REMEDIES Copyright February 2001 - State Bar of California In 1998, Diane built an office building on her land adjacent to land owned by Peter. Neither she nor Peter realized that the building encroached about ten inches on Peter's adjacent property. Because of the narrowness of Diane's lot, Diane did not have much latitude in the design of her office building. In December 2000, a town survey made for other purposes revealed the mistake. In constructing her office building, Diane inadvertently destroyed two dozen ornamental trees that had been on Peter's land for years. Peter, who was a restaurateur, maintained a garden where he grew specialty vegetables for his restaurant. The vegetables have been unable to flourish without the filtered sunlight provided by the trees that Diane destroyed. As a result, Peter's costs have risen as he has been forced to buy more produce from suppliers. In addition, his reputation as a restaurateur has suffered because his customers had come to look forward to his fresh garden vegetables. Many of his customers have begun to frequent other restaurants, and the long-term effect on his business is incalculable. Diane has had tenants in her building since it opened in 1998, and most of them have leases covering several years. To remove the encroaching wall would be costly to Diane, would reduce the office space, and would disrupt the tenants on the encroaching side of the building sufficiently that they could claim a constructive or even an actual eviction. Diane's tenants have been parking on a lot in back of Diane's building. Diane paid for the paving of the lot under the mistaken belief that the lot was on her land. In reality, the lot is almost entirely on Peter's land. Diane has been charging her tenants $50 a month to lease parking space in the lot. Peter has never voiced any objection to this practice because, until the town survey, he did not realize that the lot was on his land. What remedies are available to Peter against Diane, and on what theories of liability are they based? Discuss.
REMEDIES Copyright February 2001 - Scott F. Pearce, Esq. Outline I. Peter v. Diane - Theories of Liability A. Encroachment of Office Building: Continuing Trespass, 1998-2000 B. Destruction of Peter s Ornamental Trees 1. Conversion 2. Trespass Causing Severance 3. Waste C. Parking Lot: Encroachment - Continuing Trespass D. Diane s Defenses: None, other than a lack of knowing willfulness. E. Conclusion: Diane is Liable II. Peter s Remedies A. Damages 1. Encroachment of Building 2. Trees a. Peter s Increased Costs b. Peter s Damaged Reputation c. Peter s Incalculable Lost Business 3. Punitive Damages B. Restitution - Parking Lot: $50 per month per space - Diane has a right to recoup C. Injunctive Relief 1. Inadequacy of Legal Remedies 2. Property Right 3. Feasibility 4. Balancing 5. Defenses D. Conclusion
REMEDIES Copyright February 2001 - Scott F. Pearce, Esq. Answer I. Peter v. Diane - Theories of Liability Peter s restaurant business and his ownership interest in his real property have been compromised by the intentional and careless conduct of Diane. Diane s new office building encroaches onto Peter s land. Her construction activities destroyed two dozen trees on Peter s land, thereby harming his garden and causing his restaurant to suffer financial losses. Peter will pursue theories of liability for each of his harms, and he will seek compensatory and punitive damages, along with restitution and equitable relief. A. Encroachment of Office Building: Continuing Trespass, 1998-2000 Peter recently discovered that Diane built her office building onto a ten inch strip of Peter s adjoining parcel of land. This encroachment is a continuing intentional trespass onto Peter s property, because in effect Peter has been ousted from a portion of his real property. Diane did not know her building was encroaching on Peter s property until an unrelated town survey revealed the mistake. Her lot was narrow and she did not have much latitude in the design of her building, but it was her responsibility to construct her building on her lot and not the lot of her neighbor. Her conduct was intentional and Peter will be entitled to remedies. B. Destruction of Peter s Ornamental Trees During the construction of her building, Diane inadvertently destroyed two dozen trees that had been on Peter s property for years. Peter has several possible theories of liability for the damages caused by the loss of these trees. 1. Conversion Peter s principle theory of liability for the loss of his trees is conversion. Diane s construction project was deliberate and the mere fact that she apparently did not intend to harm the trees will likely not serve as a defense. At a minimum, Diane s construction was done negligently, and she owed Peter a duty not to carelessly destroy his property. As discussed below, Diane s lack of bad intent may well serve to prevent Peter from obtaining a substantial punitive damages award, but Diane certainly faces liability for the destruction of Peter s trees.
2. Trespass Causing Severance Had Diane harvested the trees for some commercial purpose, Peter would have a case for trespass causing severance. Because she merely destroyed them, this cause of action is not very strong. 3. Waste If Diane s lack of intent somehow were enough for her to escape liability for conversion, her conduct would be considered waste. She, or more likely her agents, came onto Peter s property and destroyed the trees. At a minimum Peter would be able to pursue damages under this theory. C. Parking Lot: Encroachment - Continuing Trespass Diane paid for the paving of a parking lot that is almost entirely on Peter s land. Her tenants have been using the lot since her building opened in 1998. As discussed above with regard to the office building, this encroachment constitutes a continuing trespass and will justify Peter recovering significant damages. Furthermore, Diane has been renting the spaces for $50 a month and thereby directly benefitting at Peter s expense. He will seek restitution as well as compensatory damages. D. Diane s Defenses: None, other than a lack of knowing willfulness. Diane made a mistake. She did not know that her building and parking lot encroached onto Peter s property - and, for that matter, neither did Peter. As discussed below, Diane s lack of knowing willfulness will be a defense to punitive damages, but it will not shield her from liability for her wrongful acts. It is true that Peter did not bring his action until sometime between one and two years after Diane s misconduct. It is conceivable that Diane might raise a laches defense based on this delay, but it is likely that the statute of limitations will run from the date the encroachment was discovered rather than the date it started. Few, if any, jurisdictions allow a party to obtain title to real property by adverse possession in less than two years. Diane will not be able to claim title to the property she has occupied. E. Conclusion: Diane is Liable Diane built her building and parking lot on her neighbor s property. Peter did nothing wrong. He will be entitled to seek damages, restitution and equitable relief, which is discussed in the following section.
II. Peter s Remedies A. Damages 1. Encroachment of Building Diane s office building sits on a ten inch strip of Peter s land. His damages would be measured by the fair market value of the strip of land. They also could be measured by the diminution in value of the remainder of Peter s land. To the extent that Diane has benefitted financially from this wrongful occupation of her neighbor s land, she would be liable in restitution in order to prevent her unjust enrichment at Peter s expense. 2. Trees As discussed above, Diane is liable for the destruction of these trees, probably under a conversion theory of liability. It is very unlikely that all two dozen trees were sitting on the ten inch strip of land the building was constructed on, and the facts do not indicate that they stood on the land occupied by the parking lot. Peter s ideal remedy would be damages to replace the trees and restore his garden, along with compensatory damages for the damages he suffered as a consequence of the loss of the trees. a. Peter s Increased Costs Peter has to buy produce from outside suppliers at an increased cost compared to the produce he grew for himself under the filtered sunlight of the trees. Diane will be liable for damages to compensate Peter for these losses. b. Peter s Damaged Reputation Peter s reputation as a restauranteur has suffered because Peter no longer serves vegetables from his private garden. It may be hard to ascertain these damages with any certainty, but Peter will be entitled to recover to the extent he can prove his harm. c. Peter s Incalculable Lost Business The long term effect on Peter s business is characterized as incalculable. If this means that his damages are uncertain, he will not be able to obtain compensation. If this instead means that Peter s business will be devastated, his damages will be greater and so will his case for injunctive relief. 3. Punitive Damages Peter has established claims for two instances of continuing trespass and one claim for conversion. These are intentional torts and Peter will be entitled to seek punitive damages. It is true that Diane did not have evil intent when she took the deliberate actions that harmed Peter. This may limit the
punitive damages that Peter will recover, particularly if the trees can be replaced and his greatest long term harms avoided. B. Restitution - Parking Lot: $50 per month per space - Diane has a right to recoup Diane paid to pave some of Peter s land for a parking lot for her building. As discussed above, this is a continuing trespass. Peter will be entitled to compensatory and perhaps to punitive damages for these acts, but he also will be entitled to seek restitution for the $50 per space monthly rental Diane has been charging her tenants, and to whatever future income is generated. Diane will be allowed to recoup her investment in improving the lot, since she acted in good faith. It is possible Diane would be characterized as possessing an easement in this part of Paul s property, or at least an executed license, allowing her tenants to continue to use the lot so long as Peter is fairly compensated. C. Injunctive Relief Peter may seek to force Diane to remove the encroaching part of her building and parking lot, and he may have a persuasive claim for equitable relief. 1. Inadequacy of Legal Remedies Real property is unique. If it is impossible to replace the trees, it may not be possible to calculate Peter s damages. 2. Property Right Peter is defending his interest in real estate, so even under the strictest standard this requirement is met. 3. Feasibility A court would have no problem directly enforcing its order on these parties. 4. Balancing Removing the encroaching wall would be devastating to Diane. It would be expensive and the tenants in this part of her building would have good claims for actual eviction. Presumably Diane could remove the parking lot more easily, though that too would present Diane with the problem of seeking to provide her tenants with parking elsewhere, perhaps at significant cost. Peter is entitled to have his trees back. If this is possible without removing the encroaching wall, the balance favors Diane. If the trees cannot be replaced without removing the wall, Diane may have to be the one to bear a harsh result.
5. Defenses Diane s only defense to equity lies in the balance of hardships. Peter did nothing wrong. The only issue is what remedies he is entitled to. D. Conclusion Peter s most severe harm has been caused by the loss of his trees. If they can be replaced, they should be - at the defendant s expense, of course. Peter is entitled to compensatory damages according to proof and he will be able to make out a prima facia claim for punitive damages based on continuing trespass and conversion theories. If it is impossible to replace the trees Peter is more likely to get punitive damages, because his long term damages may be hard to calculate and because he has not done anything wrong, unlike Diane. Peter is entitled to restitution for the value of the encroaching building and for the rental value of the parking lot, subject to Diane s right to recoup her investment in improving the property. Peter is unlikely to obtain an injunction ordering Diane to remove the encroaching part of her building, but he would have a better chance of forcing the removal of the parking lot, should he seek that remedy.