By Jon Chown
The Santa Cruz County Regional Transportation Commission claims it owns a large chunk of the parking lot in front of the Bayview Hotel, Trout Gulch Crossing and Betty’s Burgers, and while the dispute has been simmering in court since 2023, a trial is finally set to start June 18.
The RTC filed a complaint to quiet title the property against Laurie Negro and Juan Valledor, the owners of Trout Gulch Crossing, and Cristina Locke, owner of Bayview Hotel, on Oct. 2, 2023. The complaint was amended weeks later to include Betty 41st LLC, known to the public as Betty’s Burgers.
The property comprises a portion of the Santa Cruz Branch Rail Line, which extends from Watsonville to Davenport. According to the RTC’s complaint, the Santa Cruz Railroad Company purchased the land in 1877 from Jose Arano, and when the RTC bought the Branch Line in 2012, it became the new owner of the property.
The RTC claims it owns the land outright and not merely a railroad easement. As evidence, it points to the deed and the fact that the RTC is insuring the property differently from property for which it has only easements.
Defendants say the contract was for an easement and point to language in the deed to support their argument. The deed, written in flowing script that is sometimes difficult to read, contains the elements of an easement. The opening granting clause says, “I, Jose Arano … hereby grant to the Santa Cruz Railroad Company for a right of way and for the construction, operation and maintenance of its main track …”
In addition, the document requires the railroad to keep crossings open, avoid blocking access, maintain convenient crossings and avoid storing freight on the property.
“No lumber, timber, stone, earth or any other freight shall be stored or piled upon the lands hereby conveyed and granted, provided this shall not be deemed to apply to freight or baggage brought to the tracks for immediate shipment or landed therefrom for immediate delivery …”
It also requires that the property be used for railroad purposes.
The RTC, however, points out that the deed gives the railroad extensive rights and uses the words “grant” and “convey.” To convey or grant land to another is generally descriptive of a transfer of ownership. The entire tract of land and its boundaries are also described.
In addition, the RTC says any claims the defendants might have had were lost when the current owners “agreed to the permanent closure and removal of the private railroad crossing through which they had previously exercised the right to cross … .”
There have been a lot of court filings and conferences since the case was filed almost three years ago. Betty 41st has argued that additional documents could shed light on gaps in the RTC’s claimed chain of title and the agency’s ownership interest in the corridor. The RTC has countered that the requests are speculative and overly broad, seeking communications dating back decades and, in some cases, to the 19th century. The agency also said some older records may no longer exist because of records-retention practices and a server failure that affected historical electronic records. Even if they did exist, the RTC argues that any remaining undisclosed records are protected by attorney-client privilege.
Attorneys from all parties declined to comment for this story.
Bayview Hotel Realtor Unfazed
The Bayview Hotel has been for sale for years. It has entered escrow more than once, but one issue or another has stalled the sale. It was under contract again at the beginning of the year, but has since fallen out once more. Now, the hotel is faced with losing the majority of its front parking lot.
Despite what it might seem, Datta Khalsa of Main Street Realtors, the hotel’s listing agent, said the lawsuit shouldn’t affect any potential sale. In fact, he said the property is close to being in escrow again, with the owner weighing two potential offers.
“Some buyers raise the lawsuit as a consideration, others don’t,” Khalsa said. “It’s not standing in the way of negotiations that are currently underway. Hopefully we get it back under contract and third time is a charm.”
He said it would take about a year before a change of ownership could happen. “And that’s if everything goes well.”
Khalsa said the other defendants would likely be more damaged by the suit. He pointed out that the back one-third of the Bayview property is undeveloped and could potentially be a profit center should the RTC win the lawsuit.
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The hearing will be held in Department 10 of the Santa Cruz County Superior Court. The case is 23CV02345.