Majestic Oaks Homeowners Association, Inc. v. Majestic Oaks Farms, Inc. , 530 S.W.3d 435 ( 2017 )

RENDERED: SEPfEMB_ER 28, 2017
TO BE PUBLISHED
2016-SC-00213-DG
MAJESTIC OAKS HOMEOWNERS APPELLANT
'ASSOCIATION, INC.
ON REVIEW FROM COURT OF APP~ALS ·
v. CASE NO. 2014-CA-000492 .
SHE~BY CIRCUIT COURT NO. 2009-CI-00873
. .
MAJESTIC OAKS FARMS,.INC., JOSEPH APPELLEES
O'BRIEN. AND ASHLYN O'BRIEN
OPINION OF THE COURT BY CHIEF JUSTICE MINTON
REVERSING AND REMANDING
Kentucky law confirms the possibility of a defeasible easement, although
the term itself appears in no reported case describing this· type of easement,
which is an easement capable of termination upon the occurrence of a specified
event or contingency. In this case, Majestic Oaks Homeowners Association
(HOA) contends the d~feasible .easement principle applies to the easement for
ingress and egress retained by its subdivision's developer, Majestic Oaks Farnts
(Developer), to terminate it when a majority of HOA members voted to do so, as
allowed by the express terms. of Developer's recorded subdivision plat. On .
discretionary review, we agree with HOA.
I. FACTUAL AND PROCEDURAL BACKGROUND.
\
ln 1995, Developer began developing a residential subdivision, Maj~stic
Oaks Equestrian Estates (Estates). To memorialize Developer's and fut:ure
homeowners' rights in Estates, Developer.recorded with its subdivision plat a
declaration of covenants, conditions, and restrictions (Original Declaration) and
incorporated its terms into the homeowners' deeds to lot~ in the development.
The Original Declaration accomplished two noteworthy things ..
First, the Original Declaration created Developer's easement in gross,
stating, "[Developer] shall have a superior right and·easement in gross [to use
. Estates's private roads] ... for so long as [Developer], its successors or assigns,
owns any Lot or any portion of the Property." The Original Deelaration defined
· Lot as "any Lot which is part of the Property:" Property was defined as "Lots 1-
23 as shown on the above referenced Plat." Additional lots could be added as
part of Property, according to the following language: "[Developer] intends to
make this section containing 23 lots a part of a larger community known as
[the Estates], having been developed in accordance with current plan.
Subsequent additional plats will be recorded in the office of the Shelby County
Clerk's Office."
Second,§ 8.3 of the Original Declaration, the other section at the center
of this dispute, states:
Unless cancelled, altered or amended under the provisions of this
paragraph, these covenantS and restrictions are to run with the
land ~d shall be binding on all parties claiming under
them ... unless an instrument signed by a majority of the then
owners of all lots subject to these restrictions has been recorded
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agreeing to change these restrictions and covenants in whole or in
part. These restrictions· may be cancelled, altered or amended at
any time by a 67% approval from each class of membership
subject to these restrictions, but Developer shall retain.the sole
right to appoint the architectural approval committee until the last
lot is sold.I
In 1998 and 2000, Developer e:Xpanded Estates to inciude Lots 24-59, (
identified as "Sections 2 and 3,'~ by recording a plat. The plat for Section 3 also.
. .
identified a section ofland for "Future Developinent," identified as "Sections 4
and 5." By this time, Estates .included Lots 1-59; identified as "Sections 1-3."
By March 13, 2006, Developer no longer owrted any property in the Estat~s,
having transferred Sections 1-3 to individual homeowners within the HOA
through a quitclaim deed, but bontinued to own Section 4. Section 4 did not
become. part of Estates until April 2008, two years after all of Developer's
. then-.
existing property in the Estates was originally conveyed.
In August 2006, HOA proposed amendments to the Original Declaration
to be voted on by the homeowners, proposing_two relevant changes: (1) to
expahd "Property'' to include Lots 1-59, i.e. Seetions 1-3 of the Estates; and (2)
to remove the language granting an easement in gross to Developer_. The
amendment to remove this language passed with -82% approval, well above the
67% required_ by the Original Declaration. 2
r Emphasis has been added to highlight the import~t language. .
2 Because we ultimately conclude that Developer:'s easement was expressly made
terminable and that the easement terminated when the HOA membership vot~d
decisively in August 2006~ we consider Developer's argument of the possible legal
effect of its continued ownership of Section 4-the effective date of its inclusion in
Property being disputed-is not a material fact that precludes summary judgment in
favor of HOA. · ·
3
Believing the easeme.nt to be ineffective, HOA filed suit in circuit court
against Developer to stop Developer's continued use of the purportedly
terminated easement in· gross l;>ecause of the adoption by HOA of th~ ·
amendment to the Original Declaration arid the relinquishment by Developer of
any ownership rights in "Property'." Both parties filed summary judgment
motions against each other, with the trial court granting Developer's motion
and a panel of the Court of Appeals affirming. We granted HOA's motion for
discretionary review.
II. ANALYSIS.
A. Standard or Review.
· "The standard of review on appeal of a summary judgment is whether the
trial court correctly found that there were no genuine issues as to any material
fact and that the moving party was.entitled to judgment as a matter oflaw."3
"An appellate court need not defer to the trial court's decision on summary
judgment and will review the issue de novo beca~se only legal questions and
no factual findings are involved. "4
B. The Possessory Interest Granted to Developer was a Defeasible
Easement in Gross that Terminated Upon a Q:reater Than 67% Vote,
Sufficiently Fulf"illing a Condition for Termination Stated in the
Written Docum.ent Granting the Easement.
An easement "is an incorporeal hereditament to which corporeal property
is rendered subject."5 In other words, it is the right to use the land owned by
)
3 Coomerv. CSX Tran.Sp., Inc.,'319 S.W;.3d 366, 370 (Ky. 2010) (citing Scifres v. Kraft,
916 S.W.2d 779, 781 (Ky. App. 1996)). .
4 Id. at 370-71 (citing Hallahan v .. The· Courier-Jouma~ 138 S.W.3d 699, 704 (Ky. App.
2004)). . . . :
s Illiilois Cent R.R. Co. v. Roberts, 928 S.W.2d 822, 826 (Ky. App. 1996) (citing Henry
Bickel Co. v. Texas Gas Transmisswn Corporation, 336 S.W.2d 345, 347 (Ky. 1960).
4
someone else for a specified P.lirpose. "An easement in gross is_ a mere personal
interest in orright to use the land of another. It is attached to and vested in,
the person to whom it is granted."6 "[T]he principal distinction between~
easement in gross and an easement appurtenant is that in the first there is
not, and in the second there is, a dominant tenement to which it is attached. "7
"An express easement i~ created by a written grant with.the formalities of a.
deed."8
There is no question in this case that whatever right Developer has in the
real property it conveyed to HOA of an express easement in gross. And· the
disagreement between the parties rests on whether that express ea~ement in
gross is legally capable of termination and whether HOA actually terinihated it.
A defeas1.ble easement is one that "terminate[s] upon the oqcu:i:rence of a
given event."9 ."[A]n easement may be expressly subject to termination by the
servient owner upon the ·occurrence of a specified event or contingency. "io
"Where an easement has been created until the happening of a specific event. or
contingency, the easement will terminate ipso facto on the happening of the
specified eveni.or contingency."11
6 Meade v. Ginn, 159 S.W.3d 314, 320 (Ky. 2004):
1 Id.
s Sawyers v. Beller, 384 S.W.3d 107, 111 (Ky. 2012). · .
9 Jon W. Bruce and James W. Ely, Jr., The Law ofEasements & Licenses in Land,§
10:3 (1988). .
io 25 Am. Jur. 2d Easements & Licenses§ 84 (2014).
11 Id.
5
Kentucky has never formally recognized the term defeasible easements.
But two cases confirm the existence of defeasible easements in Kentucky;1'2 In
Kenner, the Court stated:
The doctrine is well-settled at common law that no·freehold or fee-·
simpl~ estate can be destroyed by the breach or non..:performance
of a condition subsequent ... This common-law rule does not apply,
however ... tothe creation of mere easements. [A]n incorpore8.l
hereditament is not cre~ted at common law by liyery of seizin; and
whenever the breach of a subsequent condition happens in an
estate or grant of this character the estate terminates without any
entry. 13
Ascertained from the language above, this Court recognized the exis_tence
of defeasible easements in Kentucky in Kenner.
In Otter, the entire discussion of the Court ceri;.ered on whether an
easement purporting to end when a water storage tank owner "remove[d]
said tank" ended when the owner simply replaced the tank. 14 The Court
could not have even entertained this discussion had it not ·assu~ed the
reco~ition of defeasibl~ easements in Kentucky. So according to Kenner
and Otter, Kentucky recognizes the existence of defeasible easements,
easem~nts ending upon the occurrence of a given event. Although this
dispute involves. two such events, termination of the easement upon vote
of .the individual homeowner members of the HOA conclusively decides
this matter.·
· 12Kenner v. American Contract Co., 72 Ky. 202 (Ky. 1872); Louisville Chair & Furniture
Co. v. Otter, 294 S.W. 483 (Ky..1927).
13 Kenner, 72 Ky. at 207-08.
14 Otter, 294 S.W.at 483-87.
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"In the case of an eXpress easement ... the terms of [an ec:i-sement]
determine the rights and liabilities of the parties."is "[B]ecause [the] contract
created the easement, that contract also defines the extent of the easement."16
A trial court "commit[s] an error when it [goes] outside the easement agreement
to ascertain extraneously its meanln.g and effect, because the result [is] an
interpretation of the instrument inconsistent with the clear and definite
language employed in it."17
Taking these rules together, the extent of Developer's rights as to its
easement is confined by the very language it chose in retaining that easement.·
, The Onginal Declaration states, "These restrictions may be cancelled, altered or
amended at any time by a 67% approval from each class of membership
subject to these restrictions, but [Develop'er] shall retain the sole right to
appoint the architectural approval committee until the last lot is sold." No
dispute exists as to the procedural validity of the vote itself-both parties agree
· that the vote was conducted properly. So, because the existence of Developer's
easement is li:r:nited by its granting language in the Original Declaration, and
1s Sawyers v. Beller, 384 S.W.3d 107, 111 (Ky. 2012) (citing Tex. E. Transmission Corp.
v. Carman, 314 S.W.2d 684, 687 (Ky, 1958)).
16 Chancy v. Chancy Lake Homeowners Association, 55 So. 3d 287, 297 (Ala. Civ. App.
2010) (citing Romar Dev. Co. v. Gulf View Mgmt. Corp., 644 So. 2d 4p2, 465 (Ala.
1994)). Chancy, although only persuasive authority, is the subject of much debate
between the parties and lower courts. The lOwer courts seem to have missed an
important factual distinction between Chancy and this case that shows that Char.i.cy
does not in fact support Developer's position. The .Chancy court did not allow the
homeowners' association in that case to amend the easement because Chaney's
easement-granting document did not contain any sort of limitation or amendment
. language. Chancy, 55 So. 3d at 297. Rather, in this case, the Original Declaration, the
easement-granting document, allows for the a.I!lending of the "restrictions" of the
Original Declaration.. · · ·
11 Texas Eastern Cqrp. v. Carman, 314 S.W.2d 684,-687 (Ky. 1957).
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because HOA validly abided by the procedure necessary to remove that
easement, HOA extinguished Developer's easement.
Developer argues that HOA's ability to amend .the Original Declaration is .
confined to "restrictions," and not "covenants anc:i restrictions," per the
language used in § 8.3 of the Original Declaration. And Developer argues that
the term easement does not fit under the umbrella of either "covenants" or
"restrictions."
alack's Law Dictionary, specific to property law~ defines Qffirmative
covenant as ".[an] agreement that real property will be used in a certain way."18
An ~asement constitutes a coven~t because an easement, as stated earlier, is
an interest that can be created by an agreement and th~t ·allows a landowner to
use lan,d that he or she does own for a specific purpose. So an easement falls
under the covenants umbrella in the Original Declaration.
To Developer's point, it is· true tJ:?.at this Court would_ be hard-pressed to
refer to any easement, besides a negative easement, as a restriction. But the
language of§ 8.3 of the Original Declaration, in addition to interpretative
. .
canons, supports our conclusion that an easement falls under the restrictions
· umbrella of the Original Declaration.
The applicable section,§ 8.3, begins by stating, "Unless cancelled, altered
or amended under the provisions of this paragraph, these covenants and
restrictions shall be binding.... " This opening 1anguage implies nothing less
than covenants, and thus: easements, are. amendable. The language of§ 8.3 ,
is Black's Law Dictionary (10th ed. 2014).
8
also states, " ... unless an instrument signed by a majority of the then owners of
all lots subject to these restrictions has been recorded agreeing to change these
restrictions and covenants in whole or in part." Again, this language implies
that covenants are amendable.
The section then describes an amendment-voting process: ''These
restrictions may be cancelled, altered_ or amended at any time by a 67%
approval from each Class of membership subject to these restrictions, but
Developers shall retain the sole right to appoint the architectural approval
. .
committee until the last lot is sold." We read this language more as~
description ·of the amendment process than as ~.limitation on what can be
amended, considering the entirety of the section. 19 Even more in support of
this reading is the .discussion of Developer's "sole right to appoint the
architectural approval committee .... " If Developer truly intended to restrict
application of the amendment process only to_ "restrictions," it would not have
induded, in the same sentence, a discussion of Developer's "rights;"
Developer's rights including the use. of the easement.
.
Additionally,§ 8.3 is
located uri.der Art. VIII - General Provisions in a document entitled "Declaration
of Covenants, Conditions and Restrictions." So this amendment provision
seemingly generally applies to the _ability of HOA to amend covenants,
conditions, and restrictions.
19 Vansant v. Co.;,,_rrwnwealth, 224 S:W. 367, 371 (Ky. 1920) ("the meaning of a word
may be ascertained by reference to the meaning of words associa,.tedwith it").
9
/
Lastly, this Court follows the contract interpretation canon historically
known by the useful Latinism, conf!aproferentem_:.When interpreting_ contracts
susceptible to two meanings, we construe ambiguity. against the drafter,
Developer in this case. 20 If Developer wanted its easement to be indefeasible, it
could have simply included a provision stating, "Nothing in this document will
~ow the amendment, alteration, or extinguishment of Developer's easement/'
This would have prev~nted anyone from arguing that Developer's easement is
amendable, and thus, terminable.·
So Developer's defeasible easement terminated upon a vote by the
membership of HOA, in accordance with. the Original Declaration.. The trial
court improperly granted summaryjudgment to Developer and the panel of the
Court of Appeals improperly affirmed the trial court. We hold from these facts
that HOA was entitled to judgment as a matter of law and th~ trial court erred
when it failed to grant HOA's summary judgment motion.
III. CONCLUSION.
We reverse the holding of the Court of Appeals and remand this case to
·the trial court with directions to enter summary judgment in favor of Majestic
Oaks Homeowners Association.
Minton, C.J.; C~nningh~, Hughes, Keller, Venters and Wright, JJ.,
sitting. All concur. VanMeter, J., not sitting.
20 B. Perini & Sons V. Southern Ry. Co., 239 S.W.2d 964, 966 (Ky. 1951).
' 10
COUNSEL FOR APPELLANT:
John C. ·Robinson
Robinson Salyers, PLLC
Brad Keeton
Matthew Kuhn
William M. Lear Jr
Stoll Keenon Ogdon, PLLC
COUNSEL FOR APPELLEE, MAJESTIC OAKS FARMS, INC.:
Paul Anton Zimlich
PaUI A. Zimlich, PLLC
coµNSEL FOR APPELLEES, JOSEPH O'BRIEN AND ASHLYN O'BRIEN:
Austin Hays ·
Austin Hite Hays, PLLC.
John B. Baughmam
Baughman Harp, PLLC.
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