Benoit v. Cerasaro

• Decision Date: 19 April 2016
• Docket Number: No. 2015–0573,2015–0573
• Citation: 169 N.H. 10,139 A.3d 1134
• Parties: Thomas M. BENOIT & a. v. Joseph A. CERASARO, Trustee of the Joseph A. Cerasaro Revocable Trust & a.
• Court: New Hampshire Supreme Court

169 N.H. 10

139 A.3d 1134

Thomas M. BENOIT & a.

v.Joseph A. CERASARO, Trustee of the Joseph A. Cerasaro Revocable Trust & a.

No. 2015–0573

Supreme Court of New Hampshire.

Argued: March 8, 2016

Opinion Issued: April 19, 2016

Tarbell & Brodich, P.A., of Concord (David E. LeFevre on the brief and orally), for the plaintiffs.

Primmer Piper Eggleston & Cramer PC, of Manchester (Matthew J. Delude on the brief and orally), for defendants Ronald N. and Rita A. Delude.

DALIANIS, C.J.

The plaintiffs, Thomas M. Benoit and Kathleen A. Nawn–Benoit, appeal from an order of the Superior Court (Colburn, J.) granting the summary judgment motion filed by defendants Ronald N. and Rita A. Delude, and denying the plaintiffs' cross-motion for summary judgment. We affirm.

I. Facts

The summary judgment record reflects the following pertinent facts. In 1974, a developer created plans for the Profile Estates Subdivision (subdivision), a development in Merrimack. The plans, recorded in the Hillsborough County registry of deeds, created 70 lots and a seven-acre parcel of "Common Land for Profile Estates, Phases I and II" (Common Land) (capitalization omitted). The developer also recorded a "Declaration of Covenants" for the subdivision (Declaration). According to the Declaration, the developer desired to "create ... a residential community with permanent open spaces and other common facilities for the benefit of [that] community." With the exception of five lots, all of the lots, including the Common Land, are subject to the Declaration. The developer included reference to the Declaration in each deed conveyed to the original purchaser of a lot in the subdivision.

The Declaration provides that all of the lots subject to it "shall be held, transferred, sold, conveyed and occupied subject to the covenants, restrictions, easements, charges and assessments" set forth therein. The Declaration requires each record owner of the lots subject to it to join the "PROFILE ESTATES HOMEOWNERS ASSOCIATION" (Association). The Association "is to be formed by the Owners for the purpose of maintaining and administering the Common [Land] and facilities thereon, administering and enforcing the restrictions, and collecting and disbursing the assessments and charges." The developer "may retain the legal title" to the Common Land until the developer is of the opinion that the Association "is able to maintain the same," but "must convey legal title to the Association when fifty-one percent (51%) of the Lots have been sold." The cost of maintaining the Common Land "shall be borne by the [d]eveloper or its successors in title until the transfer of said Common [Land] to the Association and thereafter the cost of maintenance shall be borne by said Association."

Each record owner of the properties subject to the Declaration is given "a right and easement of enjoyment in and to" the Common Land, "and such easement shall be appurtenant to and shall pass with the title to every lot." The Common Land is "restricted to recreational, conservation and park uses for all of the Owners" and no structures shall be erected on the Common Land "except as incident to said uses."

The Declaration provides that the restrictions contained in it

shall run with, and bind the land, and shall inure to the benefit of and be enforceable by the Association, or the Owner of any land subject to this Declaration, their respective legal representatives, heirs, successors, and assigns, for a term of ten (10) years from the date this Declaration is recorded, after which time said restrictions shall be extended for successive periods of ten (10) years unless an instrument signed by the then Owners of two-thirds (2/3) of the Lots has been recorded, agreeing to change said restrictions in whole or in part.

The Declaration further provides that the failure of the Association or any owner "to enforce any covenant or restriction" contained therein "shall in no event be deemed a waiver of the right to do so thereafter."

All of the lots in the subdivision were subsequently sold, but the Association was never formed, and the developer retained title to the Common Land. The developer, however, failed to pay the property taxes and the Common Land was sold at a tax sale in August 1979 to R. Robert Gaumont, Jr., who owned and lived in Lot 51 in the subdivision, adjacent to the Common Land. Gaumont recorded the tax sale deed in September 1981.

In August 2001, Gaumont sold Lot 51 to the plaintiffs by warranty deed. The deed to Lot 51 stated that the conveyance was "[s]ubject to and with the benefit of" the Declaration. On the same date, Gaumont sold the Common Land to the plaintiffs for less than $100 by quitclaim deed. Since buying the Common Land, the plaintiffs have paid approximately $40,000 in taxes on it.

In July 2014, over the objections of several lot owners in the subdivision, the plaintiffs obtained a variance to build a single-family residence on the Common Land. In January 2015, the plaintiffs brought a petition against the residents of the subdivision seeking: (1) a declaratory judgment that the Declaration is unenforceable; (2) an order that they have acquired title to the Common Land "free and clear of the Declaration through adverse possession"; and (3) to the extent that the Declaration is deemed enforceable, an order requiring the defendants to form the Association, purchase the Common Land from the plaintiffs "at its fair market value," and reimburse them for their "out-of-pocket expenses ..., including real estate taxes."

Two residents, the defendants before us, moved for summary judgment "on behalf of all" of the defendants on the plaintiffs' claims, and the plaintiffs cross-moved for summary judgment on their request for a declaratory judgment. The trial court granted the defendants' motion for summary judgment and denied the plaintiffs' cross-motion, and concluded that "[b]ecause the undisputed material facts and the applicable law apply equally to the [plaintiffs'] claims asserted against all of the other [defendant]-lot owners, they are likewise entitled to summary judgment." The court subsequently denied the plaintiffs' motion for reconsideration, and this appeal followed.

II. Standard of Review

"In reviewing the trial court's rulings on cross-motions for summary judgment, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law." Bovaird v. N.H. Dep't of Admin. Servs., 166 N.H. 755, 758, 103 A.3d 1207 (2014) (quotation omitted). "If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment." Id. (quotation omitted). "We review the trial court's application of the law to the facts de novo." Id. (quotation omitted).

III. Enforceability of the Declaration

The plaintiffs argue that the trial court erred in ruling that the Declaration is enforceable. They assert that the tax sale extinguished the Declaration: (1) under the "tax assessment theory"; (2) because the Association was never formed and rights under the Declaration never vested; and (3) upon default of redemption by the Association. The trial court considered, and rejected, each of these arguments, as do we.

"Ordinarily, a tax sale does not divest easements charged on the property sold." Gowen v. Swain, 90 N.H. 383, 387, 10 A.2d 249 (1939) (quotation omitted); see Marshall v. Burke, 162 N.H. 560, 564, 34 A.3d 705 (2011) (holding that a tax sale does not extinguish prescriptive easements that have ripened into vested property rights prior to recording of the tax deed); see also Buchholz v. Waterville Estates Assoc., 156 N.H. 172, 175, 934 A.2d 511 (2007) (concluding that condominium covenants that run with the land survive a tax sale); cf. Burke v. Pierro, 159 N.H. 504, 514–15, 986 A.2d 538 (2009) (when 20–year prescriptive period had not run before town acquired title to the lot, the tax sale created a new title).

The plaintiffs acknowledge this case law. Nonetheless, relying upon cases from other jurisdictions, they first argue that, in this case, we should apply the "tax assessment theory" and conclude that the tax sale extinguished the easements because "the value of the easements and restrictions has never been assessed against the dominant estates," and the Common Land "has always been assessed at fair market value as a buildable lot."

We agree with the trial court that the tax sale did not extinguish the Declaration as a matter of law. We also agree with the court's conclusion that, pursuant to Gowen and Marshall, "[w]hether or not the assessors accurately assessed the dominant and servient estate[s'] value is immaterial, because it is presumed that assessors take into account the effect restrictions have on the valuation of property." We recognized in Gowen that "[p]resumably assessors take into account this effect of easements on value in making their appraisals." Gowen, 90 N.H. at 387, 10 A.2d 249. "[I]f, acting in ignorance of the existence of an easement, they overvalue the servient estate, the mistake is correctible by abatement proceedings unless circumstances exist which render abatement inequitable." Id. (citation omitted). Thus, "while assessors are presumed to take account of the impact of easements on the value of properties, the practical reality is that the actual burden of insuring that this occurs is placed on the property owner through the tax abatement process." Marshall, 162 N.H. at 566, 34 A.3d 705.

Second, the plaintiffs argue that the tax sale extinguished the Declaration because the Association was never formed and rights under the Declaration never vested. They assert that under the language of the Declaration, the Declaration was "subject to" the express condition precedent that title to the property was...