Town of Ellettsville, Indiana Plan Commission and Richland Convenience Store Partners, LLC

FILED
Nov 29 2018, 11:01 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE
Indiana Supreme Court
Supreme Court Case No. 53S01-1709-PL-612
Town of Ellettsville, Indiana Plan Commission and
Richland Convenience Store Partners, LLC,
Appellants,
–v–
Joseph V. DeSpirito,
Appellee.
Argued: November 30, 2017 | Decided: November 29, 2018
Appeal from the Monroe Circuit Court
No. 53C01-1509-PL-1714
The Honorable E. Michael Hoff, Judge
On Petition to Transfer from the Indiana Court of Appeals
No. 53A01-1611-PL-2559
Opinion by Justice Slaughter
Chief Justice Rush and Justices David, Massa, and Goff concur.
Slaughter, Justice.
We adhere to Indiana’s longstanding common-law rule that relocating
a fixed easement requires the consent of all affected estate-holders. And
we reject the minority approach, reflected in the Third Restatement of
Property (Servitudes), which permits the unilateral relocation of
easements if a court finds the proposed relocation is “reasonable”,
consistent with the “normal” use and development of the servient estate,
and does not adversely affect the dominant estate. Property rights in
Indiana are not so flimsy that they may be modified or eliminated if their
exercise impedes what is thought to be a more productive or worthwhile
use of land. Under Indiana law, such rights may be abridged only with the
bargained-for consent of the property owner or through the lawful
exercise of eminent domain.
Factual and Procedural History
History of the Affected Properties
At issue here are two adjoining lots in Ellettsville, Indiana, that were
once a single parcel of land owned by Swifty Oil Company. In 1996,
Swifty subdivided the parcel and recorded the subdivision by a plat filed
with the Monroe County Plan Commission. The plat delineates a utility
easement across Lot 1. Swifty conveyed Lot 2 by warranty deed to Martin
Hukill, the predecessor in interest to appellee, Joseph V. DeSpirito.
In 2011, DeSpirito obtained Lot 2 by a special limited warranty deed
executed and recorded in the Monroe County Recorder’s Office. This deed
conveyed Lot 2 “as shown on the recorded plat thereof” and “[s]ubject to
covenants, easements and restrictions, if any, appearing in the public
records.” DeSpirito’s deed does not explicitly mention a utility easement
running through Lot 1. But one of the public records to which it is
subject—namely, the subdivision plat—does show the easement.
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In 2014, Swifty conveyed the other lot—Lot 1—to appellant Richland
Convenience Store Partners, LLC, by a limited warranty deed executed
and recorded in April 2014. Richland’s title was explicitly subject to
“encroachments, easements, rights of way, covenants, reservations, and
restrictions in the chain of title to the Real Estate or otherwise existing
thereon”. Richland’s deed made clear Lot 1 was subject to various
covenants, conditions, restrictions and, relevant here, “Utility and
Drainage easements and setback lines”, along with any amendments
disclosed on the subdivision’s recorded plat.
Town of Ellettsville Plan Commission Proceedings
In 2015, Richland asked the Town of Ellettsville Plan Commission, also
an appellant here, for permission to relocate the utility easement on Lot 1.
Richland wanted to move the easement, along with the private sewer line
running beneath it, fifteen to twenty feet south—all at Richland’s own
expense. Richland sought to relocate the easement to increase the
buildable area of Lot 1. DeSpirito, who owned Lot 2, opposed the
relocation and testified against it at the hearing.
Despite DeSpirito’s opposition, the Plan Commission approved
Richland’s request. It found that Richland’s “application [met] all of the
requirements as set forth by the Town of Ellettsville Zoning Ordinance”;
and it granted the proposed amendment to the plat. The Commission
specifically found that relocating the sewer line would cause only minimal
disruption to DeSpirito, and that Richland had agreed to incur the cost of
replacement. It also found that relocation would increase the buildable
area on Lot 1 and represented “the best location to allow for future
development of the site and maintain the functionality of the sewer line.”
Trial Court Proceedings
DeSpirito petitioned for judicial review of the Commission’s decision in
the Monroe Circuit Court. He also sought a declaration that the
Commission’s ruling was null and void, along with injunctive relief
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preventing construction or other development on Lot 1 inconsistent with
the utility easement’s existing location as described in the plat. The parties
agreed to the preliminary injunction. On summary judgment the trial
court found that DeSpirito, as owner of Lot 2, had a fixed utility easement
through Lot 1, the location of which was specified in the subdivision plat.
Citing Indiana appellate caselaw, the court held that the easement’s fixed
location meant it “cannot be changed by either party without consent of
the other.” The court thus granted DeSpirito’s motion for summary
judgment and remanded to the Commission with instructions to dismiss
Richland’s petition unless DeSpirito agreed to it. The court also ordered
the preliminary injunction to remain in effect.
Court of Appeals Proceedings
Richland and the Commission appealed the trial court’s entry of a
purported final judgment, though the entry did not resolve all claims as to
all parties. Town of Ellettsville v. DeSpirito, 78 N.E.3d 666 (Ind. Ct. App.
2017). Ignoring any jurisdictional infirmity, the court of appeals agreed
with the trial court that there were no disputed material facts. Id. at 668.
But the court distinguished the caselaw the trial court had relied upon,
finding it involved “an easement by necessity” and thus did not apply. Id.
at 676-77. The court of appeals concluded that the “more modern” and
“more equitable approach to easement relocation” is stated in Section 4.8
of the Third Restatement of Property (Servitudes). Id. at 677. This
provision entitles the holder of the servient estate—Richland—to “make
reasonable changes in the location or dimensions of an easement” at its
own expense, but only if they do not “(a) significantly lessen the utility of
the easement, (b) increase the burdens on the owner of the easement in its
use and enjoyment, or (c) frustrate the purpose for which the easement
was created.” Restatement (Third) of Property: Servitudes § 4.8(3) (2000).
In adopting the Restatement, the court of appeals cited an opinion from
the Supreme Judicial Court of Massachusetts, M.P.M. Builders, LLC v.
Dwyer, 809 N.E.2d 1053 (Mass. 2004). The Massachusetts court rejected the
common-law approach because it “permits an easement holder to prevent
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any reasonable changes in the location of an easement” and thus renders
“an access easement virtually a possessory interest rather than what it is,
merely a right of way.” Id. at 1058. Our court of appeals found that
rationale convincing and predicted we would, too. “We find these
observations persuasive and believe that our supreme court would also
recognize the utility of adopting the Restatement’s approach to easement
relocation.” 78 N.E.3d at 679.
Supreme Court Proceedings
DeSpirito sought transfer, which we granted, thus vacating the court of
appeals’ opinion. After oral argument, we found appellate jurisdiction
lacking because the trial court never issued a final judgment—one that
“disposed of all claims as to all parties”. Ind. Appellate Rule 2(H)(1). Town
of Ellettsville v. DeSpirito, 87 N.E.3d 9, 11 (Ind. 2017). In the interest of
judicial economy, we did not dismiss the case outright; rather, we stayed
the appeal and remanded to the trial court to determine whether it could
enter a final judgment. Id. at 11-12. In response to our opinion, the trial
court expressly determined that there was no just reason for delay and
expressly directed entry of judgment for DeSpirito on his claim for judicial
review and against Richland and the Commission. This entry is sufficient
to secure appellate jurisdiction.
Standard of Review
We review the entry of summary judgment de novo, and that is no less
true when the trial court sits as a reviewing court on judicial review from
an administrative ruling. Under our settled standard, summary judgment
is proper if the designated evidence shows there is no genuine issue as to
any fact material to a claim or issue, and the movant is entitled to
judgment as a matter of law. Ryan v. TCI Architects/Engineers/Contractors,
Inc., 72 N.E.3d 908, 912-13 (Ind. 2017). Here, the parties agree there are no
disputed issues of material fact. The only dispute is one of law, which we
also review de novo: Should we adhere to Indiana’s longstanding
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common-law rule, which requires all affected estate-holders to consent to
the relocation of a fixed easement; or adopt the Restatement position,
which does not always require such consent? We continue to follow the
common-law rule as the law of Indiana and thus affirm the trial court.
Discussion and Decision
I. Lot 2’s utility easement through Lot 1 is fixed.
An easement is the right to use another’s land for a specified purpose.
An easement appurtenant benefits adjoining land; an easement in gross
benefits a specific individual. The land benefited by an easement is the
dominant estate; the land burdened by an easement is the servient estate.
At issue here is an easement appurtenant because the easement benefits
land. The parties agree that Lot 2 has a utility easement running through
Lot 1. DeSpirito owns Lot 2, the dominant estate. Richland owns Lot 1, the
servient estate. The easement originated in 1996 when the parcel was
subdivided, and the easement was delineated in the plat recording the
subdivision. The easement runs with the land and thus survived the
changed ownership of both lots. DeSpirito obtained Lot 2 “as shown on
the recorded plat thereof”. Likewise, Richland obtained Lot 1 subject to
(among other things) “Utility and Drainage easements and setback lines
and any amendments thereto as disclosed on the recorded plat of
subdivision.”
Richland argues the easement’s location is not fixed, which is a mixed
question of law and fact. An easement is fixed if the instrument creating it
specifies its location or if the law requires it to be maintained in a specific
position. In contrast, a “floating easement” is not limited to any specific
part of the servient estate. Easement, BLACK’S LAW DICTIONARY (10th ed.
2014). Richland argues that the plat describes only the easement’s width,
not its location in relation to the lot’s boundaries. Thus, Richland says, the
easement is not fixed.
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We disagree. Richland is correct that the plat does not expressly
indicate the relative distance of the easement to the boundaries. But the
plat is drawn to scale: One inch equals sixty feet. The plat describes the
width of the easement and indicates its path through the lot with two
dashed lines. With a ruler, one can determine the distance of the easement
to the lot boundaries. These distances are determinable, and the
easement’s width is explicitly indicated. The easement is fixed.
Moreover, even if the plat were not drawn to scale, the disputed
easement is fixed by practice. “Where the right to an easement is granted
without giving definite location and description to it, the exercise of the
easement in a particular course or manner, with the consent of both
parties, renders it fixed and certain”. Dudgeon v. Bronson, 159 Ind. 562, 565,
64 N.E. 910, 910 (1902). (citation omitted)
In sum, Lot 2 has a utility easement through Lot 1, and its location in
the subdivision plat is fixed.
II. Indiana’s common law follows a bright-line rule
that is easy to apply, in contrast to the
Restatement’s multifactor test, which leads to
uncertain results.
Indiana common-law precedent requires all affected
parties to consent to the modification of various
servitudes.
We next consider whether, under Indiana law, a servient estate-holder
can unilaterally move a fixed utility easement or whether he must obtain
the dominant estate-holder’s consent.
Our starting point is a well-settled principle concerning easements by
necessity and restrictive covenants. An easement by necessity arises when
the easement is essential to the reasonable use of nearby property, such as
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an easement connecting a landlocked parcel of land to a road. Easement,
BLACK’S LAW DICTIONARY. Once two landowners agree on an easement by
necessity, one cannot alter it without the other’s consent. Ritchey v. Welsh,
149 Ind. 214, 221, 48 N.E. 1031, 1033 (1898) (finding a way once selected
cannot be changed by either party without the consent of the other). The
same goes for restrictive covenants, which are private agreements that
restrict the use or occupancy of real property. Covenant, BLACK’S LAW
DICTIONARY. “If any lot, or part of a lot, located in such plat shall have
been sold and conveyed, no modification thereof can be made unless the
owners of all the lots and parts therein join in the execution of such
writing.” Wischmeyer v. Finch, 231 Ind. 282, 288, 107 N.E.2d 661, 664 (1952)
(internal quotation marks omitted).
Here, we deal with a servitude that is similar to both an easement by
necessity and a restrictive covenant—specifically, an express fixed
easement appurtenant. Such an easement is a permitted use of land
granted by the servient estate-holder for the benefit of the dominant
estate-holder and runs with the dominant estate. See Sanxay v. Hunger, 42
Ind. 44, 48 (1873); accord William C. Haak Trust v. Wilusz, 949 N.E.2d 833,
835 (Ind. Ct. App. 2011).
Our court of appeals considered this type of easement in Shedd v.
American Maize Products Company, 60 Ind. App. 146, 108 N.E. 610 (1915).
There, the court found that our default rule for easements by necessity—
that, once established, they cannot be changed without the consent of both
parties—also applies to fixed easements appurtenant. “When such a way
is once selected and located it cannot be changed by either party without
the consent of the other.” 60 Ind. App. at 155, 108 N.E. at 614 (citing
Thomas v. McCoy, 30 Ind. App. 555, 66 N.E. 700 (1903); Ritchey, 149 Ind.
214, 48 N.E. 1031). Cf. Daviess-Martin County REMC v. Meadows, 179 Ind.
App. 622, 625, 386 N.E.2d 1000, 1002 (1979) (affirming trial court’s
determination that government’s unilateral relocation of electrical-line
easement was taking for public use even when easement was
prescriptive).
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Although we have never previously adopted this rule expressly, we see
no reason to depart from Shedd’s holding. The same considerations
regarding relocation rights that apply to easements by necessity also apply
to easements appurtenant. The Shedd court was correct in concluding that
once an easement appurtenant’s location is fixed, it cannot be relocated
unilaterally.
The Restatement approach to relocation agreements is
unclear and appears internally inconsistent.
The Restatement advances a different rule—one that only a few state
courts have adopted and that our court of appeals describes as “more
modern” and “more equitable” than our common-law approach.
DeSpirito, 78 N.E.3d at 677. The Restatement “rejects the rule espoused by
the weight of authority in the United States” in favor of a new rule its
drafters believe will
• “permit development of the servient estate to the extent it can be
accomplished without unduly interfering with the legitimate
interests of the easement holder”;
• “increase overall utility”; and
• “encourage the use of easements” by decreasing the cost to the
servient landowner to grant them.
Restatement § 4.8 cmt. f.
To date, six state courts of last resort have adopted the Restatement’s
approach. See Roaring Fork Club, L.P. v. St. Jude’s Co., 36 P.3d 1229 (Colo.
2001); Dwyer, 809 N.E.2d 1053; St. James Village, Inc. v. Cunningham, 210
P.3d 190 (Nev. 2009); Lewis v. Young, 705 N.E.2d 649 (N.Y. 1998); Stanga v.
Husman, 694 N.W.2d 716 (S.D. 2005); Roy v. Woodstock Cmty. Trust, Inc., 94
A.3d 530, 539 (Vt. 2014) (adopting § 4.8 for underground easements only).
But see AKG Real Estate, LLC v. Kosterman, 717 N.W.2d 835 (Wis. 2006);
Herren v. Pettengill, 538 S.E.2d 735 (Ga. 2000); Stowell v. Andrews, 194 A.3d
953 (N.H. 2018). These adopting courts rely primarily on the rationale that
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the Restatement “strikes an appropriate balance between the interests of
the respective estate owners by permitting the servient owner to develop
his land without unreasonably interfering with the easement holder’s
rights.” Dwyer, 809 N.E.2d at 1057.
1. Under a plain-meaning interpretation of Section
4.8, the Restatement does not apply to fixed
easements.
The Restatement’s operative provision, Section 4.8, opens with an
introductory clause that suggests the rule does not apply to fixed
easements:
Except where the location and dimensions are determined by
the instrument or circumstances surrounding creation of a
servitude, they are determined as follows:
(1) The owner of the servient estate has the right within a
reasonable time to specify a location that is reasonably suited to
carry out the purpose of the servitude.
(2) The dimensions are those reasonably necessary for
enjoyment of the servitude.
(3) Unless expressly denied by the terms of an easement, as
defined in § 1.2, the owner of the servient estate is entitled to
make reasonable changes in the location or dimensions of an
easement, at the servient owner’s expense, to permit normal
use or development of the servient estate, but only if the
changes do not
(a) significantly lessen the utility of the easement,
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(b) increase the burdens on the owner of the easement in its
use and enjoyment, or
(c) frustrate the purpose for which the easement was created.
Restatement § 4.8 (emphasis added).
In light of Section 4.8’s introductory provision—“Except where the
location and dimensions are determined by the instrument or
circumstances surrounding creation of a servitude, they are determined as
follows”—its plain meaning would seem to make the rest of Section 4.8
inapplicable when the “instrument” creating the servitude or the
“circumstances surrounding” its creation “determined” the location. This
provision, in other words, would appear to limit Section 4.8 to servitudes
that are not “determined” or fixed.
2. The Restatement’s drafters believe Section 4.8
applies even to fixed easements.
But a plain-meaning interpretation of Section 4.8 leads to a result at
odds with what the Restatement’s drafters say they were doing in
adopting Section 4.8—namely, rejecting “the rule espoused by the weight
of authority in the United States”. Restatement § 4.8 cmt. f. Stated
differently, the Restatement announced a new rule that would
purportedly modernize outdated common-law restraints, like Indiana’s,
and thereby “increase overall utility” and “encourage the use of
easements”. Id. But if the new rule applies only to the unliteral relocation
of non-fixed easements, then Section 4.8 amounts to no more than a
rephrasing—a restatement, if you will—of the longstanding common-law
rule already in place. Read this way, Section 4.8 is not rejecting anything.
The Supreme Court of Nevada faced this very question in St. James
Village, 210 P.3d 190. There, the court considered whether Section 4.8
applies to an easement recorded by deed with a metes-and-bounds
description. The court adopted the Restatement but held “that the plain
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meaning of the rule’s introductory language prohibits application of the
rule when the creating instrument provides for an express location or
dimensions of the easement.” Id. at 193. The court continued: “Thus, when
the easement at issue has a location certain, the Restatement rule is not
applicable and the easement cannot be unilaterally relocated.” Id. See also
Offshore Systems-Kenai v. State, Dep't of Transp. & Public Facilities, 282 P.3d
348, 357 (Alaska 2012) (adding in dicta that Restatement applies only
when easement is not fixed); Lewis, 705 N.E.2d 649, 653–54 (applying draft
version of § 4.8 to non-fixed easement); Stanga, 694 N.W.2d 718-19
(applying § 4.8 because right-of-way easement was not described in deed
and had changed course and form over time).
The Nevada court’s plain-meaning interpretation, however, may not be
what the Restatement’s drafters had in mind. Their comments state that
subsection 4.8(3) applies unless “expressly negated by the easement
instrument.” Restatement § 4.8 cmt. f. And if the purchasers of an
easement wish “to retain control over any change in location, the
instrument should be drafted to accomplish that result.” Id. The drafters
also state, under the section “Effects of Specifying Location or
Dimensions”, that specified locations or dimensions of an easement in the
creating instrument “may indicate the parties’ intent that no deviation be
permitted”. Restatement § 4.8, Reporter Note p.570 (emphasis added).
These statements cast doubt on a plain-reading construction of Section
4.8. The term “expressly negated” in comment f could mean, as the
Nevada court found, that specific locational measurements strictly forbid
unilateral relocation. But this reading is at odds with the “may” language
following it in the Reporter notes: Specific locations or dimensions in the
creating instrument “may indicate the parties’ intent that no deviation is
permitted.” Restatement § 4.8, Reporter Note p.570 (emphasis added).
Comment f also indicates that when parties wish to contract around the
Restatement rule permitting unilateral relocation, the “instrument should
be drafted to accomplish that result.” In other words, the instrument
creating the easement should expressly prohibit unilateral relocation of
the easement, or else such one-sided action will be deemed permitted.
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Further evidence that the Restatement was intended to apply to
traditionally fixed easements can be found in Section 4.8’s expository
examples. In one example, Whiteacre has an easement through Blackacre
to use the “existing roadway for a private way”. Restatement § 4.8 illus. 4.
This easement was granted in 1910. The existing roadway meanders
through Blackacre and passes within ten feet of the house located on
Blackacre. Blackacre, the servient estate, wants to re-route the road to a
better location. The deed describes the easement. The road is located when
the easement is created and is determinable. The road has existed for over
a century and so is determined by practice. Under the common law, this
easement would be fixed, thus requiring all parties to consent to a
relocation. Yet the drafters use this as an example of an easement that can
be relocated unilaterally. Id.
3. Some courts conclude that Section 4.8 does not
mean what it says.
Unlike Nevada’s high court, the Supreme Judicial Court of
Massachusetts in Dwyer, 809 N.E.2d 1053, declined to adopt the plain-
meaning construction and instead read Section 4.8 as being a true new
path. Because the “deed describes the location of the easement” and
“contains no language concerning its relocation”, id. at 1055, Dwyer held
the fixed easement could be unilaterally relocated under Section 4.8. In
contrast, and consistent with Section 4.8’s plain meaning, the Wisconsin
Supreme Court found Dwyer to be an outlier in applying Section 4.8 to
fixed easements. See AKG Real Estate, 717 N.W.2d at 845.
These conflicting state-court opinions persuade us that our court of
appeals erred in relying on Dwyer for its conclusion that Richland could
relocate the disputed easement without DeSpirito’s consent. Given the
plain meaning of Section 4.8, we reject Dwyer’s holding that the
Restatement applies to fixed easements. Thus, even if we were to adopt
the Restatement, we would interpret it based on the section’s actual text
and not the drafters’ apparent intent. But, as discussed next, we decline to
adopt Restatement Section 4.8 at all—not as intended or written.
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III. Indiana’s common-law approach has long been
settled, and we see no reason to modify it.
We decline to adopt the Restatement and opt instead to reaffirm
Indiana’s common law concerning the relocation of easements: Once an
easement’s location is fixed, neither the servient nor dominant estate-
holder can relocate or modify the easement without the other’s consent.
This rule applies to easements by necessity, restrictive covenants, and,
relevant here, express easements appurtenant.
For four reasons, we continue to embrace the common-law rule. First,
the common-law approach settles the expectations of property owners
and honors their bargained-for holdings, ensuring stability in land
ownership and property valuation. Second, it avoids the likely flood of
litigation that would occur were we to abandon the common law’s bright-
line rule and thus inject uncertainty into whether and when the
Restatement applies to various scenarios. Third, it avoids having to
address whether modifying the common-law rule would effect a judicial
taking of private property, triggering an entitlement to just compensation.
And, fourth, it likely leads to more efficient economic outcomes than the
Restatement.
Settling expectations
Our first concern with the Restatement’s approach is that it may
unsettle property values by frustrating the contracting parties’
expectations. Parties often bargain over an easement’s type and location
when first creating an easement. Allowing one party to thwart that
bargain may result in a windfall for one party and a corresponding
shortfall for the other, thus depriving it of its bargain.
As the Supreme Court of Maine explained in Davis v. Bruk, 411 A.2d
660 (Me. 1980), the Restatement approach would “introduce considerable
uncertainty into land ownership” by depriving the dominant estate-
holder “of his property rights in the servient estate”. Id. at 665. And, the
court continued, following the Restatement could
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confer an economic windfall on the servient owner, who
presumably purchased the land at a price which reflected the
restraints existing on the property. Such a rule would relieve
him of such restraints to the detriment of the owner of the
dominant estate whose settled expectations would be derailed
with impunity.
Id. Reaffirming Indiana’s common-law approach signals to landowners
that we are holding the parties to the agreement they—or their
predecessors in interest—made when they negotiated their easement or
acquired their property concerning the easement. A key virtue of the
common-law rule is that it promotes certainty and encourages
investments in dominant estates and the easements serving them by
ensuring their property interests and corresponding property values
remain stable and predictable.
Minimizing litigation
As Indiana’s dearth of caselaw on this topic underscores, our common-
law approach has not generated much litigation over the years. The
common-law approach is a clear, bright-line rule requiring parties to
consent to the modification or relocation of a fixed easement. Were we to
adopt the Restatement approach, it would fall to courts to determine,
among other things:
• what is a reasonable change to an easement;
• would a reasonable change permit normal use or development
of the servient estate;
• would relocation significantly lessen the utility of the easement;
and
• would the relocation frustrate the easement’s purpose?
Property owners are better suited than courts to answer these
questions. We leave the determination of such questions to the parties
themselves and the market. Under such circumstances, the governing
legal principles should be clear, black-letter rules that leave no room for
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judicial discretion. Our longstanding common-law rule fills that bill. See
Herren, 538 S.E.2d at 736 (allowing unilateral relocation by servient estate-
holder would be “opening the door for increased litigation over
‘reasonableness’ issues based on today’s conditions rather than those
considered in the original bargain”).
Avoiding judicial takings
Another reason for retaining the common-law rule is that the Supreme
Court, in a plurality opinion by Justice Scalia, has observed that a judicial
taking may arise if a court modifies the common law to eliminate a settled
property right.
In sum, the Takings Clause bars the State from taking private
property without paying for it, no matter which branch is the
instrument of the taking. . . . If a legislature or a court declares
that what was once an established right of private property no
longer exists, it has taken that property, no less than if the State
had physically appropriated it or destroyed its value by
regulation.
Stop the Beach Renourishment, Inc. v. Florida Dep’t of Envt’l Protection, 560
U.S. 702, 715 (2010) (emphasis in original). By retaining the common-law
rule, we avoid having to consider whether the Restatement so
fundamentally alters a property right in the easement that abandoning the
rule amounts to a taking of that right requiring the payment of just
compensation.
Securing economically efficient outcomes
A final reason for adhering to the common-law rule is the economic
reality that property owners with easement disputes often will bargain
extralegally—meaning they will contract around existing rules. Both the
common-law and Restatement approaches are alternative rules that
presumptively govern a legal relationship unless the parties agree to other
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terms. But parties are more likely to contract around clear rules that
address whether and when the law applies. The Restatement often leaves
such questions unanswered. In contrast, the common law provides a
straightforward answer and encourages interdependence between parties
by requiring them to work cooperatively any time one of them wishes to
move an easement.
A potential problem with extralegal bargaining is that if transaction
costs are more than de minimis, the parties may be deterred from
bargaining to the optimal, so-called “Pareto-efficient” outcome—where it
is impossible to enhance the welfare of one party without making another
worse off. This is the Coase Theorem in its simplest form. As Professor
Coase acknowledged, transaction costs often prevent extralegal
bargaining and frustrate optimal outcomes. R. H. Coase, The Problem of
Social Cost, 3 J. Law & Econ. 1 (1960). Because transactions costs are
usually more than negligible, we seek the rule that minimizes bargaining
costs and encourages parties to attain a more efficient outcome.
The Restatement approach threatens to make bargaining costlier and
deter the most efficient use of resources. Under the Restatement, the
servient estate-holder may take initial steps to relocate the easement
unilaterally because he does not need the dominant estate-holder’s prior
consent. Especially if those initial steps include investing significant
resources, those sunk costs might make the owner of the servient estate
“reluctant to accept an offer from the owner of the dominant estate to
cease the relocation, even if doing so would be the most efficient
outcome.” Note, The Right of Owners of Servient Estates to Relocate Easements
Unilaterally, 109 Harv. L. Rev. 1693, 1701 (1996). The common-law rule, in
contrast, forces parties to cooperate from the outset. The servient estate-
holder, aware he must obtain the dominant estate-holder’s consent before
relocating the easement, will likely engage in dialogue before incurring
significant costs that would deter a mutually beneficial outcome. Thus, in
such instances, the common-law rule encourages bargaining at a lower
cost than the Restatement approach.
Indiana Supreme Court | Case No. 53S01-1709-PL-612 | November 29, 2018 Page 17 of 19
Richland worries about the bad actor—the dominant estate-holder who
uses the common-law rule as a shield and refuses to consent to an
easement’s relocation despite an economic motive to do so. That is a fair
concern, and we acknowledge the prevailing rule may enable dominant
estate-holders to use their utility easements to block economically
beneficial development of an adjacent plot. But the Restatement presents
its own bad-actor problems. As described by the Maine Supreme Court,
the dominant estate-holder “could be subjected to harassment by the
servient owner’s attempts at relocation to serve his own conveniences.”
Davis, 411 A.2d at 665. Adopting the Restatement would not solve the
bad-actor problem. It would simply empower a different party—the
servient estate-holder—to act badly. There is no reason to believe servient
estate-holders will pursue their own self-interest with any less gusto
under the Restatement than dominant estate-holders under the common
law. Thus, adopting the Restatement to thwart the dominant estate-holder
that uses the easement as a shield would merely reassign property values
to the servient estate-holder, and we see no point in that.
Conclusion
For these reasons, we retain Indiana’s common-law rule prohibiting the
unilateral relocation of fixed easements and thus affirm the trial court’s
entry of judgment for DeSpirito on his petition for judicial review and
against Richland and the Commission.
Rush, C.J., and David, Massa, and Goff, JJ., concur.
Indiana Supreme Court | Case No. 53S01-1709-PL-612 | November 29, 2018 Page 18 of 19
ATTORNEYS FOR APPELLANTS
TOWN OF ELLETTSVILLE PLAN COMMISSION
Darla S. Brown
Sturgeon & Brown, P.C.
Bloomington, Indiana
RICHLAND CONVENIENCE STORE PARTNERS, LLC
Andrew P. Sheff
Sheff Law Office
Indianapolis, Indiana
Carina M. de la Torre
The de la Torre Law Office LLC
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE
Michael Rabinowitch
Maureen E. Ward
Wooden McLaughlin LLP
Indianapolis, Indiana
Indiana Supreme Court | Case No. 53S01-1709-PL-612 | November 29, 2018 Page 19 of 19