Opinion ID: 891677
Heading Depth: 3
Heading Rank: 1

Heading: Cloudview Is a Good Faith Purchaser of Parcel F and Owns Parcel F Subject to the City's Recorded Drainage Easement.

Text: {14} In Romero v. Philip Morris Inc. (Philip Morris), 2010-NMSC-035, 148 N.M. 713, 242 P.3d 280, we repeated the following standards regarding appeals of summary judgments. Our review of summary judgment on appeal is de novo. Id. ¶ 7. Summary judgment will be affirmed if we conclude that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Id. (internal quotation marks and citation omitted). We view the facts in a light most favorable to the party opposing summary judgment and draw all reasonable inferences in support of a trial on the merits. Id. (internal quotation marks and citation omitted). The party moving for summary judgment has the initial burden of establishing a prima facie case for summary judgment by presenting such evidence as is sufficient in law to raise a presumption of fact or establish the fact in question unless rebutted. Id. ¶ 10 (internal quotation marks and citation omitted). Once the moving party has met this burden, the burden shifts to the non-movant to demonstrate the existence of specific evidentiary facts which would require trial on the merits. Id. (internal quotation marks and citations omitted). To determine which facts are material, a court's focus should be on whether, under the pertinent substantive law, the fact is necessary to give rise to a claim. Id. ¶ 11 (internal quotation marks and citation omitted).
{15} The City contends that evidence before the district court created genuine issues of material fact precluding summary judgment because such evidence supports a reasonable inference that the City acquired fee title to Parcel F by either statutory dedication or adverse possession. The evidence before the district court was that in 1985, Amrep submitted to the City a preliminary plat for the proposed VHWU1 subdivision. The VHWU1 preliminary plat is part of the record on appeal, but it contains no markings to indicate that it was ever recorded in Sandoval County. The preliminary plat describes Parcel F as land that WILL BE OPEN SPACE. {16} In contrast, the final plat for the VHWU1 subdivision, which was recorded in the public property records of Sandoval County on October 18, 1985, labels Parcel F with the abbreviation D.E., which, according to the plat, stands for Drainage Easement. The recorded final plat also states that the Owners of the Property do hereby dedicate all public thoroughfares which are shown hereon to the City of Rio Rancho, New Mexico, and do hereby grant easements shown on the plat. The VHWU1 recorded plat was approved by the City's Planning and Zoning Commission and endorsed by Amrep. {17} The record on appeal reflects the City's consistent admission that it instructed Amrep to apply the drainage easement designation to Parcel F on the VHWU1 recorded plat. The City maintains, however, that drainage easement was used as a surrogate term for open space, and that it relied on Amrep's representations that Amrep would nonetheless set Parcel F aside as open space in perpetuity when the City approved the plat. Thus, argues the City, having acquired fee title by virtue of dedication or adverse possession prior to Amrep's sale of Parcel F, Amrep had no interest in Parcel F to convey, thus depriving Cloudview of good faith purchaser status.
{18} Because the City relies on Section 3-20-11 for its argument that fee title to Parcel F vested in the City before Amrep sold Parcel F, we will rely on this section to determine which facts are material for purposes of summary judgment. Under Section 3-20-11, a municipality automatically acquires fee title to land within its territory once a plat that designates the land for public use is endorsed and filed. The City contends that the drainage easement designated on the final recorded plat constitutes a dedication for public use under Section 3-20-11. We disagree. Although drainage undoubtedly can be a public use of property,. . . [m]erely because land can be dedicated to public use[] does not mean it has been. Smith v. Beesley, 226 Ariz. 313, 247 P.3d 548, 556 (App.2011) (finding that drainage easements designated solely for the purpose of drainage on subdivision plat were not for public use); see State ex rel. State Highway Comm'n v. Briggs, 73 N.M. 170, 172, 386 P.2d 258, 259-60 (1963) (The plat . . . as filed and received into evidence certainly did not designate the parking area as an area set aside for public use as required by the statute. It merely designates the area involved as a `parking area.'). Where a subdivision plat does not clearly designate land as set aside for public use, we cannot find the land to have been dedicated under Section 3-20-11. {19} The practical effect of allowing the City to prevail on this claim would be the transformation of a lesser, nonpossessory property interestan easementinto a greater, possessory interestfee titlewithout an indication on the recorded plat of the parties' intent to do so. Section 3-20-11 only operates to vest fee title to a specific property in a municipality where a plat expressly dedicates the property for public use. Although the preliminary plat submitted by Amrep did identify Parcel F as land that will be open space, that preliminary plat was not recorded as required by NMSA 1978, Section 14-9-1 (1991). Moreover, the only dedication in the recorded plat was of the public thoroughfares. The language in the plat abundantly clarifies the grant of a drainage easement for Parcel F, not a more general open space easement. Had the City wanted Parcel F to be dedicated for public use, it could have insisted that Parcel F be dedicated for public use as open space. It did not. {20} There is no genuine issue of material fact concerning whether the VHWU1 recorded plat designates Parcel F for public use. The plat designates Parcel F as a drainage easement and nothing more. Because the VHWU1 recorded plat did not meet this statutory requirement, the City's claim for acquisition of fee title by operation of Section 3-20-11 fails as a matter of law. The district court's grant of summary judgment against the City on this claim was appropriate.
{21} The City also claims that it has fee title to Parcel F under adverse possession. Adverse possession is defined as an actual and visible appropriation of land, commenced and continued under a color of title and claim of right inconsistent with and hostile to the claim of another. NMSA 1978, § 37-1-22 (1973). A party claiming ownership of land by adverse possession must prove by clear and convincing evidence continuous adverse possession for ten years under color of title, in good faith, and payment of taxes on the property during these years. Williams v. Howell, 108 N.M. 225, 227, 770 P.2d 870, 872 (1989). If any one of the elements necessary to establish title to land by adverse possession is missing, the claimant will not obtain title. Hernandez v. Cabrera, 107 N.M. 435, 436, 759 P.2d 1017, 1018 (Ct.App.1988). {22} The City relies on the VHWU1 recorded plat for color of title. To possess color of title, the claimant must have a writing or a conveyance of some kind that purports to convey the land title to which is claimed. Madrid v. Rodriguez (In re Estate of Duran), 2003-NMSC-008, ¶ 20, 133 N.M. 553, 66 P.3d 326 (internal quotation marks and citation omitted); see Slemmons v. Massie, 102 N.M. 33, 34, 690 P.2d 1027, 1028 (1984) ([Color of title] must attempt to give title to the adverse occupant, but for some reason fails to do so.). {23} The VHWU1 recorded plat grants a drainage easement to the City over the entirety of Parcel F. Is the grant of this drainage easement a writing or conveyance that purports to convey fee title to the City? The answer is no; an easement is distinguished from a fee, and constitutes a liberty, privilege, right, or advantage which one has in the land of another . . . measured by the nature and purpose of the easement. Kennedy v. Bond, 80 N.M. 734, 736-37, 460 P.2d 809, 811-12 (1969) (internal quotation marks and citation omitted). We conclude that the City has failed to create a genuine issue of material fact on the essential element of color of title because the VHWU1 recorded plat does not purport to grant fee title to the City. We hold that this claim fails as a matter of law and uphold the district court's grant of summary judgment as to the City's adverse possession claim.
{24} The City next argues that even if the City does not hold fee title to Parcel F, Cloudview is not a good faith purchaser without notice of the City's claim to an open space easement. In district court, the City sought a declaratory judgment that the drainage easement designated on the final recorded plat actually granted the City a permanent open space easement over the entirety of Parcel F that cannot be vacated because the City and Amrep intended to create open space as part of the VHWU1 subdivision approval process. In the alternative, the City sought a declaratory judgment that Amrep impliedly dedicated Parcel F to the City when Amrep represented that Parcel F would be maintained as open space in perpetuity. See Santa Fe Cnty. Bd. of Cnty. Comm'rs v. Town of Edgewood, 2004-NMCA-111, ¶ 13, 136 N.M. 301, 97 P.3d 633 (explaining that the public obtains an easement if a landowner offers to dedicate certain property for public use and the offer is accepted). {25} The City does not assert that Cloudview had actual knowledge of the City's alleged open space easement. Instead the City argues that Cloudview was on inquiry notice of the City's claim to an open space easement. Therefore, argues the City, because Cloudview had knowledge of facts that would have led a prudent person to investigate the history and reasons for designating a drainage easement over the entirety of Parcel F, Cloudview should be charged with knowledge of all facts that a reasonably diligent investigation would have revealed. The City contends that such an investigation would have revealed to Cloudview that Amrep and the City intended Parcel F to be open space in perpetuity. {26} A good faith purchaser of real property who has invested money in the property without notice of a third party's unrecorded interest in that property is protected under New Mexico law. See NMSA 1978, § 14-9-3 (1990); Angle v. Slayton, 102 N.M. 521, 523, 697 P.2d 940, 942 (1985). The general rule is that a prospective purchaser of real property is deemed to have notice of adverse claims to that property if the purchaser has [k]nowledge of such facts as ought to put a prudent [person] upon inquiry as to the title. Hunt v. Ellis, 27 N.M. 397, 401, 201 P. 1064, 1065 (1921) (internal quotation marks and citation omitted). Once a prospective purchaser obtains knowledge of facts that trigger a duty to inquire about the title, that purchaser must perform a reasonably diligent investigation-one that would lead to the knowledge of the requisite facts by the exercise of ordinary diligence and understanding. Id. (internal quotation marks and citation omitted). In such cases, the prospective purchaser is charged with knowledge of all facts that a reasonably diligent investigation would have ascertained. Id. (internal quotation marks and citation omitted). In applying the inquiry notice rule, each case must be governed by its own peculiar circumstances. Id. (internal quotation marks and citation omitted). A person cannot be a [good faith] purchaser if that person is aware of facts that should have put him [or her] to an inquiry, which if pursued with due diligence, would have led to a knowledge of the infirmities appearing upon the face of the instrument involved in the transaction. Dunne v. Petterman, 52 N.M. 284, 287-88, 197 P.2d 618, 620 (1948). {27} The City presents two distinct theories to support its claim that Cloudview had a duty to inquire: (1) that the City was in open possession of Parcel F when Cloudview made its purchase, and (2) that before purchasing Parcel F, Cloudview knew of an inherent ambiguity in the VHWU1 recorded plat. We analyze each theory in turn.
{28} The City argues that Cloudview had a duty to inquire about the nature and scope of the drainage easement on Parcel F because Cloudview's agent, Mr. Garcia, knew that the City had an easement over Parcel F, and Parcel F had remained open space despite having been surrounded by development for more than twenty years. In light of these facts, the City contends that Cloudview had a duty to investigate why the City was in open possession of Parcel F when Cloudview purchased the property. Cloudview argues that the City was not in open possession, citing Teofan v. Cools (In re Spring Creek Invs. of Dallas, N.V., Inc.), 71 B.R. 157, 159 (Bankr.N.D.Tex.1987) (possession, to act as . . . notice of adverse ownership, must be visible, open, notorious, and exclusive, and not merely constructive possession.). {29} Possession of land by one other than the owner of record can be sufficient to trigger a purchaser's duty to inquire further. See Hunt, 27 N.M. at 402, 201 P. at 1066 (A person who purchases an estate in the possession of someone other than the seller is bound to inquire of such possessor what right [the possessor] has in the estate. (internal quotation marks and citation omitted)). What acts may or may not constitute a possession are necessarily varied and depend to some extent upon the nature, locality, and use to which the property may be applied, the situation of the parties, and a variety of circumstances which have necessarily to be taken into consideration. Id. at 401-02, 201 P. at 1065 (internal quotation marks and citation omitted). {30} However, open possession of property creates no duty to investigate where all signs of possession can be attributed to and are consistent with ownership by the owner of record. See id. at 403, 201 P. at 1066 (holding that a subsequent purchaser did not have constructive notice of a third party's claimed interest because the third party's land use was not noticeably different than the use made prior to the third party's alleged acquisition); see also Teofan, 71 B.R. at 159 (Possession that could easily be referred to the person in whom stood the record title is not sufficient.). Where open possession can be attributed to the owner of record, [a]n investigator may certainly rely upon the truth of the recitals of a record, where they are specific. Smith & Ricker v. Hill Bros., 17 N.M. 415, 431, 134 P. 243, 247 (1913); see also Allison v. Curtis, 62 N.M. 387, 390, 310 P.2d 1042, 1044 (1957) (holding that innocent purchasers for value were entitled to rely on the property records). {31} Is the fact that Parcel F is undeveloped and surrounded by subdivided parcels inconsistent with ownership by Amrep? No. The lack of development on Parcel F, even when viewed in contrast to the surrounding development, fails to raise a reasonable inference that anyone other than Amrep, and subsequently the Mares group, made the decision to leave the parcel undeveloped, and it certainly does not constitute open possession by anyone other than the owner of record. Accordingly, we conclude that the City failed to present evidence upon which reasonable minds would differ as to the City's open possession of Parcel F.
{32} The City also argues that Cloudview owed a duty to inquire further because Mr. Garcia readily admits that prior to purchase he was aware of the inherent ambiguity in the Final Plat. More specifically, the City contends that there is an inherent ambiguity in the language granting the drainage easement because (1) the recorded drainage easement covered the entirety of Parcel F; (2) the topography of Parcel F precluded its use as a drainage easement; (3) the easement had to be vacated before the City would permit the subdivision to proceed; (4) Cloudview's inquiry with the City resulted in an indefinite answer because the City employees with whom Cloudview spoke did not know the history of Parcel F's designation as a drainage easement; and (5) the City would require Cloudview to cite all previous drainage studies and reports in its new drainage report for the area. {33} The VHWU1 recorded plat expressly grants the City a drainage easement over Parcel F. An easement creates a nonpossessory right to enter and use land in the possession of another and obligates the possessor not to interfere with the uses authorized by the easement. Restatement (Third) of Prop.: Servitudes § 1.2(1), at 12 (2000). The easement holder's right to use the property is limited to the particular purpose for which the easement was created. See Restatement (Third) of Prop.: Servitudes § 1.2 cmt. d, at 15 (The holder of the easement . . . is entitled to make only the uses reasonably necessary for the specified purpose.). The owner of the fee title retains the right to make any reasonable use desired of the land in which the easement exists, as long as that use is consistent with the rights of the easement holder. Kennedy, 80 N.M. at 736-37, 460 P.2d at 811-12 (internal quotation marks and citation omitted). For example, the transferor of an easement for an underground pipeline retains the right to enter and make any use of the area covered by the easement that is not specifically prohibited by the easement and that does not unreasonably interfere with use of the easement for pipeline purposes. The holder of the easement may only use the area for purposes reasonably related to the pipeline. Restatement (Third) of Prop.: Servitudes § 1.2 cmt. d, at 15. {34} The purpose of the City's easement, according to the unambiguous language on the VHWU1 recorded plat, is drainage. The ordinary connotation of the word `drainage' means the carrying away of water and other liquids either in closed or open conduits. Peterson v. Barron, 401 S.W.2d 680, 686 (Tex.Civ.App.1966). Cloudview and other subsequent purchasers are entitled to rely upon the recorded plat's specific recital of the City's right to use Parcel F only for drainage purposes. See Smith & Ricker, 17 N.M. at 431, 134 P. at 247 (Cloudview may certainly rely upon the truth of the recitals of a record, where they are specific). The City, which admits that it instructed Amrep to use drainage easement as a surrogate term for open space on the recorded plat, cannot now rely upon a theory of ambiguity arising from that written instrument, unambiguous on its face, to defeat Cloudview's claim for protection as a good faith purchaser for value without notice. We hold as a matter of law that the designation of a drainage easement over Parcel F did not give rise to a duty for Cloudview to investigate the nature or extent of the easement.
{35} As the Court of Appeals correctly noted, `[a]n easement should be construed according to the intent of the parties.' Cloudview, No. 29,510, slip op. at 19 (quoting Olson v. H & B Props., Inc., 118 N.M. 495, 498, 882 P.2d 536, 539 (1994)); see Restatement (Third) of Prop.: Servitudes § 4.1(1), at 496-97 (A servitude should be interpreted to give effect to the intention of the parties ascertained from the language used in the instrument, or the circumstances surrounding creation of the servitude, and to carry out the purpose for which it was created.). {36} Based on these general principles, the Court of Appeals relied upon contract law to conclude that the district court erred when it failed to consider all of the extrinsic evidence presented by the City to show that the Plat was ambiguous as to the true intent of the parties regarding the designation and future use of Parcel F. AMREP, 2010-NMCA-075, ¶ 11, 148 N.M. 542, 238 P.3d 911; see Mark V, Inc. v. Mellekas, 114 N.M. 778, 781, 845 P.2d 1232, 1235 (1993) (holding that the district court should have allowed the parties to submit extrinsic evidence to show that the meaning of a contract was unclear); C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 508-09, 817 P.2d 238, 242-43 (1991) ([I]n determining whether a term or expression to which the parties have agreed is unclear, a court may hear evidence of the circumstances surrounding the making of the contract and of any relevant usage of trade, course of dealing, and course of performance. (footnote omitted)). The City argues that this rule of contract interpretation should be applied to plats as well as contracts. See Wilson v. Owen, 261 S.W.2d 19, 23 (Mo.1953) (explaining that where the meaning of writing on a plat is in doubt, the court can look to extrinsic evidence to determine the parties' intent). {37} However, the legal treatment of language in a recorded plat is different than the legal treatment of language in a contract. An easement described in a recorded instrument must be in writing and duly recorded in the office of the county clerk of the county where the easement is situated. Section 14-9-1. More importantly, when interpreting the nature and extent of an easement, we place heavy emphasis . . . on the written expressions of the parties' intent. Restatement (Third) of Prop.: Servitudes § 4.1 cmt. d, at 499. Easements are intended to bind successors to interests in the land, as well as the contracting parties, and are generally intended to last for an indefinite period of time. Id. The recorded instrument is often the primary source of information available to a prospective purchaser of the land. Id. Therefore, the language in a granting instrument should be interpreted to accord with the meaning an ordinary purchaser would ascribe to it in the context of the parcels of land involved. Id. Consideration of extrinsic evidence that may illuminate a particular meaning adopted by the creating parties is generally inappropriate because the creating parties intended to bind and benefit successors for whom the written record will provide the primary evidence of the [easement]'s meaning. Id. at 499-500. An easement should be construed according to its express and specific terms as a manifestation of the intent of the parties. Sanders v. Lutz, 109 N.M. 193, 194, 784 P.2d 12, 13 (1989). But [w]hen the express terms of an easement are ambiguous, the intent of the parties should be determined from the language of the granting instrument in conjunction with the surrounding circumstances. Olson, 118 N.M. at 498, 882 P.2d at 539. {38} To allow extrinsic evidence to establish an ambiguity in the meaning of language in a plat, when the language itself is unambiguous, would frustrate the purpose of our law that governs the recording of instruments affecting real estate. To ensure that subsequent purchasers of property have notice of prior claims of interest, New Mexico law provides that all writings affecting the title to real estate shall be recorded in the office of the county clerk of the county or counties in which the real estate affected thereby is situated. Section 14-9-1. The inevitable consequence of this requirement is the constructive knowledge that flows from it because [s]uch records shall be notice to all the world of the existence and contents of the instruments so recorded from the time of recording. NMSA 1953, § 14-9-2 (1886-87). {39} The purpose for requiring the recording of instruments affecting real estate in the county where the property is situated is to provide a place and a method by which an intending purchaser . . . can safely determine just what kind of title [the purchaser] is in fact obtaining. Romero v. Sanchez, 83 N.M. 358, 361, 492 P.2d 140, 143 (1971) (internal quotation marks and citation omitted). The recording requirement seeks to protect [good faith] purchasers against loss from adverse claims of interest that are not disclosed by any public record and not ascertainable by due diligence. Id. (internal quotation marks and citation omitted); see also Arias v. Springer, 42 N.M. 350, 359, 78 P.2d 153, 159 (1938) (The object of the statute is to prevent injustice by protecting those who, without knowledge of infirmities in the title, invest money in property or mortgage loans; and those who have acquired judgment liens without such knowledge.). {40} Thus, Section 14-9-3 provides that unrecorded instruments asserting interests in real estate shall not affect the title or rights of purchasers to real estate if the purchaser did not have knowledge of the existence of such unrecorded instruments. See Jeffers v. Doel, 99 N.M. 351, 353, 658 P.2d 426, 428 (1982) (explaining that the statute protects innocent purchasers for value without notice of unrecorded instruments (internal quotation marks and citation omitted)). {41} Municipalities are not exempt from the recording requirements. Municipalities are entitled to have instruments affecting real estate [conveyed] to them . . . to be duly recorded in . . . the various counties in which the real estate is situated. NMSA 1978, § 14-9-7(A) (1987). When a municipality records an instrument affecting real estate, that instrument shall have the full legal effect of recording and be legal notice of the rights of the public entities [to the] interests conveyed or granted. Section 14-9-7(B). {42} The final recorded plat is what governs in this case, and the recorded plat unambiguously grants a drainage easement to the City. Because the drainage easement is unambiguous, Cloudview did not have a duty to investigate any additional adverse claims the City might have had to the title of Parcel F. Even if the City and Amrep intended drainage easement to mean open space, their intent is now irrelevant in light of Cloudview's good faith purchaser status. When a good faith purchaser takes real property without notice of an unrecorded easement, the unrecorded easement is extinguished under Section 14-9-3. See Restatement (Third) of Prop.: Servitudes § 7.14 cmt. a, at 440 (The basic rule is that all unrecorded servitude benefits, regardless of the manner of their creation, are subject to extinguishment under the recording act.). We agree with the Restatement that the benefits produced by subjecting [easements] to extinguishment under the recording act will outweigh the social costs because prospective purchasers will be able to rely on the property records. Id. {43} Cloudview is a good faith purchaser who took Parcel F subject only to the City's recorded drainage easement. See § 14-9-2 (charging subsequent purchasers with constructive notice of all recorded documents within the purchaser's chain of title). We hold that each of the City's claimed but unrecorded interests in Parcel F have been extinguished by Cloudview's good faith purchaser status. Further, under the circumstances of this case, neither the scope nor the purpose of the easement may vary from drainage as expressed on the VHWU1 recorded plat.