Case Name: James L. Schilling, et al. v. Bernhard Szilagyi, et al.

Case No.: 18CV328451

Demurrer of Cross-Defendants Schilling, Ramos, and Gonzalez to First Amended Cross-Complaint Filed by Cross-Complainants Szilagyi

Factual and Procedural Background

On December 30, 2010, defendant Bernhard Szilagyi (“Szilagyi”) acquired title to 8360 Winter Green Court in Gilroy. (Complaint, ¶¶12 – 13.) On April 25, 2014, plaintiffs James L. Schilling and Kathleen T. Schilling (collectively, “Schillings”), as trustees of their living trust, acquired title to 8361 Winter Green Court in Gilroy. (Complaint, ¶¶12 and 14.) In July 2014, plaintiff Schillings began building a custom home on their property which they completed in May 2015. (Complaint, ¶15.)

During construction, with the express permission of defendant Szilagyi, plaintiff Schillings used a portion of Szilagyi’s property to gain better access to their back yard and as a paved parking area. (Complaint, ¶16.) The party of Szilagyi’s property used consists of a right-triangular shaped area located about midway along the common northwest boundary line of the two lots (“Disputed Area”). (Id.) The Schillings made permanent improvements, with Szilagyi’s consent, to the Easement Area consisting of concrete, retaining walls, landscaping and stone. (Id.)

In consideration of Szilagyi’s permission, James L. Schilling verbally promised to help design a home for Szilagyi and provide other valuable services to help with the construction of a home on Szilagyi’s property. (Complaint, ¶17.) Plaintiff James L. Schilling is a former licensed general contractor and long-time successful real estate developer and builder. (Complaint, ¶1(b).) On April 16, 2015, Szilagyi wrote and signed and delivered a letter to the Schillings in which Szilagyi granted the Schillings permission to use a portion of his lot and stated his willingness to formalize an easement. (Complaint, ¶18.) Beginning in April 2015 and continuing until February 2018, plaintiff James L. Schilling spent time and effort designing a home for Szilagyi that fit within his budget. (Complaint, ¶19.) Plaintiff Jim Schilling also gave Szilagyi equipment, materials, and utilities for Szilagyi’s construction project which commenced in July 2017. (Complaint, ¶20.)

On July 14, 2017, Szilagyi recorded a grant deed to 8360 Winter Green Court in Gilroy vesting title in himself and his parents, defendants Kurt and Christiana Szilagyi (“Szilagyi Parents”), as tenants in common. (Complaint, ¶21.)

In March 2018, plaintiff James L. Schilling informed Szilagyi that he wanted to list his home for sale and needed to formalize the promise to grant an easement made by Szilagyi so the Schillings could properly market their home without impediments to a sale. (Complaint, ¶22.) On March 28, 2018, plaintiff James L. Schilling emailed a proposed “Grant of Parking Easement” suitable for recording to Szilagyi and asked Szilagyi and his parents to sign and acknowledge it. (Complaint, ¶24.) On March 30, 2018, Szilagyi signed and acknowledged the Grant of Parking Easement. (Complaint, ¶25.) On April 8, 2018, James L. Schilling emailed Szilagyi inquiring about the progress of obtaining Szilagyi Parents’ signatures. (Complaint, ¶26.) On April 15, 2018, Szilagyi stated to James L. Schilling, in relevant part, “In regards to the easement my parents are not in agreement and do not want one attached the [sic] property,” which came as a shock to the Schillings. (Complaint, ¶27.)

On May 16, 2018, Plaintiffs filed a complaint against Szilagyi and Szilagyi Parents asserting causes of action for:

(1) Breach of Partly Written Oral Contract [versus Szilagyi]
(2) Intentional Interference with Contractual Relations [versus Szilagyi Parents]
(3) Common Counts
(4) Equitable Easement
(5) Quiet Title to Easement in Real Property
(6) Specific Performance of Contractual Promise to Grant am Easement
(7) Financial Abuse of Elder

On July 6, 2018, defendants Szilagyi and Szilagyi Parents filed an answer to the Schilling’ complaint and also filed a cross-complaint. On August 8, 2018, Szilagyi and the Szilagyi Parents filed a first amended cross-complaint (“FAXC”) in which they allege the Schillings owned 8361 Winter Green Court in Gilroy through approximately July 2018 when defendants Mark A. Ramos (“Ramos”) and Rosa M. Gonzalez (“Gonzalez”) became owners. (FAXC, ¶¶4 – 5.) The FAXC alleges causes of action against the Schillings, Ramos, and Gonzalez for:

(1) Trespass
(2) Financial Elder Abuse

On August 30, 2018, cross-defendants Schillings, Ramos, and Gonzalez filed the motion now before the court, a demurrer to Szilagyi and Szilagyi Parents’ FAXC.

I. Request for judicial notice.

In support of their demurrer, cross-defendants request judicial notice of the complaint and answer filed in this action as well as the existence and contents of grant deeds which are attached as exhibits to the complaint. Cross-defendants fail to comply with California Rules of Court, rule 3.1306, subdivision (c) which requires, “A party requesting judicial notice of material under Evidence Code sections 452 or 453 must provide the court … with a copy of the material.” More importantly, the court does not find the documents necessary in ruling on the demurrer. (See Duarte v. Pacific Specialty Insurance Company (2017) 13 Cal.App.5th 45, 51, fn. 6—denying request where judicial notice is not necessary, helpful or relevant.) Accordingly, the request to take judicial notice in support of demurrer of cross-defendants Schilling, Ramos, and Gonzalez to first amended cross-complaint filed by cross-complainants Szilagyi is DENIED.

II. Cross-defendants’ demurrer to the first cause of action [trespass] in the FAXC is OVERRULED.

“As a general rule, landowners and tenants have a right to exclude persons from trespassing on private property; the right to exclude persons is a fundamental aspect of private property ownership.” (Allred v. Harris (1993) 14 Cal.App.4th 1386, 1390.) “Trespass is an unlawful interference with possession of property.” (Staples v. Hoefke (1987) 189 Cal.App.3d 1397, 1406; see also CACI, No. 2000.) “The elements of trespass are: (1) the plaintiff’s ownership or control of the property; (2) the defendant’s intentional, reckless, or negligent entry onto the property; (3) lack of permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant’s conduct was a substantial factor in causing the harm.” (Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 262; emphasis added.)

In demurring, cross-defendants contend Szilagyi and Szilagyi Parents (collectively, “Szilagyis”) cannot truthfully allege that cross-defendants lack permission for entry onto the Disputed Area. According to cross-defendants, any allegation by the Szilagyis concerning a lack of permission is sham in light of Szilagyis’ verified answer to the complaint which states, in relevant part, “Defendant Bernhard Szilagyi [sic] admits signing the letter referenced in Paragraph 18 of the verified complaint on file herein, however defendants deny that Bernhard wrote this letter, as defendants assert and allege this letter was written by plaintiff James Schilling in furtherance of his dealings with the City of Gilroy.”

At paragraph 18 of the complaint, the Schillings allege, “On Apr 16 2015 Bernhard wrote and signed a letter and delivered it to Schilling. A copy of this letter is attached as Exhibit 3.” The letter attached as Exhibit 3 to the complaint reads as follows:

April 16, 2015

To Whom It May Concern,

I Bernhard Szilagyi, property owner of 8360 Winter Green Ct. Gilroy, California hereby grant permission to James L. and Kathleen Teresa Schilling, to use a portion of my lot. The Schillings have built a home adjacent to my lot. Their address is 8361 Winter Green Ct. Gilroy California. With my permission and consent they have constructed a rock wall and driveway which part of is on my property. The location of the wall and driveway is in the lower left hand corner of my lot. These improvements do not restrict the use of my lot in any way. In fact the rock wall helps to soften the visual impact of their home.

If the City requires a more formal agreement like an easement, I am willing to grant that. The Schillings have indicated their willingness to pay for the drafting of the legal description and the recording if the City requires such an arrangement. The area in question is small and does not affect the usage of my lot.

Please contact me if you have any additional questions or concerns regarding this matter.

Sincerely,

Bernhard Szilagyi

The FAXC alleges, in relevant part, that “In or about the year 2014, the Schillings requested, and cross-complainants granted to them a license to use a small triangular portion of cross-complainants’ property to access the Schillings’ back yard during construction and to park vehicles thereon during the construction. … Said license to use said triangular portion of land was, and remained, revocable by cross-complainants as grantors of said license. In or about March of 2018, the Schillings informed cross-complainants that they would be listing for sale their adjoining property. Also, at that time, the Schillings asserted that they did not have a license to use the triangular portion of cross-complainants’ land but rather owned an easement appurtenant for parking automobiles. At or about that time, in response to this assertion, and seeking to retrieve said portion of land before any sale of the Schillings’ property, cross-complainants revoked said license and requested the Schillings vacate the property of cross-complainants and cease any and all further use.” (FAXC, ¶¶6 – 9.)

“Under the sham pleading doctrine, plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment. [Citations and footnote omitted.] A noted commentator has explained, ‘Allegations in the original pleading that rendered it vulnerable to demurrer or other attack cannot simply be omitted without explanation in the amended pleading. The policy against sham pleadings requires the pleader to explain satisfactorily any such omission.’” (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425 – 426.)

In Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 384, the court wrote:

It is axiomatic that the function of a demurrer is to test the legal sufficiency of the pleading by raising questions of law. [Citation.] It is also well established that, when reviewing a judgment entered following the sustaining of a demurrer without leave to amend, the appellate court must assume the truth of the factual allegations of the complaint. (Ibid.) However, an exception exists where a party files an amended complaint and seeks to avoid the defects of a prior complaint either by omitting the facts that rendered the complaint defective or by pleading facts inconsistent with the allegations of prior pleadings. [Citations.] In these circumstances, the policy against sham pleading permits the court to take judicial notice of the prior pleadings and requires that the pleader explain the inconsistency. If he fails to do so the court may disregard the inconsistent allegations and read into the amended complaint the allegations of the superseded complaint.

“The purpose of the doctrine is to enable the courts to prevent an abuse of process… The doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 751.)

The cross-defendants contend it is inconsistent for the Szilagyis to acknowledge the April 16, 2015 letter which expressly grants permission or a license to use the Disputed Area and then turn around and now allege otherwise in the FAXC. However, the court does not find the allegations in the FAXC to be inconsistent. The Szilagyis consistently allege they granted the Schillings permission (license) to use the Disputed Area, but that they revoked that permission in or around March 2018.

What cross-defendants apparently contend in this demurrer is that Szilagyi’s grant of a license ripened into an irrevocable license or de facto easement. Cross-defendants rely on Belmont County Water Dist. v. State of California (1976) 65 Cal.App.3d 13, 17 (Belmont) where the court wrote, “we emphasize that under well recognized general rules a license is a personal, revocable and unassignable privilege conferred either by writing or parol to do one or more acts on the land without possessing any interest therein. A license by deed or parol is by definition revocable at the pleasure of the licensor and is generally not compensable in a condemnation proceeding.”

To the general rule, however, there is an exception. As the court put it in County of Alameda v. Ross (1939) 32 Cal.App.2d 135, 141 [89 P.2d 460]: “Under certain circumstances a license which is ordinarily revocable at will may become irrevocable by the licensor, when the licensee, acting in good faith under the terms of the instrument, constructs valuable improvements on the property, making it unjust to permit the cancellation without first fully compensating the licensee for his loss and expenditure of money” (italics added). The cases underline that the exception thus stated is predicated on the doctrine of equitable estoppel and its primary purpose is to prevent the revocation of the license when the licensee has made substantial expenditures in reasonable reliance upon the representations by the licensor with respect to the duration of the license and when the permission of revocation would work fraud or injustice upon the licensee (Cooke v. Ramponi (1952) 38 Cal.2d 282, 286 [239 P.2d 638]; Higgins v. Kadjevich, supra, at p. 524; Gravelly Ford Co. v. Pope-Talbot Co., supra; Rest., Property, § 519, subd. (4)1).

(Belmont, supra, 65 Cal.App.3d at pp. 17–18.)

Cross-defendants contend the Szilagyis concede the Schillings constructed valuable improvements on the Disputed Area consisting of a rock wall and paved driveway. Even so, the court cannot apply the doctrine of equitable estoppel to find Szilagyi’s grant of a license irrevocable as a matter of law. “Whether there is an estoppel is chiefly a nonjury question of fact to be determined by the trial judge, and normally it must be pleaded, either as a part of the cause of action or as a defense.” (13 Witkin, Summary of California Law (10th ed. 2005) Equity, §191(2), p. 529.) “In the usual case, estoppel is a question of fact to be resolved by the trier of facts.” (Mills v. Forestex Co. (2003) 108 Cal.App.4th 625, 652.) “The existence of an estoppel in pais is a question of fact unless the facts are undisputed and susceptible of only one inference in which event it is a question of law.” (Ware Supply Co. v. Sacramento Savings & Loan Association (1966) 246 Cal.App.2d 398, 407 – 408; see also Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 305; see also Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, 1248 – 1249 [“Estoppel is resolvable by summary judgment when … no estoppel could exist as a matter of law.”])

Accordingly, cross-defendants’ demurrer to the first cause of action in cross-complainants FAXC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for trespass is OVERRULED.

III. Cross-defendants’ demurrer to the second cause of action [financial elder abuse] in the FAXC is OVERRULED.

Financial elder abuse is defined by Welfare and Institutions Code section 15610.30, subdivision (a) as follows:

“Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 1575 of the Civil Code.

To state a cause of action for financial elder abuse, a plaintiff must allege with particularity that: (1) the victim was an “elder” at the relevant time; (2) the defendant took, secreted, appropriated or retained, or assisted another in taking, secreting, appropriating or retaining, real or personal property of the elder; and (3) wrongful use of the property or intent to defraud the elder. (Welf. & Inst. Code, § 15610.30; Covenant Care, Inc. v. Super. Ct. (2004) 32 Cal.4th 771, 790 [financial elder abuse claims must be pled with particularity].) “A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.” (Welf. & Inst. Code, §15610.30, subd. (b); see also Bonfigli v. Strachan (2011) 192 Cal.App.4th 1302, 1315.)

Cross-defendants demur to the second cause of action of the FAXC on the basis that cross-complainant Szilagyi Parents have not alleged financial elder abuse with the requisite particularity. Cross-defendants focus on an allegation found in the first cause of action for trespass where it is alleged cross-defendants “have used various occasions to attempt to fraudulently cajole cross-complainants into executing and delivering to them a written easement.” (FAXC, ¶12.) The court does not find this allegation to be the relevant allegation. Instead, paragraph 17 of the FAXC alleges, in relevant part, cross-defendants, “in refusing to vacate possession of the property of cross-complainants, in continuing to occupy and use said property to park and store their vehicles, boats, and other items of personal property, and in making alterations to said property without the consent of cross-complainants, have taken, secreted, appropriated, obtained, and retained the property of cross-complainants for wrongful use and/or with the intent to defraud cross-complainants.” This allegation is pleaded with sufficient particularity.

Cross-defendants argue further that this allegation does not allege a “taking, secreting, appropriating, obtaining, or retaining” that is wrongful because, as argued above, the license ripened into a valid easement in favor of cross-defendants, therefore it is not wrongful. For the same reasons discussed above, the court cannot apply the doctrine of equitable estoppel on demurrer to find the grant of a license irrevocable as a matter of law.

Accordingly, cross-defendants’ demurrer to the second cause of action in cross-complainants FAXC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for financial elder abuse is OVERRULED.