C & A Invs. v. Jiangson Duke, LLC

• Decision Date: 11 October 2022
• Docket Number: 79881,83279
• Court: Nevada Supreme Court
• Parties: C & A INVESTMENTS, L.L.C., Appellant, v. JIANGSON DUKE, LLC; BANK OF UTAH, NOT INDIVIDUALLY, BUT SOLELY AS REMAINDERMAN TRUSTEE UNDER REMAINDERMAN TRUST AGREEMENT (1995-2), DATED AS OF JUNE 13, 1995, AS SUCCESSOR TRUSTEE TO WELLS FARGO TRUST COMPANY, N.A. (FORMERLY KNOWN AS WELLS FARGO BANK NORTHWEST, N.A., FORMERLY KNOWN AS FIRST SECURITY BANK OF UTAH, N.A.); AND NORTHERN NEVADA COMSTOCK INVESTMENTS, LLC, Respondents. C & A INVESTMENTS, L.L.C., Appellant/Cross-Respondent, v. JIANGSON DUKE, LLC; AND NORTHERN NEVADA COMSTOCK INVESTMENTS, LLC, Respondents/Cross-Appellants, and BANK OF UTAH, NOT INDIVIDUALLY, BUT SOLELY AS REMAINDERMAN TRUSTEE UNDER REMAINDERMAN TRUST AGREEMENT (1995-2), DATED AS OF JUNE 13, 1995, AS SUCCESSOR TRUSTEE TO WELLS FARGO TRUST COMPANY, N.A. (FORMERLY KNOWN AS WELLS FARGO BANK NORTHWEST, N.A., FORMERLY KNOWN AS FIRST SECURITY BANK OF UTAH, N.A.) Respondent/Cross-Respondent.

C & A INVESTMENTS, L.L.C., Appellant, v. JIANGSON DUKE, LLC; BANK OF UTAH, NOT INDIVIDUALLY, BUT SOLELY AS REMAINDERMAN TRUSTEE UNDER REMAINDERMAN TRUST AGREEMENT (1995-2), DATED AS OF JUNE 13, 1995, AS SUCCESSOR TRUSTEE TO WELLS FARGO TRUST COMPANY, N.A. (FORMERLY KNOWN AS WELLS FARGO BANK NORTHWEST, N.A., FORMERLY KNOWN AS FIRST SECURITY BANK OF UTAH, N.A.); AND NORTHERN NEVADA COMSTOCK INVESTMENTS, LLC, Respondents.

C & A INVESTMENTS, L.L.C., Appellant/Cross-Respondent, v. JIANGSON DUKE, LLC; AND NORTHERN NEVADA COMSTOCK INVESTMENTS, LLC, Respondents/Cross-Appellants, and BANK OF UTAH, NOT INDIVIDUALLY, BUT SOLELY AS REMAINDERMAN TRUSTEE UNDER REMAINDERMAN TRUST AGREEMENT (1995-2), DATED AS OF JUNE 13, 1995, AS SUCCESSOR TRUSTEE TO WELLS FARGO TRUST COMPANY, N.A. (FORMERLY KNOWN AS WELLS FARGO BANK NORTHWEST, N.A., FORMERLY KNOWN AS FIRST SECURITY BANK OF UTAH, N.A.) Respondent/Cross-Respondent.

Nos. 79881, 83279

Supreme Court of Nevada

October 11, 2022

UNPUBLISHED OPINION

ORDER AFFIRMING (DOCKET NO. 79881), AND AFFIRMING IN PART, REVERSING IN PART, AND REMANDING (DOCKET NO 83279)

PARRAGUIRRE, C.J.

These are consolidated appeals from a final judgment following a bench trial in a real property dispute and postjudgment orders denying attorney fees, awarding costs, and denying a motion to set aside the judgment under NRCP 60(b)(5) and (6). First Judicial District Court, Carson City; William A Maddox, Senior Judge.^[1]

The dispute arises from a Reciprocal Easement and Operation Agreement (REOA) that places restrictive covenants on the Northtown Plaza (Plaza) located in Carson City, Nevada. C & A Investments sued to invalidate the REOA restrictions. After a bench trial, the district court entered a final judgment in favor of defendants Jiangson Duke, LLC (Jiangson) and Northern Nevada Comstock Investments, LLC (Comstock). C & A appealed from the final judgment (Docket No. 79881). Thereafter, it also moved for relief from the judgment under NRCP 60(5) and (6), and Jiangson and Comstock filed motions for attorney fees and costs. The district court granted in part the motions for costs but denied the motion for attorney fees and the NRCP 60(b) motion. C & A appealed from the order denying the NRCP 60(b) motion, and Comstock appealed from the orders denying attorney fees and partially denying costs.^[2] Appeal from the final judgment (Docket No. 79881)

In its appeal from the final judgment, C & A first argues that the district court erred by finding that it had not demonstrated changed conditions to warrant invalidating the REOA.^[3] A restrictive covenant like those in the REOA becomes unenforceable when "changed conditions have so thwarted the purpose of the . . . limitation that it is of no appreciable value to other property owners and it would be inequitable or oppressive to enforce the restriction." Gladstone v. Gregory, 95 Nev. 474, 478, 596 P.2d 491, 494 (1979); Wallace v. St. Clair, 127 S.E.2d 742, 757 (W.Va. 1962) ("Changed conditions of the neighborhood will not defeat enforcement of a restrictive covenant unless the changes are so radical as practically to destroy the essential objects and purposes of the agreement." (quoting Rombauer v. Compton Heights Christian Church, 40 S.W.2d 545, 553 (Mo. 1931))); see also Restatement (Third) of Property (Servitudes) § 7.10 cmt. a (2000) (explaining that "[t]he test is stringent: relief is granted only if the purpose of the servitude can no longer be accomplished[] . . . serve[s] no useful purpose, and would create unnecessary harm to the owner of the servient estate"; and further urging courts to "apply the changed-conditions doctrine with caution"). "As long as the original purpose of the covenants can still be accomplished and substantial benefit will inure to the restricted area by their enforcement, the covenants stand even though the subject property has a greater value if used for other purposes." W. Land Co. v. Truskolaski, 88 Nev. 200, 205, 495 P.2d 624, 627 (1972) (quoting W. Alameda Heights Homeowners Ass'n v. Bd. of Cty. Comm'rs, 458 P.2d 253, 256 (Colo. 1969)); see also Gladstone, 95 Nev. at 479, 596 P.2d at 494 (holding that an increased monetary value without the restriction did not justify invalidating the restriction based on changed conditions).

In reviewing the district court's judgment, we give deference to its factual findings that are supported by substantial evidence but review its legal conclusions de novo. See W. Land Co., 88 Nev. at 205, 495 P.2d at 627 (reviewing the district court's factual findings for substantial evidence supporting its decision regarding the enforceability of a restrictive covenant); see also U.S. Bank, Nat'l Ass'n ND v. Res. Grp., LLC, 135 Nev. 199, 200-01, 444 P.3d 442, 445 (2019) (reviewing a "district court's legal conclusions de novo but giv[ing] deference to its factual findings unless they are clearly erroneous or not supported by substantial evidence"). Here, the trial evidence supports the district court's decision. The stated purpose of the REOA restrictions is to provide for the "operation and maintenance thereon of retail mercantile businesses, financial institutions and related facilities common to family-type retail shopping centers." The evidence reflected that, since 1999, C & A has continuously leased space in the Plaza to family-oriented, retail commercial businesses. Additionally, trial testimony showed the property owners benefited from the restrictions tying the properties together by creating a theme for the Plaza and the types of services available there and giving tenants confidence regarding the type of future tenants they could expect at the Plaza. Further evidence showed that the combination of these factors increased the market value of the properties at the Plaza. Although the court heard evidence regarding the economic recession that hit retail commercial businesses in the area beginning in 2006, it also heard evidence that the area was recovering and would return to historic norms within a few years. Thus, substantial evidence supports the district court's findings that the REOA's purpose "has not been thwarted because the Plaza remains a viable family-oriented retail/commercial shopping center," and that the REOA's restrictions continue to benefit the parcel owners.

Lastly, the record reflects that enforcing the REOA restrictions would not be inequitable or oppressive because, as the district court found, C & A was on notice of several factors affecting the Plaza when it acquired its interest in the Plaza and C & A knew of the restrictions when it entered into the REOA. See Wood v. Dozier, 464 So.2d 1168, 1170 (Fla. 1985) (holding that even if changed conditions "would ordinarily be sufficient to grant relief from enforcing the covenants," the fact that the party was on notice when he purchased the property precluded relief (quoting Allen v. Avondale Co., 185 So. 137, 138 (Fla. 1938))). For example, when acquiring its interest in the Plaza, C & A knew that Kmart was experiencing financial difficulties nationally-ultimately leading to store closures and bankruptcy. C & A was also aware that a freeway bypass was going to be constructed around Carson City, and that traffic to the Plaza would diminish once that opened. And while the restrictions may prohibit a more profitable use of the property, that is an insufficient basis to invalidate the restrictions under the doctrine of changed conditions. See Truskolaski, 88 Nev. at 205, 495 P.2d at 627.

C & A next argues that the district court erred by not finding abandonment of the REOA restrictions based on prior violations of those restrictions. To support a finding of abandonment, a party must show violations of the restrictions that are so substantial and general that they "frustrate the original purpose of the agreement." W. Land Co., 88 Nev. at 207, 495 P.2d at 628. Furthermore, abandonment "must be established by clear and unequivocal evidence of acts of a decisive nature." Tompkins v. Buttrum Constr. Co. of Nev., 99 Nev. 142, 145, 659 P.2d 865, 867 (1983) (quoting Lindner v. Woytowitz, 378 A.2d 212, 216 (Md. Ct. Spec. App. 1977)). As evidence of abandonment, C & A alleged that the restrictions had been violated in five instances. The first two alleged violations include a nonprofit tenant that supplies food to local children and a pizza parlor, both of which purportedly violate the REOA restriction on certain food providers. The remaining three alleged violations include a fitness center located in a portion of the abandoned anchor tenant building, gaming machines in the anchor tenant building until 2003, and gaming machines currently in a tenant restaurant. Notably, the gaming machines at issue were operated under a limited gaming license that permits no more than fifteen gaming machines. These violations, even taken together, neither frustrate the Plaza's ability to operate and maintain "retail mercantile businesses, financial institutions and related facilities common to family-type retail shopping centers," nor do they constitute "clear and unequivocal evidence of acts" to abandon the restrictions, Tompkins, 99 Nev. at 145, 659 P.2d at 867. We thus conclude that these violations, occurring over the span of nearly three decades, do not equate to abandonment because they were not "so general as to frustrate the original purpose" of the agreement.^[4] See W. Land Co., 88 Nev. at 207, 495 P.2d at 628. Thus, we affirm the final judgment.

Appeal from the order denying the NRCP 60(b) motion (Docket No. 83279)

C &amp A argues that the district court erred by denying its motion for relief from the judgment under NRCP 60(b)(5) and (6) because it did not apply the correct standards.^[5] Reviewing for an abuse of discretion, see Rodriguez v. Fiesta Palms,...