Scott v. Lee & Donna Metcalf Charitable Trust

September 8 2015
DA 14-0798
Case Number: DA 14-0798
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 265
TERRANCE LEE SCOTT and
LAURIE A. SCOTT,
Plaintiffs and Appellants,
v.
THE LEE AND DONNA METCALF
CHARITABLE TRUST, PETER MICHAEL
MELOY, Trustee and LEWIS AND CLARK
COUNTY,
Defendants and Appellees.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clerk, Cause No. ADV 2013-501
Honorable Mike Menahan, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
R. J. “Jim” Sewell, Jr., Craig D. Charlton, Scott H. Clement, Smith Law
Firm; Helena, Montana
For Appellees:
Peter Michael Meloy, Meloy Law Firm; Helena, Montana
Leo Gallagher, Lewis and Clark County Attorney, K. Paul Stahl,
Lewis and Clark Deputy County Attorney; Helena, Montana
Submitted on Briefs: July 8, 2015
Decided: September 8, 2015
Filed:
__________________________________________
Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 Terrance Scott and Laurie Scott (the Scotts) appeal from the order of the Montana
First Judicial District Court, Lewis and Clark County, resolving cross-motions for
summary judgment in favor of the Lee and Donna Metcalf Charitable Trust (the Trust).
We affirm.
ISSUES
¶2 We review the following issues:
1. Did the District Court err by deciding that the Metcalf Restrictions were
enforceable against the Scotts by the Trust?
2. Did the District Court err by deciding that the Metcalf Restrictions were
enforceable as anything other than a conservation easement?
3. Did the District Court err by deciding that the Metcalf Restrictions were
not void as violations of the rule against perpetuities?
4. Did the District Court err by deciding that the Metcalf Restrictions were
not void for vagueness?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 On January 3, 1996, Donna Metcalf (Metcalf) transferred a 40-acre parcel of land
located near Lake Helena to Richard Thieltges (Thieltges) by warranty deed. The deed
stated that:
[Metcalf], for and in consideration of the sum of One Dollar and
other valuable consideration . . . to her in hand paid by [Thieltges], . . . does
by these presents grant, bargain, sell, convey, warrant and confirm unto
[Thieltges] and to his heirs and assigns forever, the hereinafter-described
real estate . . . .
. . .
2
[Metcalf] does hereby impose and charge all of the above-described
property with certain exceptions, with the covenants, restrictions,
conditions and charges as follows:
1. [Thieltges] shall not engage in any activity nor shall he permit
another to use the property in any way so as to reduce the quality of the
stream running through the property below the water quality as it exists on
the date of this conveyance, nor shall [Thieltges] utilize the riparian area
surrounding the stream in any way such that the quality of the said riparian
area shall be reduced below that existing at the time of this conveyance.
2. The above-described parcel has several improvements, including a
log dwelling house situated thereon. No more than one single-family
residence, in addition to the existing log dwelling structure, shall be placed
upon this parcel, and the said parcel may not be subdivided beyond its
existing forty acres.
These restrictions and covenants are to run with the land and shall be
binding upon [Thieltges], his successors, heirs or assigns. Enforcement
shall be by proceedings at law or in equity against any person or persons
violating or attempting to violate any covenants, either to restrain violations
or to recover damages.
The “covenants, restrictions, conditions and charges” imposed in paragraphs 1 and 2 will
hereinafter be referred to as the Metcalf Restrictions. Thieltges recorded the deed with
the Lewis and Clark County Clerk and Recorder on January 10, 1996.
¶4 On September 1, 2000, Thieltges transferred the full 40-acre parcel to the Scotts
by warranty deed. The deed incorporated by reference a title insurance report, which
specifically mentioned the Metcalf Restrictions. In light of this and based on their
communications with Thieltges, the Scotts admit that they had actual knowledge of the
Metcalf Restrictions at the time of the transfer.
¶5 On July 12, 2013, the Scotts filed a complaint in the District Court seeking
permission to subdivide their 40-acre parcel. The Scotts asked the District Court to
invalidate the Metcalf Restrictions and allow them to subdivide the property. In the
complaint, they named the Trust and Lewis and Clark County as defendants. Lewis and
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Clark County disclaimed an interest in the suit, and it has not participated in the case
since. The Trust answered the Scotts’ complaint and then filed a counterclaim asking the
Court to enforce the Metcalf Restrictions.
¶6 Soon thereafter, both parties filed motions for summary judgment. They agreed
there were no factual issues to be resolved, and that the case could be decided based on
construction of the Metcalf Restrictions. The District Court granted summary judgment
in favor of the Trust on November 12, 2014. It decided that the Metcalf Restrictions
were covenants of which the Scotts had actual notice. It also decided that Metcalf and
Thieltges intended the Metcalf Restrictions to run with the land. For these reasons, it
concluded that the Metcalf Restrictions were enforceable against the Scotts and any other
of Thieltges’s successors with actual notice of them. It refused to invalidate the
restrictions. The Scotts appeal.
STANDARDS OF REVIEW
¶7 We review a district court’s summary judgment ruling de novo, applying the same
rule, M. R. Civ. P. 56(c)(3), that a district court does when making a summary judgment
ruling. Beaverhead Cnty. v. Mont. Ass’n of Cntys. Joint Powers Ins. Auth., 2014 MT 267,
¶ 11, 376 Mont. 413, 335 P.3d 721. We review a district court’s conclusions of law for
correctness. Blazer v. Wall, 2008 MT 145, ¶ 24, 343 Mont. 173, 183 P.3d 84.
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DISCUSSION
¶8 1. Did the District Court err by deciding that the Metcalf Restrictions were
enforceable against the Scotts by the Trust?
¶9 The Trust argues that the Metcalf Restrictions are real covenants enforceable
against Thieltges and his successors in interest, the Scotts. The Scotts, on the other hand,
argue that the Metcalf Restrictions are an easement in gross that is unenforceable against
them by the Trust. For this reason, they argue that the District Court erred when it
granted summary judgment in favor of the Trust. We do not wholly agree with either
party. We hold that the Metcalf Restrictions are enforceable against the Scotts by the
Trust as an easement in gross.
¶10 An easement in gross is a nonpossessory interest in land that benefits the holder of
the easement personally. Bos Terra, LP v. Beers, 2015 MT 201, ¶ 11, 380 Mont. 109,
___ P.3d ___. It is distinguishable from an easement appurtenant, which benefits a
particular parcel of land. Bos Terra, LP, ¶ 11. Both easements in gross and easements
appurtenant burden a parcel of land, which is termed the servient estate. Section
70-17-103, MCA; Bos Terra, LP, ¶¶ 11-12. Easements appurtenant also benefit an
associated parcel of land, which is termed the dominant estate. Section 70-17-103, MCA;
Bos Terra, LP, ¶¶ 11-12. No such dominant estate exists for easements in gross. See
§ 70-17-103, MCA; Slauson v. Marozzo Plumbing & Heating, 2009 MT 333, ¶ 16,
353 Mont. 75, 219 P.3d 509.
¶11 We agree with the Scotts that when Metcalf and Thieltges made the Metcalf
Restrictions they created easements in gross. We have held that a servitude or restriction
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is properly classified as an easement in gross if it falls within the scope of § 70-17-102,
MCA, and if there is no dominant estate that the servitude or restriction benefits.
Slauson, ¶ 17; Broadwater Dev., L.L.C. v. Nelson, 2009 MT 317, ¶ 34, 352 Mont. 401,
219 P.3d 492; Lindley v. Maggert, 198 Mont. 197, 198-99, 645 P.2d 430, 431 (1982); see
§ 70-17-102, MCA (“servitudes upon land may be granted and held though not attached
to land”); Bos Terra, LP, ¶ 12. Section 70-17-102(7), MCA, specifically allows the
creation of easements for “the right of conserving open space to preserve park,
recreational, historic, aesthetic, cultural, and natural values on or related to land.”
¶12 The parties in this case agree that the Metcalf Restrictions were made for
conservation purposes. Additionally, the Scotts have repeatedly argued that the benefit of
the easement is not attached to any dominant estate. The Trust has not disagreed nor has
it provided evidence indicating that such a dominant estate exists. Moreover, we cannot
identify any estate benefited by the Metcalf Restrictions from the terms of the
Restrictions or from any other part of the record. As such, there is no genuine issue that
there is no dominant estate benefitted by the Metcalf Restrictions. Thus, the Metcalf
Restrictions created an easement in gross since they comply with § 70-17-102(7), MCA,
and they do not benefit any dominant estate.
¶13 We disagree with the Scotts’ conclusion that this characterization of the Metcalf
Restrictions—characterization of them as easements in gross—compels the conclusion
that the Metcalf Restrictions are unenforceable against them. For an easement to be
enforceable against parties that were not the original parties to the easement, the burden
of the easement must pass to the original easement grantor’s successors in interest and the
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benefit of the easement must pass to the original easement grantee’s successors in
interest. See Restatement (Third) of Property: Servitudes §§ 4.4, 4.7 (2000); 4 Richard R.
Powell, Powell on Real Property § 34.17, at 34-167 to -176, (Michael Allan Wolf ed.,
2015); 7 Thompson on Real Property, §§ 60.02(a), 60.07(a), at 460-61, 548-49 (David A.
Thomas ed., 2d ed. 2006). Since both pass in this case and since the Scotts base their
arguments concerning enforceability only on whether the benefit and burden passed, we
conclude that the easement was enforceable by the Trust against the Scotts.
¶14 The burden of the easement passed to the Scotts. According to § 70-20-308,
MCA, an easement remains attached to a servient estate despite transfer of that estate.
Section 70-20-308, MCA (“transfer of real property passes all easements attached
thereto”); Meine v. Hren Ranches, Inc., 2015 MT 21, ¶ 41, 378 Mont. 100, 342 P.3d 22;
see § 70-17-111, MCA (not including transfer of a servient estate in its list of ways in
which an easement may be extinguished). Here, the 40-acre parcel became the servient
estate of the easement when Thieltges and Metcalf created the Metcalf Restrictions and
Thieltges thereby granted an easement to Metcalf. By § 70-20-308, MCA, Thieltges’s
subsequent transfer of the parcel to the Scotts did not extinguish the easement.
¶15 We have suggested that an easement may not survive certain transfers where the
original parties to the easement have no intent for the easement to pass to successors or
where a successor to the servient estate succeeds to the estate without notice of the
easement. See Earl v. Pavex, Corp., 2013 MT 343, ¶ 19, 372 Mont. 476, 313 P.3d 154;
Reichert v. Weeden, 190 Mont. 95, 99, 618 P.2d 1216, 1219 (1980). Neither requirement
provides grounds for the Scotts to avoid the burden of the easement in this case. Metcalf
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and Thieltges intended the Metcalf Restrictions to pass with the servient estate. In their
deed, they specifically stated that “[t]hese restrictions and covenants are to run with the
land and shall be binding upon [Thieltges], his successors, heirs or assigns.” Also, the
Scotts took the property with both record and actual notice of the Metcalf Restrictions.
They admitted in their briefs to this Court and to the District Court that they had actual
knowledge of the Metcalf Restrictions. Indeed, the restrictions were acknowledged in the
deed they took from Thieltges. The Metcalf Restrictions also had been recorded with
Lewis and Clark County at the time Metcalf transferred the property to Thieltges. The
Scotts also, therefore, had record notice of the easement. See Earl, ¶ 36. For the
foregoing reasons, the burden of the easement passed with the servient estate when it was
transferred to the Scotts.
¶16 The benefit of the easement also passed when it was transferred from Metcalf to
the Trust. Both parties assume that the Trust is Metcalf’s successor in interest,
presumably as the devisee of her estate. The Scotts contend that the easement, as an
easement in gross, was extinguished upon Metcalf’s death and that it was not devisable,
descendible, or otherwise transferrable to the Trust. We disagree.
¶17 We have held that “whether or not . . . an easement may be alienated and
apportioned depends upon the manner and the terms of the creation of the easement.”
Lindley, 198 Mont. at 199, 645 P.2d at 431. In Lindley, we decided that an easement in
gross survived transfer of the benefit of the easement from the original grantee of the
easement to his successor in interest. We held that the easement in gross was enforceable
against the grantor’s successor in interest by the grantee’s successor in interest. We
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reasoned that there was “no language in the warranty deed limiting the grant[ee]’s right to
freely alienate and apportion the easement.”1 Lindley, 198 Mont. at 199, 645 P.2d at 431.
¶18 Similarly, in this case, neither the deed from Metcalf to Thieltges nor the deed
from Thieltges to Scott contains any language limiting Metcalf’s right to freely transfer
the easement. As in Lindley, we hold that the easement in gross comprising the Metcalf
Restrictions was freely transferrable. It was, therefore devisable to the Trust. The
easement in gross was not rendered unenforceable by its transfer or by Metcalf’s death.
¶19 We recognize that we have repeatedly stated that “with an easement in gross, no
dominant tenement exists and the easement right does not pass with title to any land.”
E.g., Bos Terra, LP, ¶ 11; Broadwater Dev., L.L.C., ¶ 33; Slauson, ¶ 16; Blazer, ¶ 24. In
concluding that the easement here survived transfer, we do not qualify that statement or
abrogate the cases in which we made the statement. The statement is consistent with our
holding. Rather than addressing whether the benefit of an easement may be transferred
from the original benefit holder to a third person, the statement merely clarifies that the
“easement right”—or the benefit of an easement—does not pass automatically with the
1
The unaltered language of Lindley is “no language in the warranty deed limiting the grantor’s
right to freely alienate and apportion the easement.” Lindley, 198 Mont. at 199, 645 P.2d at 431.
This Court used the terms grantor and grantee in a different sense in Lindley than we do in this
Opinion. For the sake of consistency in this Opinion, we have altered the language from Lindley.
When the Court referred in Lindley to the grantor, it was referring to Pinnow, the party in Lindley
who had reserved an easement for himself upon transferring land to the defendants. Pinnow
subsequently transferred the benefit of the easement to the Lindley plaintiffs. Lindley, 198 Mont.
at 198-99, 645 P.2d at 431. He therefore stands, relative to the defendants and plaintiffs in
Lindley, in the same position as Metcalf does in the case at bar, relative to the Trust and the
Scotts. For this reason, and since we have referred to Metcalf as the grantee of the easement in
this case, we quote the language from Lindley but alter its use of “grantor.” Regardless of the
terminology, the aspect of Lindley that is important to our present Opinion is that the benefit of
the easement may be transferred and then enforced against the owner of the servient estate.
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title to any parcel of land. This makes sense because there is no dominant estate and the
benefit of an easement in gross is not attached to any land. See §§ 70-17-102 and -103,
MCA.
¶20 We also recognize that our holding—allowing Metcalf to transfer the benefit of
her easement in gross absent language in the deed limiting her right to do so—is at odds
with the laws of many other jurisdictions. Most jurisdictions in the United States strictly
limit the transfer of easements in gross. See Powell on Real Property §§ 34.02[2][d],
34.16, at 34-19 to -20, 34-163 to -167; Thompson on Real Property, § 60.07(c), 552-55.
However, our law governing easements has not always tracked the rule followed by the
majority of states, and we do not feel compelled to follow the majority rule here.
Compare Reichert v. Weeden, 190 Mont. 95, 618 P.2d 1216 (1980) (recognizing a
negative easement restricting the sale of alcohol on the servient estate) with Thompson on
Real Property, § 60.02(e)(1), 464-68 (stating that courts are reluctant to recognize
negative easements for anything but access to light, air, water, and lateral support).
Moreover, our conclusion is not wholly inconsistent with the jurisprudence of the rest of
the country. For example, the Restatement (Third) of Property states that benefits of
servitudes in gross are transferrable and devolve either as property of their owners or as
contractual obligations of their obligor. Restatement (Third) of Property: Servitudes
§ 5.8 (citing cases from Colorado, Florida, Georgia, Illinois, and Wisconsin, in addition
to this Court’s decision in Lindley). We do not adopt the Restatement, but we note that
we have quoted it approvingly in the past and we cite it here as authority that our holding
in this case is not wholly unique.
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¶21 For the foregoing reasons, we conclude the Metcalf Restrictions created an
easement in gross, and that the benefit of the easement passed to the Trust and that the
burden of the easement passed to the Scotts. Because we find the parties’ arguments to
the contrary unpersuasive, we conclude that the Metcalf Restrictions are enforceable
against the Scotts by the Trust as an easement in gross.
¶22 2. Did the District Court err by deciding that the Metcalf Restrictions were
enforceable as anything other than a conservation easement?
¶23 The Scotts argue that the Metcalf Restrictions should not be enforced because,
based on their subject matter, a Title 76, Chapter 6, MCA, conservation easement was the
only appropriate means of enforcing the Metcalf Restrictions. They argue that the
statutory requirements for creating a conservation easement were not complied with and
that the Metcalf Restrictions were invalid as a result.
¶24 We disagree. As discussed above, § 70-17-102, MCA, specifically allows creation
of servitudes for conservation purposes. Moreover, § 76-6-105(2), MCA, states that
Title 76, Chapter 6, MCA, governing conservation easements, “may not be construed to
imply that any easement, covenant, condition, or restriction that does not have the benefit
of this chapter is not enforceable based on any provisions of this chapter.” The Scotts’
argument contradicts the plain language of § 76-6-105(2), MCA. By its terms, Title 76,
Chapter 6, MCA, conservation easements provide nonexclusive means of conserving
land. Conservation easements do not displace the servitudes specified in other parts
of the code, including § 70-17-102, MCA. Section 76-6-105(2), MCA. The Metcalf
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Restrictions are not unenforceable simply because they were not created as a Title 76,
Chapter 6, MCA, conservation easement.
¶25 3. Did the District Court err by deciding that the Metcalf Restrictions were not
void as violations of the rule against perpetuities?
¶26 The Scotts also argue that the easement created by the Metcalf Restrictions is a
nonvested property interest and, for this reason, that it violates § 72-2-1002, MCA,
Montana’s rule against perpetuities. We disagree.
¶27 Section 72-2-1002, MCA, states that “a nonvested property interest is invalid
unless” certain criteria are met. However, despite the relatively broad language of
§ 72-2-1002, MCA, the rule does not apply to all nonvested property interests. Section
72-2-1005(1), MCA, states that “Section 72-2-1002 does not apply to: (1) a nonvested
property interest . . . arising out of a nondonative transfer.” Section 72-2-1005(1), MCA,
lists several exceptions to this rule, none of which is applicable here.
¶28 The Metcalf Restrictions easement arose out of a nondonative transfer. It arose
when Metcalf transferred her property to Thieltges in exchange for “valuable
consideration . . . to her in hand paid.” Thus, even if we assume that the Scotts are
correct when they argue that the easement is nonvested, the rule against perpetuities does
not apply to the easement. The Metcalf Restrictions do not violate the rule against
perpetuities.
¶29 4. Did the District Court err by deciding that the Metcalf Restrictions were not
void for vagueness?
¶30 The Scotts argue that the portion of the Metcalf Restrictions preventing Thieltges
and his successors from using the land in any way that would reduce the quality of the
12
stream running through the property or that would reduce the quality of the riparian area
is too ambiguous to be enforceable. Citing our decision in Town & Country Estates
Ass’n v. Slater, 227 Mont. 489, 493, 740 P.2d 668, 671 (1987), the Scotts argue that the
“standard of approval is too vague to be enforceable.”
¶31 We decline to address this argument. Neither party contends that the Scotts’ use
of the property has reduced the quality of the riparian area or the quality of the stream.
Neither party contends that the Scotts have breached this portion of the easement. As
such, the meaning of the restriction is not actually at issue here. To render a decision
regarding the enforceability of the riparian and water quality provision, we would be
required to rule without the benefit of actual facts or a concrete controversy. As we have
stated, albeit under somewhat different circumstances, “[t]his Court cannot declare that
the proposed use will be inconsistent with the reserved easement on the basis of
speculation as to possible future uses.” Lindley, 198 Mont. at 199, 645 P.2d at 432. We
will not interpret the riparian and water quality provisions without the benefit of facts to
which we may apply the provisions.
CONCLUSION
¶32 The District Court did not err by granting summary judgment in favor of the Trust.
When Metcalf and Thieltges created the Metcalf Restrictions, Thieltges granted an
easement in gross to Metcalf. It was immaterial to the creation of the easement that the
easement might have been enforced via a Title 76, Chapter 6, MCA, conservation
easement. The easement also was not void for violating the rule against perpetuities.
The terms of the easement did not prevent its transfer and the easement was not
13
extinguished when Metcalf died or when Metcalf transferred the easement to the Trust. It
also was not extinguished when Thieltges transferred the servient estate to the Scotts.
For these reasons, the District Court correctly concluded that the Metcalf Restrictions
could be enforced by the Trust against the Scotts. We affirm its decision to grant
summary judgment in favor of the Trust.
/S/ MICHAEL E WHEAT
We Concur:
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER
/S/ PATRICIA COTTER
/S/ LAURIE McKINNON
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