Cassani v. Northfield Savings Bank

Cassani v.  Northfield Savings Bank (2004-430); 179 Vt. 204; 893 A.2d 325

2005 VT 127

[Filed 16-Dec-2005]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2005 VT 127

                                No. 2004-430


  Robert E. Cassani, Shirley Cassani 	         Supreme Court 
  and Melanie Ross
                                                 On Appeal from
       v.	                                 Caledonia Superior Court


  Northfield Savings Bank and	                 June Term, 2005
  Ernest and Linda LaBrie


  M. Kathleen Manley, J.

  Paul S. Gillies of Tarrant, Marks & Gillies, Montpelier, for
  Plaintiffs-Appellees.

  Oliver L. Twombly, Barre, for Defendants-Appellants LaBrie. 


  PRESENT:  Reiber, C.J., Johnson and Skoglund, JJ., and 
            Allen, C.J., (Ret.) and Gibson, J.(Ret.), Specially Assigned	

        
       ¶  1.  SKOGLUND, J.   Plaintiffs brought a complaint for reformation
  of a deed that purported to grant them an easement over a 49.5-acre parcel
  owned by defendants Ernest and Linda LaBrie, or, in the alternative, for a
  way of necessity across defendants' land. (FN1)  The court granted
  reformation of the deed, and defendants appealed.  We reject most of the
  claims of error defendants raise on appeal, but we do not decide whether
  the easement established in the reformed deed is prohibited by, or
  impermissibly burdens, a previously existing right-of-way owned by
  defendants and two nonparty adjoining landowners.  As explained below, this
  issue has been raised and will be resolved in another action that was filed
  by plaintiffs against defendants and the adjoining landowners during the
  pendency of this appeal.  Accordingly, the matter is remanded for
  consolidation with the case pending before the Caledonia Superior Court.

       ¶  2.  Plaintiffs own a 178.5-acre parcel in the Town of Groton. 
  Defendants own a 49.5-acre parcel that abuts plaintiffs' property to the
  south.  Plaintiffs Robert and Shirley Cassani had previously owned both
  parcels.  They acquired the 178.5-acre parcel in 1988 from Roy Van Vleck,
  Trustee for the Ricker Estate, and the 49.5-acre parcel in 1986 from the
  co-owners, defendant Ernest LaBrie and another person.  Defendants' parcel
  was created by a 1981 grant by George Rock of three lots: lot 1, lot 1A,
  and lot 1B.  Defendants' parcel is lot 1B, which borders lots 1 and 1A on
  their westerly edges.  See the attached survey map excerpt for the
  locations of lots 1, 1A, and 1B, plaintiffs' parcel, and the Rock
  right-of-way. [Attachment not available online.] 

       ¶  3.  In connection with this transfer by Rock, lots 1, 1A, and 1B
  were granted a common easement in a right-of-way that runs along the
  eastern edge of lot 1B, the 49.5-acre parcel now owned by defendants, and
  the western edges of lot 1A and lot 1, providing access to the three lots
  from town highway #24.  The right-of-way extends from TH #24 for
  approximately 2,157 feet. 

       ¶  4.  In 1995, plaintiffs ceded title to the 178.5-acre parcel in
  bankruptcy and lost the 49.5-acre parcel in a foreclosure action to
  defendant Northfield Savings Bank.  In 1997, the Bank conveyed the
  49.5-acre parcel to the LaBries.  The habendum clause in the deed to the
  LaBries stated that "[t]he premises conveyed hereby are conveyed subject to
  and with the benefit of rights-of-way and easements of record."
   
       ¶  5.  By deed dated May 13, 1996 [hereinafter the Trustee Deed],
  the trustee of the Cassanis' bankruptcy estate conveyed the 178.5-acre
  parcel to Laurie Quensler, plaintiffs' daughter.  The Trustee Deed
  purported to grant Quensler a fifty-foot perpetual easement for ingress to
  and egress from the parcel, by reference to an earlier deed that has
  sparked this controversy.  Labeled the "Vermont Easement Deed," and dated
  February 23, 1996 [hereinafter the Easement Deed], that earlier deed
  appeared to convey a "50' perpetual easement, for the sole purpose of
  ingress and egress, over and on" the 178.5-acre parcel from the Bank, which
  at that time held title to the 49.5-acre parcel, to the bankruptcy trustee. 
  As described in the Easement Deed, the easement ran "in a generally
  northwesterly direction across the lands of [the Bank]. . .  along the
  existing lane or road." 

       ¶  6.  In 2001, Quensler brought an action against the LaBries,
  entitled Quensler v. LaBrie, Docket No. 214-8-01 Cacv, for declaratory
  relief regarding the existence of a claimed right-of-way over defendants'
  property.  The superior court granted summary judgment in favor of the
  LaBries in May 2002.  The court held that the description of the easement
  in the Easement Deed was "so inaccurate" that it was not possible to
  construe it "to grant any effective right-of-way which actually reaches the
  178.5-acre parcel."  The court then suggested that Quensler might be
  entitled to reformation of the Easement Deed so as to state the true intent
  of the Bank and the bankruptcy trustee.  

       ¶  7.  By June 2002, plaintiff Robert Cassani had again obtained title
  to the 178.5-acre parcel from his daughter, Quensler.  He then filed suit,
  (FN2) seeking reformation of the Deed and, in the alternative, a way of
  necessity across the 49.5-acre parcel owned by defendants.
       
       ¶  8.  During the period when plaintiffs owned the 49.5-acre parcel,
  plaintiffs used the premises as a camp, and they put a trailer on the land
  in 1987.  As noted, plaintiffs purchased the 178.5-acre parcel in 1988 from
  the larger Van Vleck parcel.  The Van Vleck parcel, as a whole, had road
  frontage on TH #26.  The 178.5-acre parcel purchased by plaintiffs,
  however, did not have road frontage on TH #26 or any other public highway. 
  Plaintiffs knew the land lacked road frontage, but intended to access it
  through the 49.5-acre parcel they owned, which abuts the larger 178.5-acre
  parcel.  During their ownership of the two parcels, plaintiffs worked to
  extend the existing easement road, which served the 49.5-acre parcel, from
  TH #24 to the 178.5-acre parcel.  Though defendants disagree as to the
  level of development of this extension, there is no dispute that a road
  existed.  
        
       ¶  9.   Prior to the 1996 sale of the 178.5-acre parcel to Quensler,
  the trustee in bankruptcy had become aware that the 178.5-acre parcel was
  being accessed through the 49.5-acre parcel, off of TH #24, so that there
  was a need for a right-of-way.  The Bank agreed to convey an easement
  across the smaller parcel for the benefit of the larger parcel, to follow
  the road that was already in place and utilized by plaintiffs when they
  owned both parcels.  To that end, the Easement Deed drawn up by the Bank
  referred to a right-of-way as appearing on a certain survey on the Milton
  Ricker Estate, i.e., the Van Vleck land.  That survey, however, did not
  depict the right-of-way, nor did it specifically depict the 49.5-acre
  parcel. 
   
       ¶  10.  The trial court found that the testimony of both the trustee
  in bankruptcy and the attorney for the Bank was credible, clear, and
  unrefuted that, at the request of the bankruptcy trustee, the Bank agreed
  to convey a right-of-way across the 49.5-acre parcel then owned by the Bank
  so that future owners of the 178.5-acre parcel would have access to that
  parcel through the right-of-way across the smaller parcel.  The court
  further found that it was "clearly the intent" of both property owners to
  convey a specified right-of-way that they believed was accurately reflected
  in the description prepared by them and more particularly depicted on a
  survey map that had been recorded in the Groton Town Clerk's office.  The
  court found that it was not until the decision in the declaratory judgment
  action brought by Quensler against LaBrie that the bankruptcy trustee and
  the Bank realized the Easement Deed did not effectuate their intent to
  convey the right-of-way.  Both the trustee and the Bank were mistaken in
  their respective assumptions that the deed conveyed such a right-of-way. 
  The court accordingly granted plaintiffs' claim for reformation.

       ¶  11.  On appeal defendants argue that: (1) the court was precluded
  from ordering reformation because the earlier declaratory judgment
  proceeding brought by Quensler established that the Easement Deed failed to
  convey a right-of-way; (2) the bankruptcy trustee, the counsel for the
  Bank, and the trial court all erred in believing that the parcel was
  landlocked, in that it is accessible by virtue of a right-of-way by
  necessity to TH #26 over the remaining Van Vleck lands, obviating the need
  for reformation; (3) reformation is not an appropriate remedy for a bona
  fide purchaser without notice; and (4) the court erred in additionally
  burdening the right-of-way benefitting the lots in the Rock subdivision
  without providing notice and an opportunity to be heard to the two other
  owners thereof.
   
       ¶  12.  For the reasons set forth below, we reject the first three
  arguments.  We decline to decide the fourth issue, however, because the
  record in this case does not contain all of the relevant facts needed to
  resolve that issue, and because the same issue is under advisement before
  the same superior court judge in another case involving all the interested
  parties, including the adjoining landowners who are not parties to the
  instant action.  In that case, Cassani v. Hale, Docket No. 256-12-04 Cacv,
  which was filed in March 2005, plaintiffs sued all three owners of the Rock
  right-of-way, asking the superior court to prevent the defendants from
  interfering with plaintiffs' use of the right-of-way.  Thus, that case will
  allow the superior court to determine how, if at all, its decision to
  reform the Easement Deed affects the other owners of the Rock right-of-way. 
  Given these circumstances, we remand the instant case for consolidation
  with the case pending below.

       ¶  13.  We turn now to defendants' other arguments challenging the
  trial court's decision to reform the Easement Deed.  First, we reject
  defendants' claim that the Quensler declaratory judgment action foreclosed
  the court from entertaining the instant request for reformation.  "The
  purpose of a declaratory judgment is to enunciate so far as is requested
  and appropriate the rights of the parties and nothing more."  Griffith v.
  Nielsen, 141 Vt. 423, 427, 449 A.2d 965, 967 (1982).  Put another way, a
  "declaratory action determines only what it actually decides and does not
  have a claim preclusive effect on other contentions that might have been
  advanced."  Restatement (Second) of Judgments § 33 cmt. c (1982).  Because
  a plaintiff seeking a declaratory judgment is "merely requesting a judicial
  declaration as to the existence and nature of a relation between himself
  and the defendant," it follows that either party "may pursue further
  declaratory or coercive relief in a subsequent action."  Id.  The Supreme
  Judicial Court of Maine recognized this principle in modifying a
  declaratory judgment that defined the scope of a prescriptive easement:
  "Nothing prevents either party from bringing . . . a new action because a
  declaratory judgment has preclusive effect in a subsequent action only as
  to the matters actually declared."  Bray v. Grindle, 2002 ME 130, ¶ 20, 802 A.2d 1004.
   
       ¶  14.  Based on the foregoing, plaintiffs' current case seeking
  reformation of the Easement Deed is not precluded by the declaratory
  judgment rendered in Quensler.  Plaintiffs in the instant case asked the
  court to alter the rights of the parties by reforming the deed, while the
  plaintiff in Quensler sought only a declaration of the extent of her rights
  under the Easement Deed.  The claim in Quensler hinged solely upon the
  rights and interests, if any, granted by the written instrument as executed
  and recorded in the land records.  The court held that, notwithstanding the
  "obvious intention of both the Bank and the Bankruptcy Trustee to create an
  easement, or right-of-way for access to and from the 178.5-acre parcel then
  owned by the Trustee," the Easement Deed's description of the easement was
  "so inaccurate . . . as to go beyond mere ambiguity" and could not be
  interpreted "to grant any effective right-of-way which actually reaches the
  178.5-acre parcel.  The 1996 Easement Deed is simply, but fatally,
  mistaken."  By contrast, the relief sought in the instant case required the
  trial court to look beyond the recorded instruments and determine whether
  the Easement Deed was incorrect and in need of reformation.  Therefore, we
  hold that the trial court was not precluded by the declaratory judgment in
  Quensler from considering the reformation claim. 

       ¶  15.  This conclusion is reinforced by the well-settled observation
  that reformation is a separate and distinct action sounding in equity,
  whose purpose is to correct mutual mistakes of the parties that have
  created a result neither party intended.  See Burlington Sav. Bank v.
  Rafoul, 124 Vt. 427, 431, 209 A.2d 738, 741 (1965) ("[T]he court exercises
  the power of reformation where the mistake is common to both parties and by
  reason of it each has done what neither intended." (quotations omitted));
  accord Ward v. Lyman, 108 Vt. 464, 472, 188 A. 892, 896 (1937).  The
  Restatement (Second) of Contracts § 155 (1981) provides: 


  Where a writing that evidences or embodies an agreement in whole or in part
  fails to express the agreement because of a mistake of both parties as to
  the contents or effect of the writing, the court may at the request of a
  party reform the writing to express the agreement, except to the extent
  that rights of third parties such as good faith purchasers for value will
  be unfairly affected.

    "Once it has been established that there was an intended agreement
    that the formal writing mistakenly failed to express, equity will
    deal generously in the correction of mistakes."  deNeergaard v.
    Dillingham, 123 Vt. 327, 331, 187 A.2d 494, 497 (1963). 

       ¶  16.  Defendants next challenge the reformation by positing that the
  Easement Deed was the result of a mistaken belief that plaintiffs' parcel
  was landlocked.  They suggest that their parcel was entitled as a matter of
  law to a right-of-way by necessity when it was subdivided away from the
  larger Van Vleck parcel.  Even if this is true and the trustee in
  bankruptcy and the attorney for the Bank were mistaken about the landlocked
  status of the property, it is of no moment.  The Bank, the then-titleholder
  of defendants' parcel, agreed to deed an easement over the property to the
  trustee in bankruptcy, the then-titleholder of the 178.5-acre parcel.  

       ¶  17.  There was no finding by the court that plaintiffs, or anyone
  else, deliberately misled the trustee in bankruptcy into obtaining the
  Easement Deed, or that plaintiffs understood that a way of necessity may
  have existed from the larger Van Vleck parcel.  The only finding on this
  point was that plaintiffs purchased the 178.5-acre parcel knowing that the
  acreage was without road frontage, "but [they] intended to access the 178.5
  acres through the 49.5-acre parcel . . . which they then owned."  Nor did
  the court find any relevant misunderstanding involved in the acquisition of
  the Easement Deed from the Bank.  The burden on the land was the Bank's to
  assume.

       ¶  18.  Next, defendants argue that reformation is not available
  against a bona fide purchaser.
   
    "A party who purchases property for value and without notice will
    have a defense in an action to reform a deed involving that
    property.  The purpose of this limitation is clear.  When a bona
    fide purchaser acquires an interest in land and makes an
    investment in the land, that party is entitled to have his or her
    expectations protected. . . .  A person should not be deprived of
    his or her investment when he or she had no means of discovering
    the defect." 

  Morse v. Murphy, 157 Vt. 410, 416, 599 A.2d 1367, 1370 (1991) (mem.)
  (Gibson, J., dissenting) (quoting 6A R. Powell, Powell on Real Property ¶
  901[3], at 81A-166 (rev. ed. 1991)) (emphasis added); accord Lockwood v.
  White, 65 Vt. 466, 468-69, 26 A. 639, 640 (1893).

       ¶  19.   The court found that all the relevant evidence established
  that defendants had notice of a right-of-way across the 49.5-acre parcel. 
  Evidence relied upon by the court included discussions between Robert
  Cassani and Ernest LaBrie in the spring of 1996 concerning the location of
  the right-of-way and the long familiarity of LaBrie with both the geography
  of the parcels and the existence of the road constructed by Cassani across
  the 49.5-acre parcel for access to the 178.5-acre parcel.  Most persuasive
  on this issue was the letter prepared by defendant Linda LaBrie, in her
  offer to the Bank to buy the 49.5-acre parcel in October 1997, in which she
  acknowledged that "[t]he property contains a right-of-way through it, right
  past the camp, that is the sole access for the Quensler acreage."  The
  existence of the right-of-way was used in support of the price offered by
  defendants to purchase the property.  Given this evidence of notice, the
  court correctly ruled that defendants were not bona fide purchasers without
  notice.  Thus, reformation was available as a remedy for plaintiffs. 
   
       ¶  20.  Finally, defendants argue that if an easement across their
  land does exist, then they should be permitted to designate its course. 
  Defendants are correct that when a right-of-way is described in a deed in
  general terms, the owners of the servient estate initially have the right
  to designate its course.  Patch v. Baird, 140 Vt. 60, 66, 435 A.2d 690,
  692-93 (1981); Lafleur v. Zelenko, 101 Vt. 64, 70, 141 A. 603, 605-06
  (1928).  Here, the trial court concluded that, based on the evidence, it is
  possible to "establish the route of the right-of-way, despite the lack of
  survey or detailed metes and bounds description, upon review of Mr.
  Cassani's sketch of its location and confirmation of same on the ground." 
  Thus, the trial court did not err by declining to allow defendants to
  designate the course of the easement.

       The superior court's August 12, 2004 decision and August 26, 2004
  judgment order are affirmed to the extent that they grant plaintiffs'
  request for reformation of the February 23, 1996 Vermont Easement Deed. 
  The instant case is remanded for consolidation with Docket No. 256-12-04
  Cacv for the superior court to determine in the first instance whether the
  easement established in the reformed deed is legally permissible in light
  of the  preexisting Rock right-of-way.


                                       FOR THE COURT:


                                       _______________________________________
                                       Associate Justice


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                                  Footnotes


FN1.  References in this opinion to "defendants" denote the LaBries and not
  defendant  Northfield Savings Bank because the Bank is not a party in this
  appeal.

FN2.  Plaintiffs Shirley Cassani and Melanie Ross-joint tenants with rights
  of survivorship in the 178.5-acre parcel, along with plaintiff Robert
  Cassani-were later added to the lawsuit as indispensable parties, on
  defendants' unopposed motion.