Philip Mnuk v. Harmony Homes Inc., 2009AP1178.

• Decision Date: 29 July 2010
• Docket Number: No. 2009AP1178.,2009AP1178.
• Citation: 790 N.W.2d 514,2010 WI App 102
• Parties: Philip MNUK and Holly Mnuk, Plaintiffs-Respondents, v. HARMONY HOMES, INC., Defendant-Appellant.
• Court: Wisconsin Court of Appeals

790 N.W.2d 514
2010 WI App 102

Philip MNUK and Holly Mnuk, Plaintiffs-Respondents,
v.
HARMONY HOMES, INC., Defendant-Appellant.

No. 2009AP1178.

Court of Appeals of Wisconsin.

Submitted on Briefs March 8, 2010.
Opinion Filed July 29, 2010.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Joshua L. Gimbel and Susan M. Sager of Michael, Best & Friedrich, LLP, Milwaukee.

On behalf of the plaintiffs-respondents, the cause was submitted on the brief of Thomas G. Kreul of Schober & Radtke, S.C., New Berlin.

Before VERGERONT, LUNDSTEN and FITZPATRICK, JJ. ¹

790 N.W.2d 516

VERGERONT, J.

¶ 1 This action arises out of two access easement agreements between adjoining landowners in which each granted an easement to the other for the purpose of building a joint driveway. The agreements also provided that one of the landowners, Harmony Homes, Inc., was financially responsible for building

and maintaining the driveway. ² The other landowner, Philip and Holly Mnuk, filed this action seeking modification of the easements and other relief based on the impossibility of building the driveway on the easements because of the existence of wetlands. Harmony Homes appeals two rulings of the circuit court in favor of the Mnuks. First, Harmony Homes contends the court erred in concluding the action was timely. According to Harmony Homes, the six-year statute of limitations for contract actions applies, not the forty-year statute of limitations regarding easements. Second, Harmony Homes contends the court erred in concluding it had the authority to modify the easements. According to Harmony Homes, the easements must be terminated because it is now impossible to fulfill their primary purpose.

¶ 2 On the first issue, we conclude that the two claims relevant to this appeal are timely. The Mnuks' claim for a modification of the easements is governed by the forty-year statute of limitations for enforcing easements, Wis. Stat. § 893.33(6) (2007-08), ³ not the six-year statute of limitations for contract actions, pursuant to § 893.43. As to their claim for a declaration of Harmony Homes' obligations under the construction provisions of the agreements, even if § 893.43 is the applicable statute of limitations-an issue we do not decide-the six years has not yet begun to run because there has been no breach of the construction provisions.

¶ 3 On the second issue, we conclude the circuit court employed an incorrect analysis but we affirm because we conclude that Restatement (Third) of Property: ServitudesS § 7.10(1) (2000) ⁴ is applicable. Under this provision, the circuit court has the discretionary authority to modify or terminate the easements, given that it is impossible to accomplish their primary purpose. In addition, under this provision, the court has the authority to award compensation for harm resulting from either modification or termination.

¶ 4 Accordingly, we affirm and remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 5 For purposes of this appeal, the relevant facts are not in dispute. Harmony Homes was a joint venturer in the development of a subdivision in the Town of Waukesha. The Mnuks purchased lot 121 in 1987. Lot 121 lies to the north of several lots that abut the street, Kame Terrace, to the south. The Mnuks have an easement (western easement) over two of these lots for access to the western part of their property, where they built a residence.

¶ 6 In 1990 the Stelpflugs purchased the lot to the north of the Mnuks, lot 120. The Stelpflugs subsequently filed a lawsuit claiming that their property was landlocked

790 N.W.2d 517

and demanding that the town lay out a public road over the western easement and apparently over a small portion of the Mnuks' property. In order to provide the Stelpflugs access without a public road, and in order to provide the Mnuks with access to the eastern part of their property, the Stelpflugs, the

Mnuks, and Harmony Homes entered into negotiations. ⁵ The result was the withdrawal of the Stelpflugs' petition for a public road and drafting of the access easement agreements that are at issue in this case.

¶ 7 As part of these negotiations Harmony Homes hired surveyors to lay out an area over eastern portions of lots 121 and 120 that the Mnuks describe as “poles”-narrow pieces of land on each lot that extend to Kame Terrace-for a driveway that provides access to both lots. This area was laid out in a manner that took into account the wetlands that were there. ⁶ In 1995 the Stelpflugs and the Mnuks both signed a Lot 120 Access Easement Agreement under which the Stelpflugs granted the Mnuks a perpetual, nonexclusive easement on the described area on their property for motor vehicle and pedestrian ingress and egress. At the same time, both parties also signed a Lot 121 Access Easement Agreement under which the Mnuks granted the Stelpflugs the same type of easement on a described area of the Mnuks' property.

¶ 8 In addition, in the Lot 121 Access Easement Agreement, the Mnuks granted the Stelpflugs the right to construct and maintain a driveway in a specified location on the easement they granted. In the Lot 120 Access Easement Agreement the Stelpflugs granted the

Mnuks the right to use the driveway that the Stelpflugs were to construct on the easement they granted. Both agreements contained identical provisions on construction of the driveway under which the Stelpflugs were responsible, “at [their] sole expense” for the construction and were to pave it by the earlier of one year from the construction of a dwelling on their property or three years from the date of the agreement. If they did not complete it within that time period, the Mnuks could contract for the work and the Stelpflugs were responsible for the costs. The Stelpflugs were also responsible for the maintenance and repair of the driveway.

¶ 9 The Lot 121 Access Easement Agreement also obligated the Stelpflugs to reconstruct the western easement within three months of the agreement.

¶ 10 In 1997 the Stelpflugs sold lot 120 to Harmony Homes. Apparently, Harmony Homes concedes that it thereby assumed the obligations of the Stelpflugs under the 1995 access easement agreements. Harmony Homes did not complete the reconstruction of the western easement until 2002. Harmony Homes then informed the Mnuks that it was going to build the driveway described in the access easement agreements. Because of the passage of time, the wetlands needed to be re-delineated and this process revealed that there were wetlands in the area on which the turnaround of the driveway was to be built. Harmony Homes and the

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Mnuks attempted to negotiate a new location for the driveway to avoid the wetlands but were unable to do so.

¶ 11 The Mnuks filed this action in March 2007 seeking a declaratory judgment modifying the easements, a declaration that Harmony Homes is bound by its obligations under the access easement agreements, and other relief.

¶ 12 Harmony Homes moved for summary judgment on two primary grounds: (1) the Mnuks' claims are barred by the six-year statute of limitations for contract actions; and (2) the easement agreements should be terminated because it is not possible to construct a driveway on the easements given the wetlands, and the court did not have the authority to modify the easements. The circuit court concluded that the forty-year statute of limitations for easements applied, not the six-year statute of limitations for contract actions, and therefore the action was timely. The court also concluded that it was legally impossible to build a driveway on the easements described in the agreements, that the legal descriptions were severable under the severability clause in the agreements, and that this created an ambiguity, which gave the court the authority to modify the easements. The court also concluded that, because the designated time period for Harmony Homes' construction of the driveway had passed, the Mnuks could install it and Harmony Homes would then be responsible for reimbursing the Mnuks.

¶ 13 The court's order anticipated further proceedings in which it would decide how to modify the easement. We granted Harmony's petition for leave to appeal this non-final order.

DISCUSSION

¶ 14 On appeal Harmony Homes renews its arguments that the action should be dismissed because it is barred by the six-year statute of limitations for contract actions and, alternatively, the easements may not be modified and should be terminated.

¶ 15 The effect of the circuit court's challenged rulings was a denial of Harmony Homes' motion for summary judgment and a partial summary judgment in

the Mnuks' favor. Because the relevant facts are undisputed, the question is whether the circuit court's rulings were correct as a matter of law. See Wis. Stat. § 802.08(2). Our review is de novo. Green Spring Farms v. Kersten, 136 Wis.2d 304, 314-16, 401 N.W.2d 816 (1987).

I. Statute of Limitations

¶ 16 Harmony Homes contends that the Mnuks' claims are governed by Wis. Stat. § 893.43, which provides: “An action upon any contract, obligation or liability, express or implied ... shall be commenced within 6 years after the cause of action accrues or be barred.” According to Harmony Homes, the Mnuks' cause of action accrued when Harmony Homes did not build the driveway within three years from the date of the agreements and, thus, the Mnuks had to file their action before July 13, 2004. The Mnuks respond that the proper statute of limitations is that contained in § 893.33(6), which provides that an action to enforce a recorded easement may be filed anytime within forty years of the recording. ⁷ They also assert

790 N.W.2d 519

that the agreements do not require Harmony Homes to build the driveway within three years but, rather, provide that, if it does not, the Mnuks may build it and

Harmony Homes must pay for it. Therefore, they continue, no cause of action for a breach of that obligation has yet accrued.

¶ 17...