Tuesday, May 21, 2013

I Fought the Law (and the Law Won)

Marsh Inter Vivos Trust v. McGillvray et al., 2013 VT 6

Plaintiff in today’s case tried to beat the establishment. 

Unfortunately for her, the “establishment” here was the property rights of others, which are protected by another establishment: the SCOV.

The Clash between the parties arises from Plaintiff’s attempt to develop a lot within the Quechee Lakes subdivision in the Town of Hartford.  In 1971, the Plaintiff purchased a “farmstead” parcel from the Quechee Lakes Corporation, comprised of two contiguous building lots.  The larger of the two lots consisted of 5.73 acres, and the smaller, “saleable” lot consisted of one acre.

The deed conveying the parcel referred to certain restrictive covenants, which, among other things, limited use of the subdivided lots to residential occupancy by a single family.  It also prohibited the construction of guest houses on the so-called farmstead parcels which, by definition, already had a separate lot upon which accessory structures might be erected.  A separate deed restriction contained setback requirements for both the larger and smaller lots.  The Plaintiff’s lots were also subject to the Town of Hartford’s zoning regulations as well as the Town’s “Master Plan.”

Soon after purchasing the parcel, the Plaintiff built a single-family residence on the smaller, saleable lot.  After re-subdividing the lots and reconfiguring the lot lines so that the parcels consisted of two, equally-sized lots, the Plaintiff obtained appropriate zoning permits and built a garage with guest accommodations upstairs.  At the time, the second lot remained undeveloped.

Seeing where this was headed, Plaintiff’s neighbors—who we now know as the Defendants—soon complained that any construction on the still-undeveloped, second lot would violate the deed restriction because the lot was set back 280 feet from the road, rather than the 70 feet called for in the deed.  To cut that opposition off at the pass, the Plaintiff sought a declaratory judgment from the trial court (civil division) to legally settle her right to build a dwelling more than 70 feet from the road.

While she waited for the wheels of justice to turn in the trial court, the Plaintiff applied for and was granted a permit to construct a dwelling on the second lot.  The neighbors appealed, first to the Hartford Zoning Board of Adjustment, which upheld the permit, and then to the environmental court.  There, the neighbors argued that, because guest quarters were not allowed on farmstead parcels, the guest accommodations constructed on the first lot should operate as the second dwelling permitted on the two lots, and should therefore foreclose the possibility of constructing a dwelling on the second lot. 

The environmental court upheld the zoning permit, finding that the propriety of the zoning regulations was not controlled by the restrictive covenants on the property.  After a trial, the trial court ruled against the Plaintiff, concluding that the restrictive covenants and deed restrictions precluded construction of a dwelling on the second lot.

On appeal to the SCOV, Plaintiff asserted that the statute of limitations barred the Defendants’ arguments, that the issues were not appropriately before the trial court, and that the trial court improperly considered extrinsic evidence to discern the meaning of the deed restrictions and restrictive covenants. 

First, the SCOV rejects Plaintiff’s argument that the eight-year statute of limitations had run on enforcement of the restrictive covenant.  In short, the SCOV finds the statute of limitations for enforcing a restrictive covenant starts running when the covenant is breached.  The SCOV concludes that, where the alleged violation of the covenant concerns the erection of a noncomplying structure, a breach occurs when construction begins, and not, as plaintiff argued, with preparatory steps, such as reconfiguring the lot lines.  

Since plaintiff had yet to begin construction, the actions taken in preparation for construction did not trigger the statute of limitations.  The SCOV thus concludes that the Plaintiff was on the statute of limitations train in vain.

Plaintiff next asked: “Should I Stay or Should I Go?”  On this, the SCOV finds that the issue was properly before the trial court.  In essence, the SCOV rules that a question as to the propriety of the zoning permit—which falls within the ambit of the environmental court—is entirely distinct from the enforcement of the private property rights originating in the deed restrictions and restrictive covenants.  Pursuant to statute, the questions posed by Plaintiff’s action for declaratory judgment are subject to the jurisdiction of the trial court.  Based on similar reasoning, the SCOV holds that the doctrines of issue preclusion and claim preclusion do not prevent the trial court from entertaining the civil action.

Finally, while the SCOV agreed with Plaintiff that the trial court might have improperly considered extrinsic evidence without first deciding that the language of the deed restrictions and covenants was ambiguous, it determines that Plaintiff is not now in a position to question that approach. 

Prior to the introduction of the extrinsic evidence at issue, Plaintiff had already elicited similar testimony from her own witness “to provide context for interpreting the documents.”  The SCOV noted that Plaintiff’s theory of the case at trial was that the restrictive language was ambiguous, which Plaintiff readily conceded when the trial court sought clarification.  Plaintiff was in complete control of how to present her own case; accordingly, the SCOV rejects Plaintiff’s retrospective attempt to redefine the question before the trial court.

Ultimately, Plaintiff’s attempts to Rock the Casbah were unsuccessful.  The lesson here is to make sure you carefully review and consider the restrictions that exist on your property before you start sinking time and money into avoiding them. 

Plaintiff here tried to force a round peg into a square whole, but the SCOV saw through this and ruled accordingly.

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