Lazy Dog Ranch v. Telluray Ranch Corp.

• Decision Date: 14 September 1998
• Docket Number: No. 97SC529,97SC529
• Citation: 965 P.2d 1229
• Parties: 98 CJ C.A.R. 4761 LAZY DOG RANCH, a New Jersey partnership, Petitioner, v. TELLURAY RANCH CORPORATION, a Colorado corporation; Charles Ergen; and Dan Levere, Respondents.
• Court: Colorado Supreme Court

Page 1229

965 P.2d 1229

98 CJ C.A.R. 4761

LAZY DOG RANCH, a New Jersey partnership, Petitioner, v. TELLURAY RANCH CORPORATION, a Colorado corporation; Charles

Ergen; and Dan Levere, Respondents.

No. 97SC529.

Supreme Court of Colorado.

Sept. 14, 1998.

As Modified on Denial of

Rehearing Oct. 19, 1998.

Tisdel, Hockersmith & Burns, P.C., Robert B. Burns, Ouray, for Petitioner.

Cashen, Cheney & Thomas, Robert J. Thomas, Montrose, for Respondents.

Justice MARTINEZ delivered the Opinion of the Court.

The issue before us is the proper approach for determining whether a particular use of an expressly granted easement over land is permitted. We granted certiorari to decide whether the doctrine of collateral estoppel precludes a challenge to a particular use of an easement when the dimensions of the easement have been established by previous litigation. ¹ Because the size of the easement and the use of the easement are distinct concepts, we hold that a party to the earlier litigation is not estopped from challenging a particular use, even if the challenged use takes place within the dimensions of the easement. We hold further that the determination of whether a particular use of an easement by grant is permitted depends in part upon the reasonableness of the challenged use in light of the language and circumstances of the grant. Accordingly, we reverse the judgment of the court of appeals in Lazy Dog Ranch v. Telluray Ranch Corporation, 948 P.2d 74 (Colo.App.1997), and remand the case for further proceedings consistent with this opinion.

I.

This case continues a protracted dispute between landowners in Ouray County, Colorado. Petitioner Lazy Dog Ranch ("Lazy Dog") and respondent Telluray Ranch Corporation ("Telluray") each own portions of a formerly unified property. For several decades prior to ownership by either Lazy Dog or Telluray, the single parcel was owned by Pleasant Valley Ranch ("Pleasant Valley"). In 1986, Lazy Dog's predecessor in title, Kenneth Vilkin, purchased approximately 530 acres from Pleasant Valley. Lazy Dog acquired this property in 1990. In 1991, Pleasant Valley conveyed the remainder of its property, approximately 6,200 acres, to Telluray.

As part of a plan to subdivide its property, Lazy Dog began improving various access roads across its property. One of these access roads, known as the Railroad Grade, actually crosses a small section of Telluray's property. After Telluray placed gates across this portion of the Railroad Grade, Lazy Dog sought a declaratory judgment in the District Court of Ouray County to determine its rights of access across Telluray's property and whether Telluray had a right to place gates across this access. Telluray also sought determination of its claim of rights of access across Lazy Dog's property.

By an order dated May 13, 1994, the trial court made several rulings. First, the court held that the land sale contract between Vilkin and Pleasant Valley (the "Vilkin Contract") did not merge into the warranty deed conveying the Lazy Dog property to Vilkin. Thus, the provisions of the Vilkin Contract not contained in the deed remained fully enforceable. Second, relying in part upon the Vilkin Contract, the court determined that Lazy Dog owned a sixty-foot wide easement across Telluray's (formerly, Pleasant Valley's) property along the Railroad Grade, among other roads. Third, the court balanced the interests of both parties in the subject land and fashioned a compromise in which Telluray was allowed to cross the Railroad Grade with cattle guards rather than gates.

Finally, the court found that Telluray owned various easements across Lazy Dog's property. The court found that the warranty deed, as modified by a correction deed, between Pleasant Valley and Vilkin "is not ambiguous and reserves to Pleasant Valley Ranch and its successors and assigns a non-exclusive right of way access and utility easement 60 feet in width" along certain roads across Lazy Dog's property, including one known as the Sigafus Cutoff.

Thus, the trial court's ruling secured to Telluray, as successor of Pleasant Valley, a sixty-foot wide right of way for access and utilities upon the Sigafus Cutoff across Lazy Dog's property. Lazy Dog subsequently filed a Motion to Amend Findings and Judgment in which it requested that the trial court order's reflect that the historic use of the Sigafus Cutoff was for "agricultural purposes," including the moving of cattle to and from the high country. The trial court denied this request because the easements owned by Telluray were based on documentary grants, rather than on use. Upon review by the court of appeals, the trial court's order was affirmed in all respects. See Lazy Dog Ranch v. Telluray Ranch Corp., 923 P.2d 313 (Colo.App.1996) ( "Telluray I "), cert. denied, No. 96SC252 (Colo. Sept. 3, 1996).

After the trial court's order in Telluray I, Telluray implemented plans to develop its easement along the Sigafus Cutoff. According to Lazy Dog, the Sigafus Cutoff was historically a ten to twelve-foot wide jeep trail along a steep incline. Telluray announced its intention to expand the existing road to thirty feet in width with altered grades. Lazy Dog alleges that Telluray marked all trees within the sixty-foot wide easement for cutting and requested that electric and telephone service to the lots within the Lazy Dog subdivision be shut off in preparation for bulldozing. ² Thereupon, Lazy Dog commenced the litigation that is presently before this court.

Lazy Dog initiated a declaratory judgment action in the Ouray County District Court requesting a determination of Telluray's rights to access across the easement, and requested injunctive relief enjoining Telluray from proceeding with its development plans. Lazy Dog alleged that Telluray's plans to bulldoze and grade the right of way for a road thirty feet in width would cause severe damage to Lazy Dog's property. Specifically, because of the steep incline involved, Telluray would be required to make deep and wide cuts into the terrain in order to grade the Sigafus Cutoff for a thirty-foot wide road. Thus, Telluray's plans would destroy those underground utilities within the sixty-foot wide easement, remove many trees, and cut impassable swaths across the Windy Road where it intersects with the easement, thereby preventing access to the upper portion of the Lazy Dog subdivision. In addition, Lazy Dog alleged that Telluray had no need to improve the Sigafus Cutoff in the proposed manner because Telluray could use (as it had in the past) the existing Windy Road, which begins and ends in approximately the same locations as the Sigafus Cutoff. Thus, Lazy Dog maintained that Telluray should not be allowed to implement its plans to improve the easement because the improvements were unreasonable and unnecessary. ³

Telluray responded to Lazy Dog's complaint with a Motion to Dismiss, which the trial court treated as a Motion for Summary Judgment. After a hearing on January 23, 1995, the trial court granted Telluray's motion. The court first ruled that the extent of an easement based upon a grant is defined exclusively by the language of the grant. The court found that the import of the grant's language was established by the Telluray I litigation, and thus Lazy Dog was barred by res judicata from relitigating this issue. According to the court, the earlier litigation established that the grant's language was unambiguous and reserved to Telluray a sixty-foot wide easement for access and utilities.

The trial court acknowledged that "the exact scope of the easements" was not litigated in Telluray I; however, the court found that the issue of proper use was subsumed within the issue of the easement's width. The court found that, because Telluray's contemplated use would occur within the sixty-foot wide right of way, the use was permitted as a matter of law:

[T]he scope and use of the easement, so long as consistent with a right-of-way access and utility easement, is really unfettered as a matter of law and the Plaintiff cannot in any way restrict Defendants' use and modification of the easement consistent with its use as an access and utility easement.

(Emphasis added.) Because the court found that historic use, reasonableness, and necessity were not relevant to the question of whether Telluray could expand the Sigafus Cutoff road to thirty feet in width, the court concluded that no genuine issue of material fact existed. Accordingly, the trial court declined to hold an evidentiary hearing, and granted summary judgment in favor of Telluray.

Lazy Dog subsequently filed both a Motion to Amend Order and a Motion to Permit Filings of Supplemental Pleadings. In its Motion to Amend Order, Lazy Dog alleged that the non-merged Vilkin Contract limits Telluray's activities on the easement to "maintenance of the existing roads for the same uses and in the same historical condition as they now are." Lazy Dog requested that the court amend its order to prevent Telluray from expanding the easement beyond its historic use. The trial court denied this motion, stating the contract language was irrelevant because "we are dealing with a well-defined and unambiguous grant of easement of which Lazy Dog was aware when [it] purchased the[ ] property."

In its motion to permit supplemental pleadings, Lazy Dog asserted that it had recently learned that Telluray was using the Sigafus Cutoff to benefit property not appurtenant to the easement. Lazy Dog requested injunctive relief to prevent all use of the easement by Telluray "until such time as it can be shown that the easements can be used only for the reserved purposes for the specifically benefited property." The trial court denied this motion, ultimately concluding that "the fact that [the easement] may benefit some other property is of no consequence."

On appeal by Lazy Dog, the court of appeals first determined that "the nature, extent, and use of the easement was the...