STEVENSON v. BAUM
65 Cal.App.4th 159 (1998)
Action for damages for fraud.
In 1980, Plaintiffs, Ted and
Alice Stevenson, bought a mobilehome park in Contra Costa
County from Defendant, James Baum.
In December, 1945, the Standard
Oil Company recorded an easement affecting the property as
the servient tenement. The easement was for underground
pipeline purposes, with rights of ingress and egress for
inspection, maintenance, and repair.
Defendant Baum acquired the
mobilehome park in 1968, apparently without the benefit of
Three years later -- in 1971 --
Standard Oil notified Baum that it intended to inspect its
easement, and to "service" the pipeline. In response to the
oil company's request, Baum relocated five (5) of the
mobilehomes. Baum returned the mobilehomes to their original
location after completion of the inspection.
The property was refinanced in
1978, and Baum obtained an owner's policy of title insurance
from First American Title Insurance Company. First
American's policy identified the Standard Oil Co. easement
as an exception from coverage, and provided the following
Easement for ingress and egress
and pipeline purposes, and incidents thereto, granted a
Standard Oil Co. of California in the instrument
Recorded: December 24,
1945, Book 857, page 400,
Affects: the northerly portion of the premises.
See map for approximate location.
First American attached to the
policy a plat depicting the approximate location of the
Baum listed the property for
sale in 1980. He did not inform the listing broker that
title to the property was subject to an easement, or that
several of the mobilehomes had been moved in 1971 to
accommodate Standard Oil's inspection request.
The Stevensons responded to ads
placed by Baum's broker. They were informed by the broker
that the property had 44 "approved" mobilehome spaces. This
representation was correct: the property was approved for 44
spaces under Contra Costa County land use ordinances.
The Stevensons offered to
purchase the mobilehome park in November, 1980. Their offer
to purchase, presented on a broker's preprinted form,
contained the following language regarding title to the
is to be free of liens, encumbrances, easements,
restrictions, rights and conditions of record or known
to seller other than the following:
Those of record.
[The parties understood the term
"Those of record" to mean documents recorded in the Office
of the County Recorder of Contra Costa County].
Baum accepted the offer. There was no dialogue between Baum
and the Stevensons concerning the transaction -- all
communications were through the parties' brokers.
The Stevensons did not review
the preliminary report which was issued during escrow, and
made no attempt during escrow to investigate matters which
affected, or may have affected, title to the mobilehome
park. However, after escrow closed the Stevensons read their
policy of title insurance, and noted an easement for
"ingress and egress" in favor of the Standard Oil Company.
In the policy the easement was described as follows:
easement affecting the portion of said land and for the
purposes stated herein, and incidental purposes,
of: Standard Oil Company, a corporation
For: Ingress and Egress
Recorded: December 24, 1945, in Book 857, Page 400,
in the Stevensons' policy, and in the preliminary report
which preceded it, made no mention of a "pipeline," and the
Stevensons believed that the language in their policy
("ingress and egress") meant that Standard Oil was only
entitled to enter and travel across the property.
In 1993 the Stevensons received a letter from Chevron
stating that it was the current owner of the easement, and
that it was necessary for the Stevensons to remove several
mobilehomes which were encroaching on the easement and
blocking access to the pipeline.
Stevensons sued Baum and his broker for intentional fraud
and fraudulent concealment. The broker was voluntarily
dismissed. Baum moved for summary judgment, arguing that he
had not made any affirmative misrepresentations, and that
the purchase and sale agreement relieved him from any duty
to disclose the recorded easement. The trial court granted
the motion. On appeal, HELD, affirmed.
Requirement of Misrepresentation.
The Court of
Appeal (3rd. Dist.) rejected -- for lack of evidence -- the
Stevensons' claim of affirmative misrepresentation. The
mobilehome park had 44 county-approved spaces, which is
precisely what Baum's broker represented to the Stevensons.
Stevensons contended that an "approved" space means a
"usable" space, and that five of the spaces were not usable
because they were burdened by the pipeline easement.
However, according to the Court, the Stevensons adduced no
evidence or authority to show that an "approved" space
necessarily means a "usable" space. 65 Cal.App.4th at 165.
Concealment: Contractual Term Obligating Buyer To Take Title
Subject To Easements of Record Satisfies Seller's Duty To
Disclose Rights of Easement Owner.
the Stevensons, the contract term obligating them to take
title subject to easements of record served merely to put
them on notice of prior recorded interests, and was
independent of Baum's duty of disclosure. According to the
Stevensons, that duty required Baum (1) to disclose the
actual location of the easement; and (2) to reveal that he
had formerly relocated five mobilehomes because they
encroached on the easement.
was not persuaded:
it would no doubt have interested the Stevensons to
learn of the 1971 incident, the primary material fact
which potentially affected the value of the property was
the "underlying" fact of the pipeline itself - a fact
immediately ascertainable from the public records. A
reasonable person in the Stevensons' position, knowing
that the oil company's easement was for pipeline
purposes, would have realized that the easement holder
might exercise its right to access to the pipeline at
any time. Moreover, it is undisputed that the recorded
easement accurately described where the pipeline was;
thus, if the Stevensons had consulted the public
records, they would have learned that the pipeline
underlay mobile home spaces.
warning the Stevensons in the purchase contract that
they took title subject to easements of record, Baum put
them on notice of the above materials facts, which
satisfied his duty of disclosure under the express terms
of the contract. Because Baum did not breach that duty,
the Stevensons cannot state a cause of action for
fraudulent nondisclosure as a matter of law. Id. at 166.
distinguished Seeger v. O'Dell, 18 Cal.2d 409 (1941),
a Supreme Court case on which the Stevensons substantially
relied. The essence of Seeger is that a party charged
with affirmative misrepresentations cannot rely on his
accuser's constructive notice (of facts disclosed by a
recorded document), to prove that the accuser had knowledge
of matters which are inconsistent with facts represented to
the accuser. "Seeger is a case of active,
affirmative, intentional misrepresentation, not the mere
alleged failure to disclose; moreover, Seeger did not
involve facts which were just as accessible to the plaintiff
as to the defendant. For both reasons, it is not on point."
Id. at 166-167.
also rejected the Stevensons' argument that a legal
description of an easement's location may not reveal its
actual, exact location, and that it is the duty of a seller
to explain any variance which exists.
as these assertions amount to an argument that a legal
description of an easement is insufficient as a matter
of law to give a buyer notice of its true location, we
reject the argument as unsupported by authority and
contrary to law. (Cf. Civ.Code, § 1213; Evid.Code §
664.) Id., at 166, Fn. 7.
Construction Corp. v. City of Los Angeles, 2 Cal.3d 285
(1970), the Supreme Court indicated that a cause of action
for non-disclosure of material facts may arise in "at least"
seller makes a partial representation without disclosing
facts which materially qualify the representation;
only the seller knows the facts or said facts are only
accessible to the seller, and the seller knows that
those facts are not known to or reasonably discoverable
by the buyer; or
seller actively conceals facts from the discovery of the
In terms of
these three "accepted" scenarios, Baum couldn't have been
liable to the Stevensons for fraud. With the exception of
the statement made by Baum's broker regarding the number of
county-approved spaces, no representations --
partial or otherwise -- were made by Baum to the Stevensons.
second category (facts known only to the seller), as a
matter of law all persons had constructive
notice of the contents of Standard Oil's easement. CC §
1213; Hochstein v. Romero, 219 Cal.App.3d 447, 452
there was no evidence that Baum in any way prevented
discovery of information regarding the easement. See, e.g.,
Herzog v. Capital Co., 27 Cal.2d 349, 352-353 (1945).
Significantly, the Baum/Stevenson contract was a commercial
transaction to which the transfer disclosure statement
legislation did not apply. While the Court noted that CC §
1102 et seq. does not apply to a transaction involving real
property improved with more than four dwelling units [Id.,
at 165, Fn. 6], it also observed that there is no "lesser
duty to disclose" in a commercial real estate transaction
than in a residential transaction. Nevertheless, if this had
been a residential transaction, could Baum have avoided
liability to the Stevensons if he had failed to reveal the
1971 "replacements" in Section II of the TDS?