Court Opinion

ID: 9949820
Source: CourtListenerOpinion
Date Created: 2024-03-12 17:03:39.7286+00
Date Added: 2024-06-11T14:33:39.043751
License: Public Domain

Filed 3/12/24 Clemmensen v. Dora Belle Mutual Water Company CA5

                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

 DANNY C. CLEMMENSEN, et al.,
                                                                                             F085405
           Plaintiffs and Respondents,
                                                                             (Super. Ct. No. 21CECG00501)
                    v.

 DORA BELLE MUTUAL WATER                                                                  OPINION
 COMPANY,

           Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of Fresno County. Mark E.
Cullers, Judge.
         Herr, Pedersen & Berglund, Leonard C. Herr and Ron Statler, for Defendant and
Appellant.
         Lang, Richert & Patch; Creede – Blyth Law, Stan D. Blyth and Zena M. Sin, for
Plaintiffs and Respondents.
                                                        -ooOoo-
         Dora Belle Mutual Water Company (“Dora Belle”) appeals from the grant of a
motion for judgment and issuance of a peremptory writ against it in favor of Danny C.
Clemmensen and Kathy A. Clemmensen (the “Clemmensens”). The Clemmensens
purchased Lots 8 and 9 in the Shaver Lake Heights subdivision in 2014. When the
property was initially subdivided, the original owners reserved a portion of Lot 9 for their
own use, and thus sold Lots 8 and 9 to the same purchaser, ostensibly to be used together.
After the Clemmensens purchased the lots, they desired to build a separate structure on
Lot 9 and asked Dora Belle to provide a “will-serve” letter committing to ensure
sufficient water would be available to supply houses on both lots. Dora Belle refused to
do so, and the Clemmensens filed for a writ of mandate to force Dora Belle to provide the
water.
         The case was heard by the trial court on the papers and declarations submitted by
the parties; neither party apparently requested oral testimony. The court found in the
Clemmensens’ favor, finding two separate shares had been issued, one for Lot 8 and one
for Lot 9; that the shares were appurtenant to the land; and that the Clemmensens were
therefore entitled to water service on each lot. The court thereafter issued a judgment and
a peremptory writ of mandate, from which Dora Belle appeals.
                                     BACKGROUND
         Dora Belle is a mutual water company formed pursuant to Articles of
Incorporation (the “Articles”) dated August 3, 1962, and subsequent bylaws approved at
a meeting on August 28, 1962. The Articles reflect that Dora Belle was formed by
Stephen and Maxine Young as a non-profit corporation to provide water to the owners of
property in Shaver Lake Heights Subdivision No. 4, which was apparently originally
owned by the Youngs who were subdividing it for sale.
         The crux of this dispute involves the provision of water to Lots 8 and 9. On
July 3, 2014, the Clemmensens purchased both of these lots from Richard and Linda
Tappe, who were successors in interest to the original purchasers, Virgil and Thelma
Tappe. Thereafter, the Clemmensens became interested in building another structure on
the second lot, and sought to confirm they would have access to water if they elected to
do so. Dora Belle refused to agree to supply water to both lots, causing the Clemmensens
to file suit.

                                              2.
       Certain of the foundational documents for Dora Belle, including the Articles,
suggest the corporation intended to issue up to 22 shares of stock, which would be
sufficient to include separate shares for Lot 8 and Lot 9. Specifically, per the Articles,
the property to be subdivided included “Lots 6, 7, 8, and 9 in Block 30”; where other lots
were to receive only a single water share, the same was noted, for instance, by observing
there would be “1 [share] certificate jointly for lots 5, 6, and 7 in Block 32.” Dora Belle
was thus authorized pursuant to the Articles to issue 22 shares of stock, each of which
“shall attach and be appurtenant to the lots” in the subdivision.
       Other foundational documents for Dora Belle, however, including the bylaws,
suggest only 20 shares of stock were to be issued, and that Lots 8 and 9 would be issued
only one share of stock to be held jointly for both lots. The bylaws state in Article I,
section 1, “[t]o qualify, and be, a shareholder in this corporation, a person, firm,
partnership, corporation or any entity (hereinafter referred to as person) must own a lot or
lots of the land described in the Articles of Incorporation, except that only one share shall
be issued jointly for Lots 8 and 9 in Block 30, and Lots 5, 6, and 7 in Block 32, and
except that no share shall be issued for Lots 5 and 14 in Block 33 and Lot 9 in Block 32.”
Later, in Article IX, Section 1, the bylaws again state: “Certificates for shares of this
corporation shall be issued on the basis of one share for each lot, except only one share
shall be issued jointly for Lots 8 and 9 in Block 30 ….” The reason for the discrepancies
between the Articles and the bylaws is not clear from the record.
       Regardless of what the foundational documents indicate about what Dora Belle
intended to do, the record reflects that Share No. 7, appurtenant to Lot No. 8, was issued
to Virgil A. Tappe on June 2, 1964. There is a handwritten note appended to the
certificate of Share No. 7 that says: “This share voided Replaced by share 22 for lot #9
instead of Lot #8.” The record also contains a document listed as Share No. 22, which is
dated October 30, 1964, and purports to be intended for Lot No. 9. Share No. 22 does not
identify the person to whom it was issued, and instead contains a handwritten notation

                                              3.
across its face stating “Void.” Lastly, the record shows a certificate labelled as Share No.
68, issued to the Clemmensens on June 2, 2014, appurtenant to Lot No. 9.
       The Clemmensens filed a petition for writ of mandate on February 19, 2021,
pursuant to Code of Civil Procedure section 1085,1 seeking to compel Dora Belle to
furnish water to them at cost on their real property adequate to support a dwelling on each
of Lot 8 and Lot 9. After overruling the demurrer, the trial court proceeded by way of a
motion for judgment on the writ, and the matter was heard on the papers. On
September 28, 2022, the court issued an order granting the Clemmensens’ motion for
judgment on the writ. The court concluded separate shares in Dora Belle were issued for
each of Lots 8 and 9 and, once issued, each was appurtenant to the land.2
       The court entered judgment granting the peremptory writ of mandate on
October 6, 2022, and issued the writ the same day. An amended peremptory writ was
issued on October 24, 2022. This appeal timely followed.

       1 Undesignated statutory references are to the Code of Civil Procedure.

       2 The order of the trial court which is appealed from was omitted from the court
transcript, apparently by mistake, and is put before us now by way of Dora Belle’s
Request for Judicial Notice, filed in this court on September 15, 2023. The Clemmensens
object to this Request, claiming that while this document “technically would be the
proper subject of a request for judicial notice, [Dora Belle] has not followed the required
procedure,” because it did not request that the superior court clerk add this document to
the record pursuant to Rule 8.155(b) of the California Rules of Court. While
subdivision (b) does state “a party may serve and file a notice in superior court”
requesting the omitted portion be added, subdivision (a) of Rule 8.155 states, “[a]t any
time, on motion of a party or its own motion, the reviewing court may order the record
augmented to include … [a]ny document filed or lodged in the case in superior court.”
(Cal. Rules of Court 8.155(a)(1)(A).) Respondents concede this document is
appropriately part of the record here and would be proper for judicial notice. We
interpret the request for judicial notice as a motion to augment the record, grant the
motion in relation to this document only, and direct the record be augmented to include
the lower court’s decision. The motion is denied as to the remaining documents, which
are property records that were not before the lower court. (Brosterhous v. State Bar
(1995) 12 Cal.4th 315, 325 [“In deciding the question raised by an appeal, a reviewing
court will ordinarily look only to the record made in the trial court.”].)

                                             4.
                                       DISCUSSION
I.     Standard of Review
       Section 1085 states, “A writ of mandate may be issued by any court to any inferior
tribunal, corporation, board, or person, . . . to compel the admission of a party to the use
and enjoyment of a right or office to which the party is entitled, and from which the party
is unlawfully precluded by that inferior tribunal, corporation, board, or person.” (§ 1085,
subd. (a).) A petitioner seeking a writ of mandate under section 1085 “ ‘is required to
show the existence of two elements: a clear, present and usually ministerial duty upon the
part of the respondent, and a clear, present and beneficial right belonging to the petitioner
in the performance of that duty.’ ” (Mednik v. State Dept. of Health Care Services (2009)
175 Cal.App.4th 631, 639.)
       On appeal, “foundational factual findings must be sustained if supported by
substantial evidence,” but legal questions are reviewed de novo. (Rosenblit v. Superior
Court (1991) 231 Cal.App.3d 1434, 1443; see also Shelden v. Marin County Employees’
Retirement Assn. (2010) 189 Cal.App.4th 458, 463 [noting legal questions are reviewed
de novo].) We may affirm the trial court’s ruling on any ground supported by the record.
(Taylor v. Elliott Turbomachinery Co., Inc. (2009) 171 Cal.App.4th 564, 573 fn.5;
People v. Evans (2011) 200 Cal.App.4th 735, 742.)

II.    The Trial Court Did Not Err in Concluding that, Once Issued, Stock
       Certificates for Lots 8 and 9 Became Appurtenant to the Land
       Dora Belle asserts in its opening brief that it voided Share No. 7, noting “[a]n
interlineation on Share #7 shows that it was voided and ‘replaced by Share #22.’ ” Thus,
Dora Belle argues that, as a factual matter, Share No. 7 was void. Similarly, in reply,
Dora Belle makes clear this issue is factual, noting, “the facts are actually quite simple.
Share No. 7 was issued in June, 1964. [Citations.] Share no. 22 was issued later that
same year, voiding No. 7.”

                                              5.
       Without delving into the question of whether and how a mutual water company
may lawfully cancel or void a share of stock, an issue not raised by Dora Belle here, it is
apparent the trial court was not convinced factually that Share No. 7 ever was canceled or
voided. The court noted simply that Virgil and Thelma Tappe “were issued Share #7 for
Lot 8” on June 2, 1964 and the Clemmensens “were issued Share #68 for Lot 9” on
June 2, 2014. The court later commented Dora Belle had “no legal right to void Share
#7, and any attempted voiding was of no force and effect,” also indicating it did not
believe the share had been voided. The court also found Lots 8 and 9 were transferred to
the Clemmensens on July 3, 2014. Thus, the question we must answer here is whether
the court was presented with substantial evidence to support its implicit finding that
Share No. 7 was not voided. The record does indeed contain such evidence.
       Share No. 7 was issued to Virgil A. Tappe on June 2, 1964, for Lot #8 in Block 30
of Shaver Lake Heights. There is a handwritten notation apparently appended to the
stock certificate, stating “This share voided Replaced by share 22 for lot #9 instead of
Lot #8.” It is not apparent from the document who wrote this note, what authority that
person had to cancel or void shares in Dora Belle, when the note was written, or the
circumstances surrounding such a writing. Nor are we directed elsewhere in the record to
any evidence explaining these handwritten notations. It is therefore somewhat
unsurprising the trial court elected to ignore these notes, or at the least treat them as being
of minimal evidentiary value. Either way, the court did not treat this notation as
establishing that Share No. 7 was, in fact, voided, instead simply noting the date Share
No. 7 was issued in its recitation of the facts. The only comment the court made in
relation to this note was that, even if it was evidence that Share No. 7 was voided—which
the court clearly did not believe it was—it had no force and effect.
       Similarly, the trial court apparently viewed Share No. 22 as being of minimal
evidentiary value. The copy of Share No. 22 in the record also contains a handwritten
notation that it was “Replacing Share #7 issued by mistake.” This handwritten notation is

                                              6.
illegible in our copy of the record, but one of the parties—presumably the Clemmensens,
since it is attached to a Request for Judicial Notice submitted by them in the trial court—
added typed language to the document indicating it read, “Replacing Share #7 issued by
mistake.” However, it also has a handwritten notation stating “Void” written across its
face. Moreover, the document does not specify to whom it was issued, if anyone. Again,
no date, signature, attribution, or authority for either handwritten notation is included on
the document, or elsewhere in the record.
       We defer to the trial court’s factual findings, such as whether Share No. 7 was
voided, and uphold them so long as they are supported by substantial evidence. The
court’s determination that Share No. 7 was not voided is supported by substantial
evidence, and therefore we treat it as established on appeal.3 It was well within the
court’s purview as finder of fact to determine that Share No. 22, which is expressly
labeled as “Void,” did not demonstrate that it replaced Share No. 7, and that the
handwritten notations were of no evidentiary value. Thus, if the handwritten notations
were given no evidentiary weight, there is no evidence in the record establishing Share
No. 7 was voided. Even if the trial court simply elected to ignore all handwritten
notations on these share documents, it would have been left with a situation in which
apparently three shares were issued, two for Lot No. 9 and one for Lot No. 8, all of
which, as explained below, would run appurtenant to the land.

       3 We also note it is not readily apparent that a corporation may simply cancel a
share of stock that is appurtenant to real property. Appurtenant shares in a water
company are generally treated as part of the real estate, and while an owner may elect to
separately convey them and thus sever the connection, “the mere exchange of one
muniment of title to the water right for another cannot be deemed a severance thereof
from the land to which it was concededly appurtenant.” (Woodstone Marble & Tile
Co. v. Dunsmore Canyon Water Co. (1920) 47 Cal.App. 72, 77.) There is no evidence
identified to us showing that Share No. 7, once issued, was ever conveyed back to Dora
Belle or conveyed separately from the land to which it was appurtenant.

                                             7.
       It is undisputed by the parties that, once stock certificates were issued, they
became appurtenant to the land.4 The articles of incorporation for Dora Belle recite that
all water produced or supplied by the company “shall be appurtenant to said land,” and
share certificates “representing the rights to use said water shall only be transferred with
the particular parcel for which same has been issued.” That sentiment is echoed by the
Declaration of Restrictions, Easements, Uses, and Covenants (hereafter, the
“Declaration”),5 which states that “[r]ights to water or water shares shall be appurtenant
to the land.” Similarly, when Dora Belle applied for issuance of shares, it advised the
Department of Corporations that the shares would be “appurtenant to the Land described
in its Article of Incorporation.” Indeed, Dora Belle does not argue on appeal that the
shares are not appurtenant to the land. Nor does Dora Belle argue a shareholder is not
entitled to a share of water sufficient to supply a dwelling. Rather, Dora Belle argues

       4 In response to a question, Dora Belle’s counsel suggested at oral argument that
he may not agree that any shares Dora Belle issued run appurtenant to the
land. However, the articles, declaration, and bylaws all indicate an intent on behalf of the
corporation to have shares run with the land, and this issue was not disputed in the trial
court or in briefing here. As such, we treat it as undisputed. Moreover, the question of
whether shares in a given water company are appurtenant is a factual one. (See Erwin v.
Gage Canal Co. (1964) 226 Cal.App.2d 189, 192–193.) We defer to the trial court’s
factual findings, particularly where Dora Belle has not attempted to demonstrate those
findings were erroneous.
       5 We reject Dora Belle’s labeling of this document as the “CC&Rs,” which is an
acronym commonly referring to the covenants, conditions, and restrictions that are
recorded in connection with the formation of a common interest development. (See
Miller & Starr, California Real Estate, 4th ed., § 28:142 (Dec. 2023 update).) Dora Belle
is not a common interest development, but rather a mutual water company. Moreover, it
appears Shaver Lake Heights is likely not a common interest development either, since
there is no apparent common area. (See Committee to Save Beverly Highlands Homes
Ass’n v. Beverly Highlands Home Ass’n (2001) 92 Cal.App.4th 1247, 1268–1271 [noting
the Davis-Stirling Act does not apply to a development which does not have common
area].) While the Declaration purports to impose certain restrictions and covenants, it
does not apparently create common area for the use of all tenants, even among the roads
of the development.

                                             8.
only one valid share was issued for Lot Nos. 8 and 9. However, the court found
differently, and that determination is supported by substantial evidence.
       We are thus faced with a fairly simple analysis. Dora Belle issued separate shares
for both of Lots 8 and 9, which entitle the holders to water. Those shares are appurtenant
to the land, and thus run with the land when its ownership is transferred. The
Clemmensens are the current owners of Lots 8 and 9 and, because the shares are
appurtenant, the owners of the shares issued for each of these lots. Those shares entitle
the Clemmensens to water for their lots. Dora Belle does not explain how the trial
court’s conclusion that Share No. 7 was validly issued is not supported by substantial
evidence, nor does it present any other legal reason it may deny the holder of Share
Nos. 7 and 68 the water rights that accrue to the holder of said shares.6
       Dora Belle’s other arguments do not change this analysis. Dora Belle argues the
trial court misread the articles of incorporation, and that even if the articles of
incorporation suggested a share may be issued for each of Lot 8 and Lot 9, the bylaws
and Declaration are legally entitled to greater weight. Setting aside the statutory
arguments, which are inapposite,7 of far greater importance than what any of these

       6 Dora Belle’s argument that a corporation must have authority to fix its mistakes
is not persuasive. No one argues that, if the issuance of Share No. 7 were truly a mistake,
there is no way for the corporation to fix it. Indeed, the corporation could have requested
the owner of Share No. 7 transfer it back to the corporation at the same time a
replacement share was issued correcting the mistake. However, there is no evidence this
occurred, and for reasons that remain unexplained, the corporation apparently simply
attempted to issue a second share of stock, Share No. 22 (although again, the copy in the
record here purports to be “Void”). We do not sit to evaluate the wisdom of corporate
decisions, only their legal effect, and the issuance of shares by a corporation has
significant legal effects.
       7 The Davis-Stirling Act, to which Dora Belle and the lower court cited, was not
enacted until 1985, more than 20 years after Dora Belle was formed. (See Bear Creek
Master Assn. v. Edwards (2005) 130 Cal.App.4th 1470, 1479.) Moreover, the act only
applies to common interest developments, which are “created whenever a separate
interest coupled with an interest in the common area or membership in the association is,
or has been, conveyed[.]” (Civ. Code, § 4200.) As referenced above, Dora Belle is not a

                                               9.
documents say about what the corporation intended to do is what the corporation actually
did, i.e., its actual issuance of Shares No. 7 and 68. Dora Belle does not point us to
evidence showing it was an abuse of discretion for the trial court to conclude Share No. 7
was not voided. Thus, regardless of what other documents say about the shares the
corporation intended to issue, it in fact issued separate shares for Lots 8 (Share No. 7) and
9 (Share No. 68), as the trial court found.
       Ultimately, Dora Belle has not pointed us to evidence in the record to override the
substantial evidence supporting the trial court’s finding that Share No. 7 was issued and
was not voided. Absent this, the Clemmensens own two shares in Dora Belle—Share
No. 7 for Lot 8 and Share No. 68 for Lot 9—which entitles them to all rights, privileges,
and benefits of each and every shareholder, including the right to access and use water on
both of Lots 8 and 9.

common interest development, but a mutual water company, and it does not appear that
Shaver Lake Heights contains any common area, meaning the Act would not apply.

                                              10.
                                  DISPOSITION
      For the reasons specified above, the judgment is affirmed. Costs are awarded to
Respondents.

                                                                      SNAUFFER, J.
WE CONCUR:

FRANSON, Acting P. J.

SMITH, J.

                                        11.