Posted by: Patricia Salkin | July 6, 2013

VT Supreme Court Considers Rulings and Requirements Relating to Zoning in Connection with a Planned Development and Enforcement of Restrictive Covenants and Holds That Ambiguous Set Back Language in Deed Restriction Must Be Resolved by Extrinsic Evidence

Plaintiff Blanche S. Marsh is a property owner of a parcel within the Quechee Lakes subdivision in Vermont.  Plaintiff brought a declaratory judgment action against her neighbors to establish her right to build a single-family dwelling on her property.  She originally got permit approval from the local zoning board, which was affirmed by the Environmental Division.  In the declaratory judgment action, however, the civil division determined that Plaintiff was in violation of the applicable restrictive covenants and deed restrictions.

Plaintiff’s land deed stated that the property is subject to the “Declaration of Covenants, Restrictions, Rights and Benefits (“Covenants”) pertaining to the Quechee Lakes Subdivision.”  It further provided that the Farmstead (defined as a single-family two-lot parcel of land) dwelling needed to be erected “at the set back line of seventy (70) feet from Hillside Road” and the Salable Lot dwelling “at the set back line of 40 feet from Hillside Road.”  Plaintiff’s property was also subject to the Hartford Zoning Regulations, which likewise required any “building [on a] single-family lot to be built within 40 feet of any public right of way.”

Plaintiff’s property had two equal-sized lots—Lot A and Lot B.  Lot A was already developed with a single-family dwelling, while Lot B remained undeveloped.  Plaintiff sought declaratory judgment to declare her right to build a single-family dwelling on Lot B more than 70 feet from Hillside Road.  In the civil action, Defendants argued that per the Covenants requirements, Plaintiff could not build a dwelling on Lot B because the building began much further than 70 feet from the road.  Defendants also argued that since Plaintiff had a guest quarters on Lot A in addition to the single-family dwelling, the Covenants also prevented Plaintiff from building a third dwelling on Lot B.  The superior court determined that the language of the Covenants did not allow the dwelling to be built more than 70 feet from the road and the additional dwelling on Lot B would constitute an impermissible third dwelling on the property.

On appeal, the Supreme Court of Vermont reviewed (1) whether a statute of limitations barred Defendants from challenging Plaintiff’s claims; (2) whether the civil division lacked jurisdiction over Plaintiff’s action; (3) whether the civil division should have considered extrinsic evidence in its interpretation of the language of the deed restrictions and Covenants; (4) whether the deed language placed a minimum distance requirement or an exact distance requirement on the building of dwellings on the property; (5) whether Plaintiff’s erection of an additional dwelling on Lot B would constitute an impermissible third dwelling; and (6) whether the original developer and Defendants undermined any development restrictions by reconfiguring lot lines and ignoring the restrictions such that they were no longer reasonably valid.

Plaintiff argued that the applicable Vermont statute requires that an action founded on a land deed covenant must be brought within eight years of accrual of the action.  The court determined that accrual of the action began here when Plaintiff began construction of the structure at issue.  Since this began within eight years of the filing of the civil suit, the court concluded that the statute of limitations was not applicable here and the claim was not barred.

With regard to lack of jurisdiction, Plaintiff argued that appeal to the Environmental Division was the exclusive means of challenging this type of action.  As such, Plaintiff claimed that the civil division did not have jurisdiction over the present action.  Plaintiff further asserted a claim of res judicata – specifically that the issue here was already decided by the Environmental Division and should not have been readdressed by the civil division. The court found that due to the subject matter of the issues brought by Plaintiff, the civil division had jurisdiction over the issues regarding the Covenants and deed restrictions while the Environmental Division did not.  Since the issue was regarding the interpretation of the deed restrictions and not about the validity of the zoning permit, only the civil division had proper jurisdiction to discuss such issues.  Likewise, res judicata was not applicable here because the specific issues addressed in the Environmental Division were different than those addressed in the civil division.  While the Environmental Division focused on the validity of Plaintiff’s zoning permit, the civil division focused on Plaintiff’s property rights under the applicable Covenants and deed restrictions.  As such, the particular claim before the civil division had not been previously adjudicated by the Environmental Division.  Since res judicata only precludes the relitigation of identical claims, the doctrine was not applicable here.

The Supreme Court of Vermont then addressed the issue of extrinsic evidence to interpret the language of the land deed.  Plaintiff alleged that the language of the deed was unambiguous regarding the requirement that a Farmstead dwelling be built “at the set back line of 70 feet from Hillside Road” and a Salable Lot dwelling be built “at the set back line of 40 feet from Hillside Road.”  Plaintiff further argued that absent a finding of ambiguity, the civil division should not have considered any extrinsic evidence in determining the meaning behind the deed’s language.

The court discussed how extrinsic evidence may be referred to when determining whether an ambiguity exists in the first place, but that extrinsic evidence should not be referred to if the language is determined to be unambiguous.  Plaintiff’s own witness expressly acknowledged that the language “at the set back line” was unclear.  The two competing interpretations are Plaintiff’s interpretation – that the requirement only established a minimum distance from the road – and Defendants’ interpretation – that the dwelling needed to be built at exactly the stated distance, no closer and no further.  It was Plaintiff’s own theory at trial that the language here was ambiguous.  The appellate court held that Plaintiff could not change its position and challenge the ambiguity of the language when it was Plaintiff’s own assertion in the first place.  Moreover, the court agreed with the determination that the language was ambiguous. It was unclear whether the deed restriction was an exact distance or a minimum distance.

As a result, the court found it appropriate for the trial court to have resorted to extrinsic evidence to interpret the deed language.  The court likewise agreed that the evidence supported the conclusion that the deed required the dwelling to be built at exactly the stated distance and no further.

Defendants also claimed that Plaintiff’s erection of an additional dwelling on Lot B was not permissible because the Covenants restricted the erection of more than two dwellings on the property.  While the civil division found the additional dwelling to be prohibited by the Covenants, the supreme court determined that the issue was barred by the eight year statute of limitations.  The guest house built in Lot A – the alleged second dwelling – was built in 1986 and much more than eight years ago.  As such, the issue of whether a dwelling on Lot B would be a “third dwelling” was barred by this statute of limitations.

Finally, Plaintiff argued that both the original developer of the property and the Defendants had violated the Covenants to the extent that the restrictions had become obsolete.  Plaintiff claimed that she was solely subjected to restrictions that were ignored by others and never enforced.  The court determined that a substantial showing would be required to prove this contention.  Since there was no evidence to indicate that Plaintiff had been solely subjected to these restrictions and that enforcement would be nonsensical in light of the circumstances, the court rejected Plaintiff’s claim for lack of support.

Marsh v. McGillivray, 2013 WL 765367 (VT 3/1/2013)

The opinion can be accessed at: http://info.libraries.vermont.gov/supct/current/op2012-060.html


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