is intended to exclude risks that should be covered under different policies. Here, the Court said, the property on which the accident occurred was never listed in his homeowner’s policy, but instead happened on another piece of property that should have been covered by its own policy. Besides, the accident happened because Tal was removing a tree from the roof of the rental house. The Court guessed that if Tal had left the tree on the roof, it would have badly affected the value of the house.

That being true, the Court said, this was pretty clearly a project related to a rental property, and pretty clearly excluded from the Tal’s insurance policy, a happy ending for common sense but not so happy for Tal and Rosemary, both of whom hoped State Farm’s deep pocket would solve their problems.

Stills v. Mims, 973 So.2d 118 (La.App., 2007). Stills rented her home from Tal and Tommie Lee Mims. Tal operated a business named Tal’s Custom Landscaping, Inc. When a storm caused a tree to fall on the roof of the home. Stills informed Tal of the damage, and he came to remove the tree. In doing so, a limb fell from the roof onto the ground and injured Stills’ son, LeWilliam. stickit150427Stills sued Tal and Tommie Lee Mims, and added State Farm as a defendant. She alleged State Farm had in effect at the time of the accident a policy covering the Mims’ actions.

State Farm filed a motion for summary judgment asserting that the homeowner’s policy issued to Tal Mims was for his personal residence at 2508 Lindholm Street, and that State Farm never issued a policy for 604 Central Avenue, where the accident occurred. State Farm asserted that the liability and medical payments coverages provided in the policy excluded bodily injury and property damage “arising out of the rental or holding for rental of any part of any premises by any insured” and “arising out of premises owned or rented to any insured, which is not an insured location.” The trial court granted summary judgment in favor of State Farm, finding no coverage under the Mims’ homeowner’s policy. Both Stills and the Mims appealed.

Held: The trial court’s dismissal of State Farm Insurance was upheld. Stills argued that her claim was based on the Mims’ negligence in cutting the tree down, and not on any property defect, making the insured location issue irrelevant. Both Stills and the Mims asserted that the business pursuit exclusion did not apply, because the Mims’ actions fell under the exception for activities ordinarily incident to non-business pursuits.

Mims denied being in the business of renting homes. He claimed that he was acting on his own behalf at the time of the accident and that he was not engaged in any business pursuit or employment. The Court noted that insurance companies are free to limit coverage so long as the limitations do not conflict with statutory provisions or public policy. Exclusions must be strictly construed against the insurer with any ambiguities construed in favor of the insured. The insurer bears the burden of proving the applicability of an exclusion to a claimed loss.

The Court said that the business pursuits exclusion in a homeowner’s policy is intended to exclude risks that should be covered under different policies. For example, the commercial risks of a business would typically be covered by a commercial liability policy, whereas the risks associated with a rental dwelling would typically be insured by rental property insurance. The removal of the risks associated with business enterprises or rental properties helps to lower the rates of homeowner’s insurance by eliminating non-essential coverages.

Stills and the Mims argued that her claim did not arise from any business pursuit by the Mims, but rather, the claim was based on the Mims’ personal liability and involved activities that were ordinarily incident to non-business pursuits. They cited Blue Ridge Insurance Co. v. Newman — where the Court found that such a tree mishap was covered by a homeowners’ policy – in support of their position. But the Court said Blue Ridge was different. First, plaintiff Newman’s property on which the tree was located was insured under his homeowner’s policy. Here, the house leased by Stills was not insured under the Mims’ State Farm policy. The Mims were not seeking coverage for an accident that occurred on Tal’s insured residence, but instead, the Court held, he sought to have his homeowner’s insurance cover an incident that occurred on an unrelated rental location that should have been insured by some other policy. The very purpose behind the business pursuits exclusion, the Court said, supported a finding of no coverage.

scamSecond, in Newmanthe defendant’s property had been his family’s home since 1965, and had only been rented to a friend for less than a year prior to when the accident occurred. In Tal Mims’ case, there was no indication that the Stills residence was anything other than a rental property.

Third, Newman’s house was vacant when the tree fell, whereas Stills and her son were residing in the Central Avenue home when the tree fell on it. Fourth, the damage in Blue Ridge arose when the tree from Newman’s property fell on a neighboring property. Here, the existence of the tree on the property and its falling during the storm did not cause the damage. Instead, young LeWilliam’s injury arose from Mims’ removal of the tree from the roof of the rental dwelling.

Finally, the Blue Ridge court’s major consideration was that the mere existence of the tree on the property had no bearing on the use of the property- as a rental. The fact that a tree fell on the roof of the rental home in this case, particularly if left there, would likely affect the suitability of Stills’ rental dwelling. While the existence, or maintenance, of a tree on Newman’s family property was an activity usually incident to non-business pursuits, Mal Mims’ removal of a fallen tree from the roof of a rental dwelling by Stills was clearly not.

Pretty clever argument, the Court conceded – but State Farm was not liable.

– Tom Root

TNLBGray

Case of the Day – Tuesday, April 16, 2019

MURRELL II – WINNING THE BATTLE BUT LOSING THE WAR …

So many say. But it's their clients who are driving the train ...

So many say. But it’s the clients who are driving the train …

Here we are, the day after Tax Day. The year is fleeting (and we just sent our last dime in the direction of Washington, D.C.)…

Meanwhile, those fun-loving Murrells of Rolling Hills, California, are back for an encore performance! The couple’s quixotic effort to hold their condo association liable for all sorts of alleged backroom dealing and breach of trust in cutting down their trees to improve the view of their neighbors, the Fullers, was covered in the Case of the Day for Monday, April 15, 2019 (funny, it seems like only yesterday). Lest you think that decision was the end of the saga, I now bring you Murrell II, the Very Expensive Sequel.

If you’re the kind of person who remembers what kind of mayo you had on your sandwich at lunch a week ago last Thursday (J&D’s Baconnaise), you’ll recall that the Rolling Hills Community Association held an easement across the Murrell’s’ property for “[r]oads, streets, or bridle trails, parkways and park areas[, p]oles, wires and conduits for the transmission of electricity…; [p]ublic and private sewers, storm water drains, land drains, and pipes, water systems, water, heating and gas mains or pipes; and … [a]ny other method of conducting and performing any public or quasi-public utility service or function on, over and under the surface of the ground.” The easement gave the Association the right to trim or cut trees within its limits. The Fullers, whose view of the ocean was obscured by the Murrells’ trees, convinced the RHCA to trim back some of the Murrells’ trees and whack down a few others, so that they could enjoy the million-dollar vista they had paid for when they bought their place.

That’s “long story short.” The actual history of the tortured litigation and thundering herd of parties is byzantine with a small “b”, and is amply (if not completely) recounted in the full opinion. The Murrells ended up suing the Fullers, the RHCA, and an individual member of the RHCA board (who was seemingly picked at random). There were counterclaims and crossclaims. When the 2007 dust settled, the board member was dismissed, and judgments or pieces of judgments were rendered against the RHCA and the Murrells. Board member Donald Crocker was held not to have breached any duty. And a judge ordered the Murrells to pay more than $700,000 in legal fees for the Fullers and RHCA.

And Chinese viewers thought that it was confusing missing the White Walkers’ message in the new Game of Thrones!

Naturally, everyone appealed. And that brings us to today’s 2011 decision.

Recollect that the Murrells argued the RHCA had no right to cut down trees to improve someone else’s view. In today’s case, they added the argument that the community association should have been equitably estopped from cutting down the trees because it had approved the Murrells’ construction of an addition to their home with a wall of windows, and the Fullers had not objected. Both parties, the Murrells contended, had lulled them into building something that depended on their trees for privacy, and the defendants could not fairly be allowed to strip their privacy away by cutting down those trees, even if it otherwise had the legal right to do so.

The Court of Appeals made short work of the Murrells’ latest lament. First, it concluded that the easement let the RHCA cut down trees for any reason it liked. As for the “equitable estoppel” argument, the judges held that “[t]he Murrells fail to cite pertinent authority that RHCA should be estopped from removing a tree on its easement because of the Murrells’ addition plans.” The decision was not elegant, but then, the Court pretty clearly thought the argument was so foolish as to not deserve much analysis.

Much of the remainder of the decision is dedicated to the Murrells’ complaints about how much they were forced to pay for the RHCA’s and Fullers’ attorneys. The lengthy recitation is mind numbing (unless you happen to be a lawyer, in which case $250.00 an hour for a second-year associate who carries your briefcase is a “feel good” story). The Murrells ended up winning $30,000 from RHCA and nothing from the Fullers. It cost them $500,000 in legal fees for themselves and another $492,000 in the defendants’ legal fees, all to fight for their recently departed Aleppo pine tree.

pyrric140710“Another such victory and I am undone!” King Pyrrhus is reputed to have said. So could the Merrills. At the same time, most of us find it difficult to imagine being able to drop $1.6 million on a legal battle over some trimmed trees.

Oh, to live in Rancho Palos Verde Estates. Or at least to be able to afford to do so …

Murrell v. Rolling Hills Community Association, Case No. B202019, 2011 Cal. App. Unpub. LEXIS 772 (Ct.App. Cal., Jan. 31, 2011). A contentious and costly feud over trees and a neighbor’s view has spawned multiple legal actions, cross-actions, five appeals and two cross-appeals. To obtain an unobstructed ocean view, the Fullers wanted certain trees on “the Murrell property” trimmed or removed. The Murrells, who sought to preserve privacy, resisted. So began a decade-plus dispute.

After many attempts to mediate, the case went to trial in 2007. The Fullers obtained judgment in full against the Murrells in the amount of $10,000, and the Murrells obtained judgment in the amount of $30,000 against RHCA on RHCA’s breach of its covenants, conditions and restrictions (CC&Rs) and breach of fiduciary duty.

The Murrells incurred $892,000 in attorney fees. They were awarded $400,000 as attorney fees against RHCA but were ordered to pay $159,000 as attorney fees to RHCA on a separate claim and $334,000 as attorney fees to the Fullers.

The Murrells claimed the CC&Rs did not authorize RHCA to “trim, top and/or remove trees and foliage on the Murrell property” for the purpose of providing the Fullers with an ocean view. The Fullers sued in turn for injunctive and declaratory relief that they had the right to have the trees cut or trimmed. The Murrells also sued RHCA for breach of the CC&Rs, breach of fiduciary duty, trespass, and conversion, alleging that by going onto the Murrell property and removing a pine tree in order to benefit the Fullers’ view at the expense of the Murrells’ privacy, RHCA acted contrary to the CC&Rs and its fiduciary duty to act in good faith and fair dealing.

In so doing, the Murrells claimed RHCA violated the CC&Rs because they did not empower RHCA “to remove trees in the easement on the Murrell property for any reason unrelated to the express and implied purposes of the easement, which are the creation of and maintenance of roads, bridle trails, utilities, parkways, park areas, above ground poles, wires and conduits as well as sewers, drains, pipes and below ground conduits.” denied the complaint’s material allegations and pleaded 17 affirmative defenses.

The trial court granted summary judgment to the RHCA. The Murrells contended summary judgment was improper on the grounds that neither RHCA nor the trial court addressed their equitable estoppel claim. The Murrells argued the CC&Rs cannot be interpreted to authorize RHCA to remove the pine tree, which was on RHCA’s easement, for the purpose of enhancing the Fullers’ view. They further argued that even if such authority existed, questions of fact existed regarding whether RHCA complied with its fiduciary duty to the Murrells in light of expert evidence that removal of the pine tree was unnecessary to improve the Fullers’ view.

Stormy Daniels probably wasn’t smiling when she was told to pay the President’s legal fees – reportedly $840 an hour for one attorney – and it’s a cinch the Murrells weren’t grinning at what they owed for the Association’s lawyer’s bill, either.

The Murrells argued RHCA was estopped from asserting any right to remove the pine tree for the reason RHCA and the Fullers did not complain to the Murrells about their plans to construct an addition to their residence involving floor to ceiling windows, and in reliance on this “silence, ” the Murrells constructed this addition with the expectation that their “foliage and mature trees[, including the pine tree ]” would preserve their privacy.” The Court held that the Murrells failed to cite pertinent authority that RHCA should be estopped from removing a tree on its easement because of their addition plans. The estoppel argument failed.

The Murrells also contended RHCA was not authorized to remove the tree to enhance the Fullers’ view, which was not a reason recognized as an easement use under section 2(b) of article V under the CC&Rs. The Court held that the “fallacy of their position lies in their misinterpretation of the pertinent provisions of the CC&R’s. When viewed in context, these provisions reveal RHCA has the right to remove trees located in its easement, without regard to purpose.”

The Court said that the “language of the CC&Rs governs if it is clear and explicit, and we interpret the words in their ordinary and popular sense unless a contrary intent is shown.” The Court interpreted the CC&Rs “to make them lawful, operative, definite, reasonable and capable of being carried into effect, and [to] avoid an interpretation that would make them harsh, unjust or inequitable.” Here, it was uncontroverted that the Murrell property is burdened by an easement in favor of RHCA and that the pine tree was located on this easement portion of that property. RHCA had the right to remove trees located on that portion of the Murrell property burdened by its easement. The Court said that the unambiguous language of the CC&Rs in the phrase “in or along any easements” referred to the physical location of the tree which RHCA is authorized to remove rather than to any particular qualifying reason for its removal, for example, solely for an easement use or purpose. Thus, the fact that enhancing a member’s view is not an enumerated easement use is inconsequential.

– Tom Root

TNLBGray140407

Case of the Day – Monday, April 15, 2019

NO, RODNEY, WE CAN’T JUST GET ALONG

Rodney King (1965-2012), whose DUI stop turned into a beating at the hands of the police, making him an unwitting icon of racial injustice and a plainspoken advocate for understanding.

Rodney King (1965-2012), whose DUI stop turned into a beating at the hands of the police, making him both an unwitting symbol of racial injustice and a plainspoken advocate for understanding.

From California, the land of pleasant living… we take you to a war zone. Compton? South LA? No, it’s the City of Rolling Hills, California, perched on the Rancho Palos Verde peninsula, a place where poverty – which in includes anyone driving a vehicle worth less than a hundred grand – appears to have been banned.

It’s unlikely the late Rodney King would have lived here.

Remember Rodney? Decades before #Blacklivesmatter, Rodney King was the poster child for police brutality against minorities, or – if you roll this way – he was the man who should have known better than to be driving around after dark while engaged in being black.  After some of the police officers involved in his beating were acquitted, rioting ensued. Rodney’s plaintive plea for peace, which went viral before going viral became fashionable, asked, “can we all get along?”

Amid its 23 miles of horse trails, the 690 homes and the 26 miles of roads, the people in Rolling Hills apparently cannot. The Fullers made it a habit to complain about the Murrells’ trees because it spoiled their view (something people on Rodney’s side of town probably didn’t worry much about). The Murrells kept trying to get along, acceding to trim job after trim job, until they had finally had enough. But they didn’t sue the Fullers. Instead, they sued the Rolling Hills board of directors, and specifically Donald Crocker, for having caved in to years and years of the Fullers’ fulminations about the trees.

Naturally, Mr. Crocker, who was a volunteer board member, didn’t much like being sued. After all, he said, he was just doing his job. And the Court agreed. In California, as is the case in many places, directors of corporations, for-profit and not-for-profit alike, are protected by a “business judgment rule.” The rules shields directors from liability when they have acted in good faith, haven’t engaged in self-dealing and have acted on an informed basis. (Note: the “business judgment rule” varies from state to state, and can be rather nuanced. You should not assume that the application of the “business judgment rule” in this case represents what would happen in your own state).

Besides, the Court said, the Murrells shouldn’t be allowed to benefit after leading the Board and everyone else to believe that year after year they were agreeing – however reluctantly ­­– to the tree trimming, and only when they reached the breaking point, did they decide sue for everything that had ever happened.

Sgt. Joe Friday, iconic LA cop who would not have approved of the Rodney King beating, but would have used the Murrells' prior acquiescence against them, just as the court did.

Sgt. Joe Friday, the iconic LA cop. Joe would not have approved of the Rodney King beating, but he would have used the Murrells’ prior acquiescence against them, just as the court did.

There are a couple of morals here. One is that if you just try to get along, your efforts to do so “can and will be used against you in a court of law,” as Sgt. Joe Friday liked to tell defendants. The second, and more basic moral, sadly enough, is that turning the other cheek in Rolling Hills is just an invitation to your neighbor to smite you on that one, too.

Sorry, Rodney. Guess we can’t “just get along.” That’s why there are lawyers and courts.

Murrell v. Crocker, Not Reported in Cal.Rptr.3d, 2007 Cal. App. Unpub. LEXIS 5321, 2007 WL 1839478 (Cal. App. 2 Dist., June 28, 2007). The Murrells and Fullers are neighbors in Rolling Hills, California. They are members of the Rolling Hills Community Association, a nonprofit cooperative corporation governed by a five-member board of directors, one of whom is Mr. Crocker.

A governing document called the CC&R sets out the rights and obligations among the RHCA, the Murrells and the Fullers. According to the CC&R, in order to improve the view and to protect adjoining property, the RHCA has the authority to cut back or trim trees and shrubs on a member’s property. The RHCA also has a 10-foot wide easement along the boundary of each lot in which it has the right to remove trees or shrubs.

In 1997, the RHCA passed a resolution establishing procedures for maintaining and improving views. At that time, the Fullers demanded that the Murrells remove foliage to create a view for the Fullers. To be good neighbors and to avoid a dispute, the Murrells did so. In 2000, the Fullers brought a view complaint to the RHCA, which “caused the removal” of five trees and the trimming of an additional 12 trees on the Murrell property.

In 2002, the Board adopted yet another resolution, which contained more detailed procedures to maintain and improve views.

The next year, the Fullers submitted a second view complaint to the RHCA, which recommended that two of the Murrells’ trees be trimmed. The Murrells did so, but the Fullers complained that the trees were not trimmed enough, and in 2004 the Board ordered that a pine in the RHCA easement be removed and that other trees not on the easement be severely trimmed.

Finally the Murrells had had enough. They sued Crocker and the RHCA Board for taking actions inconsistent with their fiduciary duties and the CC&Rs, including failing or refusing to inform other Board members that the CC&Rs did not permit the removal of trees or other plantings from the portion of the Murrells’ property outside of the easement; adopting resolutions inconsistent with the powers granted to the RHCA under the CC&Rs; letting the Fullers pretty much call the shots, and trimming of trees so that the trees would not grow back for three or four years.

Crocker moved for summary judgment on the grounds that he had no individual liability to the Murrells, and that the claims in the complaint were specious. He complained that the first view complaint was resolved by an agreement between the Murrells and the Fullers after meetings with the Committee and an arborist. He argued the Murrells had agreed or acquiesced to almost all of the trimming. Although George Murrell denied any such agreement, he felt that because the Committee and the Board had a negative attitude toward him and his wife, he “had no choice but to play along with the concept that some agreement had been reached as the Association Board and View Committee were claiming.” His wife said she had been trying to “avoid a confrontation in the hope that the … Board would, in the end, make some effort to protect some aspect of our privacy.”

The trial court dismissed Crocker as a party. The Murrells appealed.

The Palos Verde peninsula offers stunning vistas of the Pacific Ocean, when the neighbors' trees aren't in the way.

The Palos Verde peninsula offers stunning vistas of the Pacific Ocean, when the neighbors’ trees aren’t in the way.

Held: Crocker was dismissed as a party. The Court noted that under California law, directors of nonprofit corporations, such as a homeowners association, are fiduciaries who are required to exercise their powers in accordance with the duties imposed by the Corporations Code. A director fulfills his duty to a member of the association by strictly enforcing the provisions of the CC&Rs but has no fiduciary duty to exercise his discretion one way or the other with regard to a member so long as the director’s conduct conforms to the standard set out in § 7231 of the Corporations Code.

That section of the law sets out the standard of care for directors of nonprofit corporations, known as “California’s statutory business judgment rule,” providing that a “director shall perform the duties of a director … in good faith, in a manner such director believes to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use in similar circumstances.” In performing such duties, a director “shall be entitled to rely on information, opinions, reports or statements … prepared or presented by … one or more officers or employees of the corporation whom the director believes to be reliable and competent in the matters presented; counsel … or a committee of the board upon which the director does not serve … so long as, in any such case, the director acts in good faith, after reasonable inquiry when the need therefore is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted.” A person who performs the duties of a director according to the rule has no liability based upon any alleged failure to discharge his or her obligations as a director.

Here, Crocker provided a declaration that he performed his duties in connection with both view complaints in good faith and with due care within the meaning of the rule, and the Murrells had no evidence to the contrary. The Court found that Crocker’s only involvement with the Murrells or the Fullers has been in public meetings of the RHCA or in officially sanctioned trips to their property, that he has no personal relationship with either the Murrells or the Fullers and had no personal interest in the outcome of their dispute, that Crocker was not the “primary driving force” behind the alleged improper treatment of the Murrells, that the votes were unanimous in all Board actions regarding the Murrells and the Fullers, and that he did not knowingly or with reckless disregard for the truth take any action, or encourage any other Board member, to take any action inconsistent with a Board member’s fiduciary duties or the CC&Rs.

The Court also noted that the Murrells had admitted that they engaged in conduct leading Crocker and the RHCA to believe that the Fullers and the Murrells had come to agreements involving the removal and trimming of the trees. The Court held that because there was no reason for Crocker to suspect that the Murrells were laboring under any mistake as to their legal rights, there was no duty for him to make any disclosures on the point. Any unexpressed position on the part of the Murrells concerning the view complaints did not, the Court said, create an issue of fact as to Crocker’s good faith compliance with his duties.

– Tom Root

TNLBGray140407

Case of the Day – Friday, April 12, 2019

DON QUIXOTE GETS WINDMILLED

quixote150416A Yankee landowner ­– we’ll call him El Ingenioso Hidalgo Don Juan Roberto Hamilton de la Vermancha – was furious at the Holland Town select board when it announced plans to widen the road in front of his house. He complained to the Town, and it scaled back the plans. That wasn’t good enough for our hero: He sued.

The case went to the Supreme Court of Vermont twice, where our landowner proved his point. The Court held that the Holland Town tree warden couldn’t cut down the trees in front of Don Hamilton’s house without holding a hearing first.

A tree warden is a concept unique to New England, a municipal official given powers by statute to make decisions about the cutting and trimming of diseased or hazard trees. The tree warden’s powers are defined by statute.

In today’s case, when all the legal dust had settled, the Town succeeded in widening the road, the tree warden was able to cut down the trees standing in the way of progress, and all necessary hearings were held, with everyone – including Don Hamilton receiving due process, that is, the “process that is due.”

For Don Hamilton’s considerable efforts in protecting the due process rights of all landowners who might have the tree warden try to cut down healthy trees without a prior hearing, the plaintiff was rewarded with damages … of one dollar.

Of course, Don Juan Roberto Hamilton used two lawyers and spent about $30,000 in pursuit of his glorious quest, and for reasons you can read about in the full case, he didn’t win any attorneys’ fees. But he has his dollar, and the sense of satisfaction that he stepped up and made a difference.

road150416Hamilton v. Town of Holland, 950 A.2d 1183, 2007 VT 133 (Sup.Ct. Vt., 2007). John Robert Hamilton owned property on Lackey Road. In 2001, the Town select board decided to widen a half-mile section of Lackey Road because the section was not wide enough to allow large vehicles – such as a truck, snowplow or school bus – to pass each other safely. The Town engaged the assistance of the State District/Regional Highway Commission in selecting and marking the trees that needed to be removed for the road project.

As originally planned, the road-widening project required removal of many trees, and would have required blasting, digging drainage ditches, and installing culverts. John objected to the tree-cutting proposal. The select board voted to go ahead with the project anyway, but it scaled back the road and reduced the number of trees to be cut.

John sued for a declaratory and injunctive relief, seeking to prevent the Town from cutting down the trees. He argued that the Town must follow the statutory procedures for altering a public highway, including performing a survey of the road, before proceeding with the widening project. The Town argued that it had authority to maintain Lackey Road, and that widening the road is part of the Town’s maintenance responsibility. The Town also argued that the Town’s tree warden was not required to hold a hearing before removing the trees, because they were a hazard to the public. The trial court granted summary judgment for the Town, and John appealed.

The Vermont Supreme Court reversed the decision, holding that the record did not support the court’s grant of summary judgment, because while the trial court had grounded its decision in part on the fact that the trees to be cut were all located within the right-of-way for Lackey Road, and that all of the work would take place within that right-of-way, the location of the right-of-way and the trees to be cut was an issue of fact that was not resolved. The Supreme Court also agreed with the landowner that state law on tree wardens did not grant the tree warden authority to cut public shade trees under the “public hazard” exception unless the trees themselves presented the public safety hazard.

On remand, John amended his complaint, raising a 42 U.S.C. §1983 claim of deprivation of his constitutional right to due process. The due process claim was based on the failure of the tree warden to hold a hearing prior to removing the trees in question. He also claimed trespass and conversion of trees, both of which claims were grounded in state law. The trial court concluded that the road project was “more extensive than routine maintenance,” but that fact alone did not constitute “a major alteration to the road as that term is defined in state law.” Therefore, the court held, the project did not trigger the requirements of 19 V.S.A. §704 for a survey.

The trial court also concluded that the tree warden’s failure to hold a hearing on the proposed cuttings violated 24 V.S.A. §2509, but that John wasn’t injured by the violation. The court awarded nominal damages in the amount of $1.00 for his §1983 claim, and — because of these nominal damages, John was the prevailing party under federal law and entitled to attorney’s fees. The Town appealed, and landowner cross-appealed.

dollar150416

John Hamilton only won a dollar – but what a nice dollar it must have been!

Held: The trial court’s determination that the widening was not a major alteration was upheld. According to the statute, “ ‘[a]ltered’ means a major physical change in the highway such as a change in width from a single lane to two lanes.” If the change constituted an alteration, then the Town was required to comply with 19 V.S.A. §704, which required expensive studies of project before it was undertaken.

The project involved cutting fifteen trees in front of John’s property, a total of thirty to thirty-nine trees along the entire length of the road, and regarding and adding gravel. John argued that the original project was much more extensive, but the Court said that the Town’s response to his original complaint — to scale back the project — was an appropriate response, and the statute had to be applied to what was finally done, not what was originally planned. The Court observed that the project did not widen Lackey Road from one lane to two, but rather all of the work was done within the existing right-of-way. No culverts were installed or blasting done. Ditches were improved and gravel spread, which appeared to be maintenance under state law. Trees were removed, but such removal is specifically contemplated as a matter of maintenance by 19 V.S.A. §904. The Court agreed with the Town that all the work it performed qualified as maintenance under state law. As such, the Town did not need to perform the survey requirements found in §704.

John had spent $2,000 planting new trees, but he admitted the new planting took place in an area different from where the Town proposed to cut trees and was completed before any cutting by the Town. The Court thus found that John’s plantings were not related to the roadwork.

Inasmuch as John did prove a deprivation of due process and a violation of his property rights in the removal of trees located in the Town’s adjacent right-of-way, the superior court was correct to award him nominal damages of $1.00. Because the Town cut down the trees without holding a tree-warden hearing, the Court said, John’s due-process rights were violated regardless of his inability to prove loss or damage.

– Tom Root

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Case of the Day – Thursday, April 11, 2019

YOU MAY (ALREADY) BE A CRIMINAL

There was a time that the expression “don’t make a federal case of it” actually had meaning, when only the serious stuff – liking stopping mobsters with tax evasion cases and busting big trusts – became a federal offense. No more.

Now, the feds go after people about 60,000 times a year for any of over 4,000 different criminal offenses, a number that does not even include federal rules that themselves have been criminalized, like the one in today’s case.

Today’s example is a textbook case. Roy P. Hinkson is a 69-year-old Purple Heart recipient who never faced any criminal charges in his life. That changed on November 15, 2014, when the U.S. Forest Service charged Roy with the misdemeanor crime of building a camp on National Forest System land without a permit, in violation of 36 CFR § 261.10(a), a misdemeanor punishable by a $500.00 fine and six months in jail.

It used to be easy. You’d don a mask and a gun, rob a bank, and make off with the loot. You enjoyed the thrill of knowing you had been really, really bad. Roy missed out on that.

A number of commentators – including Alex Kozinski, a judge on the 9th Circuit Court of Appeals (until he was driven off by political correctness run amok) – have complained about the overcriminalization of America. With so many thousands of statutes, and thousands more rules that have been criminalized, just about everyone can commit three felonies a day without breaking a sweat.

Roy found out just how much living a clean life got him, and how little his government appreciated his taking a bullet in Vietnam.

United States v. Hinkson, 2017 U.S. Dist. LEXIS 90409, 2017 WL 2544195 (W.D.Mich. June 13, 2017). Roy Hinkson owned a small hunting cabin, which was built in the 1950s by Al Repp. By mistake, Al had built the camp about 200 feet or so across the line in Hiawatha National Forest rather than on the 40 acres of land that Al owned. Roy’s parents had no ownership interest in the land or the cabin, but they were family friends. In fact, when Roy returned from the Vietnam War, he used the cabin for deer hunting.

In 1976, a fire destroyed the original hunting cabin. A lot of folks, including Roy and at least U.S. Forest Service worker helped clean up the mess. During the clean-up, a few of the USFS people asked Al to rebuild it about 25 feet east of the original site, just to be sure the cabin was on private property. Al was an accommodating fellow, so when he rebuilt the place two years later, he did as the Forest Service people asked.

That’s where things stood for 46 years. The owner passed on, and Roy inherited the cabin. Roy enjoyed occasional use of the camp when he hunted. To get to it, he used an access road, also on USFS land, that was blocked by a locked gate. Roy provided a key to the Forest Service, which kept it on a key rack at the Manistique Ranger District office.

In 2014, a Forest Officer playing with Google Earth on his computer noticed Roy’s cabin appeared to be on National Forest System land. A week later, he investigated the cabin with a GPS tracker, confirming it was on USFS land.

Instead of notifying Roy by leaving a note or sending a letter, the Forest Service – as militarized as any other federal agency – set up a sting-like operation for the opening day of deer hunting season. Despite the utter foolishness of raiding a camp full of men armed with high-power rifles, officers from USFS and the Michigan Department of Natural Resources swarmed the deer hunting blinds on the first day of hunting season and arrested the hunters, fortunately without incident.

The USFS officer leading the raid said the hunters had committed at least 30 different violations. However, he only issued three tickets – Roy was issued two, and his son was issued a third for having a permanent deer blind on federal property. One of Roy’s tickets charged him with “Camp Constructed on NFSL: in violation of 36 CFR § 261.10(a). The next day, Roy removed most of the temporary structures, but the cabin remained.

Held: When Roy appeared in court, the magistrate judge dismissed the charges. The government said all it had to do was prove beyond a reasonable doubt that (1) Roy constructed, placed, or maintained the camp, (2) the camp was located on National Forest System lands, and (3) there was no special-use authorization, contract, or approved operating plan if such authorization was required. Roy on the other hand, argued that the court had to imply a mens rea requirement in the regulation.

The traditional rule is that proof of a guilty mind, the mens rea, is required to convict a person of a crime. The Supreme Court has said that offenses requiring no mens rea generally are disfavored, and has “suggested that some indication of congressional intent, express or implied, is required to dispense with mens rea as an element of a crime.” However, the courts have found statutes or regulations do not require a mens rea element when they are considered public welfare offenses.

The Court differentiated Roy’s offense from one in which someone, for example, cuts timber from a national forest without permission. Timber cutting in a national forest is a strict liability offense, because cutting timber “causes irreparable harm to our national forests. On the other hand, a mere occupier of land… does not seriously threaten the community’s health or safety.”

Here, the court said, the charges are not a public welfare offense. The offense at issue here differs substantially from “public welfare offenses” previously recognized. “In most previous instances, Congress has rendered criminal a type of conduct that a reasonable person should know is subject to stringent public regulation and may seriously threaten the community’s health or safety.” Nothing puts a reasonable person on notice that having a cabin on national forest land does the same.

What’s more, the court said, even statutes creating public welfare offenses generally require proof that the defendant had knowledge of sufficient facts to alert him to the probability of regulation of his potentially dangerous conduct.

The Court held that the facts of the case cannot support a conviction for the offense charged. There is no suggestion that Roy had any reason to believe that he was in violation of the regulation. In fact, the evidence suggests that the U.S. Forest Service had given him reason to believe that he was in full compliance with the regulation, as it was Forest Service employees who suggested where the cabin should be built. To convict Roy of the offense charged “without any scienter requirement smacks of unfairness.”

The Court noted that Roy “has been attempting to work out an arrangement with the U.S. Forest Service so he does not have to destroy the camp. He has offered to buy the land or trade some of his land with the U.S. Forest Service. As of today, the parties have not reached an agreement… Why this matter cannot be resolved amicably remains a mystery that contradicts logic.”

– Tom Root

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Case of the Day – Wednesday, April 10, 2019

HEAD IN THE SAND

ostrich150416When Dominick Cristino and his brother got sued for cutting down a silver maple and a couple elms on his neighbor’s land, Don’s bro hired a lawyer. But Dom wasn’t worried. His brother was a nervous Nellie. What did Dom need a high-priced lawyer for?

He soon found out, because acting as his own attorney, Dom had a fool for a client. He missed the deadline for pleading, and he couldn’t figure out that the judge was throwing him a life ring when he suggested Dom work something out with the plaintiff’s attorney. When Dom did not, the court entered a default against him. When the judge ruled that the tree damage was about $12,000, Dom thought that maybe having a mouthpiece wasn’t such a bad idea.

The new solicitor asked the court to set aside the judgment because Dom thought his brother’s lawyer was his lawyer, too. Horse-puckey, the Court said. Then Dom said he and his brother hadn’t cut the trees down willfully, meaning that treble damages could not be assessed under state law. The Court had to balance justice and judicial efficiency, fairness and the public interest in finality. Dom had had his chance to argue that he hadn’t deliberately chopped down the trees. He sat on his rights.

The judge may have been no Solomon, but he did all right: he decided that justice demanded that Dominick not be hammered with treble damages — which, after all, are punitive in nature — without a chance to be heard. So the court told the plaintiff he could take the $12,000 and run, or the Court would decide the treble damage issue on the merits.

The judge was not Solomon, and he kept the swords out of the courtroom - but he brokered a balanced, efficient and fair result.

     The judge was not Solomon, and he kept the swords out of the courtroom – but he brokered a balanced, efficient and fair result.

Still, Dominick would have done a lot better if he had hired counsel at the outset.

Bontempo v. Cristino, 2007 Mass. Super. LEXIS 407, 2007 WL 3014707 (Mass.Super., Sept. 6, 2007).  Bontempo sued the Cristino brothers for the harm caused when Dominick Cristino cut down three trees located on the Bontempo property without permission.

One brother settled, but Dominick Cristino did not bother to defend the action. A default judgment was entered against him, despite the fact he was in court when it occurred. He declined the court’s invitation to talk to the plaintiffs to settle, and offered no reason why a judgment should not enter against him.

At a damages hearing, Noel Bontempo and Dominick Cristino both testified. An expert estimated the replacement cost of the silver maple that had been cut down at $30,000 and two other elms at $7,000 each. The court determined that damages in the amount of $12,000 should be awarded against Dominick Cristino.

After the hearing, Dominick Cristino hired a lawyer and moved to set aside the default on the grounds that Dominick Cristino was misled into thinking that the law firm representing his brother also represented him. Also, Dominick and his brother Antonio filed affidavits maintaining they acted on the mistaken but good faith belief, that the trees in question were located on their land.

chop150416Held: The default judgment would stand, because Dominick Cristino had admitted that he cut down trees on Bontempo’s land without license in violation of Massachusetts G.L. Chapter 242, §7. What is in dispute, according to Dominick Cristino, was whether he acted willfully. If he did, the Court held, he would be liable to the owner for three times the amount of the damages assessed. The Court held that the interests of justice required that Bontempo should be given the opportunity to offer evidence in rebuttal to Dominick’s affidavit, and then the Court would decide the issue of willfullness on the merits, that is, whether the damages should be trebled or not. If Bontempo was satisfied with the $12,000 award, the Court would uphold that and everyone could go home.

– Tom Root

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