Opinion
No. 35654-6-II.
April 8, 2008.
Appeal from a judgment of the Superior Court for Kitsap County, No. 06-2-00672-2, M. Karlynn Haberly, J., entered November 8, 2006.
Affirmed by unpublished opinion per Houghton, C.J., concurred in by Armstrong and Van Deren, JJ.
Dan and Jean Preston filed a slander of title claim against Meadowmeer Golf Country Club (MGCC), after MGCC filed a lien on the Prestons' property (Property) for unpaid membership dues and other costs. MGCC appeals the trial court order denying its cross motion for summary judgment and granting the Prestons' motion for summary judgment. We affirm.
FACTS
In May 1969, Meadowmeer, Inc., filed a Declaration of Protective Covenants and CC Rs (Covenants, Conditions Restrictions), as recorded under Kitsap County Auditor's File No. 953961, that governed a discrete portion of its property, namely, the Plat of Meadowmeer Division 1. The legal description of the subject real property included "[a]ll the land embraced within the Plat of Meadowmeer, Division 1, according to the plat thereof recorded in Volume 13 of Plats . . . records of Kitsap County." Clerk's Papers (CP) at 100. The parties agree that the legal description did not include the Property, which was adjacent to the Plat of Meadowmeer.
In 1979, Meadowmeer, Inc., amended the 1969 covenants and recorded them under File No. 7912270105. The amended Meadowmeer Protective Covenants (Covenants) would "supersede and replace any and all such covenants heretofore made applicable to the Meadowmeer area." CP at 152. A majority of the Meadowmeer landowners agreed to be bound by the Covenants.
Under Article I, Section 2 of the Covenants, "[t]he area subject to these covenants . . . shall include all improved residential lots and unimproved building sites situated in the area known and referred to as 'Meadowmeer.'" CP at 152. Article IX, Section 1 provides that "[t]he foregoing covenants shall constitute a servitude upon all lots within the area above described in Article I and those hereafter, by agreement of the owners thereof, properly included and brought within their provisions." CP at 158. Additionally, Article IX, Section 2 states that the Covenants "shall run with the land and be binding upon all present and future owners of said lots and upon all persons claiming by, through or under them as provided in Article I, Section 3 hereof." CP at 158.
Article I, Section 3 provides:
All improved residential lots and unimproved building sites within the above-described area shall be held, transferred, sold, conveyed and occupied subject to these covenants, including without limitation reservations, easements and buffer zones of record, all of which shall run with the land and be binding upon all the present and future owners of said property and all persons claiming by, through or under them including without limitation any purchasers, grantees, transferees, heirs, devisees, administrators, executors, successors or assigns.
CP at 153.
In April 1981, Meadowmeer, Inc., filed with the county auditor a statutory warranty deed conveying real property to Meadowmeer Woods Associates (MWA). The parties agree that the adjacent land conveyed in this transaction includes what is presently the Property. The conveyance deed stated that the real property conveyed is "SUBJECT TO restrictive and protective covenants, as amended, recorded under Kitsap County Auditor's # 7912271105." (Emphasis added.) CP at 202. In a declaration, Steve Green of Land Title Company of Kitsap County stated that he had researched that file number and that, unlike the actual file found under No. 7912270105, the file referred to in the 1981 conveyance deed does not exist. (Boldface added.)
In its cross motion for summary judgment, MGCC sought to have File No. 7912271105 corrected by the trial court as a scrivener's error, claiming that the correct auditor file number was 7912270105, the file number under which the auditor recorded the covenants.
Also, Green reviewed the Plat of Meadowmeer and later documents recorded under File Nos. 953961, 7912271105, 7912270105, 9005240198, and 3136599. According to Green, the Property is not located within the Plat of Meadowmeer or within the area subject to the Covenants per the document's attached map and legal description.
In April 1983, MWA sold a parcel to Corman and Lavina Geisler. The quitclaim deed stated, "SUBJECT to restrictive and protective covenants, as amended and recorded under auditor's file No. 7912271105." CP at 200. This conveyance also included what is now the Property.
In 1990, the Geislers subdivided the real property into three parcels and filed a Short Subdivision Application (Short Plat 5169) for Lots A, B, and C. The Property is Lot B. Short Plat 5169 was filed with Kitsap County under File No. 9005240198, and it stated that the real property was subject to "restrictive and protective covenants, as amended and recorded under Auditor's File No. 7912271105." CP at 122.
In August 1990, the Geislers conveyed the Property to James and Susan Theros by a statutory warranty deed that described the Property as subject to "[c]ovenants, conditions, restrictions and or easements and maintenance agreements as contained in the Short Plat No. 5169, recorded under Auditor's File No. 9005240198." CP at 142. On February 6, 1998, the Theroses executed a deed of trust for the Property, with Continental Savings Bank as beneficiary. The deed contained a planned unit development rider that stated:
The Property includes, but is not limited to, a parcel of land improved with a dwelling, together with other such parcels and certain common areas and facilities, as described in the Declaration of Covenants, Conditions and Restrictions (the "Declaration"). The Property is a part of a planned unit development known as MEDOWMEER [sic] [Name of Planned Unit Development] (the "PUD"). The Property also includes Borrower's interest in the homeowners association or equivalent entity owning or managing the common areas and facilities of the PUD (the "Owners Association") and the uses, benefits and proceeds of Borrower's Interest."
CP at 134.
On November 30, 1998, the Prestons purchased the Property from the Theroses. Both the Prestons' deed and title insurance report refer to File No. 9005240198. James Theros told the Prestons he believed the Property was located outside the Plat of Meadowmeer and not subject to the Meadowmeer covenants.
The minutes of a September 16, 2003 MGCC board meeting reflect that the Theroses informed the board that the Geisler short plat was never put into the Meadowmeer map and that the Meadowmeer Homeowners Association never accepted the Property into the Covenants.
On January 16, 2004, MGCC filed a lien claim on the Property for costs related to the Covenants. On March 21, 2006, the Prestons filed a slander of title action against MGCC.
MGCC sought "charges, assessments or dues and collection costs as authorized" by the Covenants. CP at 49. Specifically, MGCC claimed unpaid monthly dues in the amount of $532.32, unpaid "[c]orresponding dues from January 1, 2004 at $65.16 per month or the then-current rate," along with interest and collection costs. CP at 49.
On June 27, 2006, the Prestons moved for summary judgment on their slander of title claim, arguing that MGCC wrongfully filed the lien because the Covenants did not apply to the Property. On July 13, MGCC filed a cross motion asking the trial court to decide that the Property was subject to the Covenants. MGCC also asked the trial court to correct the incorrect auditor's filing number as a scrivener's error under the doctrine of reformation.
With respect to the Prestons' slander of title claim, the trial court determined that genuine issues of material fact precluded summary judgment and denied the motion. With respect to MGCC's cross motion, the trial court found that the Property was not subject to the Covenants as a matter of law because the Property was not included in the legal description of property subject to the Covenants.
In addressing the nonexistent auditor's file number, the trial court stated:
Defendants Motion for Summary Judgment seeking reformation of the Short Plat documents filed under Kitsap County Auditor's #9005240198 as a matter of law is denied. The documents under that filing number were unilaterally created by Bill Geisler and his agent. There was no bilateral agreement identified between Geisler and the "Meadowmeer" property legally described under Kitsap County Auditor's #7912270105. There are no material issues of fact in dispute as to the documents and the creation of those documents. Based on these undisputed material facts, there were no parties that made a mutual mistake for whom the Court could or should exercise equitable powers to reform the documents. There was a unilateral mistake by Mr. Geisler that cannot be remedied by the doctrine of reformation. Assuming arguendo that the Court could correct what could be found to be a scrivener's error under some other theory of law, the property is not included in the legal description for Meadowmeer for which included properties are subject to the Meadowmeer covenants. Therefore, the Preston property is not subject to the covenants as a matter of law.
CP at 192.
MGCC moved for reconsideration, submitting, as new evidence, the deeds from Meadowmeer, Inc., to MWA and from MWA to Geisler. MGCC argued that the deeds showed mutuality of intent of the original developer and purchaser to bind the Property to the Covenants.
The trial court denied MGCC's motion, finding:
It is undisputed that the property Geisler short platted is not within the property legally described for the Meadowmeer [Protective] Covenants and has never been included within that legal description. It is undisputed that the three lots developed by Geisler were stated to be subject to the Meadowmeer Restrictive Covenants on the face of the plat.
The inclusion in the short plat and deeds to successors in interest that transferred the lots subject to the covenants could not and did not modify or amend the legal description of "Meadowmeer."
The owners of the lots within "Meadowmeer" never agreed to include the three lots owned by Geisler within the Plat of Meadowmeer. Therefore, there was no real covenant binding the Plaintiffs' property to the Meadowmeer [Protective] Covenants. Alternatively, there was no equitable restriction because "Meadowmeer" never accepted the Geisler property into the Plat of Meadowmeer. The Geisler property was simply never included within the property bound by the Meadowmeer Protective Covenants. This is fatal to their attempt now to impose the provisions of the covenants on Plaintiffs' property.
CP at 219.
Later, the trial court entered a CR 54(b) certification order.
ANALYSIS
MGCC contends that the trial court erred in deciding that the Covenants do not apply to the Property as a matter of law. It asserts that the trial incorrectly based its decision on the fact that the Property does not appear in the Meadowmeer subdivision legal description.
On review of an order for summary judgment, we engage in the same inquiry as the trial court. Hollis v. Garwall, Inc., 137 Wn.2d 683, 690, 974 P.2d 836 (1999). We consider summary judgment appropriate when the pleadings, depositions, admissions, and affidavits, if any, show that no genuine issue of material fact exists, thus entitling the moving party to judgment as a matter of law. CR 56(c); Hollis, 137 Wn.2d at 690. We consider the facts and all reasonable inferences in the light most favorable to the nonmoving party, and we review all questions of law de novo. Mountain Park Homeowners Ass'n v. Tydings, 125 Wn.2d 337, 341, 883 P.2d 1383 (1994).
Two basic types of covenants run with the land, real covenants and equitable covenants, although Washington courts do not generally distinguish between them. Hollis, 137 Wn.2d at 691; see Lake Limerick Country Club v. Hunt Manufactured Homes, Inc., 120 Wn. App. 246, 254, 84 P.3d 295 (2004). Under Washington law, both real covenants and equitable servitudes "must originate in a covenant that is enforceable between the original parties under the law of contract." 17 William B. Stoebuck John W. Weaver, Washington Practice: Real Estate: Property Law § 3.11, at 149 (2d. ed. 2004); see Lake Limerick, 120 Wn. App. at 254. Thus, we must determine whether the original covenant was, as a matter of law, enforceable between the original parties. We hold that it was not enforceable, but we reach this decision based on reasoning that differs from the trial court's.
We may affirm the trial court on any ground, even though the trial court did not directly consider the particular ground. Nast v. Michels, 107 Wn.2d 300, 308, 730 P.2d 54 (1986).
MGCC argues that, "[i]n connection with the sale of the property, Meadowmeer Inc. and [MWA] agreed to bind the subject property to the Meadowmeer Covenants and included language in the deed that incorporates the covenants by reference." Appellant's Reply Br. at 4. We disagree. By its terms, the statutory warranty deed recorded in 1981, between Meadowmeer, Inc., and MWA incorporated by reference a nonexistent auditor's file.
Nevertheless, MGCC asks that the original 1981 conveyance between MGCC and MWA be reformed to reflect the parties' mutual intent. It is well settled that a court in equity may reform a contract to correct a scrivener's error. Geoghegan v. Dever, 30 Wn.2d 877, 889, 194 P.2d 397 (1948). "A scrivener's error occurs when the intention of the parties is identical at the time of the transaction but the written agreement errs in expressing that intention." Reynolds v. Farmers Ins. Co., 90 Wn. App. 880, 885, 960 P.2d 432 (1998). But a deed cannot be reformed as against innocent purchasers for value. See Seward v. Spurgeon, 9 Wash. 74, 77, 37 P. 303 (1894); see also Billings v. Billings, 156 Wash. 505, 512, 287 P. 46 (1930) (holding that a lessor conveying land to a lessee cannot assert against subsequent innocent mortgagees that deed and lease do not express what they express on the face of the documents).
According to Seward, equitable reformation of the original deed or the Geisler Short Plat would be improper if the Prestons were "innocent purchasers." 9 Wash. at 77. Both parties argue about whether the Prestons had notice of the Covenants. "One who has notice of facts sufficient to prompt a person of average prudence to inquire is deemed to have notice of all facts which reasonable inquiry would disclose." Enterprise Timber, Inc. v. Wash. Title Ins. Co., 76 Wn.2d 479, 483, 457 P.2d 600 (1969). Even if we were to agree with MGCC that the Prestons indeed bargained for a property subject to some covenants, because of the scrivener's error in the original conveyance, a reasonable inquiry would not reveal that the Property was specifically subject to the Covenants. Further, even had the Prestons somehow discovered, by happenstance the correct auditor's file, the legal description of Meadowmeer does not include the Property. Thus, as the trial court correctly decided, the Prestons purchased without notice of the Covenants.
In sum, no enforceable agreement existed between the original parties. And the innocent purchase by the Prestons precludes deed reformation. Therefore, the trial court correctly found that the Covenants do not bind the Property.
Because we hold that the trial court did not err, we do not address the parties' further arguments regarding the doctrine of incorporation by reference.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered. Armstrong, J., Van Deren, J., concur.