Clayton v. Clayton Investments, Inc.
Annotate this Case
Clayton v. Clayton Investments, Inc. (2006-093)
2007 VT 38A
[Filed 13-Jun-2007]
ENTRY ORDER
2007 VT 38A
SUPREME COURT DOCKET NO. 2006-093
DECEMBER TERM, 2006
Steven C. Clayton } APPEALED FROM:
}
v. }
} Chittenden Superior Court
}
Clayton Investments, Inc. }
} DOCKET NO. S0818-05 CnC
Trial Judge: Ben W. Joseph
In the above-entitled cause, the Clerk will enter:
¶ 1. Defendant, Clayton Investments, Inc., appeals a decision of
the superior court that deeds offered by it to plaintiff, Steven Clayton,
failed to comply with the parties' option-to-purchase agreement. Defendant
contends the court "re-wrote" the option by invalidating parking
restrictions and a provision for common area maintenance (CAM) fees in its
suggested deeds. Defendant further contends the court erroneously failed
to address its claim for past-due CAM fees, raised for the first time at
trial. We modify the decision of the superior court and, as modified,
affirm it.
¶ 2. The facts of this family property dispute are as follows.
Defendant is owned by Harry and Lucille Clayton and four of their five
children. Plaintiff is the fifth child of Harry and Lucille, and is the
only child not to hold stock in the family business. Defendant owns the
Shelburne Shopping Park in Shelburne, Vermont, which is home to the
Shelburne Supermarket, among other businesses. Harry and Lucille were
part-owners of the supermarket business until they sold their shares to
plaintiff, who now holds the majority of shares. The supermarket building
is located on Lot 8 of the shopping park. In 1983, defendant, then known
as Clayton Realty Inc., sold the supermarket building to plaintiff. This
conveyance was part of a series in which defendant conveyed a building in
the shopping park to each of the Clayton children. Each deed for a
building was substantially identical to the others. Each deed contained a
requirement that the purchaser pay CAM fees according to a specified
allocation formula based on the amount of occupied first floor space in the
building. It also contained a noncompetition covenant.
¶ 3. In addition to conveying the supermarket building, defendant
leased to plaintiff Lot 8, the lot underlying the building, starting in
1983. Defendant also leased to the supermarket twenty parking places in
the shopping park.
¶ 4. In 1997, the parties entered into an option-to-purchase
agreement under which plaintiff could buy Lot 8 at a set price when the
lease expired on December 31, 2004. The lease described the property
subject to the option as Lot 8 and "[n]on-exclusive easements over the
common areas and driveways of the Shelburne Shopping Center, for purposes
of vehicular and pedestrian access and egress and utility services." The
option did not specifically include the parking spaces that were the
subject of the separate lease. It did not mention CAM fees. It specified
that if plaintiff exercised the option, defendant had to provide "a good
and sufficient warranty deed . . . conveying a good and clear, record and
marketable title . . . and in fact, free from all defects, liens, and
encumbrances." The option went on to state that title would not be deemed
"good and clear, record and marketable, if Seller ha[d] not obtained all
state and local subdivision, zoning, and land use permits required for the
conveyance."
¶ 5. This dispute arose when plaintiff attempted to exercise the
option. Plaintiff informed defendant in writing of his intent to purchase
Lot 8 in November 2004 pursuant to the terms of the agreement. Defendant
subsequently offered two deeds to the property which contained, among other
things, a provision forbidding parking in the common areas of the shopping
park and a provision requiring the payment of CAM fees. Plaintiff refused
the deeds and proposed his own without the offending provisions on parking
or CAM fees, which defendant rejected. Eventually, defendant wrote to
plaintiff in June 2005 stating that it considered his option to have
expired and ordered that he quit possession of Lot 8. Plaintiff, in
response, filed a complaint and motion for a restraining order in superior
court. The case culminated in a bench trial in which the court held that
the deeds tendered by defendant did not comply with the terms of the
option. The court concluded that (1) the attempted parking restriction
was not permitted by either the option or the original subdivision permit
for the shopping park discussed below, and (2) the CAM fees were not
required by these documents, and were already provided for in the
supermarket building deed. It therefore ordered defendant to execute a
deed to Lot 8 without the provisions. This appeal followed.
¶ 6. The parties' claims are based primarily on two documents.
The first is the option agreement, which plaintiff argues requires
defendant to provide parking spaces; defendant disputes this claim. The
second is the nine-lot subdivision permit granted by the Town of Shelburne
for the shopping park in 1983. Defendant argues that this permit requires
that any deed to Lot 8 must contain a provision imposing CAM fees;
plaintiff disputes this construction of the permit and the notion that the
permit conditions must be in the deed.
¶ 7. Additional facts about the subdivision permit are necessary
to understand the claims. The final approval for this permit included a
provision for "Covenants or Deed Restrictions" for "Maintenance" and
"Non-competition." A letter from Harry Clayton to the Shelburne Planning
Commission contained "proposed covenants and/or deed restrictions" for the
shopping park; the wording is exactly that which appeared in the building
deeds discussed above. As for parking, the final subdivision approval
identified over eight acres in the shopping park as "Common Space for
parking" and stated: "Parking area shown on Plan (Clayton Investments and
Clayton Realty Inc.) to be left open for parking; to be maintained by
owner."
¶ 8. Defendant makes two assertions on appeal: (1) that its
proffered deeds not only comply with, but are compelled by, the subdivision
permit, and (2) that the trial court erred in failing to allow defendant to
assert a claim for past-due CAM fees at trial. We address each in turn.
¶ 9. Our standard of review is two-tiered. We are deferential to
a trial court's findings of fact and will reject them only if they are
clearly erroneous; conclusions of law, on the other hand, are reviewed de
novo, and will be upheld only if reasonably supported by the findings.
Luneau v. Peerless Ins. Co., 170 Vt. 442, 444-45, 750 A.2d 1031, 1033
(2000).
¶ 10. We begin with the option, its relationship to the permit, and
its conditions. For both issues in which defendant added deed language -
CAM fees and parking - the option agreement does not explicitly resolve the
dispute. That is, the option does not specify that plaintiff must pay CAM
fees or that plaintiff must have the right to use the common area parking
spaces for supermarket customers. Instead of the option, the parties rely
on the description and conditions in the subdivision permit because the
definition of marketable title in the option requires compliance with
permit conditions.
¶ 11. First, with respect to CAM fees, defendant argues that any
deed must contain plaintiff's obligation to pay CAM fees because the permit
approval requires a condition on maintenance and that brief description is
based on a proposed condition that its predecessor provided to the Town of
Shelburne on CAM fees. See New Eng. Fed. Credit Union v. Stewart Title
Guar. Co., 171 Vt. 326, 330-31, 765 A.2d 450, 453 (2000) (parties may
define encumbrance on title as compliance with state subdivision
regulations under terms of contract). It argues that this result is
commanded in any event by the holding of Bianchi v. Lorenz that, in certain
circumstances, the sale of property in violation of zoning laws violates
the covenant against encumbrances in a warranty deed. 166 Vt. 555, 558,
701 A.2d 1037, 1039 (1997), superceded by statute, 27 V.S.A. § 612, as
recognized in New Eng. Fed. Credit Union, 171 Vt. at 332 n.4, 765 A.2d at
454 n.4.
¶ 12. We note at the outset that Bianchi and the cases on which it
relies involved a buyer who claimed that the seller failed to provide
marketable title. Here the seller is arguing, over the objection of the
buyer, that it must include a provision that benefits the seller in the
deed to provide marketable title. We conclude that defendant's argument
goes too far. The marketable title provision in the option is inserted for
the benefit of the buyer, not the seller, and cannot be used to advance the
interests of the seller against the wishes and interests of the buyer. If
the buyer is satisfied that it has received marketable title without the
offending deed restriction, the inquiry ends. (FN1)
¶ 13. Even if defendant could rely on the subdivision permit
condition, its argument on this point fails because it is not supported by
the permit language. The permit condition, if it can be called that, is
one word: "maintenance." Defendant acknowledges that the condition lacks
specificity, but argues that the specificity is supplied by its proposal to
the Shelburne Planning Commission, which included the CAM fee language that
ended up in the building deed. We cannot agree that this single word
imposes the CAM fee requirement. Permit conditions must be explicit and
"must be expressed with sufficient clarity to give notice of the
limitations on the use of the land." In re Farrell & Desautels, Inc., 135
Vt. 614, 617, 383 A.2d 619, 621 (1978). A zoning board may impose a
condition that a developer complete its project in compliance with its
submission to the board. In re Kostenblatt, 161 Vt. 292, 299, 640 A.2d 39,
44 (1994). In the absence of such an explicit requirement, we must look
solely to the permit conditions as written. Id. We have applied
Kostenblatt to subdivision permits. In re Stowe Club Highlands, 164 Vt.
272, 276, 668 A.2d 1271, 1275 (1995). In this case, the permit does not
require the permit holder to comply with the content of its proposal
generally, and it does not impose a clear, specific requirement that lot
owners pay CAM fees to defendant. Indeed, to the extent the permit
language is explicit, it imposes the maintenance obligation on defendant.
Defendant cannot rely on the permit to place the CAM fee provision in the
deed to plaintiff.
¶ 14. The situation with respect to parking is essentially
reversed. Again, the option fails to specify that parking is included. In
adding specific language to the deed that parking is not included,
defendant claims that it has a right to clarify the deed description.
Plaintiff argues, however, that the Shelburne subdivision permit requires
that supermarket patrons be allowed to use common area parking. The permit
language does require that the common area "be left open for parking," but
provides no specificity about the arrangement between defendant and the
building owners. As defendant argues, this omission is to be expected
because the whole shopping center, including all the buildings, was in
common ownership at the time the permit was issued.
¶ 15. We reemphasize, as noted above, that permit restrictions must
be expressed with "sufficient clarity to give notice of the limitations on
the use of the land." In re Farrell & Desautels, 135 Vt. at 617, 383 A.2d
at 621. We cannot find sufficient clarity in support of plaintiff's
position here. The language of the permit can be seen as a restriction on
the use of the common area - it must be used for parking - but not as an
entitlement for each lot owner to obtain a right to parking as part of the
lot deed. There are many ways for a shopping center to structure rights to
use parking, and many possible arrangements between the owner of the
parking lot and the owners of the buildings. This is shown by the
arrangement at the time of the exercise of the option under which plaintiff
leased a specific number of spaces from defendant.
¶ 16. The superior court stated, as its primary holding, that
"[o]bviously, the [permit] is based on the assumption that the common
parking areas will be available to owners and customers of all the
buildings on all the lots in the Shopping Park." We do not think that an
"assumption" meets our standard for the specificity of permit restrictions.
¶ 17. The superior court agreed with plaintiff on an additional
rationale. Both the deed tendered by defendant, and that tendered by
plaintiff, contained standard language that the deed conveyed the property
"with all the privileges and appurtenances thereof." The court held that
under this language "the use of the parking areas in common with other lot
owners is included in the grant of the deed."
¶ 18. In Swazey v. Brooks, this Court described the scope of an
appurtenance as follows:
We think that the word appurtenances in the habendum of the
defendant's deed has its full force and application when it is
confined to existing rights which naturally and necessarily
belonged to the thing granted in the hands of the grantor, and
that it ought not to be extended so as to carry an easement in
other land, which by reason of not having ripened into a legal
right, had not become legally attached to the premises conveyed,
unless accompanied by proper words describing it, and showing the
intention of the grantor to pass it.
34 Vt. 451, 454 (1861); see Cole v. Haynes, 22 Vt. 588, 590 (1849) ("Land
does not pass as a mere appurtenance to other land; and, consequently, no
portion of the highway, or stream, will be conveyed, unless the instrument
of conveyance can, by reasonable construction, be made to include it.");
see also Humphreys v. McKissock, 140 U.S. 304, 314 (1891) (land cannot be
appurtenant to other land, and "[a]ll that can be reasonably claimed is
that the word 'appurtenance' will carry with it easements and servitudes
used and enjoyed with the lands for whose benefit they were created"). On
the other hand, we recognize, consistent with other courts that have
addressed the issue, that "[s]hopping centers exist because of an abundance
of parking area and ease of access from and to the same. Deny either
parking or access thereto and they cease to exist as a viable entity."
Joseph v. Hustad Corp., 454 P.2d 916, 918 (Mont. 1969). A good example of
the reconciliation of these principles is Grand Central Plaza, Inc. v.
Bussel, 528 N.Y.S.2d 726, 728 (App. Div. 1988). That case is otherwise
identical to this one except that the lease there included an easement to
use common area parking. On that basis, the court held that the option
impliedly included an easement for parking. Id. In comparison, the
evidence here is that the preexisting lease to Lot 8 did not include an
express right to common area parking.
¶ 19. We cannot accept, based on the record before us, that the
appurtenance clause necessarily gave plaintiff an easement over the parking
area with no further contribution. We find, however, that the court's
decision on parking was not necessary to decide the narrow question before
it. Like the option agreement to which it must conform, see Buchannon v.
Billings, 127 Vt. 69, 75, 238 A.2d 638, 642 (1968), the deed tendered by
plaintiff contained no mention of parking. Thus, the deed was fully
consistent with the option, and the court acted properly to accept it.
¶ 20. The evidence in this case cautioned against going further on
the parking controversy. It disclosed that there is other litigation
between defendant and the supermarket over parking rights. Thus, the court
could not determine whether providing parking was necessary to enable
plaintiff to use his land and building as a supermarket. In the absence of
further evidence, the court acted within its discretion in refusing to
accept defendant's additional language that the deed provided no right to
parking. That issue could be determined in the other litigation before the
court. Thus, we affirm the order of the court granting plaintiff specific
performance of the option, and its specific order that defendant execute a
deed in the form tendered by plaintiff. We strike, however, the court's
findings and conclusions that plaintiff has necessarily acquired the right
for his supermarket patrons to use any space within the common area parking
lot.
¶ 21. Defendant's final issue relates to a stipulation the parties
entered into early in the litigation. Plaintiff initially sought a
restraining order because defendant had taken the position that the option
had been extinguished by plaintiff's failure to accept the tendered deeds
and that plaintiff was a holdover tenant who would be evicted. During the
course of the argument over the restraining order, defendant claimed that
plaintiff had failed to pay CAM fees pursuant to the formula in the
building deed. Under the stipulation, defendant withdrew its demand that
plaintiff quit the premises pending the deed litigation and plaintiff
agreed to make certain payments for past due CAM fees and certain payments
the purpose of which would be resolved in the future. The stipulation was
signed by the superior judge as an order. Shortly thereafter, defendant
filed an answer to plaintiff's complaint and a counterclaim. The
counterclaim related only to the deed controversy and not to the allegedly
unpaid CAM fees.
¶ 22. During the trial, defendant sought to introduce evidence of
plaintiff's failure to pay the CAM fees due under the building deed,
including the amount ordered to be paid in the stipulated order. Plaintiff
successfully kept the evidence out on the basis that defendant's
counterclaim did not include a demand for the unpaid fees. In its
decision, the superior court ruled that because defendant had not pled a
claim for breach of the CAM fee provision of the building deed, it could
not recover unpaid CAM fees and all fees paid by plaintiff pursuant to the
stipulation would be credited to the purchase price for the land.
¶ 23. On appeal, defendant argues that the superior court erred by
not including the terms of the stipulated order in the final judgment.
This argument reflects the state of the trial court record as of the date
that defendant filed its notice of appeal. After defendant filed a notice
of appeal, however, defendant changed its approach and filed a motion to
enforce the terms of the stipulated order. Over plaintiff's objections
that: (1) defendant was precluded from raising enforcement of the
stipulated order by failing to include such a claim in the counterclaim and
(2) the court lacked jurisdiction because of the appeal, the court found
that the issue was properly before it and set the matter for an evidentiary
hearing. Apparently, the holding of the evidentiary hearing has been
delayed for discovery.
¶ 24. The stipulated order gave defendant a judgment for at least
part of the CAM fees, exactly the result defendant sought. Thus, its
failure to include in its counterclaim a claim on which it already held a
judgment is of no consequence. Since the judgment had already issued, we
see no reason why defendant could not move to enforce it in this case. The
effect of defendant's action, however, is that the court's decision on
appeal is not a final judgment with respect to the collection of CAM fees
and is not properly before us. To ensure, however, that the order of the
superior court is not considered a final judgment on this issue, we strike
paragraphs four and five (FN2) of the conclusions of law and order. On
remand, the superior court can consider whether to reinstate these
paragraphs in resolving the motion to enforce the stipulated order.
Because the issue of collection of the CAM fees remains before the superior
court, we decline to reach it on appeal.
Affirmed, except that finding five, the last two paragraphs of the
"Discussion," and paragraphs four and five of the superior court's
conclusions of law and order are stricken.
BY THE COURT:
_______________________________________
Paul L. Reiber, Chief Justice
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Denise R. Johnson, Associate Justice
_______________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Brian L. Burgess, Associate Justice
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Footnotes
FN1. If it turns out that the buyer does not have marketable title for lack
of CAM obligations in the deed, at the buyer's insistence, then he has made
his own bed and cannot be heard to complain later.
FN2. Paragraph four states that there is no claim in the case as to breaches
of the building deed provision with respect to CAM fees. There was, of
course, such a claim in the argument over the stipulation, and the claim
was resolved by the judgment of the court. Paragraph five states that all
payments plaintiff made under the stipulated order shall be applied to the
purchase price of the property. The extent to which money paid by
plaintiff should be credited to overdue CAM fees or alternatively to the
purchase price is exactly what will be litigated in the enforcement
hearing.
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