Alexander v. Fairway Villas, Inc.

• Decision Date: 02 October 1998
• Citation: 1998 ME 226,719 A.2d 103
• Parties: John J. ALEXANDER, Jr. et al. v. FAIRWAY VILLAS, INC., et al. v. The WOODLANDS HOMEOWNERS ASSOCIATION.
• Court: Maine Supreme Court

719 A.2d 103

1998 ME 226

John J. ALEXANDER, Jr. et al. v. FAIRWAY VILLAS, INC., et al. v. The WOODLANDS HOMEOWNERS ASSOCIATION.

Supreme Judicial Court of Maine.

Argued February 2, 1998.

Decided October 2, 1998.

Arnold Macdonald (orally), George F. Burns, Burns Ray & Delano, Portland, for plaintiffs.

Ralph I. Lancaster (orally), Peter W. Culley, Christopher T. Roach, Pierce Atwood, Portland, for Fairway Villas, Inc., Golf Development Corp., et al.

Paul R. Johnson (orally), Harrison L. Richardson, Richardson, Whitman, Large & Badger, P.C., Portland, for The Woodlands Homeowners Ass'n.

Before WATHEN, C.J., and ROBERTS¹, CLIFFORD, RUDMAN, DANA, LIPEZ², and SAUFLEY, JJ.

RUDMAN, Justice.

[¶ 1] Golf Development Corp. (GDC),³ the developer of "The Woodlands," a residential subdivision in Falmouth, appeals from the judgment of the Superior Court (Cumberland County, Mills, J.) declaring that GDC is not entitled to use the subdivision's roadways for access to and development of an adjacent parcel of land. We disagree and vacate the judgment.

I. Background

[¶ 2] In 1986 and 1987, GDC purchased a large parcel of real estate in Falmouth and developed the larger northern portion into "The Woodlands," a subdivision consisting of ninety-five residential house lots, a private roadway system, and a private golf club known as "The Woodlands Club." A smaller southern portion of the original parcel, known as "the Commercial Zone," remains undeveloped and is presently accessible only through the private roadway system of The Woodlands.

[¶ 3] GDC established The Woodlands by recording a subdivision plan and a document entitled "A Declaration of Common Easements, Restrictions, Covenants and Reservations of Rights Affecting the Subdivision Called The Woodlands" (Declaration). The Declaration, by its terms, was "to be incorporated by reference hereto in each deed conveying any interest in property in the Subdivision[.]" Pursuant to the Declaration, GDC was to create a "Common Space" within the subdivision, consisting of the private roadway system, storm water control facilities, a golf course and driving range, and other common use improvements. The Declaration further provided that, following the sale of 75% of the house lots, GDC was to deed the Common Space to the Woodlands Homeowners Association (Association), a nonprofit corporation, whose members are all subdivision lot owners. The Association is charged with administering and enforcing the Declaration's provisions.⁴ Finally, the Declaration provided that GDC's conveyance of the Common Space to the Association was to be "subject to those encumbrances specified herein."

[¶ 4] GDC began to sell lots in the subdivision in 1987. Each lot owner's deed conveyed an individual lot and expressly provided that the conveyance was made subject to the provisions of the Declaration. In 1993, after selling 75% of the house lots, GDC conveyed the Common Space, including the roadways, to the Association in a deed containing the following reservation:

EXCEPTING AND RESERVING, to the Grantor, for itself and its successors and assigns, the right to use all roads and rights-of-way and emergency access ways as depicted or referenced on the Subdivision Plan or described in the Declaration for any future development and for the use, maintenance and enjoyment of or relating to [the Commercial Zone].... The Rights reserved by Grantor in this paragraph in and to such roads, rights-of-way and emergency access ways shall specifically include the right, and Grantor is hereby permitted, to reassign and/or grant to others, the right to use any such roads, rights-of-way and emergency access ways.

[¶ 5] In May 1995, the owners of four lots in the subdivision filed a four-count complaint for declaratory relief pursuant to 14 M.R.S.A. §§ 5951-5963 (1980) to establish their rights with respect to the subdivision roadways and to establish that GDC is not entitled to use those roadways for access to or development of the Commercial Zone.⁵ Shortly after the lot owners filed their complaint, GDC moved to compel joinder of, inter alia, the Association as a necessary party pursuant to M.R.Civ.P. 19(a). The lot owners responded by moving to amend their complaint to narrow their requested relief to a declaration concerning GDC's rights relative to the roadways. This specific declaration, they argued, would eliminate the need for any joinder because it would have "no bearing on the property interests of any person or organization not now a party[.]" In April 1996, the court granted the lot owners leave to amend their complaint and denied GDC's motion to compel joinder.⁶

[¶ 6] Upon the parties' cross motions for summary judgment, the court granted judgment to the lot owners with respect to counts I, II, and IV of their complaint, ruling, inter alia: (1) that "[t]he Declaration does not reserve to [GDC] or its successors or assigns the right to use the roads for future development of the Commercial Zone"; and (2) that "[t]he Deed from [GDC] to the Association is declared invalid to the extent that it purports to reserve the above-listed rights to [GDC]." The court did not reach the breach of fiduciary duty claim at that time.

[¶ 7] GDC then filed a third-party complaint against the Association, seeking declaratory relief that GDC had a right to use the roadways by virtue of an easement by necessity, an easement by implication, an easement from recorded plan, and a costsharing and joint-use agreement concerning the roadways entered into by the Association and the Fairway Villas Owners Association. GDC also moved to amend its third-party complaint to join additional parties and add several counts. The lot owners responded by moving to dismiss count III of their original complaint and moving to dismiss GDC's third-party complaint. The Association, as third party defendant, also moved to dismiss GDC's third-party complaint. The court denied GDC's motion to amend and dismissed count III and the third-party complaint. Hence, the only claim adjudicated was the individual lot owners' request for a declaration that GDC was precluded by the Declaration from using the roads to develop and access the Commercial Zone. This appeal followed.

II. The Lot Owners' Rights

[¶ 8] The lot owners base their entitlement to seek relief in this case on two sources. First, the purchasers of lots in a subdivision obtain an easement by implication in the common roads. See Chase v. Eastman, 563 A.2d 1099, 1101 n. 2 (1989)

.⁷ Second, the incorporation of the Declaration into the lot owners' deeds created enforceable contractual rights between the lot owners and GDC. See DeWolf v. Usher Cove Corp., 721 F.Supp. 1518, 1527 (D.R.I.1989) (The general rules governing construction of such Declarations are essentially the same as those applicable to any contract.). That contract bound both parties and expressly required GDC to transfer the Common Spaces to the Homeowners association "following the sale of Seventy-Five Percent (75%) of the lots in the subdivision subject to those encumbrances specified [in the Declaration]."

[¶ 9] Accordingly, the lot owners may seek to enjoin GDC's use of the roads to the extent that: (1) the proposed use unreasonably interferes with their own easement (whether created by the contract or by common law); or (2) the proposed use conflicts with the Declaration. The lot owners did not assert that the use intended by GDC would unreasonably interfere with their own use of the roads.⁸ Rather, they argued that GDC promised to deed the roads to the Association unencumbered by any remaining interest in GDC.

[¶ 10] GDC argues that, notwithstanding its agreement to transfer the Common Spaces to the Association, it retained the right as fee owner of the roads to transfer the roads under whatever terms and conditions it chose.⁹ The Declaration, however, bound GDC to undertake the transactions promised therein. Although GDC remained the fee owner, that ownership became encumbered by the terms and conditions of the Declaration upon sale of the lots. The Declaration, incorporated in the deeds and constituting part of the lot owners' bargain with GDC, is subject to the rules of interpretation of any contract.¹⁰ Upon incorporation into the purchasers' deeds, the Declaration's terms became binding upon the grantor-developer as well as the purchasers and their heirs and assigns. GDC did not remain free to dispose of the Common Spaces except as consistent with the Declaration. We therefore turn to the language of the Declaration.

III. The Declaration

[¶ 11] As a contract, the Declaration must be interpreted to effect the parties' intentions as reflected in the written instrument, construed with regard for the subject matter, motive, and purpose of the agreement, as well as the object to be accomplished. See Bumila v. Keiser Homes of Maine, Inc., 1997 ME 139, ¶ 12, 696 A.2d 1091, 1094

. It must be interpreted as a whole. See Bartley v. Eastern Maine Med. Ctr., 617 A.2d 1020, 1022 (Me.1992); Benedix v. Boston Old Colony Ins. Co., 417 A.2d 453, 455 (Me.1980); Forbes v. Wells Beach Casino, Inc., 307 A.2d 210, 216 (Me.1973). The issue presented here is whether GDC contracted to fully relinquish its rights to use the roads within the Woodlands Subdivision to the Association, thereby precluding it from reserving any right to use the roads when it deeded the common space to the Association. Although each of the parties agreed that the Declaration could be interpreted by the court without reference to extrinsic facts, both parties submitted affidavits and depositions on the question of intent. The court, however, agreed with the parties that extrinsic evidence...