Low v. Reick , 384 Mont. 101 ( 2016 )

07/12/2016
DA 15-0641
Case Number: DA 15-0641
IN THE SUPREME COURT OF THE STATE OF MONTANA
2016 MT 167
STEVEN LOW, VINCENT HARKER, JUDY WALTERS,
FREDERICK WALTERS, THOMAS GILDAY, SANDRA
HARKE, JOHNSON TESTAMENTARY TRUST, ECHO
SKILPADDE TRUST, AND WILLIAM BURTON,
Plaintiffs and Appellants,
v.
KENNETH REICK AND KATHLEEN REICK,
Defendants and Appellees.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-12-1359C
Honorable Heidi Ulbricht, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Evan F. Danno, Danno Law Firm, P.C., Kalispell, Montana
For Appellee:
Anne G. Biby, Hash, O’Brien, Biby & Murray, PLLP, Kalispell, Montana
Submitted on Briefs: March 30, 2016
Decided: July 12, 2016
Filed:
__________________________________________
Clerk
Justice Patricia Cotter delivered the Opinion of the Court.
¶1 The parties own real property in Echo Chalet Village on a peninsula in Echo Lake
in Bigfork, Flathead County, Montana. Kenneth and Kathleen Reick own the parcel on
the southern end of the peninsula through which the sole vehicular road granting access
to the northern lots owned by Plaintiffs/Appellants lies. The Reicks purchased the
property in 1983 under a warranty deed and subject to a long-term 20-foot existing
easement allowing Appellants access to their respective properties. The access road runs
parallel to Echo Lake and consists of various low-elevation sections subject to flooding.
In 1992, the parties entered into a road maintenance agreement (Maintenance Agreement)
which set forth how, when, and at whose expense maintenance of the access road would
occur. Following a flood and a dispute over repair and maintenance of the road,
Appellants filed a complaint in November 2012, seeking declaratory judgment that the
Maintenance Agreement was valid and enforceable. Seeking specific performance and
damages, they alleged that the Reicks breached the Maintenance Agreement. The Reicks
counterclaimed and both sides sought summary judgment. The Eleventh Judicial District
Court granted partial summary judgment to the Reicks and subsequently conducted a
bench trial on the remaining issues. The court then entered judgment in favor of the
Reicks. Appellants appeal the District Court’s ruling on summary judgment and its post-
trial findings, conclusions, orders and judgments. We affirm in part and reverse in part.
2
ISSUES
¶2 A restatement of the issues on appeal is:
¶3 Did the District Court err by ruling that the Reicks’ lot is encumbered by a single
easement, which is the existing road, measured 10 feet from each side of the road’s
centerline?
¶4 Did the District Court err by rejecting Appellants’ claim of authority to sign and
submit an application for a lakeshore improvement permit?
¶5 Did the District Court err by concluding the Maintenance Agreement is
unenforceable against the Reicks for lack of consideration?
¶6 Did the District Court err by ruling that the Reicks did not breach the Maintenance
Agreement?
¶7 Did the District Court err by concluding that Appellants breached the Road Detour
Agreement, and awarding damages to the Reicks?
¶8 Did the District Court err by concluding that the Reicks did not convert the
Appellants’ fill material?
¶9 Did the District Court err by ordering Appellants to pay Reicks’
counterclaim-related attorney’s fees and costs?
FACTUAL AND PROCEDURAL BACKGROUND
¶10 Echo Chalet Village in Bigfork, Montana, consists of 21 lots numbered 24-44 and
is located on a peninsula that extends northward into Echo Lake. The parties to this case
own the majority of these lots but some lot owners have been dismissed and are not
parties to this action.
3
¶11 Testimony established that in the early 1950s, prior to creation of the subdivision,
a road was established to service a single home on the north end of the peninsula. This
road was referenced in a 1968 land survey. In 1974, the two families who owned the
peninsula at that time, Masons and Mastoliers, executed a subdivision plat of Echo Chalet
Village which included a 20-foot wide road easement which ran in part along the west
boundary of Lot 24. Mason owned Lots 24 and 25. Lot 24 is located on the southern end
of the peninsula through which all northern lot owners must pass to access their
properties.
¶12 The Reicks purchased Lot 24 from Mason in 1983 under a warranty deed and
subject to a long-term existing easement establishing the access road to Lots 25-44 (the
Easement Road). The Reicks occasionally use the Easement Road but it is generally not
necessary to their use of their property. The Easement Road runs parallel to Echo Lake
and consists of various low-elevation sections subject to occasional flooding.
¶13 In 1992, the parties (or their predecessors) entered into the Maintenance
Agreement which provided:
1. Expenses and/or labor will be shared equally among the respective
parties in maintaining the access.
2. Repairs or maintenance on the access shall be required when a decision
is reached by a majority of the owners of these properties. Repairs and
maintenance shall then proceed on a schedule and in a manner agreed
upon by the majority.
3. This agreement shall be deemed and is intended to run with the land and
shall be binding upon the undersigned, their heirs, personal
representatives, successors, and assigns until such a time as said
roadway/access shall be dedicated to and accepted for use as a public
roadway by a governmental entity.
4
¶14 Subsequently, Echo Lake topped its banks on two occasions—1997-98 and
2011-12. The earlier flood did not render the Easement Road totally impassable as the
northern property owners could access their properties by driving slowly through the
flooded areas. The 2011 flood, however, rendered low elevation portions of the
Easement Road impassable. In June 2011, Appellants and the Reicks entered into a Road
Detour Agreement (Detour Agreement) in which the parties agreed to bring in gravel and
construct an elevated “spur road” utilizing the Reicks’ private driveway and contiguous
property. The spur road tied back into the access road at a higher-elevation northerly
location. The County approved the construction of the spur road. The Detour Agreement
provided that the materials creating the spur road would be removed when the flood
waters subsided and the Reicks’ property would be restored to its pre-spur-road condition
by the northern property owners. In addition to building the spur road, the parties utilized
purchased fill material to elevate low sections of the Easement Road. The Reicks
enabled this by submitting a signed application for an emergency lakeshore improvement
permit to allow the temporary elevation of the Easement Road. The parties used the spur
road throughout 2011 as well as in the spring of 2012 when Echo Lake’s waters rose
again but not as dramatically.
¶15 Subsequently, the Reicks posted a sign prohibiting use of the spur road by heavy
construction vehicles but allowed northern property owners in their personal vehicles to
continue using the detour road. In late summer 2012, the flood waters receded and the
County and the Reicks demanded the fill material be removed. Appellants requested that
the Reicks obtain a lakeshore permit to allow them to take the fill material from the spur
5
road and use it to elevate the Easement Road. For multiple reasons, the Reicks refused.
Appellants thereafter refused Reicks’ demands to remove the fill material.
¶16 In November 2012, the Plaintiffs (now Appellants) filed this action in the Eleventh
Judicial District Court seeking declaratory judgment that the 1992 Maintenance
Agreement was valid and enforceable and authorized them to elevate the Easement Road.
Seeking specific performance and damages, they alleged that the Reicks breached the
Maintenance Agreement.
¶17 In late summer 2013, the Reicks again demanded that Appellants remove the spur
road fill and restore their property pursuant to the Detour Agreement. Appellants
refused. Thereafter the Reicks spent $5,300 restoring their property to its June 2011
condition. Because the Reicks unilaterally removed and disposed of the fill material,
Appellants amended their Complaint to add a count for conversion. The Reicks
counterclaimed for breach of the Detour Agreement, quantum meruit seeking to recover
the value of providing the spur road and the later costs of removing it, and breach of the
implied covenant of good faith.
¶18 In February 2014, Appellants moved for summary judgment claiming they had
multiple easement rights over Reicks’ property, the combination of which would allow
them to unilaterally re-construct the Easement Road at a higher elevation. They further
asserted that under the Maintenance Agreement, they did not require Reicks’ signatures
to submit applications for lakeshore permits for the purpose of improving the Easement
Road. Appellants also sought summary judgment on their conversion allegations. Reicks
responded and filed a cross-motion for partial summary judgment.
6
¶19 In May 2014, the District Court denied Appellants’ summary judgment motion,
and granted summary judgment to the Reicks on two issues. The court concluded that:
(1) a single easement exists over Lot 24, not multiple easements; (2) Appellants are not
authorized to submit lakeshore permit applications without the Reicks’ participation; and
(3) the Reicks did not breach the Detour Agreement.
¶20 In February 2015, the District Court conducted a non-jury trial with respect to the
remaining issues. In September 2015, the court issued its Findings of Fact, Conclusions
of Law and Order awarding judgment to the Reicks. The court reiterated its rulings on
summary judgment and further concluded that: (1) Appellants breached the Detour
Agreement and were liable for the Reicks’ fees and costs associated with this issue; (2)
the Maintenance Agreement is unenforceable against the Reicks for want of
consideration; (3) the Reicks did not commit conversion by removing and disposing of
the spur road fill material; and (4) Appellants must pay the costs incurred by the Reicks
to remove the fill material and restore their property along with prejudgment interest.
¶21 Appellants appeal the District Court’s ruling on summary judgment and its post-
trial findings, conclusions, orders and judgments. We affirm in part and reverse in part.
STANDARD OF REVIEW
¶22 We will affirm the factual findings of a district court sitting without a jury unless
those findings are clearly erroneous. A district court’s findings are clearly erroneous if
they are not supported by substantial evidence, if the district court has misapprehended
the effect of the evidence, or if a review of the record leaves this Court with the definite
and firm conviction that a mistake has been committed. To determine whether
7
substantial credible evidence supports the district court’s findings, we review the
evidence in the light most favorable to the prevailing party. We review a district court’s
conclusions of law for correctness. Jacobson v. Bayview Loan Servicing, LLC, 2016 MT
101, ¶ 19, 383 Mont. 257, 371 P.3d 397 (internal citations omitted).
¶23 We review a district court’s entry of summary judgment de novo. Summary
judgment is appropriate when the moving party demonstrates both the absence of any
genuine issues of material fact and entitlement to judgment as a matter of law. Mont.
Immigrant Justice Alliance v. Bullock, 2016 MT 104, ¶ 14, 383 Mont. 318, 371 P.3d 430
(internal citations omitted).
¶24 We review a district court’s conclusion regarding the existence of legal authority
to award attorney fees for correctness. If legal authority exists, we review a district
court’s order granting or denying attorney fees for abuse of discretion. Mont. Immigrant
Justice Alliance, ¶ 15.
DISCUSSION
¶25 Did the District Court err by ruling that the Reicks’ lot is encumbered by a single
easement, which is the existing road, measured 10 feet from each side of the
road’s centerline?
¶26 Appellants claim that Lot 24 is encumbered by co-existing express, implied,
prescriptive, and implied by necessity easements. Appellants assert that by combining
these easements, they have adequate property and authority to elevate the Easement Road
as much as needed—five to seven feet—to ensure it is usable in flood years. It is
undisputed that such an elevation would require a subjacent and lateral support slope
extending well beyond the 20-foot express easement. Appellants argue that with the
8
combined easements, they enjoy a second 20-foot easement running parallel and
contiguous with the original express easement which would allow for reconstruction of
the Easement Road at a higher elevation. The District Court disagreed, holding that
Appellants have a 20-foot-wide express easement which is the Easement Road, but no
other easement rights. The court granted summary judgment to Reicks on this issue.
¶27 It is well-established that “[t]he breadth and scope of an easement are determined
by the actual terms of the grant.” Section 70-17-106, MCA, provides “The extent of a
servitude is determined by the terms of the grant or the nature of the enjoyment by which
it was acquired.” Numerous historic documents presented to the District Court establish
that a 20-foot easement was expressly granted to Appellants. Moreover, the record
indicates that Appellants have “enjoyed” a defined and constructed 20-foot road over Lot
24 for more than fifty years and previously have never alleged the existence of multiple
easements. The location of the Easement Road, as well as its width, is well-established,
historical, and accurately documented on a 1968 Certificate of Survey. See Anderson v.
Stokes, 2007 MT 166, ¶ 43, 338 Mont. 118, 163 P.3d 1273 (An easement is limited to its
historical location and size.). Claims of a subsequently-granted parallel express easement
are not supported by the record.
¶28 Additionally, Appellants have not established the existence of a prescriptive
easement. They claim a prescriptive easement based upon their use of extra footage
along the Easement Road for snow plowing and their repeated utilization of a paved
turnaround location near the Reicks’ garage when needed. The District Court was
9
unpersuaded by these claims. It found that Appellants’ typical use of the turnaround area
would not have taken them outside of their allotted 20-foot express easement.
¶29 The court further held that Appellants did not have an implied easement by
necessity. In granting summary judgment to the Reicks on this issue, the court correctly
determined that the elements required to establish an easement by necessity were not
satisfied. An easement by necessity arises when there is unity of ownership and strict
necessity. Ashby v. Maechling, 2010 MT 80, ¶ 19, 356 Mont. 68, 229 P.3d 1210. Strict
necessity is defined as “a lack of practical access to a public road for ingress or egress.”
Additionally, strict necessity must exist at the time of severance to create an easement by
necessity. Kelly v. Burlington N. R.R., 279 Mont. 238, 243, 927 P.2d 4, 7 (1996). The
record shows that at the time of severance Appellants had an existing roadway, an
established route for ingress and egress, and a granted easement; consequently, there was
no easement by necessity as a matter of law.
¶30 Lastly, Appellants claim they acquired an implied easement by pre-existing use
before the subdivision was created and the tracts were severed from common ownership.
They assert that when the original two families subdivided the property for residential
development in 1974, these owners intended the implied easement by pre-existing use to
continue after severance. Appellants’ argument is unpersuasive and unsupported. As
established above, Appellants have a written, express easement that clearly identifies the
easement granted by the original grantor. This written easement gives Appellants access
via the Easement Road to their property. Moreover, a claim to an implied easement by
pre-existing use does not provide Appellants with additional rights or property beyond
10
those granted by the express easement. The express easement is the controlling
easement.
¶31 The scope of the easement to which Appellants are entitled includes maintenance
or reconstruction of the Easement Road as much as practicable within the 20-foot
easement corridor, providing such construction complies with applicable regulations and
does not unduly burden the servient estate. The court’s order of summary judgment on
this issue was correct as a matter of law.
¶32 Did the District Court err by rejecting Appellants’ claim of authority to sign and
submit an application for a lakeshore improvement permit?
¶33 Appellants argue that the scope of their easement includes the right to improve the
road in any manner required to stay above floodwaters and that they should be authorized
to sign for lakeshore improvement permits to accomplish such improvements. They
claim the District Court erred when it denied their request for summary judgment on this
issue. The District Court observed that Appellants presented no specific plan for raising
the road; rather, they simply requested declaratory judgment that their easement
authorized them to repair and maintain the Easement Road and they should be allowed to
obtain permits necessary to do so. The court noted that the right to obtain lakeshore
improvement permits normally rests with the landowner. Additionally, Appellants had
no right under their easement to “unreasonably interfere with [Reicks’] reasonably
convenient enjoyment of the servitude” or do unnecessary injury to the Reicks’ property.
Consequently, the District Court did “not find it appropriate to entirely remove [Reicks]
from decision making regarding changes to the road that affect the [sic] both the
11
lakeshore and [Reicks’] property.” The District Court held Appellants were “not entitled
to a Court order permitting them to apply for lakeshore improvement permits” without
Reicks’ approval.
¶34 Appellants present no legal authority supporting their claim of a right to sign for
permits authorizing improvements to land they do not own. Appellants have a right to
repair and maintain their single express easement providing such repairs and maintenance
can take place within the 20-foot easement property, are in compliance with applicable
regulations, and do not unreasonably interfere with Reicks’ enjoyment of their property.
Earl v. Pavex, 2013 MT 343, ¶ 44, 372 Mont. 343, 313 P.3d 154. The District Court did
not err in denying Appellants’ motion for summary judgment as to this issue.
¶35 Did the District Court err by concluding the Maintenance Agreement is
unenforceable against the Reicks for lack of consideration?
¶36 As noted above, the Reicks and Appellants entered into the 1992 Maintenance
Agreement which set forth that a majority of signatories could determine what repairs
and maintenance to the Easement Road were needed and when these repairs would take
place. The Maintenance Agreement provided that all signatories would share the costs of
such repairs or maintenance. Appellants allege that the Reicks breached the Maintenance
Agreement by refusing to defer to the majority’s desired repairs and refusing to share in
the costs of such repairs. The District Court held that the 1992 Maintenance Agreement
was unenforceable against the Reicks for want of consideration, stating the Reicks gained
nothing by signing the 1992 agreement and Appellants gave up nothing.
12
¶37 The essential elements of a contract are: (1) identifiable parties capable of
contracting; (2) the consent of these parties; (3) a lawful object; and (4) consideration.
Section 28-2-102, MCA. Consideration consists, in part, of any “benefit conferred or
agreed to be conferred upon the promisor by any other person . . . .” Section 28-2-801,
MCA. It is undisputed that the Reicks share the use of the Easement Road. Upon
entering into the 1992 Agreement, they received the benefit of a cost-sharing
arrangement for road maintenance and repair. Such mutual benefit constitutes
consideration rendering the Maintenance Agreement enforceable against the Reicks. The
District Court erred in holding that the Maintenance Agreement was unenforceable
against them; however, as discussed below, the error is harmless and does not warrant
remand.
¶38 Did the District Court err by ruling that the Reicks did not breach the
Maintenance Agreement?
¶39 Appellants claim that the Reicks breached the Maintenance Agreement by refusing
(1) to comply with the majority of the homeowners’ decision to improve the Easement
Road; (2) to allow the spur road gravel to be placed on the Easement Road; and (3) to
share in the cost of the spur road fill materials. They posit that the District Court erred by
denying their motion for summary judgment on the Reicks’ breach, and by entering
judgment against them on this issue following trial.
¶40 While the majority of the Appellants signing the Maintenance Agreement did
determine repairs to the Easement Road were required, the proposed repairs—a five to
seven foot elevation of the Easement Road—could not be achieved within the
13
Appellants’ easement. Because the purpose of the Maintenance Agreement was to
preserve the usability of the easement, it must be interpreted within the confines and
restrictions of the easement. There is no evidence that the Maintenance Agreement was
prepared and executed with the intent to expand the size of the easement or grant greater
rights to Appellants under the easement. Had Appellants proposed repairs to the
Easement Road that could have been attained within the easement boundaries, the Reicks
would have been obligated under the Maintenance Agreement to agree to the repairs and
share in the costs. As Appellants have not yet proposed such repairs or maintenance, the
Reicks have not breached the Maintenance Agreement.
¶41 As the Reicks have not breached the Maintenance Agreement, the District Court’s
erroneous holding that the agreement was unenforceable for lack of consideration is
harmless.
¶42 Did the District Court err by concluding that Appellants breached the Detour
Agreement, and awarding damages to the Reicks?
¶43 Appellants argue that the Reicks prevented them from performing their obligations
under the Detour Agreement by refusing to allow them to remove the spur road gravel
and apply it to the Easement Road. Additionally, they claim the Detour Agreement did
not require that they restore Reicks’ property “as soon as the water receded”; rather, that
was a County requirement. They assert that the majority of the gravel used for the spur
road was located on their easement and should not have been removed. Lastly, they
assert the Reicks are not entitled to equitable relief as the Reicks have “unclean hands.”
14
¶44 The District Court determined that the Reicks did nothing to prevent Appellants
from performing under the terms of the Detour Agreement, and that Appellants breached
the contract by refusing to remove the fill material and restore the Reicks’ property in a
timely manner. The court entered judgment for the Reicks on their counterclaim in the
sum of $5,300, representing the costs incurred by the Reicks to remove the fill material
and return their property to its original condition, together with prejudgment interest.
¶45 The record does not support Appellants’ allegations. It is undisputed that the
floodwaters receded in the summer of 2012 and the Reicks and the County demanded
removal of the spur road. Appellants refused. One year later, Reicks demanded removal
and restoration again and the Appellants refused again. The terms of the Detour
Agreement were simple and unequivocal. Reicks would allow the spur road to be
constructed and used by Appellants and Appellants would remove it and restore Reicks’
property when the water receded. The Detour Agreement was a binding agreement and
the Reicks performed as required. The Reicks did nothing to prevent Appellants from
performing under the agreement. The District Court did not err in granting summary
judgment to the Reicks on this issue.
¶46 Did the District Court err by concluding the Reicks did not convert the Appellants’
fill material?
¶47 Appellants claimed the Reicks committed conversion of property by removing and
disposing of the gravel fill material Appellants had purchased and used to construct the
spur road and repair portions of the Easement Road. Appellants argued they intended to
remove the material from the spur road and reuse it for further repairs to the Easement
15
Road. They claimed damages in the amount of $5,564, i.e., the price of the gravel.
Reicks countered that Appellants contracted to remove the fill and breached the contract
by refusing to do so; consequently, Appellants waived their right to possession of it.
Furthermore, Reicks assert they were forced to provide free storage for 640 tons of fill
material after the floodwaters receded and the fill was no longer needed. The District
Court denied Appellants’ claim for conversion.
¶48 Conversion requires ownership of property; a right of possession; unauthorized
dominion over that property by another; and resulting damages. Eatinger v. Johnson, 269
Mont. 99, 104, 887 P.2d 231, 234 (1994). In the case before us, Appellants suffered no
damages. Under the Detour Agreement, Appellants were under a contractual obligation
to pay the costs of removing the fill material and restoring Reicks’ property to its pre-
flood condition. Additionally, testimony by County officials established that the fill
material used to construct the spur road and temporarily repair the Easement Road during
the flood period did not meet County standards and would not be sanctioned for
Easement Road repairs. As a result, Appellants would have had to remove and dispose of
the fill material in any event. As Appellants refused to do so, the Reicks undertook the
removal and restoration of the property. Consequently, Appellants suffered no damage
from Reicks’ removal of the unwanted and unusable fill material and the District Court
did not err in denying Appellants’ claim for conversion.
16
¶49 Did the District Court err by ordering Appellants to pay Reicks’
counterclaim-related attorney’s fees and costs?
¶50 As noted above, the Reicks counterclaimed against Appellants for breach of the
Detour Agreement, quantum meruit, and breach of the implied covenant of good faith.
Following the District Court’s ruling that the Reicks prevailed on their counterclaim, and
relying upon § 25-7-105(1) and (3), MCA, the court awarded Reicks the attorney’s fees
and costs pertaining to the counterclaim. Appellants claim this was error and that
Appellants are entitled to their fees and costs.
¶51 Section 25-7-105, MCA, provides, in relevant part:
(1) At any time more than 60 days after service of the complaint and more
than 30 days before the trial begins, any party may serve upon the adverse
party a written offer to settle a claim for the money or property or to the
effect specified in the offer. If within 10 days after the service of the offer,
the adverse party serves written notice that the offer is accepted, either
party may then file the offer and notice of acceptance together with proof of
service of the offer and notice of acceptance with the clerk of court and the
court shall enter judgment. An offer not accepted is considered withdrawn
and evidence of the offer is not admissible except in a proceeding to
determine costs. If the final judgment is less favorable to the offeree than
the offer, the offeree shall pay the costs incurred by the offeror after the
offer was made. The fact that an offer is made but not accepted does not
preclude a subsequent offer.
. . .
(3) For the purposes of this section, costs include reasonable attorney fees.
¶52 The Reicks presented their offer of settlement of the counterclaim on December
31, 2013, seeking $5,250 from Appellants. The Reicks also notified Appellants of their
potential liability for attorney’s fees and costs under § 25-7-105, MCA. Appellants
submitted their counter-offer of settlement of the counterclaim on April 15, 2014,
seeking $5,564. As the Reicks prevailed on their counterclaim and the final judgment of
17
$5,300 was less favorable to the Appellants than their settlement offer, the District Court
awarded the Reicks attorney’s fees and costs. The District Court’s interpretation and
application of the statute was not error.
CONCLUSION
¶53 For the foregoing reasons, we affirm the District Court’s rulings with the
exception of its conclusion that the Maintenance Agreement was unenforceable against
the Reicks for want of consideration. While this was error, it was harmless error as the
Reicks did not breach the Maintenance Agreement.
/S/ PATRICIA COTTER
We Concur:
/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ LAURIE McKINNON
/S/ JAMES JEREMIAH SHEA
18