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2016-SC-00213-DG

## [Q)~**lf~1oh<ih, r<,~atJ~.bc.**  MAJESTIC OAKS HOMEOWNERS APPELLANT ASSOCIATION, INC.



### v. ON REVIEW FROM COURT OF APPEALS CASE NO. 2014-CA-000492 SHE:{JBY CIRCUIT COl!RT NO. 2009-CI-00873
MAJESTIC OAKS FARMS, INC., JOSEPH O'BRIEN. AND ASHLYN O'BRIEN APPELLEES

OPINION OF THE COURT BY CHIEF JUSTICE MINTON REVERSING AND REMANDING Kentucky law confirms the possibility ofa defeasible easement, although the term itselfappears in no reported case describing this·type ofeasement, which is an easement capable oftermination upon the occurrence ofa specified event or contingency. In this case, Majestic Oaks Homeowners Association

. . (HOA) contends the defeasible easement principle applies to the easement for ingress and egress retained by its subdivision's developer, Majestic Oaks Farms (Developer), to terminate it when a majority ofHOA members voted to do so, as ·

.allowed by the express terms ofDeveloper's recorded subdivision plat. On discretionary review, we agree with HOA.I. FACTUAL AND PROCEDURAL BACKGROUND. ln 1995, Developerbegan developing a residential subdivision, _Majestic Oaks Equestrian.Estates (Estates). To memorialize Developer's and fut:u_re homeowners' rights in Estates, Developer recorded with its subdivision plat a declaration ofcovenants, conditions, and restrictions (Original Declaration) and incorporated its terms into the homeowners' deeds to**lot~** in the development. The Original Declaration accomplished two noteworthy things. First, the Original Declaration created Developer's easement in gross, stating, "[Developer] shall have a superior right and easement in gross [to use

.Estates's private roads]
...for so long as [Developer], .its successors or assigns,

. . . owns any Lot or any portion ofthe Property." The Original Dedaration defined 

### Lotas "any Lot which is part ofthe Property:'' 

### Property was defined as "Lois 1- 23 as shown on the above referenced Plat." Additional lots could be added as part ofProperty, according to the following language: "[Developer] intends.to make this section containing 23 lots a part ofa larger community known as [the Estates], having been developed in accordari.ce with current plan
.

. Subsequent additional plats will be recorded in the office ofthe Shelby County Clerk's Office." Second,§ 

### 8.3 ofthe Original Declaration, the other section at the center ofthis dispute, states: 

### Unless cancelled, altered oramendedunder the provisions ofthis paragraph, these 

### covenantS and restrictions are to run with the land a.pd shall be binding on all parties claimingunder them
...unless an instrument signed by a majority ofthe then owners ofall lots subject to these restrictions has been recorded 2 \

### agreeing to change these restrictions and covenants in whole or in part. These 

### restrictions may be cancelled, altered oramended at any time by a· 67% approval from each class ofmembership subject to these restrictions, 

### butDevelopershall retain the sole rightto appoint the architectural approval committee until the last lot is sold.1 In 1998 and 2000, Developer e:Xpanded Estates to inciude Lots 24-59, 

### r identified as "Sections 2 and 3," byrecording a plat. The plat for Section 3 also

. . identified a section ofland for "Future Development," identified as "Sections 4 and 5." By this time, Estatesincluded Lots 1-59; identified as "Sections 1-3." By March 13, 2006, Developer no longer owned any property in the**Estat~s,** having transferred Sections 1-3 to ihdividual homeowners within the HOA through a quitclaim deed, but tontinued to own Section 4. Section 4 did not become·part ofEstates until April 2008, two years·after all ofD·eveloper's then-
.· existing property in the Estates was originally conveyed. In August 2006, HOA proposed amendments to the Original Declaration to be voted on by the homeowners, proposing_two relevant changes: (1) to expand "Property" to include Lots 1-59, i.e. Seetions 1-3 ofthe Estates; and (2) to remove the language granting an easement in gross to Developer. The amendment to remove this language :Passed with82% approval, well above the 67% required bythe Original Declaration. 2

1 Emphasis has been added to highlight the**iniport~t** language.
. 2 Because we ultimately conclude that Develope:r:'s easement was expressly ma.de terminable and that the easement terminated when the HOA membership voted decisively inAugust 2006', we consider Developer's argument ofthe possible legal effect ofits continued ownership ofSection 4-the effective date ofits inclusion in Property being disputed-is not a material fact that precludes summaryjudgment in favor ofHOA. · · 3Believing the easeme.nt to be ineffective, HOA filed suit in circuit court against Developer to stop Developer's continued use ofthe purportedly terminated easement in·gross because ofthe adoption by HOA ofthe

. . amendment to the Original Declaration arid the relinquishment by Developer of any ownership rights in "Property." Both parties filed summaryjudgment motions against each other, with the trial court**~anting** Developer's motion ) . and a panel ofthe Court ofAppeals affirming. We granted HOA's motion for discretionary review. II. ANALYSIS. A. Standard ofReview.

."The standard ofreview on appeal ofa summaryjudgment is whether the trial court con:ectly found that there were no genuine issues as to any material fact and that the moving partywas entitled tojudgment as a matter oflaw."3 "An appellate court need not defer to the trial court's decision on summary judgment and will review the issue de novo**beca~se** only legal questions and
no factual findings are involved."4 B. The Possessory Interest Granted to Developer was a Defeasible Easement in Gross that Terminated Upon a Q.reater Than 67% Vote, Sufficiently Fulfilling a Condition for Termination Stated in the Written Docum,ent Granting the Easement. . An easement "is an incorporeal hereditament to which corporeal property is rendered subject."5 In otherwords, it is the right to use the land owned by · ) a Coomer v. CSXTransp., Inc., ·319 S.W;3d 366, 370 (Ky. 2010) (citing Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996)).
. 4 Id. at 370-71 (citing Hallahan v. The.**Courier-Jouma~** 138 S.W.3d 699, 704 (Ky. App. 2004)).
. . . .. s Illinois Cent. R.R. Co. v. Roberts, 928 S.W.2d 822, 826 (Ky. App. 1996) (citing Henry Bickel Co. v. Texas Gas Transmission Corporation, 336 S.W.2d 345, 347 (Ky. 1960). 4

### someone else for a specified P,tirpose. "An 

### easement in gross is ·a_mere personal interest in or right to use the land ofanother. It

### is attached to and vested in, the person to whom it is granted." 6 

### "[T]he principal distinctionbetween**~** 

### easement in gross and 

## an easement appurtenant is that in the first there is I 

### not, and in the second there is, a dominant tenement to which it is attached."7 "An express easement is created by a written grant with.the formalities ofa. deed."8 

### ·There is no question in this case that whatever**ri~t** 

### Developer has 1n the real propertyit conveyed to HOA of

# an express easement in gross. And·the disagreement between the parties.rests on whether that express**ea~ement** 

### in gross islegally capable oftermination and whetherHOA actually terinihated it. A defeasible easement is one that "terminate[s] upon the occurrence ofa given event."9 

### "[A]n easementmay be expressly subject to termination by the servient owner upon the·occurrence ·ofa specified event or contingency."id 

### "Where an easement has been created until the happening of

## a specific event.or contingency, the easementwill terminate ipso facto on the happening ofthe specified event or contingency."11

6 Meade v. Ginn, 159 S.W.3d 314, 320 (Ky. 2004): 1 Id.
. s Sawyers v. Beller, 384 S.W.3d 107, 111 (Ky. 2012).
. 9 Jon W. Bruce and James W. Ely, Jr., The Law of.Easements & Licenses in Land,§ 10:3 (1988).
. 10 25 Am. Jur. 2d Easements & Licenses§ 84 (2014). 11 Id. 5Kentucky has never formally recognized the term 

### defeasible easements. But two cases confirm the existence ofdefeasible_easements in Kentucky;l2 In 

### Kenner, the Court stated: The doctrine is well-settled at commonlaw that no·freehold or fee-·**simpl~** estate can be destroyed by the breach or non..:performance ofa condition subsequent
...This common-lawrule does not apply, however
...to the creation ofmere easements. [A]n incorporeal. hereditament is not created at common lawby livery ofseizin; and whenever the breach

### of~ subsequent condition happens in an estate or grant ofthis character the estate terminates without any entry. 13 Ascertained from the language above, this Court recognized the existence ofdefeasible easements in Kentucky in 

### Kenner. In 

### Otter, the entire discussion ofthe Court centered on whether an

. . f easement purporting to end when a water storage tank owner "remove[d] said tank" ended when the owner simply replaced the tank. 14 The Court could not have even entertained this discussion had it

### not·assu~ed the recognition of**defeasibl~** easements in Kentucky. So**acc~rding** to 

### Kenner and 

### Otter, Kentucky recognizes the existence ofdefeasible easements,**easem~nts** ending upon the occurrence ofa given event. Although this dispute involves.two s"-uch events, termination ofthe easement upon vote ofthe individual homeowner members ofthe HOA conclusively decides this matter. ·

i2 Kenner v. American ContractCo., 72 Ky. 202 (Ky. 1872); Louisville Chair& Furniture ·Co. v. Otter, 294 S.W. 483 (Ky. 1927). 13 Kenner, 72 Ky. at 207-08. 14 Otter, 294 S.W. at 483-87. 6. 

### ' "In the case ofan ex:press easement...the terms of [an easement] determine the rights and liabilities ofthe parties."is "[B]ecause [the] contract created the easement, that contract also defines the extent ofthe easement."16 A trial court "commit[s] an errorwhen it [goes] outside the easement agreement to ascertain extraneously its mean.lng and effect, because the result [is] an**inferpretatic~n** ofthe instrument incorisistent with the clear and definite language employed in it."17 Taking these rules together, the extent ofDeveloper's rights as to its easement is confined by the very language it chose in retaining that easement.

, The Onginal Declaration states, "These restrictions may be cancelled, altered or

amended at any time by a 67% approval from each class ofmembership subject to these restrictions, but [Developer] shall retain the sole right to appoint the architectural approval committee until the last lot is sold." No dispute exists as to the procedural validity ofthe vote itself-both parties agree

·that the vote was conducted properly. So, because the existence.ofDeveloper's

easement is limited byits granting language in the Original Declaration, and
is.sawyers v. Beller, 384 S.W.3d 107, 111 (Ky. 2012) (citing Tex. E. Transmisswn Corp. v. Carman, 314 S.W.2d 684, 687 (Ky.· 1958)). 16 Chancy v. Chancy Lake Homeowners Association, 55**~o.3d** 287, 297 (Ala. Civ. App. 2010) (citing RomarDev. Co. v. GulfView Mgmt. Corp., 644 So.2d 462, 465 (Ala. 1994)). Chancy, although only persuasive authority, is the subject ofmuch debate between the parties and lower courts. The lOwer courts seem to have missed an important factual distinction between Chancyand this case that shows that Chancy does not in fact support Developer's position. The .Chancycourt did not allow the homeoWn.ers' association in that case to amend the easementbecause Chaney's easement-granting document did not contain any sort oflimitation or amendment language. Chancy, 55 So.3d at 297. Rather, in this case, the Original Declaration, the easement-granting document, allows for the a!p.ending ofthe "restrictions" ofthe Original Declaration. · · 17 Texas Eastern Cqrp. v. Carman, 314 S.W.2d 684,-687 (Ky. 1957). 7because HOA validly abided by the procedure necessary to remove that easement, HOA extinguished Developer's easement.

. . Developer argues that HOA's abilityto amend the Original :peclaration is
. confined to "restrictions," and not "covenants and restrictions," per the language used in § 8.3 ofthe Original Declaration. And Developer argues that the term 

### easementdoes not fit under the

### ~mbrella ofeither "covenants" or "restrictions." :alack's Law Dictionary, specific to property**law~** defines 

### affirmative covenant**~s** ".[an] agreement that real property will be used in a certain way."18 An**~a.sement** constitutes a covenant because an" easement, as stated earlier, is
an interest that can be created by an agreement and that·allows a landowner to
use lan,d that he or she does own for a specific purpose. So an 

### easementfalls under the 

### covenantsumbrella in the Original Declaration. To Developer's point, it is·true**~at** this Court would. be hard-pressed to refer to any easement, besides a negative easement, as a 

### restriction. But the language of§ 8.3 ofthe Original Declaration, in adc:Ution to interpretative canons, supports our conclusion that an 

### easementfalls under the 

### restrictions

· umbrella ofthe Original Declaration. The applicable section,§ 8.3, begins by stating, 

### "Unless cancelled, altered
oramendedunder the provisiOns ofthis paragraph, these 

### covenants and restrictions shall be binding
...." This opening1anguage implies nothing less than covenants, and thus:easements, are amendable. The language of§ 8.3 ,
is Black's Law Dittionacy (10th ed. 2014). 8also states, "
...unless an instrument signed by a majority ofthe then owners of all lots subject to these restrictions has been recorded agreeing to change these restrictions and covenants in whole or in part." Again, this language implies that covenants are amendable. The section then describes an amendment-voting process: "These restrictions may be cancelled, altered.oramended at any time by a 67% approval from each class ofmembership subject to these restrictions, but Developers shall retain the sole rightto appoint the architectural approval

. . committee until the last lot is sold." We read this language more as 13- description ofthe amendment process than as a .limitation on what can be amended, considering the entirety ofthe section.19 Even more in· support of this reading is the.discussionofDeveloper's "sole rightto appoint the architectural approval committee
...." IfDeveloper truly intended to restrict application ofthe amendment process only to. "restrictions," it would not have ineluded, in the same sentence, a discussion ofDeveloper's**"rights~"** '

. Developer's rights including the use ofthe easement. Additionally, § 8.3 is. located uri.der Art. VIII

- General Provisions in a document entitled "Declaration ofCovenants, Conditions and Restrictions." So this amendment provision seemingly generally applies to the.ability ofHOA to amend covenants, conditions, and restrictions.

19 Vansant v.**Co~monwealth,** 224 S:W. 367, 371 (Ky. 1920) ("the meaning ofa word may be ascertained byreference to the meaning ofwords associE;i.ted with it")_. 9Lastly, this Court follows the contract interpretation canon historically known.by the useful Latinism,**con~a**

### proferentem.:·When interpreting contracts susceptible to two meanings, we construe ambiguity.against the drafter,

' ' Developer in this case. 20 IfDeveloper wanted its easement to be indefeasible, it could have simplyincluded a provision stating,."Nothing in this document will**~ow** tile amendment, alteration, or extinguishment ofDeveloper's easement:" This would have prevented anyone from arguing that Developer's easement is ·amendable, and thus, terminable. So Developer's defeasible easement terminated upon a vote by tl).e membership ofHOA, in accordance with the Original Declaration. The trial
' ' court improperly granted summaryjudgment to Developer and the panel ofthe Court ofAppeals improperly affirmed the trial court. We holdfrom these facts that HOA was entitled tojudgment as a matter oflaw and the trial court erred when it failed to grant HOA's summaryjudgment motion. III. CONCLUSION. We reverse the holding ofthe Court ofAppeals and remand this case to ·the trial court with directions to enter summaryjudgmentin favor ofMajestic Oaks Homeowners Association. Minton, C.J.;

### C~.:mningh~, Hughes, Keller, Venters and Wright, JJ., sitting. All concur. VanMeter, J., not sitting.

20 B. Perini & Sons V. Southern Ry. 

### Co., 239 S.W.2d 964, 966 (Ky. 1951). ' 10COUNSEL FOR APPELLANT: John C. ·Robinsoμ. Robinson Salyers, PLLC Brad Keeton Matthew Kuhn William M. LearJr Stoll Keenon Ogdon, PLLC
COUNSEL FOR_APPELLEE, MAJESTIC OAKS FARMS, INC.: Paul Anton Zimlich Paul A. Zimlich, PLLC COUNSEL FORAPPELLEES, JOSEPH O'BRIEN AND ASHLYN O'BRIEN:

. . Austin Hays Austin Hite Hays, PLLC. John B. Baughmam Baughman Harp, PLLC. . . .

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