Burcalow Family, LLC v. Corral Bar, Inc.
| Decision Date | 14 November 2013 |
| Docket Number | No. DA 12–0716.,DA 12–0716. |
| Parties | BURCALOW FAMILY, LLC, Plaintiff and Appellant, v. The CORRAL BAR, INC., Defendant, Appellee and Cross–Appellant. |
| Court | Montana Supreme Court |
OPINION TEXT STARTS HERE
For Appellant: Michael J. Lilly, Berg, Lilly & Tollefsen, P.C.; Bozeman, Montana.
For Appellee: Arthur V. Wittich, Margaret M. Reader, Wittich Law Firm, P.C.; Bozeman, Montana.
[372 Mont. 499]¶ 1 Appellant Burcalow Family, LLC, (Burcalow) appeals the decision of the Eighteenth Judicial District Court, Gallatin County, that determined that The Corral Bar, Inc. (the Corral) possesses a prescriptive easement over Burcalow property and that entitled the Corral to rescind a license agreement between the parties. The Corral cross-appeals that the District Court has not entered a final judgment. We reverse and remand.
¶ 2 We address the following issues on appeal:
1. Whether the Corral possesses a prescriptive easement over Burcalow's property.
2. Whether allegedly fraudulent representations by Burcalow's counsel entitled the Corral to rescind the parties' license agreement.
3. Whether the November 2, 2012, judgment constituted a final judgment.
¶ 3 The Corral Bar sits in the Gallatin Canyon along Highway 191 to the south of the popular skiing destination at Big Sky, Montana. The Corral property consists of a bar, restaurant, and motel on 0.563 acres of land. The bar and restaurant have been in operation since the 1940s. The Corral Bar employs between 35 and 40 people. It serves annually approximately 50,000–80,000 patrons.
¶ 4 The Corral purchased the Corral Bar and motel property in 1988. The property sits contiguous to property formerly owned by the United States Forest Service (Forest Service). In fact, part of the restaurant building, a storage shed, a well and water transmission line, a satellite television system, a propane tank, and a sanitation system consisting of a dosing tank actually sit on property formerly owned by the Forest Service. The Corral obtained a special use permit from the Forest Service to use this land.
¶ 5 The United States Congress in the 1990s authorized the Forest Service to trade property in the Big Sky area with private property owners. The Forest Service and Big Sky Lumber Company entered into an exchange agreement pursuant to these acts. The Forest Service agreed to trade property that it owned in exchange for land that the Big Sky Lumber Company owned. The Forest Service included in the exchange with Big Sky Lumber Company property that the Corral used pursuant to its special use permit. The Forest Service advised the Corral of the proposed exchange in December 1998. The Forest Service informed the Corral that its special use permit would be terminated as of December 31, 1998.
¶ 6 Burcalow purchased certain lots in Section 28 and additional adjoining property from the Big Sky Lumber Company on September 1, 1999. This property sits adjacent to the Corral Bar and includes the former Forest Service land that the Corral had been using. After Burcalow's purchase of the land, Larry Burcalow (Larry), an owner of Burcalow, and the Corral discussed the Corral's possible purchase of the property used by the Corral. Larry also had conversations with Devon White (Devon), an owner of the Corral, and Devon's business partner, David House, before September 1, 1999, in which Larry assured the two that the parties could reach an agreement for the purchase of a portion of Section 28 so that the Corral could complete its expansion plans. Larry testified at trial that he told Devon that if Burcalow bought Section 28, he would “make it right” with the Corral.
¶ 7 The parties eventually agreed to a common boundary realignment. The Corral exchanged the north and south corners of its land for a similar area of Burcalow's land to the west of the Corral's property. The Corral's property included in this trade to Burcalow enjoyed direct access to Highway 191. The Corral used the land that it acquired from Burcalow to expand its kitchen. This exchange did not provide the Corral with sufficient land, however, for its drain field or well. The Corral nevertheless continued to use the land with its drain field and well.
¶ 8 Burcalow's counsel wrote to the Corral on July 6, 2004. Burcalow's counsel informed the Corral that its special use permit had expired on the date that the Forest Service conveyed its interest in the land to a private entity. As a result, the letter pointed out that the Corral “ha[d] been using the 1.79 acres covered by the special use permit without express authority to do so.”
[372 Mont. 501]¶ 9 Burcalow's counsel proposed that the Corral and Burcalow execute an agreement for the Corral's continued use of that 1.79 acres. The letter warned, however, that the Corral and Burcalow must reach an agreement “or a lawsuit [will be] filed to quiet the title to the property not later than August 15, 2004.” The letter concluded with counsel's assurance that Burcalow was “interested in amicably working out an agreement” for the Corral's continued use of the land in question. Burcalow's counsel cautioned the Corral that Burcalow “must take legal action by August 15, 2004, to protect its interests in the event an agreement cannot be reached.”
¶ 10 The parties signed a license agreement effective August 1, 2004. The Corral agreed to pay Burcalow $250.00 per year beginning on August 1, 2004, for the use of Burcalow's property pursuant to the agreement. The license agreement expired in August 2009. The parties failed to negotiate the Corral's purchase of the land.
¶ 11 Burcalow filed a suit against the Corral in 2010 in which it alleged claims for trespass and a declaratory judgment. The Corral answered and asserted six counterclaims: prescriptive easement, detrimental reliance, mistake, negligent misrepresentation, fraud, and breach of the covenant of good faith and fair dealing, and requested that the license agreement be rescinded.
¶ 12 Burcalow filed a motion for separate trials. It requested a bench trial on the equitable claims for declaratory judgment, rescission (i.e. mistake and fraud), estoppel (i.e. detrimental reliance), and prescriptive easement. It requested a jury trial for the remaining legal issues of trespass, negligent misrepresentation, and breach of the covenant of good faith and fair dealing. The District Court granted Burcalow's motion to bifurcate.
¶ 13 The District Court issued findings of fact, conclusions of law, and an order on October 12, 2012. The District Court determined that the Corral possessed a prescriptive easement over and across Burcalow's property. The District Court also rescinded the license agreement. Thus, the District Court estopped Burcalow from relying upon the license agreement and ordered Burcalow to refund the $1,250.00 in fees that the Corral had paid under the license agreement. The District Court entered a judgment on November 2, 2012, in accordance with its October 12, 2012, order.
¶ 14 The District Court conducted a hearing on May 1, 2013, to address whether its November 2, 2012, order constituted a final order. The Corral argued that it never had the chance to present its remaining counterclaims to a jury, including its claims for negligent misrepresentation, detrimental reliance, fraud, and breach of the covenant good faith and fair dealing. The District Court disagreed and deemed its November 2, 2012, judgment to be final. In doing so, the District Court implicitly dismissed the Corral's counterclaims.
¶ 15 We review for clear error a district court's findings of fact. Boyne USA, Inc. v. Spanish Peaks Dev., LLC, 2013 MT 1, ¶ 28, 368 Mont. 143, 292 P.3d 432. We review for correctness a district court's legal determination. N. Cheyenne Tribe v. Roman Catholic Church, 2013 MT 24, ¶ 21, 368 Mont. 330, 296 P.3d 450.
¶ 16 Whether the Corral possesses a prescriptive easement over Burcalow's property.
¶ 17 Burcalow argues that the Corral cannot meet the five-year statutory requirement needed to establish a prescriptive easement on Burcalow's property. Burcalow first claims that the Forest Service owned the Burcalow property at the time that the District Court concluded that the Corral's adverse possession began. Burcalow emphasizes that adverse use cannot run against the federal government. Burcalow next maintains that the Corral's use of Burcalow's land cannot be characterized as adverse in light of the mutual agreement by the parties to allow the Corral's use of the land as set forth in the license agreement.
¶ 18 A prescriptive easement claim requires exclusive, continuous, uninterrupted, open, notorious, and adverse use of a piece of property for five years. Section 70–19–404, MCA; Brown & Brown of MT, Inc. v. Raty, 2012 MT 264, ¶ 19, 367 Mont. 67, 289 P.3d 156. A party cannot obtain title to government property through adverse possession or use under Montana law. Davis v. Hall, 2012 MT 125, ¶ 34, 365 Mont. 216, 280 P.3d 261. Other jurisdictions routinely have recognized that private entities cannot acquire a right to use property owned by the government via prescription. United States v. California, 332 U.S. 19, 39–40, 67 S.Ct. 1658, 1669, 91 L.Ed. 1889 (1947), superseded on other grounds,43 U.S.C. § 1301; United States v. Osterlund, 505 F.Supp. 165, 168 (D.Colo.1981); State v. Hutchison, 721 N.W.2d 776, 782 (Iowa 2006). Courts understand that the federal government lacks the resources to monitor continuously whether people adversely are using its vast land holdings. Restatement (Third) of Property: Servitudes § 2.17 cmt. e (2000).
[372 Mont. 503]¶ 19 The District Court determined that the Corral's adverse use began on December 31, 1998, and, as a result, concluded that the Corral had met the five-year statutory requirement for a prescriptive easement. Thus, the District Court...
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