CITIZENS FOR COVENANT COMPLIANCE v. ANDERSON

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Court of Appeal, First District, Division 1, California.

CITIZENS FOR COVENANT COMPLIANCE, an unincorporated association, et al., Plaintiffs and Appellants, v. Jared A. ANDERSON et al., Defendants and Appellants.

A062032.

Decided: October 20, 1994

Debra Summers,Wilson, Sonsini, Goodrich & Rosati, Palo Alto, for plaintiffs and appellants Citizens for Covenant Compliance. Kenneth J. Adelson, Benjamin K. Riley, Yvonne Gonzalez Rogers, Cooley Godward Castro Huddleson & Tatum, San Francisco, for defendants and appellants Anderson, et al.

Appellant Citizens for Covenant Compliance (hereinafter “Citizens”) appeal from the judgment of the superior court denying them injunctive relief against defendants Jared and Anne Anderson.   The Andersons cross-appeal from an order denying their motion for attorneys fees as sanctions.

BACKGROUND

The Andersons own two adjacent parcels of property in Woodside, California.   They obtained a permit from the Town of Woodside allowing them to plant a vineyard, and thereafter planted a portion of their property with grapes.1  On April 29, 1992, the Andersons obtained a conditional use permit from the Town of Woodside under which they are permitted to produce wine on their property, subject to a number of conditions.2  The permit recites that it is to be reviewed annually for the first three years, and once every three years thereafter, and “is subject to cancellation if it is determined by the Planning Commission that the conditions contained herein or any other conditions that may be attached to the permit have not been followed.”

On May 12, 1992, Citizens brought an action against the Andersons to enjoin these activities and restore the property to its pre-vineyard state.   Citizens also complained that the Andersons were raising llamas on the property, and further sought to enjoin that activity.   Citizens alleged that conditions, covenants and restrictions (CC & Rs) filed against each of the Andersons' parcels provided that the parcels would be used for nothing other than residential purposes, and forbade the Andersons from raising llamas.3  Citizens argued that the CC & Rs are binding on the Andersons either as equitable servitudes or covenants running with the land.   The superior court disagreed, and granted summary adjudication to the Andersons on the issue of breach of the CC & Rs.   Citizens then dismissed without prejudice its remaining cause of action (nuisance).   The court thereafter entered judgment in favor of the Andersons, but denied their motion for attorneys fees.

References to the CC & Rs in the Deeds

One of the Andersons' parcels is part of the Friars Subdivision.   That subdivision, comprised of four parcels, was created in 1977.   The developer, Cowper–Hamilton, recorded a subdivision map on May 10, 1977, and on the same day recorded CC & Rs.   On May 12, 1977, Cowper–Hamilton sold Parcel 1 of the subdivision to the Gavas.   This parcel was conveyed several times over the years, and finally was purchased by the Andersons at a foreclosure sale.   The deed from the developer to the Gavas, although referring to the parcel map, did not make any express reference to the CC & Rs.   No other deed in the Andersons' chain of title referred to the CC & R's.   The Andersons' second parcel is part of “Skywood Acres.”   Skywood Acres was created in the 1950s when Joseph and Claire Stadler subdivided a parcel of land owned by them into some 60 residential building lots.   They later executed and recorded CC & Rs, which recited, among other things, that they ran as covenants with the land.   On October 14, 1958, the Stadlers sold what later would become the Andersons' lot to Benjamin Herbert under a grant deed which did not refer to the CC & Rs.   No other deed in the Andersons' chain of title refers to the CC & Rs.   Thus, it is undisputed that although the developers of the subdivisions for each parcel of the Andersons' property recorded CC & Rs, there was no express reference to the CC & Rs in the deeds from the developers to the Andersons' predecessors in interest, or in any deed in the Andersons' chain of title.   In addition, no deed conveying any lot in either the Friars subdivision or the Skywood Acres referred to the CC & Rs.

THE APPEAL

I.The CC & Rs are not Binding on the Andersons

 Where, as here, there is no privity of contract between the parties, restrictions on the use of real property are enforceable only if they meet the requirements of covenants running with the land, or if an equitable remedy—usually the common law doctrine of equitable servitudes—is available.

 The only covenants that run with the land are those specified in or allowed by statute.  (Civ.Code, § 1461 4 ;  Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1543, 253 Cal.Rptr. 344.)   The relevant statutes are Civil Code sections 1462 and 1468.   There are several reasons why the CC & Rs do not run as covenants with the land as to either the Friars or the Skywood Acres lots under either section.   Chief among these reasons is the fact that there is no recorded instrument reflecting the mutual intention of the original grantor and the original grantee of the lots, expressing their mutual intent that the CC & Rs run with the land.   Thus, a covenant will run with the land under section 1462 only if it is contained in a grant conveying the property.  (Oceanside Community Assn. v. Oceanside Land Co. (1983) 147 Cal.App.3d 166, 174, 195 Cal.Rptr. 14.)   A covenant will run under section 1468 only if there is some recorded instrument expressing the joint intent of the grantor and grantee that a restriction run with the land.5  (Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1545, 253 Cal.Rptr. 344.) 6

 There are, however, additional reasons for concluding that the CC & Rs do not run as covenants with either of the Andersons' parcels.   A covenant will run under section 1462 only if it benefits the parcel at issue;  a covenant which burdens the property will not run.  (Marra v. Aetna Construction Co. (1940) 15 Cal.2d 375, 378, 101 P.2d 490;  Oceanside Community Assn. v. Oceanside Land Co., supra, 147 Cal.App.3d at p. 174, 195 Cal.Rptr. 14.)   The CC & Rs, while arguably providing an indirect benefit to the parcels in either subdivision, unquestionably burdened the Andersons' lots.   Further, although section 1468 now authorizes a grantor and grantee to create a covenant running with land conveyed to the grantee, it did not do so until it was amended in 1969.   Prior to 1968, section 1468 provided only that owners of different parcels of property could agree to burden either or both parcels with covenants which then would run with both parcels.   In 1968, the section was amended to permit a covenant to run with the land of a grantor.   In 1969 the section was again amended to permit a covenant to run with the land of a grantee.   The amendments, however, do not apply retroactively.  (Oceanside Community Assn. v. Oceanside Land Co., supra, 147 Cal.App.3d at p. 174, fn. 4, 195 Cal.Rptr. 14;  Taormina Theosophical Community, Inc. v. Silver (1983) 140 Cal.App.3d 964, 972, fn. 3, 190 Cal.Rptr. 38.)   Here, if the Skywood Acres grantors created any covenant at all, they created it in 1958 when they conveyed what later would become the Andersons' lot to Benjamin Herbert.   It follows that although section 1468 potentially has application to the lot owned by the Andersons as part of the Friars subdivision, it has no application to the lot owned by the Andersons as part of the Skywood Acres subdivision.

Because burdening covenants did not run under section 1462, and could not run under section 1468 with granted property until after 1969, CC & Rs recorded prior to 1969 traditionally were analyzed under the doctrine of equitable servitudes.  (Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1544, 253 Cal.Rptr. 344.)   In addition, in certain circumstances that doctrine will permit a burden to run with a grantee's property even when the grant deed does not reflect that grantor and grantee intended the grantee's property to be so burdened.   These circumstances were summarized by the court in Trahms v. Starrett (1973) 34 Cal.App.3d 766, 770–771, 110 Cal.Rptr. 239, discussing the seminal case of Werner v. Graham (1919) 181 Cal. 174, 183 P. 945:  “To create an equitable servitude, both the grantor and a grantee must intend that a parcel of land conveyed from the grantor to the grantee be restricted pursuant to a general plan.  (Werner v. Graham, supra, at p. 182, 183 P. 945.)   That intent must appear in the instruments between them.  (Ibid.)  The agreement between the two parties must show ‘that the parcel conveyed [is] subject to restrictions in accordance with the plan for the benefit of all the other parcels and also that all other parcels [are] subject to such restrictions for its benefit.’  (Id. at p. 183, 183 P. 945.)   The dominant and servient tenements must be shown.  (Id. at pp. 180, 183, 183 P. 945.)   If these conditions have been met the grantee of the first deed from the developer of a tract will be entitled to enforce the covenants as to all the remaining area placed under equitable servitude;  operation of the recording statutes will prevent the developer from exempting other grantees by omitting reference to restrictions in drawing later deeds.   (Girard v. Miller (1963) 214 Cal.App.2d 266, 276 [29 Cal.Rptr. 359.] )  [¶] Thus the grantees of the first lot, whose deed did refer to and adopt the restrictions, could enforce them against a person who succeeded to any of [the subsequently conveyed] lots, as long as the successor had actual or constructive notice of the restrictions.  (Werner v. Graham, supra, 181 Cal. 174, 183–184, 183 P. 945;  see Russell v. Palos Verdes Properties (1963) 218 Cal.App.2d 754, 763 [32 Cal.Rptr. 488].)   Similarly, [the grantor] could enforce the restrictions against the grantee's successor who took title with notice of the restrictions.  (See Arrowhead Mut. Service Co. v. Faust (1968) 260 Cal.App.2d 567, 580 [67 Cal.Rptr. 325].)   Successors to a grantee possessing a dominant interest could enforce the restrictions against successors to [the grantor], provided the notice requirement was met, and vice versa.  (See Werner v. Graham, supra, at pp. 183–184, 183 P. 945;  Martin v. Holm (1925) 197 Cal. 733;  745–746 [242 P. 718].)   But a grantee possessed of a dominant interest could not enforce the restrictions as to lots that were deeded without restriction by [the grantor] prior to the execution of the grantee's deed.   This conclusion follows from the fact that a grantor cannot place restrictions on land he does not own, or contract for third parties without their consent.  (See Werner v. Graham, supra, at pp. 181, 183–184, 183 P. 945.   See generally Powell on Real Property, par. 679, at pp. 207–210.)”   The court in Werner v. Graham further indicated that the agreement to restrict the property had to be incorporated in the grant deeds themselves.  “Such understanding was not incorporated in the deeds, and as we have said, the deeds in this case constitute the final and exclusive memorials of the understandings between the parties.   Any understanding not incorporated in them is wholly immaterial in the absence of a reformation.”  (181 Cal. at p. 185, 183 P. 945;  and see Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 512, 131 Cal.Rptr. 381, 551 P.2d 1213.)   It has been held, however, that a restriction incorporated into some other written instrument—such as a lease—also may be enforceable as an equitable servitude.  (Hudson Oil Co. v. Shortstop (1980) 111 Cal.App.3d 488, 494–495, 168 Cal.Rptr. 801.)   The operative fact is that there be a recorded enforceable written instrument providing constructive notice of the agreed-upon restrictions, and that it reflect the joint intent of the parties to restrict the property pursuant to a general plan.

In brief, the reasoning behind the doctrine of equitable servitudes appears to be this:  A grantor decides to subdivide and convey his or her land subject to a general plan of restrictions.   The grantor then deeds property to Grantee A by a written instrument meeting all the requirements for the creation of equitable servitudes.   At that point the land retained by the grantor has a dominant interest—the restrictions—in the land conveyed to the grantee.   The land conveyed to Grantee A, similarly has a dominant interest in the land retained by the grantor.   The grantor then deeds property to Grantee B.   Grantee B takes subject to the dominant interest of Grantee A, but also is granted the grantor's dominant interest in the lot conveyed to Grantee A.   Each successive conveyance of the land retained by the grantor similarly obtains a dominant interest in any property previously conveyed, but is subject to the interest of the previous grantees.   As to each successive grantee it is enough that such grantee have actual or constructive notice of the common plan of restrictions.   The only grantees who would not take subject to the restrictions, therefore, would be any who took without restriction prior to the conveyance between the grantor and Grantee A.

 Under these principles Citizens could enforce the CC & Rs against the Andersons, whether or not the Andersons' deeds reflected an agreement by them to be bound by the CC & Rs, if, but only if:  (1) the lots of the Andersons and Citizens were owned by the same grantor, (2) the grantor and some grantee who took prior to the Andersons intended their lots to be restricted pursuant to a general plan, (3) that intent appears in recorded instruments exchanged between the grantor and that grantee, (4) those instruments provide that the grantee's lot is subject to restrictions in accordance with the plan for the benefit of all the other parcels and also that all other parcels are subject to the restrictions for the benefit of the grantee, and (5) the dominant and servient tenements are shown.   The problem for Citizens here is that, as the trial court found, no lot in either subdivision was in fact conveyed pursuant to an express, written, agreement that it was conveyed subject to a general plan of restrictions.   Absent that, it is irrelevant that the Andersons may have had actual notice of the CC & Rs.  (Trahms v. Starrett, supra, 34 Cal.App.3d at p. 771, 110 Cal.Rptr. 239;  and see Murry v. Lovell (1955) 132 Cal.App.2d 30, 281 P.2d 316, where it was held that absent a recorded agreement to be bound, restrictions were not enforceable even though the grantor recorded CC & Rs and in fact read them to each grantee.)

Having concluded, generally, that the CC & Rs are not enforceable either as covenants running with the land or as equitable servitudes, we will respond, briefly, to specific arguments made by Citizens.

A. The CC & Rs do not Run as a Benefit under Section 1462.

 As noted, only covenants which benefit granted property run with the land under section 1462.   The CC & Rs at issue restrict the use of land and, accordingly, burden the property.   Citizens, however, cite Anthony v. Brea Glenbrook Club (1976) 58 Cal.App.3d 506, 130 Cal.Rptr. 32 as taking a “fresh look” at the situation, and recognizing that burdensome covenants run under section 1462 when in imposing that burden the subdivision as a whole is benefitted.   To the extent that “fresh look” is synonymous with “failing to follow settled precedent,” we decline to follow Anthony.   In addition, we find that the case provides only the slimmest authority for Citizens' argument.   The plaintiff in that case sought relief from the requirement that all homeowners of a subdivision pay for membership in a recreational club.   The court did state, as Citizens here emphasizes, that the maintenance of such a club was a benefit to all homeowners because it enhanced the value of their properties, and cited authority finding that in interpreting section 1462, “ ‘the courts have uniformly adopted the view that if the covenant tends to enhance or increase the value of the land, it is a direct benefit within the meaning of the code and therefore runs with the land.’ ”  (Id. at p. 511, 130 Cal.Rptr. 32.)   The court, however, did not analyze the question of whether the burden of paying the dues also ran with the land;  it stated the issue before it as being “whether the burden of mandatory membership imposed upon the homeowners touches and concerns the land,” (id. at p. 510, 130 Cal.Rptr. 32) further stating without analysis that the “other elements essential to a covenant running with the land are unmistakably present.”   (Id. at p. 510, fn. 1, 130 Cal.Rptr. 32.)  Anthony therefore does not provide compelling authority for the proposition that a burden runs with the land under section 1462 simply because it is a necessary counterpart of a benefit.

B. Section 1468 does not Apply to the Skywood Acres Lot.

 As discussed earlier, section 1468 authorized parties to cause a covenant to run with a grantee's land only after 1969.   Prior to 1968, when the Skywood Acres grantors first conveyed what later became the Andersons' lot, section 1468 provided:  “A covenant made by the owner of land with the owner of other land to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the covenantee, and which is made by the covenantor expressly for his assigns or to the assigns of the covenantee, runs with both of such parcels of land.”   (Emphasis added.)   Citizens contends that the Skywood Acres' CC & Rs ran with the lot in the Skywood Acres' subdivision because Skywood acres was jointly owned by Joseph and Clair Stadler.   We are not persuaded that an agreement between two joint owners of the same property should be deemed an agreement between “the owner of land with the owner of other land,” thus bringing the transaction under pre–1968 section 1468.

Citizens cites no authority for the proposition that an agreement between any type of joint owners of a single parcel of property, whether or not subdivided, could create a continuing burden to the land under pre–1968 law.7  The evident purpose of the pre–1968 statute was to limit the ability to restrict the use of land to parties dealing at arms' length, and not to permit grantors from restricting the ability of grantees to make full use of the property after title had passed.   We decline to adopt a construction of the statute undermining that purpose.   Nor is Citizens' citation to Thew v. Thew (1939) 35 Cal.App.2d 691, 96 P.2d 826 of any aid to it.   There, a husband and his first wife executed a property settlement by which, in part, he promised to pay her a percentage of any profits derived from the extraction of mineral deposits from a particular parcel of property.   The husband then remarried.   On January 18, 1937, at 10:10 a.m., the settlement agreement was recorded as part of a quitclaim deed executed by the first wife to the husband.   At 10:11 and 10:12 a.m., the husband and his second wife recorded instruments conveying the property to them as joint tenants.   The second wife sought to avoid the obligation, contending, in part, that the covenant was personal to the husband and did not run with the land.   Although the court concluded that the second wife was bound “both in law as well as in equity,” it did not analyze whether or not the covenant was one which might run with the land.  (35 Cal.App.2d at 699, 96 P.2d 826.)   Instead, the court simply concluded that when the party seeking to avoid the covenant “ ‘took with knowledge of the covenant and it was of such a nature that when the intention of the parties coupled with the result of a failure to enforce it was considered, equity could not in conscience withhold relief.’ ”  (35 Cal.App.2d at p. 699, 96 P.2d 826, citing Richardson v. Callahan (1931) 213 Cal. 683, 686, 3 P.2d 927.)   We do not find that Thew v. Thew provides any support to the argument that the Skywood Acres CC & Rs were covenants running with the land.   In addition we see no reason to adopt the remedy fashioned by the court in Thew v. Thew when the rights of the parties here may be determined under the established doctrine of equitable servitudes.   That doctrine, of course, was inapplicable in Thew v. Thew which did not involve a subdivision of land.   In all events, even if section 1468 did apply to the Skywood Acres lot, no covenant running with the land was created under that section for the same reason none was created in the Friars subdivision:  the grant deeds did not refer to or incorporate the CC & Rs.

C. There is no Recorded Agreement that Grantees of the Lot in the Friars Subdivision be Bound by the CC & Rs.

 Unlike section 1462, section 1468 does not by its own terms require that the covenant be contained “in a grant of an estate in real property.”   The court in Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at pages 1544–1545, 253 Cal.Rptr. 344, found that such a requirement must be read into subdivision (a) of section 1468, providing that a covenant will run under that section only if “[t]he land of the covenantor which is to be affected by such covenants, and the land of the covenantee to be benefited, are particularly described in the instrument containing such covenants.”   We do not see that the section itself mandates that the instrument describing the land be the grant deed.   Nonetheless, we agree that in order to create a covenant running with the land, the deed (or some comparable instrument) must at least refer to the covenant at issue.

First, it is apparent that the amendments to section 1468 were designed to provide statutory support for the relief traditionally provided under the theory of equitable servitudes.   Thus, as the court in Scaringe concluded, section 1468 may be presumed to have codified the requirements of that theory, including the requirement that the covenant be set forth in the grant deed or other relevant document.   The court explained:  “[This requirement appears] to codify a requirement developed in equitable servitude cases.  (See Comment, Covenants and Equitable Servitudes in California (1978) 29 Hastings L.J. 545, 563.)   Mutual equitable servitudes are created when the owner of a subdivided tract conveys lots by deed containing mutually enforceable restrictions pursuant to a common plan designed for the benefit of the entire tract.  (Werner v. Graham (1919) 181 Cal. 174, 183 [183 P. 945].)   An essential element of an equitable servitude is a written instrument between the grantor and the grantee showing their joint intent that the grantee's title is conveyed subject to the common plan of restrictions.  (Id. at p. 184, 183 P. 945.)   The grantor's intent, although readily ascertainable from the common plan of restrictions, is insufficient.   As the state Supreme Court said in Werner:  ‘[I]t is not [the grantor's] intent that governs.   It is the joint intent of himself and his grantees, and as between him and each of his grantees the instrument or instruments between them, in this case the deed, constitute the final and exclusive memorial of such intent․  [I]f the parties desire to create mutual rights in real property of the character of those claimed here they must say so, and must say it in the only place where it can be given legal effect, namely in the written instruments exchanged between them which constitute the final expression of their understanding.’  (Werner v. Graham, supra, 181 Cal. at pp. 184–185, 183 P. 945.)”  (Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at pp. 1544–1545, 253 Cal.Rptr. 344.)

 The requirement of a written instrument stated in Werner springs from the same policy considerations as underlie the statute of frauds.   As stated by the court in Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d at page 510, 131 Cal.Rptr. 381, 551 P.2d 1213, quoting from McBride v. Freeman (1923) 191 Cal. 152, 215 P. 678:  “ ‘Any other rule would make important questions of the title to real estate largely dependent upon the uncertain recollection and testimony of interested witnesses.   The rule of the Werner case is supported by every consideration of sound public policy which has led to the enactment and enforcement of statutes of frauds in every English-speaking commonwealth.’ ”   It follows that, notwithstanding the absence of an express mandate in section 1468, CC & Rs will not be enforced as a continuing burden against the property unless there is a written document expressing the joint intent of grantor and grantee.   Moreover, practical considerations require that the document be something that can be discovered by searching the record, and thus will afford constructive notice of the restrictions.   Ordinarily this document will be the grant deed itself, although it is enough that the deed expressly refer to the CC & Rs.   (Oceanside Community Assn. v. Oceanside Land Co., supra, 147 Cal.App.3d at p. 174, 195 Cal.Rptr. 14.)

 Citizens points out that the recorded CC & Rs refer to the Friars Subdivision.   The CC & Rs, however, although affording notice of the intent of the developer/grantor that granted lots be bound, neither constitutes an agreement by the grantee to be bound, nor affords notice to subsequent purchasers that a burden runs with the property.   It is not the expressed intent of the grantor that governs, but the expressed joint intent of grantor and grantee.  (Riley v. Bear Creek Planning Committee, supra, 17 Cal.3d at p. 506, 131 Cal.Rptr. 381, 551 P.2d 1213;  Werner v. Graham, supra, 181 Cal. at 184–185, 183 P. 945;  Scaringe v. J.C.C. Enterprises, Inc., supra, 205 Cal.App.3d at p. 1545, 253 Cal.Rptr. 344.)

 Citizens contends that the grant deed between the developer, Cowper–Hamilton, and the Gavas as the first owner of the Andersons' lot, does incorporate an agreement to create or abide by the CC & Rs.   The Friars CC & Rs, however, are not set forth in the Gava deed.   They are not even mentioned.   The deed recites in full:

“FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, COWPER–HAMILTON BUILDING, INC., a California corporation

organized under the laws of the state of

hereby GRANTS to

RAY L. GAVA and NANCY ANN GAVA, his wife as community property

the following described real property in the Town of Woodside County of San Mateo, State of California:

ALL OF THE LANDS embraced within the boundaries of PARCEL 1 of that Certain Parcel Map entitled ‘Land Division No. 224 Parcel Map being a portion of Lots 17, 11 and 23 ‘Map of Portola Hills' in Volume 7 of Maps, at page 20, San Mateo County, said Portions being described in Book 7182 Official Records of San Mateo County, Page 205 Town of Woodside, California’, which was filed for record in the office of the Recorder of San Mateo in Volume 36 of PARCEL MAPS at page 38, San Mateo County on May 10, 1977.”

It may be that Citizens is arguing that the Gavas' intent to be bound should be inferred from the fact that the grant deed refers to the Parcel Map and the Parcel Map refers to a “Town Clerk's Certificate” and notes that a resolution was adopted on January 24, 1977.   The resolution, which was not recorded, among other things approves the Parcel Map on condition “that prior to the execution of the agreement [to install utilities, etc.] the Developer shall (1) prepare and submit to the Town Attorney the covenants, conditions and restrictions applicable to this land division․”  We do not view these documents as expressing an agreement by the Gavas to be bound by the CC & Rs.   At the most there exists only a very indirect method of ascertaining that the developer was contemplating the possibility of filing CC & Rs.

 Citizens points to a title insurance policy issued by Title Insurance and Trust to the Gavas, which policy refers to CC & Rs.   A title insurance policy is not a deed, nor is it made part of a deed simply because it is filed with the true deed.   We are aware of no authority providing that parties to a sale of land are in any way bound by anything recited in a policy of title insurance.   The policy reflects an agreement not between grantor and grantee, but between the insurer and the party seeking insurance.

 Citizens also argues that the Andersons had actual notice of the CC & Rs.   We need not resolve this factual issue as there is no authority for the proposition that a covenant will run with the land simply because a grantee has actual notice that it was intended by the grantor and the grantee's predecessor that such a covenant would burden the property.   As has been discussed, actual notice may be enough for purposes of enforcing equitable servitudes if the other requirements of that doctrine are met.   Covenants running with the land, however, are not creatures of equity but creatures of law and will not run unless all legal requirements have been fulfilled.

 Finally, Citizens appears to argue that the transaction between Cowper–Hamilton and the Gavas is irrelevant, because the CC & Rs were referred to in a transaction between Cowper–Hamilton and the Town of Woodside.   As we understand this argument, it is that in permitting Cowper–Hamilton to develop the property a “grant” was made, and that because the CC & Rs were made a condition of that grant under the unrecorded town resolution discussed earlier, they were made in connection with the grant of land and, accordingly, were binding on any subsequent purchaser.   Citizens apparently is referring to the fact that in obtaining approval of its development plan, Cowper–Hamilton granted various easements to the Town of Woodside.   It argues that in connection with these “grants” the Parcel Map must be considered a deed.   Even assuming that the Parcel Map indeed incorporated the CC & Rs, we find the argument meritless.   The Parcel Map is not a deed, but a parcel map.   It grants no interest in land to anyone.   The Parcel Map did not grant a burdened interest in land to Cowpers–Hamilton, which already owned the land.   The argument that simply by filing a parcel map a developer can bind grantees to CC & Rs strains the requirements of section 1468 beyond recognition, and discounts the reasoning of those cases holding that no CC & Rs will run as a burden against a subdivision lot unless (1) the grant deed to that lot expressly refers to the CC & Rs or (2) the grant deed to a previously-conveyed lot satisfies the requirements for creation of equitable servitudes.   We will not adopt such an argument here.

D. As the CC & Rs are not Enforceable as Covenants Running with the Land or as Equitable Servitudes, They are not Enforceable at all.

 As discussed, supra, the circumstances existing here do not meet the requirements for enforcement of the CC & Rs as equitable servitudes.   Citizens nonetheless has cited various cases departing somewhat from the norm, in which restrictions were in fact enforced.   To the extent that these cases fail to follow the settled principles we have discussed, we decline to follow them.   To the extent that they grant some form of equitable relief other than that provided by the doctrine of equitable servitudes we decline to follow them because they necessarily turned on their own specific facts.   The present case does not present an extraordinary situation calling for an extraordinary remedy.

In addition, we find in general that the cited cases do not stand for the propositions asserted.   Citizens cites Seaton v. Clifford (1972) 24 Cal.App.3d 46, 100 Cal.Rptr. 779, for example, as authority for its argument that the Andersons should be bound to the CC & Rs simply because the CC & Rs were recorded prior to their purchase of their lot.   It is true that the restrictions at issue in that case were enforceable against the defendant even though they were not recited in the deed.   They were enforceable, however, as equitable servitudes under the rules discussed above because they were incorporated into a conveyance of subdivided land by the developer to a first grantee.  (24 Cal.App.3d at p. 46, 100 Cal.Rptr. 779.)   That is not the situation here.   In Wayt v. Patee (1928) 205 Cal. 46, 269 P. 660 there was a written, recorded agreement signed by the owners of lots of a subdivision, including the defendants' predecessors in interest, agreeing to certain restrictions.   Here there is no recorded agreement, but only CC & Rs unilaterally recorded by the grantors.   It is true that the court in Thew v. Thew, supra, 35 Cal.App.2d 691, 96 P.2d 826 discussed earlier, held that on the particular facts before it, that an agreement executed between a husband and his first wife, burdening property quitclaimed by the first wife to the husband as part of a marital settlement agreement, could be enforced against the second wife.   As we have discussed, however, we do not view that case as having any precedential value here.

 Finally, Citizens' insistence that numerous cases hold that CC & Rs do not need to be set forth in the deed by which the original conveyance of property from grantor to grantee was made, is correct, but misleading.   As we have pointed out, for a covenant to run with the land in granted property it ordinarily must be set forth in the deed between the grantor and grantee.   (§§ 1460, 1462, Scaringe v. J.C.C. Enterprises, Inc., supra, at p. 1546, 253 Cal.Rptr. 344.)   It is sufficient, however, if the deeds incorporate the covenant by reference or otherwise make reference to covenants or restrictions of record.  (Oceanside Community Assn. v. Oceanside Land Co., supra, 147 Cal.App.3d at p. 174, 195 Cal.Rptr. 14.)   If the covenant is one between separate land owners there will be no grant deed, but there still must be some agreement of record.  (E.g. Wayt v. Patee, supra, 205 Cal. 46, 269 P. 660.)   For a restriction to be enforceable as an equitable servitude it is enough that it have been set forth in the deed between the grantor and a first grantee.  (Trahms v. Starrett, supra, 34 Cal.App.3d at pp. 770–771, 110 Cal.Rptr. 239.)   Again, it does not follow, as Citizens would imply, that the mere recording by a grantor of CC & Rs, or a Parcel Map, will cause the owner of a lot within a relevant subdivision to be bound by any restrictions set forth in the CC & Rs or map.

For all of the above reasons we conclude that the CC & Rs were not binding on the Andersons.   The only restrictions on the Andersons' use of their property, therefore, appear to be the relevant zoning laws and ordinances.   Having obtained the necessary permit or permits from the Town of Woodside, the Andersons are entitled to use their property in accordance with the provisions of those permits.

The judgment is affirmed.

THE CROSS–APPEAL

The Refusal to Award Sanctions was not Error

 The Andersons sought an award of $120,000 in attorneys fees and expenses from Citizens as sanctions under Code of Civil Procedure section 128.5.   They argued in the trial court, as they argue here, that sanctions were appropriate because Citizens “(i) filed a complaint which contained false material factual allegations, (ii) continued to pursue the action for nearly five months after being notified about the falsity of the factual allegations, and (iii) delayed in dismissing the remaining nuisance causes of action until merely four days before the scheduled trial date.”   The “false material factual allegations” are the allegations in the complaint that the deeds in the chain of title of the Andersons' lots referred to the CC & Rs.

Code of Civil Procedure section 128.5 provides, as relevant:  “(a) Every trial court may order a party, the party's attorney, or both to pay any reasonable expenses, including attorney's fees, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.”  “Frivolous” is defined as “(A) totally and completely without merit or (B) for the sole purpose of harassing an opposing party.”  (Code Civ.Proc., § 128.5, subd. (2).)  The trial court here concluded that the action was not filed for the sole purpose of harassing the Andersons, and was not totally without merit.   We agree.   The fact that the complaint alleged that the CC & Rs were incorporated into deeds in the Andersons' chain of title is not fatal.   First, it was arguable that the deeds referred to the CC & Rs, albeit indirectly.   Second, as we have discussed, the lack of reference to the CC & Rs in the Andersons' deeds would not necessarily preclude relief to Citizens.   Third, Citizens was able to mount some colorable arguments that it was entitled to relief.   Citizens cannot therefore be condemned simply for continuing the action even after learning that the Andersons' deeds did not expressly refer to the CC & Rs.   In addition, we do not see that Citizens acted wrongfully in continuing to prosecute the action on a theory of nuisance, a theory which involves issues distinct from any recitations in grant deed.   It follows that the action was not frivolous.

The trial court further found, and we again agree, that “There is no way this complaint was solely intended to cause unnecessary delay.”   As the action was neither frivolous nor prosecuted solely in order to cause unnecessary delay, sanctions would not be appropriate if Code of Civil Procedure section 128.5 is construed to authorize an award only for “bad-faith actions or tactics” that are frivolous or solely intended to cause unnecessary delay.   As the trial court recognized, the weight of authority adopts this construction of section 128.5.  (E.g., West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 702, 3 Cal.Rptr.2d 790;  Summers v. City of Cathedral City (1990) 225 Cal.App.3d 1047, 1071, 275 Cal.Rptr. 594;  Bruno v. Superior Court (1990) 219 Cal.App.3d 1359, 1365, 269 Cal.Rptr. 142;  Llamas v. Diaz (1990) 218 Cal.App.3d 1043, 1048, 267 Cal.Rptr. 427.)   Finding the reasoning of these cases persuasive, we affirm the superior court's order denying the award of sanctions.

FOOTNOTES

1.   Although the Andersons sought and obtained the permit, they assert that they were not required to do so, noting that tilling of the soil for agricultural purposes is excluded from the activities requiring a Town site development permit.

2.   The conditions, among other things, restrict the Andersons to the annual production of 1,000 gallons of wine, and the annual sale of 2,000 gallons of wine.   They require the Andersons to obtain an approved parking plan and an approved method of disposing of grape skins.   They provide that crushing “shall be limited to a maximum of seven (7) days of activity per year, restricted to 7:00 A.M. until sunset,” and provide that a bottling truck will be permitted to park on the Andersons' driveway no more than 10 days per year.

3.   The CC & Rs permit owners to keep animals (including horses) as pets on condition they are not kept, bred or raised for commercial purposes.   Citizens' theories, contested by the Andersons, are that the llamas are wild animals and that they are being bred for commercial purposes.

4.   Unless otherwise specified, further statutory references are to the Civil Code.

5.   Section 1462 provides:  “Every covenant contained in a grant of an estate in real property, which is made for the direct benefit of the property, or some part of it then in existence, runs with the land.”Section 1468 provides:  “Each covenant, made by an owner of land with the owner of other land or made by a grantor of land with the grantee of land conveyed, or made by the grantee of land conveyed with the grantor thereof, to do or refrain from doing some act on his own land, which doing or refraining is expressed to be for the benefit of the land of the covenantee, runs with both the land owned by or granted to the covenantor and the land owned by or granted to the covenantee and shall, except as provided by Section 1466, or as specifically provided in the instrument creating such covenant, and notwithstanding the provisions of Section 1465, benefit or be binding upon each successive owner, during his ownership, of any portion of such land affected thereby and upon each person having any interest therein derived through any owner thereof where all of the following requirements are met:“(a) The land of the covenantor which is to be affected by such covenants, and the land of covenantee to be benefited, are particularly described in the instrument containing such covenants;“(b) Such successive owners of the land are in such instrument expressed to be bound thereby for the benefit of the land owned by, granted by, or granted to the covenantee;“(c) Each such act relates to the use, repair, maintenance or improvement of, or payment of taxes and assessments on, such land or some part thereof, or if the land owned by or granted to each consists of undivided interests in the same parcel or parcels, the suspension of the right of partition or sale in lieu of partition for a period which is reasonable in relation to the purpose of the covenant;“(d) The instrument containing such covenants is recorded in the office of the recorder of each county in which such land or some part thereof is situated.“Where several persons are subject to the burden of any such covenant, it shall be apportioned among them pursuant to Section 1467, except that where only a portion of such land is so affected thereby, such apportionment shall be only among the several owners of such portion.   This section shall apply to the mortgagee, trustee or beneficiary of a mortgage or deed of trust upon such land or any part thereof while but only while he, in such capacity, is in possession thereof.”

6.   As will be discussed in greater detail, infra, we agree with this conclusion of the court in Scaringe, although we do not completely agree with the court's reasoning in reaching it.

7.   Citizens does cite authority such as Valensin v. Valensin (1886) 28 Fed. 599, 602, holding that a husband and wife can make any argument affecting their property interests that unmarried persons can make.   We do not see that this authority is of any aid to it.

STEIN, Associate Justice.

STRANKMAN, P.J., and NEWSOM, J., concur.