Bachich v. Bachich

Filed 3/7/07 Bachich v. Bachich CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Amador)

In this family dispute over undeveloped land located in Amador County, defendants George Albert Bachich, Jr. (George) and Loren John Bachich (John)(collectively defendants) appeal from an interlocutory judgment of partition in favor of their cousin, plaintiff Robert Allen Bachich (Bob or plaintiff).

The subject property, Alpi Ranch, is jointly owned by the parties, but is used exclusively by John to run his cattle. In 1995, the parties entered into an agreement in which they divided their possessory interests in several pieces of land and adjusted their proportionate interests in Alpi Ranch but retained joint ownership of the ranch.

On appeal, defendants contend the agreement must be interpreted to prohibit partition of Alpi Ranch, partition is barred by principles of waiver, estoppel, and unfairness, and the trial court erred by excluding parole evidence of the circumstances surrounding the agreement and the parties intent at the time of contracting.

We find no error and shall affirm the interlocutory judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The evidence presented by the parties was undisputed and limited, consisting of an agreement and a grant deed. Those two documents establish that on September 29, 1995, George, John and Bob signed an agreement entitled VOLUNTARY PARTITION AND MUTUAL RELEASE AGREEMENT (hereafter Agreement). It is undisputed that George and John are brothers and Bob is their cousin.

The Agreement states that it is the intention of the parties to divide all assets equally. To that end, 10 specified parcels were divided in kind. Bob received four of the parcels, George and John each received an undivided 50 percent interest in four other parcels, and ownership of the two remaining parcels, referred to as Alpi Ranch or ranch, was to be held in cotenancy. Alpi Ranch lies in Amador County and consists of 196 acres of undeveloped land. Bob was to receive an undivided 39 percent interest in the ranch while George and John were each to receive an undivided 30.5 percent interest. The Agreement was carried out and a grant deed to Alpi Ranch was executed in conformance with the Agreement.

Defendants rely on several paragraphs in the Agreement as prohibiting partition. We shall therefore set out the pertinent provisions.

Paragraph 1 (Nature and Effect of Agreement) states that it consists of a compromise and settlement by each party of that partys claims against the other party, a voluntary partition of jointly held assets and a release given by each party to the other relinquishing all claims against the other with regard to any and all assets relating to Amador and El Dorado County real property. . . .

Paragraph 2 (Nature and Status of Dispute) states that the parties . . . are the owners of undivided interests in real property in Amador and El Dorado Counties. The parties have been unable to agree as to a proper and equal division for some time and rather than file a Court action have agreed to divide said assets as described in this Agreement. [] JOHN BACHICH and GEORGE BACHICH further agree that in the event of a sale or partition of the Clinton Road property that JOHN BACHICH will retain the house that he is currently residing in and approximate[ly] three (3) acres around it.

Paragraph 3 (Mutual Compromise Agreement) states that [e]ach party, in consideration of the promises and concessions made by the other does hereby agree to divide all jointly held Amador County and El Dorado County real property and any assets derived therefrom and hereby compromises and settles any and all past, present, or future claims, demands, obligations, or causes of action, whether based on tort, contract, or other theories of recovery, which that party has against the other party and the other partys predecessors and successors in interest, heirs and assigns . . . arising from the subject matter of the actions described in Paragraph 2 of this Agreement, concerning Amador and El Dorado County real property and any income received therefrom and the parties agree to divide said assets.

Paragraph 6 (Mutual General Release) states that [e]ach of the parties on behalf of themselves, their descendants, ancestors, dependents, heirs, executors, administrators, and assigns . . . does release each other, their representatives, assigns, and successors from all rights, claims and actions which each party and the above mentioned successors now have against the other party and the above mentioned successors, stemming from their differences described in Paragraph 2.

Paragraph 11 (Property Values) provides that the parties have made this Agreement to divide the real property to the best of their ability in equal portions according to the present interests of each.

Paragraph 15 (Entire Agreement) is an integration provision which states that the Agreement is the entire Agreement between the parties.

On May 18, 2004, approximately nine years after the Agreement was executed, plaintiff filed an action seeking partition of his undivided 39 percent interest in Alpi Ranch.

The matter was tried before the court, which ruled in favor of plaintiff and issued an interlocutory judgment of partition. (Code Civ. Proc., 872.720, subd. (a).) Defendants properly appeal from the interlocutory judgment. (Code Civ. Proc.,

904.1, subd. (a)(9).)

DISCUSSION

I.

Partition

Defendants contend partition is barred under the terms of the Agreement and under principles of waiver, estoppel,^[1]and unfairness. Plaintiff contends there is nothing in the Agreement express or implied to bar partition, nor does partition result in unfairness or inequity. We agree with plaintiff.

When real property is jointly held by several persons, a partition of the property serves to divide the existing interests and sever the owners unity of possession. (Schwartz v. Shapiro (1964) 229 Cal.App.2d 238, 257; 4 Witkin, Summary of Cal. Law (9th ed. 1987) Real Property, 286, p. 483.) It may be accomplished by physically dividing the property, referred to as partition in kind (Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 757), or by joint sale of the entire property. (Schwartz v. Shapiro, supra, 229 Cal.App.2d at p. 253.)

A cotenant is entitled to partition as a matter of right. No reason need be given and it will not be denied merely because it will result in financial loss to the cotenants. The only indispensable requirement is that the cotenant demanding partition show clear title. (American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1013 (Feller).) However, the right of a co-owner of real property to seek partition is subject to the requirement of fairness (Feller, supra, 59 Cal.App.3d at p. 1015; Penasquitos, Inc. v. Holladay (1972) 27 Cal.App.3d 356, 358 (Penasquitos)) and the right may be limited or waived by contract, express or implied. (Code Civ. Proc., 872.710; Feller, supra, 59 Cal.App.3d at pp. 1013-1014 [waiver]; Schwartz v. Shapiro, supra, 229 Cal.App.2d at

p. 253 [limitation].)

A. The Agreement

The Agreement is silent on the right to partition Alpi Ranch. In light of this silence, defendants contend the Agreement must be construed to prohibit further partition of the ranch. In their view, the Agreement provides that Alpi Ranch was to remain in cotenancy, that the parties stated intent to avoid litigation, coupled with the release clause, evinced an intent to permanently bar plaintiffs right of partition.

Before construing the Agreement, we first consider the pertinent rules governing the interpretation of contracts, which hold that the language of the agreement governs its interpretation if that interpretation is clear and explicit and does not involve absurdity (Civ. Code, 1638) and that the parties intention is to be ascertained from the writing alone if possible. (Civ. Code, 1639.) In so doing, we must construe the contract as a whole, giving effect to every part if reasonably practical, each clause helping to interpret the other. (Civ. Code, 1641.)

Before turning to the specific provisions of the Agreement, we first reject a basic assumption that appears throughout defendants brief, namely that the Agreement divided Alpi Ranch. It did not. By arguing the Agreement prohibits further partition of Alpi Ranch, defendants erroneously assume the ranch was partitioned under the Agreement. Pursuant to the Agreement, the parties adjusted their proportionate interests in the ranch but retained undivided joint ownership. Although the division of Alpi Ranch appears in paragraph 5 entitled Property Divided in Kind, this title does not override the language in the Agreement and the grant deed, which gave each party an undivided interest in the land. Because the parties did not sever their unity of possession, no partition took place. (Schwartz v. Shapiro, supra, 229 Cal.App.2d at p. 257.)

We also reject defendants claim the Agreement provides that Alpi Ranch shall remain in cotenancy. No such language appears in the Agreement.

Turning to paragraph 1, defendants contend this paragraph shows the parties intent to resolve their dispute over the family properties forever by their voluntary partition of the parcels and that in consideration of the settlement, plaintiff permanently surrendered his right to partition the undivided cotenancy. We disagree.

Paragraph 1 constitutes a release given by each party

. . . relinquishing all claims against the other with regard to any and all assets . . . shown in Exhibit A [and] extinguish[es] any obligations heretofore existing between the parties. (Italics added.) Exhibit A describes the location and parameters of the property owned by the Bachich family prior to the Agreement. The dictionary defines heretofore to mean before this or up to this time. (Websters 3d New Internat. Dict. (1971) p. 1059.) Thus, the Agreement served to extinguish only those obligations relating to property owned up to the time of the Agreement.

Clearly however, the Agreement did not extinguish the parties right to sue for breach of the Agreement itself. Similarly, there is nothing in the Agreement that alters or limits the parties rights with respect to property interests acquired pursuant to the Agreement. More specifically, the Agreement did not extinguish the parties rights to bring a future action for partition of properties that were maintained in cotenancy.

This can be seen from Paragraph 2, which clearly evinces the parties contemplation of future litigation over jointly held properties. It provides that in the event of a sale or partition of the Clinton Road property, John would retain the house he resided in and the surrounding three acres. Although defendants claim the absence of a similar provision for Alpi Ranch indicates an intent to prohibit partition of that property, we fail to see how silence on the subject constitutes a complete and permanent prohibition of the basic right of a cotenant to seek partition and find the absence of such a provision significant under these circumstances.

Defendants next argue that paragraph 3 (Mutual Compromise Agreement) illustrates that the parties divided all the properties, including the properties held in cotenancy, thereby excluding the possibility of a later partition or sale of Alpi Ranch. Defendants are mistaken.

Paragraph 3 recites a compromise and settlement to divide all jointly held Amador County and El Dorado County real property and any assets derived therefrom and hereby compromises and settles any and all past, present, or future claims, demands, obligations, or causes of action . . . which that party has against the other party . . . arising from the subject matter of the actions described in Paragraph 2 of this Agreement, concerning [the] . . . real property and any income received therefrom and the parties agree to divide said assets.

Although paragraph 3 refers to a division of all the jointly held property, we must read it in light of paragraph 4, which states the parties intent to divide all listed assets equally and paragraph 11, entitled Property Values, which states to divide the real property to the best of their ability in equal portions according to the present interests of each. Reading these paragraphs together, it is apparent the parties used the term divide not in the physical sense but in the monetary sense with respect to the value of the property. Indeed, the parties do not dispute that by the Agreement, they adjusted their proportionate ownership interests in the properties to equalize the value of their interests. Moreover, as can be seen from paragraph 5, the parties retained undivided joint interests in six parcels of property. Clearly then, they did not intend to physically divide all the parcels of land.

Defendants next argue that under paragraph 6, the Mutual General Release, the parties released each other from partitioning the properties in a manner different from that stated in the Agreement. Again we disagree.

Paragraph 6 states that [e]ach of the parties . . . does release each other . . . from all rights, claims and actions which each party and the above mentioned successors nowhave against the other party and the above mentioned successors, stemming from their differences described in Paragraph 2. (Italics added.) Consistent with the terminology used in paragraph 1 (heretofore) and use of the present tense in paragraph 3 (which that party has against the other party), use of the phrase now have in paragraph 6 refers to a release of claims and obligations existing at the time of the Agreement. The release clause is also limited by its reference to the differences described in paragraph 2, which refers to the nature of the dispute and states that [t]he parties . . . are the owners of undivided interests in real property . . . . and rather than file a Court action have agreed to divide said assets as described in this Agreement. (Italics added.) Said assets is a reference to the owners undivided interests prior to the Agreement. The release clause is therefore limited to claims existing when the Agreement was executed. Indeed three paragraphs of the Agreement refer to paragraph 2 as the subject matter of the Agreement. Thus, the scope of the compromise and release provision is limited to the undivided interests in real property in Amador and El Dorado Counties, owned by the parties prior to the Agreement.

Reasonably construed as a whole, nothing in the Agreement bars plaintiff from seeking partition of Alpi Ranch.

B. Waiver and Unfairness

We also reject defendants claim that principles of waiver and fairness bar partition of Alpi Ranch.^[2] As stated, the Agreement is silent as to any future partition of Alpi Ranch. Because it does not express an actual intention to waive the right, we consider whether plaintiff impliedly waived his right of partition under the Agreement.

There are many circumstances in which the courts have found waiver by implication. However, as one court explained, because contractual rights are not subject to partition, when the effect of a cotenancy partition is to substantially impair contractually acquired joint rights, an agreement not to partition is implicit in the agreement. This is so because the contractual obligations are manifestly inconsistent with partition. [Citations.] (Penasquitos, supra, 27 Cal.App.3d at p. 359.)

Waiver is implied therefore when partition would frustrate or defeat the purpose for which the property was acquired and for which it is currently being used. (Pine v. Tiedt (1965) 232 Cal.App.2d 733, 736-737.) For example, implied waiver has been found where by agreement, cotenants entered into a long term lease with an option to buy at a stated price (Penasquitos, supra, 27 Cal.App.3d at p. 359; Schwartz v. Shapiro, supra, 229 Cal.App.2d at p. 253), agreed to a plan designed to develop and operate property under a long term oil and gas lease (Thomas v. Witte (1963) 214 Cal.App.2d 322, 327), invested in property to provide a secure source of income under a long term lease (Feller, supra, 59 Cal.App.3d at pp. 1016-1017; Pine v. Tiedt, supra, 232 Cal.App.2d at pp. 736-737), and entered into a property settlement agreement providing that the family home was to remain in cotenancy as long as the wife occupied the property as her home for herself and her children and did not remarry. (Miranda v. Miranda (1947) 81 Cal.App.2d 61, 68.)

No such circumstances appear here. Read as a whole, the terms of the Agreement make clear the purpose of the Agreement was to (1) resolve existing legal disputes over the specified parcels of property as they were owned at the time of the Agreement and (2) equally divide the listed properties. Those purposes were accomplished when the deeds to all the parcels listed in the Agreement were executed. There is nothing in the record to suggest those purposes were not carried out at that time and defendants do not claim otherwise. On the other hand, there is nothing in the Agreement that limits or specifies the purpose for which Alpi Ranch may be used. Nor was there any evidence of another agreement involving a long term plan to jointly use the ranch for a particular purpose inconsistent with partition. Defendants have therefore failed to establish the existence of an implied waiver.

We similarly reject defendants contention it is unfair to allow plaintiff to return to court to partition or force a sale of the property, which was divided under the Agreement. Again, the Agreement did not divide Alpi Ranch, it merely specified the parties proportionate undivided interests in that property, thereby adjusting the size of their interests.

Defendants also contend partitioning Alpi Ranch is unfair because it will deprive John of his livelihood and if they knew plaintiff had any intention to partition the land after the Agreement, they would have sought a different division of the land. Defendants have failed to demonstrate unfairness. Unlike in Penasquitos, supra, 27 Cal.App.3d at page 358 or Feller, supra, 59 Cal.App.3d at pages 1015 through 1016, where the parties had purchased an interest in real property as part of a long-term lease with an option to buy or a lease agreement to secure a steady stream of income, here there was no such agreement. Nor is plaintiff seeking to take unfair advantage of defendants. While John may no longer enjoy exclusive use of Alpi Ranch for his cattle business, neither the Agreement nor the deed to the ranch granted him that right.^[3]

Had preservation of the ranch in its current configuration and acreage actually been of concern to defendants at the time of the Agreement, they could have provided for that outcome. They were aware of the possibility and nature of partition of jointly owned property having specifically provided for an agreed division of any future partition of the Clinton Road property. Having failed to include a similar provision for Alpi Ranch in the Agreement, defendants may not now assert such a restriction. Accordingly, we reject their claim of unfairness.

II.

Parole Evidence

Defendants contend the trial court erred by excluding their proffered evidence to show they intended to prohibit any future partition of Alpi Ranch and to support their fairness defense. Plaintiff contends the evidence was properly excluded because the Agreement was not ambiguous, the Agreement is not reasonably susceptible of defendants construction, and the evidence was insufficient to show partition would be unfair. We agree with plaintiff.

The parole evidence rule, codified in Civil Code section 1625^[4]and Code of Civil Procedure section 1856,^[5]is a substantive rule that prohibits consideration of extrinsic evidence whether it be written or oral, for the purpose of adding to, detracting from, or otherwise varying or contradicting the terms of an integrated written agreement. (Pacific Gas & Electric Co. v. G. W. Thomas Drayage & Rigging Co., Inc. (1968) 69 Cal.2d 33, 39 (PG&E); EPA Real Estate Partnership v. Kang (1992) 12 Cal.App.4th 171, 176.)

Extrinsic evidence may be considered by a court to aid in the interpretation of a written contract when it is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. (PG&E, supra, 69 Cal.2d at p. 37.) However if the proffered evidence would not persuade a reasonable man that the instrument meant anything other than the ordinary meaning of its words, it is useless. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 913.)

Whether the parol evidence rule applies is a question of law, which we consider de novo to the extent no evidentiary conflict exists. (EPA Real Estate Partnership v. Kang, supra, 12 Cal.App.4th at p. 176.) Generally, the resolution of this issue involves a two-part analysis: (1) was the writing intended to be an integration; and (2) is the agreement reasonably susceptible of the meaning urged by the party offering the evidence. (Ibid.)

Defendants made the following offer of proof: The Bachich family began acquiring the listed parcels in the 1860s and their land was always used for agricultural purposes, primarily to run cattle. John took over his fathers cattle business, which he continues to run on Alpi Ranch. Cattle ranching is Johns sole livelihood and he intends to run cattle as long as he can.

In 1970, Alpi Ranch was placed in the Williamson Act. The purpose of that act is to preserve the land for agricultural use or open space use. In 1993 when the city proposed to bring the ranch into its sphere of influence, John and Bob sent a letter to the city objecting to that proposal because they wanted to retain it in its current form. At the time the parties entered into the Agreement, they did not intend to sell or divide Alpi Ranch.

The purpose of the Agreement was to avoid litigation. Had defendants known plaintiff wanted to partition the property, they would have divided the various parcels differently. The deed to Alpi Ranch has a recital that states [t]his transfer is made pursuant to a voluntary partition agreement between parties hereto, and constitutes an equal division of their respective interests.

The trial court found the offer inadequate to prove, inter alia, waiver, release, estoppel, unfairness, or that partition would defeat the purpose for which the property was held.

Applying the above stated principles, we find the evidence was properly excluded. Although the Agreement is an integrated instrument (This Agreement contains the entire Agreement between the parties), defendants do not claim the instrument is ambiguous. Rather they seek to vary the Agreement by adding a term to it, namely that partition of Alpi Ranch is prohibited. The evidence is inadmissible for that purpose and as discussed in Part I, the Agreement is not reasonably susceptible of an interpretation that prohibits the future partition of Alpi Ranch. Indeed such a term would be inconsistent with the Agreement, which we have found applies only to interests, rights and obligations that existed at the time the Agreement was executed.

We also find the evidence is inadequate to support the fairness defense because the proffered evidence does not show partition contravenes the purpose for which the property was acquired. Again, the Agreement does not limit use of the land for agrarian purposes nor does it grant John the exclusive right to use the land for cattle ranching. Furthermore, there is nothing to show that partition is incompatible with agrarian use of the land.

Because defendants seek to add a term to the Agreement that conflicts with the Agreement, we find the proffered evidence was properly excluded.

DISPOSITION

The interlocutory judgment is affirmed. Respondent is awarded costs on appeal. (Cal. Rules of Court, rule 8.276(a).)

BLEASE , Acting P. J.

We concur:

NICHOLSON , J.

MORRISON , J.

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Analysis and review provided by La Mesa Property line attorney.

^[1] Defendants do not cite any authority or engage in any analysis in support of their estoppel theory. Their failure to do so forfeits their claim under that theory. (Thompson v. County of Los Angeles (2006) 142 Cal.App.4th 154, 171.)

^[2] Waiver is the intentional relinquishment of a known right. (State of Washington ex rel. Burton v. Leyser (1987) 196 Cal.App.3d 451, 460.) The elements of waiver are an existing right, a benefit or advantage, actual or constructive knowledge of the right, and an actual intention to relinquish the right or conduct so inconsistent with the intent to enforce it as to induce a reasonable belief it has been relinquished. (Ibid.)

^[3] Each cotenant has an equal right to possession of the whole property. (Dabney v. Dabney (2002) 104 Cal.App.4th 379, 382; 4 Witkin, Summary of Cal. Law, supra, Real Property, 264, pp. 465-466.)

^[4] Civil Code section 1625 provides that [t]he execution of a contract in writing, whether the law requires it to be written or not, supersedes all the negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.

^[5] Code of Civil Procedure section 1856 provides that (a) Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.

(b) The terms set forth in a writing described in subdivision (a) may be explained or supplemented by evidence of consistent additional terms unless the writing is intended also as a complete and exclusive statement of the terms of the agreement.

(c) The terms set forth in a writing described in subdivision (a) may be explained or supplemented by course of dealing or usage of trade or by course of performance.

(d) The court shall determine whether the writing is intended by the parties as a final expression of their agreement with respect to such terms as are included therein and whether the writing is intended also as a complete and exclusive statement of the terms of the agreement.

(e) Where a mistake or imperfection of the writing is put in issue by the pleadings, this section does not exclude evidence relevant to that issue.

(f) Where the validity of the agreement is the fact in dispute, this section does not exclude evidence relevant to that issue.

(g) This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates, as defined in Section 1860, or to explain an extrinsic ambiguity or otherwise interpret the terms of the agreement, or to establish illegality or fraud.