Silicon Valley Business Neighbors Fight Over Easement

Disputes between neighbors can often get heated and become fraught with emotion. Although the most common neighbor disputes involve residential properties, a conflict between a medical device company and a law firm in Silicon Valley shows how adjacent commercial property owners can also become entangled in contentious quarrels.

Hoffman v. 162 North Wolfe LLC, (Sixth Appellate District Case Number H038643)(Opinion Filed July 15, 2014)

Jonathon Owens and Thomas Haverstock were two patent attorneys in Sunnyvale. Their law firm, Haverstock & Owens, was a tenant in the building they owned at 162 North Wolfe Road. On April 29, 2009, Steven Hoffman and Swee Lin Hoffman (the Hoffmans) entered into a contract to purchase the commercial building at 170 North Wolfe, which was next to the building owned by Owens and Haverstock through their company 162 LLC. The Hoffmans closed escrow on 170 North Wolfe on March 5, 2010.

Prior to escrow closing, BackProject, a medical exercise device manufacturing company owned by the Hoffmans, leased 170 North Wolfe. After BackProject became a tenant and moved into the premises, Steven Hoffman (Hoffman) noticed that employees of Haverstock & Owens were parking in the spaces in front of 170 Wolfe. Hoffman complained to Owens who indicated that the employees would not park in front of 170 Wolfe in the future. Hoffman continued to observe various vehicles, such as UPS, Federal Express, DHL and Costco trucks, using 170 Wolfe to service 162 Wolfe. Hoffman also saw that Haverstock & Owens’ employees would back out of their parking spaces into 170 Wolfe. Then in July 2009, Hoffman had another conversation with Owens in which Hoffman told Owens that he did not want Owens’ vehicles to cross the property line. Owens replied that he would “take care of it.” Owens believed that he held a prescriptive easement to drive through the Hoffmans’ land.

In California, a prescriptive easement is established by use of land that is:

1) open and notorious,
2) continuous and uninterrupted,
3) adverse to the true owner, and
4) is all of these things for a period of five years.

On May 18, 2010, Owens and Haverstock, through their company 162 LLC, sued the Hoffmans to quiet title to its prescriptive easement. The Hoffmans cross-complained alleging two fraud claims, concealment/suppression of facts and intentional misrepresentation, against Owens and Haverstock. The Hoffmans based their fraud claims on the second conversation Hoffman had with Owens.

Owens and Haverstock successfully moved for summary adjudication of the Hoffmans’ fraud claims and the parties settled their remaining claims with the Hoffmans reserving the right to challenge the summary adjudication order. The Hoffmans then appealed the adverse summary adjudication ruling.

The Court of Appeal for the Sixth Appellate District held that there was no error with respect to the summary adjudication of the Hoffmans’ fraud claims. The court reasoned that Owens and Haverstock had no duty to disclose their claim to the prescriptive easement and that the Hoffmans did not justifiably rely on the facts as they understood them without a disclosure.

An Expensive Way to Resolve a Dispute

It seems as if both parties chose the most expensive method of resolving their dispute. If the Hoffmans were so bothered by people associated with Owens and Haverstock using their property to park their cars, deliver packages and obtain other services, it begs the question why they did not simply construct a fence around their property to prevent unwanted vehicles from entering. The facts of the case indicate that Owens and Haverstock would have had a difficult time establishing their prescriptive easement claim because Owens and Haverstock did not complain when the area in dispute was partially obstructed by vehicles and pallets and Owens and Haverstock did not repair, maintain or pay taxes on the disputed area.

Hoffman is also a reminder that commercial property owners also need to vigilantly monitor and guard their properties rights. Neglecting to guard your property rights may lead to assertions of ownership by others.