Equine Holdings LLC v. Auburn Woods LLC

• Decision Date: 11 February 2021
• Docket Number: No. 20181022-CA,20181022-CA
• Citation: 482 P.3d 880
• Parties: EQUINE HOLDINGS LLC, Appellant, v. AUBURN WOODS LLC, Densonock LLC, Daniel Simmons, and Blue Sky Ranch Homeowners Association Inc., Appellees.
• Court: Utah Court of Appeals

482 P.3d 880

EQUINE HOLDINGS LLC, Appellant,

v.AUBURN WOODS LLC, Densonock LLC, Daniel Simmons, and Blue Sky Ranch Homeowners Association Inc., Appellees.

No. 20181022-CA

Court of Appeals of Utah.

Filed February 11, 2021

Deborah L. Bulkeley, South Jordan, Attorney for Appellant

Francis M. Wikstrom, Zack L. Winzeler, and Alan S. Mouritsen, Salt Lake City, Attorneys for Appellees

Judge Ryan M. Harris authored this Opinion, in which Judge Jill M. Pohlman and Senior Judge Kate Appleby concurred.¹

Opinion

HARRIS, Judge:

¶1 This case involves a dispute, between owners of lots in a three-lot subdivision, regarding the size of a special use area easement (Special Use Area) that burdens one of the lots. Equine Holdings LLC (Equine) appeals from the district court's ruling, on summary judgment, that the covenants, conditions, and restrictions (CC&Rs) that govern lots in the subdivision, as amended in 2006, were unambiguous, and described a Special Use Area much smaller than Equine envisioned. Based on its determination that the CC&Rs were unambiguous, the court refused to consider extrinsic evidence, proffered by Equine, which indicated that the smaller Special Use Area did not reflect the drafters’ intent. We conclude that the CC&Rs are ambiguous, and therefore reverse the court's summary judgment order and remand for further proceedings.

BACKGROUND²

¶2 In the mid-2000s, an individual (Founder) owned (or controlled, through entities) approximately ninety acres of undeveloped real property, and wanted to divide that property into a "unique three-lot rural subdivision" designed to appeal to horse owners. In 2004, Founder named the subdivision the Blue Sky Ranch Subdivision (Subdivision), and recorded the first set of CC&Rs affecting the property (2004 CC&Rs). A plat map (2004 Plat) was attached to those original CC&Rs the map depicted the manner in which the ninety acres were to be divided into three large lots, and indicated that Lot 2 was to be burdened by a "Special Use Area" easement "as defined in [the] CC&Rs." The Special Use Area, shown as a shaded area on the 2004 Plat, was depicted as a 320-foot-wide corridor that began at a highway on the eastern end of the Subdivision, and terminated on its western end in a straight north-south line; it did not extend into the wide western portion of Lot 2. But other than on the 2004 Plat, the 2004 CC&Rs did not use the term "Special Use Area." Instead, the 2004 CC&Rs appeared to refer to the shaded area on the 2004 Plat as a "[u]se [c]orridor," and described the corridor as a "perpetual non-exclusive easement" for the benefit of Lots 1 and 3 to be used for many purposes, including a "right to access" as well as the right to "walk, run, [or] ride horses."

¶3 An amended plat map for the Subdivision was independently recorded in August 2005 (2005 Plat); this new map showed that Lot 2 was still burdened by a Special Use Area easement, "as defined in [the] CC&Rs," but this time the shaded portion of the Subdivision depicted as the Special Use Area was much larger, extending into the wide western portion of Lot 2 and terminating on its western end not in a straight line but in a meandering line, defined by a creek. The 2005 Plat indicated that the new Special Use Area comprised 33.96 acres. No amendment to the CC&Rs was undertaken in connection with the 2005 amendment to the plat map.

¶4 In October 2005, soon after the 2005 Plat was recorded, Equine entered into an agreement to lease Lots 1 and 3 from an entity controlled by Founder, who at that time still owned or controlled (through various entities) all three lots. Since 2005, when it first leased Lot 1, Equine has continuously operated a horse pavilion on that lot, from which it "offers boarding, training, recreation and other horse related activities to its guests," as well as access to a trail system—located primarily on Lot 2—for its guests to ride their horses.

¶5 In March 2006, Founder amended the plat map again (March 2006 Plat), but this time he also amended the CC&Rs (March 2006 CC&Rs). The March 2006 Plat again depicted a shaded Special Use Area, "as defined in [the] CC&Rs," and, although the total acreage of the shaded Special Use Area was this time reduced to 26.63 acres, that area's western boundary was the same as on the 2005 Plat: a meandering line defined by a creek. In connection with this March 2006 amendment, the CC&Rs were modified so that, for the first time, they defined the term "Special Use Area." The March 2006 CC&Rs did not include a legal description of the Special Use Area, but instead defined it as "that certain shaded area identified as" the Special Use Area on the March 2006 Plat. Like the 2004 CC&Rs, the March 2006 CC&Rs described the Special Use Area as a "perpetual non-exclusive easement" for the benefit of Lots 1 and 3, to be used for many purposes, including "the right to access" and the right to "walk, run, [or] ride horses."

¶6 Also in March 2006, the majority owner and managing member of Equine (Member) entered into a real estate purchase contract with Founder, on behalf of herself "and/or Assigns," tendering an offer to purchase Lots 1 and 3. During the ensuing negotiations and before closing, Member sought assurances from Founder that she and Equine would have access to the Provo River corridor, which borders the far western edge of Lot 2 but does not abut Lot 1 or Lot 3, and is outside the Special Use Area. To accommodate Member's request, Founder again amended the CC&Rs in June 2006 (June 2006 CC&Rs), and did so before closing on the sale of Lots 1 and 3 and while he still owned or controlled all three lots. The June 2006 CC&Rs indicated that the "[o]wner of Lot 2" grants to the owners of Lots 1 and 3 "a perpetual non-exclusive right of way and covenant running with, through and across Lot 2 for the purpose of accessing the Provo River corridor by any non-mechanical means, including pedestrian, horseback and bicycle." This Provo River access easement was different from, and not to be "considered a part of," the Special Use Area.

¶7 The June 2006 CC&Rs did not include a new plat map, and instead referenced the March 2006 Plat as the operative map. But although they did not purport to change the plat map itself, the June 2006 CC&Rs offered a new definition of the Special Use Area, this time utilizing a metes-and-bounds legal description. In the June 2006 CC&Rs, the Special Use Area was described as a "perpetual non-exclusive use and access easement" for the benefit of Lots 1 and 3, to be used for "recreation, or any other legal use." And most significantly for present purposes, the June 2006 CC&Rs described the Special Use Area as "a portion of that shaded area" (emphasis added) on the March 2006 Plat that is "identified as" the Special Use Area, "which portion is legally described as follows:"

An access road being three hundred and twenty (320) feet wide, BEGINNING at a point South 66°16’38" West 1943.76 feet from the Northeast quarter corner of Section 19, Township 3 South, Range 5 East, Salt Lake Base & Meridian; thence South 62°28’44" West 323.253 feet, thence North 55°44’31" East 1203.403 feet; thence North 89°19’54" West 447.286 feet; thence South 0° West 320 feet; thence South 89.19’54" [sic] East 346.969 [feet]; thence South 55°44’31" East 1298.26 feet; thence North 62°28’44" East 514.69 feet; thence Noth [sic] 27°31’16" West 320 feet to POINT OF BEGINNING.

Unbeknownst at the time to either Founder or Member, this legal description contains several errors, both major and minor. On the minor end of the spectrum, the description contains two errors in its fifth call (a decimal point instead of a degree symbol in the directional call, and the omission of the word "feet" after the distance call) and a typographical error in the eighth call ("Noth" instead of "North").

¶8 But in addition to these relatively minor errors, the description contains three other mistakes that are more significant. Specifically, the legal description: (1) uses as its starting reference "the Northeast quarter corner" of a section, a term the parties here agree is meaningless in the Public Land Survey System; (2) states that the point of beginning is "a point South 66°16’38" West 1943.76 feet" from the aforementioned "Northeast quarter corner," a direction and distance that the parties agree is materially erroneous, because the true starting point was apparently meant to be "a point South 66°49’59" West, 1933.88 feet, from the Northeast corner"; and (3) uses the word "East" in its second directional call ("North 55°44’31" East 1203.403 feet") when—according to the parties—it was meant to say "West." Because of these errors, the legal description—when mapped according to its terms—depicts a non-existent parcel of property situated almost completely outside of the Subdivision, with boundaries that do not close.

¶9 Just days after the June 2006 CC&Rs were recorded, Member closed on the purchase of Lot 3, and Equine closed on the purchase of Lot 1. Over the next few years, Member, Equine, and Founder occupied their respective lots in relative peace. All parties appeared to share the understanding that the Special Use Area extended to the creek running through the wide western portion of Lot 2, and that Member and Equine (as the owners of Lots 1 and 3), as well as their invitees, had the right to use that area for recreational pursuits, including horseback riding. The Special Use Area—including specifically the part of it located in the wide western portion of Lot 2—contained many trails for walking and horseback riding, and Equine and Founder shared in both the cost and effort of maintaining those trails.

¶10 In 2012, Founder sold Lot 2 to Daniel Simmons and his wife, who were and are the owners and members of Auburn Woods LLC; Lot 2 was later conveyed to Auburn Woods. In 2014, Densonock LLC—another entity controlled by the Simmonses—acquired Lot 3. Thus, since 2014, Lots 2 and 3 have been controlled by the Simmons Parties ...