Opinion
No. C9-02-457.
Filed October 22, 2002.
Appeal from the District Court, St. Louis County, File No. CX01600046.
William M. Burns, Jacob J. Baker, (for respondents)
Virginia A. Dwyer, Michael J. Dwyer, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In this real-estate dispute, appellant challenges a declaratory judgment and injunction that the district court granted after finding that appellant's proposed plat alteration violates a restrictive covenant. Appellant argues that (a) the judgment is inconsistent with the prior denial of respondents' motion for summary judgment; (b) the record does not support the district court's reading of the restrictive covenant; (c) the district court's reading of the covenant renders parts of it meaningless and unreasonably restrains alienation; (d) the district court erred by not deferring to the city's approval of appellant's request to alter the plat; and (e) respondents failed to join the city, an indispensable party. Because we find no error, we affirm.
FACTS
In 1991, Sonside Investments, Inc. purchased property in St. Louis County and platted it as a development called Crystal Tree. The Crystal Tree plat contains a restrictive covenant, which, in relevant part, is to run with the land "for a period of thirty years from the date of the deed of conveyance." Paragraph 3 of Crystal Tree's Declaration of Protective Covenants provides:
LOT AREA AND WIDTH. No dwelling shall be erected or placed on any lot having a width of less than 76 feet at the minimum building setback line, nor shall any dwelling be erected or placed on any lot having an area of less than 14,000 square feet. There shall be a limit of one dwelling per lot, and no lot shall be subdivided to enable the construction of another dwelling.
In 1993, respondents James and Judy Murphy purchased a lot in Crystal Tree and constructed a single-family house on the lot; in 1996, respondent Joseph R. Link purchased two lots in Crystal Tree and constructed one single-family house on those two lots. Sonside sold most of the remaining lots to appellant Northwood Oaks L.L.C. under a contract for deed.
Respondent James Murphy died after the trial. His wife, Judy Murphy, remains a respondent.
In November 2000, Sonside and Northwood received approval from the City of Duluth's planning commission to replat the Northwood lots as a new development called Crystal Village. Under the Crystal Village plat, 31 undeveloped lots and 2 outlots in Crystal Tree were reconfigured to become 58 lots. The streets also were reconfigured, and one access from the major highway to the north was eliminated.
Link and the Murphys brought a declaratory-judgment action against Sonside and Northwood, contending that the new plat violated the restrictive covenant associated with the Crystal Tree plat and that they had relied on that covenant when they purchased their lots. They argued that the proposed replatting subdivided lots to enable the construction of additional dwellings, in violation of the covenant. They sought to enjoin Sonside and Northwood from vacating or altering the Crystal Tree plat.
The district court denied motions for summary judgment brought first by Link and the Murphys and subsequently by Northwood and Sonside. Following a bench trial, the district court granted Link and the Murphys a declaratory judgment and enjoined Sonside and Northwood from
further efforts * * * to replat any portion of the plat of Crystal Tree in violation of the Declaration of Protective Covenants prohibiting the subdivision of lots to enable the construction of more dwellings.
This appeal followed.
DECISION
In reviewing a judgment when the appellant has not moved for a new trial, our review is limited to whether "the evidence sustains the findings of fact and whether such findings sustain the conclusions of law and the judgment." Gruenhagen v. Larson, 310 Minn. 454, 458, 246 N.W.2d 565, 569 (1976). Because Northwood did not move for a new trial and represents that it does not dispute the district court's findings of fact, we examine only whether the district court's findings sustain its conclusions of law and judgment.
Ambiguity of Covenant
Restrictive covenants must "be given the full force and effect intended by the parties who created them, and where the language used is clear and unambiguous it will be given its obvious meaning." Rose v. Kenneseth Israel Congregation, 228 Minn. 240, 253, 36 N.W.2d 791, 798 (1949) (quotation omitted). When specific provisions of a contract cannot be reconciled easily with its other provisions, the contract is ambiguous and the court must examine "all the facts and circumstances surrounding the transaction." Donnay v. Boulware, 275 Minn. 37, 43, 144 N.W.2d 711, 715 (1966); see State by Crow Wing Env't Prot. Ass'n, Inc. v. City of Breezy Point, 363 N.W.2d 778, 781 (Minn.App. 1985) (using rules for interpretation and construction of contracts to construe restrictive covenant), review denied (Minn. May 20, 1985); see also Beall v. Hardie, 279 P.2d 276, 278 (Kan. 1955) (stating that the word "covenant" means "to bind oneself in contract"); Clarke v. Devoe, 26 N.E. 275, 276 (N.Y. 1891) (using rules of contract construction, similar to those articulated in Donnay, to construe a restrictive covenant because a covenant "is simply a contract of a special nature"). In doing so, the court may resort to extrinsic evidence, and construction of the covenant is a question of fact unless the evidence is conclusive. Donnay, 275 Minn. at 44, 144 N.W.2d at 716.
Northwood argues that the district court erred by construing the covenant without first making an explicit finding that the covenant is ambiguous and, despite its claim that it does not dispute the court's findings of fact, that the court's implicit "finding" that the covenant is ambiguous is not supported by the facts.
There is no requirement that a district court explicitly conclude that a covenant is ambiguous before it resorts to using extrinsic evidence to construe it. See Ecolab, Inc. v. Gartland, 537 N.W.2d 291, 295 (Minn.App. 1995) (stating that, although it was unclear whether district court had determined contract was ambiguous, reviewing court would independently determine issue of ambiguity, which is question of law). By denying the parties' motions for summary judgment, the district court implicitly concluded that paragraph 3 of the covenant is ambiguous with respect to whether it applies to the proposed replat of the property. Although the district court stated in its memorandum that it seemed "clear" that Link and the Murphys could not subdivide their lots, it heard evidence with respect to the intent of the covenant and the process of replatting before determining that the effect of the proposed replatting would be no different from that caused by subdividing a lot and, therefore, is prohibited by the covenant. The court stated:
The parties' dispute is over whether the restrictive covenants should be interpreted to prohibit the re-platting action which defendants now propose to take.
It seems clear that the language of Paragraph 3 would prevent [Link and the Murphys] from having purchased their lot[s] * * * and then subdivide [each] into two lots for the purpose of construction of two homes. * * *
The proposed "re-platting" of Crystal Village by the defendants would appear to be no different.
The district court's findings with respect to the details of the dispute and the testimony of Link and the Murphys regarding their understanding of the covenant support the court's implicit conclusion that the covenant is ambiguous.
Northwood also argues that the district court's "finding" of ambiguity is inconsistent with its denial of the summary-judgment motion made by Link and the Murphys. But its conclusion that the covenant is ambiguous is entirely consistent with its previous summary-judgment rulings. Generally, where the terms of a contract are at issue and any of its provisions is ambiguous or uncertain, summary judgment is not appropriate. Donnay, 275 Minn. at 45, 144 N.W.2d at 716. Thus, it is reasonable to infer that by denying the parties' summary-judgment motions, the district court determined that the terms of the covenant are ambiguous.
In its memorandum explaining its denial of the summary-judgment motion brought by Link and the Murphys, the district court described the parties' conflicting interpretations of the covenant and stated that it could not conclude that Link and the Murphys were entitled to judgment as a matter of law. Similarly, when the district court denied the summary-judgment motion made by Northwood and Sonside, it stated that it had denied Link and the Murphys' motion because it determined that the matter should go to trial. At trial, the district court heard evidence regarding the intent of the contracting parties.
Construction of Covenant
When a covenant is ambiguous, the court may look at extrinsic evidence and examine "all the facts and circumstances surrounding the transaction." Id. at 43-44, 144 N.W.2d at 715-16.
Northwood argues that the testimony of Link and the Murphys is less relevant than the testimony of Philip Johnson, Sonside's owner, and therefore, the district court's construction of the covenant is not supported by the evidence of the contracting parties' intent. As we have noted, because Northwood did not move for a new trial, our review would normally be limited to determining whether the district court's findings are supported by the evidence and sustain its conclusions of law and judgment. But because Northwood clearly states in its brief that it agrees with the district court's findings of fact, our review in this case is further limited to ascertaining whether the district court's findings sustain its conclusions of law and judgment. It is inconsistent for Northwood to agree with the court's findings but to argue here that the district court's construction of the covenant is not supported by the evidence of the contracting parties' intent. The role of this court is to correct errors. In re Welfare of M.D.O., 462 N.W.2d 370, 374-75 (Minn. 1990). Because Northwood clearly concedes, in its brief, that the district court's findings are not erroneous, we decline to address Northwood's argument regarding the relevancy of the testimony of Link and the Murphys.
Northwood also argues that the district court did not construe paragraph 3 so as to give meaning to the whole covenant and that the court's interpretation produces an inequitable result because it unreasonably restrains alienation of property. A restraint on alienation
is an attempt by an otherwise effective conveyance or contract to cause a later conveyance
(a) to be void; or
(b) to impose contractual liability on the one who makes the later conveyance when such liability results from a breach of an agreement not to convey; or
(c) to terminate or subject to termination all or part of the property interest conveyed.
Holiday Acres No. 3 v. Midwest Fed. Sav. Loan Ass'n of Minneapolis, 308 N.W.2d 471, 483 (Minn. 1981) (citation omitted).
The district court found that the provisions of the covenant most pertinent to this dispute are paragraphs 1, 3, and 9 and recognized that the covenant would limit Northwood's flexibility to divide the property. The district court concluded that paragraph 3 prevents Link and the Murphys from subdividing their lots and concluded that language similarly prohibits the proposed replatting, which would have the same effect for the balance of the Crystal Tree plat.
The district court's findings and memorandum demonstrate that the district court examined the entire covenant, determined which provisions were most applicable, interpreted the portion that dealt with subdividing property, determined how the covenant affected the proposed new plat, and considered the overall effect on alienation. The district court's construction of the covenant is supported by the findings.
City of Duluth's Involvement
Finally, Northwood argues that the district court erred by failing to address its argument that the city was an indispensable party and that Link and the Murphys' failure to add the city as a party creates a nonjusticiable controversy. Northwood also argues that the district court erred by failing to defer to the city's approval of the new plat.
Northwood does not present an argument regarding how the district court erred by failing to discuss the indispensable party/justiciability issue, but simply cites Minneapolis-St. Paul Sanitary Dist. v. City of St. Paul, 231 Minn. 379, 43 N.W.2d 219 (1950). In that case, the court determined that the City of St. Paul was a necessary party in the declaratory-judgment action because the plaintiff sanitary district wanted the district court to articulate the extent of the city's statutory obligation to pay the district for additions made to the district's sewage-disposal plant. Id. at 382, 43 N.W.2d at 221. Because Northwood provides no argument, we decline to address this issue. See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn.App. 1997) (citation omitted) (stating that assignment of error in brief based on "mere assertion" and not supported by argument or authority is waived unless prejudicial error is obvious upon inspection).
Northwood argues that the district court should have deferred to the city's approval of the proposed plat because the state has given the city the authority to plan. Under Minn. Stat. §§ 462.353, subd. 1, and 462.358, subds. 1a, and 2a (2000), a city has the authority to conduct comprehensive municipal-planning activities to guide its future development, including the authority to adopt regulations related to subdividing property.
But even if the district court should have deferred to the city's approval of the proposed plat as Northwood argues, the evidence does not support a finding that the city approved the new plat. At its August 8, 2000 meeting, the Duluth Planning Commission recognized that it was not a party to the covenant and that the parties who are subject to the covenant are charged with its enforcement. A staff member for the commission recommended final approval of the preliminarily approved replat because it complied with the city's subdivision regulations and the zoning ordinance. That person said that it was his understanding that if the commission approved the replat, it could not be recorded until the parties independently resolved the covenant issue. The commission did not approve the replat on August 8 and readdressed the issue on September 12, 2000, when the commission was informed about the pending legal action among the parties. The commission tabled the issue. On November 11, 2000, although the commission voted to approve the replat so long as there were no more than 58 lots because it met the city's subdivision and zoning requirements, it decided to wait to review and sign the final plat documents until the parties resolved the covenant issue. The record does not indicate that the commission signed the final plat documents.
Because the city is waiting for the resolution of the covenant issue before it signs the replat, the district court did not err by determining the covenant issue independently, even if it were to give the city any deference. See In Re the Petition of Verbick, 607 N.W.2d 148, 151 (Minn.App. 2000) (discussing discretion afforded to city's statutorily granted decision making).
Affirmed.