BILL ANALYSIS �
AB 1927
Page 1
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
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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