Two recent California court decisions, involving all-too-common neighbor disputes, have provided new guidance concerning easements and property ownership.

In Romero v. Shih (S275023 [2024]), the California Supreme Court ruled that a neighbor (Sierra Madre, L.A. County) can acquire an exclusive right to a driveway easement by implication even where all of the elements of adverse possession are not met, namely, where the party claiming an easement has not paid taxes on the land in question.  The Court reversed the Court of Appeal, which had held that as a matter of law, such an easement could have been created only by a written instrument.  According to the Court of Appeal, the key fact was that the easement was “exclusive”.  Because it was used as a driveway, no other use of the property was possible.  Given the significance of this property right, such an easement could be created only by a written instrument.

The California Supreme Court disagreed.  The driveway had existed and been used by the neighbor for at least 30 years.  The two properties had been bought and sold over the years, but the respective deeds made no mention of the driveway.  Nevertheless, the Supreme Court found that a writing evidencing the easement wasn’t necessary, nor was it necessary that all of the elements of adverse possession be met.  The Court concluded that an easement by implication can be created where any reasonable person observing the two properties and an existing driveway would have assumed the neighbor using the driveway retained at least some continuing interest in the disputed strip of land.

The key facts were that for over 30 years, between the original separation of the properties and the discovery that the user of the driveway didn’t actually own the property, every successive owner of either property had allowed for and/or behaved as if the easement owner had the right to encroach upon the disputed strip of land with the driveway, which had remained unchanged in its use and function since at least the initial property separation.  This was enough to establish an implied easement.

The case of Goodhart, et al v. Honeybadger Acquisitions (A165781 [2023]) concerned the creation of an “equitable easement” in Tiburon.  For over ten years, the Goodharts improved and maintained approximately 950 square feet of land, believing the area was part of their front and rear yards.  The defendant discovered the area was his property when he commissioned a survey in connection with his plan to build a perimeter fence.  After defendant commenced construction of the fence, the Goodharts brought suit, seeking injunctive relief and a declaration that they are entitled to an equitable easement to use the disputed area.

The court’s decision was not a final judgment but rather granted a preliminary injunction, finding that the easement claimant (Goodhart) was “likely to prevail on the merits”.  The court explained that an [equitable] easement over the trespassed-upon property in the trespasser’s favor is created if the trespasser shows that (1) her trespass was ‘ “innocent” ’ rather than ‘ “willful or negligent,” ’ (2) the public or the property owner will not be ‘ “ ‘irreparabl[y] injur[ed]’ ” ’ by the easement, and (3) the hardship to the trespasser from having to cease the trespass is ‘ “ ‘greatly disproportionate to the hardship caused [the owner] by the continuance of the encroachment.’ ” ’ ”  (Shoen v. Zacarias (2015) 237 Cal.App.4th 16, 19.)

The court found that the Goodharts’ trespass was innocent because they thought the property was theirs.  As to potential injury to the defendant property owner and the balancing of harms, the court found this favored the Goodharts.  If the defendants built a fence on the true property lines as planned, it would come within two feet of the Goodharts’ driveway and front steps and the back of their house, and the Goodharts would lose approximately 950 square feet of their yards.  In comparison, the disputed areas constituted less than 1% of the defendants’ property and was located downhill from their residence on undeveloped hillside that was largely unusable to them.  Under these circumstances, the Goodharts were entitled to an equitable easement over the subject area of defendant’s property.

Authored by Reuben, Junius & Rose, LLP Attorney Thomas Tunny.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

The San Francisco Planning Department has released more details on its Expanding Housing Choice Program, a citywide rezoning that will primarily target the city’s westside. The rezoning proposal originates in the city’s 2022 Housing Element Update, which was adopted last January, and requires the city to rezone to allow for approximately 36,000 housing units in order to meet its regional housing need allocation (RHNA) goal. Much like last year’s Constraint’s Reduction Ordinance legislation, the Expanding Housing Choice Program proposes sweeping changes to the Planning Code that are meant to spur housing development. These changes include upzoning along various transit and commercial corridors, relaxing of development standards and density controls, adoption of objective design standards, and the creation of a local “housing program” to rival the state’s density bonus law.

The most visible–and perhaps most controversial–aspect of the Expanding Housing Choice Program is the proposed upzoning along commercial and transit corridors in the city’s “well-resourced neighborhoods”.  At the end of January, the Planning Department released its final draft proposal map, which would see height limits of 65-85 feet (or 6-8 stories) on most major streets on the westside, where near uniform 40-foot (4 stories) height limits have reigned for decades. Although the proposal may look simple at first glance, it should also be noted that the draft map shows “final heights” that are intended to be the maximum height after the application of any density bonuses, and the actual base height limits will be lower than those shown on the draft map.

On February 1, 2024, the Department gave an informational presentation on the rezoning to the Planning Commission, and it was met with several hours of public comment. Many residents expressed disagreement over the upzoning, including concerns about the loss of quieter neighborhoods, impacts to traffic and infrastructure, and displacement of longtime residents and commercial uses. The comments were well received by the Planning Commission, who asked Department staff to consider altering the proposal to address the comments. If last year’s Constraints Reduction Ordinance is any indication, it is likely that the upzoning proposal will be modified several times and go through several heated hearings at the city’s Board of Supervisors, Land Use committee, and Planning Commission.

A less controversial aspect of the Expanding Housing Choice Program includes the creation of a new “local housing program” that will provide an alternative to the state density bonus law that has risen in popularity in recent years. The new local housing program will offer housing projects various development benefits, such as density bonuses and streamlined processing, in exchange for providing affordable housing units. Unlike the state density bonus, however, which gives developers the ability to override development standards, the local housing program will give the city more control over these projects’ physical aspects and design character.

In addition to these major changes, the city will also adopt objective design standards to streamline project review and give projects more certainty from the initial design phase. Other changes include “density decontrol” along transit and commercial corridors, which will remove hard density limits (i.e. 2 units per lot) and allows projects to construct as many units as would reasonably fit within the envelope of a code-complying project. The proposal would also provide an alternative way to comply with the city’s inclusionary housing requirements by allowing small developments (less than 25 units) to provide units as rent-controlled units rather than BMR units.

While the Planning Department has finalized its Expanding Housing Choice proposal after almost a year of outreach and public engagement, the legislation still needs to be introduced, reviewed, and adopted by the city’s legislative body. Due to the wide-reaching changes and controversial reaction to the proposal so far, we expect it will continue to evolve over the coming months.

Leases, construction contracts, easement agreements, and other contracts often require one party to name the other as an “additional insured” under its liability insurance policy.  The insuring party often provides its counterpart with a “certificate of insurance.”  The receiving party may believe that the insuring party complied with its obligations.  But unless an additional insured endorsement is issued, the negotiated risk transfer to the insuring party’s insurance carrier was not accomplished.

A certificate of insurance is nothing more than evidence of insurance.  It typically identifies the insurance carrier, states the kinds of coverage that are maintained, and outlines the insured’s policy limit(s).  A certificate does not provide additional insured status to the certificate holder.

Additional insured status may be conferred by a “scheduled” or “blanket” additional insured endorsement.  A “scheduled” endorsement is specific to the additional insured, includes its name on the endorsement, and amends the insurance policy:

Section II—Who Is an Insured is amended to include as an additional insured the person(s) or organization(s) shown in the Schedule. . . .

(Insurance Services Office, Inc. (“ISO”) endorsement CG 20 10).  When an insured who is frequently required to provide additional insured coverage to other parties (e.g., a subcontractor), its insurance carrier may simply include a “blanket” additional insured endorsement in the policy.  Such endorsements may identify the “Name of Additional Insured Person(s) Or Organizations(s)” as follows:

Any person whom you have agreed in a written and executed contract, prior to an “occurrence”, that such person or organization be added as an additional insured on your policy.

(ISO CG 20 10 12 19).  But the coverage is typically limited by the endorsement.  For instance:

If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured.

Additional limitations often appear, including:

If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance:

1. Required by the contract or agreement; or
2. Available under the applicable limits of insurance;

Whichever is less.

(ISO CG 20 10 12 19 (2018)).  The limitations outlined in additional insured endorsements are important because the additional insured may receive less coverage than it might otherwise expect, or none at all.

An example highlights the issues:

A construction contract requires a contractor to procure and maintain a minimum of $5,000,000 in liability insurance coverage.  The contractor assumes indemnity obligations and agrees to provide $5,000,000 in additional insured coverage for the benefit of the property owner.  The parties agree that the contractor will cause its subcontractors to indemnify and provide additional insured status to the owner and contractor, and that any subcontractor that performs excavation will insure against subsidence risks.  The owner’s objective is to assure that if damage results from the excavation, the excavation subcontractor’s insurance company will defend the owner and pay the loss.  The owner intends to transfer the risk to the subcontractor’s insurance carrier.

But when the contractor enters into its subcontracts, the excavation subcontractor is only required to carry $2,000,000 in liability insurance coverage, agrees to provide additional insured status to the contractor only, and is not explicitly required to carry subsidence coverage.  The contractor provides a certificate of insurance to the owner that (a) shows the owner as the certificate holder on a $10,000,000 liability insurance policy, and (b) attaches a blanket additional insured endorsement.

During construction, the excavation subcontractor is negligent, and a neighboring property is damaged.  The owner asks the subcontractor’s insurance carrier to defend the claim.  But the insurance carrier will likely not defend or indemnify the owner, because the subcontractor did not agree to provide the owner with additional insured status.  If the carrier does provide coverage, it is likely that only $2,000,000 of the subcontractor’s $10,000,000 insurance coverage will be available.  Worse yet, the carrier may deny the claim entirely because the loss was caused by land subsidence, and the excavation subcontractor did not agree to provide that coverage (even if the subcontractor’s policy actually insures against that risk).  The insurance carrier will rely on the language of the blanket additional insured endorsement to support its positions.

When parties negotiate risk transfer provisions, they intend that losses will be allocated between them (and their insurance carriers) in a particular way.  But the risk transfer is not typically complete when the contract is signed.  Business owners and property owners will be well-served by paying attention to the details of insurance coverage – before there is a problem – to assure that their objectives are achieved.

Authored by Reuben, Junius & Rose, LLP Attorney Corie A. Edwards.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

Can cities and states really ban natural gas hookups? On January 2, 2024, the Ninth Circuit handed down a decision in California Restaurant Association v. City of Berkeley finding that Berkeley’s natural gas ban was preempted by federal legislation and struck the ordinance down.

In 2019, the City of Berkeley adopted first-of-its-kind legislation amending the city’s building code to prohibit the use of natural gas in virtually all newly constructed buildings, with some limited exceptions. Berkeley’s ordinance was originally enacted with the goal of curbing greenhouse gas emissions and encouraging all-electric infrastructure in the city. Soon after its enactment, however, the California Restaurant Association sued, arguing that the ordinance was preempted by the federal Energy Policy and Conservation Act (EPCA). The EPCA, enacted by Congress in 1975, provides a comprehensive scheme for federal energy regulation. For the purposes of this lawsuit, however, the statute also governs federal regulation of consumer goods using natural gas. Under the EPCA, these consumer goods are referred to as “covered products.” Under the EPCA, once a federal energy conservation standard is adopted for a covered product, state and local governments are prohibited from further regulating the product with some minor exceptions.

The district court, which first heard the case back in 2019, was largely favorable to Berkeley’s arguments that the ordinance was not preempted by federal law. After rejecting the city’s motion to dismiss the California Restaurant Association’s suit, the district court interpreted the EPCA narrowly so that the Act would not “sweep into areas that are historically the province of state and local regulation.” [i] The district court concluded that the EPCA was not preempted because the ordinance did not explicitly regulate or mandate the installation of any particular product or appliance, and because the ordinance’s effect on consumer products was “at best indirect.” [ii]

The majority for the Ninth Circuit disagreed with the lower court, explicitly abandoning the district court’s limited reading of the EPCA’s preemption statue. As the majority at the Ninth Circuit observed, following the plain language of the EPCA, once the federal government adopts an energy conservation standard for consumer products covered by the EPCA, state and local governments are limited in their ability to further regulate those products. At the appeals court, Berkeley had argued that the EPCA’s concern with covered products should be understood narrowly to exclude the distribution of natural gas. But the court was unpersuaded.

An inherent aspect of regulating covered consumer products under the EPCA, the majority observed, is whether those products can access natural gas at all. Therefore, the EPCA must preempt local and state regulations like Berkeley’s natural gas ban affecting natural gas supply to those covered products. But, as the court opined, the EPCA’s scope is not infinite and the statute may not preempt state or local regulation of a utility’s distribution of natural gas.

At the appeals court, Berkely had also argued that a finding that the city’s natural gas ban was preempted by the EPCA would necessarily repeal the Natural Gas Act, a comprehensive ban and federal regulatory scheme for the sale of natural gas. The Court, however, did not find any implied preemption because the Natural Gas Act only restricts the Federal Energy Regulatory Commission’s ability to regulate local distribution of natural gas, and therefore did not implicate the EPCA.

This ruling leaves other California jurisdictions with similar natural gas bans, such as San Francisco, San Jose, and Los Angeles, in an awkward position and will likely temper efforts by other jurisdictions to adopt similar bans. The case, though, is widely expected to be appealed to the Supreme Court, which may address the extent of the EPCA’s preemption of local gas regulation in the years to come.

[i] Cal. Rest. Ass’n v. City of Berkeley, 547 F. Supp. 3d 878,891 (N.D. Cal. 2021).

[ii] Id.

The Downtown Oakland Specific Plan (“DOSP”) is Oakland’s sixth area plan and has been in the works since the mid-2010s. On April 27, 2022, Zoning Code Amendments to implement the objectives of the DOSP were released. The DOSP’s objectives, include new and equitable housing production, economic opportunity, social justice, culture keeping, quality urban form, climate-friendly mobility, and climate-responsive development.

The Zoning Amendments consist of changes to both the Oakland Zoning Map and the Planning Code.

Key elements of the proposed Zoning Amendments include:

• Establish a Zoning Incentive Program. The Zoning Incentive Program allows developers to elect to provide one or more community benefits, or pay a fee to the city to fund such benefits, in exchange for increases in allowable building height and/or density. Community benefits in the Zoning Incentive Program were selected to increase housing affordability, provide affordable rent for small businesses, train Oakland’s workforce, and create resources that support public health. Details of the Zoning Incentive Program have yet to be released and are expected sometime in mid-May.
• New area-specific regulations. The current Central Business District includes four zoning districts and will increase to ten, each with development standards and allowable uses tailored to specific conditions, objectives, and geography.
• High-density efficiency units. Allowing for dwelling units of 500 square feet or less at a higher density than regular dwelling units.
• Office Priority Combining Zone. Establishing an Office Priority Combining Zone within which properties must dedicate at least sixty percent of building floor space to office uses before other uses are allowed.
• Green Loop Combining Zone. Establishing a Green Loop Combining Zone to provide safe, inviting pedestrian connections between commercial, cultural, recreational, natural and entertainment areas of the Downtown District. Controls include the provision of pedestrian-oriented amenities along ground-floor storefronts and development standards for attractive, inviting open space between buildings and sidewalks.
• Transfer Development Rights (“TDR”) program. Establish a TDR program to protect historic buildings from demolition by allowing their owners to sell development rights to owners of sites in less historic areas of downtown.

The DOSP has undergone revisions in response to extensive community review of the draft released in 2019. In conjunction with release of the Zoning Code Amendments, the Planning and Building Department will be hosting several additional community outreach meetings and hearing in the coming months. Individuals interested in the DOSP and its Zoning Amendments are encouraged to attend one or all of the following upcoming meetings:

• Special Districts, May 16 6:00-7:30 p.m.
• Development Standards and Zoning Incentive Program, June TBD 6:00-7:30 p.m.
• Community Advisory Group (CAG) Meeting, TBD
• Zoning Update Committee (ZUC) Hearing, TBD

Later this year, the City Council is anticipated to consider both the Final Draft Zoning Amendments and Final DOSP for adoption.

Reuben, Junius, & Rose LLP has experience with entitlement projects and land use diligence throughout Oakland, and we are pleased to have worked on some of the largest housing projects approved in the city over the last several years. We will continue to track this significant rezoning and community planning effort as it moves forward.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

On May 18, 2021, District 8 Supervisor Rafael Mandelman introduced legislation that could increase residential density on corner lots located in Residential, House (“RH”) zoning districts. RH Districts, which occupy most of the western San Francisco landscape, also have the lowest residential density levels that encourage development of single-family homes as well as some duplexes and triplexes.

Mandelman’s proposed legislation creates an exception from residential density limits for all corner lots in RH districts, allowing development of up to 4 units in addition to any permissible Accessory Dwelling Units (“ADUs”). For reference, lots that permit development of four or fewer dwelling units are typically allowed just one ADU under existing zoning. The exception would not apply to projects seeking or receiving a density bonus under California state law.  Further, projects taking advantage of the density exception would be subject to building standards (rear yard setback, usable open space, etc.) applicable to the RH-3 District.

As reported in a recent San Francisco Chronicle article, the legislation originally would have applied to all lots located within a half-mile radius of Muni, CalTrain, or BART station, as well as corner lots. However, Mandelman stated that the broader version would have required extended CEQA study and failed to provide a significant benefit over the current version, since the majority of larger mass transit stops are located on the east side of the City where residential density levels are typically higher. Mandelman stated that he may sponsor citywide legislation to permit fourplexes in the future, but not until San Francisco has completed its pending, long-range “Housing Element” update to the General Plan – likely next year.

Still, the legislation’s current focus on RH districts could provide for significant development potential. The legislation notes that roughly 60% of San Francisco’s developable land area is located in the RH Districts, with 38% of that area zoned exclusively for development of single-family homes. And, according to the San Francisco Planning Department’s March 2020 City’s Housing Affordability Strategies Report, local housing production has been heavily concentrated outside of the RH Districts, in the eastern and southeastern parts of the City, with approximately 90% of all new housing produced in just 10 eastside and central neighborhoods.

Mandelman’s fourplex legislation marks the latest in a number of local, regional, and statewide efforts to increase residential density in areas traditionally zoned for single-family homes or small multi-unit buildings. Berkeley and Sacramento have recently enacted legislation eliminating single-family zoning, while cities like San Jose and Oakland are considering similar measures. And, at the state level, the pending Senate Bill (“SB”) 9 legislation proposes to allow existing residentially-zoned properties state-wide which meet certain requirements to be subdivided into two lots, each of which can contain up to two units (duplex) in a single-family zone with ministerial processing.  After a third reading on the Senate floor and a favorable vote of 28-6, SB 9 is now headed to the Assembly and could pass in this year.

Following its introduction to the Board of Supervisors on May 18, 2021, Mandelman’s fourplex legislation was assigned to the Land Use and Transportation Committee for review following a mandatory 30-day hold period. A Committee hearing date has not yet been set for this legislation.

Authored by Reuben, Junius & Rose, LLP Attorney Melinda Sarjapur.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.