NO. 93-331 IN THE SUPREME COURT OF THE STATE OF MONTANA 1993

ROBERT SCHERPENSEEL and SHIRLEY SCHERPENSEEL,husband and wife; ROBERT EICKERT and THERESA EICKERT, husband and wife, Plaintiffs and Appellants,

-vDUANE BITNEY and BETTY BITNEY, husband and wife; EDGAR GRANRUD and 

### DEC

## 22

## 1993 

# D

HELEN GRANRUD, husband and wife; and FLATHEAD COUNTY,MONTANA, a 

# 22Xz;i.$ CLERKOFSUPRC'~?~' CQ~JR~ political subdivision of the State STATE OFI:IOIUT,~NA of Montana, by and through its Board of County commissioners, Defendants and Respondents.

APPEAL FROM: District Court of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Michael H. Keedy, Judgepresiding.

COUNSEL OF RECORD: For Appellants: PatrickM. Springer,Kalispell,Montana For Respondents: M. Dean Jellison, Murphy, Robinson, Heckathorn & Phillips, Kalispell, Montana (Bitneys), James C. Bartlett, Hash, O'Brien & Bartlett, Kalispell, Montana (Granruds)

## , Dennis J. Hester, Deputy Flathead County Attorney, Kalispell, Montana

Submitted on Briefs: November 10, 1993

Filed: Decided: December 22, 1993Justice James C. Nelson delivered the Opinion of the Court. Plaintiffs/Appellants appealanorder oftheEleventh Judicial District Court, Flathead County, granting summary judgment to the defendants and denying plaintiffs' motion to alter or amend that judgment. We reverse. The issues on appeal are as follows: 1. Does the Covenant to Dedicate, entered into by the defendants in 1975, run with the land? 2. Does the eight-year statute of limitations bar the plaintiffs' cause of action? 3. Did the District Court err in granting summary judgment in favor of the defendants? In 1975,thedefendants Edgar and Helen Granrud and Duane and Betty Bitney (the defendants) owned certain real property in Flathead County known as StillwaterTerrace, Unit 2 (Unit2). The defendants applied for summary review of their subdivision application on February 18, 1975, and a summary review report was subsequently prepared. On May 19, 1975, the defendants entered into a "Covenantto Dedicate" with Flathead County and its Board of County Commissioners. This document provided, in pertinent part:



# . . . in consideration of the Board of County Commissioners of Flathead County, Montana, approving the covenantorsmap or plat of StillwaterTerrace,Unit 2 

## .



# . . the Covenantors agree in the future to donate as a County Road [portions of Lots 8 and 91. Covenantors agree to donate the beforementioned Easterly 60 feet of Lots 8 and 9 of Stillwater Terrace, Unit 2, 233.54 feet in length in the future if the Covenanteewill agree to approvethe StillwaterTerrace, Unit 2map forrecording. The Covenantors further agree for the considerationbefore stated that any future conveyance of Lots 8 or 9 of StillwaterTerrace, Unit 2, Flathead County, Montana, will be subject to the terms of this Agreement, and the Covenantors further agree that they will improve the Easterly 60 feet of Lots 8 and 9 of Stillwater Terrace, Unit 2 said 60 foot sectionbeing 233.54 feet in length, and that such improvements on theportions of Lots 8 and 9will comply with the standards for County Roads. 

# . . . The same day, the Board of County Commissioners accepted the plat forUnit 2 subject to the "restrictive covenants to dedicate." Thereafter, on June 12, 1975, the plaintiff Shirley Scherpenseelpurchased Lot 9ofUnit 2 from theGranruddefendants. Although not in the record, it is alleged that, on July 28, 1975, the plaintiffs Robert and Theresa Eickert purchased Lot 8 in Unit 2 from the Granrud defendants, and the defendants have not denied this allegation. On July 31, 1990, the plaintiffs made a formal demand to the defendants requesting that they perform in accordance with the Covenant to Dedicate. On July 8, 1991, the plaintiffs filed a complaint against the defendants, alleging that they had an obligationtoconstructa road abutting theplaintiffs' property to county specifications. The plaintiffs also sued Flathead County, requesting that, after the road was constructed, the county be required to accept and maintain that road as a county road. On October 9, 1991, the plaintiffs filed a Motion for Determination of Plaintiffs1Standing to Seek Declaratory Relief. On December 10, 1991, the District Court issued an order finding thattheplaintiffs had standing topursue theaction. Thereafter, on September 30, 1992, the Bitney defendants filed a Motion for Summary Judgment. Although the other defendants did not file 3similar summary judgment motions, the Bitneysr motion was apparently considered to be inclusive of all defendants. On March 15, 1993, the District Court granted summary judgment in favor of all the defendants on the basis that the plaintiffs' action was time-barred by the statute of limitations. On March 26, 1993, the plaintiffs filed a Motion toAlter orAmend Order Granting Summary Judgment,which was denied by theDistrict Court on April 26, 1993. From theMarch 15, 1993 and April 26, 1993, orders, theplaintiffs appeal. Our standard in reviewing a grant of summary judgment is the

same as that initially utilized by the district court. McCracken

v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894. Summary judgment isproper when there isno genuine issueas to any material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. I

## - COVENANT RUNNING WITH THE LAND Theplaintiffs contend that theCovenant to Dedicaterunswith the land, thus benefitting their property and binding the defendants to make the agreed-upon road improvements. 

### We agree. It isundisputed that, in 1975,when the subdivision plat and Covenant to Dedicate at issue here were accepted by the Board of County Commissioners and were respectively filed and recorded in Flathead County, the subdivision and plat were subject to the requirements of theMontana Subdivisionand Platting Act (theAct), 99 11-3859, et seq., RCM, 1947, as amended, (now §§ 76-3-101, et seq.

### ,MCA)

## .The purposes of the Act were set forth at 5 11-3860, RCM, 1947, as amended, (now5 76-3-102,MCA), as follows: It is the purpose of this act to promote the public health, safety, and general welfare by regulating the subdivision of land; toprevent overcrowding of land;to lessen congestion inthe streetsandhighways: toprovide for adeuuate light, air,water supply, sewage disposal, parksand recreation areas, inqressand earess,and other public requirements; to require development in harmony with the natural environment; to require that whenever necessary, the appropriate approval of subdivisions be contingentupon a written finding of public interest by the governing body; and to reauireuniformmonumentation of land subdivisionsand transferrinq interests in real propertv bv reference to plat or certificate of survey.

(emphasisadded) With minor amendments not at issue here, those purposes have remained in theAct to the present. Under the statutory definition inplace in 1975, a subdivision was a division of landwhich created oneormore parcels containing less than twenty acres. Section 11-3861(12)

### , RCM, 1947, as amended. That remained true at all times pertinent to this litigation. See g 76-3-103(15), MCA. In this case, the warranty deed from the Granruds to Shirley Scherpenseeldescribed the real property as follows:' Lot 9 of Stillwater Terrace 

## - Unit 2, as shown on the plat or map thereof on file and of record in the office of the Clerk and Recorder of Flathead County,Montana. The plat referred to in this real property description is the one accepted by the Board of County Commissioners on May 19, 1975 and 

# ' We note that the record in this case has not been extensively developed; for example, the Eickerts are named plaintiffs, but their deed of conveyance is not in the record. However, this opinion applies to them with equal weight, assuming that their deed contains the same or similar language as the deed from the Granruds to Shirley Scherpenseel.subsequently filed. The plat was accepted after the Covenant to Dedicate was executed by the defendants and "in consideration of the Board 

### of County Commissioners of Flathead County, Montana, approving the covenantorsmap or plat of Stillwater Terrace,Unit

Section 11-3870(3), RCM, 1947, as amended, (now 

### 5 76-3-304, MCA) provided in 1975, and still provides that: The recording of any plat made in compliance with the provisions of thisact [now referred to aschapter] shall serveto establish the identityof all lands shownon and being a part of such plat. Where lands are conveyed by reference to a plat, the plat itself or any copy of the plat properly certified by the county clerk and recorder as being a true copy thereof, shall be regarded as incorporated into the instrument of conveyanceand shall be received in evidence in all courts of this state. Section 11-3869, RCM, 1947, as amended, (now

### 5 76-3-306, MCA)

### , provided in 1975,and still provides, that: All covenants shall be considered to run with the land, whether marked or noted on the subdivision plat or contained in a separate instrument recorded with the plat. In this case, the Covenant to Dedicate was a separate instrument which was recorded with the Clerk and Recorder. Although not in the record, the plaintiffs also contend that the Covenant to Dedicate isnoted on therecordedplat,and thedefendantshave not denied this contention. This contention is supported by the Board of County Commissioners1 minutes, dated May 19, 1975,which state that theplat of Unit 2was accepted "withrestrictive covenantsto dedicate." Accordingly,wehold that,undertheabove-citedprovisions of the Act, the Covenant to Dedicate at issue here clearlywas and isone running with the land for the benefit of the plaintiffs and binding upon the defendants and, further, that the covenant was incorporated inplaintiffs' deed of conveyanceby operation of law. Ruling to the contrary, the District Court relied solely on the case of Majers v. Shining Mountains (1986), 219 Mont. 366, 711 P.2d 1375, in granting summary judgment to the defendants. However, Maiers is not on point. In that case, the defendant subdivided a 7,000 acre ranch. In order to sell the lots, the defendant prepared and filed subdivision plat maps. These plats

were filed prior to the effective date of the Montana Subdivision and Platting Act and were not subject to its provisions. The plaintiffs purchased lots within thesubdivisionand allegedlywere told by the defendant's personnel that roads would be constructed and maintained by thedefendantand thata damwould be constructed

across a creek to form a lake suitable for fishing and other recreational pursuits. When the plaintiffs requested that the defendant construct the roads, the defendant refused. The plaintiffs then filed an action alleging an implied covenantbased

on the verbal representations allegedly made by the defendant's personnel. Maiers, 711 P.2d at 1376. We held that the plats themselves did not give rise to a promise to construct roads, and

we remanded for adeterminationof whatverbal representations were made when the defendant sold the lots to the plaintiffs. Maiers, 711 P.2d at 1378. We also held that the appropriate statute of limitations on an implied covenant arising from the use of written documents was eight years, the limitation for actions based on awritten contract. Maiers, 711 P.2d at 1378-79. We disagree with the District Court's conclusion that Maiers is "very similar" to the case at hand. First, the subdivision and plat at issue inMaiers were not subjectto theMontana Subdivision and Platting Act, as are the subdivision, plat and covenant at issue in the present case. Second, Maiers dealt with oral representationsgiving rise to an implied covenant. In the case at hand, an express, written covenant was executed and recorded. Therefore, we conclude that Maiers is not sufficiently similar to the instant case so as to warrant reliance thereon. In passing, we note that the Board of County Commissioners' minutes refer to the covenant at issueas a "restrictivewcovenant. A restrictive covenant is defined as a "[p]rovision in a deed limiting the use of the property and prohibiting certain uses." Black's Law Dictionary 1182 (5thed. 1979). On the otherhand, an affirmative covenant is defined as a covenant "inwhich the party binds himself to the existence of a present state of facts as represented or to the future performance of someact." Black's Law Dictionary 327 (5thed. 1979). We concludethat, in actuality, the covenant at issue here is an affirmative covenant, instead of a restrictivecovenant,notwithstandingthereference in theBoard of County Commissioners1minutes. I1 

## - STATUTE OF LIMITATIONS Plaintiffs filed their action in 1991, some sixteen years after purchasing their properties from the Granruds, but within eleven months of demanding, in writing, that the Bitneys andGranrudsperform in accordance with the Covenant to Dedicate. The District Court ruled that plaintiffs1 cause of action was timebarred by the eight-year statute of limitationsprovided for in § 27-2-202, MCA. The plaintiffs contend that their action is not time-barred by the statute of limitations. We agree with the plaintiffs. Section 27-2-202, MCA, provides that an action upon any obligation founded upon an instrument inwriting must be commenced within eight years. We have previously held that a deed constitutes a contract founded upon a written instrument for purpose 

### of invoking the eight-year statute of limitations applicable towritten contracts. Neils v. Deist (1979),180Mont. 542, 545-46, 591 P.2d 652,654-55. Similarly,we have applied the eight-year statute of limitations to cases involving covenants. See, for example, Maiers, 711 P.2d at 1378-79; U.V. Industries, Inc. v. Danielson (1979), 184 Mont. 203, 228, 602 P.2d 571, 586 (actionto enforce an implied covenant in an oil and gas lease). Accordingly, the eight-year statute of limitations is applicable here to an action to enforce an affirmative, written covenant running with the land incorporated by operation of law in plaintiffs' deed of conveyance. However, while the eight-year statute of limitations is the appropriate statute, we must, nevertheless, determine when the eight-year limitationsperiod began to run in this case. Theplaintiffscontend that the statute of limitationsdid not begin to run until they made a demand for performance. Thedefendants argue that the eight-year limitations period began to

run on May 19, 1975, the day the Covenant to Dedicate was signed. This is 

### an issue of first impression in Montana. What little

case law there is from other jurisdictions is annotated at 17 ALR 2d 1251. Those cases, however, in addition to being relatively old, are not factually analogous to the instant case, nor do such authorities consider the statute of limitations question in the context of the requirements of a land use law such as theAct. As a point of departure, however, we note that other courts have generally taken one of three different approaches in determining when a statute of limitations begins to run on an actionto enforce anaffirmative,written covenant runningwith the land. One approach holds that the statute of limitationsdoes not begin to run until an actual demand for performance is made. A second approach modifies the first by requiring, through application of the doctrine of laches to old, stale or untimely claims, that thedemandbemade within a reasonableperiod of time. A third approach dispenses with the necessity for a demand by taking theposition that there isa continuing breach so that a new cause of action arises from day to day. Taking into considerationthe facts of this case, our State's comprehensive scheme of land use laws and regulations, and Montanans' unique inalienable right to a clean and healthy environment embodied in Article 11,Section 3,of ourConstitution, we conclude that the first approach above-mentioned best effectuates the purposes and public policy of the Act, while,coincidentally,providing a definite and easily determinable time frame within which actions must be commenced to enforce affirmative, written covenants running with the land. As in this case, developers of real property often enter intoaffirmative, written covenantsand agreementsas a part of the subdivision process in order to obtain the approval of the governing body to file a subdivision plat. In many cases, roads and other improvements required by the local government, by applicable laws or rules and/or by the developer's covenants and agreements are not made immediately, but, rather, are constructed

over a period of time as parcels or units of the subdivision are sold.When developers fail to timely construct roads and improvementsagreedupon or otherwiserequired,innocent purchasers of theproperty, and in some instances the local government and its taxpayers, are left to shouldertheburden and expense involved in constructing and financing the roads and improvements that were properly the responsibility of the developers. Worse, the purposes of the Act, as set forth at length in 

### 5 76-3-102, MCA, are frustrated to the ultimate detriment of the public, the environment and the orderly, safe and harmonious development of Montana's lands. Simply put, public policy, as expressed in the Act, demands that real estate developers be strictly held to their covenants and agreements, and that they not be allowed to gain the advantage of their failure toperform by the fortuitous passage of time.Accordingly, we hold that the eight-year statute of limitations in which to commence an action to enforce an affirmative, written covenant runningwith the land doesnot begin to rununtil the date on which an actual demand for performance is made.In this case, the plaintiffs demanded performance in writing

on July 31, 1990, and filed a formal complaint on July 8, 1991. Based on the rule, set forth above,that the eight-year statute of limitationsdid not begin to run until the demand for performance

wasmade,we hold that theplaintiffs' complaint, filed on July 8, 1991,wasnot time-barred by the eight-year statute of limitations of 

### 5 27-2-202,MCA. I11 

### - SUMMARY JUDGMENT The plaintiffs contend that the District Court erred in granting summary judgment to the defendants. We agree. Summary judgment is proper when there is no genuine issue as to any material fact and themoving party is entitled to judgment

as a matter of law. Rule 56(c), M.R.Civ.P. In this case, the defendantsacknowledgedthattherewasno genuine issue of material fact when they moved for summary judgment. However, we cannot agree that the defendants are entitled to judgment as a matter of law. Clearly, they are not. As we held above, the Covenant to Dedicate is an affirmative, written covenant running with the land and, as such, is meant to benefitplaintiffs' property. Therefore,there isan obligation on thedefendants toperform pursuant to the terms of their covenant.In addition, the plaintiffsJ action is not time-barred by the applicable eight-year statute of limitations. Therefore, we hold

defendants. Reversed and remanded for furtherproceedings consistent with this opinion.