Justia Real Estate & Property Law Opinion Summaries

The New Hampshire Department of Revenue Administration (DRA) appealed a superior court order that reversed its decision assessing a real estate transfer tax against Petitioners Say Pease, LLC and Say Pease IV, LLC. Two International Group, LLC (TIG) is a real estate holding company. It owned a ground lease on property near Pease International Tradeport that it wanted to use to secure a mortgage loan. To obtain the loan, TIG’s prospective lender required that TIG, and all of its members, be "single purpose bankruptcy remote entities." To comply with the lender’s requirement, the members of Say Pease formed Say Pease IV, a new limited liability company (LLC) with the same members. Say Pease IV’s LLC agreement provides that it was "formed for the sole purpose of being a Managing Member and Member of [TIG]" and was not authorized "to engage in any other activity[,] business or undertaking so long as [TIG] shall be indebted under any mortgage or other securitized loan." Say Pease’s interest in TIG was transferred to Say Pease IV, and Say Pease IV replaced Say Pease as TIG’s managing member. As a result of these transactions, Say Pease IV owned a 47.5% interest in TIG as a sole purpose remote bankruptcy entity, Say Pease held no interest in TIG, and TIG obtained the loan. Based upon this transfer, DRA issued notices assessing the real estate transfer tax against Say Pease and Say Pease IV. After appealing unsuccessfully through DRA’s administrative appeal process, Say Pease and Say Pease IV appealed to the superior court. The parties filed cross-motions for summary judgment, and the trial court reversed DRA's order, ruling that the transfer at issue was not a "[c]ontractual transfer," RSA 78-B:1-a, II (2003), and, therefore, the real estate transfer tax did not apply. Upon review, the Supreme Court found that the parties did not employ a business entity as a shield for an otherwise taxable exchange of value for an interest in property. Instead, those that executed Say Pease IV’s LLC agreement sought to maintain TIG’s original ownership while placing it in a suitable financing vehicle; the promises exchanged related to the creation of the financing vehicle, Say Pease IV, not the subsequent property transfer. Thus, the substance of the transaction here failed to create a bargained-for exchange because there was no "exchange of money, or other property and services, or property or services valued in money for an interest in real estate."

In 1995, Petitioner John Rhodes, a resident of the Town of Georgia, petitioned his local governing body, the selectboard, to clarify several issues surrounding two roads that bordered his land.  While this case began as a suit over the existence and use of two ancient roads, "it grew over time into a test of constitutional guarantees and a saga about abuse of power."  After almost fifteen years of litigation, including two side trips to federal court, the trial court entered judgment against the Town of Georgia.  The court found that Petitioner's request to access his land over town roads had been repeatedly and maliciously frustrated by the Town selectboard in an ongoing attempt to protect the value of a neighbor's property, a violation of Chapter I, Article 7 of the Vermont Constitution, the Common Benefits Clause.  The court concluded that Article 7 was self-executing and awarded monetary damages for the constitutional violation.  In this consolidated appeal, the Town of Georgia sought to overturn the trial court decision.  Upon careful review, the Supreme Court affirmed the judgment of liability against the Town: the Court "underscore[d] the unique circumstances" of this case, finding that the "trial court's unchallenged findings describe a deliberate, decades-long course of discriminatory conduct by the Town so malicious and self-serving as to deny Rhodes his fundamental rights to due process and equal treatment under the Vermont Constitution.  Absent such egregious misconduct, and clear proof of the exacting elements necessary for relief, towns and local officials have no cause for concern about the myriad decisions made in the normal exercise of authority.  Failing to recognize a remedy in a case such as this, however, would undermine the constitutional principles that all Vermonters hold dear.  Vermont has consistently sustained its essence as one big small town by affirming and reinforcing the fundamental values that define it.  This decision affirms those values."

Defendant Randy J. Rouleau appealed the decision of the Washington Civil Division which held that Wells Fargo Bank Minnesota, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Security Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-CF2 (Wells Fargo), was entitled to enforce his personal guaranty of a promissory note secured by mortgages on five mobile home parks.  The civil division concluded that Wells Fargo could enforce the guaranty as the holder of the note under 9A V.S.A. § 3-301(i), which defines who may enforce a negotiable instrument.  Defendant argued that the court erred in ruling that Wells Fargo has standing to enforce the guaranty because Wells Fargo could not prove the chain of assignments from the original lender to itself and therefore that Wells Fargo, and not some third party, is the assignee of the guaranty.  Defendant also argued that the court erred in treating assignment of the note as sufficient to show assignment of the guaranty because the guaranty, in contrast to the note, is a separate contract that must be expressly assigned.  Finally, defendant argued that because Wells Fargo lacked standing to enforce the guaranty, the court lacked jurisdiction over the enforcement action.  Based on the evidence presented, the Supreme Court could not conclude that the court's finding that Wells Fargo was assigned the note and mortgage was clearly erroneous.  Moreover, the court's finding on this point, essential to Wells Fargo's status as a holder, directly supports its conclusion that Wells Fargo has standing to enforce the guaranty.  Because Wells Fargo had standing, Defendant's final argument that the court lacked jurisdiction over the enforcement action has no merit. The Supreme Court affirmed the civil division.

In this eminent domain proceeding, Landowner, Manhattan Ice and Cold Storage, initiated district court review of the $3.2 million appraisers' award for the taking of three tracts of land by the condemning authority, the City of Manhattan. The jury returned a verdict of $3.5 million. Landowner appealed, arguing that the trial judge's evidentiary rulings and refusal to instruct on special use prevented it from presenting its theory of the case. The Supreme Court affirmed, holding (1) Landowner's challenges to the trial judge's evidentiary rulings lacked merit and/or resulted in no prejudice; and (2) the jury instructions given in this case were legally sound.

This appeal arose from a decade-long fight over title to a piece of real property. Juan Cuevas allegedly agreed to sell the property to Defendant-Counterclaimant-Appellant Bernardino Barraza in 2001. However, after Barraza failed to pay the purchase price, Juan filed a quiet title action against Barraza. Barraza defaulted. While Barraza was seeking to set aside the default, Juan quitclaimed the property to his relative, Plaintiff-Counterdefendant-Respondent Wilfrido Cuevas. Meanwhile, Barraza was successful in setting aside the default on appeal. On remand, Juan defaulted and the district court quieted title in Barraza. Wilfrido then filed the present quiet title action against Barraza, in which the district court found the default judgment against Juan void and quieted title in Wilfrido. Upon review, the Supreme Court held that the default judgment against Juan is void, but vacated the summary judgment quieting title in Wilfrido as against Barraza.

Real estate purchasers Thomas and Vicki Stevenson appealed the district court's grant of summary judgment that dismissed their unjust enrichment claim against Windermere Capital Group (Windermere), broker to seller 323 Jefferson, LLC (Jefferson). The Stevensons desired to purchase a condominium from Jefferson, and the parties executed a Real Estate Purchase and Sale Agreement (REPSA) for that purpose. Pursuant to the REPSA, the Stevensons deposited $38,000 earnest money with Jefferson’s broker, Windermere. Upon the Stevensons' written authorization, Windermere transferred the funds to Jefferson. Jefferson then paid Windermere a partial commission pursuant to an Exclusive Seller Representation Agreement which obligated Jefferson to pay Windermere a commission whenever a ready, willing, and able purchaser was procured. Jefferson decided not to sell the condominium to the Stevensons and notified them that it was terminating the REPSA. The REPSA specified remedies upon default by either of the parties to the agreement. In the event that Jefferson failed to comply with any term of the agreement, the Stevensons were entitled to their deposit plus interest. Despite this unambiguous provision, Jefferson failed to return the deposit. The Stevensons filed suit against both Jefferson and Windermere. Their complaint alleged that Jefferson breached the REPSA and also advanced a claim of unjust enrichment against both Jefferson and Windermere. The Stevensons also asserted that the REPSA was unenforceable because it did not contain an adequate legal description. Jefferson settled with the Stevensons, agreeing to refund the Stevensons' earnest money, less the commission paid to Windermere. Windermere answered and cross-claimed against Jefferson, alleging two counts of breach of contract, two counts of unjust enrichment and one count of fraud. Windermere later moved for summary judgment as to the Stevensons’ unjust enrichment claim. Upon review, the Supreme Court held that the district court properly exercised its discretion and affirmed the award of summary judgment to Windmere.

A three-mile public recreational trail runs through 32 acres owned by the state and is used, in part, to access the state-managed Scarborough Marsh Wildlife Management Area. In 1961 Maine purchased the land with federal funds under the Federal Aid in Wildlife Restoration Act, 16 U.S.C. 669-669k for the approved purpose of “waterfowl habitat, waterfowl management, and access to waterfowl hunting.” The state subsequently granted easements for sanitary pipelines and a town road and to private parties for access to adjoining property. An easement granted in 2005 allowed construction of a road over 766 feet of previously-restricted trail for access to a planned subdivision. Objectors sought injunctive and declaratory relief, alleging violations of the Wildlife Restoration Act, the National Environmental Policy Act, 42 U.S.C. 4321, and state law. The district court dismissed federal claims and declined to exercise supplemental jurisdiction over the state law claims. The First Circuit affirmed, first holding that the federal agency’s decision to not enforce the funding provisions of the WRA is within its discretion. The federal government did not grant the easements, so NEPA did not apply.

John Witt, HydroTech Corporation, and attorney Mark Shere (Appellants) were held in contempt of court for violating the terms of a temporary restraining order (TRO). The contempt holding arose from protracted litigation in a lawsuit over the costs of an environmental cleanup. The trial court issued the TRO enjoining work on the site until a preliminary injunction hearing could be held. After the TRO was issued, work on the site commenced. The trial court subsequently issued the preliminary injunction. Later, the court held Appellants in contempt and held them jointly and severally liable for $108,487 in costs and attorneys' fees. The Supreme Court granted transfer and affirmed the trial court, concluding that the trial court did not err in holding Witt, Shere, and HydroTech in contempt, determining the sanction, and imposing it jointly and severally.

After Sawmill Creek's taxes became delinquent on its property, the Marion County Auditor set the property for tax sale. A tax deed was issued to McCord Investments upon the petition of the Auditor following the one-year redemption period after a tax sale. The trial court ultimately set aside the tax deed on grounds that the Auditor's effort to notify Sawmill of the tax sale was constitutionally deficient for failing to meet the requirements of due process. The Supreme Court reversed, holding that the notices of the tax sale and of Sawmill's right to redeem did not violate due process because, under the Mullane v. Cent. Hanover Bank & Trust Co. standard, the Auditor's actions were reasonably calculated to provide notice to Sawmill.

The Point of the Mountain Aqueduct is a sixty-inch diameter pipeline that runs along the Draper Canal and transports culinary water to Salt Lake City and other cities in the Salt Lake Valley. Plaintiffs in this case were homeowners who asserted claims challenging Metropolitan Water District's construction of the aqueduct as exceeding the scope of its real property rights along the canal route. The district court granted summary judgment for the Water District. The Supreme Court affirmed the district court's decision in most respects, but reversed the district court's conclusion that (1) Reaches 16-17 were not limited by restrictive covenants; and (2) enclosing the Draper Canal within a buried pipeline was reasonable as a matter of law and so did not exceed the scope of the Water District's property rights in Reach 19. The Court then (1) held that warranty deeds imposed restrictive covenants that run with the land, limiting Reaches 16-17 to canal purposes only; and (2) remanded for a factual determination of whether the canal enclosure was reasonable and did not materially alter the burden to Appellants' land with respect to Reaches 16, 17, and 19.