Minnesota Office Plaza, LLC, Appellant, vs. Target Stores, Inc., et al., Respondents.
Annotate this CaseThis opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480 A. 08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
A06-1320
Minnesota Office Plaza, LLC,
Appellant,
vs.
Target Stores, Inc., et al.,
Respondents.
Filed August 21, 2007
Affirmed
Kalitowski, Judge
Ramsey County District Court
File No. 62-C9-05-005278
Mark W. Vyvyan, Sten-Erik Hoidal, Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402; and
Thomas P. Kane, Jennifer C. Kalvestran, Hinshaw & Culbertson, 222 South Ninth Street, Suite 3100, Minneapolis, MN 55402 (for appellant)
Wendy J. Wildung, Sonya A. Royston, Michael M. Krauss, Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-3901 (for respondent)
Considered and decided by Worke, Presiding Judge; Kalitowski, Judge; and Hudson, Judge.
U N P U B L I S H E D O P I N I O N
KALITOWSKI, Judge
Appellant Minnesota Office Plaza, LLC challenges the district court's grant of summary judgment in favor of respondents Rose Building Corp. and Target Stores, Inc. on its action seeking a declaratory judgment, temporary restraining order, temporary injunction, and permanent injunction, arguing that it raised genuine issues of material fact sufficient to withstand summary judgment. We affirm.
FACTS
Appellant Minnesota Office Plaza, LLC (MOP) brought this action against respondents Rose Building Corp. (Rose) and Target Stores, Inc. (Target Stores), each of which is a prior owner of property now owned by Target Corporation. Appellant sought a declaratory judgment that it possessed enforceable interests in easements and restrictive covenants against respondents' property and a temporary restraining order, temporary injunction, and permanent injunction prohibiting respondents from violating the restrictive covenants and obstructing the easements.
The relevant disputed easements and property are all located on land surveyed and registered in Ramsey County in August 1955, pursuant to Registered Land Survey No. 86 (RLS 86). Respondent Rose originally owned and developed the land in RLS 86. In 1976, Rose was acquired by, and merged into, Dayton Hudson Corporation, which later changed its name to Target Corporation. Rose no longer exists. Respondent Target Stores was a subsidiary of Target Corporation: Target Stores was merged into the Dayton Hudson Corporation in 1999, before Dayton Hudson changed its name to Target. The prior owner of appellant's property is State Farm Insurance Company (State Farm).
Three encumbrances formed the basis of appellant's action: the Tract H Easement, 1962 Roadway Easement, and 1962 Restrictive Covenants.
Tract H Easement:
In 1955, Rose sold Tract C to State Farm. In conveying title of Tract C, Rose also granted State Farm a "non-exclusive easement for roadway purposes" over Tracts D, E, H, and G. In October 1961, Rose wanted to construct a retail building that would obstruct the Tract H easement. To facilitate this construction, State Farm conveyed all of its interests (except the east 33 feet) in Tract H to Rose, by quitclaim deed, dated October 23, 1961, and Rose granted State Farm nonexclusive roadway easements over Tracts D, G, I, and part of F, for access to County Road B. For reasons not contained in the record, the conveyance of Tract H from State Farm to Rose was recorded against the Rose property (now owned by Target Corporation) but was not recorded against the State Farm property (now owned by appellant).
After Rose constructed the building over Tract H, Target Stores leased the building and it became the first Target store (T-1). T-1 operated until December 31, 2004, when it was closed and demolished to make room for a new SuperTarget on the same property. T-1 sat directly on Tract H until it was demolished in 2004.
In June 1998, appellant acquired title to the MOP property from State Farm by warranty deed. The record indicates that when appellant obtained the property, it had an understanding that Target would redevelop T-1 and the surrounding property at some future time and considered the adjacent location of T-1 a "huge plus."
Sometime in late 2003, appellant contacted Target Corporation and initiated discussions about jointly redeveloping the MOP and Target properties according to a common plan. After appellant demanded $500,000 "[t]o even continue the discussion," Target Corporation terminated the discussion without agreement. During these negotiations, appellant generally raised concerns about its property rights being impacted by a new Target store, but never referenced its interests in the Tract H easement, the 1962 roadway easement, or the restrictive covenants.
Target submitted the applications necessary to obtain city approval for the proposed new SuperTarget. The Planning Commission approved the application on August 8, 2004, and because appellant owned three tracts of land (Tracts A, B, and C) within a one-mile radius of the proposed SuperTarget, appellant was allegedly sent three notices of the impending public meeting at which the Roseville City Council would discuss Target's application. Appellant claims that it did not receive any of the three notices.
The Roseville City Council voted to approve Target's applications at a public meeting on September 13, 2004. Appellant asserts that it first learned that Target's application had been approved in October 2004.
In November 2004, a co-owner of appellant examined the certificate of title (COT) for the MOP property for the first time. On November 12, 2004, appellant wrote Target indicating that Tracts D, E, G, and H, owned by Target, were encumbered by a "non-exclusive easement for roadway purposes" in favor of appellant. Target's counsel replied on January 5, 2005, advising that Target's COT did not show the claimed easements and that Target was entitled to rely on its own COT.
1962 Easement and Restrictive Covenant:
The Lebedoff and Rubenstein families acquired land from Rose in RLS 86 in 1962, on which they operated a Perkins restaurant. The Perkins restaurant was formerly located near Snelling Avenue on Tract J. The October 31, 1962 indenture conveying the property from Rose to the Lebedoffs/Rubensteins conveyed the land "together with a nonexclusive easement for roadway and driveway purposes for the benefit of the present and future parts (as now and hereafter divided) of [RLS 86]." The conveyance to the Lebedoffs/Rubensteins also contained restrictive covenants prohibiting the operation of a major discount department store, the sale of food for consumption off the premises, or the construction of a building that is more than one story or more than 10,000 square feet.
Appellant argues that the conveyance between Rose and the Lebedoffs/Rubensteins created easements and restrictive covenants for the benefit of all of RLS 86 and therefore the restrictive covenants bind the property now owned by Target Corporation for the benefit of every parcel in RLS 86 and provide appellant with ingress and egress to County Road B over Tracts D, E, and H.
To enable the construction of SuperTarget, Target Corporation traded some of its land in RLS 86 with the Lebedoffs[1] in exchange for the Lebedoff/Rubenstein property. As part of this transaction, the Lebedoffs executed a Termination Agreement on April 4, 2005, that terminated the 1962 Roadway Easement. At the time the Termination Agreement was executed, appellant had not claimed rights in the 1962 Roadway Easement or restrictive covenants and neither Target Corporation nor the Lebedoffs had knowledge of appellant's alleged interest in these encumbrances.
D E C I S I O N
A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions, together with any affidavits, show that there is no genuine issue of material fact and a party is entitled to judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). On a motion for summary judgment, "a court may not weigh the evidence or make factual determinations." State by Hatch v. Allina Health Sys., 679 N.W.2d 400, 406 (Minn. App. 2004) (quoting Fairview Hosp. & Health Care Servs. v. St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995)). "On appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the [district] court[] erred in [its] application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
I.
The district court found that appellant never owned the Tract H Easement because appellant's predecessor, State Farm, had conveyed the easement back to Rose in 1961. The district court stated "any [q]uitclaim deed that was created in [appellant's] favor from State Farm would have been ineffective in transferring any interest or title in Tract H to [appellant] because State Farm did not hold any interest in Tract H when [appellant] acquired the State Farm property . . . in 1998." Appellant argues that it may enforce the Tract H easement against Target because the language of the quitclaim deed did not convey the Tract H easement to Rose and, because the quitclaim deed was not recorded on appellant's COT, it was ineffective against appellant.
Under Minnesota's Torrens system, "[e]very person receiving a certificate of title pursuant to a decree of registration and every subsequent purchaser of registered land who receives a certificate of title in good faith and for valuable consideration shall hold it free from all encumbrances and adverse claims" except those noted on the certificate of title or subject to a statutory exception. Minn. Stat. § 508.25 (2006). "The object of this law . . . is to afford a method of acquiring a decree of registration and a certificate of title free, so far as possible, from all encumbrances and adverse claims not noted on the certificate." Konantz v. Stein, 283 Minn. 33, 37, 167 N.W.2d 1, 5 (1969).
The quitclaim deed from State Farm to Rose states that State Farm:
do[es] hereby Convey and Quitclaim to [Rose]. . . the Real Estate . . . described as follows . . . Tract "H"; Registered Land Survey No. 86, except the East thirty-three (33) feet thereof.
Thus, the plain language of the deed broadly conveys Tract H to Rose. But appellant argues that the following language in the deed's statement of purpose limits the conveyance:
The purpose of this deed is to release and discharge any easement or claim of easement which the grantor . . . may have in the property above described under that deed dated July 21, 1955 . . . filed as document No. 352441.
The document that created State Farm's easement over Tract H was recorded as document No. 352453, not document No. 352441, referenced in the deed. Thus, appellant argues that the Tract H easement was never conveyed back to Rose from State Farm because the deed references a document different from the document that created the Tract H easement. We disagree.
Because the document referenced in the purpose section of the deed (No. 352441) was not presented to the district court, we cannot determine whether the purpose language conflicts with the conveyance language. Absent evidence of the content of document No. 352441, the deed does not contradict itself, and we conclude that its plain language conveys the Tract H easement to Rose.
Moreover, internal memoranda from State Farm during the time period immediately preceding the conveyance unambiguously establish State Farm's intent to convey its easement over Tract H to Rose. A 1961 State Farm memorandum describes the agreement between State Farm and Rose:
The Rose Building Corporation owns the property to the south of our parking lot and extending to County Road B . . . . They [Rose] are presently constructing a large discount house and super market in that area and discover that we hold an easement to tract "H" which runs right through the proposed building.
This easement [Tract H] is of no particular value to us but it is important that we have an easement for road purposes from our parking lot all the way to County Road B. At present we have such an easement over tract "G" but not over Tract "I". We have therefore reached an agreement that we will sign a Quit Claim Deed to Tract "H" except for the easterly 33 feet thereof . . . . In return, the Rose Building Corporation is to give us an easement over tract "I".
We conclude that the district court did not err by determining that appellant's predecessor, State Farm, conveyed the Tract H easement to respondents' predecessor, Rose. Appellant's mere allegation that the deed references a contradictory instrument, without evidence of the content of that instrument, is not sufficient to raise a genuine issue of material fact sufficient to withstand summary judgment.
Appellant also argues that the conveyance of Tract H to Rose was never recorded on State Farm's COT and, generally, unregistered conveyances do not affect title to Torrens property. See, e.g., United States v. 7752 Unity Ave. N., 294 F.3d 954, 957 (8th Cir. 2002) (applying Minnesota law) (holding that because only the act of registration creates an interest in land, a lender had no legal interest in real property until it registered its mortgage); In re Alchemedes/Brookwood, Ltd., 546 N.W.2d 41, 42 (Minn. App. 1996) (stating that an owner of registered land generally holds title free of all encumbrances except those memorialized on the certificate).
But here, appellant and respondents have conflicting COTs. Respondents' COT shows that they hold title to Tract H free of encumbrances except for the easement over the east 33 feet, while appellant's COT shows that it has an easement over Tract H benefiting Tract C.
COTs are not inviolate and the Torrens Act provides that a COT may be altered by order of the court in a proceeding subsequent, on the grounds that "registered interests of any description . . . have terminated and ceased," that "any error or omission was made," or "upon any reasonable ground." Minn. Stat. § 508.71, subds. 2(1), (3), and (7) (2006). "[W]hile a certificate of title is conclusive evidence that there is an easement contained in the certificate, it does not preclude judicial inquiry into the validity of the easement." Nolan v. Stuebner, 429 N.W.2d 918, 922 (Minn. App. 1988) (affirming alteration of a certificate of title when necessary to show the intent of the parties and the correct legal description of the easement), review denied (Minn. Dec. 16, 1988). And an erroneous COT does not create an interest in land. Estate of Koester v. Hale, 297 Minn. 387, 393, 211 N.W.2d 778, 782 (1973).
In Estate of Koester v. Hale, a COT erroneously included surrounding lands that the titleholders had not purchased. Id. at 389, 211 N.W.2d at 780. The titleholders argued that their COT gave them an enforceable interest in the surrounding lands. Id. at 392, 211 N.W.2d at 781. Rejecting this argument, the Supreme Court stated:
No person holding a certificate of title to registered land ought to acquire title to land not intended to be purchased and conveyed, and for which no consideration was paid, solely on the ground that the basic purpose of the Torrens registration procedure precludes a challenge to the title of lands described in the certificate of registration except in cases of lack of jurisdiction or fraud. This case represents no more than a correction of an error admittedly committed during the registration proceedings. To permit [titleholders] to maintain their registered title to the disputed tract would exploit the title registration law and would accomplish a manifest injustice.
Id. at 393, 211 N.W.2d at 782.
Like the titleholders in Koester, appellant is attempting to use its COT to claim an easement over Tract H, even though the Tract H easement could never have been conveyed to appellant because State Farm conveyed the easement to Rose in 1961. Because State Farm conveyed the easement to Rose in 1961, it no longer had an interest in the easement in 1998, when appellant purchased the property from State Farm. We conclude that appellant does not have an easement over Tract H.
In addition, even if appellant's COT gave it an interest in the Tract H easement, any such interest is no longer enforceable because it was abandoned. The district court stated that appellant
did not stake [its] claim to an easement over Tract H until forty years later in November of 2004. Such inaction proves to be inconsistent with intentions to use an easement over Tract H and thus this Court finds that [appellant] abandoned any right to such easement that it may have had.
"Whether or not an easement has been abandoned is a question of fact." United Parking Stations, Inc. v. Calvary Temple, 257 Minn. 273, 280, 101 N.W.2d 208, 213 (1960).
"[E]asements may be lost by abandonment where the owner of the dominant estate has made no use of it and his conduct is such as to evidence intention to abandon." Id. at 278, 101 N.W.2d at 212. Mere nonuse of an easement does not establish abandonment unless "nonuse is accompanied by affirmative and unequivocal acts indicative of an intent to abandon and is inconsistent with the continued existence of the easement." Richards Asphalt Co. v. Bunge Corp., 399 N.W.2d 188, 192 (Minn. App. 1987). While mere nonuse is not enough to establish abandonment, nonuse coupled with a failure to object to a significant obstruction is conduct clearly inconsistent with an intention to use the easement and may establish abandonment. See United Parking Stations, Inc., 257 Minn. at 279-80, 101 N.W.2d at 212-13 (affirming a finding of abandonment where easement was unused for more than 40 years and prior easement holder did not object to various obstructions interfering with use of the easement); Simms v. Fagan, 216 Minn. 283, 292-93, 12 N.W.2d 783, 787-88 (1943) (affirming a finding of abandonment based on easement holder's acquiescence to multiple obstructions over several decades).
In Hickerson v. Bender, we affirmed the district court's determination that an easement holder's failure to object to the servient land owner's obstruction of an easement by erection of a garage that materially blocked the easement, combined with more than two decades of nonuse, constituted abandonment. 500 N.W.2d 169, 170-72 (Minn. App. 1993). The facts here are analogous. The erection of T-1 materially obstructed the Tract H easement because the easement ran directly under T-1, and, as stated by one of appellant's owners, "[I]t's fairly obvious that nobody's going to drive through the store [T-1]."
State Farm and appellant's nonuse of Tract H for more than 40 years, coupled with their acquiescence to the erection of T-1 directly on Tract H, is inconsistent with the continued existence and intent to use the Tract H easement. Therefore, we affirm the district court and conclude that appellant has failed to raise a genuine issue of material fact sufficient to withstand summary judgment on the issue of abandonment.
II.
The district court held that appellant did not have an interest in the 1962 Roadway Easement or restrictive covenants because "a deed of title to one party may not convey an easement right to another [party]" and the conveyance did not evidence an intent to convey rights to appellant.
We need not reach the issue of whether a party conveying deed of title to one party may convey easement rights to a third party in the same instrument because the conveyance from Rose to the Lebedoffs/Rubensteins does not evidence an intent to create property rights in appellant. Thus, even if appellant was a third-party beneficiary of the conveyance, any easement possibly created to benefit appellant ceased to exist when the Lebedoffs and Target executed a termination agreement.
An easement may not be enlarged by legal construction beyond the objects originally contemplated or agreed on by the parties, and the law does not favor easements creating undue burdens on property, absent a clear intent to create them. Hwy. 7 Embers, Inc. v. Nw. Nat'l Bank, 256 N.W.2d 271, 278 (Minn. 1977).
When an easement is by express grant, its extent depends entirely upon the construction of the terms of the grant. Only when ambiguities exist may the circumstances surrounding the grant be considered. As the language of the grant becomes less precise, the circumstances of the grant grow in importance as an interpretive aid.
Id. at 275 (citations omitted).
Here, the indenture from Rose conveyed to the Lebedoffs/Rubensteins the subject property "together with a nonexclusive easement for roadway and driveway purposes for the benefit of the present and future parts (as now and hereafter divided) of [RLS 86]." Appellant argues that this language suggests that Rose intended the conveyance of the easement and restrictive covenants not only to the Lebedoffs/Rubensteins, but also to all property owners in RLS 86 as third-party beneficiaries. But respondents argue that this language merely reinforces that the easement granted to the Lebedoffs/Rubensteins was not exclusive and did not preclude Rose from granting similar easement rights to others. Because both of these interpretations represent reasonable constructions of the terms of the grant, we conclude that the grant is ambiguous and look to the circumstances surrounding the grant as an interpretive aid. See Hwy. 7 Embers, Inc., 256 N.W.2d at 275.
The circumstances surrounding the grant from Rose to the Lebedoffs/Rubensteins show that the conveyance was not meant to create rights in third-party beneficiaries. In 1962, at the time of the indenture, State Farm owned all property in RLS 86 not owned by Rose or the Lebedoffs/Rubensteins. Thus, if Rose intended to convey easement rights on all property owners in RLS 86, it could have easily identified State Farm by name in the indenture. Further, there is no evidence suggesting that State Farm ever believed it had rights or interests in the 1962 Roadway Easement.
When Rose granted the easement to the Lebedoffs/Rubensteins, State Farm already had a means of ingress and egress to its property on Old State Farm Road, which had been granted as an easement directly from Rose to State Farm one year earlier. Additionally, the 1962 Roadway Easement was never recorded against the property that State Farm subsequently conveyed to appellant and does not appear on any COT issued for appellant's property. Based on this record, we affirm the district court's conclusion that appellant does not have a property interest in the 1962 Roadway Easement or restrictive covenants.
Moreover, even if appellant once had a property interest in the 1962 Roadway Easement, it was properly terminated by agreement between Target and the Lebedoffs.
"[A]n intended beneficiary's rights do not vest until the third party has either accepted the agreement or detrimentally relied upon it." 13 Richard A. Lord, Williston on Contracts § 37:57 (4th ed. 2000); see also Restatement (Second) of Contracts § 311 cmt. g (1981) ("If there is a material change of position in justifiable reliance on the promise, the change of position precludes discharge or modification of the contract without the beneficiary's consent."); Morstain v. Kircher, 190 Minn. 78, 80, 250 N.W. 727, 728 (1933) (holding that the principal parties' termination of contractual obligations is effective against a third-party beneficiary who did not bring suit or change his position in reliance on the contract).
Here, appellant did not have knowledge of the 1962 Roadway Easement until after Target and the Lebedoffs executed the Termination Agreement. Thus, appellant could not have changed its position in reliance on the easement. Under these facts, even if appellant was a third-party beneficiary to the conveyance from Rose to State Farm, any interest it may have had in the 1962 Roadway Easement was properly terminated when the Termination Agreement was executed.
We affirm the district court's grant of summary judgment in favor of respondent because appellant has failed to establish a genuine issue of material fact regarding the 1962 Termination Agreement and restrictive covenants.
III.
Appellant argues that the district court abused its discretion by denying its motion for leave to amend the complaint to include Target Corporation as a defendant.
Appellant included only Rose and Target Stores (the record owners on the COTs) in the caption of its complaint, but neither entity existed when appellant filed its complaint because both had been merged into Target Corporation. In its scheduling order, the district court gave a deadline of November 17, 2005, to add new parties. On February 20, 2006, appellant moved to amend its complaint to include Target Corporation in the caption. The district court denied the motion, stating:
I am going to deny your motion to amend to add Target Corporation, and I'll tell you . . . [respondents] have been saying [ ] since day one, that the proper person to sue is Target Corporation, and you haven't done it until this late date. The scheduling order would have required you to have done it.
A district court has broad discretion when deciding whether to grant leave to amend a complaint, and its ruling will not be reversed absent a clear abuse of discretion. Fabio, 504 N.W.2d at 761. Although leave to amend shall be freely given when justice so requires, it should not be given if the amendment would prejudice the adverse party. Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 332 (Minn. 2004).
Here, granting leave to appellant to add Target Corporation to the complaint would not have been prejudicial since Target Corporation was already involved in all aspects of the litigation. But because appellant's motion was untimely and the district court has broad discretion when determining whether to grant leave to amend a complaint, we conclude that the district court did not abuse its discretion by denying appellant's motion for leave to amend. Moreover, because we are affirming the district court's grant of summary judgment in favor of respondents, appellant cannot show that it was prejudiced by the district court's denial of its motion.
IV.
Finally, appellant argues that the district court erred by adjudicating the case without declaring the validity of its easements over Tracts D, E, and G. These easements were granted by Rose to State Farm when State Farm bought Tract C in August of 1955. Respondents acknowledged these easement rights in appellant to the district court, and during the summary judgment hearing, appellant's counsel acknowledged that respondents did not dispute the easements over Tracts D, E, and G.
"It is a well-established rule in Minnesota that a court only has jurisdiction to issue a declaratory judgment if there is a justiciable controversy." Kahn v. Griffin, 701 N.W.2d 815, 821 (Minn. 2005). "[I]ssues which have no existence other than in the realm of future possibility are purely hypothetical and are not justiciable." State v. Colsch, 284 N.W.2d 839, 842 (Minn. 1979).
We affirm the district court's nonadjudication of appellant's easement rights over Tracts D, E, and G because both parties agree that appellant holds easement rights over Tracts D, E, and G and therefore no justiciable controversy exists.
V.
In conclusion, we affirm the district court's grant of summary judgment regarding the Tract H easement because (1) State Farm did not have an interest in the Tract H easement when it allegedly conveyed the easement to appellant in 1998; and (2) even if appellant had an interest in Tract H, it was abandoned by appellant and State Farm's nonuse and acquiescence to the material blockage of the easement.
We conclude that the district court did not err regarding the 1962 Roadway Easement and restrictive covenants because the conveyance from Rose to State Farm did not evidence an intent to create third-party beneficiary rights in appellant, and even if such rights were created, they were terminated by the principal parties before vesting.
Finally, we conclude that the district court did not abuse its discretion by denying appellant's motion for leave to amend and did not err by failing to declare the validity of the Tract D, E, and G easements because their validity presented a nonjusticiable issue.
Affirmed.
[1] The Rubensteins previously transferred their interest in the Lebedoff/Rubenstein property to the Lebedoffs.
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