BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1927
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          Date of Hearing:   April 10, 2012

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                  Mike Feuer, Chair
                     AB 1927 (Jones) - As Amended:  April 9, 2012

                                  PROPOSED CONSENT
           
          SUBJECT  :   Easements: Maintenance: Arbitration 

           KEY ISSUE  :  Should the owner of an easement be permitted to 
          apply to a smalls claim court to recover proportionate costs of 
          maintaining the easement from other owners?

           FISCAL EFFECT  :   As currently in print this bill is keyed 
          non-fiscal. 

                                      SYNOPSIS

          Sponsored by the Conference of California Bar Associations, this 
          bill would permit an easement owner who seeks reimbursement for 
          maintenance costs from easement co-owners to seek a judgment 
          from small claims court, if the amount in controversy is within 
          the jurisdiction of the small claims court.  Existing law states 
          that an easement owner "may" apply to "any court" of competent 
          jurisdiction for the appointment of an impartial arbitrator to 
          apportion the liability of each easement co-owner.  If any party 
          disputes the arbitrator's award, it may ask the court for a 
          judgment apportioning the liability of the co-owners.  The 
          statute as drafted appears to permit an owner to bring an action 
          in either a small claims court or a superior court, and the 
          permissive "may" arguably leaves open the possibility that a 
          party could seek a judgment directly from the court without 
          going through the arbitration process.  An appellate court, 
          however, concluded that despite the seemingly permissive 
          language, the only option available under existing law is to 
          apply to superior court for the appointment of an arbitrator.  
          According to the author, however, these cases often involve 
          modest demands that could easily be handled in small claims 
          court and without the higher costs and fees associated with 
          superior court and mandatory arbitration.  This bill would 
          authorize an easement owner to seek a judgment in small claims 
          court, assuming the amount of the demand is within the 
          jurisdictional amount of the small claims court.  It would 
          clarify, consistent with existing law, that where the 








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          application is not made to small claims court, it may be made to 
          superior court for the appointment of an impartial arbitrator to 
          apportion costs.  This change would only apply where the parties 
          have not made a prior agreement on how to apportion costs.  
          There is no known opposition to this bill. 

           SUMMARY  :  Authorizes the owner of a right-of-way easement to 
          seek a judgment from a small claims court determining 
          proportionate liability of each owner for maintenance costs, if 
          the amount of controversy is within the jurisdictional limits of 
          the small claims court.  If the application is not made in small 
          claims, then the owner may, consistent with existing law, seek 
          the appointment of an impartial arbitrator in superior court.  

           EXISTING LAW  : 

          1)Requires the owner of an easement in the nature of a private 
            right-of-way, or of land to which the easement is attached, to 
            maintain the easement in repair.  (Civil Code Section 845.)

          2)Provides that if an easement is owned by more than one person, 
            or is attached to parcels of land under different ownership, 
            the costs of maintaining the easement shall be shared by each 
            owner pursuant to the terms of any agreement entered into by 
            the owners.  Specifies that if any owner who is a party to the 
            agreement refuses to contribute to the costs, an action for 
            specific performance may be brought against that owner in a 
            court of competent jurisdiction by the other owners, either 
            jointly or severally.  (Civil Code Section 845 (b).)

          3)Authorizes, in the absence of an agreement, any owner of an 
            easement, or land to which the easement is attached, to apply 
            to any court where the right-of-way is located, and that has 
            jurisdiction over the amount in controversy, for the 
            appointment of an impartial arbitrator to apportion the costs. 
             (Civil Code Section 845 (c).)

          4)Specifies that the above provisions do not apply to 
            rights-of-way held or used by railroad common carriers subject 
            to the jurisdiction of the Public Utilities Commission.  
            (Civil Code Section 845 (e).) 

          5)Provides that small claims courts have jurisdiction for an 
            action brought by a natural person, if the amount of the 
            demand does not exceed $10,000.  (Code of Civil Procedure 








                                                                  AB 1927
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            Section 116.221.)

           COMMENTS  :  Existing law requires the owner of a right-of-way 
          easement, or in the land to which the easement attaches, to 
          maintain the easement.  Where the easement is owned by more than 
          one person, all owners are expected to contribute to the costs 
          of maintaining the easement.  Sometimes the distribution of 
          these costs is provided for by agreement between the owners, and 
          if one owner refuses to pay his or her share, the other owners 
          can bring an action for specific performance of the agreement.  
          Where there is no prior agreement, however, existing law makes a 
          presumption that the costs of maintenance shall be shared in 
          proportion to the use made by each owner.  In the latter case, 
          where there is no agreement, existing law authorizes an owner of 
          the easement to apply to a court of competent jurisdiction for 
          the appointment of an impartial arbitrator to apportion the 
          costs.  Although the language of existing law is permissive, 
          some courts have interpreted this to mean that the owner must 
          apply to superior court for the appointment of an arbitrator, 
          and therefore an owner is precluded from seeking a judgment 
          directly from a small claims court, even if the amount in 
          controversy is within the jurisdictional limit of the small 
          claims court.  Because the arbitrator's award is non-binding, 
          any owner who is unhappy with the award may ask the court to 
          enter a judgment determining the proportional liability of each 
          owner. 

          According to the author, however, in many cases these disputes 
          involve relatively small amounts that could be determined more 
          efficiently and cost effectively by a small claims court.  For 
          example, the author notes that a $500 dispute might require 
          owners to file in superior court (which is more expensive) and 
          then go through an arbitration process with a court-appointed 
          arbitrator.   If any owner disagrees with the arbitrator's 
          award, that owner can force the superior court to determine the 
          proportional liability of each owner.  The author believes that 
          in appropriate cases, it would make more sense for an owner or 
          owners to seek a judgment directly from the small claims court - 
          especially given that, even after going through the arbitration 
          process, the court may be required to determine the proportional 
          share of each owner anyway. 

          The intent of this bill is to give an owner the option of 
          seeking a judgment from small claims court where the amount in 
          controversy is within the jurisdiction of the small claims 








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          court, but where the amount in controversy is more than the 
          limits of the small claims court, this bill would preserve the 
          option of applying to superior court the appointment of an 
          impartial arbitrator to apportion the costs. 

           Existing case law and the scope of the problem:   On its face, 
          the language of the existing statute arguably already permits an 
          owner to apply to either a small claims court or a superior 
          court - that is, it states that an owner may apply to "any court 
          . . . that has jurisdiction over the amount in controversy."  
          (Civil Code Section 845.)  The reference to "any court" and the 
          "amount in controversy" would certainly suggest that the 
          drafters of this statute anticipated filings in small claims 
          court.  However, existing law also seems to require that any 
          application to a court could not be for a judgment, per se, but 
          only for the appointment of an impartial arbitrator.  Even 
          though the existing statute uses the word "may," the only remedy 
          authorized by Section 845 is for the appointment of an 
          arbitrator.  This interpretation is reinforced by case law.  For 
          example, the California Court of Appeal for the Sixth District 
          held that "section 845 requires that an arbitrator apportion 
          costs before the matter reaches court."  (Healy v. Onstott 
          (1987) 192 Cal. App. 3d 612 at 616. Emphasis added.)  In other 
          words, the court held, only if the arbitration award is not 
          accepted by all of the owners, may the court determine and enter 
          a judgment on the proportionate liability of the owners.  Yet, 
          this same court conceded just prior to making this holding that 
          the statute was not exactly "a model of clarity."  (Id. at 615.) 
           

          According to the sponsor, by reading the statute to require 
          appointment of an arbitrator - instead of seeking a judgment in 
          the first instance - the courts have also effectively required 
          that application be made in superior court, as opposed to small 
          claims court, because the latter generally do not appoint 
          arbitrators.  That is, existing law not only limits the 
          jurisdiction of the small claims court as to amount of 
          controversy, it also generally limits the remedies that it may 
          provide to awarding money judgments; for example, existing law 
          expressly prohibits small claims for providing equitable relief 
          unless expressly authorized by statute.  (Code of Civil 
          Procedure Section 116.220 et seq.)  Whether or not a small 
          claims court could appoint an arbitrator may be debatable, but 
          according to the sponsor, they generally do not do so, thereby 
          making the requirement to apply for the appointment of an 








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          arbitrator effectively a requirement to make the application in 
          superior court, even where the amount in controversy is within 
          the jurisdiction of the small claims court.  

          This bill would make it clear that, for amounts that are within 
          the jurisdiction of the small claims court, an owner may seek a 
          judgment (as opposed to the appointment of an arbitrator) from a 
          small claims court.  However, this bill does not require an 
          owner to file in small claims court.  Regardless of the amount 
          in controversy, if the owner elects not to file in small claims 
          court, he or she may still apply to superior court for the 
          appointment of an impartial arbitrator, and the case will only 
          go to trial for a judgment if a party rejects the arbitrator's 
          determination.  It should also be stressed that the change made 
          by this bill only applies where co-owners have not entered into 
          a prior agreement on apportionment of the costs.  Where there is 
          an agreement, the law will be unchanged: if an owner fails to 
          pay his or her share, then the other owners, jointly or 
          severally, may bring an action for specific performance in any 
          court of competent jurisdiction. 

           ARGUMENTS IN SUPPORT  :  According to the sponsor, the Conference 
          of California Bar Associations (CCBA), this bill will make it 
          much less expensive and time-consuming for the owner of an 
          easement to recover maintenance costs from all owners who are 
          liable for those costs.  The existing process requires the owner 
          to apply to superior court for the appointment of an arbitrator; 
          if one of the owners objects to the arbitrator's award, the 
          dispute will end up going to court anyway.  The costs of this 
          extended process, CCBA maintains, often exceeds the owner's 
          underlying demand.  For example, the sponsor writes:

             Filing in Superior Court requires a larger filing fee, and 
             brings into play full Superior Court rules on discovery.  
             The paying landowner must file a Petition asking the Court 
             to appoint at an arbitrator.  The arbitrator is appointed 
             and the arbitration held. If the defendant doesn't like 
             the decision of the arbitrator, the defendant can request 
             and the court must provide a full trial on the issue.  As 
             a result, a $500.00 dispute can easily end up in Superior 
             Court, go through non-binding arbitration, and then go 
             through a full court trial.  The cost to the paying 
             landowners is thousands of dollars in attorney fees and 
             costs, to collect from one or more recalcitrant landowners 
             . . . In these small amount cases, the Small Claims 








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             procedure is faster, costs far less, and gives the 
             defendants the opportunity to have their "day in court". . 
             . with a decision that is binding unless a losing 
             defendant elects to appeal to the Superior Court.  On the 
             other hand, if the amount in controversy is close to the 
             jurisdictional limits of the Small Claims Court, the 
             Petitioner may elect to file in Superior Court. This 
             flexible system, which AB 1927 will make possible, works 
             to the benefit of all concerned.

           REGISTERED SUPPORT / OPPOSITION  :   

          Support 
           
          Conference of California Bar Associations

           Opposition 
           
          None on file 
           

          Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334