Summers ( 2015 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
ABIGAIL M. LEGROW
MASTER IN CHANCERY NEW CASTLE COUNTY COURTHOUSE
500 NORTH KING STREET, SUITE 11400
WILMINGTON, DE 19801-3734
Draft Report: July 7, 2015
Exceptions Submitted: September 21, 2015
Final Report: November 3, 2015
Charles Snyderman, Esquire
The Snyderman Law Firm
11 Middleton Drive
Wilmington, DE 19808
Donald L. Gouge, Jr., Esquire
Donald L. Gouge, Jr., LLC
800 N. King Street, #303
Wilmington, DE 19801
Re: Summers, et al. v. Walnut Ridge Community Association, Inc.
C.A. No. 8599-ML
Dear Counsel:
The plaintiffs filed this action challenging their obligation to pay a portion of
the costs incurred by a community association to improve a private road in the
neighborhood where the plaintiffs live. The defendant – the community
association – seeks summary judgment on the plaintiffs’ claim. Because the
undisputed facts show the plaintiffs are obligated to pay the costs assessed by the
association, I recommend that the Court grant the defendant’s motion. This is my
final report.
C.A. No. 8599-ML
November 3, 2015
Page 2
BACKGROUND
Unless otherwise indicated, the following facts are not in dispute. Walnut
Ridge is a subdivision consisting of 18 single-family homes serviced by a private
road (the “Private Road”). The subdivision originated in 1955, when Daniel B.
Friel and his wife, Helen J. Friel, subdivided their land into 18 lots and sold the lots
for the purposes of residential development. According to the original deeds
included in the record, the Friels subdivided their property subject to the condition
that the owner of each lot would bear a “1/18th share of the cost, care, maintenance,
and up-keep of said 50 foot wide right of way as laid out in its entirety within this
subdivision.”1
The plaintiffs, Van and Margaret Summers (“the Summers”), purchased lot
1 in Walnut Ridge in 1996.2 The Summers’ deed specifies that they must pay a
“1/8th [sic] share of the care, maintenance, and up-keep of the [Private Road].”3
The Walnut Ridge Community Association (the “Association”) was formed in
1
See Def.’s Reply in Supp. of Mot. for Summ. J. (hereinafter “Def.’s Reply”) Ex. 3.
Although the Defendant represents that this exhibit encompasses all of the “dispositive
deeds from the Friels,” the exhibit appears only to contain the original deeds for lots 1, 2,
5, 7, 8, 12, 14, and 15. Compare Def.’s Reply at 2 with id. Ex. 3. Because the issue of
what appears in any of the deeds other than the plaintiffs’ deed is immaterial to my
recommendation, it does not preclude summary judgment.
2
Def.’s Mot. for Summ. J. (hereinafter “Motion”) Ex. 2.
3
Id. Although the Summers’ deed refers to a 1/8th share, that appears to be a
typographical error. There is no dispute that there are 18 lots in Walnut Ridge and that
the original deeds granted by the Friels when they subdivided the property imposed on
each lot an equal share of the costs associated with the Private Road. The Association
only billed the Summers for 1/18th of the cost of the work to the Private Road.
C.A. No. 8599-ML
November 3, 2015
Page 3
1958.4 Since that time, the Association has overseen a number of relatively minor
projects involving the Private Road. The most expensive such project was less
than $10,000 total. In 2007, the Association assessed each homeowner $1,540 to
fund road work. On all those previous occasions, the cost was shared by each of
the homeowners, including the Summers or their predecessors-in-interest.5
In 2011, the Association resolved to evaluate “the necessity of repaving the
community road.”6 After considering different options, the Association sought
bids from contractors. The Association ultimately contracted with Vandemark &
Lynch to rehabilitate and repave the entire Private Road (the “Road Project”).7 To
pay the cost of the Road Project, the Association assessed the owners of each lot
$10,200.8 The assessment was approved by all the homeowners present for the
meeting, except for the Summers, who voted against the resolution.9
The Summers filed this action on May 29, 2013, seeking a declaratory
judgment that the Association does not have the authority to assess the Summers a
portion of the Road Project and that the Summers therefore are not obligated to pay
the assessment. The Association filed its motion for summary judgment on
4
Id. Ex. 1.
5
Id. at 2.
6
Id. at 2 & Ex. 3 at WR14, WR17.
7
Id. Ex. 3 at WR14, Ex. 4.
8
Verified Complaint (“Compl.”) ¶ 10.
9
Motion Ex. 3 at WR12.
C.A. No. 8599-ML
November 3, 2015
Page 4
December 9, 2014. For the reasons that follow, I believe the Association is entitled
to judgment as a matter of law.
ANALYSIS
Summary judgment should be awarded if “the pleadings, depositions,
answers to interrogatories and admissions on file, together with the affidavits,
show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.”10 When considering a motion
for summary judgment, the evidence and the inferences drawn from the evidence
are to be viewed in the light most favorable to the nonmoving party.11 A party
seeking summary judgment bears the initial burden of showing that no genuine
issue of material fact exists.12 If the movant makes such a showing, the burden
then shifts to the non-moving party to submit sufficient evidence of a genuine
factual issue, material to the outcome of the case, that precludes judgment before
trial.13
10
Twin Bridges Ltd. P’ship v. Draper, 2007 WL 2744609, at *8 (Del. Ch. Sept. 14, 2007)
(citing Ct. Ch. R. 56(c)).
11
Judah v. Del. Trust Co., 378 A.2d 624, 632 (Del. 1977).
12
Johnson v. Shapiro, 2002 WL 31438477, at *3 (Del. Ch. Oct. 18, 2002).
13
Id.; Conway v. Astoria Fin. Corp., 837 A.2d 30, 36 (Del. Ch. 2003).
C.A. No. 8599-ML
November 3, 2015
Page 5
A. The Summers are obligated to pay 1/18th of the cost of the care,
maintenance and up-keep of the Private Road.
The undisputed facts of this case show that the Summers’ deed, and the
deeds within their chain of title, require them to pay a 1/18th share of the care,
maintenance, and up-keep of the Private Road.14 The Summers cannot, and do not,
dispute that the restriction exists in both their deed and the chain of title for their
lot, but nonetheless argue that there are disputed issues of fact regarding whether
deeds to other lots within the subdivision contain the same restriction, pointing to
two current deeds that do not contain language regarding the costs of the Private
Road. The Summers do not explain why that factual dispute is material to the
Association’s motion. Whether owners of other lots are obligated to pay a share of
the costs for the care, maintenance, and up-keep of the Private Road does not alter
the restriction in the Summers’ deed.15
Similarly, the Summers argue that the current deeds for the lots within
Walnut Ridge contain inconsistent metes and bounds descriptions of the Private
Road. The Summers do not explain, however, why that factual dispute bears on
their obligation to pay the assessment relating to the Road Project. The Summers
14
See Def.’s Reply Ex. 4.
15
In any event, the owners of the 17 other lots in Walnut Ridge all paid the assessment
associated with the Road Project, and do not appear to contest their obligation to do so.
The record indicates the deed restriction at issue appears in the chain of title for each of
these lots. See Def.’s Reply Ex. 2.
C.A. No. 8599-ML
November 3, 2015
Page 6
do not dispute that the metes and bounds description in their deed corresponds to
the Private Road on which the work was done. Again, the existence or absence of
a reciprocal obligation in the deeds of other owners within the subdivision does not
alter the plain language of the obligation in the Summers’ deed.
B. The Road Project fell within the meaning of “care, maintenance and
up-keep.”
Perhaps recognizing that the factual disputes on which they rely are not
material to the issues before the Court, the Summers devote most of their
opposition to the motion to arguing that the Road Project does not fall within the
meaning of “care, maintenance and up-keep.” According to the Summers, the cost
of the Road Project, particularly when compared to previous projects undertaken
by the Association and the alternatives the Association considered, “makes it
obvious that the project was a major improvement and reconstruction of the road,
not maintenance.”16
Whether the Road Project is a “major improvement,” as opposed to
“maintenance,” is a factual dispute. For purposes of the pending motion, however,
I will accept that the Road Project is a “major improvement.” From that premise,
the Summers summarily conclude that because a “major improvement” is not
“maintenance,” the Road Project does not fall within the scope of the restriction
16
Pls.’s Opp’n to Mot. for Summ. J. (“Opp’n”) at 3.
C.A. No. 8599-ML
November 3, 2015
Page 7
requiring the Walnut Ridge owners to share the costs of the Private Road. In
support of that argument, the Summers cite the settled principle that restrictive
covenants must be interpreted “in accordance with their plain meaning in favor of a
grantee … and against a grantor or the one who enforces in his place.”17
Although the Summers correctly state the law, they gloss over a number of
other important principles regarding contract construction,18 namely that (1)
contractual language should be interpreted as it would be understood by an
objective, reasonable third party,19 and (2) contracts are read as a whole, and each
provision and term should be given effect, where possible, so as not to render a
part of the contract mere surplussage.20 Applying those principles to the language
at issue, it is clear that the restriction in the Summers’ deed must encompass more
than maintenance, and that the terms “care” and “up-keep” must be read – if
possible – to have independent meaning distinct from “maintenance.” Such a
reading is both possible and the only reasonable reading of the language at issue.
17
Opp’n at 5 (citing Serv. Corp. of Westover Hills v. Guzzetta, 2009 WL 5214876 (Del.
Ch. Dec. 22, 2009)).
18
Deed restrictions are contractual agreements and, as such, ordinary principles of
contract law govern their interpretation. Goss v. Coffee Run Condominium Council, 2003
WL 21085388, at *7 (Del. Ch. Apr. 30, 2003).
19
Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010); Emerging Europe Growth Fund,
L.P. v. Figlus, 2013 WL 1250836, at *4 (Del. Ch. Mar. 28, 2013).
20
Osborn, 991 A.2d at 1159; Emerging Europe Growth Fund, L.P., 2013 WL 1250836,
at *4; One Virginia Avenue Condominium Assoc. of Owners v. Reed, 2005 WL 1924195,
at *6 (Del. Ch. Aug. 8, 2005).
C.A. No. 8599-ML
November 3, 2015
Page 8
In my view, the only reasonable reading of the language is that the grantors
used broad terms to shift to the owners of Walnut Ridge all the costs associated
with the Private Road. “Care” and “up-keep” are terms that an objective,
reasonable third party would understand to include a range of tasks, including the
“road improvement” and “pavement rehabilitation and construction” associated
with the Road Project.21 In fact, it would be unreasonable to conclude – as the
Summers urge – that the deed restriction applies narrowly and only to maintenance
to the road, because it would mean that necessary work on the Private Road could
not be accomplished, as the costs could not be shifted to the municipality, unlike a
publicly dedicated road. In other words, the phrase “care, maintenance and up-
keep” must be understood to encompass all work a majority of Walnut Ridge
owners determine should be undertaken to maintain the use of the Private Road,
because otherwise the road would fall into dis-repair and become useless, as no
other entity is responsible for maintaining the road. Without the Private Road, of
course, the lot owners could not reliably access their property.
When the original language of the deed restriction is considered, the
meaning of the challenged language becomes even clearer. The language in the
original deeds from the Friels required the lot owners to undertake a proportional
amount of the “cost, care, maintenance and up-keep” of the Private Road. The
21
See Opp’n at 4.
C.A. No. 8599-ML
November 3, 2015
Page 9
word “cost” does not appear in the Summers’ deed, but it does appear in their
chain of title, and the Summers’ deed was granted “subject … to the covenants,
agreements, conditions, easements, reservations and restrictions” in the 1957 deed
from the Friels. In my view, if the word “cost” can be read into the Summers’
deed, as I believe it can under principles of actual and constructive notice, the
Road Project certainly was a “cost” of the Private Road. Although I need not reach
that issue, because I conclude the language in the Summers’ deed unambiguously
encompasses the Road Project, the use of the word “cost” in the original deeds
supports the conclusion that the restriction encompasses all work on the Private
Road.
This is not to say there are no limits or parameters on what costs could be
shifted to the lot owners in the subdivision. To the contrary, a very obvious
limitation, and perhaps the best one available, exists: a majority of the property
owners must agree that the work should be undertaken. The property owners, who
have a vested interest in the outcome, are the persons charged with determining
whether and when to undertake “care, maintenance and up-keep” to the Private
Road. That is precisely what happened here, and it is not for this Court to second-
guess the discretion the grantors vested in the members of the community.
In their exceptions to my draft report on the pending motion, the Summers
contend the restriction is ambiguous and therefore must be interpreted against the
C.A. No. 8599-ML
November 3, 2015
Page 10
drafters. Other than making an ipse dixit assertion regarding ambiguity, however,
the Summers do not articulate the basis for their position. In my view, the phrase
“care, maintenance and up-keep” is not ambiguous. When read and understood in
the context of the fact that the costs of the Private Road cannot be shifted to
anyone other than the lot owners, the only reasonable meaning of that phrase is that
is refers to all road work agreed upon by a majority of the lot owners.
C. The Association has standing to enforce the restriction.
The Summers argue that the Association does not have standing to enforce
the restriction because none of the Walnut Ridge deeds mention a civic association
or authorize “the community” to enforce the deed restrictions.22 Although the
Summers are correct as a factual matter that the deeds neither mention a civic
association nor identify who may enforce the restrictions, they are incorrect that
the Association lacks the authority to enforce the restriction. It is settled law in
Delaware that “[w]here, under a general plan of development, the owner of
property divides it into building lots and places upon them uniform restrictions,
any subsequent owner of any of these lots may enforce the restrictions against any
other grantee or present owner.”23 The Friels subdivided their property and placed
upon each lot the uniform restriction regarding the cost of the Private Road, and, as
22
Opp’n at 5-6.
23
Welshire, Inc. v. Harbison, 88 A.2d at 121, 123 (Del. Ch. 1952).
C.A. No. 8599-ML
November 3, 2015
Page 11
a result, any lot owner may enforce the restrictions against another owner. Here,
the Walnut Ridge owners have established a community association, comprised of
members of the subdivision, who granted the Association the authority to, among
other things, “protect the community rights of the inhabitants [of Walnut Ridge]
with regard to road maintenance, deed restrictions, and other matters of community
interest.”24 In addition, the members of the Association voted at the 2013 annual
meeting to demand payment from the Summers based on the deed restriction and
pursue litigation if the matter could not be resolved privately.25 In my view,
therefore, the Association has the authority to enforce the restriction against the
Summers.
D. The Summers had more than sufficient opportunity to develop the
record.
Finally, the Summers urge me to deny the Association’s motion because
“the law or its application would be clarified by a more thorough development of
the record.”26 The Summers do not, however, explain what additional discovery
they would undertake to develop the record, nor is it apparent to me what
additional information would clarify the rather straightforward issue presented by
this case. In addition, the Summers filed this action more than two years ago. In
24
Motion Ex. 1 (Walnut Ridge Community Assoc., Inc. By-Laws, Art. II).
25
Id. Ex. 3 at WR 3.
26
Plaintiffs’ Opening Br. in Support of Exceptions to Draft Report at 11-12.
C.A. No. 8599-ML
November 3, 2015
Page 12
that time, they propounded one set of interrogatories. According to the docket, the
Summers did not pursue any other discovery. A vague allusion to further
development of the record, without more, does not persuade me that additional
development of the record would illuminate the issues in this case.
CONCLUSION
For the foregoing reasons, I believe that the Summers properly were
assessed for 1/18th the cost of the Road Project and I recommend that the Court
grant the Association’s motion for summary judgment. This is my final report and
exceptions may be taken in accordance with Rule 144.
Sincerely,
/s/ Abigail M. LeGrow
Master in Chancery