DRD Enterprises, LLC v. Flickema
| Decision Date | 04 January 2011 |
| Docket Number | No. 25595.,25595. |
| Citation | 2010 S.D. 88,791 N.W.2d 180 |
| Parties | DRD ENTERPRISES, LLC, Plaintiff and Appellant, v. Todd Thomas FLICKEMA, Dawn Amy Flickema, and PSC Properties, LLC, Defendants and Appellees, Aventure Estates, LLC, Five J Investment Co., LLC, and Pinnacle Holdings, LLC, Defendants. |
| Court | South Dakota Supreme Court |
Dylan A. Wilde of Brady & Pluimer, PC, Spearfish, SD, Attorneys for plaintiff and appellant.
Dwight A. Gubbrud of Bennett, Main & Gubbrud, PC, Belle Fourche, SD, Attorneys for defendants and appellees.
[¶ 1.] Appellant DRD Enterprises, LLC commenced a declaratory action against Todd and Dawn Flickema (Flickemas) and PSC Properties, LLC to obtain an access easement across their properties. DRD based its claim upon a "Blanket Easement" granted by Dakota Resorts Management Group (Dakota Resorts), a prior owner of Flickemas' and PSC's properties. The circuit court concluded that the Blanket Easement sufficiently described the servient tenement. Nevertheless, the court entered judgment for Flickemas and PSC because the court concluded that they were good faith purchasers without notice of the easement. We only address the predicate question regarding the sufficiency of the easement description. Because we conclude that the Blanket Easement failed to sufficiently describe the servient tenement, we affirm the judgment.
[¶ 2.] In 1999, the Gali Family Trust sold legally described real property to Dakota Resorts on a contract for deed. For ease of reference we refer to the property as the "Non-Emery Properties." On February 16, 2000, while in possession of the Non-Emery Properties, Dakota Resorts executed a document referred to as the Blanket Easement. By the terms of the document, Dakota Resorts granted "the rights of a to be determined, as requested, legal right of ingress and egress" for the benefit of legally described properties.For ease of reference we refer to the dominant tenement as "Emery No. 4" and "Emery No. 5." The Blanket Easement did not, however, provide a legal description of the servient tenement. It only indicated that the easement "shall provide a reasonable route through the grantor's land that will not cause undo [sic] and unreasonable work and engineering." (Emphasis added.) 1 The Blanket Easement was filed with the Lawrence County Register of Deeds on February 22, 2000, and was recorded as Doc. No. 2000-704. The Lawrence County Register of Deeds indexed the Blanket Easement against Emery Nos. 4 and 5. But without a legal description, the Blanket Easement was not indexed against any servient tenement.2
[¶ 3.] On March 30, 2000, a Gali-Dakota Resorts Short Form Contract for Deed was recorded as Doc. No. 2000-1202. The short form evidenced the 1999 sale of Non-Emery Properties to Dakota Resorts. It indicated that 378.3 acres, legally described as "Mineral Survey 1356 ... of Sections 11, 12, 13, and 14 ...," had been conveyed. Thus, the Lawrence County Register of Deeds' records indicated that Dakota Resorts had been the equitable owner of Non-Emery Properties at the time it granted the Blanket Easement.
[¶ 4.] Dakota Resorts sold the dominant tenement (Emery Nos. 4 and 5) to Kenneth and Amy O'Neill around the time it executed the Blanket Easement. The O'Neills sold Emery No. 5 to Aventure Estates, LLC in October 2004, and they sold Emery No. 4 to DRD in November 2005. The warranty deeds given to Aventure and DRD referenced the Blanket Easement recorded in Document No. 2000-704.
[¶ 5.] Dakota Resorts also sold a portion of the Non-Emery Properties, the purported servient tenement, to Aventure in October 2004. The warranty deed conveying title to Aventure made no reference to the Blanket Easement. Aventure subsequently subdivided and replatted its portion of the Non-Emery Properties into lots. Aventure then sold Lot 5 to Flickemas on September 30, 2006. Aventure sold Lot 6 to PSC Properties on October 17, 2006.
[¶ 6.] Before closing on Lot 5, Lawrence Title Company issued Flickemas an initial commitment for title insurance. The Blanket Easement was attached to the commitment and was noted as a special exception. After reviewing the title commitment, Flickemas asked their real estate agent, Kathy Whitelock, about the Blanket Easement. Whitelock made an inquiry of the seller's real estate agent, who contacted the title company. Lawrence Title Company subsequently amended the commitment for title insurance, removing the Blanket Easement as a special exception. Neither Flickemas' final title insurance policy nor their warranty deed contained any reference to the Blanket Easement. Additionally, Todd Flickema personally inspected Lot 5. He observed no access road, trail or path across Lot 5 suggesting the existence of an ingress/egress easement.
[¶ 7.] Prior to closing on Lot 6, PSC obtained a title insurance commitment. PSC's commitment made no reference to the Blanket Easement. PSC's principal member, Dr. Paul Cink, inspected the land and did not observe any evidence suggesting the presence of an ingress/egress easementon Lot 6. Neither PSC's final title insurance policy nor its warranty deed mentioned the Blanket Easement.
[¶ 8.] In 2006, DRD brought this declaratory action against several landowners, including Flickemas and PSC, to utilize the Blanket Easement to obtain an access easement from Terry Peak Summit Road to DRD's nearby land (Emery No. 4). Flickemas and PSC claimed the Blanket Easement was of "no effect" because the easement's mere reference to "grantor's land" did not sufficiently describe the servient tenement. The circuit court granted DRD summary judgment on this issue. The court ruled that the servient tenement, described only as "grantor's land," could be determined by resort to public records. According to the court, "grantor's land" included those Non-Emery properties Dakota Resorts had owned lying between Emery Nos. 4 and 5 and the Terry Peak Summit Road (which included Flickemas' Lot 5 and PSC's Lot 6). Therefore, the court held that the Blanket Easement sufficiently described the servient tenement to be effective. The court ruled, however, that there were factual issues precluding summary judgment on whether the Blanket Easement burdened Flickemas' and PSC's properties because they may have been good faith purchasers without notice of the Blanket Easement.3
[¶ 9.] Following further discovery, the parties filed additional motions for summary judgment. The circuit court then concluded that the easement was not in Flickemas' or PSC's chain of title and that Flickemas and PSC were not burdened by the Blanket Easement because they were good faith purchasers without notice of the easement.4 DRD appeals claiming that it was entitled to summary judgment declaring that the Blanket Easement burdened Flickemas' and PSC's properties.
[¶ 10.] This Court's standard of review on summary judgment is well-settled:
Our standard of review on summary judgment requires this Court to determinewhether the moving party has demonstrated the absence of any genuine issue of material fact and entitlement to judgment on the merits as a matter of law. The circuit court's conclusions of law are reviewed de novo. However, all facts and favorable inferences from those facts must be viewed in a light most favorable to the nonmoving party. We will affirm the circuit court's ruling on a motion for summary judgment when any basis exists to support its ruling.
United Bldg. Centers v. Ochs, 2010 S.D. 30, ¶ 10, 781 N.W.2d 79, 82.
[¶ 11.] DRD argues that Flickemas had "express information of the Blanket Easement" through the title insurance commitment, which included a copy of the easement and listed it as a special exception. DRD argues that PSC had actual knowledge because Dr. Cink received a copy of the Blanket Easement in connection with the purchase of Lot 9 (another Non-Emery property in the Aventure subdivision). Alternatively, DRD contends that Flickemas and PSC had constructive knowledge through the easement itself (Flickemas' title commitment) and through PSC's agency relationship with its realtor who knew of the easement. DRD claims that with constructive knowledge, Flickemas and PSC were burdened with a duty of inquiry, and a diligent inquiry would have disclosed "the existence" of the easement.
[¶ 12.] Flickemas and PSC argue that they were good faith purchasers of Lots 5 and 6 without notice of the Blanket Easement. They contend that because the Blanket Easement did not appear on their final title insurance commitments or on any deeds within their chain of title, they did not have notice that the Blanket Easement burdened their properties. They also argue that any constructive knowledge they had of the existence of the Blanket Easement was irrelevant because they made a reasonable inquiry and were presented with information from the title company leading them to believe the easement did not burden their properties.5
[¶ 13.] To resolve this appeal, it is necessary to highlight DRD's specific argument. DRD contends Flickemas and PSC knew the Blanket Easement expressly provided "that there was an easement for the benefit of Emery number 4 and Emery number 5." But it may be assumed without deciding that Flickemas and PSC had knowledge of the existence of the Blanket Easement benefiting Emery Nos. 4 and 5. The pertinent question is: What knowledge did that easement convey regarding the purported servient tenement, Lots 5 and 6? Because the Blanket Easement legally described Emery Nos. 4 and 5 as the dominant tenement while only describing the servient tenement as "grantor's land," the public record only disclosed that an easement on some undisclosed land, which Dakota Resorts once owned, benefited Emery Nos. 4 and 5. Obviously, knowing that some undescribed Blanket Easementbenefited Emery Nos. 4 and 5 does not support DRD's contention that Flickemas and PSC had knowledge that the...
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