MOUNTAINVIEW LANDOWNERS CO-OP. ASSOCIATION, INC. v. DR. JAMES …

• Decision Date: 26 February 2004
• Docket Number: No. 28762.,28762.
• Citation: 86 P.3d 484,139 Idaho 770
• Parties: MOUNTAINVIEW LANDOWNERS CO-OPERATIVE ASSOCIATION, INC., an Idaho non-profit corporation; Donald N. Nepean and Haleen Nepean, husband and wife, Plaintiffs-Respondents, v. DR. JAMES COOL, D.D.S. and Synthia Cool, husband and wife, Defendants-Appellants. Dr. James Cool, D.D.S. and Synthia Cool, husband and wife, Counterclaimants-Appellants, v. Mountainview Landowners Cooperative Association, Inc., an Idaho non-profit corporation, Counterdefendant-Respondent.
• Court: Idaho Supreme Court

86 P.3d 484

139 Idaho 770

MOUNTAINVIEW LANDOWNERS CO-OPERATIVE ASSOCIATION, INC., an Idaho non-profit corporation; Donald N. Nepean and Haleen Nepean, husband and wife, Plaintiffs-Respondents, v. DR. JAMES COOL, D.D.S. and Synthia Cool, husband and wife, Defendants-Appellants.

Dr. James Cool, D.D.S. and Synthia Cool, husband and wife, Counterclaimants-Appellants, v. Mountainview Landowners Cooperative Association, Inc., an Idaho non-profit corporation, Counterdefendant-Respondent.

No. 28762.

Supreme Court of Idaho, Coeur d' Alene, October 2003 Term.

February 26, 2004.

Preston, Gates & Ellis, LLP, Coeur d'Alene, for appellants. Joseph T. Reuter argued.

William F. Boyd, Coeur d'Alene, for respondents. William F. Boyd argued.

KIDWELL, Justice.

James and Synthia Cool, (Appellants) husband and wife, appeal the district court's interpretation of the "Use Agreement" which grants Mountain View Landowners Cooperative Association, Inc., (Respondent) an easement to use Appellants' Priest Lake property for swimming and boating, a boat launch, and for parking. The Appellants seek review by this Court regarding the district court's holdings.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Appellants purchased deeded property on Priest Lake in 1998. The property is located at Lot 1, Block 3, Mountain View Addition, Bonner County, Idaho. The Respondent is an Idaho non-profit corporation acting for and on behalf of all other owners of lots in Blocks 1, 2 and 3 of Mountain View Addition. The Appellants purchased the property from Larry and Barbara Bailey who had previously purchased the property from Pauline and Jack Powers.

Mountain View Addition was originally a single tract of land used for commercial purposes including a store, cabins, boat launch, private sandy beach, etc. The original owner, Ben Noonan, platted the property as Mountain View Addition and sold the lots and cabins to persons, including the Appellants' predecessors in interest, as recreational lake property.

In October 1988, Mountain View Landowners Cooperative Association, Inc. and the Appellants' predecessors in interest, Jack E. Powers and Pauline F. Powers, (Powers) husband and wife, made a certain Private Use Agreement and recorded it with the Bonner County Recorder (hereinafter "Use Agreement"). The Use Agreement resolved a previous lawsuit between the Respondent and the Powers. The lawsuit was in regard to the Respondent's use of the Powers' road down to the beach and exactly which beach the Respondent could use.

The Use Agreement provided the Respondent with what amounts to an easement for "use of the beach area located north of the existing boat moorage facility for swimming and boating only without any fee or assessment." The Use Agreement also obligated the Appellants, among other obligations, to provide the Respondent with "use of the improved concrete launching area ... [but, the Appellants] may impose a daily launch fee and may provide the alternative of an annual launch fee." Furthermore, the Use Agreement required the Appellants to provide the Respondent the "use of [a] parking area [which is] contingent upon payment of parking fees on a daily or annual basis payable to the [Appellants]."

On June 9, 1999, the Respondent filed suit against the Appellants alleging breach of the Use Agreement and seeking injunctive relief. Beginning on May 9, 2001, the matter was tried before the District Court of the First Judicial District of Idaho, Bonner County. The district court held that the term "swimming" includes picnicking, sunbathing and gatherings for relaxation and social interaction. The district court also defined the area of the Appellants' parking area contained in the Use Agreement and gave the Respondent the option of paying either daily or annual fees for use of the parking area. The Appellants seek review by this Court regarding the district court's holdings.

II. STANDARD OF REVIEW

The existence of ambiguity determines the standard of review of a lower court's interpretation of a contract or instrument. Union Pac. R.R. Co. v. Ethington Family Trust, 137 Idaho 435, 437-38, 50 P.3d 450, 452-53 (2002). "The initial inquiry into whether a ... legal instrument is ambiguous presents a legal question, over which this court exercises free review." Chubbuck v. City of Pocatello, 127 Idaho 198, 201, 899 P.2d 411, 414 (1995); Union Pac. R.R. Co., at 437-38, 50 P.3d at 452-53. "An instrument which is reasonably subject to conflicting interpretation is ambiguous." Latham v. Garner, 105 Idaho 854, 858, 673 P.2d 1048, 1052 (1983). "The legal effect of an unambiguous written document must be decided by the trial court as a question of law." Id. at 857, 673 P.2d at 1051. "If, however, the instrument of conveyance is ambiguous, interpretation of the instrument is a matter of fact for the trier of fact." Id.

"Findings of fact cannot be set aside on appeal unless they are clearly erroneous, i.e., not supported by substantial, competent evidence." Kohring v. Robertson, 137 Idaho 94, 99, 44 P.3d 1149, 1154 (2002) (citing Savage Lateral Ditch Water Users Ass'n v. Pulley, 125 Idaho 237, 241-42, 869 P.2d 554, 558-59 (1993)). Findings based on substantial although conflicting evidence will not warrant reversal. Id. "[T]he trial court's findings of fact will be liberally construed in favor of the judgment entered." Id.

III. ANALYSIS

A. The District Court Was Correct In Relying Upon Extrinsic Evidence To Define:

1. "Swimming" In The Use Agreement.

As an initial matter that will apply to all subsequent issues, the Use Agreement should be treated as an easement for the analysis below regarding ambiguity. Prior to the execution of the Use Agreement in 1988, deeds of lots in the Mountain View Addition contained "[a] perpetual easement ... for the use of the beach ... in common with other owners of lots in said Mountain View Addition." The Use Agreement of 1988 does not contain the term "easement." Rather, "[t]his agreement shall be binding upon the parties thereto and their heirs and assigns forever. This agreement has the effect of a covenant to the platted subdivision and the terms and conditions shall be binding upon all lot owners in perpetuity." Thus, the language "heirs and assigns" of the Use Agreement resembles that of an easement, yet the term covenant is used to describe the agreement. See King v. Al Lang, 136 Idaho 905, 909, 42 P.3d 698, 702 (2002)

. Therefore, the Use Agreement should be treated as an easement because the 1988 Use Agreement: contains language that creates an easement; defines the original easement contained in the pre-1988 deeds; and was entered into as a settlement for a lawsuit pertaining to the original easement.

Before extrinsic evidence can be used to interpret the term "swimming" in the Use Agreement, this Court must determine that the Use Agreement, or at least the term "swimming," is ambiguous. See Chubbuck at 201, 899 P.2d at 414; Union Pac. R.R. Co., at 437-38, 50 P.3d at 452-53. Extrinsic evidence may be considered to determine the intent of a drafter of an ambiguous document. Matter of Estate of Kirk, 127 Idaho 817, 824, 907 P.2d 794, 801 (1995). This Court has free review over determining ambiguity. Id. Essentially, swimming is ambiguous if it is "reasonably subject to conflicting interpretations." Mut. of Enumclaw Life Ins. Co. v. Lincoln, 130 Idaho 72, 74, 936 P.2d 1314, 1316 (1997).

The Appellant argues that "swimming" has a well-settled definition set forth in dictionaries; as such, there is no patent ambiguity. A patent ambiguity "is evident from the face of the instrument." Estate of Kirk at 824, 907 P.2d at 801. Yet, the circumstances of this case present a latent ambiguity over the term swimming. "A latent ambiguity is not evident on the face of the instrument alone, but becomes apparent when applying the instrument to the facts as they exist." Id.

The Use Agreement states that the "[l]andowners shall have use of the beach area ... for swimming and boating only." Thus, the beach can be used for swimming, but swimming and its accompanying activities are not defined. Appellants claim swimming is restricted to mean only "to propel oneself through water," according to Webster II New Riverside Dictionary, Houghton Mifflin Co., 1984. Adopting the Appellants' strict definition of swimming could lead to illogical results. Parents would be unable to lifeguard their swimming children because they themselves were not "propelling themselves through water." Moreover, such a strict interpretation would preclude those who wish to stand or dangle their feet in the water because they also are not "propelling themselves through water." Id.

Furthermore, there may not be a universal unambiguous definition of swimming as claimed by the Appellants. According to Webster's Third New International Dictionary Unabridged, G. & C. Merriam Co., 1967, swimming "is the act, art, or sport of swimming and diving." Thus, according to at least one other source, swimming also includes diving. Id. Therefore, more than one definition and interpretation of swimming exists. We hold that swimming is an ambiguous term as used in this context; as such, further analysis below is required.

"In construing an easement in a particular case, the instrument granting the easement is to be interpreted in connection with the intention of the parties, and the circumstances in existence at the time the easement was granted and utilized." Nelson v. Johnson, 106 Idaho 385, 387, 679 P.2d 662, 664 (1984); see Villager Condominium Ass'n, Inc., v. Idaho Power Co., 121 Idaho 986, 988, 829 P.2d 1335, 1337 (1992)

; Burns v. Alderman, 122 Idaho 749, 752, 838 P.2d 878, 882 (Ct.App.1992).

Even if the Use Agreement were not construed as an easement, the same "intention of the parties" analysis is warranted. The Use Agreement is, at the least, a contract, because it is binding upon the parties. If the Use Agreement is construed as a contract, "evidence of custom or...