Summers

• Court: Court of Chancery of Delaware
• Decided: November 3, 2015
• Docket: CA 8599
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE ABIGAIL M. LEGROW MASTER IN CHANCERY NEW CASTLE COUNTY COURTHOUSE 500 NORTH KING STREET, SUITE 11400 WILMINGTON, DE 19801-3734

Draft Report: July 7, 2015 Exceptions Submitted: September 21, 2015 Final Report: November 3, 2015

Charles Snyderman, Esquire The Snyderman Law Firm 11 Middleton Drive Wilmington, DE 19808

Donald L. Gouge, Jr., Esquire Donald L. Gouge, Jr., LLC 800 N. King Street, #303 Wilmington, DE 19801

Re: Summers, et al. v. Walnut Ridge Community Association, Inc. C.A. No. 8599-ML

Dear Counsel:

The plaintiffs filed this action challenging their obligation to pay a portion of

the costs incurred by a community association to improve a private road in the

neighborhood where the plaintiffs live. The defendant – the community

association – seeks summary judgment on the plaintiffs’ claim. Because the

undisputed facts show the plaintiffs are obligated to pay the costs assessed by the

association, I recommend that the Court grant the defendant’s motion. This is my

final report. C.A. No. 8599-ML November 3, 2015 Page 2

BACKGROUND

Unless otherwise indicated, the following facts are not in dispute. Walnut

Ridge is a subdivision consisting of 18 single-family homes serviced by a private

road (the “Private Road”). The subdivision originated in 1955, when Daniel B.

Friel and his wife, Helen J. Friel, subdivided their land into 18 lots and sold the lots

for the purposes of residential development. According to the original deeds

included in the record, the Friels subdivided their property subject to the condition

that the owner of each lot would bear a “1/18th share of the cost, care, maintenance,

and up-keep of said 50 foot wide right of way as laid out in its entirety within this

subdivision.”1

The plaintiffs, Van and Margaret Summers (“the Summers”), purchased lot

1 in Walnut Ridge in 1996.2 The Summers’ deed specifies that they must pay a

“1/8th [sic] share of the care, maintenance, and up-keep of the [Private Road].”3

The Walnut Ridge Community Association (the “Association”) was formed in 1 See Def.’s Reply in Supp. of Mot. for Summ. J. (hereinafter “Def.’s Reply”) Ex. 3. Although the Defendant represents that this exhibit encompasses all of the “dispositive deeds from the Friels,” the exhibit appears only to contain the original deeds for lots 1, 2, 5, 7, 8, 12, 14, and 15. Compare Def.’s Reply at 2 with id. Ex. 3. Because the issue of what appears in any of the deeds other than the plaintiffs’ deed is immaterial to my recommendation, it does not preclude summary judgment. 2 Def.’s Mot. for Summ. J. (hereinafter “Motion”) Ex. 2. 3 Id. Although the Summers’ deed refers to a 1/8th share, that appears to be a typographical error. There is no dispute that there are 18 lots in Walnut Ridge and that the original deeds granted by the Friels when they subdivided the property imposed on each lot an equal share of the costs associated with the Private Road. The Association only billed the Summers for 1/18th of the cost of the work to the Private Road. C.A. No. 8599-ML November 3, 2015 Page 3

1958.4 Since that time, the Association has overseen a number of relatively minor

projects involving the Private Road. The most expensive such project was less

than $10,000 total. In 2007, the Association assessed each homeowner $1,540 to

fund road work. On all those previous occasions, the cost was shared by each of

the homeowners, including the Summers or their predecessors-in-interest.5

In 2011, the Association resolved to evaluate “the necessity of repaving the

community road.”6 After considering different options, the Association sought

bids from contractors. The Association ultimately contracted with Vandemark &

Lynch to rehabilitate and repave the entire Private Road (the “Road Project”).7 To

pay the cost of the Road Project, the Association assessed the owners of each lot

$10,200.8 The assessment was approved by all the homeowners present for the

meeting, except for the Summers, who voted against the resolution.9

The Summers filed this action on May 29, 2013, seeking a declaratory

judgment that the Association does not have the authority to assess the Summers a

portion of the Road Project and that the Summers therefore are not obligated to pay

the assessment. The Association filed its motion for summary judgment on

4 Id. Ex. 1. 5 Id. at 2. 6 Id. at 2 & Ex. 3 at WR14, WR17. 7 Id. Ex. 3 at WR14, Ex. 4. 8 Verified Complaint (“Compl.”) ¶ 10. 9 Motion Ex. 3 at WR12. C.A. No. 8599-ML November 3, 2015 Page 4

December 9, 2014. For the reasons that follow, I believe the Association is entitled

to judgment as a matter of law.

ANALYSIS

Summary judgment should be awarded if “the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits,

show that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.”10 When considering a motion

for summary judgment, the evidence and the inferences drawn from the evidence

are to be viewed in the light most favorable to the nonmoving party.11 A party

seeking summary judgment bears the initial burden of showing that no genuine

issue of material fact exists.12 If the movant makes such a showing, the burden

then shifts to the non-moving party to submit sufficient evidence of a genuine

factual issue, material to the outcome of the case, that precludes judgment before

trial.13

10 Twin Bridges Ltd. P’ship v. Draper, 2007 WL 2744609, at *8 (Del. Ch. Sept. 14, 2007) (citing Ct. Ch. R. 56(c)). 11 Judah v. Del. Trust Co., 378 A.2d 624, 632 (Del. 1977). 12 Johnson v. Shapiro, 2002 WL 31438477, at *3 (Del. Ch. Oct. 18, 2002). 13 Id.; Conway v. Astoria Fin. Corp., 837 A.2d 30, 36 (Del. Ch. 2003). C.A. No. 8599-ML November 3, 2015 Page 5

A. The Summers are obligated to pay 1/18th of the cost of the care, maintenance and up-keep of the Private Road.

The undisputed facts of this case show that the Summers’ deed, and the

deeds within their chain of title, require them to pay a 1/18th share of the care,

maintenance, and up-keep of the Private Road.14 The Summers cannot, and do not,

dispute that the restriction exists in both their deed and the chain of title for their

lot, but nonetheless argue that there are disputed issues of fact regarding whether

deeds to other lots within the subdivision contain the same restriction, pointing to

two current deeds that do not contain language regarding the costs of the Private

Road. The Summers do not explain why that factual dispute is material to the

Association’s motion. Whether owners of other lots are obligated to pay a share of

the costs for the care, maintenance, and up-keep of the Private Road does not alter

the restriction in the Summers’ deed.15

Similarly, the Summers argue that the current deeds for the lots within

Walnut Ridge contain inconsistent metes and bounds descriptions of the Private

Road. The Summers do not explain, however, why that factual dispute bears on

their obligation to pay the assessment relating to the Road Project. The Summers

14 See Def.’s Reply Ex. 4. 15 In any event, the owners of the 17 other lots in Walnut Ridge all paid the assessment associated with the Road Project, and do not appear to contest their obligation to do so. The record indicates the deed restriction at issue appears in the chain of title for each of these lots. See Def.’s Reply Ex. 2. C.A. No. 8599-ML November 3, 2015 Page 6

do not dispute that the metes and bounds description in their deed corresponds to

the Private Road on which the work was done. Again, the existence or absence of

a reciprocal obligation in the deeds of other owners within the subdivision does not

alter the plain language of the obligation in the Summers’ deed.

B. The Road Project fell within the meaning of “care, maintenance and up-keep.”

Perhaps recognizing that the factual disputes on which they rely are not

material to the issues before the Court, the Summers devote most of their

opposition to the motion to arguing that the Road Project does not fall within the

meaning of “care, maintenance and up-keep.” According to the Summers, the cost

of the Road Project, particularly when compared to previous projects undertaken

by the Association and the alternatives the Association considered, “makes it

obvious that the project was a major improvement and reconstruction of the road,

not maintenance.”16

Whether the Road Project is a “major improvement,” as opposed to

“maintenance,” is a factual dispute. For purposes of the pending motion, however,

I will accept that the Road Project is a “major improvement.” From that premise,

the Summers summarily conclude that because a “major improvement” is not

“maintenance,” the Road Project does not fall within the scope of the restriction

16 Pls.’s Opp’n to Mot. for Summ. J. (“Opp’n”) at 3. C.A. No. 8599-ML November 3, 2015 Page 7

requiring the Walnut Ridge owners to share the costs of the Private Road. In

support of that argument, the Summers cite the settled principle that restrictive

covenants must be interpreted “in accordance with their plain meaning in favor of a

grantee … and against a grantor or the one who enforces in his place.”17

Although the Summers correctly state the law, they gloss over a number of

other important principles regarding contract construction,18 namely that (1)

contractual language should be interpreted as it would be understood by an

objective, reasonable third party,19 and (2) contracts are read as a whole, and each

provision and term should be given effect, where possible, so as not to render a

part of the contract mere surplussage.20 Applying those principles to the language

at issue, it is clear that the restriction in the Summers’ deed must encompass more

than maintenance, and that the terms “care” and “up-keep” must be read – if

possible – to have independent meaning distinct from “maintenance.” Such a

reading is both possible and the only reasonable reading of the language at issue.

17 Opp’n at 5 (citing Serv. Corp. of Westover Hills v. Guzzetta, 2009 WL 5214876 (Del. Ch. Dec. 22, 2009)). 18 Deed restrictions are contractual agreements and, as such, ordinary principles of contract law govern their interpretation. Goss v. Coffee Run Condominium Council, 2003 WL 21085388, at *7 (Del. Ch. Apr. 30, 2003). 19 Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010); Emerging Europe Growth Fund, L.P. v. Figlus, 2013 WL 1250836, at *4 (Del. Ch. Mar. 28, 2013). 20 Osborn, 991 A.2d at 1159; Emerging Europe Growth Fund, L.P., 2013 WL 1250836, at *4; One Virginia Avenue Condominium Assoc. of Owners v. Reed, 2005 WL 1924195, at *6 (Del. Ch. Aug. 8, 2005). C.A. No. 8599-ML November 3, 2015 Page 8

In my view, the only reasonable reading of the language is that the grantors

used broad terms to shift to the owners of Walnut Ridge all the costs associated

with the Private Road. “Care” and “up-keep” are terms that an objective,

reasonable third party would understand to include a range of tasks, including the

“road improvement” and “pavement rehabilitation and construction” associated

with the Road Project.21 In fact, it would be unreasonable to conclude – as the

Summers urge – that the deed restriction applies narrowly and only to maintenance

to the road, because it would mean that necessary work on the Private Road could

not be accomplished, as the costs could not be shifted to the municipality, unlike a

publicly dedicated road. In other words, the phrase “care, maintenance and up-

keep” must be understood to encompass all work a majority of Walnut Ridge

owners determine should be undertaken to maintain the use of the Private Road,

because otherwise the road would fall into dis-repair and become useless, as no

other entity is responsible for maintaining the road. Without the Private Road, of

course, the lot owners could not reliably access their property.

When the original language of the deed restriction is considered, the

meaning of the challenged language becomes even clearer. The language in the

original deeds from the Friels required the lot owners to undertake a proportional

amount of the “cost, care, maintenance and up-keep” of the Private Road. The

21 See Opp’n at 4. C.A. No. 8599-ML November 3, 2015 Page 9

word “cost” does not appear in the Summers’ deed, but it does appear in their

chain of title, and the Summers’ deed was granted “subject … to the covenants,

agreements, conditions, easements, reservations and restrictions” in the 1957 deed

from the Friels. In my view, if the word “cost” can be read into the Summers’

deed, as I believe it can under principles of actual and constructive notice, the

Road Project certainly was a “cost” of the Private Road. Although I need not reach

that issue, because I conclude the language in the Summers’ deed unambiguously

encompasses the Road Project, the use of the word “cost” in the original deeds

supports the conclusion that the restriction encompasses all work on the Private

Road.

This is not to say there are no limits or parameters on what costs could be

shifted to the lot owners in the subdivision. To the contrary, a very obvious

limitation, and perhaps the best one available, exists: a majority of the property

owners must agree that the work should be undertaken. The property owners, who

have a vested interest in the outcome, are the persons charged with determining

whether and when to undertake “care, maintenance and up-keep” to the Private

Road. That is precisely what happened here, and it is not for this Court to second-

guess the discretion the grantors vested in the members of the community.

In their exceptions to my draft report on the pending motion, the Summers

contend the restriction is ambiguous and therefore must be interpreted against the C.A. No. 8599-ML November 3, 2015 Page 10

drafters. Other than making an ipse dixit assertion regarding ambiguity, however,

the Summers do not articulate the basis for their position. In my view, the phrase

“care, maintenance and up-keep” is not ambiguous. When read and understood in

the context of the fact that the costs of the Private Road cannot be shifted to

anyone other than the lot owners, the only reasonable meaning of that phrase is that

is refers to all road work agreed upon by a majority of the lot owners.

C. The Association has standing to enforce the restriction.

The Summers argue that the Association does not have standing to enforce

the restriction because none of the Walnut Ridge deeds mention a civic association

or authorize “the community” to enforce the deed restrictions.22 Although the

Summers are correct as a factual matter that the deeds neither mention a civic

association nor identify who may enforce the restrictions, they are incorrect that

the Association lacks the authority to enforce the restriction. It is settled law in

Delaware that “[w]here, under a general plan of development, the owner of

property divides it into building lots and places upon them uniform restrictions,

any subsequent owner of any of these lots may enforce the restrictions against any

other grantee or present owner.”23 The Friels subdivided their property and placed

upon each lot the uniform restriction regarding the cost of the Private Road, and, as

22 Opp’n at 5-6. 23 Welshire, Inc. v. Harbison, 88 A.2d at 121, 123 (Del. Ch. 1952). C.A. No. 8599-ML November 3, 2015 Page 11

a result, any lot owner may enforce the restrictions against another owner. Here,

the Walnut Ridge owners have established a community association, comprised of

members of the subdivision, who granted the Association the authority to, among

other things, “protect the community rights of the inhabitants [of Walnut Ridge]

with regard to road maintenance, deed restrictions, and other matters of community

interest.”24 In addition, the members of the Association voted at the 2013 annual

meeting to demand payment from the Summers based on the deed restriction and

pursue litigation if the matter could not be resolved privately.25 In my view,

therefore, the Association has the authority to enforce the restriction against the

Summers.

D. The Summers had more than sufficient opportunity to develop the record. Finally, the Summers urge me to deny the Association’s motion because

“the law or its application would be clarified by a more thorough development of

the record.”26 The Summers do not, however, explain what additional discovery

they would undertake to develop the record, nor is it apparent to me what

additional information would clarify the rather straightforward issue presented by

this case. In addition, the Summers filed this action more than two years ago. In

24 Motion Ex. 1 (Walnut Ridge Community Assoc., Inc. By-Laws, Art. II). 25 Id. Ex. 3 at WR 3. 26 Plaintiffs’ Opening Br. in Support of Exceptions to Draft Report at 11-12. C.A. No. 8599-ML November 3, 2015 Page 12

that time, they propounded one set of interrogatories. According to the docket, the

Summers did not pursue any other discovery. A vague allusion to further

development of the record, without more, does not persuade me that additional

development of the record would illuminate the issues in this case.

CONCLUSION

For the foregoing reasons, I believe that the Summers properly were

assessed for 1/18th the cost of the Road Project and I recommend that the Court

grant the Association’s motion for summary judgment. This is my final report and

exceptions may be taken in accordance with Rule 144.

Sincerely,

/s/ Abigail M. LeGrow Master in Chancery