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Daiello v. Town of Vernon

Supreme Court of Vermont

February 16, 2018

Steven Daiello
Town of Vernon

         On Appeal from Superior Court, Windham Unit, Civil Division Michael R. Kainen, J.

          Wanda Otero-Weaver and James W. Swift of Langrock Sperry & Wool, LLP, Middlebury, for Plaintiff-Appellant.

          James F. Carroll of Carroll, Boe & Pell, P.C., Middlebury, for Defendant-Appellee.

          PRESENT: Reiber, C.J., Skoglund, Robinson and Eaton, JJ., and Teachout, Supr. J., Specially Assigned

          EATON, J.

         ¶ 1. Plaintiff landowner, who built a residence on leased property owned by defendant, Town of Vernon, appeals the superior court's order granting the Town summary judgment with respect to his claim that the Town breached a covenant of quiet enjoyment implied in the lease by not providing him access to the property. We reverse and remand for further proceedings.

         ¶ 2. This is the third time that issues surrounding plaintiff's property have reached this Court. The property is part of glebe land[1] first leased by the Town in the early nineteenth century. The instant claim is premised upon an alleged covenant of quiet enjoyment in an 1838 deed in which the Town leased the land for the lessee "to farm occupy" and "to hold said granted premises with all the privileges and appurtenances." Plaintiff obtained his interest in the leased land through a quitclaim deed from his wife in 2013. Plaintiff and his wife had received their interest in the property from a company controlled by plaintiff and a friend. Plaintiff built a residence on the property in 2000.

         ¶ 3. At the center of this dispute is Old Stebbins Road, [2] which runs east to west and establishes the southern boundary of both plaintiff's property and the abutting property to the east owned by Dale and Brenda Merritt. Plaintiff's chain of title includes "any and all rights held by the Grantor over and across the discontinued Town Highway formerly known as Stebbins Road . . . if any there may be." Stebbins Road was discontinued as a public road in 1904.

         ¶ 4. In 2006, plaintiff sought to have the Public Service Board (now called the Public Utility Commission) declare Stebbins Road a public road so that he could obtain utility access to his property and residence. He claimed that the 1904 decision to discontinue the road was void because the Town had failed to follow certain statutory procedures. The Merritts intervened and moved to dismiss the case for lack of jurisdiction. The Board granted the Merritts' motion, and this Court affirmed that decision. See In re Doolittle Mountain Lots, Inc., 2007 VT 104, 182 Vt. 617, 938 A.2d 1230 (mem.).

         ¶ 5. In 2008, the Merritts filed a complaint in the superior court seeking a declaratory judgment that plaintiff had no legal right of access over Stebbins Road through their property or, in the alternative, that any right of way over Stebbins Road was limited to prior uses. The Merritts later amended their complaint, adding a claim that Stebbins Road had never been properly laid out as a public road because there was no record of the Town having formally accepted or established an 1801 survey of the road. Plaintiff objected to the amendment, but the court allowed the complaint to be amended, and a bench trial was held. Neither party sought to join the Town of Vernon at any time during the proceedings.

         ¶ 6. The superior court found that the pertinent section of Stebbins Road had never been officially laid out as a public road and that, therefore, plaintiff never obtained an abutting right of access over the road that would have survived the Town's later discontinuance of the road. See Okemo Mountain, Inc. v. Town of Ludlow, 171 Vt. 201, 207, 762 A.2d 1219, 1225 (2000) (stating that abutting landowner has right to access over public road adjacent to private property and further "retains the private right of access" even after "[the] public road is discontinued or abandoned"). The court emphasized that although the 1801 survey was initiated under the authority of the town selectboard, it was not officially approved or adopted by the selectboard, as required by the law. The court further found that there was no easement by necessity because the property was not landlocked, having clear access from the west.

         ¶ 7. Plaintiff appealed to this Court, arguing, among other things, that: (1) the evidence did not support the court's finding that Stebbins Road was not properly laid out; and (2) the court erred in concluding that plaintiff had no easement of necessity because his property was not landlocked. A three-justice panel of this Court affirmed the superior court's decision, concluding, in relevant part, that: (1) the inferences suggesting the Town had properly laid out Stebbins Road were insufficient to overturn the superior court's finding that the road had never been property laid out; and (2) plaintiff did not have an easement by necessity because, even assuming his property was landlocked, he had failed to demonstrate that there was a common division of land. Merrittv. Daiello, No. 2010-171, 2010 WL 7799806, at *3-4 (Vt. Oct. 21, 2010) (unpub. mem.), [ QA27-XTEX]; Okemo, 171 Vt. at 206, 762 A.2d at 1224 ("To obtain a way of necessity, one must show that (1) there was a division of commonly owned land, and (2) the division resulted in creating a landlocked parcel."). In support of the latter conclusion, we noted that there had been no evidence submitted at trial indicating that plaintiff's property was ever owned in common with the Merritts' property or that the parcels had become landlocked as the result of a common division of land. Merritt v. Daiello, 2010 WL 7799806, at *2.

         ¶ 8. In August 2014, plaintiff filed the instant action against the Town, claiming that the Town had breached an implied covenant of quiet enjoyment in the 1838 lease that included a right of access to the leased property. The Town filed a motion for summary judgment, arguing that: (1) for several reasons, plaintiff cannot enforce any right of access which may have existed in the 1838 lease; (2) plaintiff waived any covenant implying a right of access by accepting an assignment of rights over a discontinued road only if any such right existed; and (3) the glebe land that includes plaintiff's property was accessible in 1838 and continued to be accessible over the next 175 years. As a component of the latter argument, the Town asserted that the 2010 decision in Merritt v. Daiello had a preclusive effect against plaintiff as a party to that action but not against the Town as a nonparty to the action. Hence, the Town took the position that plaintiff could not prevail on his claim that the Town's action or inaction had impacted access to his property because: (1) plaintiff was estopped from relitigating the finding in Merritt v. Daiello that he had access from the west; and (2) notwithstanding the superior court's finding in that case that Stebbins Road was never properly laid out as a public road, the Town was not estopped from demonstrating in this action that Stebbins Road had in fact been properly laid out. In its motion for summary judgment, the Town presented undisputed facts showing that a late eighteenth-century fire had destroyed town records that would have proved that Stebbins Road had been properly laid out.

         ¶ 9. The trial court granted the Town's summary judgment motion, ruling that: (1) there is an implied covenant of quiet enjoyment in the 1838 lease that includes a right of access; (2) the covenant does not guarantee any particular point of access; (3) the covenant is breached if the lessor causes a substantial interference with the lessee's use of the premises as contemplated by the lease; and (4) as a matter of law, the Town did not breach the covenant because the finding in Merritt v. Daiello that plaintiff had access to his property from the west precluded plaintiff from relitigating that fact. The court concluded that even though plaintiff did not in fact appear to have access from the west, applying issue preclusion was fair because of the need for finality of judgments. Given its resolution of the case, the court expressly declined to address whether any act or omission by the Town substantially interfered with plaintiff's enjoyment of his land, whether the Merritts' lawsuit and ensuing judgment could be attributed to the Town, whether the Town was required to ensure access to the property only to the extent access was needed for farming, or whether plaintiff's conduct constituted a waiver of his claimed right to access his property.

         ¶ 10. Plaintiff moved to alter or amend the judgment, arguing that the court's ruling would result in manifest injustice. In response, although plaintiff had not moved for summary judgment, the court gratuitously stated that, based on the undisputed facts before it, it would have concluded that plaintiff's property cannot be accessed from the west but that the Town had properly laid out Stebbins Road before 1801 such that plaintiff had a right to access his property over the discontinued public road pursuant to the principle stated in Okemo. The court declined to make these conclusions, however, stating that it could not do so without joining the Merritts as indispensable parties to relitigate the same issues litigated in 2010 in Merritt v. Daiello before Judge Howard. The court noted that it was unclear whether the evidence before Judge Howard in that case was different from the evidence in this case, but that, if there was any manifest injustice, it occurred in the first case.[3] According to the court, applying issue preclusion in this action was fair because otherwise it would allow plaintiff a second bite at the apple.

         ¶ 11. On appeal to this Court, plaintiff argues that: (1) he is not precluded from challenging the lack of access to his property from the west because that issue was not resolved on appeal in Merritt v. Daiello; and (2) precluding him from relitigating whether Stebbins Road was properly laid out as a public road is manifestly unjust because it violates public policy against allowing land to sit idle and sanctions the Town's breach of its duty to preserve and promote the value of glebe lands. The Town challenges both arguments but does not otherwise claim error in the superior court's decision. In the Town's view, plaintiff cannot show a breach of any covenant of quiet enjoyment that exists with respect to his leased land because: (1) as a party in Merritt v. Daiello, plaintiff is bound by findings therein confirming that his property is not landlocked; and ...

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