Hostility is not satisfied by longstanding acquiescence to fence installed with neighbor’s permission. Dahlke Family Limited Partnership (Dahlke) and Fuoss are neighboring landowners. In the 1960s, the prior owners of both parcels discussed a problem of repeated flooding from a nearby creek. They orally agreed that Fuoss’s predecessor would install a fence on the Dahlke parcel, which resulted in the separation of a triangular area of over one acre from the rest of the Dahlke parcel. Fuoss claimed that he had purchased the fence-enclosed area although it was not covered in his legal description. Dahlke stated that he allowed Fuoss to use the triangular area just as he had allowed Fuoss’s predecessors to do so. In response to unauthorized hunting, Dahlke installed a locked gate, which deprived Fuoss of access to the triangular area. Fuoss sued to establish title by adverse possession or a prescriptive easement over the area. The trial court accepted Fuoss’s argument that the hostility element for adverse possession and prescriptive easement were satisfied by the doctrine of acquiescence to the longstanding location of the fence. Dahlke appealed, and a divided supreme court reversed and remanded, finding the lower court improperly applied the doctrine of acquiescence to reject uncontroverted evidence of permitted use. The court found the circumstances also did not give rise to a prescriptive easement. In the first place, there was no agreement to set or change the boundaries. Instead, the evidence overwhelmingly showed possession and use with the owner’s permission. Allowing a neighbor to occupy and use part of the owner’s land does not change the boundary line or grant the neighbor a right to use the land in perpetuity. Permissive use can change into hostile occupation only when the neighbor’s conduct gives inquiry notice to the owner of the invasion of his rights. Neither Fuoss, nor any predecessor, ever provided notice of any kind of a claim beyond the use granted to them permissively. Fuoss v. Dahlke Family Ltd. P’ship, 984 N.W.2d 693 (S.D. 2023).
Labeling deed as warranty deed does not make it a statutory short-form deed without incorporation of statutory language. A bank foreclosed on real property and sold it to Lizotte, conveying by a deed with the caption “Warranty Deed.” Later Lizotte conveyed to Kneizys, who learned of a competing claim to title and brought a quiet title action against the claimants. After losing this action, Kneizys brought suit against the bank in federal court, claiming a breach of warranties of title. Kneizys claimed the deed contained warranties, even though there was no warranty-covenant language in the deed. The district court certified the question to the Maine supreme judicial court on the question of whether any warranty is implied by the use of the term “warranty deed” to describe the deed instrument. The court answered, “No.” Maine has a statutory short-form deed, the use of which implies warranty covenants into the instrument. 33 Me. Rev. Stat. § 764. But to be entitled to this benefit, a party must substantially use the statutory form. The deed here contained only the words “Warranty Deed” in the title. Merely titling an instrument a warranty deed is not enough. Kneizys v. Federal Deposit Ins. Corp., 290 A.3d 551 (Me. 2023).
Mention of additional rights in mandatory pre-foreclosure notice to borrower does not void the notice. The lender sent the borrower a notice required by statute before initiating foreclosure. N.Y. Real Prop. Actions and Proc. L. § 1304. The notice contained the mandatory provisions, including the length of default, what was required to cure, and notice of the availability of housing counselors. The statute provides that “the notices required by this section shall be sent . . . in a separate envelope from any other mailing or notice.” In addition, the lender’s notice advised that the lender was communicating as a debt collector, that if the borrower is in bankruptcy, the notice was for information only, and that if the borrower is a serviceman, he might be eligible for certain protections and benefits. The lender moved for summary judgment on the action to foreclose, and the borrower defended on the ground that the notice violated the statute’s “separate envelope” provision by including the additional notices in the same communication. The trial court ruled for the borrower, and the appellate court affirmed. The court of appeals reversed, rejecting the bright line rule applied by the lower courts, instead finding that the most sensible reading of the statute was that nothing in the required notice provisions prohibited additional information to be given to the borrower. Here, the addition of information about rights under the Bankruptcy Code was consistent with the aim of the statute, enacted in the wake of the housing crisis of 2008, to ensure homeowners and tenants are aware of their rights upon being faced with the threat of foreclosure. The notice is valid so long as the information related to the pending foreclosure is not false, misleading, or obfuscatory. Bank of Am. v. Kessler, 206 N.E.3d 1228 (N.Y. 2023).
Terms of commercial lease and not Restatement rules determine whether tenant’s failure to pay rent is material breach. Dolly Investments LLC (Dolly) was the landlord under a 15-year lease of a building to MMG Sioux City, LLC (MMG), where it operated a Golden Corral restaurant. Article 13.1 of the lease stated if the tenant breaches its rent obligation, the landlord must send a written notice to cure in 15 days. After that time, failure to cure constituted a default, which gave the landlord an option to terminate the lease and recover costs and damages or reenter the property, expel the tenant, and relet without terminating the lease. In June 2019, MMG failed timely to pay rent and later paid a portion but notified Dolly it did not have the balance. Soon after, Dolly learned that the Golden Corral restaurant had closed, and then Dolly inspected the property, finding it abandoned in wretched condition. Dolly secured the property by changing the locks, and the next day MMG sent a letter complaining of the landlord’s actions and expressing a desire to terminate the lease. Dolly sent MMG a notice to cure on July 3 and terminated the lease on August 22. Dolly sued MMG, receiving $290,625 in damages for unpaid rent for over 15 months plus attorney’s fees. However, the trial court also awarded MMG $108,828 in damages for Dolly’s wrongful conversion of MMG’s furniture, fixtures, equipment, and other personal property. On a motion to reconsider, the trial court reduced Dolly’s damages to $9,375 to reflect the unpaid half of the June rent. The court of appeals affirmed the lower court, and on further appeal, the supreme court found that Dolly and MMG both breached the lease, but only MMG’s breach was material. Dolly was determined to have breached the lease by changing the locks before sending a notice of default and notice to cure. The court stated that when a lease did not define whether a breach is material, the five-factor approach of Restatement (Second) of Contracts, § 241 may apply. Because the lease here contained provisions regarding the tenant’s duty to pay rent and the landlord’s concomitant rights and duties, those terms define what constitutes a material breach. MMG’s failure timely to cure its default on nonpayment of rent, therefore, breached the terms of the lease and was material. The court noted that because the lease had no terms addressing the landlord’s breach, the application of the Restatement factors was necessary. All factors weighed against materiality or were neutral regarding Dolly’s actions. Dolly deprived MMG of no reasonably expected benefit, Dolly could easily have compensated MMG for any lost benefit because of the change of locks, MMG did not suffer a forfeiture because of Dolly’s actions, Dolly was likely able to cure its own default, and Dolly did not appear to conduct itself below the standards of good faith and fair dealing. The court remanded for the trial court to award the originally calculated damages for unpaid rent but did not disturb the award to MMG of damages for the conversion of personal property. [Eds. Given the court’s analysis of Dolly’s breach under the Restatement, it seems odd that MMG should have been entitled to such a large award, if anything.] Dolly Inv., LLC v. MMG Sioux City, LLC, 984 N.W.2d 168 (Iowa 2023).
Landlord may enforce tenant’s promise to vacate by voluntary stipulation in mediation without commencing summary proceedings. Dacey leased a two-bedroom apartment from Burgess for $1,250 a month. Thereafter, Burgess increased the rent to $1,315, Dacey refused to pay, and Burgess served a notice to quit. Before answering, Dacey filed a complaint for a temporary restraining order to remediate a bedbug problem. The parties agreed to mediate and reached a voluntary stipulation, which the judge approved. Under the stipulation, Dacey waived his claims against Burgess and agreed to vacate the premises by August 31 in exchange for one month’s free rent to assist with relocation expenses. After Dacey did not vacate as stipulated, Burgess obtained a judgment and execution to regain possession of the premises. Dacey sought to “revise, revoke, or vacate the judgment,” arguing that the Housing Court lacked authority to enforce the voluntary stipulation as Burgess failed to bring a summary proceeding under Mass. Gen. L. ch. 239. The trial court rejected the claim, and the supreme judicial court affirmed. The court concluded that a voluntary dismissal and settlement obviated the need for a summary proceeding. The plain language of the statute demonstrates that a summary process action, although the most common avenue for a landlord to recover possession of leased premises, is not the exclusive avenue for recovery of possession. In fact, the statute allows recovery of possession of a leased premises by “other proceedings authorized by law,” Mass. G. L. ch. 184, § 18, demonstrating that the legislature understood that in some limited circumstances, a landlord may recover possession of leased property without a summary proceeding. Here, the parties chose to resolve their dispute by court-referred mediation in the housing court, which role the supreme judicial court previously had recognized and approved. Any summary proceeding action following the voluntary stipulation would have been superfluous. Entry of judgment based on a voluntary stipulation constituted an “other proceeding . . . authorized by law” under section 18. Dacey v. Burgess, 202 N.E.3d 1172 (Mass. 2023).
Landlord is not liable for injury suffered by tenant’s invitee on leased property. Fleurrey, a 54-year-old man with developmental disabilities, died by drowning in an unfenced pond near the home in which he lived with a full-time caretaker. Fleurrey’s sister and estate administrator sued Upper Valley Services (UVS), which had supervised Fleurrey’s care for more than 25 years, the live-in caretaker, and the landlord who leased the home to UVS. The sister alleged that the landlord failed to fence the pond, thereby negligently failing to keep the property free from unreasonably dangerous conditions that it knew to exist. The landlord moved to dismiss, arguing it owed Fleurrey no duty to fence the pond. The trial court agreed and dismissed the claim against the landlord. On de novo review, the supreme court affirmed. The court recited precedents that required an invitee to seek redress for injuries sustained on negligently maintained property from the land possessor, who invited the injured invitee to the defective property, rather than the absentee landlord. Because this landlord was not a possessor, it owed no duty to Fleurrey. The court explained that liability should rest on the person in control with the power to make repairs. The court refused to impose the duties recognized by the Restatement (Second) Torts §§ 343 and 343A, as both sections by their terms only apply to “possessors of land.” A possessor is a person who is in occupation of the land, with intent to control, or one entitled to occupation if no other person is in possession. Restatement (Second) of Torts § 328E. The court also rejected liability based on the foreseeability of the harm because foreseeability by itself does not give rise to a duty. Fleurrey v. Dep’t of Aging & Indep. Living, 292 A.3d 1219 (Vt. 2023).
Public adjuster who is compensated by contingency fee cannot serve as “disinterested” appraiser under appraisal provision of insurance policy. Parrish was insured by State Farm when his home suffered damage from a hurricane. He filed a claim and hired Keys Claims Consultants (KCC) to provide public adjusting services to estimate repair costs. KCC was to receive ten percent of whatever Parrish received from State Farm. State Farm and KCC inspected the property and developed irreconcilable estimates. KCC later invoked the appraisal provision of Parrish’s homeowner’s policy and further stated KCC’s president would serve as Parrish’s appraiser. The policy language called for each party to “select a qualified, disinterested appraiser,” and State Farm argued that KCC already was serving as Parrish’s public adjuster and therefore was not qualified to be a disinterested appraiser. The trial court denied State Farm’s petition to compel Parrish to secure another appraiser. The appellate court reversed. The supreme court noted disagreement in the precedents of intermediate appellate courts. The supreme court resolved the issue by affirming the appellate court’s decision, expressly disapproving of prior decisions inconsistent with its reasoning. Because the term “disinterested” was not defined by the policy or in the state insurance code, the court resorted to the ordinary meaning of the term. According to Webster’s Third International Dictionary and Black’s Law Dictionary, “disinterested” means free from bias or partiality and not having a pecuniary interest in the matter at hand. The contingency fee arrangement gave KCC a pecuniary interest in Parrish’s claim, meaning neither KCC nor its president could be disinterested. To the contrary, the more KCC helped Parrish recover, the greater its compensation. The court went on to say that disclosure of the appraiser’s interest makes no difference, nor does the fact that the appraiser might be independent, rejecting a view expressed by the dissenting justice. Parrish v. State Farm Florida Ins. Co., 356 So. 3d 771 (Fla. 2023).
Coverage for filing of mechanic’s lien after construction lender stops funding the loan depends upon analysis of causation. A developer obtained a $41.1 million loan to finance the construction of a condominium project. The lender obtained a title insurance policy from Fidelity National Title Insurance, which insured the priority of its lien. After construction issues caused the developer to miss an installment payment of interest on the loan, the lender declared the loan in default and withheld further funding for the project. The developer failed to pay the general contractor for the completed work. The general contractor filed a notice and claim of mechanic’s lien. Three years later, the lender settled with the general contractor and then filed a claim under the title policy. Fidelity denied the claim, asserting exclusion 3(a), which bars coverage for losses or damages arising out of any “defects, liens, encumbrances, adverse claims, or other matters . . . created, suffered, assumed, or agreed to by the insured claimant.” The trial court held that the exclusion does not apply as a matter of law when an insured acts within its contractual right, as here by declaring a default and stopping funding of the construction loan. The court of appeals reversed the trial court, instead applying a bright line rule that when a construction lender cuts off funding, exclusion 3(a) precludes coverage for liens that arise when completed work goes unpaid because of a funding shortfall. In other words, a construction lender who exercises a right to withhold funding “creates” the superior mechanic’s lien as a matter of law. The supreme court disagreed with both lower courts, adopting an intermediate position. Construing the policy under its plain meaning, the supreme court ruled that to “create” means to “cause,” to act affirmatively to bring about the risk. The “created” risk exclusion applies “whenever the insured intended the act causing the defect,” irrespective of the insured’s misconduct or intent that the defect occurs. The court remanded with instructions for a determination of causation with specific guidance: the exclusion applies if the developer failed to pay the general contractor because the lender withheld the remaining funds; by contrast, the exclusion does not apply if the developer’s failure to pay the general contractor preceded the lender’s withholding of funding. The court also observed that other facts may be relevant to causation: whether the lender notified the general contractor that funding would cease and whether the work that resulted in the mechanic’s lien occurred before or after the lender withheld funds. [Eds. Although the ruling seems to leave lenders in a most precarious position—continue funding a doomed project or withhold funds and trigger the policy exclusion—it nevertheless brings a bit of clarity to the infamous exclusion 3(a).] Fidelity Nat’l Title Ins. Co. v. Osborn III Partners, LLC, 524 P.3d 820 (Ariz. 2023).
Statute prohibiting conservation agency from issuing mining permits if local ordinance prohibits mining does not apply to permits for non-conforming uses. Sand Land operated a sand and gravel mine. The mine became a non-conforming use when the Town of Southampton amended its zoning in 1972. In 2014, Sand Land sought a permit from the state environmental conservation agency to increase the depth of mining by 40 feet and also to mine on additional acres. After an exchange of proposals, the agency allowed Sand Land to increase its current activity by three acres, to cover a total of 34.5 acres of the 50-acre site, and to allow mining to a depth of 120 feet above sea level. The town opposed the permit, relying on the environmental conservation law that provides that no permit should be issued for mining “within [certain] counties… which draw their primary source of drinking water… from a designated sole source aquifer, if local zoning laws or ordinances prohibit mining uses within the area proposed to be mined.” N.Y. Envtl. Conserv. § 23-2703(3). The trial court determined that the statute did not apply because Sand Land’s proposed expansion of its mining operations was a renewal rather than a modification of the previous permit. In addition, the court concluded that the statute did not apply to permit modifications that authorized deeper mines within an existing footprint where mining is presently authorized. The appellate division reversed, holding that the statute applies to all applications, not just new permits seeking substantial modifications. The court of appeals reversed. In a textual analysis of the statute, it found that local laws preempt the agency only when local laws prohibit mining uses within the area proposed to be mined. Because Sand Land was already mining under an existing permit, preemption did not apply. Allowing Sand Land to continue under a non-conforming use was not otherwise prohibited by local law. The court nevertheless remanded the case for a determination of whether the proposed changes are allowable as non-conforming uses. Town of Southhampton v. New York State Dept. of Envtl. Conservation, 205 N.E. 3d 426 (N.Y. 2023).
Standing to challenge zoning board decision does not require real property ownership. North Shores LLC proposed a planned unit development (PUD) comprising a variety of residences, buildings, dockominiums, a boat basin, and open spaces. The zoning commission granted preliminary approval, and an environmental group, the Saugatuck Dunes Coastal Alliance (SDCA), appealed. The members of the group alleged injury to their properties, businesses, riparian rights, and legacies by impacts on natural areas bearing their names. The zoning board of appeals found that SDCA lacked standing, and the SDCA appealed further. The circuit court affirmed, as did the appellate court, holding that standing was lacking because the SDCA was not a party aggrieved by the commission’s approvals. The supreme court vacated and remanded. It noted that Mich. Comp. Laws § 125.3604(1) allows a “person aggrieved” to appeal a commission decision related to a PUD or special land use decision, and Mich. Comp. Laws §§ 125.3605, 125.3606(1) indicates any “party aggrieved” may further appeal a zoning board decision to the circuit court. Despite the use of those terms for a century, neither the statute nor legislature ever defined them. The court looked at various jurisdictions that have defined the same or similar terms and settled on a definition more expansive than its past precedent. The court stated its interpretation of “aggrieved party” was consistent with its historical meaning and that an aggrieved party must allege and prove special damages not common to other property owners. But “aggrieved” had become inappropriately intertwined with real property ownership. The court noted neither statute referenced an appellant’s property ownership. Because the legislature specifically required property ownership elsewhere in the statute, the omission in the applicable sections established a class of potential appellants broader than real property owners. The supreme court concluded that to be a party aggrieved under Mich. Comp. Laws § 125.3605 and a person aggrieved under Mich. Comp. Laws § 125.3604(1), an appellant must have taken a position in the challenged proceeding such as by letter or oral public comment, must claim some legally protected interest or protected right likely to be affected by the challenged decision, and must provide some evidence of special damages but not only as they compare to other real property owners similarly situated. As before, generalized concerns, such as traffic congestion or aesthetic and ecological impact, are not sufficient. A strong dissent criticized the majority for destabilizing Michigan zoning law by overturning years of precedent and conjuring new definitions, criteria, and factors destined to be litigated for years to come. Saugatuck Dunes Coastal Alliance v. Saugatuck Twp., 983 N.W.2d 798 (Mich. 2022).
In Construction Contracts and ADR: Choosing the Right Shoe Size and Style, 39 Prac. Real Est. Law 9 (2023), Daniel D. McMillan outlines the considerations faced most often in construction law regarding alternative dispute resolution (ADR). Consistent with the nature of pieces usually featured in practice-oriented periodicals, the article provides straightforward skills-oriented advice without exploring any theoretical or predictive analytics. As a practitioner’s piece, the article is instructionally expansive, providing valuable insight into a broad spectrum of considerations construction lawyers should address to be effective for their clients. Although ADR has been part of the legal landscape for centuries, it has only recently overtaken litigation as the primary manner to settle property conflicts. The article introduces readers to the variety of concerns and choices in construction contracts, many of which are traditional, but also some that have only recently become very popular. The author begins by suggesting that each contract feature a dispute resolution ladder, which is an agreed-upon flow chart of how to resolve disputes through the life of the construction project. He details pitfalls to avoid, such as making steps in the ladder conditions precedent to moving forward, failing to set realistic time limits for each step, and making assumptions about standard ADR provisions regarding matters such as forum selection clauses. One may be surprised that so many states (30-40) have legislation voiding or limiting ADR clauses designating controlling law outside of their home state. As one expects, negotiation is an initial and important step in any commercial conflict, but the author highlights the benefit of having specific clauses addressing it, particularly noting when negotiations need take place at the project and stage levels as opposed to the executive level. The article’s main focus is on mediation clauses for construction contracts. The author uses comparative analysis between models from various entities, including the American Institute of Architects (AIA), the American Arbitration Association (AAA), and Judicial Arbitration and Mediation Services (JAMS). Treatment in this section of the article is particularly helpful in highlighting the need to distinguish between facilitative mediation and evaluative mediation so that appropriate language is used. Although the two types of mediation are not mutually exclusive, their differences call for specifically drafted clauses. Arbitration rule options go beyond AAA and JAMS, and the author notes other routine choices such as the United Nations Commission on International Trade Law and International Centre for Dispute Resolution. Federal law considerations are paramount as well regarding compliance with the Federal Arbitration Act (FAA), at least when dealing with domestic parties. To that end, one needs to pay attention to avoiding conflicts between the FAA, institutional rules, and state law, as many states have been surprisingly active in efforts to regulate construction industry contracting and dispute resolution. More recent preferences for resolving disputes in this area that warrant consideration in drafting one’s dispute resolution ladder are partnering, project neutrals, and dispute resolution boards. These options share the feature of being available from the outset of a project until completion. The parties agree on the resource, time, and expenses related to conflicts throughout the construction period. He concludes that one should consider the full range of available selections, try them out as much as possible, and settle on what is the best fit for one’s client; no one size fits all.
In Mitigating Catastrophe Risk for Landowners, 74 Hastings L.J. 869 (2023), Prof. Stewart Sterk exposes the gaps in the existing legal mechanisms for compensating landowners in the case of catastrophic events, from floods to pandemics. Private insurance, by its business purpose, evaluates risks based on historical events and seeks to minimize claims either by charging higher rates or withdrawing from risk-prone markets altogether. In the case of insurance against floods, this latter course left many homeowners at risk of monumental losses, leading to the creation of the National Flood Insurance Program, a program itself fraught with difficulties, not the least of which is a mounting $20 billion federal deficit. Among the many obstacles to private insurance against other catastrophic-related losses, Prof. Sterk sees information deficits (how to predict the next wildfire for instance) and the moral hazard as the most challenging. But he has ideas for overcoming some of them, including reinsurance and catastrophic bonds. Prof. Sterk is skeptical that the federal government should continue as the insurer of last resort in the case of floods. He believes that insurance is not a good business for the government, and the absence of a profit motive, which animates private insurers, has led to governmental decisions on risk management that are less than optimal. Rejecting the idea that the government has a societal duty as a matter of corrective or distributive justice, Prof. Sterk believes that actuarially sound insurance is a preferred alternative to government assistance.
Climate change has caused us to rethink our heavy reliance on fossil fuels for energy. Prominent among our responses is the development of carbon-neutral energy sources, particularly wind. Although the benefits of this alternative source are undeniable, there are many externalities yet to be grappled with, including noise pollution, damage to infrastructure from construction, sound and light pollution, and limitations on competing land uses. In Fencing the Wind: Property Rights in Renewable Energy, 125 W. Va. L. Rev. 27 (2022), Martin Lockman outlines the largely unaccounted-for harms and shows how existing legal theories are not a good fit for marking the boundaries of rights in wind. Mr. Lockman proposes a novel property mechanism, drawing upon the practice of unitization used in oil and gas development. Traditional unitization has the core characteristics of pooling shared interests in a resource, decision-making by voting of the community, and the communal sharing of the benefits and detriments. Mr. Lockman calls for the creation of “classes” of interest holders in wind resources and a requirement that each class approves of any proposed unitization plan. If nothing more, his ideas offer the promise of standardization and predictability.
Mississippi exempts real estate licensees from liability for failure to make required disclosures to buyers. Instead, only the property owners have liability for violations of the statute. 2023 Miss. S.B. 2647.
Wyoming provides for the continuation of property insurance coverage to a beneficiary of a transfer on death deed. The coverage is extended for a period of up to 60 days following the date of the death of the last owner unless the grantee beneficiary has disclaimed an interest in the real property. 2023 Wyo. Sess. Laws 85.
Wyoming amends law for the creation of tenancy by the entirety. Unless the deed specifies another form of ownership, the designation of tenants on an instrument of conveyance or transfer of real property as “husband and wife,” “spouses,” or similar language is deemed to establish a tenancy by the entirety. 2023 Wyo. Sess. Laws 97.
Wyoming redefines criteria for prescriptive easement for water conveyance. An easement requires the use of a water conveyance system under a claim of right for a period of ten years, during which time the use must be continuous and uninterrupted and consistent with the historical and traditional use of the water conveyance system. A temporary change of use or cessation of use, so long as the water rights are not abandoned, shall not be deemed an interruption. The use must be open and notorious and adverse. The holder of an easement so established may file a notice with the county clerk, describing the prescriptive easement. Once established, the easement holder acquires the right to access and repair the water conveyance. Upon notice to the servient owner, the easement holder may temporarily remove infrastructure in or spanning the water conveyance system for purposes of maintenance. 2023 Wyo. Sess. Laws 69.
