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Reeves v. Godspeed Properties, LLC

Supreme Court of Alaska

January 26, 2018

JOHN REEVES and FAIRBANKS GOLD CO., LLC, Appellants and Cross-Appellees,
v.
GODSPEED PROPERTIES, LLC and GOLD DREDGE 8, LLC, Appellees and Cross-Appellants.

         Appeal from the Superior Court of the State of Alaska No. 4FA-12-02133 CI, Fourth Judicial District, Fairbanks, Bethany Harbison, Judge.

          Joseph W. Sheehan, Sheehan Law Office, Fairbanks, for Appellants/Cross-Appellees.

          Michael C. Kramer, Kramer and Associates, and Robert John, Law Office of Robert John, Fairbanks, for Appellees/Cross-Appellants.

          Before: Fabe, Chief Justice, Stowers, Maassen, Bolger, and Carney, Justices. [Winfree, Justice, not participating.]

          OPINION

          STOWERS, JUSTICE.

         I. INTRODUCTION

         Two adjoining landowners dispute the creation and continuing validity of an easement for ingress and egress to and from property near Fairbanks. The superior court held that a valid easement was created but had been extinguished by prescription. We are asked to decide whether one party's mining activities - placing gravel piles, equipment, and a processing plant in the easement - were sufficient to prescriptively extinguish the entire easement. We hold that they were not. Although the processing plant extinguished the portion of the easement on which it stood, the evidence presented regarding the gravel piles and equipment was insufficient to support extinguishing the entire easement.

         II. FACTS AND PROCEEDINGS

         A. Facts

         Alaska Gold Company owned a considerable amount of property near Fairbanks in the early 1980s. In 1982 John Reeves purchased a lot from Alaska Gold- MS-8 51 - that contained an old gold dredge, which he turned into a tourist attraction. The parties refer to this property as "Gold Dredge 8." MS-851 was located southwest of MS-1724, a separate lot owned by Alaska Gold. Alaska Gold allowed Reeves to cross MS-1724 to reach Gold Dredge 8.[1]

         In 1986 Alaska Gold sold MS-1724 to Alice Ellingson. Alice married Harold Ellingson shortly thereafter. The deed contained a reserved easement for Alaska Gold to cross MS-1724 to reach its other properties:

SPECIFICALLY RESERVING UNTO THE GRANTOR, its successors and assigns a dedicatable easement for ingress, egress, and utilities, 100 feet in width, along the southerly boundary of Side Claim On Bench Off No. 2 Above Discovery On Engineer On R.L. Placer, United States Mineral Survey No. 1724 beginning at its intersection with the westerly boundary of the Old Steese Highway right of way and proceeding South 59°37' West approximately 500.00 feet to Corner No. 1 of said claim; Thence North 70°09' West approximately 728.2 feet to Corner No. 2 of said claim.

         Alaska Gold owned MS-1709, the property at the terminus of the reserved easement. Pete Eagan, Alaska Gold's manager beginning in 1986, used the easement occasionally to travel to Alaska Gold's land beyond the easement. Eagan was friendly with the Ellingsons, and he was aware of the easement to cross MS-1724. He also gave Reeves permission to use Alaska Gold's easement to access Gold Dredge 8.

         Alice and Harold Ellingson erected a gold plant on MS-1724 soon after Alice purchased the property from Alaska Gold.[2] The plant began operating in 1988. At Reeves's suggestion, the Ellingsons also erected an elevated footbridge spanning the easement so that tourists could walk from Gold Dredge 8 to the gold plant to view the mining operations. Eagan commonly drove off the easement onto other portions of the Ellingsons' property with the Ellingsons' knowledge.

         In 1996 Reeves sold Gold Dredge 8 to Holland America, which in turn sold it to Godspeed Properties. In 2000 Reeves bought Alaska Gold's remaining property in the area. This included part of MS-1709 - the parcel next to MS-1724 - at the terminus of the easement. In 2002 the Ellingsons shut down the gold plant, and in 2009 Godspeed purchased MS-1724 from Alice Ellingson. Thus, at the time of this litigation, Godspeed owned Gold Dredge 8 and MS-1724, while Reeves owned MS-1709, the parcel at the end of the easement crossing MS-1724.

         Reeves informed Godspeed of the easement and offered to sell it to Godspeed. The parties negotiated between 2009 and 2012 but were unable to come to an agreement. During this time Godspeed developed MS-1724 as an integrated tourist attraction with Gold Dredge 8; it built a small-gauge railway through the property for visitors to view Gold Dredge 8 and learn about mining in the area.

         In 2012 Reeves was granted plat approval to subdivide MS-1709. The plat memorialized Reeves's plan to dedicate the easement through MS-1724 to public use as the access for the subdivision. Reeves constructed a rough dirt road through the easement. In response, Godspeed built a gravel berm across the easement and blocked access.

         B. Proceedings

         Godspeed filed a complaint against Reeves seeking declaratory relief and to quiet title. Godspeed also moved for and was granted a preliminary injunction barring Reeves from constructing the road until a court determined whether the easement was valid. After considerable motion practice, the superior court ruled that the 1986 deed from Alaska Gold to Ellingson created a valid easement. The court also concluded that "John Reeves and [Reeves's company] Fairbanks Gold Company, LLC are the successors-in-interest to Alaska Gold Company." The parties proceeded to trial on the main remaining issue: whether the easement was extinguished by prescription during the time that the Ellingsons owned MS-1724 and Alaska Gold owned MS-1709.

         During the trial, Alice Ellingson testified that she and Harold poured the concrete foundation for the gold plant in 1986 and that it was "all concrete and steel and it . . . probably [weighed] ... a couple hundred tons." The plant was "pretty sophisticated, " cost close to a million dollars to install, and occupied "not quite half of the easement.[3] She explained that equipment, conveyor belts, and sand, gravel, and sewer rock surrounded the plant. She also testified that the plant was in continuous operation until 2002 when it was dismantled. Both Alice and Eagan testified that the footbridge between Reeves's property and the gold plant was high enough to drive underneath.

         There was also considerable testimony about the condition of the remainder of the easement. Alice testified that Harold built berms out of sewer rock around the property. One year, he also blocked the main gate with a berm in the winter and unblocked it in the spring. And she testified that there were piles of material in the easement that were continually being built up and moved as they were sold. Hatton Franciol, a former employee of the Ellingsons, testified that cars had been parked on the easement and that, based on a picture taken when the Ellingsons owned MS-1724, a pile of rock spanned almost the entire easement at one end. But he also explained that miners berm off the entrance to mines at the end of the season to comply with safety regulations. Like Alice, he testified that the material piles in the easement were for sale and constantly moving. Eagan testified that the process piles[4] "were not permanent"; "the nature of [the] business is that you produce piles of material and then hopefully you're [going] to sell them."

         Eagan further testified that he would visit the property three to six times each summer. He stated that "Harold ended up having the plant out there and ... parts of the easement were blocked. But [Eagan did] know that you could pretty much get through there, " and it was never "absolutely blocked." Alice testified that a "substantial" gate blocked the easement but that it was only meant to keep out the public and that Reeves had a key to the gate. Reeves testified that the gate was built after he sold the dredge. And former employees testified that they had seen Reeves using the easement frequently.

         In its decision the superior court noted that "because of the social relationship between the Ellingsons and Eagan/Alaska Gold, adversity is difficult to determine." As a result the court required "Godspeed [to] show extensive activity in the easement area." The court concluded that "operating and maintaining the gold plant within the easement area for a period of 15 years unreasonably interfered with Alaska Gold's ingress and egress along the easement to access MS-1709, " and "[i]t also unreasonably interfered with a prospective dedication of the easement to the public." The court found that the gold plant was a "permanent and expensive improvement that was difficult and damaging to remove" and that it "completely blocked approximately half of the easement." The court further found that sometimes the plant activities blocked the entire easement or forced someone navigating it to go close to the gold plant in a manner that would be unsafe for the general public. Finally, the court found that the Ellingsons had constructed various barriers that restricted public access to the easement. Based on these findings the court concluded that the entire easement had been terminated by prescription.

         Both parties appeal. Godspeed appeals the superior court's conclusion that an easement was created, and Reeves appeals its conclusion that the easement was terminated by prescription.

         III. STANDARD OF REVIEW

         Whether a deed or plat is ambiguous is a question of law that we review de novo.[5] "When applying the de novo standard of review, we apply our independent judgment..., adopting the rule of law most persuasive in light of precedent, reason, and policy."[6] When a deed is ambiguous, the trial court's findings about the parties' intent are findings of fact that we review for clear error.[7] A decision is clearly erroneous "when a review of the entire record leaves us with a definite and firm conviction that a mistake has been made."[8]

         Whether an easement was extinguished by prescription presents issues of both law and fact.[9] "We do not disturb a trial court's findings of fact unless they are clearly erroneous. We review the application of law to facts de novo."[10]

         IV. DISCUSSION

         A. The 1986 Deed Created An Easement Appurtenant.

         The superior court concluded that Alaska Gold's transfer of MS-1724 to Ellingson in 1986 created an easement appurtenant.[11] Godspeed contends that this holding was error because the deed contained ambiguities. Specifically, Godspeed argues that the deed uses the word "dedicatable"-which is not a word-and does not specify which property is benefited by the easement.

         " '[T]he touchstone of deed interpretation is the intent of the parties, ' and 'where possible, ... the intentions of the parties [will be] given effect.' "[12] We apply a three-step test to interpret a deed: first, we "look at the four corners of the document to see if it unambiguously presents the parties' intent"; second, "[i]f a deed is ambiguous, the next step is to consider 'the facts and circumstances surrounding the conveyance' to discern the parties' intent"; and finally, "[i]n the event that the parties' intent cannot be determined, we rely on rules of construction."[13] The inquiry under step two "can be broad, looking at 'all of the facts and circumstances of the transaction in which the deed was executed, in connection with the conduct of the parties after its execution.' "[14]

         The language of the 1986 deed states, in relevant part: "SPECIFICALLY RESERVING UNTO THE GRANTOR, its successors and assigns a dedicatable easement for ingress, egress, and utilities, 100 feet in width, along the southerly boundary of... [MS] No. 1724." While "dedicatable" is not a word, its use was plainly an attempt to create an easement that was capable of being dedicated.[15] We conclude that the use of a slight variation on a well-known and commonly used word does not make the deed ambiguous; rather, the use of the variant word is akin to a spelling mistake. "Where it is perfectly plain that a word is misspelled, the courts will construe the deed according to the meaning of the word intended, rather than according to the meaning of the word actually used."[16] This is especially true when construing the word as written "would give no effect to the clause containing the doubtful word."[17] Here "looking within 'the four corners of the document, ' 'the [word "dedicatable" is] capable of but one reasonable interpretation.' "[18] The deed is not ambiguous in this regard.

         But the deed is ambiguous as to whether the easement is an easement appurtenant or an easement in gross. An easement appurtenant "is a right to use a certain parcel, the servient estate, for the benefit of another parcel, the dominant estate."[19] "[A]n appurtenant easement. . . may not be used for the benefit of property other than the dominant estate."[20] While easements appurtenant run with the land and continue to benefit the dominant estate, easements in gross are assigned to a specific person and do not run with the land.[21] Here, although the easement is for ingress and egress and is descendable, [22] it is ambiguous whether the easement is an easement appurtenant because it is not clear, looking at the face of the deed, which parcel of land is to benefit. Because the deed fails to explicitly state what parcel will be benefited by the easement, the deed must be considered ambiguous.[23]

         Thus, we proceed to apply the second step of our three-step analysis in interpreting deeds: we consider " 'the facts and circumstances surrounding the conveyance' to discern the parties' intent."[24] The relevant inquiry is whether the easement was intended to benefit another parcel of land or a person.[25]

         The superior court considered evidence of the parties' intent, the situation of the properties, and the purpose and nature of the easement. The court found that "[the easement] clearly created a servient estate (MS-1724) in favor of a dominant estate (adj acent Alaska Gold [p]roperty, specifically, MS-1709, which is now divided into MS- 1709 and MS-1709A)." It noted that the "domina[nt] estate is the property at the terminus of the easement corridor, " MS-1709. This finding is not clearly erroneous. MS-1709 lies at the end of the easement, so it would be the logical benefited parcel of an easement for ingress and egress. The evidence shows that Alaska Gold usually accessed its land by driving across MS-1724. And a 2002 Notice of Reservation of Rights given by Alaska Gold to Reeves reflects this intent by stating that Alaska Gold had easements to access its adjoining land. The superior court therefore did not err in holding that the 1986 deed created a valid easement appurtenant on MS-1724.

         B. It Was Error To Conclude That The Entire Easement Was Terminated By Prescription.

         The superior court concluded that the entire easement was terminated by prescription. An easement is terminated by prescription if the party claiming prescription can "prove continuous and open and notorious use of the easement area for a ten-year period by clear and convincing evidence."[26] The prescriptive period is triggered when "use of the easement 'unreasonably interfere[s]' with the current or prospective use of the easement by the easement holder."[27]

         The superior court found that the gold plant was a "permanent and expensive improvement that was difficult and damaging to remove" and that "operating and maintaining the gold plant within the easement area for a period of 15 years unreasonably interfered" with Alaska Gold's use of the easement. The court also found that the operation of the plant used the entire easement, that Eagan did not drive next to the gold plant, and that it would not have been safe for him to do so.

         Reeves disagrees with the superior court and argues: (1) there was no interference, much less unreasonable interference, with the current or prospective use of the easement because mining operations ceased before the development of the easement; (2) the Ellingsons' property was a mining claim, and therefore mining on the property should not be considered unreasonable interference; (3) gold plants are movable and therefore are not permanent improvements; and (4) the gold plant did not entirely block use of the easement.

         We disagree with Reeves's third argument and conclude that the superior court did not err in holding that the gold plant extinguished that portion of the easement upon which it stood. But we agree with Reeves's fourth argument that the gold plant did not entirely block use of the easement. This suggests that the easement was partially prescripted. We requested supplemental briefing from the parties on partial prescription.[28]

         1. Alaska law allows for partial extinguishment of an easement prescription.

         In Hansen v. Davis we "follow[ed] the approach adopted by the Restatement (Third) of Property and many jurisdictions and h[e]ld that an easement can be extinguished by prescription."[29] We have not previously addressed the possibility of partial prescription, but we agree with the weight of authority that an easement may be partially prescripted.

         The Restatement explains that an easement may be "modified or extinguished" by prescription;[30] it further clarifies in a comment that "extinguishment brought about by prescription may be complete or partial."[31] The treatise The Law of Easements and Licenses in Land explains, "An easement... may be increased in width, depth, or height by prescription. Likewise, a servient owner may reduce an easement's dimensions by preventing the holder from utilizing a portion of the easement area for the prescriptive period, "[32] and more directly, "[A]n easement may be partially extinguished "[33] The treatise Powell on Real Property agrees: "The servient owner can extinguish an easement in whole or in part by adverse uses continued for the prescriptive period."[34]

         The rationale underlying the doctrine of prescription supports recognizing partial prescription. "The doctrine [of prescription] protects the expectations of purchasers and creditors who act on the basis of the apparent ownerships suggested by the actual uses of the land."[35] Prescription also "is supported by the rationale that underlies statutes of limitation[:] [b]arring claims after passage of time encourages assertion of claims when evidence is more likely to be available and brings closure to legal disputes."[36] Recognizing partial prescription best allows for legal title to match apparent title and brings closure to legal disputes in the way that best reflects reality.[37]

         Godspeed argues that adopting partial prescription "will substantially erode the hostility element for prescription because doing so will encourage people to stealthily encroach on easements by expanding their garden, extending their lawn, or building an addition to their deck." Easement holders will still be able to use their easements, Godspeed argues, and will not recognize the infringement of their rights until it is too late. But this argument understates the "hardi[ness]"[38] of easements. The prescriptive period is not triggered until the owner of the servient estate's "use of the easement 'unreasonably interfere[s]' with the current or prospective use of the easement by the easement holder."[39] This standard sufficiently guards the rights of the easement holder.[40]

         The parties agree that if we adopt partial extinguishment, then the standard set forth in Hansen should apply. This is consistent with the authorities already cited, which treat partial extinguishment as part of the doctrine of extinguishment by prescription and not as a separate concept. We therefore hold that Alaska law recognizes partial extinguishment of easements through prescription and that the standard to show partial extinguishment is the standard we set out in Hansen.

         2. The gold plant partially extinguished the easement.

         The gold plant did extinguish that part of the easement upon which it stood. The superior court found that the gold plant "cost approximately one million dollars to erect" and "took years to build and substantial effort to dismantle." Alice testified that the plant was "all concrete and steel and it was probably... a couple hundred tons, " and that it was in continuous operation from 1988 until 2002, when it was dismantled. The testimony established that the plant was in continuous, open, and notorious operation for more than ten years, [41] and the superior court therefore did not clearly err in finding that the gold plant was a permanent improvement.

         3. The gold plant's operations did not fully extinguish the easement.

         We do not agree with the superior court that the remainder of the easement was extinguished. "Whether the improvement is an unreasonable interference with the servitude depends on the character of the improvement and the likelihood that it will make future development of the easement difficult. If the improvement is temporary and easily removed, it is generally not unreasonable."[42]

         Although the gold plant itself was an unreasonable interference, none of the parties testified to an impediment that continuously blocked the entire easement for the entire ten-year period. Alice testified that equipment, conveyor belts, and sand, gravel, and sewer rock surrounded the plant. A former employee testified that cars were parked in the easement and that a pile of rock spanned almost the entire easement during one year. This type of temporary activity was insufficient to terminate the easement over a mining claim.

         In Hansen we considered whether the maintenance of a garden on an easement was sufficient to terminate an easement and concluded it was not.[43] We explained that "[a]s a matter of law, the maintenance of a garden on the easement area did not constitute an improvement sufficiently adverse to commence the prescriptive period."[44] And cars, equipment, and gravel piles are not significantly less moveable than a garden. In mining country gravel piles, berms, miscellaneous mining equipment, and vehicles (often broken down) are the "vegetation" one would expect to find "growing" in the area.

         The weight of authority indicates that equipment, conveyor belts, and sand, gravel, and sewer rock are insufficient to terminate an easement, at least in a setting like mining country. "[T]he adversity standard is not met when the owner of a servient estate uses the easement area for gardening; places obstructions on the easement that the easement holder can simply go around; or relies on a natural barrier, such as an embankment, to obstruct the easement holder, " and "parking cars from time to time in a manner that obstructs the easement does not meet the continuity requirement."[45]Further, "what constitutes unreasonable interference, and thus triggers the prescriptive period, [is] heavily fact dependent."[46] This includes the manner in which the parties are using the land.[47]

         The superior court found that the operation of the gold plant, including the conveyor belts, jigs, and supporting equipment, made driving past it in the easement unsafe. The court also found that Eagan never drove past the plant in the easement, instead taking other routes through the property. Neither of these findings leads to prescription as a matter of law: "[w]here the easement holder has not used the easement for some time, or at all, the servient estate owner enjoys wide latitude with respect to use of the easement area, and a showing of extensive activity will be required to demonstrate adversity."[48] There is ...


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