Ocean Baltimore, LLC v. Celebration Mall, LLC ( 2021 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
OCEAN BALTIMORE, LLC, )
)
Petitioner, )
)
v. ) C.A. No. 2019-0043-SEM
)
CELEBRATION MALL, LLC, )
)
Defendant. )
)
MASTERS FINAL REPORT
Final Report: May 12, 2021
Draft Report: April 30, 2021
Date Submitted: January 5, 2021
Daniel F. McAllister, Larry J. Tarabiocs, TARABICOS GROSSO LLP, New Castle,
Delaware; Counsel for Petitioner.
Vincent G. Robertson, PARKOWSKI, GUERKE & SWAYZE, P.A., Rehoboth
Beach, Delaware; Counsel for Defendant.
MOLINA, M.
1
This is a quiet title action regarding the ownership of a strip of land between
Café Azafrán and Celebration Mall in Rehoboth Beach. The petitioner (the owner
of the café property) argues that its predecessors in interest obtained the strip by way
of adverse possession and have used it openly and exclusively for more than 60
years. As an alternative, the petitioner argues for a prescriptive easement. The
respondent (the owner of Celebration Mall) disagrees and argues it purchased the
entire lot from the Epworth United Methodist Church in 2008 and any use of the
strip by its neighbor was permissive and non-exclusive.
After extensive discovery, the parties have cross-moved for summary
judgment. The petitioner seeks judgment on both of its claims, while the respondent
reasoned that factual issues preclude summary judgment for or against an easement.
For the following reasons, I find there are no issues of material fact and recommend
that judgment be entered in the petitioner’s favor, declaring it the owner of the
disputed strip by way of adverse possession. As such, I decline to address the
alternatively pled claim for an easement. I also recommend that petitioner’s request
for shifting of fees be denied but petitioner be allowed costs as the prevailing party.
This is my final report.1
1
This report makes the same substantive findings and recommendations as my April 30,
2021 draft report, to which no exceptions were filed.
2
I. BACKGROUND2
To borrow from counsel, “[l]ike the history of Rehoboth Beach, this dispute
starts with a church.”3 That church is Epworth United Methodist Church (the
“Church”) and in 1914 it moved its sanctuary onto Lot 20 on Baltimore Avenue in
Rehoboth Beach.4 Baltimore Avenue runs perpendicular to the Atlantic Ocean and,
when facing the ocean, Lot 20 is on the righthand side of the street.5 Lot 20 is
bordered by Lot 22 to the west (farther from the ocean) and Lot 18 to the east (closer
to the ocean).6
When the Church moved its congregation, it situated its sanctuary more than
10 feet from the border between Lot 20 and Lot 18.7 That was done intentionally to
avoid interfering with an easement held by a neighboring homeowner for a 10-foot
by 100-foot alley on the eastern side of Lot 20, abutting Lot 18.8 But even after that
early easement was abandoned, the Church did not expand into that space, choosing
2
The record presented consists of nine (9) affidavits, four (4) deposition transcripts, and
numerous exhibits. See Docket Item (“D.I.”) 44, 48, 50. I refer to Petitioner’s exhibits
from D.I. 48 as “Pet. Ex. #,” Respondent’s exhibits from D.I. 44 and 50 as “Resp. Ex. A-
#,” and to the affidavits and depositions provided by both parties by “Last Name Aff./Dep.”
3
D.I. 43 at 3. See also Rehoboth Beach History, REHOBOTH.COM,
https://www.rehoboth.com/community/town-history/34-rehoboth-beach-early-
history.html.
4
See Resp. Ex. A-35; D.I. 43 at 6.
5
See Pet. Ex. 9.
6
See Resp. Ex. A-5.
7
See D.I. 43 at 6.
8
See Resp. Ex. A-42-45.
3
instead to grow into Lots 22 and 24, to the west.9 The location of the early easement
was roughly in the same place as the now-paved strip at issue in this litigation (the
“Disputed Area”).10
A. 1919 through 1974.
The relocated sanctuary remained on Lot 20 until around 1974, when it was
demolished and an educational building was constructed in its place.11 From the
1920’s through demolition, the neighboring Lot 18 was continuously held by the
Marine family; first by Mary N. Marine, who took title in 1924, and then inherited
by David N. Marine.12 By sometime in 1925, the Marines had established a garage
or shed at the end of the Disputed Area.13 They also utilized the Disputed Area as a
driveway providing them access to the shed and the driveway area was “well worn”
by 1931.14 This early use is depicted in photographs taken by an uninterested party.
Otherwise, there is little direct evidence before me regarding the use of the Disputed
Area from 1919 through the 1950’s.
9
See Covington Aff. ¶5.
10
See Pet. Ex. 11, Pet. Ex. 27.
11
See Covington Aff. ¶5.
12
See Pet. Ex. 10.
13
Pet. Ex. 9.
14
Id. Judge Lee testified that, in the 1960’s and 1970’s, the driveway area had a makeshift
improvement of clam or oyster shells or, perhaps, gravel or stone. Lee Dep. 36:19-37:4.
This improvement made the driveway feel firmer but, otherwise, it looked like a lawn. Id.
at 37:14-38:7, 94:1-9. He was unsure who laid the improvement but believed the owners
of Lot 18 maintained the lawn during that time. Id. at 37:6-38:7.
4
The earliest witness testimony is from neighbors who moved to the area in
1957. Margaret Susan Downs and W. James Downs, Jr. provided affidavits attesting
that they lived on Lot 16 (the eastern neighbor to Lot 18) beginning in 1957.15 Both
attest, based on direct observation, that “[s]ince 1957, to the best of [their]
knowledge, the [Disputed Area] has only been used by the owners of [Lot 18]; it was
never used by the Church.”16 Ms. Downs continues to reside in Lot 16 and contends
the use has never changed; Mr. Downs moved away in 1970.17
On the Church side, I have personal recollections from the 1960’s and 1970’s
from Reverend Charles E. Covington, Sr. and William Swain Lee, former Family
Court and Superior Court Judge. Reverend Covington served as pastor of the Church
from 1961 through June of 1975.18 He oversaw all the Church’s construction
projects during that time, including the planning for, and construction of, the
educational building in 1973 and 1974.19 Reverend Covington attests that the
easternmost line used for construction on Lot 20 (excluding the Disputed Area) was
the “commonly accepted property line” and at no time was he told that the Disputed
15
M. Downs Aff. ¶2-3; W. Downs Aff. ¶3.
16
M. Downs Aff. ¶8; W. Downs Aff. ¶7 (altering the typed affidavit to read “assumption
and direct observation”).
17
Id. An affidavit was also submitted from Robert Reed who attests that he has lived in
Rehoboth Beach for 67 years and has “never known the Church to use” the Disputed Area.
Reed Aff. ¶3, 7.
18
Covington Aff. ¶3
19
Id. ¶4.
5
Area was (or used to be) part of the Church’s property.20 Reverend Covington goes
on to state he was “surprised” to learn about the current claim of ownership and “to
[his] knowledge, . . . during [his] tenure as pastor, [the Disputed Area] was never
used by the church for any purpose; it was only utilized by the Marine family.”21
Bolstering this representation, Reverend Covington goes on to explain that from
1961 through June of 1975 “[n]o church vehicle, even for weddings, funerals, or
special occasions, was ever parked in [the Disputed Area.]”22
Judge Lee has a slightly different recollection. Judge Lee joined the Church
in 1966 or 1967 and became their go-to attorney.23 He was also the Chairman of the
Administrative Board during the planning for the construction of the educational
building.24 Judge Lee testified that he never personally witnessed the Church or its
members using the Disputed Area.25 He did, however, recall walking to the back of
the Church’s property a “couple times” by way of the driveway in the Disputed
Area.26 When planning for construction of the educational building, Judge Lee
20
Id.
21
Id. ¶6.
22
Id.
23
Lee Dep. 64:18-65:6.
24
Id. at 54:17-55:16.
25
Id. at 15:24-16:14. Likewise, Judge Lee confirmed, to his knowledge, the Church never
used the Disputed Area for bake sales, parking, or events. Id. at 49:14-50:1. But, per Judge
Lee, he was under the impression that the Disputed Area was used to service the back of
the Church’s property. See, e.g., id. at 50:2-12.
26
Id. at 72:5-10. Judge Lee also speculates that anyone repairing or servicing the back of
the Church did (or would need to) use the Disputed Area to do so. See id. at 31:21-33:16,
35:5-13. See also id. 70:11-24.
6
researched the property lines and advised the Church that he believed Lot 18 had
used the Disputed Area for an extensive period of time and, as such, had acquired a
prescriptive easement.27 Based, at least in part, on Judge Lee’s investigation and
advice, the Church decided not to build on the Disputed Area or take other steps to
oust the owners of Lot 18 from the Disputed Area.28 Judge Lee was candid while
testifying that his recollection was limited and he pointed to other individuals who
may have had a better opportunity to view and understand the situation, including,
Reverend Covington.29
The parties also provided me with one survey prepared during this period. It
was drawn by J. Curtis Fritchman, dated May 14, 1974, and notes that the Disputed
Area was occupied by the owners of Lot 18 for more than 20 years. 30 Judge Lee
testified that the surveyor was a member of the Church and the survey was prepared
27
Id. at 11:13-17, 28:17-20, 29:17-30:16. Judge Lee reasons that, because the owners of
Lot 18 did not voice a claim of ownership, they only had a prescriptive easement. See, id.
at 42:10-16, 46:1-11.
28
See id. at 9:20-10:8.
29
Id. at 6:15-7:14 (explaining “I am very leery of the fact that I am the best evidence in
this case and we’re relying on a 50-year-old memory” and “I don’t know how accurate a
50-year-old memory is. If I was a judge sitting as a trier of fact, I would be very leery of
somebody saying, well, I remember 50 years ago”). See also id. at 59:4-10 (stating “I’m
going to tell you what I remember. . . . I’ll tell you it’s a 50-year-old memory with no
documentation and without consultation with other people.”). Id. at 51:23-52:21. Judge
Lee also explained that Reverend Covington “would have been involved in everything.
That’s part of his personality.” Id. at 92:9-11.
30
Pet. Ex. 11.
7
for the Church,31 I presume in connection with the construction of the educational
building.
B. 1974 through 2008.
The educational building was constructed in the place of the original sanctuary
in 1974, leaving the Disputed Area untouched.32 In 2008, Celebration Mall, LLC
(“Respondent”) purchased Lots 20, 22, and 24, as improved, from the Church.33 The
use of the Disputed Area from 1974 through Respondent’s purchase appears to have
been largely the same as when the original sanctuary was in place.
As explained above, Ms. Downs continued to live on Lot 16 and attests that
the owners and tenants of Lot 18 exclusively used the Disputed Area.34 This view
is supported by Robert Reed, who purchased Lot 18 through T.S. Ltd. Inc. (“T.S.”)
in 1979.35 Per Mr. Reed, from March 1979 through January 1980, Mr. Reed lived
on Lot 18 with his wife and exclusively used the Disputed Area.36 During that time,
the Disputed Area “was never used by the Church.”37 Mr. Reed, through T.S.,
conveyed Lot 18 to Harry Bonk in 1980 whose family (through various entities)
31
See Lee Dep. 42:17-43:4, 45:9-24.
32
Covington Aff. ¶4.
33
Pet. Ex. 1.
34
M. Downs Aff. ¶3, 8.
35
Reed Aff. ¶4-5; Resp. Ex. A-16-18 (showing the sale by Mr. Marine’s co-guardians).
36
Reed Aff. ¶5-6.
37
Id. ¶6.
8
continues to hold the property, now through Ocean Baltimore, LLC (“Petitioner”).38
Notably, the disclosure/settlement statement from the sale to Mr. Bonk notes the
property location as “Lot 18 and Easterly 10 Feet of Lot 20, Baltimore Avenue[.]”39
Two Bonk family members confirm that they and their tenants have
exclusively used the Disputed Area since 1980.40 Karla Draper, Mr. Bonk’s
daughter, attests that from 1980-1985, she owned and operated a bathing suit shop
on the first floor of the property on Lot 18 and “[o]nly members of [her] family and
[her] customers and delivery vehicles used the disputed area[.]”41 Ms. Draper
contends the Church never used the Disputed Area.42 Likewise, Shauna Thompson,
Ms. Draper’s sister and the current managing member of Petitioner, testified that
from 1980-1983, she lived in the apartment on Lot 18 and, during that time, no one
from the Church used or attempted to use the Disputed Area.43 Rather, she and her
family used the Disputed Area exclusively.44
38
Pet. Ex. 1 (showing Lot 18 transferred from T.S. to Harry Bonk then to Alpha Farms,
LLC, then to Petitioner). See also Thompson Dep. 19:11-20, 29:21-30:17, 31:10-15.
39
Pet. Ex. 2.
40
Affiant Karla Draper and deponent Shauna Thompson are the daughters of Harry Bonk.
See Thompson Dep. 8:19-20, 30:15-17.
41
Draper Aff. ¶4.
42
Id. ¶5. Ms. Draper further attests that she continued to use the driveway in the Disputed
Area “regularly” even after she sold her business. Id. ¶6.
43
Thompson Dep. 31:10-15, 10:18-23, 15:14-16:11, 18:2-6.
44
Id. Ms. Thompson further testified that there was never a need to verbalize or
memorialize her family’s claim to the Disputed Area, such as via letters to the Church or
the posting of signs, and that her family maintained the Disputed Area without assistance
from the Church since 1980. Id. at 85:19-87:24.
9
By around 2001, Ms. Thompson took over some management responsibilities
for Lot 18 (on behalf of then-owner Alpha Farms, LLC).45 From 2001-2008, Ms.
Thompson was at Lot 18 once a month to inspect it and “quite often” parked at the
property when visiting Rehoboth Beach.46 During her visits, Ms. Thompson never
witnessed the Church using the Disputed Area and, to her knowledge, only she and
the tenants of Lot 18 used and maintained it.47 This is supported by the affidavit of
Bruce Southard, who rented the property at Lot 18 from 2005-2010, during which
time he lived on the property and operated a motorized scooter shop on the first
floor.48 Mr. Southard used the Disputed Area for his parking and business needs but
did occasionally allow members of the Church to park in the driveway during
Sunday services.49 Mr. Southard represents parking by members of the Church was
always with his express permission and he never witnessed anyone associated with
the Church use the driveway without permission.50
Recollections are largely the same on the Church side. Reverend Jonathan
Baker attests that he served as pastor of the Church from 1982 through 1996. 51 He
45
Id. at 21:13-18, 39:13-15.
46
Id. at 38:21-40:1. Ms. Thompson explains that she has a reserved spot at Lot 18 that she
can use anytime she visits Rehoboth Beach. Id.
47
Id. at 25:6-17, 26:7-24.
48
Southard Aff. ¶3.
49
Id. ¶4-6.
50
Id. ¶6. Further, Mr. Southard attests that he had to, occasionally, instruct members of
the public not to use the Disputed Area, understanding the Disputed Area to be part of his
leased interests in Lot 18. Id. ¶8.
51
Baker Aff. ¶3. Reverend Baker returned as paster from 2008 through 2013. Id.
10
also lived across the street in the Church parsonage at 17-19 Baltimore Avenue.52
Reverend Baker attests that “[d]uring [his] appointment at [the Church], the Church
never used the disputed area. [He] does not recall anyone even mentioning to [him]
that the church owned the property.”53 Further, Reverend Baker attests that he only
witnessed “the various businesses and residents of Lot 18” use the Disputed Area
during his time with the Church.54 Reverend Baker also disclosed that the Church
requested permission to use the Disputed Area in the 1980’s when they needed to do
so to access the back of the Church’s property.55 Similarly, Judge Lee testified that
he is still a member of the Church (although he’s “kind of grown away from it now”)
and during his time as a member, he has never personally witnessed the Church or
its members using the Disputed Area.56
The only potential outlier is Reverend Jack Abel who was the pastor of the
Church from 2000 or 2001 through the end of 2007.57 As a new pastor, Reverend
Abel testified that he felt it was his responsibility to understand what property the
Church owned and he believed the Church owned the Disputed Area during his time
52
Id. ¶4.
53
Id. ¶6.
54
Id. ¶7.
55
Id. ¶8.
56
Lee Dep. 73:4-74:9, 15:24-16:14.
57
Abel Dep. 10:16-22, 12:4-14.
11
at the pulpit.58 Reverend Abel further testified that he would, on occasion, park in
the Disputed Area and walk on the Disputed Area to access the back of the Church’s
property.59 Reverend Abel candidly admitted, though, that the Church was aware of
“ambiguity” regarding the Disputed Area.60 Rather than address the “ambiguity,”
Reverend Abel testified that the Church decided to sell the property, subject to the
“ambiguity,” which could be dealt with by the new owner.61
Emory Buck, a member of the Church, spoke a bit more directly about this
“ambiguity” in his affidavit. Mr. Buck attests that he has been a member of the
Church since around 1995, was a member of the Building Committee, and was
involved in the variance efforts addressed below.62 Per Mr. Buck, Judge Lee advised
that the Church had lost the Disputed Area due to adverse possession.63 Around
2004, Mr. Buck attests that he met with Reverend Abel and another member of the
58
Id. at 161:8-20. Reverend Abel explained that he “operated under the impression that it
was the church’s property” but he does not know specifically how or why he come to that
impression. Id. at 28:18-29:9.
59
See, e.g., id. at 26:10-27:16, 126:21-127:6. Reverend Abel confirmed, however, that the
Church never used the Disputed Area for events or other parking needs during his time
with the Church. Id. at 70:4-19.
60
See, e.g., id. at 92:19-93:11.
61
Id. at 60:13-17. This ambiguity is noted in the Agreement for Sale between the Church
and Respondent’s managing member as follows: “10’ Title issue re: Lot 20 to be settled by
buyer.” Pet. Ex. 4. See also Abel Dep. 34:24-35:1 (explaining his understanding that the
Church “sold the property with ambiguity”).
62
Buck Aff. ¶3,5.
63
Id. ¶7. Judge Lee does not recall giving this opinion. Lee Dep. 8:21-10:8. Reverend
Abel, likewise, does not recall receiving this opinion but explained he’s “not saying that
that didn’t occur.” Abel Dep. 18:5-23.
12
Church to discuss whether the Church could defeat an adverse possession claim;
together they concluded that the Church had never used the Disputed Area and, as
such, had lost ownership to Lot 18.64
From this period (1974-2008), the parties also provided a letter from the City
of Rehoboth Beach then-City Manager, two surveys, and documentation related to
the Church’s 2005 request for a variance. The letter is dated June 26, 1991, from
then-City Manager Gregory Ferrese to the then-owner of Lot 18.65 The letter
provides Mr. Ferrese’s understanding that previous owners of Lot 18 received
ownership of the Disputed Area through adverse possession.66 The first survey was
prepared by Wingate & Eschenbach, dated November 5, 1979, and depicts the
Disputed Area as part of Lot 18.67 The second survey was by Coast Survey, Inc.
dated January 7, 2004, and depicts the Disputed Area as part of Lot 20 but notes the
1974 Fritchman survey.68
64
Buck Aff. ¶8-10. Reverend Abel testified that he recalls the term “adverse possession”
“enter[ing his] vocabulary in that period of time” but he does not remember them leaving
the discussion of the Disputed Area with loss by way of adverse possession “as a fait
accompli.” Abel Dep. at 19:7-23, 24:20-25:3. Revered Abel clarified, however, that he
was “not disputing [Mr. Buck’s] recollection” and that he “probably [does not] have a clear
memory of these events because they’re so long ago[.]” Id. at 25:4-13.
65
Pet. Ex. 18.
66
Id.
67
Resp. Ex. A-29.
68
Pet. Ex. 16.
13
The 2004 survey was completed on behalf of the Church in connection with
its variance request.69 The Church pursued a variance from the City of Rehoboth
Beach Board of Adjustment, seeking to confirm its loss of the Disputed Area to the
owners of Lot 18 due to adverse possession.70 Through that action, the Church
advised that the shed on the Disputed Area was encroaching on Lot 20 and the owner
of Lot 18 had been using the Disputed Area “as a driveway to his shed and/or
property.”71 The request was denied, however, because the Church failed to
establish hardship or unusual practical difficulties necessary for a variance; the
Board noted the “facts surrounding the issue raised are uncertain as the claim by
adverse possession is contingent and it is uncertain as to whether and to what extent
that claim will ultimately prove to be valid.”72
C. 2008 through present.
After Respondent took title of Lots 20, 22, and 24, the status quo remained,
and the neighbors went about their business without conflict. That was until 2018.
Regarding the use of the Disputed Area from 2008 through present, the observations
of Ms. Downs, Mr. Reed, and Reverend Baker remain unchanged; per them, Lot 18
owners and tenants continued to use the Disputed Area exclusively.
69
Buck Aff. ¶5.
70
See Pet. Ex. 14.
71
Pet. Ex. 19.
72
Id.14
Mr. Southard also overlapped with the new owner of Lot 20 (Respondent) by
a couple of years. From 2008 through 2010, Mr. Southard attests that he used the
Disputed Area exclusively for his business and personal needs. 73 Mr. Southard
further attests that in 2009 a crane company paid him rent to place a crane in the
Disputed Area to service the new owner of Lot 20 (Respondent).74
After Mr. Southard left, and since January 2010, Café Azafrán has operated
out of Lot 18.75 The owner of the café, Richard B. Steele, attests that he added a
handicapped ramp and stairs, concrete pads, and an outdoor walk-in restaurant
cooler, partially within the Disputed Area, in 2010.76 No one objected to these
improvements.77 More so, since Mr. Steele has been leasing the property, no one
has used the Disputed Area, other than his employees and landlord.78 Mr. Steele
attests that no one has requested to use the Disputed Area, nor did he have any
problems with the neighboring property owner or tenants until 2018.79 Sometime
that year, dumpsters were “unexpectedly” placed in the Disputed Area by a tenant
of Lot 20.80 Mr. Steele had the dumpsters removed and informed his landlord.81 Ms.
73
Southard Aff. ¶4-5.
74
Id. ¶7.
75
Steele Aff. ¶4.
76
Id. ¶3-5.
77
Id. ¶6.
78
Id. ¶7.
79
Id. ¶8-10.
80
Id. ¶10.
81
Id.
15
Thompson confirmed this story and that she approved and participated in the
removal on behalf of Petitioner.82
I also have the benefit of testimony from the managing member of
Respondent, Ronald Eugene Lankford. Mr. Lankford testified that he had no
knowledge of how the Disputed Area was used before he purchased the Church’s
property in 2008.83 Mr. Lankford testified that he was approached multiple times by
the Church to purchase Lots 20, 22, and 24 and did not do any due diligence before
finally conceding and closing the deal.84 About one week before closing, he was
made aware of an issue with the shed in the Disputed Area but he was confident he
could work it out and closed anyway.85
Per Mr. Lankford, the real issue started with construction by the café and,
specifically, with the ramp that was installed in 2010.86 Mr. Lankford attempted to
work with the city and counsel to resolve what he saw as an encroachment on
Respondent’s property, but those efforts were unsuccessful.87 Mr. Lankford also
82
Thompson Dep. 41:10-18, 72:14-24. Ms. Thompson also testified that Mr. Lankford
“requested permission to use the property to put in an electric panel” sometime in 2009.
Id. at 41:24-42:6. Mr. Lankford testified, however, that he never asked the owners of Lot
18 for permission to use or access the Disputed Area. Lankford Dep. 41:17-42:2.
83
Lankford Dep. 15:2-8,
84
Id. at 11:9-13:1, 21:3-8.
85
Id. at 19:1-21:2. Mr. Lankford also signed, on behalf of Respondent, a survey waiver
form, confirming that he was made aware that a survey would reveal any encroachments
but he, nonetheless, waived it. Pet. Ex. 5.
86
Lankford Dep. 30:15-31:12.
87
Id. at 30:19-33:7.
16
testified that he sent maintenance workers to the back of Respondent’s property, via
the Disputed Area, believing Respondent owned it.88 But Mr. Lankford confirmed
that when his tenants placed trash cans and dumpsters in the Disputed Area, the
owners or tenants of Lot 18 had them removed.89
I also have a survey from Adams-Kemp Associates, Inc. dated May 20, 2011,
which depicts the Disputed Area as part of Lot 18, noting the Disputed Area was
claimed by adverse possession.90 The survey was prepared for Petitioner.91
D. Procedural Posture.
Petitioner filed a verified petition on January 22, 2019 with two alternative
counts: (1) to quiet title to the Disputed Area in its favor due to adverse possession
or (2) for confirmation of a prescriptive easement over the Disputed Area.92 On
March 7, 2019, Respondent answered the petition, asserted affirmative defenses, and
pled a counterclaim for declaratory relief, ejectment, and fees and expenses.93
Petitioner answered the counterclaim on March 27, 2019.94
88
See, e.g., id. at 25:5-26:19.
89
Id. at 49:16-51:10.
90
Resp. Ex. A-173.
91
Id. See also Thompson Dep. 58:8-12.
92
D.I. 1.
93
D.I. 8.
94
D.I. 10.
17
The parties have engaged in extensive discovery and, since July 9, 2020, have
operated under a stipulated status quo order regarding use of the Disputed Area.95
The parties cross-moved for summary judgment in the fall of 2020, with briefing
completed on January 5, 2021.96 Trial was originally scheduled for April 14-15,
2021, but was cancelled, and, in light of this report, need not be rescheduled.
II. ANALYSIS
Under Court of Chancery Rule 56(c), summary judgment will be granted
“only where the moving party demonstrates the absence of issues of material fact
and that it is entitled to a judgment as a matter of law.”97 “A party opposing summary
judgment, however, may not merely deny the factual allegations adduced by the
movant. If the movant puts in the record facts which, if undenied, entitle him to
summary judgment, the burden shifts to the defending party to dispute the facts by
affidavits or proof of similar weight.”98
Here, with both parties moving for summary judgment on Petitioner’s adverse
possession claim, I “deem the motions to be the equivalent of a stipulation for
decision on the merits based on the record submitted with the motions.”99 With that
stipulation, I draw no inferences in favor of one party or the other. For the reasons
95
See D.I. 23, 42, 59.
96
D.I. 52.
97
Wagaman v. Dolan, 2012 WL 1388847, at *2 (Del. Ch. Apr. 20, 2012).
98
Tanzer v. Intern’l Gen. Indus., Inc., 402 A.2d 382, 385 (Del. Ch. 1979).
99
See Ct. Ch. R. 56(h).
18
explained herein, I decline to address Petitioner’s motion regarding its Count II for
a prescriptive easement, which should be dismissed as moot. Petitioner also asks for
bad faith fee shifting, alleging improper conduct by Respondent and its counsel.
That request is addressed in Section II.C, infra.
A. Judgment should be entered in Petitioner’s favor on its Count I.
Petitioner’s Count I is a claim to quiet title due to adverse possession. To
succeed on a claim for adverse possession, Petitioner needs to establish by a
preponderance of the evidence “(1) open and notorious, (2) hostile and adverse, (3)
exclusive, (4) actual possession, (5) that was continuous for twenty years.”100 There
is no dispute that Petitioner (and the previous Lot 18 owners) openly and notoriously
used the Disputed Area for many years. At issue is whether the use was (1) hostile
and exclusive (versus with permission from the Church or its successors) and (2)
continuously for more than 20 years.
“A use is adverse or hostile if it is inconsistent with the rights of the owner.
Said differently, [h]ostile means against the claim of ownership of all others,
including the record owner.”101 And “the exclusivity element does not require
absolute exclusivity. Exclusive possession means that the adverse possessor must
show exclusive dominion over the land and an appropriation of it to his or her
100
Tumulty v. Schreppler, 132 A.3d 4, 24 (Del. Ch. 2015).
101
Bogia v. Kleiner, 2019 WL 3761647, at *10 (Del. Ch. Aug. 8, 2019) (citations and
quotation marks omitted) (alteration in original).
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benefit.”102 Once an adverse-possession claimant meets its burden of proof on all
elements, “the burden shifts to the record owner to rebut the adverse possession
claim by establishing that the possession was permissive.”103
First, I address the portion of the Disputed Area on which the shed was built.
Evidence submitted with the briefing shows that the shed was built, partially on Lot
20, by 1925 and was constructed solely by the owners of Lot 18. Constructing and
maintaining an improvement is action indicative of ownership and is adverse and
hostile.104 By 1945, at the latest, the shed still stood, the adverse possession period
was met, and that portion of the Disputed Area became the property of Lot 18, to the
detriment of Lot 20.105
102
Tumulty, 132 A.3d at 26 (citations and quotation marks omitted).
103
Waples v. Burton, 2020 WL 3286535, at *2 (Del. Ch. June 18, 2020) (citing In re
Campher, 1985 WL 21134, at *2 (Del. Ch. Mar. 20, 1985), aff’d, 489 A.2d 1090 (Del.
1985)).
104
Both parties cite to Marvel v. Barley Mill Rd. Homes, 104 A.2d 908 (Del. Ch. 1954) and
the helpful analogy that a would-be adverse possessor “must unfurl his flag on the land,
and keep it flying, so that the owner may see, if he will, that an enemy has invaded his
domains, and planted the standard of conquest.” Id. at 911 (citations omitted). The shed
was an unquestionable flag that has been flying since, at least, 1925.
105
Respondent appears to argue that the owners of Lot 18 needed to tell the Church or
Respondent that they were claiming ownership or make other overt efforts to assert
ownership such as by sending a written notice, posting signs, or constructing a fence.
Although these actions may have helped Petitioner’s case, they are not necessary to
succeed, particularly here, where there is a clear, undisputed history of open and notorious
use. See, e.g., Lewes Tr. Co. v. Grindle, 170 A.2d 280, 282 (Del. 1961) (“[I]t is not
necessary that one entering a property must expressly declare his intention to take and hold
the property as his own. The actual entry upon and the use of the premises as if it were his
own, to the exclusion of others, is sufficient[.]”). Cf. Mitchell v. Dorman, 2004 WL 117580,
at *3 (Del. Ch. Jan. 16, 2004) (rejecting a laches argument because an adverse possessor
was reasonable in assuming “that her rights in the Disputed Half-Acre were secure, and
20
The remaining part of the Disputed Area, the now-paved driveway,106 requires
a more detailed inquiry. The evidence suggests that the driveway area was in heavy
use in the 1920’s and 1930’s. But I do not have anything tying that use exclusively
to the owners or tenants of Lot 18. That brings me to 1957 when neighbors from
Lot 16 were able to view the use and now attest that the driveway area was only used
by Lot 18. But I appreciate that these neighbors do not have the most direct vantage
point or line of sight into the Disputed Area. Moving up in time, I then have
Reverend Covington who attests, from 1961 through 1975, the Church never used
the Disputed Area and it was exclusively used by the owners of Lot 18. Reverend
Covington had a direct vantage point and, as pastor of the Church, reason to make
himself apprised of the nature and scope of the Church’s property and work to
protect the Church’s property interests.
Using Reverend Covington’s 1961 start date, the 20-year adverse possession
period would have been met by 1981, unless there was an interruption or ouster. The
only person who provided equivocal testimony about the use of the Disputed Area
during this period was Judge Lee. Specifically, he testified that after 1966 or 1967,
he went to the back of the Church a “couple times” and walked along the driveway
there was no reason for her to bring a suit to quiet title or take any other action to assert her
rights. In other words, she took all the necessary action to assert her rights merely by
continuing to use and maintain the Disputed Half-Acre as if it was her own”).
106
See Pet. Ex. 27.
21
in the Disputed Area to do so. He also believes that repairs or maintenance for the
back of the Church’s property required use of the Disputed Area and was under the
impression that the Disputed Area was used to service the back of the Church’s
property.
Although I appreciate the logic in Judge Lee’s supposition, it is speculative at
best. Further, Judge Lee’s use of the Disputed Area a “couple times” and belief
regarding use by others associated with the Church is not sufficient to overcome the
evidence of exclusive and continuous use by the owners of Lot 18.107 That is
particularly true in light of Judge Lee’s admission that he never personally witnessed
the Church or its members using the Disputed Area and belief that the Disputed Area
“had been used prescriptively, adversely, whatever you want to say, without any
claim of right,” by the owners of Lot 18.108 Further, the testimony from the owners
and tenants of Lot 18 from 1979 through 1981 (the only relevant years covered in
the record) confirms Reverend Covington’s observations. Petitioner has, therefore,
met its burden of proving all elements of adverse possession by a preponderance of
107
Nor do I believe this testimony from Judge Lee creates an issue of material fact. See
Mitchell, 2004 WL 117580, at *3 (explaining “the disputed fact must be material to the
final disposition of the case”). Even if Judge Lee is correct in his understanding and
speculation that those associated with the Church occasionally used the Disputed Area to
access the back of the Church’s property, that occasional, incidental use is not enough to
defeat the claim of adverse possession. See Tumulty, 132 A.3d at 26 (finding temporary
incursions insufficient to “destroy exclusivity”).
108
Lee Dep. 29:17-22.
22
the evidence and Respondent has failed to rebut that showing. By 1981, title to the
Disputed Area was gained by the owners of Lot 18 and lost by the record owners.
Respondent tries to pull my focus from this history of use, pointing me to the
chain of title for each lot and arguing that the exclusion of the Disputed Area from
the chain of title for Lot 18, and continued inclusion in that of Lot 20, somehow
vitiates Petitioner’s claim.109 But the lack of record title is the very nature of adverse
possession; the owners of Lot 20 remained the record owners, but Lot 18 had
adversely possessed the property, gaining legal title by 1981, at the latest.110
Respondent (and its predecessors) could not defeat the accruing adverse possession
by attempts to shore up, or alert the adverse possessor of, its record title—only ouster
or attempted ouster before the expiration of the 20-year period would have been
sufficient.111 Rather than take steps to oust the owners and tenants of Lot 18 from
109
Respondent also tries to muddy the waters with talk of taxes. On the current record, it
appears the continued payment of taxes by the Church and its predecessors was made with,
and notwithstanding, the Church’s knowledge of Lot 18’s adverse possession. It would be
inequitable to allow the Church’s successors in interest to use its conduct to disprove or
attempt to vitiate the ownership already obtained. And there is no requirement under
Delaware law that an adverse possessor pay taxes for the adversely possessed property
during or after the adverse possession period to succeed on a claim to quiet title. See
Tumulty, 132 A.3d at 25 (“[T]here is no suggestion in Delaware case law that either the
recording of a deed or the payment of taxes is necessary to make out a successful adverse
possession claim.”) (emphasis in original).
110
And, I note, the disclosure/settlement statement from the sale to Mr. Bonk notes the
property location as “Lot 18 and Easterly 10 Feet of Lot 20, Baltimore Avenue[.]” Pet. Ex.
2.
111
Tumulty, 132 A.3d at 25 (citing Acierno v. Goldstein, 2004 WL 1488673, at *6 n.41
(Del. Ch. June 29, 2004)).
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the Disputed Area, the Church gave up all rights to the Disputed Area and attempted
to formalize the “commonly accepted property line” through a variance.112
Petitioner’s predecessors also did not need to include the Disputed Area in
subsequent deeds (or leases) related to Lot 18 to retain the title they gained.113
Finally, to avoid any confusion, I find testimony regarding entries into or use
of the Disputed Area by those associated with Lot 20 after 1981 are immaterial. By
1981, legal title had already been gained by Lot 18 and subsequent, occasional use
by those associated with Lot 20 cannot take that title away.114
112
During the adverse possession period, the Church simply ignored and failed to take steps
to stop the encroachment by Lot 18; that was enough to lose their interests. See Marvel,
104 A.2d at 911 (“The owner is, of course, chargeable with knowledge of what is openly
done on his land and therefore calculated to attract attention.”). The efforts in 2005 to make
the adverse possession “official,” confirms the Church’s relinquishment and appreciation
that, by then, the Disputed Area no longer belonged to the Church and was part of Lot 18.
113
Tumulty, 132 A.3d at 25. This is particularly true where subsequent owners and lessees
testified consistently that they believed and understood the Disputed Area to be part of their
interests in Lot 18. See Marvel, 104 A.2d at 913 (explaining “[i]t is generally held that
where a person having title by deed to a lot . . . also has [e]nclosed with it and is in
possession of adjoining land to which he has no record title and conveys the land by the
description in the deed and delivers with it the possession of the entire [e]nclosure, the
continuity of possession will not be broken, and the two possessions may be joined and
considered as one continuous possession”). Cf. Mitchell, 2004 WL 117580, at *3.
114
See Marvel, 104 A.2d at 913 (explaining “[t]he acquirement of title by right of adverse
possession . . . creates a new legal title though not a record title and that title would not be
lost by a cessation of possession and continued exclusive possession is not necessary to
maintain it”). Cf. Mitchell, 2004 WL 117580, at *4 (rejecting a laches argument because
of the record owners’ own lack of diligence and failure to protect their rights after they
purchased the property knowing of the dispute, failed to obtain a survey, and permitted the
adverse use to continue for years).
24
Although I start the clock at 1925 and 1961, for the shed portion and driveway
portion, respectively, I appreciate “[i]t is more than possible that [Lot 18’s]
possession began some years before that period, but there is no adequate evidence
to support it.”115 The evidence does support, however, open, notorious, hostile, and
exclusive use by the owners and tenants of Lot 18 for more than 20 years. I find
Petitioner’s use of the Disputed Area was sufficient to establish adverse possession
and Respondent has not presented any non-speculative evidence of permission or
joint use sufficient to rebut Petitioner’s showing or raise a material issue of fact. As
such, I recommend that summary judgment be granted in Petitioner’s favor and
against Respondent on Petitioner’s Count I.
B. Petitioner’s Count II should be dismissed as moot.
Having found that Petitioner should be granted summary judgment on its first
count, I decline to render what may be an advisory recommendation on its alternative
request for a prescriptive easement. I recommend, instead, that Count II be
dismissed as moot.
C. Petitioner’s request for fee shifting should be denied but costs should
be shifted under Court of Chancery Rule 54(d).
Petitioner seeks to shift its attorneys’ fees and costs to Respondent arguing
that Respondent and his counsel engaged in bad faith conduct before and during this
115
Del. Land & Dev. Co. v. First & Cent. Presbyterian Church of Wilm., Del., Inc., 147 A.
165, 180 (Del. 1929).
25
litigation. Under the American Rule, “each party is generally expected to pay its
own attorneys’ fees regardless of the outcome of the litigation.”116 One exception is
for bad faith conduct.117 “Although there is no single definition of bad faith conduct,
courts have found bad faith where parties have unnecessarily prolonged or delayed
litigation, falsified records[,] or knowingly asserted frivolous claims.”118 Further,
the bad faith exception is only “applied in ‘extraordinary circumstances’ as a tool to
deter abusive litigation and to protect the integrity of the judicial process.”119 The
party seeking fee shifting under the bad faith exception must demonstrate by clear
evidence that the other party acted in subjective bad faith.120
Petitioner argues that litigation costs were substantially increased because
Respondent obtained an allegedly false affidavit from one of the Church’s former
reverends and failed to timely disclose it during discovery.121 Although I see some
missteps, I fail to find bad faith. Deposition testimony confirms that the affidavit
was drafted by Respondent’s counsel after a telephonic discussion with the reverend.
Such is not unusual or improper. Then the reverend was provided an opportunity to
review, correct, and amend the affidavit before execution. Again, an acceptable
116
Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017).
117
Id.118
Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 546 (Del. 1998).
119
Montgomery Cellular Holding Co. v. Dobler, 880 A.2d 206, 227 (Del. 2005).
120
Lawson v. State, 91 A.3d 544, 552 (Del. 2014).
121
D.I. 48 at 51.
26
practice. It does, however, appear that the affidavit was not properly notarized, but
I find no bad faith evident in that deficiency. Likewise, although the reverend was
encouraged to revisit and revise the affidavit, I see no indication that such was done
to hide information from Petitioner or the Court and the affidavit was produced
before the close of discovery.
Petitioner also seeks fee shifting based on alleged bad faith conduct before
this litigation commenced. Petitioner argues:
Respondent knew full well before purchasing the Church Property that
Petitioner had a claim to the Disputed Area based on nearly a century
of use, and this was reflected in the purchase price. Nevertheless,
Respondent engaged in self-help, forcibly entered the Disputed Area,
and placed a dumpster there after Petitioner told one of Respondent’s
tenants not place trash cans in the Disputed Area.122
Although I appreciate Petitioner’s frustration and agree Respondent’s claim
to title was weak, I have carefully reviewed the deposition testimony of
Respondent’s managing member and find that he was under a real, albeit mistaken
and uniformed, belief that Respondent purchased the Disputed Area. Respondent’s
managing member admitted he did no due diligence and was not familiar with the
historical use of the Disputed Area before the purchase. Further, I find no evidence
that Respondent’s contract reflected a discounted or reduced price specifically due
to the loss of the Disputed Area. And, finally, I find Respondent’s decision to
122
Id. at 57-58.
27
continue this dispute is much more forgivable than that in Judge v. City of Rehoboth
Beach, 1994 WL 198700 (Del. Ch. Apr. 29, 1994). In short, I find the conduct at
issue insufficient to justify bad faith fee shifting. For these reasons, and under the
totality of the circumstances presented, I recommend that fees and expenses not be
shifted.
But I do find that Petitioner is entitled to court costs under Court of Chancery
Rule 54(d), which provides: “costs shall be allowed as of course to the prevailing
party unless the Court otherwise directs.” I find Petitioner is the prevailing party on
its primary claim in this litigation and that its costs should be allowed.
III. CONCLUSION
For the foregoing reasons, I recommend that judgment be entered in
Petitioner’s favor on its Count I and its Count II be dismissed as moot. I further
recommend that the request for fee shifting be denied but that costs be allowed to
Petitioner as the prevailing party. This is my final report and exceptions may be
taken under Court of Chancery Rule 144.
Respectfully submitted,
/s/ Selena E. Molina
Master in Chancery
28