Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-03758/USCOURTS-cand-3_05-cv-03758-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-(Citizenship)

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DARLING INTERNATIONAL, INC., et al.,

Plaintiff,

v.

BAYWOOD PARTNERS, INC., et al.,

Defendants.

___________________________________/

No. C-05-3758 EMC

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANT’S

MOTION TO DISMISS OR FOR A

MORE DEFINITE STATEMENT AND

REQUEST FOR JUDICIAL NOTICE

(Docket Nos. 11, 15)

I. INTRODUCTION

Plaintiff Darling International, Inc. (“Darling”) has filed suit against Defendants Baywood

Partners, Inc. (“Baywood”) and Regan Holding Corp. (“Regan”). Currently pending before the

Court is Baywood’s Rule 12(b)(6) motion to dismiss or Rule 12(e) motion for a more definite

statement. This matter came on for hearing on November 30, 2005. Having considered the parties’

briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby

GRANTS the motion to dismiss Darling’s First, Second, and Third Causes of Action. The Court

DENIES the motion to dismiss as to the Fourth, Fifth, Sixth and Seventh Causes of Action.

II. FACTUAL & PROCEDURAL BACKGROUND

Darling filed its complaint on September 16, 2005. Defendant Baywood filed the present

motion to dismiss or for more definitive statement on October 11, 2005. That same day, Defendant

Regan filed its answer to the complaint, and has not joined Baywood in the present motion. The

parties have consented to proceed before the undersigned pursuant to 28 U.S.C. sec. 636(c). 

In its complaint, Darling makes the following allegations.

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Darling has record title to certain property located in Sonoma County (“Darling property”). 

See Compl. ¶ 8. Baywood and Regan have record title to nearby property (“Baywood property” and

“Regan property”). See Compl. ¶¶ 9-10.

A. Quiet Title Allegations

1. Purchase Agreement

On April 30, 1990, Darling and Baywood entered into a Purchase and Sale Agreement

(“Purchase Agreement”) under which Darling agreed to sell its property to Baywood. See Compl. ¶¶

13-14 & Ex. 1 (Purchase Agreement).

Under the Agreement, Baywood immediately delivered into an escrow account a deposit of

$10,000. See Compl., Ex. 1 (Purchase Agreement ¶ 2.2, titled “Deposits”). Baywood’s obligation

to purchase, however, was expressly contingent upon and subject to its approval of the Darling

property, prior to July 6, 1990, after an inspection. See Compl., Ex. 1 (Purchase Agreement ¶ 3.1,

titled “Property Inspection”). Baywood would evidence its satisfaction with the property by

depositing a sum of $140,000 into the escrow account -- this sum being known as the Second

Deposit. See Compl., Ex. 1 (Purchase Agreement ¶ 3.1, titled “Property Inspection”). Baywood’s

failure to make the Second Deposit by July 6, 1990 would be deemed nonapproval of the property,

and “this transaction shall be cancelled.” See id. The next day, the escrow holder would return to

Baywood the initial deposit. See id.

Under the Agreement, the closing of the transaction between Darling and Baywood would

take place “thirty (30) calendar days after the date on which all conditions precedent to the Closing

described in Paragraph 6.3, below, may have occurred.” Compl., Ex. 1 (Purchase Agreement ¶ 6.1,

titled “Closing; Timing”). The conditions precedent listed in Paragraph 6.3 of the Agreement

included: (1) Baywood’s approval of the Darling property after inspection and (2) Darling’s

completion of certain remediation work or entry into a Guaranteed Contract for completion of the

remediation work. See Compl., Ex. 1 (Purchase Agreement ¶¶ 6.3.1 and 6.3.3).

Under the Agreement, Darling had certain remediation obligations to satisfy, namely, to

remove underground tanks situated on the Darling property and to remediate hazardous materials on

the Darling property. See Compl., Ex. 1 (Purchase Agreement ¶ 4.1, titled “Seller’s Remediation

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Obligation”). Darling had to satisfy these obligations prior to closing, or it could satisfy the

obligations after closing but only on certain conditions. See Compl., Ex. 1 (Purchase Agreement ¶

4.1, titled “Seller’s Remediation Obligation, and ¶ 4.6, titled “Status of Remediation Work at

Closing”). More specifically, if the remediation work was not done on or before the closing date,

then Darling would have to enter into a written contract with a contractor (called the “Guaranteed

Contract”) to perform the remediation work for a stipulated sum or a guaranteed-not-to-exceed price. 

See id. and ¶ 4.8 (titled “Completion of Remediation Work After Closing”).

Note, however, that, if the estimated cost of remediation would exceed $200,000 or could not

be calculated with reasonable certainty by July 29, 1990, then, within thirty days, Darling could elect

to postpone the remediation work by delivery of a written notice to Baywood. See Compl., Ex. 1

(Purchase Agreement ¶ 4.5, titled “Remediation Work”). Baywood would then have several

options:

(1) It could terminate the Purchase Agreement. See Compl., Ex. 1 (Purchase Agreement ¶

4.5.1).

(2) It could (but would not be required to) pay the remediation cost in excess of $200,000 and,

by written notice to Darling, demand that Darling perform forthwith all acts needed for the

close of escrow. See Compl., Ex. 1 (Purchase Agreement ¶ 4.5.2).

(3) It could do neither (1) nor (2), in which case Darling agreed that, “by a date no later than

fifty-nine (59) years from the date of execution of this Agreement, [it] shall either complete

the Remediation Work . . . or shall contract for the completion of the Remediation Work . . .

and shall complete the Remediation Work after the Close of Escrow. The Close of Escrow

shall occur within thirty (30) calendar days of the date [Darling] satisfies the condition

described in this Paragraph . . . , subject to the terms of Paragraph 6.3, below [regarding

Baywood’s conditions precedent to closing].” Compl., Ex. 1 (Purchase Agreement ¶ 4.5.3).

2. Memorandum of Agreement

The Purchase Agreement specified that it would not be recorded in the official records of

Sonoma County. See Compl., Ex. 1 (Purchase Agreement, titled “Recordation of Memorandum”). 

However, “a Memorandum hereof shall be recorded by either party at any time after the date of

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execution [of the Purchase Agreement] in the form and substance attached . . . as Exhibit “E” [to the

Purchase Agreement].” Compl., Ex. 1 (Purchase Agreement ¶ 18.14, titled “Recordation of

Memorandum”).

On May 31, 1990 -- i.e., about a month after execution of the Purchase Agreement -- Darling

and Baywood executed a Memorandum of Agreement. See Compl. ¶ 15 & Ex. 2. The

Memorandum of Agreement was recorded in the County Recorder’s Office of Sonoma County on

June 13, 1990. See Compl. ¶ 16. The Memorandum of Agreement provided, inter alia, that “[t]he

term of the [Purchase] Agreement commenced April 30, 1990 and shall extend for a maximum

period of time of fifty-nine (59) years thereafter. Escrow for the transfer of the Property shall close

at a time and in the manner described in the Agreement.” Compl., Ex. 2 (Memorandum of

Agreement).

3. Amendments to Purchase Agreement

After the Purchase Agreement was signed, the parties executed several amendments to the

Purchase Agreement. See Compl. ¶¶ 17-18. The Fourteenth Amendment was executed on February

1, 1997. See Compl. ¶ 17 & Ex. 3 (Fourteenth Amendment). It provided in part that, because a tank

report was taking longer to finalize than expected and

in order to afford Purchaser the opportunity to inspect the Subject

Property in the manner originally contemplated by the Agreement, and

to preserve otherwise the benefits to Seller of the Agreement, Seller

and Purchaser agree to extend further the time period for inspection of

the Subject Property, in the manner described in Paragraph 3.1 of the

Original Agreement as amended by the Amendments from February 1,

1997 to May 1, 1997. If Purchaser should approve of the Subject

Property, the date Purchaser must make the Second Deposit shall

similarly be extended from February 1, 1997 to May 1, 1997.

Compl., Ex. 3 (Fourteenth Amendment). 

On April 22, 1997, Baywood asked Darling to further extend the Purchase Agreement with a

Fifteenth Amendment. See Compl. ¶ 19 & Ex. 4 (letter enclosing proposed Fifteenth Amendment). 

Darling did not sign the proposed Fifteenth Amendment. See Compl. ¶ 20.

4. Subsequent Events

On May 1, 1997, Darling sent a letter to Baywood stating, that Darling had “received written

confirmation from the County of Sonoma Department of Health Services that no further

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environmental remedial action is needed.” Compl., Ex. 5 (letter). Darling added that it was “of the

opinion that Darling’s remediation obligations under the Agreement are now complete” and, “[s]ince

no further remediation is required, there does not appear to be any reason to continue to extend [the]

time periods under the Agreement.” Compl., Ex. 5 (letter). Darling stated, however, that it would

“agree to extend Baywood’s inspection period under Section 3.1 [of the Purchase Agreement] for a

reasonable period of time of up to 30 days as an accommodation to Baywood so that Baywood can

be certain that it desires to go forward with the acquisition.” Compl., Ex. 5 (letter). According to

Darling, “at the expiration of the inspection period, Baywood would be required to deposit the

second deposit of $150,000 and would be required to pay the balance of the purchase price and close

the transaction within 30 days thereafter.” Compl., Ex. 5 (letter).

Baywood did not deliver the Second Deposit by the date required by the Fourteenth

Amendment to the Purchase Agreement, i.e., by May 1, 1997. See Compl. ¶ 28. Instead, it made the

Second Deposit several years later on February 16, 2000. See Compl. ¶ 40(b). Also, Baywood did

not request closing of the Purchase Agreement within thirty days of the delivery of the Second

Deposit. See Compl. ¶ 27. 

B. Easement Allegations

According to the complaint, the Baywood and Regan properties are a former railroad right of

way. See Compl. ¶ 45. They transect a public roadway known as Casa Grande Road. See Compl. ¶

46. The portion of the Baywood and Regan properties that transects Casa Grande Road is referred to

as the Casa Grande Road Transect. See Compl. ¶ 46.

1. Public Dedication

People who seek ingress and egress to the Darling property must use Casa Grande Road and,

as a result, must and do cross the Casa Grande Road Transect. See Compl. ¶ 47. For at least five

consecutive years, the public has used the Casa Grande Road Transect to gain access to the Darling

property as well as to gain access to the Petaluma River and areas along the edge of the river. See

Compl. ¶ 48.

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2. Prescriptive Easement

Darling has used the Casa Grande Transect for ingress and egress to its property for more

than five consecutive years preceding a lease that Darling and Baywood executed for the Transect. 

See Compl. ¶ 52.

3. Common Ownership

The Darling, Baywood, and Regan properties were once under common ownership such that

there is an implied right of ingress and egress across the Baywood and Regan properties to the

Darling property. See Compl. ¶ 55.

III. DISCUSSION

A. Legal Standard

Baywood has filed a motion to dismiss Darling’s complaint for failure to state a claim

pursuant to Federal Rule of Civil Procedure 12(b)(6). Such a motion should be granted “only if ‘it

appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would

entitle him to relief,’ construing the complaint in the light most favorable to the plaintiff.” Edwards

v. Marin Park, Inc., 356 F.3d 1058, 1061 (9th Cir. 2004) (quoting Conley v. Gibson, 355 U.S. 41,

45-46 (1957)).

For a motion to dismiss, “[a] court may . . . consider certain materials -- documents attached

to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice

-- without converting the motion to dismiss into a motion for summary judgment.” United States v.

Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

In addition, “[a] district court ruling on a motion to dismiss may consider documents ‘whose

contents are alleged in a complaint and whose authenticity no party questions, but which are not

physically attached to the [plaintiff’s] pleading.’” Parrino v. FHP, Inc., 146 F.3d 699, 705 (9th

Cir.), cert. denied, 525 U.S. 1001 (1998).

Finally, “if a plaintiff’s claims are predicated upon a document, the defendant may attach the

document to his Rule 12(b)(6) motion, even if the plaintiff’s complaint does not explicitly refer to it”

-- so long as “the authenticity of [the document] is not contested, and [is one] upon which the

plaintiff’s complaint necessarily relies.” Id. at 706. “[T]he policy concern underlying the rule [is to]

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[p]revent[] plaintiffs from surviving a Rule 12(b)(6) motion by deliberately omitting references to

documents upon which their claims are based.” Id.

Baywood asserts that the Court should consider the documents attached to the Pahland

declaration pursuant to the Ninth Circuit’s holding in Parrino. Baywood also asserts that the Court

should take judicial notice of certain other documents. Darling challenges both of Baywood’s

assertions. However, the basis of Darling’s challenge does not have to do with the authenticity of

any document.

1. Pahland Declaration

The documents attached to the Pahland declaration are letters exchanged between Darling

and Baywood. The Court declines consideration of these documents because the contents of such

documents are not alleged in Darling’s complaint. See Parrino, 146 F.3d at 705 (“A district court

ruling on a motion to dismiss may consider documents ‘whose contents are alleged in a complaint

and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s]

pleading.’”). The closest case is Exhibit A, which is a letter dated February 16, 2000 from Baywood

to Darling, informing Darling, inter alia, that the Second Deposit of $140,000 was made. In its

complaint, Darling alleges that Baywood funded the Second Deposit on February 16, 2000. But this

single allegation does not allege the entire content of the letter in the complaint. The letter discusses

matters beyond the Second Deposit.

Furthermore, the Court will not consider any of the documents attached to the December 16,

2005 Pahland declaration because Darling’s complaint does not necessarily rely on any of the

documents. See id. at 706 (stating that, “if a plaintiff’s claims are predicated upon a document, the

defendant may attach the document to his Rule 12(b)(6) motion, even if the plaintiff’s complaint

does not explicitly refer to it” -- so long as “the authenticity of [the document] is not contested, and

[is one] upon which the plaintiff’s complaint necessarily relies”).

2. Baywood’s Request for Judicial Notice

Baywood asks the Court to take judicial notice of documents recorded in the official records

of Sonoma County -- namely, grant deeds, leases, and easement agreements. See Req. for Judicial

Notice in Support of Baywood’s Mot. to Dismiss. Such documents have been judicially noticed in

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other cases. See, e.g., Western Federal Sav. & Loan Ass’n v. Heflin Corp., 797 F. Supp. 790, 792

(N.D. Cal. 1992) (taking judicial notice of “certain documents contained in the public records of the

Santa Clara County Recorder including the five Deeds of Trust issued by T.D. Service Company to

Western Federal and the Declaration of Covenants, Conditions, and Restriction of the Cedar Terrace

Condominiums”).

Darling argues that judicial notice is not appropriate in the instant case. 

While courts may take judicial notice of the general meaning

of words, phrases, and legal expressions, documents are judicially

noticeable only for the purpose of determining what statements are

contained therein, not to prove the truth of the contents or any party’s

assertion of what those contents mean.

Judicial notice may be taken of the existence and authenticity

of certain public and quasi public documents, but ‘[t]o the extent their

contents are in dispute, such matters of controversy are not appropriate

subjects for judicial notice.’”

Opp’n at 14:23-15:1 (quoting United States v. Southern Cal. Edison Co., 300 F. Supp. 2d 964, 975

(E.D. Cal. 2004)).

However, Darling does not make clear the extent to which it disputes the contents of the

grant deeds, leases, and easement agreements. The Court hereby GRANTS the request for judicial

notice with respect to the existence and authenticity of the public documents except that “[t]o the

extent their contents are in dispute, such matters of controversy are not appropriate subjects for

judicial notice.” Del Puerto Water Dist. v. United States Bureau of Reclamation, 271 F. Supp. 2d

1224, 1234 (E.D. Cal. 2003); see also Cal. ex rel. RoNo, LLC v. Altus Fin. S.A., 344 F.3d 920, 931

n.8 (9th Cir. 2003) (“All requests for judicial notice are GRANTED to the extent that they are

compatible with Federal Rule of Evidence 201 and do not require the acceptance of facts ‘subject to

reasonable dispute.’”).

3. Locey Declaration

Baywood also suggests that the Court should consider the declaration of John Locey, a civil

engineer, because the information provided in the declaration (essentially, a map) is based on the

public records above. However, although the public records may be judicially noticed, that does not

make the declaration judicially noticeable as well. Federal Rule of Evidence 201 limits judicial

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notice to facts “(1) generally known within the territorial jurisdiction of the trial court or (2) capable

of accurate and ready determination by resort to sources whose accuracy cannot reasonably be

questioned.” Fed. R. Evid. 201.

The Court takes judicial notice of Exhibit 1 to the Declaration of John Locey for the limited

purpose of illustration in evaluating Baywood’s Motion to Dismiss Complaint or For a More

Definite Statement.

4. Conversion to Motion for Summary Judgment

Finally, Baywood asserts that, even if the Court does not consider the documents provided

with respect to the motion to dismiss, the Court could consider them by treating the motion to

dismiss as one for summary judgment. See Mot. at 3 n.1. 

The Wright & Miller treatise notes that a court has discretion in deciding whether to consider

documents outside the pleadings, thereby converting a motion to dismiss into a motion for summary

judgment. See Wright & Miller, Fed. Prac. & Proc. § 1366. 

This discretion generally will be exercised on the basis of the district

court’s determination of whether or not the proffered material, and the

resulting conversion from the Rule 12(b)(6) to the Rule 56 procedure,

is likely to facilitate the disposition of the action. When the

extra-pleading material is comprehensive and will enable a rational

determination of a summary judgment motion in accordance with the

standard set forth in Rule 56, the district court is likely to accept it;

when it is scanty, incomplete, or inconclusive, the district court

probably will reject it.

Similarly, the district court’s attitude toward whether a full trial

on the merits is necessary or whether discovery prior to the utilization

of the summary judgment procedure would be desirable will have a

great bearing on its willingness to employ the conversion technique. 

Id.

The Moore’s treatise also explains when conversion may be appropriate.

Because of the required early timing of a Rule 12(b)(6) motion,

the option of converting it to a Rule 56 summary judgment motion

tends to have limited utility. Whenever discovery may be needed to

determine whether the matters advanced by the movant outside of the

pleadings may present genuine issues of material fact (thus precluding

summary judgment), Rule 56(f) comes into play. That in turn will

likely lead to delays, and often the need for considerable fleshing out

of the facts of the case, contrary to the notion of the threshold

presentation and disposition of motions to dismiss.

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Courts tend to use the conversion option only in situations in

which the materials extrinsic to the pleadings are incontrovertible and

pose discrete and dispositive issues. Examples of such extrinsic

material include a government handbook establishing the absence of

an employment contract as a matter of law, plaintiff’s depositions

establishing a limitations bar, and a stipulation, incorporated into a

court order in previous litigation, that operated to bar the instant

action.

2-12 Moore’s Fed. Prac. -- Civ. § 12.34[3][a].

In the instant case, the Court finds conversion inappropriate because the extrinsic material is

neither comprehensive, incontrovertible, nor dispositive.

B. Quiet Title Claims

In its complaint, Darling asserts several claims related to its request for an order quieting title

to the Darling property. Those claims are as follows: (1) quiet title pursuant to California Civil Code

§ 886.020; (2) quiet title pursuant to California Civil Code §§ 884.010-20; (3) quiet title pursuant to

California Civil Code § 2911; and (4) declaratory relief (i.e., that Baywood has no interest in the

Darling property).

1. Quiet Title Pursuant to California Civil Code § 886.020

In its first cause of action, Darling claims that it is entitled to an order quieting title to the

Darling property pursuant to California Civil Code § 886.020. This statute provides as follows:

If the party to whom title to real property is to be conveyed pursuant to

a recorded contract for the sale of real property fails to satisfy the

specified conditions set forth in the contract and does not seek

performance of the contract or restitution of amounts paid under the

contract, the party shall, upon demand therefor made after the

operative date of this chapter, execute a release of the contract, duly

acknowledged for record, to the party who agreed to convey title.

Willful violation of this section by the party to whom title is to be

conveyed without good cause makes the party liable for the damages

the party who agreed to convey title sustains by reason of the

violation, including but not limited to court costs and reasonable

attorney’s fees in an action to clear title to the real property. Nothing

in this section makes a release or a demand therefor a condition

precedent to an action to clear title to the real property.

Cal. Civ. Code § 886.020. According to Darling, Baywood failed to satisfy the specified conditions

set forth in the Purchase Agreement by, e.g., failing to timely fund the Second Deposit. See Compl.

¶ 28 (“Because the Second Deposit was not delivered by the date required in the Fourteenth

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Amendment, the Purchase Agreement automatically terminated and Baywood has no rights to

purchase the Darling property.”). In addition, “Baywood did not request closing of the Purchase

Agreement within thirty (30) days of the delivery of the Second Deposit.” Compl. ¶ 27.

In its motion to dismiss, Baywood argues that Darling has failed to state a claim for relief

under § 886.020 because the statute applies only to a contract which requires conveyance of title to

the property within one year from the date of formation of the contract. Cal. Civ. Code § 886.010(a)

provides that, as used in this chapter covering unperformed contracts for the sale of real property,

“‘[c]ontract for sale of real property’ means an agreement wherein one party agrees to convey title to

real property to another party upon the satisfaction of specified conditions set forth in the contract

and which requires conveyance of title within one year from the date of formation of the contract.”

According to Baywood, the Purchase Agreement does not require conveyance of title within

one year from the date of formation (i.e., by April 30, 1991). Baywood points out that, under the

Agreement, if the cost of remediation were to exceed $200,000, then Darling could postpone the

remediation work, at which point, if Baywood did not then decide to terminate the Agreement or pay

the amount in excess of remediation, Darling would then have fifty-nine years to complete the

remediation work or enter into a Guaranteed Contract for the completion of the remediation work. 

See Compl., Ex. 1 (Purchase Agreement ¶ 4.5). Escrow would then close within thirty days of

Darling satisfying this condition of completing the work or contracting for its completion. See

Compl., Ex. 1 (Purchase Agreement ¶ 4.5.3). Thus, the conveyance of the Darling property might

not take place for as long as fifty-nine years. See also Compl., Ex. 2 (Memorandum of Agreement)

(providing, inter alia, that “[t]he term of the [Purchase] Agreement commenced April 30, 1990 and

shall extend for a maximum period of time of fifty-nine (59) years thereafter”).

In response, Darling argues that the Purchase Agreement is not, as asserted by Baywood, “a

59-year agreement.” Opp’n at 4. According to Darling, “[t]he 59-year period upon which Baywood

relies does not refer to the conveyance of title (as per section 886.010), but to the completion of, or

the contracting for the completion of, the ‘Remediation Work,’ which the Purchase Agreement

provides may occur after the ‘Close of Escrow.’” Id.

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 Baywood actually cites § 896.070 instead of § 886.020. However, there is no § 896.070 under

the California Civil Code. Presumably, this was a typographical error on the part of Baywood.

2

 Baywood argues that “Darling’s contention that the Purchase Agreement ‘automatically

terminated’ cannot be supported as a matter of law.” Mot. at 9. This argument is meritless because

there is a basis for Darling’s contention that the Agreement automatically terminated when Baywood

did not tender the Second Deposit within the time specified by the Fourteenth Amendment. According

to Baywood, it could not tender the Second Deposit by that time because Darling had not, e.g., provided

documents needed for Baywood to complete the inspection of the property. However, in its complaint,

Darling alleges that it “completed all of its obligations under the Purchase Agreement, or such have been

waived.” Compl. ¶ 30. For purposes of the motion to dismiss, the Court must accept this allegation as

true.

12

Darling’s argument is not persuasive. Under Paragraph 4.5.3 of the Purchase Agreement,

escrow would not close -- and therefore title would not be conveyed -- until thirty days after Darling

either completed the remediation work or entered into a Guaranteed Contract for the completion of

the remediation work, and Darling had fifty-nine years to do either. While it could take less than

one year for title to be conveyed, it could take longer. Section 886.010(a) requires that the contract

be conveyed within one year from the date of formation of the contract. It does not apply to the

Purchase Agreement as a matter of law.

Furthermore, Baywood contends that Section 886.020 is inapplicable where, as here, the

buyer seeks to perform. See Mot. Dismiss at 9 n.3.1

 Section 886.020 provides: “If the party to

whom title to real property is to be conveyed pursuant to a recorded contract for the sale of real

property fails to satisfy the specified conditions set forth in the contract and does not seek

performance of the contract or restitution of amounts paid under the contract, the party shall, upon

demand therefor made after the operative date of this chapter, execute a release of the contract . . . .” 

Cal. Civ. Code § 886.020 (emphasis added.). In the instant case, Baywood apparently does seek

performance of the contract, having requested close of escrow and tendered the balance of the

purchase price into escrow in 2005. See Compl. ¶ 40(b). Based on the statutory language, Section

886.020 is inapplicable to Darling’s claim herein.2

The Court hereby GRANTS Baywood’s motion to dismiss the First Claim for Relief under 

§ 886.020 of the California Civil Code for the reasons stated above. It is dismissed with prejudice.

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2. Quiet Title Pursuant to California Civil Code §§ 884.010-.020

In its second cause of action, Darling claims that, as an alternative, if the Purchase

Agreement may be viewed as an option, then Darling is entitled to an order quieting title to the

Darling property pursuant to California Civil Code §§ 884.010-.020. See Opp’n at 6 (“Darling’s

Second Claim for Relief is in the alternative, and is that the purchase agreement is nothing but an

option agreement which has expired.”). Section 884.010 provides as follows:

If a recorded instrument creates or gives constructive notice of an

option to purchase real property, the option expires of record if no

conveyance, contract, or other instrument that gives notice of exercise

or extends the option is recorded within the following times:

(a) Six months after the option expires according to its terms.

(b) If the option provides no expiration date, six months after the

date the instrument that creates or gives constructive notice of

the option is recorded.

Cal. Civ. Code § 884.010. And § 884.020 provides that, 

[u]pon the expiration of record of an option to purchase real property,

the recorded instrument that creates or gives constructive notice of the

option ceases to be notice to any person or to put any person on

inquiry with respect to the exercise or existence of the option or of any

contract, conveyance, or other writing that may have been executed

pursuant to the option.

Id. § 884.020.

In its motion to dismiss, Baywood argues that the Purchase Agreement in this case cannot as

a matter of law be an option agreement because “[a]n option agreement is a unilateral contract where

an optionor agrees to keep an offer to purchase open for a specified period of time in return for the

optionee’s payment of option consideration” and the Purchase Agreement here is a bilateral

agreement, requiring “a mutuality of performance.” Mot. at 10-11.

Baywood is correct that an option agreement is a unilateral contract and not a bilateral one. 

See 1 Miller & Starr, Cal. Real Estate (3d ed. 2000) § 2:7, p. 19 (“The option agreement is a

unilateral contract whereby, for consideration, the optionor promises not to revoke the offer in

exchange for the act of the offeree of payment of the option consideration.”). Indeed, in discussing

the difference between a purchase agreement and an option agreement, state courts have explained

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that “[a]n option is not an agreement to convey. . . . The distinction between a contract to purchase

or sell real estate and an option to purchase is, that the contract to purchase or sell creates a mutual

obligation on the one party to sell and on the other to purchase, while an option merely gives the

right to purchase within a limited time without imposing any obligation to purchase.” Schmidt v.

Beckelman, 187 Cal. App. 2d 462, 469-70 (1960) (internal quotation marks omitted); see also Allen

v. Smith, 94 Cal. App. 4th 1270, 1279 (2002) (“An option contract relating to the sale of land is . . .

not a sale of the property but is a sale of the right to purchase.”) (internal quotation marks omitted). 

“A legitimate option ordinarily consists of an agreement to grant an irrevocable right to purchase for

independent consideration, and a separate purchase and sale agreement attached as an exhibit

thereto.” Id. at 1280. However, ultimately, “[w]hether an instrument is an option or a sales contract

is to be determined, not by its title or form but by the obligations imposed as evidenced by the terms

of the instrument and the surrounding circumstances.” Scarbery v. Bill Patch Land & Water Co.,

184 Cal. App. 2d 87, 100 (1960) (emphasis added).

Darling argues that the Purchase Agreement in this case could be an option agreement

because, at this early stage in the proceedings, any ambiguities in the contract should be resolved in

its favor as the plaintiff and because the Memorandum of Agreement specifically states that,

“[u]nder certain circumstances, the Agreement may be converted into an option agreement.” 

Compl., Ex. 2. In response, Baywood contends that the Purchase Agreement here is “not uncertain

or ambiguous” so that “[t]he Court can and should determine that the Purchase Agreement is a

bilateral sales agreement from the text alone.” Reply at 6. Baywood also asserts that the

Memorandum of Agreement’s use of the word “‘option’ is not dispositive,” especially when the

Purchase Agreement itself did not contain the term. Id.

To the extent there is a distinction between an option and a purchase agreement, as

recognized by the authorities cited above, and apparent in the statutory scheme which addresses

separately agreements to convey property under § 886.10 et seq. and options under §§ 884.010 et

seq., the purchase agreement in this case has all the characterizations and incidents of a purchase

agreement. It is so denominated. Compl., Ex. 1 (“Agreement of Purchase and Sale”). It imposes

bilateral obligations. The body of the agreement itself makes no reference to any option. The fact

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that the purchase agreement contains an inspection contingency, a condition common to purchase

agreements for real property, does not covert a purchase agreement into an option lest the distinction

between the two be eviscerated.

Darling relies on Exhibit E to the Purchase Agreement (a Memorandum of Agreement to be

recorded) which refers to the possibility of converting into an option agreement. The Purchase

Agreement states that “a Memorandum hereof shall be recorded by either party at any time after the

date of execution [of the Purchase Agreement] in the form and substance attached . . . as Exhibit “E”

[to the Purchase Agreement].” Compl., Ex. 1 (Purchase Agreement ¶ 18.14, titled “Recordation of

Memorandum”). Exhibit E provides that, “[u]nder certain circumstances, the Agreement may be

converted into an option agreement.” Compl., Ex. 1 (Purchase Agreement, Ex. E). If anything, this

language suggests that as an initial matter, the Purchase Agreement is not an option -- it has to be

“converted” into an option agreement. Moreover, neither the Memorandum nor the Purchase

Agreement specifies the circumstances under which the Purchase Agreement would be converted

into an option agreement. Nor do they state the terms of such an option, such as when it must be

exercised. No independent consideration was paid for any such option. Finally, the Memorandum is

only an exhibit to the Purchase Agreement designed to provide the form by which notice would be

given to the world of the Agreement. Given the complete absence of anything in the Purchase

Agreement itself that creates an option, nothing suggests the Memorandum was intended to create

any new or different substantive rights not provided for in the Agreement itself.

For these reasons, the Purchase Agreement is not, as a matter of law, an option agreement

within the meaning of California Civil Code §§ 884.010-.020. Plaintiff fails to state a claim

thereunder. Baywood’s motion to dismiss the Second Claim for Relief is GRANTED with

prejudice.

3. Quiet Title Pursuant to California Civil Code § 2911

In its third cause of action, Darling seeks to quiet title by claiming that both the Purchase

Agreement and the Memorandum of Agreement are null and void. Compl. ¶ 38. Darling alleges

that (1) Baywood is barred by the statute of limitations provided in California Code of Civil

Procedure § 337 from enforcing the terms of the Purchase Agreement; and (2) “[b]ecause Baywood

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3

 Baywood’s motion to dismiss on this claim does not address that part of the third claim

contending the Purchase Agreement itself is null and void because of the statute of limitations.

4 See Compl., Ex. 2 (Memorandum of Agreement) (“The parties hereto wish to reflect in the

Official Records of the County of Sonoma, official notice of the [Purchase] Agreement.”).

16

cannot enforce the Purchase Agreement, Section 2911 of the California Civil Code provides that

Baywood’s recorded lien interest in the Darling Property [i.e., the Memorandum of Agreement]

cannot be enforced.” Compl. ¶ 37.

Section 337 provides for a four-year statute of limitations for “[a]n action upon any contract,

obligation or liability founded upon an instrument in writing.” Cal. Code Civ. Proc. § 337. Section

2911 provides that “[a] lien is extinguished by the lapse of time within which, under the provisions

of the Code of Civil Procedure, . . . [a]n action can be brought upon the principal obligation.” Cal.

Civ. Code § 2911(1).

In its motion to dismiss, Baywood argues that this claim for relief as against the

Memorandum of Agreement must fail because the Memorandum of Agreement does not constitute a

“lien” under § 2911.3

 A lien is defined as “a charge imposed in some mode other than by a transfer

in trust upon specific property by which it is made security for the performance of an act,” id. §

2872. The “generally accepted meaning” of the word “security” is “the giving of assurance by

means of mortgage, pledge, or other lien that the obligation will be performed.” McClintock v.

Bathurst, 23 Cal. App. 2d 647, 647 (1937). A lien “is typically ‘but an incident of the debt secured’

and ‘presupposes the existence of a debt.’” Parnell v. Adventist Health System/West, 35 Cal. 4th

595, 602 (2005) (citations omitted). See Black’s Law Dictionary (8th ed. 1994), p. 941 (defining

lien as a “legal right or interest that a creditor has in another’s property, lasting usu. until a debt or

duty that it secures is satisfied).

According to Baywood, “[t]he Memorandum of Agreement is not a security. The purpose of

the Memorandum of Agreement is only to put the world on record notice of the Purchase

Agreement.[4

] [It] in and of itself does nothing to ensure performance. If the Purchase Agreement is

breached, it cannot be foreclosed upon through action based on the Memorandum. Accordingly, it

has none of the characteristics of a lien.” Mot. at 12; see also Reply at 7 (“The fundamental

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characteristic of a security is that a party receives a property right if the secured act is not

performed.”) (emphasis added).

In response, Darling contends that the Memorandum of Agreement is a security because, by

its presence, it “forces performance and prohibits transfer.” Opp’n at 8. Darling argues that a

“security interest” is not an independent thing, but arises from “an underlying obligation,” citing

Parnell.

Under Darling’s reasoning, however, any contract could constitute a lien vis-a-vis any third

party with notice of it. In Parnell, the California Supreme Court did not suggest that any contractual

obligation gives rise to a lien. Rather, it merely held that under the Hospital Lien Act, a lien requires

the existence of an underlying debt owed by the patient to the hospital. Id. at 609. The lien under

the Act was typical inasmuch as it constituted security for a debt. 

The Court finds Baywood’s agreement persuasive. The recorded Memorandum of

Agreement itself cannot be foreclosed upon to enforce any obligation. It is not security for an

existing debt. When the Memorandum was recorded there was no debt. It only serves to give notice

to the public of the Purchase Agreement.

In this regard, the Memorandum of Agreement is similar to a lis pendens, which is “recorded

by someone asserting a real property claim, to give notice that a lawsuit has been filed which may, if

that person prevails, affect title to or possession of the real property described in the notice. ([Cal.

Code Civ. Proc.] §§ 405.2, 405.4, 405.20.)” Federal Deposit Insurance Corp. v. Charlton, 17 Cal.

App. 4th 1066, 1069 (Cal. App. 2 Dist., 1993). This recorded notice does not, however, create a

security interest or a lien. California courts have held that “[a] transfer of the property after a lis

pendens is recorded binds the transferee to a judgment subsequently rendered in the pending action

but it does not make the party who recorded the lis pendens a secured creditor.” Id. at 1069 (citing

Urez Corp. v. Superior Court, 190 Cal. App. 3d 1141, 1144 (Cal. App. 2 Dist., 1987) and Wardley

Development Inc. v. Superior Court, 213 Cal. App. 3d 391, 399 (1989)).

Where the parties intended the creation of a security interest or lien, the Purchase Agreement 

so provided. The Agreement provides: “At the closing, Seller shall grant Purchaser a security

interest in the Holdback [portion of the purchase price] and shall execute a security agreement in the

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form attached hereto as Exhibit “C” and a UCC-1 Financing Statement in the form required by

Purchaser and its counsel.” Compl., Ex. 1 (Purchase Agreement ¶ 6.6, titled “Holdback”). Whereas

Exhibit C to the Purchase Agreement (titled “Security Agreement”) evidences the parties’ intent to

create an enforceable security interest in the holdback amount held in escrow (but not a lien on the

Darling property), Exhibit E merely served to put third parties on notice of the Purchase Agreement.

The Memorandum of Agreement does not, as a matter of law, constitute a lien. Darling thus

fails to state a claim under Section 2911 of the California Civil Code. Baywood’s motion to dismiss

the Third Claim for Relief is GRANTED with prejudice as to Darling’s quiet title claim seeking to

nullify the Memorandum of Agreement pursuant to Section 2911 of the California Civil Code. 

Baywood’s motion to dismiss the Third Claim for Relief does not, however, address Darling’s claim

to quiet title as to the Purchase Agreement. That claim remains.

4. Declaratory Relief

In its fourth cause of action, Darling asks for declaratory relief to establish that Baywood has

no interest in the Darling property. Darling claims that Baywood has no interest in the property

because it failed to timely fund the Second Deposit and because it failed to immediately request the

close of escrow after funding the Second Deposit. See Compl. ¶ 40.

In its motion to dismiss, Baywood argues that the claim for declaratory relief “impliedly

asserts that any suit by Baywood should have been filed four years following the February 16, 2000

Second Deposit and is therefore prospectively barred,” and that a “statute of limitations may not be

used offensively and is only available as a defense to another’s suit.” Mot. at 13.

In response, Darling asserts that the claim for declaratory relief has nothing to do a statuteof-limitations theory and that the statute of limitations was implicated only in the third cause of

action. According to Darling, “[t]he crux of the Fourth Claim is that, under the terms of the

Purchase Agreement, the Purchase Agreement has cancelled by its own terms and Baywood has no

interest in the Darling Property.” Opp’n at 8 (emphasis added).

Darling is correct. Its allegation that the Purchase Agreement was cancelled by virtue of the

failure to fund the Second Deposit within the time frame provided by the Fourteenth Amendment is

not based on the statute of limitations. See Compl., Ex. 1 (Purchase Agreement ¶ 3.1, titled

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“Property Inspection”) (providing that Baywood’s failure to make the Second Deposit by July 6,

1990 would be deemed nonapproval of the property, and “this transaction shall be cancelled”);

Compl., Ex. 3 (Fourteenth Amendment) (extending time to make Second Deposit to May 1, 1997). 

It is based on Baywood’s failure to perform according to the contract.

Similarly, Darling’s contention that the Purchase Agreement was cancelled because

Baywood did not immediately request the close of escrow after funding the Second Deposit is not

dependent upon the statute of limitations. Under the Agreement, the closing of the transaction

between Darling and Baywood would take place “thirty (30) calendar days after the date on which

all conditions precedent to the Closing described in Paragraph 6.3, below, may have occurred.” 

Compl., Ex. 1 (Purchase Agreement ¶ 6.1, titled “Closing; Timing”). The conditions precedent

listed in Paragraph 6.3 of the Agreement included Baywood’s approval of the Darling property after

inspection, see Compl., Ex. 1 (Purchase Agreement ¶¶ 6.3.1), which would be evidenced by its

funding of the Second Deposit. See Compl., Ex. 1 (Purchase Agreement ¶ 3.1, titled “Property

Inspection”). Again, the claim is based on Baywood’s failure to perform according to the contract.

Baywood’s motion to dismiss the Fourth Claim for Relief is DENIED.

C. Easement Claims

Plaintiff Darling International, Inc. has filed three easement-related claims against Defendant

Baywood Partners, Inc., in its fifth, sixth, and seventh causes of action, respectively seeking quiet

title for an implied public dedication, quiet title for prescriptive easement, and declaratory relief for

an implied easement. Baywood moves to dismiss these claims based upon Darling’s failure to state

a claim upon which relief may be granted.

1. Public Dedication

In its fifth cause of action, Darling asserts that “Darling, as well as the public, is entitled to a

declaration of quiet title in favor of the public that the Casa Grande Road Transect is dedicated to

public use for ingress and egress, and for utility access, to properties along the Petaluma River,

including the Darling Property.” Compl. ¶ 50. “Dedication has been defined as an appropriation of

land for some public use, made by the fee owner, and accepted by the public.” Friends of the Trails

v. Blasius, 78 Cal. App. 4th 810, 820 (2000). “A dedication is implied by law when the public use is

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this one, where a governmental entity maintained and improved the property at issue. See Compl. ¶ 49

& Cal. Civ. Code § 1009(d).

20

adverse and exceeds the period for prescription,” which is five years in an implied dedication claim. 

Friends, 78 Cal. App. 4th at 821 (emphasis in original). Regarding adversity,

[w]hat must be shown is that persons used the property believing the

public had a right to such use. This public use may not be ‘adverse’ to

the interests of the owner in the sense that the word is used in adverse

possession cases. If a trial court finds that the public has used land

without objection or interference for more than five years, it need not

make a separate finding of ‘adversity’ to support a decision of implied

dedication. . . . For a fee owner to negate a finding of intent to dedicate

based on uninterrupted public use for more than five years, therefore, he

must either affirmatively prove that he has granted the public a license to

use his property or demonstrate that he has made a bona fide attempt to

prevent public use.

Id. at 821-22 (citing Gion v. City of Santa Cruz, 2 Cal. 3d 29, 39-41 (1970), partially superseded by

California Civil Code section 10095

).

Baywood argues that the implied public dedication claim should be dismissed because it has

granted express, permissive uses of the Casa Grande Road Transect, including (1) an easement

granted to the City of Petaluma in 1992 for access and appurtenant to the Rocky Memorial Dog

park, see Req. Judicial Notice, Ex. D, and (2) a lease between Baywood and Darling. See id., Ex. C. 

Due to the easement, Baywood claims that an implied dedication is not appropriate because “such

rights cannot exist where use is permissive as opposed to hostile and adverse.” Mot. at 14 (citing

Aptos Seascape Corp. v. County of Santa Cruz, 138 Cal. App. 3d 484, 501 (1982)). Due to the lease,

Baywood claims that “[s]ince a landlord has no right to prevent the possession by a third party

during the period of a lease, that third party cannot acquire a prescriptive title against the landlord.” 

Mot. at 15 (citing Dieterich Int’l Truck Sales, Inc. v. J.S. & J Services, Inc., 3 Cal. App. 4th 1601,

1609-11 (1992)).

The Court rejects both of Baywood’s argument. Regarding the permissive use by way of an

easement, Darling has alleged a public use of the Casa Grande Road Transect that is greater in scope

than that permitted by the easement. Darling seeks public dedication for “ingress and egress, and for

utility access, to properties along the Petaluma River, including the Darling Property,” with no

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limitation. Compl. ¶ 50. In contrast, the easement granted by Baywood in 1992 “shall be only for:

(i) vehicular ingress and egress of City vehicles on City business during normal business hours from

Casa Grande Road to the City Property; and (ii) pedestrian and bicycle ingress and egress for the

general public to any bicycle and pedestrian trail system . . . and for no other purpose.” Req.

Judicial Notice, Ex. D (Ingress and Egress Easement Agreement ¶ 2.3). Darling states a valid claim

for public dedication by alleging that the public has used the property in a non-permissive manner.

Baywood’s second argument that the lease between Baywood and Darling prevents a public

dedication claim is not persuasive for two reasons. First, Baywood relies on Dieterich Int’l Truck

Sales, Inc., 3 Cal. App. 4th at 1609-11, where the plaintiff sought a prescriptive easement, not a

public dedication. The court held that no prescriptive easement claim existed because the claim

would injure possessory interests, which an out-of-possession landlord could not protect, as opposed

to ownership interests, such as waste, which the landlord could protect. See id. at 1610 (“In our

view, the inquiry in a case involving unlawful intrusion on property rights should focus upon the

nature of the injury and the damages sought: If [on the one hand,] the right to possession has been

abridged and possessory rights damaged, the possessor [i.e., the tenant] may complain by way of an

action for trespass; if, on the other hand, an intruder harms real property in a manner which damages

the ownership interest, the property owner may seek recovery whether the cause of action be

technically labeled trespass or some other form of action, such as waste.”). Because a public

dedication may impose a considerably greater burden than a private easement against a landlord, it

may intrude more substantially upon Baywood’s ownership interest which would distinguish this

case from Dieterich. See id. at 1609-1610. Moreover, the scope of the public dedication could

exceed that of the lease for reasons similar to those discussed above. Dismissal at this juncture

under Rule 12(b)(6) is not appropriate.

Furthermore, the California Court of Appeal has suggested that even if a landlord cannot

prevent, as a matter of right, the public from accessing its property through a formal action for

trespass, the landlord would still have a practical duty to prevent public access if its tenants would

not have objected preventative steps. See Friends of the Trails, 78 Cal. App. 4th at 830. The Court

of Appeal held:

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The Landowners suggest that even if their predecessors would not

have been legally barred from preventing trespass, they would have

been prevented from such action as a practical matter because they

were required to seek permission from NID to erect gates. The

Landowners fail to show that their predecessor in interest was legally

required to defer to NID in taking reasonable steps to prevent public

use of the NID easement, i.e., that NID had a legal right to prevent

every reasonable measure which could have been effective to prevent

the adverse public user. Indeed, on the practical plane, the

Landowners’ predecessor in interest presumably could have obtained

the same agreement from NID to install the gates in issue before the

lapse of the prescriptive period.

Id. In effect, the landlord must exercise diligence in seeking to protect its interest. At this pleading

stage, the Court cannot conclude that Baywood could not, as a practical matter, prevent the public

from accessing its property. For these reasons, the Court denies Baywood’s motion to dismiss

Darling’s claim for an implied public dedication.

2. Prescriptive Easement Claim

In its sixth cause of action, Darling asserts that it is “entitled to the declaration of a nonexclusive prescriptive easement to run with and benefit the Darling Property, to burden the Baywood

Property and the Regan Property, to the physical extent of the Casa Grande Road Transect, for all

reasonable purposes.” Compl. ¶ 53. “To establish the elements of a prescriptive easement, the

claimant must prove use of the property, for the statutory period of five years, which use has been

(1) open and notorious; (2) continuous and uninterrupted; (3) hostile to the true owner; and (4) under

claim of right.” Harrison v. Welch, 116 Cal. App. 4th 1084, 1089 (2004) (internal quotation marks

omitted).

In its motion to dismiss, Baywood argues that Darling has failed to state a prescriptive

easement claim for two reasons. First, “as a matter of law, a private party cannot obtain an easement

over a railroad right of way.” Mot. at 15-16. Second, Darling is time-barred and estopped from

denying its landlord’s superior title once it entered into a lease in 1960. The Court finds neither of

these arguments persuasive.

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 California Civil Code section 1007 provides, “no possession by any person, firm or corporation

no matter how long continued of any land, water, water right, easement, or other property whatsoever

dedicated to a public use by a public utility, or dedicated to or owned by the state or any public entity,

shall ever ripen into any title, interest or right against the owner thereof.”

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 Baywood cites section 326 of the California Code of Civil Procedure, which provides a fiveyear prescriptive period to acquire a prescriptive easement, but does not provide a five-year limitations

period to quiet such a title.

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a. Railroad Right of Way

The parties do not dispute that section 1007 of the California Civil Code bars a private party

from obtaining a prescriptive easement over a railroad right of way. See Cal. Civ. Code § 1007.6

Rather, it is Darling’s contention that “[o]ne may, however, obtain prescription against a railroad

right of way if the right of way has been abandoned,” which has been alleged in the complaint. 

Opp’n at 12 (citing Machado v. Southern Pacific Transportation Co., 233 Cal. App. 3d 347, 362

(1991)). Darling’s complaint states that “[t]he Baywood Property and the Regan Property are a

former right of way.” Compl. ¶ 45 (emphasis added). Baywood contends that this is not a sufficient

allegation of abandonment. See Reply at 9. But in a motion to dismiss, all factual allegations should

be viewed in the light most favorable to the plaintiff. See Edwards v. Marin Park, Inc., 356 F.3d

1058, 1061 (9th Cir. 2004). Moreover, Federal Rule of Civil Procedure 8(a) requires only notice

pleading such that Darling need not provide more specific allegations as to how the railroad right of

way has been abandoned.

b. Temporal Estoppel

Baywood argues that Darling has been effectively dispossessed of any prescriptive easement

after it entered into a lease with Northwestern Pacific Railroad Company in 1960 and later with

Baywood, for access to the Darling property. See Mot. at 15-16. Once dispossessed, Darling must

have asserted its prescriptive rights within five years, i.e., by August 1965, because as a tenant,

Darling is estopped from challenging its landlord’s superior title. See Mot. at 16 (citing Cal. Evid.

Code § 624 for the proposition that a tenant is estopped from denying the landlord’s superior title).

Notwithstanding Baywood’s failure to cite authority supporting a five-year limitations period

to bring a quiet title action for a prescriptive easement,7

 any statute of limitations is tolled while a

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claimant remains in exclusive possession of the property, pursuant to Muktarian v. Barmby, which

held:

no statute of limitations runs against a plaintiff seeking to quiet title while

he is in possession of the property. In many instances one in possession

would not know of dormant adverse claims of persons not in possession.

Moreover, even if, as here, the party in possession knows of such a

potential claimant, there is no reason to put him to the expense and

inconvenience of litigation until such a claim is pressed against him.

63 Cal. 2d 558, 560-61 (1965) (citations omitted). Per Baywood’s contention that “[a] lease grants

the tenant exclusive possession and use of real property against all others,” Darling is considered to

have maintained exclusive possession for the purposes of this motion. Mot. at 15. Accordingly, any

statute of limitations has been tolled.

Baywood also argues that Darling cannot bring a prescriptive easement claim because

Darling is a tenant of Baywood’s, and a “tenant in possession cannot maintain a suit against a

landlord to litigate title.” Mot. at 16. As a general rule, a tenant is “estopped” from challenging his

landlord’s title during the tenancy. See Yuba River Sand Co. v. City of Marysville, 78 Cal. App. 2d

421, 425-26 (1947); see also Cal. Evid. Code § 624 (“A tenant is not permitted to deny the title of

his landlord at the time of the commencement of the relation.”). But there is an exception to the

rule. “[T]here is no estoppel present when the tenant is in possession before the lease is executed.” 

7 Miller & Starr, Cal. Real Estate § 19:57 (3d ed. 2005). The court in Tewksbury v. Magraff

provided the policy behind the rule:

To allow a party to obtain possession by entering under a lease, and then

to disclaim, either before or after the expiration of the term, would be to

encourage the very fraud and chicanery which the estoppel was designed

to prevent. The estoppel rests upon considerations of public policy which,

for obvious reasons, would be defeated in its purpose if one who has been

put in possession of land by another should be allowed to controvert the

title of the latter without first restoring him to as good a condition as he

was in before he parted with the possession.

33 Cal. 237, 244-45 (1867). This led the court to find the applicable exception:

So if the tenant did not take possession under the lease, but was in

possession at the time he took his lease, he may dispute the landlord’s

title without first surrendering the possession; for not having received the

possession from him, he is under no moral or legal obligation to restore

it before adopting a hostile attitude. . . .

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Tewksbury, 33 Cal. at 245; accord Yuba River Sand Co., 78 Cal. App. 2d at 426.

Baywood argues that for the exception to apply, Darling’s lease must now be expired or

terminated. See Reply at 9 (citing Yuba River Sand Co., 78 Cal. App. 2d at 426, indicating the

exception applied to “a lease which has expired.”). The court in Yuba River Sand Co., however, did

not hold that an expiration was necessary for the exception to apply. An expired lease was not

pivotal to the court’s reasoning. See Yuba River Sand Co., 78 Cal. App. 2d at 426 (“if the tenant did

not take possession under the lease, but was in possession at the time he took his lease, he may

dispute the landlord’s title without first surrendering the possession” (quoting Tewksbury, 33 Cal. at

245)). Nor have prior cases and the leading treatises suggested such a requirement. See, e.g.,

Tewksbury, 33 Cal. at 245; 7 Miller & Starr, Cal. Real Estate § 19:57 (3d ed. 2005); 12 Witkin,

Summary of California Law, Ch. XVII Real Prop. § 607, p. 719 (10th ed. 2005). The Court discerns

no logical or policy reason to impose such a requirement. For the foregoing reasons, the Court

denies Baywood’s motion to dismiss Darling’s claim for a prescriptive easement.

3. Implied Easement Claim

In its seventh and last cause of action, Darling seeks a declaratory judgment for an easement

by implication across the Baywood and Regan properties to the Darling property. See Compl. ¶ 56. 

“An easement by implication requires the following conditions: 1. There must be a common

ownership of a parcel and a transfer or conveyance of one parcel, or a portion of a parcel, to another. 

2. Prior to the division of title, there must have been an existing obvious, and apparently permanent,

use of the quasi-easement by the common owner. 3. The easement must be reasonably necessary to

the use and benefit of the quasi-dominant tenement.” Moores v. Walsh, 38 Cal. App. 4th 1046, 1049

(1995) (internal quotation marks omitted).

In its motion to dismiss, Baywood argues that Darling has failed to state a claim for an

easement by implication because Darling did not adequately allege in its complaint (1) pre-existing

use consistent with the easement claimed and (2) common prior ownership. According to Baywood,

Darling’s allegations based on “information and belief” are not sufficient: “At a minimum, Darling

must identify the common grantor and preexisting use so that Baywood can investigate the

allegations and respond appropriately.” Mot. at 17.

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The Court rejects Baywood’s contention. An allegation based on information and belief is

adequate. As noted by the Moore’s treatise:

Rule 8 does not expressly permit statements supporting claims for

relief to be made on information and belief. However, Rule 11 permits

a pleader, after reasonable inquiry, to set forth allegations that “are

likely to have evidentiary support after a reasonable opportunity for

further investigation or discovery.” Courts have read the policy

underlying Rule 8, together with Rule 11, to permit claimants to aver

facts that they believe to be true, but that lack evidentiary support at

the time of pleading. Generally, however, such averments are allowed

only when the facts that would support the allegations are within the

defendant’s knowledge or control.

2-8 Moore’s Fed. Prac. -- Civ. § 8.04[4].

Likewise, the Court rejects Baywood’s argument that Darling failed to adequately plead

common prior ownership. In its complaint, Darling specifically alleges that the Baywood, Regan,

and Darling properties were once commonly owned. See Compl. ¶ 55. Darling need not identify

who the common owner was, because as noted above, all that Rule 8 requires is notice pleading. See

Fed. R. Civ. P. 8(a).

Finally, the Court rejects Baywood’s argument that there is not an adequate allegation of preexisting use. Darling asserts that the public must use and, in fact, has used the Casa Grande Road

Transect to access the Darling property. See Opp’n at 14 (citing Compl. ¶ 47). Construing this

allegation in Darling’s favor, as the Court must on a motion to dismiss, see Edwards, 356 F.3d at

1061, the Court denies Baywood’s motion to dismiss Darling’s implied easement claim.

IV. CONCLUSION

For the foregoing reasons, the Court grants Baywood’s motion to dismiss Darling’s First,

Second, and Third Claims for Relief with prejudice. The Court denies Baywood’s motion to dismiss

the Fourth, Fifth, Sixth and Seventh Claims for Relief. This order does not preclude Darling from

asserting other grounds for relief not inconsistent with this order.

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The Court grants Baywood’s Request for Judicial Notice as to the public records submitted

as Exhibits A through J to that Request. The Court denies Baywood’s motion for a more definite

statement.

This order disposes of Docket Numbers 11 and 15. 

IT IS SO ORDERED.

Dated: December 21, 2005

 EDWARD M. CHEN

United States Magistrate Judge

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