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McDermott Ranch, LLC v. Connolly Ranch, Inc.

California Court of Appeals, Third District, San Joaquin

December 17, 2019

MCDERMOTT RANCH, LLC, Plaintiff and Appellant,
v.
CONNOLLY RANCH, INC., Defendant and Respondent.

         CERTIFIED FOR PARTIAL PUBLICATION [*]

          APPEAL from a judgment of the Superior Court of San Joaquin County, Nos. STK-CV-URP-2013-0009921 & 39-2013-00302451-CU-OR-STK Roger Ross, Judge. Affirmed.

          Mayol & Barringer, Bart Barringer; McCormick, Barstow, Sheppard, Wayte & Curruth LLP and Todd W. Baxter for Plaintiff and Appellant.

          Law Offices of Tony J. Tanke and Tony J. Tanke for Defendant and Respondent.

          KRAUSE, J.

         This case stems from a 1958 real estate transaction between the predecessors in interest to plaintiff McDermott Ranch, LLC (McDermott) and the predecessors in interest to defendant Connolly Ranch, Inc. (Connolly). The parties owned adjoining ranches in an area called Section 10 in rural San Joaquin County.[1] Under the 1958 transaction, McDermott's predecessors in interest received the entirety of Section 10, except for a carved out parcel in the western portion that went to Connolly's predecessors in interest (hereinafter referred to as the McDermott parcel and the Connolly parcel, respectively). The parties' lands were separated on the northern and eastern sides by Carnegie Ridge, with a fence marking the boundary.

         A dispute arose between the parties concerning the location of the southern and western borders of the Connolly parcel. According to Connolly, its parcel is approximately 165 acres with a border that ends at the Section 10 western and southern boundaries. McDermott, in contrast, argues the Connolly parcel is approximately 107 acres and only extends to a fence that runs along the western and southern portion of Section 10, plus a portion (the 24-acre Connolly defect) that connects the southeastern portion of the Connolly parcel to other land owned by Connolly in the adjacent Section 15. In September 2013, McDermott sued to quiet title to the disputed portions of Section 10 and to eject Connolly; Connolly cross-complained for the same relief.

         After a bench trial in July 2016, the trial court awarded Connolly the disputed 58 acres under the agreed boundary doctrine, in part based on testimony from Mark Connolly (Mark) regarding statements made by his father Robert Connolly (Robert) about the background and intent of the parties in doing the 1958 transaction. Robert had negotiated the deal on behalf of his mother Ann Connolly (Ann), who was a predecessor in interest to Connolly.

         On appeal, McDermott contends the trial court erred in admitting the testimony regarding Robert's hearsay statements under Evidence Code section 1323.[2] He further argues that the remaining evidence is insufficient to support the trial court's judgment because the deed and related documents reflect the parties' intent to grant Connolly the smaller parcel. Finally, McDermott asserts that the trial court abused its discretion in awarding attorney's fees after finding that McDermott had unjustifiably failed to admit certain requests for admission. We will affirm.

         FACTUAL AND PROCEDURAL BACKGROUND

         1. The 1958 transaction

         Prior to the 1958 transaction, McDermott's predecessors in interest owned approximately 75 percent of Section 10 (about 480 acres), while Connolly's predecessors in interest owned approximately 25 percent (about 160 acres). The parcel owned by Connolly's predecessors in interest was on Section 10's southern border, roughly in the middle of the southern half of the section. Connolly's predecessors in interest also owned Sections 9, 15, and 16, which bordered Section 10 to the west, south, and southwest.

         In 1958, the parties exchanged land within Section 10. Ann granted to Thomas McDermott “[t]he East one-half of the Southwest Quarter and the West one-half of the Southeast Quarter of Section 10, ” except for “any portion of the 107.27 acre parcel of land lying within the above described premises.” The grant deed provided a detailed description of the excepted 107.27 acres as “[b]eginning at a point on the West line of Section 10.” The description included portions “along the South line of Section 10 to the Southwest corner of Section 10, ” and then turned north “along the West line of Section 10 to the point of beginning, containing 107.27 acres, more or less.” Thomas executed a corresponding grant deed granting Ann the excluded parcel.

         The civil engineering firm R.W. Siegfried and Associates prepared a property description and a sketch of the Connolly parcel. The sketch (referred to as the Siegfried drawing) included markings for the fence lines on the southern and western borders of the Connolly parcel, noting “Fence on Section Line.” In an accompanying letter (referred to as the Siegfried letter), the firm representative described the parcel as the “portion of Section 10 lying southerly and westerly of Carnegie Ridge. The description follows our traverse line along Carnegie Ridge and along the fence lines on the south and west sides of the parcel. The above fence lines are assumed to be the south and west Section lines of Section 10 respectively.”

         2. The 1983 litigation, 2009 survey, and instant litigation

         In 1983, the Connollys filed suit against the McDermotts seeking to quiet title to an easement that passed through McDermott's portion of Section 10. The trial court in the 1983 action ultimately denied the Connollys' claim. Mark, who represented Connolly and Ann's estate in the 1983 litigation, testified at trial that there was no dispute about the 1958 transaction in 1983. Mark did not recall whether he had an interest in Connolly at the time of the 1983 litigation. There was a drawing prepared for the 1983 litigation stating that the Connolly parcel in Section 10 was 107 acres; Mark testified at trial that the diagram had nothing to do with the issues disputed in the current action.

         In 2009, the fence on the western side of Section 10 was damaged in a fire. McDermott hired Jon Lamb to survey the area so that the fence could be rebuilt on the section line. After Lamb discovered that the fence was not originally built on the section lines, he was hired to establish the boundaries of Section 10. Lamb was not aware of any survey of Section 10 prior to 2009. Lamb testified at trial that before his survey, the only other way to determine the boundaries of Section 10 would have been to refer to the United States Geological Survey (USGS) quad sheets. However, the USGS maps would not show the acreage.

         In 2013, McDermott filed suit to quiet title to the portions of Section 10 that it argued were deeded to it. McDermott also claimed ejectment and damages, declaratory relief, breach of implied contract and unjust enrichment, and trespass. Connolly cross-complained, seeking to quiet title to the disputed portions of Section 10 and for declaratory relief. Connolly also sought attorney's fees. In July 2015, the trial court granted Connolly's motion for summary judgment as to McDermott's claims of breach of implied contract/unjust enrichment and trespass.

         3. Trial testimony from Jon Lamb and Mark Connolly

         Lamb testified at trial that in his opinion the parties' intent in 1958 was to “grant the property to the south and west of Carnegie Ridge and bounded on the west by the west line of Section 10 and on the south by the south line of Section 10.” Lamb based his opinion on observing the site and noting that the “intent was to provide the ability to build a road down the top of the ridge and to separate the property to the south and west of that incorporated in with the Connolly Ranch.” Lamb noted that there was a road on the ridge that was very close to the ridge fence line and followed the jagged northern and western border shown in the Siegfried drawing. Lamb did not think the parties intended in 1958 to create a landlocked parcel or a gap between the Connolly parcel in Section 10 and the other adjacent lands owned by Connolly.

         With respect to the 24-acre Connolly defect running along part of the southern border of Section 10, Lamb testified that the boundaries were drawn based on the fence and the road running down Carnegie Ridge. However, the Connolly defect was not reflected in the legal description. In addition, the parties in 1958 did not intend to create a gap between the McDermott property in the southern portion of Section 10.

         Still, Lamb understood the 1958 transaction to grant only 107.27 acres to Connolly's predecessors in interest. Lamb testified that the property description and Siegfried drawing reflected that the Connolly parcel only included 107.27 acres and did not extend to the western or southern section boundary lines. In addition, the tax assessor's map of Section 10 states that the Connolly parcel is 107 acres. Lamb acknowledged that the tax assessor's map was not intended to be an actual survey reflecting the actual acreage owned in a particular section. Lamb testified that with respect to legal descriptions of real property, intent was the most important factor, then the words, and then the area.

         Lamb calculated that if the Connolly parcel were to include the disputed lands and run to the southern and western border, it would amount to 165 acres. Such a figure was “beyond what you would expect” as a “plus or minus” from the deed's description of the Connolly parcel as “containing 107.27 acres, more or less.” In sum, Lamb found nothing in the deed, Siegfried letter, or Siegfried drawing that led him to believe the parties intended to deed 165 acres to Connolly's predecessors in interest.

         Lamb testified that it was possible for the Connolly parcel to remain at 107 acres and still extend to the western and southern Section 10 borders, by “shov[ing]” it into the southwest corner of the section. Lamb acknowledged this would move the parcel border away from the existing fences, ridge, and road.

         Lamb further testified that the surveyor in 1958 would have realized that the southern and western fences were not on the USGS section boundaries. The southern fence/boundary line as shown in the Siegfried drawing was seven degrees from where it should have been if it were on the USGS boundary. This deviation was “very significant.” In addition, the western boundary line in the Siegfried drawing was about 657 feet short of the standard section boundary length, a “sizeable difference.”

         During trial, Mark testified that the description in the 1958 grant deed was “internally inconsistent” and “an impossibility.” Although the deed stated the Connolly parcel was within the USGS boundaries (and not the fence lines), the description “accurately located” the parcel on the fences running along the southern and western edges of the parcel. Mark further testified that the parties “would have known” in 1958 that the fences on the western and southern edges of the Connolly parcel did not run absolutely to the USGS boundaries because they were not straight. In Mark's opinion, the deed description reflected the surveyor's use of the fence lines as the best evidence of the USGS boundaries.

         Mark testified that if McDermott was given everything that was not within the Siegfried drawing and description, the Connolly parcel would be landlocked with narrow strips owned by McDermott extending all the way around. Such a result would “defeat[] the purpose of the 1958 exchange.”

         4. Mark Connolly's testimony at trial regarding Robert Connolly's statements

         Mark also testified that his father Robert worked on the family ranch from the end of World War II until his death in 1991. Robert negotiated the 1958 transaction on his mother Ann's behalf. Starting when Mark was approximately eight years old, he and Robert would often talk about the ranch and the 1958 transaction. Mark was one year old at the time of the 1958 transaction.

         Robert told Mark that there had “always [been] problems with the McDermotts.” The McDermotts poached, hunted, and grazed their animals without permission on Connolly lands. Both parties also used a road that ran along Carnegie Ridge to the southern border of Section 10; the road was partly on McDermott's lands and partly on Connolly's. In addition, the Connolly family was unable to use its land in Section 10 for grazing because there was no fence separating its land from McDermott land.

         Robert told Mark that by 1958 he had grown frustrated. The parties considered putting up a fence or having the McDermotts pay rent, but ultimately settled on a land swap. Robert said his “objective” was to “create a defensible position from this trespass and hunting problem that he was having.” The parties agreed the McDermotts would get the Connolly family's existing lands in Section 10 and Connolly's predecessors in interest would get “everything to the south and west” of a fence that would run along the top of Carnegie Ridge. There would be enough room on Carnegie Ridge for each party to build a road on its own side, thereby preventing roadway access to the other's property along Carnegie Ridge. Mark testified that after the transaction, “anybody who crossed the fence, other than in a fire or some kind of an emergency, was going to be arrested or turned around.” Mark currently used the road to access his home.

         Robert told Mark that the parties intended that the deal be “based on the fence lines.” Although the parties knew that the fence lines were not “exactly” on the USGS boundaries, they wished to avoid the expense of surveying the entire 160 acres of the proposed Connolly parcel. Instead, they chose to survey using the ridge and existing fence lines as “being close enough” for their purposes. Robert was unaware of any survey that was done before the exchange.

         According to Mark, Robert also said the parties intended to make the exchanges of acres “close to even, ” so as to avoid paying any funds. Robert never told Mark that any funds were paid. Robert also “never provided an acreage figure” with respect to the swap. Even though the deed did not refer to the fence lines, the coordinates in the description match the location of the fence.

         McDermott objected to Mark's testimony regarding Robert's statements as hearsay. McDermott argued Mark was not trustworthy. Connolly argued the testimony was admissible pursuant to sections 1323 and 1250. The trial court found the testimony admissible as an exception to the hearsay rule pursuant to section 1323. The trial court noted that Robert had personal knowledge of the 1958 transaction because he negotiated the exchange. Robert was deceased and therefore unavailable. In addition, there was “no credible evidence” that Robert's statements were untrustworthy. Robert's statements to Mark were made before the 1983 litigation, which “dealt with a different issue.” The trial court reasoned that even if the two had discussed the 1958 transaction again during the 1983 lawsuit, the issue of who owned the now disputed lands did not arise until 2009. Robert's statements were simply “his view as to why the exchange of the property was made, ” and they “coordinate well with the other testimony.”

         5. Judgment

         In October 2016, the trial court found against McDermott on its claims and in favor of Connolly on the claims in its cross-complaint. Relying on Lamb's testimony, the trial court held that the “mutual intent of the parties in 1958 was to give to [Connolly's predecessors in interest] all the property to the west and south of the existing fence lines” on the southern and western edges of the Connolly parcel. Lamb also testified that the parties in 1958 did not intend to create a gap between the McDermott property on the south side of Section 10 by granting Connolly the Connolly defect. In addition, the parties “ ‘assumed' ” the existing fence lines to be on the USGS boundaries. The Siegfried drawing also stated twice “ ‘Fence on Section Line,' ” indicating that the parties intended the Connolly parcel to “be at the intersection of Sections 9, 10, 15, and 16.”

         The trial court reasoned that Robert similarly told Mark that the parties' intent in 1958 was for the McDermotts to “give up everything to the south and west of the fence” along Carnegie Ridge. The effect of the deal was to give a “ ‘defensible position' ” to Connolly's predecessors in interest from any trespass or hunting, and exclusive access to a roadway. Mark also testified that he understood the 1958 transaction to have given Connolly's predecessors in interest the 107.27 acres as described on the map, plus the “50 plus acres” to the west and the south of the existing fence lines.

         In addition, reasoned the trial court, Connolly and its predecessors in interest have had, since 1958, “exclusive possession, occupancy and control of all property west and south of the fence line [along Carnegie Ridge] and have excluded [McDermott and its] predecessors in interest from said property.” Since the 1958 ...


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