Trial Court: Santa Clara County Superior Court Superior Court No. 1-07-CV087095 Trial Judge: Hon. James P. Kleinberg (Santa Clara County Super. Ct. No. 1-07-CV087095)
The opinion of the court was delivered by: Premo, J.
CERTIFIED FOR PUBLICATION
Respondents James C. Hill and Dawn L. Hill as trustees under Revocable Trust dated February 17, 1977 (the Hills) and appellant San Jose Family Housing Partners, LLC (LLC) own adjacent parcels of land located along U.S. Highway 101 in San Jose, California. Since the 1970s, the Hills have owned and operated a two-sided commercial billboard on a section of LLC's parcel, near the joint property line. In 2000, the Hills and LLC's predecessors in interest entered into a written easement agreement relating to the Hills's use of the billboard. In 2007, after learning that LLC intended to construct a multi-unit residential development on its property, which would obstruct the view of the billboard's north face, the Hills sued LLC for injunctive relief and damages.
In a bifurcated proceeding, the court first rejected LLC's affirmative defense that the easement is unenforceable because the billboard was constructed and maintained in violation of county and city building codes and ordinances. The court then found that LLC's development interfered with the Hills's easement by obstructing the billboard's visibility and awarded damages in the amount of $778,539, which included lost future profits through 2037.
After judgment was entered, LLC moved for a new trial based on newly-discovered evidence that the City of San Jose (City) was seeking removal of the billboard and such removal would substantially reduce or eliminate the lost profits portion of the Hills's damages award. The motion was denied.
On appeal, LLC contends that the trial court erred by: (1) rejecting its illegality defense to the easement agreement; (2) interpreting the easement agreement to include a view easement; and (3) denying its motion for new trial. LLC also brings a motion pursuant to Code of Civil Procedure section 909 and California Rules of Court, rule 8.252 seeking to introduce new evidence for our consideration on appeal. We deferred resolution of the motion pending consideration of the appeal and will now deny it.
We disagree with LLC's arguments regarding the rejection of its illegality defense and the interpretation of the easement agreement. However, we agree that the trial court should have granted its motion for new trial. Accordingly, we shall reverse both the judgment and the order denying the motion for new trial. We shall remand the matter for retrial on the issue of damages, but direct the trial court to stay the retrial pending a final resolution of the City's efforts to remove the billboard.
I. FACTUAL AND PROCEDURAL BACKGROUND
In 2007, LLC acquired real property located at 305 San Antonio Court in San Jose, California. The Hills own an adjoining parcel, and LLC's property is burdened by an easement agreement in favor of the Hills's property dated December 21, 2000 (the easement), the purpose of which is, as follows: "To do all things necessary and incidental to the operation of the business of a billboard, including but not limited to, placement, construction, reconstruction, maintenance and repair of the billboard (and including an electrical power easement for the same)[, and] [¶] [t]o provide ingress and egress as well as an electrical power easement across the said easement, all to facilitate the billboard business or any other lawful purpose associated with the use of the Dominant Tenement." The easement also expressly provides, "No structures, vegetation, or other objects will be allowed to interfere with or encroach on the easements in the above described Grant Deed and as herein referenced."
LLC submitted plans to construct an 86-unit residential development project on its property to the City, and the Hills, believing that this project would interfere with the visibility of their billboard, formally objected. The City declined to halt the development, concluding that protection of an easement was not within its purview. The Hills subsequently filed a verified complaint against LLC and two other defendants*fn1 seeking monetary and injunctive relief.
The parties agreed to a court trial*fn2 and bifurcated the issue of LLC's affirmative defense that the easement agreement could not be enforced on the grounds that the billboard was an illegal nonconforming structure. After taking evidence on that question, the court decided the issue in favor of the Hills.
In the second phase of the trial, the parties argued whether the easement agreement could be interpreted to include a view easement and if so whether and to what extent the view of the billboard was obstructed. The court also took evidence relating to the amount of damages to be awarded for any breach of the easement agreement. In its March 25, 2009 decision and order, the trial court found that the easement agreement must be interpreted "to allow viewing of the billboard," and that LLC's development violated the easement agreement by partially obstructing that view. The court awarded damages to the Hills in the amount of $778,539.
Following entry of judgment in favor of the Hills, LLC moved for a new trial. LLC's motion was based on "newly discovered material evidence," specifically a compliance order from the City directing LLC to remove the "illegally constructed billboard" from its property. LLC argued that because the damages awarded to the Hills were based on a calculation of the future rental income generated by the billboard that future income would be eliminated when the billboard was removed. The trial court denied LLC's motion.*fn3
A. LLC's Code of Civil Procedure section 909 motion
LLC filed a motion pursuant to Code of Civil Procedure section 909*fn4 and California Rules of Court, rule 8.252*fn5 seeking to admit new evidence in the pending appeal. LLC later supplemented its motion, submitting additional new evidence it wished this court to consider on appeal. The evidence submitted by LLC consists of: (1) a nuisance abatement cease and desist order, purportedly served on the Hills by the City on April 8, 2010; and (2) a decision by the City's Appeals Hearing Board (Resolution 11-05) adopted January 27, 2011, directing LLC and the Hills to "immediately cease and desist" operation and maintenance of the billboard and imposing administrative penalties on the Hills.
LLC contends this court should admit and consider this new evidence as it will assist the court in resolving the issues of the billboard's illegality and the future lost income component of the Hills's damages award. LLC has also requested that this court take judicial notice of Resolution 11-05.
The Hills's opposition papers contend LLC's motion is an improper attempt to retry its case on appeal. According to the Hills, neither the cease and desist order nor Resolution constitutes newly discovered evidence nor will those documents assist the court in determining the issues presented on appeal.
By order dated September 24, 2010, we deferred resolution of LLC's motion pending consideration of the merits of the appeal.
Code of Civil Procedure section 909 permits the taking of additional evidence for any purpose "in the interests of justice." That section further encourages the taking of additional evidence when doing so will allow a cause to "be finally disposed of by a single appeal." "It has long been the general rule and understanding that 'an appeal reviews the correctness of a judgment as of the time of its rendition, upon a record of matters which were before the trial court for its consideration.' [Citation.] This rule reflects an 'essential distinction between the trial and the appellate court . . . that it is the province of the trial court to decide questions of fact and of the appellate court to decide questions of law . . . .' [Citation.] The rule promotes the orderly settling of factual questions and disputes in the trial court, provides a meaningful record for review, and serves to avoid prolonged delays on appeal. 'Although appellate courts are authorized to make findings of fact on appeal by Code of Civil Procedure section 909 and [former] rule 23 of the California Rules of Court, the authority should be exercised sparingly. [Citation.] Absent exceptional circumstances, no such findings should be made.' " (In re Zeth S. (2003) 31 Cal.4th 396, 405.)
We do not find such exceptional circumstances here. The new evidence presented by LLC for our consideration is not dispositive of the billboard's illegality. As discussed below, the illegality of the billboard is not a valid defense to the Hills's action to enforce the easement agreement.
Furthermore, while it appears the City may have reached the end of its administrative nuisance abatement proceedings against the Hills, it is still far from clear who will ultimately prevail since the Hills may still pursue judicial relief from the City's action. A final resolution could be months--perhaps years--away. Accordingly, we conclude that admitting the documents submitted by LLC and ...