Opinion
No. MMX CV 075002325
April 2, 2009
MEMORANDUM OF DECISION
STATEMENT OF CASE
On July 27, 2007 the plaintiff, Max's Place, LLC filed an amended complaint for declaratory judgment against the defendant, DJS Realty, LLC. The plaintiff requests that the court declare that the plaintiff's property is not subject to the restrictive covenant in its deed, and that the court quiet title in the plaintiff's property. The plaintiff and defendant filed post-trial briefs on January 26, 2009.
The plaintiff asserts that there are three categories of recognized restrictive covenants: 1) mutual covenants in deeds exchanged by adjoining land owners; 2) uniform covenants contained in deeds executed by the owner of property who is dividing his property into building lots under a general development scheme; and 3) covenants extracted by a grantor from his grantee presumptively or actually for the benefit and protection of his adjoining land, which he retains. The plaintiff argues that the restrictive covenant in the present case does not fall within the three recognized categories, making it invalid and unenforceable. The plaintiff also notes that there is no requirement that all restrictive covenants fit into the three types described above, but that in such instances the question becomes whether the restriction is reasonable. Furthermore, the plaintiff contends the restriction is unreasonable in light of the circumstances in which it was made, that it is not limited in duration or geographical scope, and is unreasonably broad as applied to the purported interests to be protected because the language of the restrictive covenant purports to restrict the use of the property indefinitely, extends beyond the immediately burdened property of 16 Spencer Plains Road, and is vague as to what property is to benefit from it.
The defendant argues that the plaintiff has not proven that the restrictive covenant is unenforceable under the three traditionally recognized categories of restrictive covenants, and has not proven that the restrictive covenant is an unreasonable restriction on the use of 16 Spencer Plains Road. The defendant contends that the restriction is reasonable because it only limits the use of 16 Spencer Plains Road as a grocery store, and the plaintiff acquired 16 Spencer Plains Road with notice of the restriction, presumably affecting the price and thereby imposing no hardship on the plaintiff.
FACTUAL DISCUSSION
The court makes the following findings of fact based upon the evidence and testimony presented at trial on December 11, 2008. The defendant is a business entity initially created for the purpose of assembling property in Old Saybrook that would eventually be developed into a site for Home Depot, specifically it was being used to assemble properties along the intersection of the Boston Post Road and Spencer Plains Road. (Ceruzzi Deposition pp. 13, 24-25.) The defendant, as a business entity, was indirectly controlled by Louis Ceruzzi, who was in the profession of real estate development. (Ceruzzi Deposition pp. 12-13.) The defendant never assembled all the properties in the area of the Boston Post Road and Spencer Plains Road, in fact it only acquired one property that was to be part of that assemblage. (Ceruzzi Deposition p. 13.) The plan to develop a Home Depot did not come to fruition, instead, efforts were made to gather interest from Stop Shop to develop a store, but Stop Shop was not interested in that area. Stop Shop had already begun to assemble property for a store in Westbrook, at a location about three miles away. At some point in time, Ceruzzi Properties, a different entity indirectly controlled by Ceruzzi, entered into an agreement with Stop Shop whereby it would purchase the property in Westbrook from Stop Shop once they had their site approvals and develop a store for them. (Ceruzzi Deposition pp. 18-19, 26.)
On March 10, 2004, the defendant conveyed a property, hereafter referred to as "16 Spencer Plains Road" to Tiffany Benson. This property was located in the town of Old Saybrook, Connecticut, near the intersection of Boston Post Road and Spencer Plains Road.
At the time of conveyance to Tiffany Benson, the defendant placed the following restriction in the deed, which was also part of the agreement between Ceruzzi Properties and Stop Shop (Ceruzzi Deposition p. 21):
Premises are to be conveyed subject to a restrictive covenant that will run with the land and be binding on Grantee, its successors and assigns and inure to the benefit of Grantor, its successors and assigns, to wit:
"Said Premises shall not be used either by itself, or in conjunction with any other property, for the operation of a grocery store, supermarket or other business selling food for off premises consumption, nor shall such Premises be used in support, including, but not limited to parking or utilities, of such use on any other property."
This restriction was originally placed on 16 Spencer Plains Road in Volume 456, Page 966 of the Town of Old Saybrook Land Records by virtue of a warranty deed. Subsequently, Tiffany Benson conveyed 16 Spencer Plains Road to Sterling City Properties LLC, by virtue of a quit claim deed. On July 13, 2005, the plaintiff purchased 16 Spencer Plains Road from Sterling City Properties, LLC by virtue of a warranty deed and subject to the restriction.
The purpose of the restriction, according to Ceruzzi, was to benefit Stop Shop of Westbrook, as well as any other grocery store interested in developing a store in the market area to which Ceruzzi could offer the restriction to help benefit their business. (Ceruzzi Deposition pp. 30-31.) Also, the restriction was intended to burden 16 Spencer Plains Road as well as any other property in the vicinity that potentially needed to use 16 Spencer Plains Road in conjunction with the operation of a grocery store. (Ceruzzi Deposition p. 23.)
The plaintiff owns several parcels of land adjoining 16 Spencer Plains Road, but not all of the surrounding parcels. There is one parcel of land that borders the southern side of 16 Spencer Plains Road which is not currently owned by the plaintiff or the defendant. To the west of 16 Spencer Plains Road is Spencer Plains Road itself, on the other side of which lies land not currently owned by the plaintiff or the defendant. The plaintiff, however, owns all property surrounding 16 Spencer Plains Road on its north and east sides. As the sole member of Max's Place, LLC, Ronald Lyman seeks to develop a grocery anchored shopping center relative to the parcels owned by Max's Place, LLC that adjoin 16 Spencer Plains Road. (Trial Transcript pp. 21, 24.)
LEGAL DISCUSSION
"`The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties.' Interlude, Inc. v. Skurat, 253 Conn. 531, 536, 754 A.2d 153 (2000). `It is a well established rule that [t]he mere fact that a party sees fit to institute an action for a declaratory judgment in no way operates to alter or shift the ordinary rules as to the burden of proof by choosing the procedure of such an action.' Scott v. General Iron and Welding Co., Inc., 171 Conn. 132, 139, 368 A.2d 111 (1976), citing, Keithan v. Massachusetts Bonding Ins. Co., 159 Conn. 128, 267 A.2d 660 (1970). Accordingly, the party pressing the claim bears the burden of proof on that claim with respect to the declaratory judgment." (Internal quotation marks omitted.) Har v. Boreiko, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 06 4005573 (February 11, 2008, Robinson, J.).
An essential part to the determination of the plaintiff's claim is the interpretation of the intent of the defendant in creating the restrictive covenant, so it is noted at the outset that "[t]he determination of the intent behind language in a deed, considered in the light of all the surrounding circumstances, presents a question of law . . . The meaning and effect of the [language in the deed] are to be determined, not by the actual intent of the parties, but by the intent expressed in the deed, considering all its relevant provisions and reading it in the light of the surrounding circumstances." Arnold v. Hoffer, 94 Conn.App. 53, 57-58, 891 A.2d 53 (2006).
In general, there are three classes of restrictive covenants: "(1) mutual covenants in deeds exchanged by adjoining landowners; (2) uniform covenants contained in deeds executed in deeds executed by the owner of property who is dividing his property into building lots under a general development scheme; and (3) covenants exacted by a grantor from his grantee presumptively or actually for the benefit and protection of his adjoining land which he retains." Shippan Point Ass'n., Inc. v. McManus, 34 Conn.App. 209, 212, 640 A.2d 1014, cert. denied, 229 Conn. 923, 642 A.2d 1215 (1994). Generally, if a restrictive covenant falls into one of these three categories it will be found enforceable. See generally Contegni v. Payne, 18 Conn.App. 47, 557 A.2d 122, cert. denied, 211 Conn. 806, 559 A.2d 1140 (1989). The plaintiff in the present case is requesting a declaratory judgment that the restrictive covenant in its deed is invalid, accordingly the plaintiff must prove that the restrictive covenant does not fall within the three general categories of enforceable restrictive covenants.
In light of the language contained in the deed that the restrictive covenant "inure to the benefit of the Grantor, its successors and assigns," and not to any other property or person with a reciprocal right, the plaintiff has proven that the restrictive covenant does not fall under the first category. Moreover, the surrounding circumstances support the conclusion that the restrictive covenant arose from the sale of 16 Spencer Plains Road from the defendant to Tiffany Benson, not from an exchange of covenants between adjoining landowners, Williams v. Almquist, Superior Court, judicial district of Litchfield, Docket No. CV 06 5000595 (October 30, 2007, J. Marano) (44 Conn. L. Rptr. 375, 376).
The plaintiff has also proven that the restrictive covenant does not fall within the second category of a uniform plan of development. As to the second category of restrictive covenants, uniformity in the covenants is one essential characteristic, because the theory of enforceability relies on one grantee being able to enforce the covenant against another grantee. "In the second class, upon the same theory of mutuality of covenant and consideration, any grantee may enforce the restrictions against any other grantee." Stamford v. Vuono, 108 Conn. 359, 364, 143 A. 245 (1928). As already discussed, the language of the deed gives no indication that the restrictive covenant is to provide conformance with a general development scheme, but that the benefit of the covenant was to the grantor of the property, and its successors and assigns. Also, the surrounding circumstances at the time the restrictive covenant was created show that placement of the covenant in the deed was not made with the intention of creating several building lots with uniform covenants as part of a development scheme.
The Connecticut Appellate Court has explained that "[w]ith respect to the third class of covenants, the original grantor, who is the owner of the property benefited, and his assigns may enforce [the covenant] against subsequent purchasers of the property burdened. If the restrictive covenant is for the benefit of the remaining land of the grantor, it is an easement running with the land and may be enforced by a subsequent purchaser of the remaining land against the prior grantee and his successors in title . . ." (Internal quotation marks omitted.) Grady v. Schmitz, 16 Conn.App. 292, 296, 547 A.2d 563, cert. denied, 209 Conn. 822, 551 A.2d 755 (1988). In Grady the court was able to conclude from the language in the deed and from the surrounding circumstances, that it was the intent of the grantor in exacting the covenant to benefit the adjoining land which he retained. Id. First the court noted that "since [the grantor] extracted from [the grantee] such a covenant, it must be viewed as presumptively . . . for the benefit and protection of his adjoining land which [the grantor] retain[ed]." Id., 297. Central to that finding by the court was the broad principle "that a right to enforce a restriction of this kind will not be inferred to be personal when it can fairly be construed to be appurtenant to the land, and that it will generally be construed to have been intended for the benefit of the land, since in most cases it could obviously have no other purpose, the benefit to the grantor being usually a benefit to him as owner of the land, and that, if the adjoining land retained by the grantor is manifestly benefited by the restriction, it will be presumed that it was so intended." (Emphasis in original; internal quotation marks omitted.) Id., 297-98. Secondly, the court stated that the language in the deed, "namely, that the covenant `shall run with the land hereby conveyed, and be binding upon said grantee, as the heirs, executors, administrators and assigns,' itself suggests a broad rather than limited scope. The fact that [the grantor] explicitly made the covenant run with [the grantee's] land indicates that [the grantor] intended it to be enforceable by him as the owner of the land he retained, or by his assigns of that retained land." Id., 297. Similar to the language in the deed in Grady, in the present case the language in the deed to 16 Spencer Plains Road states that the restrictive covenant "will run with the land and be binding on Grantee, its successors and assigns and inure to the benefit of Grantor, its successors and assigns," however the presumption seemingly created by the language of the restrictive covenant cannot be sustained in light of the surrounding circumstances of the deed. Specifically, the evidence demonstrates that the defendant only owned one piece of property that was to constitute the Boston Post Road/Spencer Plains Road assemblage, in this case presumably 16 Spencer Plains Road, but the defendant never owned any adjoining parcels because of the termination of the project to develop a shopping center. (Ceruzzi Deposition p. 13, 16.) Without the retention of any adjoining land by the defendant there can be no presumption that the intent of the covenant was to benefit any adjoining land. In addition, the evidence also suggests that the intent of the grantor in creating the restrictive covenant was to possibly benefit Stop Shop, and other grocery stores looking to develop in the area. If anything the restriction was to potentially burden the land adjoining 16 Spencer Plains Road, not to benefit it. Therefore the restrictive covenant in the present case also does not fall within the third class of recognized enforceable covenants.
Connecticut courts have also recognized restrictive covenants which may be characterized as restraints on trade. These types of covenants do not necessarily fit within the three categories of restrictive covenants recognized in Contegni v. Payne, supra, 18 Conn.App. 47. See, e.g., Lampson Lumber Co. v. Caporale, 140 Conn. 679; 102 A.2d 875 (1954); Dick v. Sears-Roebuck Co., 115 Conn. 122, 160 A. 432 (1932). Generally, the test of such a covenant "is the reasonableness of the restraint imposed . . . To meet this test successfully, the restraint must be limited in its operation with respect to time and place and afford no more than a fair and just protection to the interests of the party in whose favor it is to operate, without unduly interfering with the public interest." (Citation omitted; emphasis added; internal quotation marks omitted.) Lampson Lumber Co. v. Caporale, supra, 683.
Before addressing the reasonableness of the restrictive covenant and the intent of the grantor when making the covenant, it is important to note some of the rules of construction pertaining to restrictive covenants. "A restrictive covenant must be narrowly construed and ought not to be extended by implication . . . Moreover, if the covenant's language is ambiguous, it should be construed against rather than in favor of the covenant." (Citation omitted.) Morgenbesser v. Aquarion Water Co., 276 Conn. 825, 829, 888 A.2d 1078 (2006). "[I]t is not enough that the parties had . . . [a particular] intention in fact [that is, as a unanimous state of mind], unless they have expressed it in some way in . . . [the] deed. The question is not what did the parties actually mean to say, but what is the meaning of what they have said." Faiola v. Faiola, 156 Conn. 12, 17, 238 A.2d 405 (1968).
From a reading of the covenant, it is clear that the restraint imposed is somewhat limited in place, and is completely unlimited in time. In Lampson Lumber Co. v. Caporale, supra, 140 Conn. 683, the court concluded that the restraint was "limited as to space because it restrains [the covenantor] from carrying on a competing business only on the property which he purchased from the [covenantee]." Presently before this court, however, is a covenant which not only restricts the property's use by itself, but restricts the property's use in conjunction with any other property, thereby expanding the restriction so as to affect other properties which may be used with 16 Spencer Plains Road. Even more significant is that this restriction on trade is completely unlimited as to its duration. In Lampson Lumber the court found the restriction to be limited as to time because it continued "only so long as the [covanantee] or its successors and assigns operate its business upon the property retained by it." Id. So although the restriction was somewhat indefinite, there would, at some point, be an end to the covenant. In the present case there is no foreseeable termination of the restriction.
With this analysis of time and space limitations in mind, there remains the question of whether the restriction affords to the defendant more than a fair protection of its interests or unduly interferes with the interest of the public. While it may be fair to assume that the property at issue would not have been sold without the restriction and that the price of the property was thereby affected, nevertheless a formidable problem exists because there is no clear beneficiary of the restrictive covenant. The surrounding circumstances indicate that the benefit may have been to Stop Shop in some form as well as to any other grocery store interested in developing a site with Ceruzzi or one of his business entities. Similar concerns with the problem of having no clear beneficiary have been raised by Connecticut courts. Williams v. Almquist, supra, 44 Conn. L. Rptr. 378; see also Bolan v. Avalon Farms Property Owners Ass'n., Inc., 250 Conn. 135, 145 n. 8, 735 A.2d 798 (1999) (in the context of third-party beneficiaries, problems with notice and discovering easements by way of title search are resolved because the language in the deed and the surrounding circumstances will manifest such an intent).
In Williams v. Almquist, supra, 44 Conn. L. Rptr. 378, the trial court, Marano, J., explained the problem presented by a restriction with no clear beneficiary: "Without a discernable beneficiary, it is difficult to determine who can enforce the restriction and for how long. Any one of the [noted parties] could possibly enforce the restriction at any given time, and this does not even begin to consider the possible rights of their respective successors in interest. The plaintiffs would have no idea who could possibly make such a claim and whether it would be legitimate or not." The problem created by a restrictive covenant with no clear beneficiary as well as no limit in duration is especially salient when the covenant is also a restraint on trade because it vastly increases the likelihood that the restriction will last in perpetuity, while at the same time restricts the ability of the owner of the property to purchase the right to develop a grocery store on that property even if it was willing to pay those benefitting from the restriction for the right to do so. Although the plaintiff had notice of the restriction, it cannot be presumed that the plaintiff had notice that there was no clear beneficiary to the restriction. As a result, the restriction affords DJS more protection than is necessary to allow it to successfully develop a grocery store in the area, and it also unduly interferes with the interests of the public in that the purchaser of the servient estate will have no notice of the beneficiaries, and therefore no notice of those who may enforce the restriction.
It is quite evident that there is no clear beneficiary in the present case. Generally, "[a] reservation in a covenant will be interpreted as appurtenant if, from the surrounding circumstances and other relevant provisions in the deed, the parties intended it to run with the land." (Emphasis added.) Castonguay v. Plourde, 46 Conn.App. 251, 258, 699 A.2d 226, cert. denied, 243 Conn. 931, 701 A.2d 660 (1997). Moreover, there is the construction principle that "[w]here a restrictive covenant contains words of succession . . . a presumption is created that the parties intended the restrictive covenant to run with the land." Id. The language in the plaintiff's deed seems to create a presumption that the benefit of the restriction was to run to a dominant estate, e.g. land retained by the defendant at the time of the conveyance to Tiffany Benson, because the deed explicitly indicates that the benefit of the restriction was to inure to the benefit of the "grantor, its successors, and assigns." However, as already discussed, the surrounding circumstances do not demonstrate that the defendant intended to benefit any adjacent land retained by the defendant because the defendant's attempts to develop a grocery store at the Boston Post Road/Spencer Plains Road intersection never materialized, if' anything the restriction was intended to burden the properties in that area.
The possibility that the benefit of the restrictive covenant was to run to other, nonadjacent land retained by the defendant at the time of the conveyance of 16 Spencer Plains Road to Tiffany Benson also cannot be entertained because it does not comport with the surrounding circumstances. The only land that may have been an intended beneficiary of this restriction was the property Stop Shop was assembling in Westbrook, but the entity that agreed to purchase the property from Stop Shop once they had assembled all the properties for the store site was Ceruzzi Properties, not the defendant. Moreover, the purpose of the defendant's business operation was to develop a shopping center in Old Saybrook, not in Westbrook.
The defendant contends that because of the Connecticut Supreme Court's abrogation of the unity of title doctrine as it applies to easements in Bolan v. Avalon Farms Property Owners Assn, Inc., supra, 250 Conn. 144-45, the restriction on 16 Spencer Plains Road may be enforced by a third party to the covenant such as the present owners of any adjacent or adjoining parcels or even by Stop Shop. Nevertheless, even if this court assumes that the reasoning of Bolan extends to restrictive covenants, it would not apply to the restriction in this case because the deed and surrounding circumstances are so ambiguous as to whom the restriction is to benefit. First, it must be noted that prior to the Bolan decision our Supreme Court decided to "defer any reconsideration of the [unity of title doctrine] as adopted in Curtin [v. Franchetti, 156 Conn. 387, 389, 242 A.2d 725 (1968),] until [it was] presented with an appropriate case where the intention of the grantor to create in his deed an interest in someone other than the grantee is reasonably clear." (Emphasis added.) Ozyck v. D'Atri, 206 Conn. 473, 479, 538 A.2d 697 (1988). Bolan was such a case because within the deed there was reference to specific maps which expressly indicated that the right of way easement was specifically for "landlocked abutters," namely the property that was owned by the plaintiff in that case. Bolan v. Avalon Farms Property Owners Ass'n., Inc., supra, 250 Conn. 142. In the present case there is no language in the deed which manifests an intent to benefit Stop Shop or its property in Westbrook. Nor does the language manifest an intent to benefit the present owners of any adjacent property or any of the potentially numerous business entities that would be interested in developing a grocery store in the Old Saybrook/Westbrook area. The defendant's argument that the restriction should be construed so as to benefit the present owners of any property adjoining 16 Spencer Plains Road is especially unpersuasive because not only is such an intent not expressed in the deed, but, as this court has already pointed out, such an intent is not supported by the surrounding circumstances.
"The unity of title doctrine provides that [n]o right of way appurtenant can be created without a dominant as well as a servient estate . . . The dominate estate enjoys the benefit of the way, and the servient estate bears the burden. The way can become legally attached to the dominant estate only if the same person has unity of title to both the way and the dominant estate . . . The doctrine is based on the common-law notion that, because a stranger to the deed has no interest in the property conveyed, he has no interest to be expected from the grant, and none from which a reservation could be carved." (Citation omitted; internal quotation marks omitted.) Bolan v. Avalon Farms Property Owners Ass'n., Inc., supra, 250 Conn. 143.
CONCLUSION AND ORDER
Accordingly, for all of the aforementioned reasons the plaintiff's request for a declaratory judgment against the defendant declaring the plaintiff's property, described in Volume 485, Page 684 of the Town of Old Saybrook Land Records, is not subject to the conditions, restrictions, and covenants as forth in the deed is hereby granted. Said restrictive covenant is hereby declared null and void.
It is so ordered.