Opinion
D071678
12-28-2017
SANCTUARY RETREAT PROPERTIES, LLC, Plaintiff and Appellant, v. GARY SHEKHTER et al., Defendants and Respondents.
Circuit, McKellogg, Kinney & Ross, L. Daniel Pearl; Dentons US and Charles A. Bird for Plaintiff and Appellant. Seltzer Caplan McMahon Vitek, Michael G. Nardi and Jessica S. Doidge for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00002487-CU-OR-NC) APPEAL from a judgment of the Superior Court of San Diego County, Earl H. Maas III, Judge. Affirmed. Circuit, McKellogg, Kinney & Ross, L. Daniel Pearl; Dentons US and Charles A. Bird for Plaintiff and Appellant. Seltzer Caplan McMahon Vitek, Michael G. Nardi and Jessica S. Doidge for Defendants and Respondents.
Frederick Howe lives next to Gary and Jean Shekhter in Rancho Santa Fe. The Shekhters installed solar array panels on their property within 100 feet of Howe's property. About four or five years later, Howe sued the Shekhters seeking declaratory relief and an injunction ordering the Shekhters to remove or relocate the solar panels. Howe relied on a 1990 written agreement (Agreement) between the predecessor owners prohibiting a "building structure or improvement" within 100 feet of the boundary line. In response, the Shekhters agreed they were bound by the Agreement, but argued the Agreement's setback rule did not apply to the solar panels. The Shekhters also raised statutory and equitable defenses.
The parties own their homes through entities controlled by them. Howe's home is owned by Sanctuary Retreat Properties, LLC (Sanctuary), of which he is a member and manager. The Shekhters own their home through the GJS Trust, of which they are trustees. For ease of reference, we will refer to Howe as the owner of his home and the Shekhters as the owners of their home. Unless the context suggests otherwise, these references are intended to identify the legal title holders (Sanctuary and/or GJS trustees). --------
After a bench trial, the court ruled in the Shekhters' favor. The court interpreted the Agreement to apply only to buildings (a " 'building structure' or 'building improvement' ") and therefore concluded the Agreement did not prohibit the solar panels. The court alternatively found Howe's claims were barred by Civil Code section 714 (section 714), which prohibits unreasonable restrictions on solar energy systems, and/or by the equitable doctrines of laches and estoppel. The court awarded the Shekhters prevailing party attorney fees.
Howe appeals. We conclude the court erred in interpreting the Agreement. Under its plain meaning, the Agreement prohibited the solar panels within 100 feet of Howe's property. However, we affirm the judgment. On Howe's covenant enforcement claim, the evidence supports the court's findings the Shekhters proved their laches defense (Howe's unreasonable delay causing prejudice). On Howe's declaratory relief claim, there are no facts showing the necessity for this form of relief.
FACTUAL AND PROCEDURAL BACKGROUND
We summarize the admissible evidence in the light most favorable to the court's rulings. (See Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 45-46.)
The Shekhters' property is on the western side of Howe's property. In 1990, the Shekhters' property (then vacant land) was owned by John and Rebecca Moores, and Howe's property (improved with a home) was owned by Harry Summers. In 1990, the Mooreses and Summers entered into the Agreement to impose restrictive covenants running with the land that would bind all successor owners.
The Agreement contained setback rules burdening each parcel. With respect to the burden on the Mooreses' parcel, the Agreement provided:
"Building Set-Back. No building structure or improvement, other than landscaping (which may include a gazebo, walkways and minor improvements solely for landscaping purposes), shall be installed, constructed or permitted to remain within that portion of [the Mooreses' parcel] described as: [¶] A strip of land 100 feet in width the easterly boundary of which is the easterly boundary of [the Mooreses' parcel]."With respect to the burden on Summers's parcel, the Agreement provided:
"Building Set-Back. No building structure or improvement, other than (i) a tennis court, restrooms and appurtenant facilities, and (ii) landscaping (which may include a gazebo, walkways, driveways,
fences, monument gates and minor improvements solely for landscaping purposes), shall be installed, constructed or permitted to remain within that portion of [Summers's parcel] described as: [¶] A strip of land 100 feet in width the westerly boundary of which is the westerly boundary of [Summers's parcel]."
The Agreement deemed monetary damages to be an inadequate remedy for a violation:
"Remedies: Monetary damages for the breach of the covenants . . . are declared to be inadequate and the owners . . . may be enjoined by any court . . . from commencing or proceeding with the construction of any improvements to or use of [the parcels] which are in violation of the covenants . . . or, if constructed, may be ordered by any court . . . to remove such improvements."The Agreement also prohibited waivers of enforcement rights based on delays in asserting those rights:
"Waiver. Any violation of the covenants contained in this Agreement shall be deemed to be a continuing violation of this Agreement and no delay in the delivery of any notice of any violation or in the enforcement of any rights or the seeking of any remedies shall constitute, or be deemed to constitute, a waiver of the right to give such notice, enforce such right or seek such remedy at any time after the occurrence of such violation."The Agreement was recorded in 1991.
About one decade later, in about 2000 or 2002, the Shekhters purchased a portion of the Mooreses' property, which was still unimproved. At the time, the Shekhters were aware of the recorded Agreement. The Shekhters soon retained an architect to create plans for a home on their property. Although they had initially considered a solar energy system, the architect's plans did not include solar panels. The Shekhters began constructing their residence in late 2006 or early 2007.
At about this same time, in 2007, Howe purchased the adjacent property from Summers. Before his purchase, Howe was aware of the recorded Agreement. He believed the Agreement was of "significant value" because he understood it provided "a buffer between the two properties." He testified the Agreement was "one of the . . . reasons why I bought the property. I wanted as much space between the properties as possible."
Two years later, in 2009, when the Shekhters' home was "mostly complete," the Shekhters decided to install solar array panels on their property. After reviewing their options with consultants, they chose a location that was on the northeast portion of their property within 100 feet of Howe's property. The location was based on various factors, including their own view corridor, the existing landscape, and the location of other structures on the property.
In December 2009, shortly after the Shekhters' contractors began installing the solar equipment, Howe became concerned that the panels would mar his views from his property, particularly when he was walking or riding his horse on his driveway. Howe told his estate manager he wanted the system removed or relocated. The estate manager then complained to the Rancho Santa Fe Homeowners Association (Association) about the appearance of the solar panels. Neither Howe nor his agents mentioned the Agreement's setback rules as grounds for these objections. The Association immediately issued a stop work notice to allow it time to review the Shekhters' plans. The Association rules require owners to seek approval before installing a solar array system, and the Shekhters had inadvertently failed to apply for a permit. At the time, the contractors had placed the racking for the solar system, but had not yet installed the panels.
The Shekhters' consultants then worked with the Association to obtain approval to complete the solar system's installation. The Shekhters received input from Howe's agents and sought to address Howe's concerns. The Shekhters' mitigation plan included installing additional landscaping to screen Howe's view of the solar panels. Based on these modifications, the Association approved the solar panels.
The Shekhters also obtained permit approval from the County of San Diego. Although the original home construction plans had identified the Agreement's 100-foot setback, the Shekhters' consultants (who were responsible for the permit applications) did not include the setback line on the solar permit application map. The Shekhters presented evidence this omission was unintentional, and they were unaware of any claim that the solar panels would be barred by the Agreement's setback rules. Mr. Shekhter testified he had forgotten about the setback requirement.
In 2010, the Shekhters completed the solar system installation. As constructed, there are three solar array panels, each about 65 feet long and about 10 feet high, on the northeastern portion of the Shekhters' property, within 100 feet of Howe's property. The system's equipment and installation cost was between $100,000 and $150,000.
Several months later, Howe (and his agents) again complained to the Association about the appearance of the solar panels, claiming the landscaping was insufficient to hide his view of the panels and the panels were inconsistent with the "look and feel" of the neighborhood. Howe again did not mention the Agreement's setback provision as a basis for his complaints. He (and his estate manager and attorneys) proposed several mitigation measures, including additional vegetation and grading to lower the effective height of the panels.
In September 2010 and October 2010, Howe's attorneys wrote to the Shekhters, asking them to cooperate in installing berms between the solar panels and Howe's property to minimize the visibility of the solar panels "upon [the] approach to [the Howe] home." Howe's attorneys claimed the solar panels were "unsightly" and constituted a nuisance. The attorneys did not mention the recorded Agreement, raise the setback requirement as a basis for Howe's continuing complaints, or ask the Shekhters to move the panels.
After considering these complaints and meeting with Howe, the Shekhters agreed to put additional landscaping along the adjoining property line to further obstruct Howe's view. The Shekhters ultimately planted substantial additional landscaping, at a cost of between $20,000 and $30,000.
During the next four years, the Shekhters continued to use the solar panels for their energy needs, and neither Howe nor his agents complained about the panels. However, in late 2014, Howe raised the issue of the Agreement's 100-foot setback rule for the first time. When asked at trial why he waited so long, Howe said "I guess one of my qualities is that I'm patient to a fault and . . . with the duration of the period of all of this activity . . . I had forgotten about the setback." Howe testified he was reminded about the Agreement when a real estate agent for a prospective buyer for another property subject to the Agreement asked Howe whether he would be willing to "remov[e] or lessen[] the setback limitations." Howe declined this request.
Within one year of this communication, in January 2015, Howe filed a lawsuit against the Shekhters, alleging two causes of action: (1) enforcement of the Agreement's 100-foot setback requirement; and (2) declaratory relief. On the first cause of action, Howe sought only equitable relief: a mandatory injunction requiring the Shekhters to remove the solar panels from the 100-foot setback area. On the second cause of action, Howe sought a declaration that the Agreement "prevents the [Shekhters] from installing or maintaining structures and improvements, other than landscaping, within the easternmost 100 feet of the [Shekhter] Property."
Trial
During the three-day trial, Howe testified and called several witnesses with first-hand knowledge of the relevant events. He also presented expert testimony to support his claim that the solar system could have been placed in alternate locations on the Shekhters' property. As his primary argument, Howe claimed the Agreement's plain language mandated the court to order the Shekhters to remove the solar panels from the setback area.
In defense, the Shekhters argued the Agreement applied only to improvements that were "buildings" and the solar panels were not buildings. The Shekhters also asserted several affirmative defenses, including section 714 (precluding enforcement of certain covenants restricting the installment or use of solar energy systems), laches, and equitable estoppel. In support of these defenses, the Shekhters presented evidence of the substantial costs previously incurred to satisfy Howe's demands for additional landscaping, and presented evidence that the relocation of the solar panels would cost about $25,000 and would require a "huge renovation" of the property because of the substantial mature landscaping that has been planted in that area.
Court's Ruling
After considering the evidence and arguments, the court found in the Shekhters' favor on both causes of action and issued a statement of decision explaining its findings. On the covenant enforcement claim, the court construed the setback provision to apply only to a " 'building structure' or 'building improvement,' " and concluded the solar array panels did not come within these terms. (Italics added.) The court thus ruled Howe did not meet his burden to establish that the installation and use of the solar system violated the Agreement. In reaching this conclusion, the court relied on: (1) legal rules governing interpretation of contracts and restrictive covenant agreements; (2) Mr. Shekhter's testimony of a statement made to him by his predecessor (Mr. Moores) suggesting the purpose of the setback rule was to provide "[p]rivacy" for the owners; and (3) its determination a contrary interpretation would violate section 714.
The court alternatively found that even if the Agreement prohibits the solar array panels in their current location, the Shekhters met their burden to prove their laches and equitable estoppel defenses. As to laches, the court discussed Howe's long delay in asserting that the Agreement prohibited the installation, and that Howe's complaint was filed long after "the Shekhters spent tens of thousands of dollars on additional landscaping as requested by [Howe] and after the solar array system has been operating for over four years." The court found this "evidence showed an unreasonable delay, [Howe's] acquiescence, and prejudice to the Shekhters." The court also rejected Howe's argument that the Shekhters' laches defense was barred by the "anti-waiver" provision in the Agreement, finding a waiver defense was materially different from the laches equitable defense.
As to equitable estoppel, the court found the Shekhters "had no reason to know that [Howe] believed the Agreement barred the installation of the solar array system in its current location" until Howe filed the lawsuit. The court also noted: " 'An injunction that bears heavily on the defendant without benefiting the plaintiff will always be withheld as oppressive.' [Citation.] Enforcing the restriction and requiring the Shekhters to remove and/or relocate the solar array system is unreasonable and inequitable. . . . There is no actual harm to [Howe] other than the solar panels being 'unsightly.' [Howe's] belated attempts to have the solar array system removed would not be equitable and would be extremely prejudicial to the Shekhters."
On the declaratory relief claim, the court stated this "cause of action effectively restates its first cause of action for Breach of Agreement. Therefore, based on the analysis . . . in regards to the Breach of Agreement claim, the Court finds that [Howe] has failed to sustain its burden of proof on its Declaratory Relief claim."
DISCUSSION
I. Interpretation of the Agreement's Setback Provision
Howe contends the court erred in interpreting the restrictive covenant to preclude only "buildings" in the 100-foot setback area.
A. Legal Principles
Contract principles govern the interpretation of a restrictive covenant. (Richeson v. Helal (2007) 158 Cal.App.4th 268, 276.) "The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting." (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955 (Founding Members).) In ascertaining the parties' intent, the court applies an objective standard. (ASP Properties Group v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266.) " 'We interpret words [in a contract] in accordance with their ordinary and popular sense, unless the words are used in a technical sense or a special meaning is given to them by usage.' " (Orien v. Lutz (2017) 16 Cal.App.5th 957, 961 (Orien).) " 'We consider the contract as a whole and interpret its language in context so as to give effect to each provision, rather than interpret contractual language in isolation.' " (Ibid.)
Generally, the parties' mutual intent "is determined from the writing alone, if possible." (Founding Members, supra, 109 Cal.App.4th at p. 955.) " 'If contractual language is clear and explicit and does not involve an absurdity, the plain meaning governs.' " (Orien, supra, 16 Cal.App.5th at p. 961.) However, a court may consider extrinsic evidence if the evidence is relevant to prove a meaning to which the contract is reasonably susceptible. (Founding Members, at p. 955.) This evidence may be considered only if it relates to the parties' objective intent. A contracting party's "undisclosed intent or understanding is irrelevant to contract interpretation." (Id. at p. 956.)
B. Extrinsic Evidence
Before turning to the contractual language, we address whether the trial court properly considered the extrinsic evidence admitted at trial. This is a predicate issue because it determines the proper review standard. Generally, an appellate court applies a de novo review in construing a written contract. (Founding Members, supra, 109 Cal.App.4th at pp. 955-956; Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843.) However, a substantial evidence review standard governs if the interpretation turns on the credibility of competent extrinsic evidence. (Founding Members, at pp. 955-956.)
The sole extrinsic evidence on the contract interpretation issue was Mr. Shekhter's brief testimony about a conversation he had with his predecessor (Mr. Moores). During direct examination, Mr. Shekhter's counsel asked him why he "believe[s] the [A]greement doesn't apply to your solar arrays?" After the court overruled an objection on the basis that the question calls for a legal conclusion, Mr. Shekhter answered: "I am not a lawyer, but, you know, based on my understanding is, it was prepared and written to create—to have privacy between two adjacent property owners, to prevent . . . building, whether it's [a] house or some other building structure put within 100 feet of the property line." Mr. Shekhter said this "understanding" was based, in part, on his conversation with Mr. Moores about six months before trial.
In its statement of decision, the court referred to this testimony in explaining the basis for its conclusion that the contracting parties intended the Agreement "to ensure privacy," and was not intended "to restrict the use of solar energy systems." (Capitalizations omitted.)
We agree with Howe that the court erred in relying on this testimony to interpret the Agreement. Even assuming Mr. Shekhter's testimony about his conversation with Mr. Moores was admissible under the parol evidence rule and under a hearsay exception, the court erred because this evidence was not competent extrinsic evidence. Evidence of the undisclosed subjective intent of the parties "is irrelevant to determining the meaning of contractual language." (Winet v. Price (1992) 4 Cal.App.4th 1159, 1166, fn. 3; accord Reilly v. Inquest Technology, Inc. (2013) 218 Cal.App.4th 536, 554; Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1444; Achen v. Pepsi-Cola Bottling Co. (1951) 105 Cal.App.2d 113, 123 [contract interpretation is "not controlled in any sense by what either of the parties intended or thought its meaning to be"].) A party's "subjective statements of 'understanding' are irrelevant . . . , particularly where there is no evidence that [the other party] had the same understanding." (PV Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210 Cal.App.4th 132, 157.)
Because Mr. Shekhter's testimony at most reflected the subjective understanding of one party to the contract and there was no evidence that this understanding was shared by the other contracting party, the testimony was not relevant to the contract interpretation issues before us. Accordingly, as there was no competent extrinsic evidence admitted at trial, we apply a de novo review in construing the meaning of the Agreement.
C. De Novo Interpretation of the Setback Provision
Under the Agreement's setback provision, "No building structure or improvement, other than landscaping (which may include a gazebo, walkways and minor improvements solely for landscaping purposes), shall be installed, constructed or permitted to remain" within the identified 100 feet of Howe's property. Applying its plain meaning, this provision prohibited the solar panels because the solar panels were "improvements." An "improvement" is "something done or added to real property that increases its value" or "a bringing into a more valuable or desirable condition . . . betterment." (Random House Dict. (2d ed. 1987) p. 963, col. 2.) The solar panels fit within this definition because they were physical items placed on the land that added value to the property.
The Shekhters do not challenge this conclusion, but they contend the Agreement prohibited only improvements that constituted a "building." In support, they argue that the phrase "building structure or improvement," must be read to mean " 'building structure' or 'building improvement.' " (Italics added.) They argue that a "building improvement" must therefore be a building, and the solar panels cannot be characterized in this manner. This is not a reasonable interpretation of the Agreement.
First, the Shekhters are asking us to read into the Agreement a word that is not there. We have no authority to do so. (See Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 764; People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2004) 116 Cal.App.4th 1253, 1265, fn. 9.)
Additionally, the Shekhters' argument that the word "building" was intended to modify both "structure" and "improvement" is not reasonable. The Shekhters rely on the grammatical rule that the "first adjective in a series of nouns" is generally read to "modify each noun." (Ward General Ins. Services, Inc. v. Employers Fire Ins. Co. (2003) 114 Cal.App.4th 548, 554.) However, grammatical rules must be considered in light of the entire instrument. (See Clausseneus v. Anderson (1963) 216 Cal.App.2d 171, 176.) Reading the word "building" to modify "improvement" makes no sense when considering the provision as a whole. At the time the Agreement was executed, there would have been no need to apply the setback rule to both "building structures" and "building improvements" because, as placed on vacant land, they are essentially the same thing. Additionally, the exceptions clause following the word "improvement" establishes that an improvement must mean more than just a building. This clause excludes from the setback rule an "improvement" that is "landscaping (which may include a gazebo, walkways and minor improvements solely for landscaping purposes)." If an improvement meant only a "building improvement," landscaping would necessarily be excluded and there would be no need to state this exception. The only reason to include an exception for landscaping is if the term "improvement" is broader than merely a building. Similarly, in the setback provision burdening Howe's property, the Agreement prohibits a "building structure or improvement, other than (i) a tennis court . . . and (ii) landscaping . . . ." Because neither a "tennis court" nor "landscaping" is a "building," there would have been no need to provide an exception for this type of improvement if "improvement" meant solely a "building improvement."
Additionally, contrary to the Shekhters' assertions, the fact the Agreement does not specifically identify solar panels as encompassed within the restriction has no significance in interpreting the Agreement. There is nothing in the Agreement showing the parties intended to identify every prohibited item. Rather, the Agreement sets forth categories ("building structure or improvement") of prohibited items. The solar panels fall within one of those categories: an "improvement."
The Shekhters' reliance on the Agreement's separate "Landscaping" provision is also unhelpful. This provision requires the owners to install landscaping within 90 days after constructing a residence on the Shekhter property, and states: "It is the intent of the parties that the boundary line between [the parcels] be shielded and hidden by a tree planting program for the purposes of providing privacy to each but without emphasizing a property ownership boundary." The Shekhters argue that this provision demonstrates the parties intended to preserve their privacy, and thus ask us to infer that the sole purpose of the Agreement's setback provision was to provide privacy in the sense that no buildings would be located within the 100-foot area. This chain of reasoning is speculative. Although the Landscaping provision was included to provide privacy for the owners, this does not necessarily suggest the parties' sole intent in imposing the separate 100-foot setback rule was to preclude the construction of buildings.
The Shekhters also rely on the rule that restrictive covenants must be construed strictly against the party seeking to enforce them. (See Zabrucky v. McAdams (2005) 129 Cal.App.4th 618, 622.) We agree with this rule, but it cannot be used to interpret a contract to mean something that it does not say. (See Hannula v. Hacienda Homes (1949) 34 Cal.2d 442, 444-445; Chee v. Amanda Goldt Property Management (2006) 143 Cal.App.4th 1360, 1377; White v. Dorfman (1981) 116 Cal.App.3d 892, 897.)
II. Defenses to Covenant Enforcement Claim
Our conclusion that the Agreement prohibited the solar panels in their current location does not end the matter. The court found that even assuming the Agreement prohibited the solar array panels, Howe could not prevail on his claim seeking a mandatory injunction because the Shekhters met their burden to prove several defenses: (1) the laches doctrine; (2) section 714; and (3) equitable estoppel and other equitable considerations. For the reasons explained below, we find the record supports the court's rulings on the laches doctrine and thus do not reach the court's other cited grounds.
Laches is an equitable defense. " 'A party asserting laches must show both unreasonable delay and prejudice resulting from the delay. [Citation.] A trial court's ruling regarding laches will be sustained if there is substantial evidence to support it.' " (Torres v. City of Montebello (2015) 234 Cal.App.4th 382, 392-393; accord Estate of Kampen (2011) 201 Cal.App.4th 971, 997; Bono v. Clark (2002) 103 Cal.App.4th 1409, 1417.) The existence of laches is " 'a question of fact to be determined by the trial court in light of all of the applicable circumstances, and in the absence of manifest injustice or a lack of substantial support in the evidence its determination will be sustained.' " (California Teachers Assn. v. Governing Board (1987) 195 Cal.App.3d 285, 296.)
Substantial evidence supported the court's conclusion that Howe unreasonably delayed in seeking injunctive relief and the Shekhters suffered undue prejudice from this delay. Howe had actual and constructive notice of the Agreement since he purchased the property in 2007. Although Howe was aware of the proposed solar panel installation in 2009, he never raised the Agreement as a bar to the installation. Instead, he complained to the Association based on the Association's rules. After the Association addressed Howe's complaints by requiring additional landscaping, the Association approved the solar panels in 2010. Howe's later complaints were limited to seeking further mitigation measures such as increased landscaping and/or berm construction, rather than the removal of the solar panels. In response, the Shekhters spent about $25,000 on additional landscaping in seeking to satisfy Howe's concerns. Had the Shekhters known Howe would be seeking the removal of the panels under the Agreement's setback provision, there would have been no need for them to incur these substantial costs. Howe then remained silent for four additional years, during which the additional landscaping matured. On this record, the court had an ample basis to find "unreasonable delay, [Howe's] acquiescence, and prejudice to the Shekhters."
We reject Howe's contention that the Agreement's "Waiver" provision bars the Shekhters' laches defense. This provision states: "Any violation of the covenants contained in this Agreement shall be deemed to be a continuing violation of this Agreement and no delay in the . . . enforcement of any rights or the seeking of any remedies shall constitute . . . a waiver of the right to . . . seek such remedy at any time after the occurrence of such violation."
Howe argues this provision precludes the laches defense because it permits the moving party to delay in asserting claimed violations of the Agreement. However, a waiver and the equitable laches defense are distinct concepts. One involves only delay and the other involves delay that causes prejudice to the other party. Similar to the principle that a claim timely under a statute of limitations can be nonetheless barred under the laches doctrine (Holt v. County of Monterey (1982) 128 Cal.App.3d 797, 801; 13 Witkin, Summary of Cal. Law (11th ed. 2017) Equity, § 17, p. 297), the fact a claim is timely under the contractual waiver provision does not eliminate a court's equitable authority to uphold a laches defense. In deciding whether to grant equitable relief, a court may exercise the full range of its equitable powers to accomplish complete justice between the parties, absent specific restrictions to the contrary. (See People v. Superior Court (1973) 9 Cal.3d 283, 286.) The Agreement did not contain any restrictions on the court's equitable powers to apply the laches defense.
Howe alternatively contends the laches defense is inapplicable because the Shekhters are the "more culpable" parties. In support, Howe notes the Agreement's 100-foot setback limitation was not contained on the Shekhters' solar permit application, and suggests this omission reflected intentional misconduct to obtain approval on incomplete facts. However, the court was not required to accept this argument. The Shekhters presented evidence showing they did not recall the fact the Agreement contained a setback requirement, and their consultants (architect and solar project employee) did not consider the Agreement to be a relevant factor in locating the solar panels. Based on this evidence, it was not unreasonable for the court to find the failure to include the 100-foot setback notation on the permit plans was inadvertent and did not result from any bad faith or otherwise wrongful conduct.
Contrasted with these facts, Howe testified he considered the Agreement to be a very important factor in deciding to purchase his property in 2007 because of his desire for a "buffer" between the properties. Less than two years later, Howe was aware that the Shekhters intended to install solar panels within 100 feet of his property. He then began strenuously complaining about the panels based on their appearance. After the Association approved the installation, Howe consulted legal counsel and his counsel wrote several letters on his behalf seeking additional landscaping and mitigation efforts. Neither Howe nor his attorneys raised or in any way mentioned the issue of the recorded Agreement as a bar to the installation or use of the panels. Instead, Howe focused solely on compelling the Shekhters to engage in costly mitigation efforts to hide his view of the panels. On this record, the court had an ample basis to reject Howe's argument that the Shekhters should not be allowed to avail themselves of a laches defense because they were the more "culpable" parties.
We also reject Howe's argument that the court's prejudice finding is not supported by the evidence because the Shekhters' $25,000 "investment in landscaping . . . is not enough" to show prejudice. Prejudice can be established where, as here, a party with actual or constructive knowledge of the alleged improper activity waits until the defendant expends substantial sums before seeking a mandatory injunction. (See Vesper v. Forest Lawn Cemetery Assn. (1937) 20 Cal.App.2d 157, 165-166; see also Gutknecht v. Paul (1948) 83 Cal.App.2d 356, 357.) Prejudice results when one party "remains passive while an adverse claimant incurs risks, enters into obligations or makes outlays in improving property, paying taxes thereon, or otherwise in reliance on his own right." (Akley v. Bassett (1924) 68 Cal.App. 270, 292, italics added.)
Howe also argues the additional costs did not show sufficient prejudice because the "landscaping probably was required by [the Landscaping provision of the Agreement] anyway." (Italics added.) There is no evidence to support this claim. There is likewise no support for Howe's suggestion that the Shekhters were required to prove "irreparable prejudice." We also find unavailing Howe's contention that the court's written findings on the laches issue were insufficient because they were "bare-bones." Howe forfeited this contention because he never raised this objection below. (See Thompson v. Asimos (2016) 6 Cal.App.5th 970, 983.) Moreover, on our examination of the statement of decision, we find the court adequately explained the factual basis for its conclusions.
III. Declaratory Relief Claim
Howe contends that even if we find the Agreement's setback provision is unenforceable with respect to the existing solar panels, the court erred in declining to grant declaratory relief.
A. Background
On his declaratory relief claim, Howe alleged the existence of a contractual dispute regarding the Shekhters' right to maintain the solar panels in the existing location, and sought a judicial determination: (1) on his "rights under the [Agreement] and a declaration that [the Shekhters'] contentions are false and are without merit," and (2) that the Agreement "is a covenant which runs with the land . . . and is binding on [the Shekhters]." In the relief portion of the complaint, Howe sought a declaration that the Agreement runs with the land and "prevents the defendants from installing or maintaining structures and improvements, other than landscaping, within the [100-foot setback area]."
In his trial brief (which also served as his counsel's opening statement), Howe did not mention his declaratory relief claim, and instead said he was seeking only a mandatory injunction for a breach of the restrictive covenant. In his closing argument, Howe's counsel likewise characterized the case solely as a breach of contract claim, and discussed only the mandatory injunction and attorney fees request. No mention was made of a declaratory relief request.
After trial, the court ruled against Howe on his declaratory relief claim based on its analysis of the breach of contract claim, i.e. that the Agreement did not apply to the solar panels.
B. Analysis
Code of Civil Procedure section 1060 provides that "in cases of actual controversy" a court "may make a binding declaration" of a litigant's rights or duties. (See Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 646 (Meyer).) Declaratory relief is designed to operate prospectively, rather than to redress past wrongs. (In re Tobacco Cases II (2015) 240 Cal.App.4th 779, 804-805; Canova v. Trustees of Imperial Irrigation District Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497; Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1404; Kirkwood v. California State Automobile Assn. Inter-Ins. Bureau (2011) 193 Cal.App.4th 49, 59.) It operates to declare rights or duties within the context of an actual, present controversy as a means of " 'preventive justice,' " before " 'obligations are repudiated, rights are invaded or wrongs are committed.' " (In re Tobacco Cases II, at pp. 804-805, italics omitted.)
Because of the focus on prospective relief, courts have "considerable discretion" to deny declaratory relief when resolution of the controversy " 'would have little practical effect in terms of altering parties' [future] behavior.' " (Poniktera v. Seiler (2010) 181 Cal.App.4th 121, 139.) In such cases, declaratory relief may properly be denied under Code of Civil Procedure section 1061, which allows the court "to deny declaratory relief because 'it is not necessary or proper at the time under all the circumstances.' " (Meyer, supra, 45 Cal.4th at p. 648.)
We have determined the installation of the solar array panels violated the Agreement, but the court acted within its equitable authority in determining Howe's unreasonable delay in asserting the violation and the resulting prejudice to the Shekhters precluded enforcement of the Agreement. Under this ruling, the Shekhters have the legal right to continue to maintain and use the solar array panels in the existing location. Howe contends that even with such a ruling, declaratory relief in the form of an order stating that the Agreement prohibits "building structures" and "improvements" (other than the specified landscaping items) is necessary. Howe argues that without a declaratory relief ruling the parties would be "free to construct visually and aurally intrusive unenclosed recreational facilities in their setback zones," and that "all owners subject to the Agreement will be allowed to install anything that is not a building in the setback zone."
The flaw in this argument is that there is no evidence in the record showing that the Shekhters or any other future owner has any intent to install any additional improvements in the 100-foot setback zone. On the Shekhters' breach of contract action, we have ruled that the Agreement prohibits building structures and improvements (other than the specified landscaping), but the Agreement is not enforceable based on the laches doctrine. Absent some evidence that there will be any continuing controversy of the Agreement's meaning after this opinion is filed and/or that the Shekhters are proposing new additions to the property in the setback area, there is no need for declaratory relief.
DISPOSITION
Judgment affirmed. Appellant to bear respondents' costs on appeal.
HALLER, J. WE CONCUR: BENKE, Acting P. J. NARES, J.