Ponderosa Pines Golf Course v. Ponderosa Pines

CORRECTION PAGE: Cover Page, line 6, Ponderosa Pines Golf Course v. Ponderosa Pines Property, No. 31,489, HnKV, Filed 5/2/13: Changed “IT’S” to “ITS” This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. 1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 2 PONDEROSA PINES GOLF COURSE, LLC 3 Plaintiff-Appellant, 4 v. NO. 31,489 5 PONDEROSA PINES PROPERTY OWNER’S ASSOCIATION 6 and ITS INDIVIDUAL MEMBERS; and SKIP PRIDEMORE, 7 President & Director; DRAPER BRANTLEY, Vice President 8 and Director; GAIL CHAMPION, Vice President and Director; 9 ROBERT HOWELL, Secretary and Director; and 10 WALTER THAYER, Director. 11 Defendants-Appellees. 12 APPEAL FROM THE DISTRICT COURT OF OTERO COUNTY 13 James Waylon Counts, District Judge 14 Hakanson & Associates 15 John R. Hakanson 16 Alamogordo, NM 17 and 18 L. Helen Bennett PC 19 L. Helen Bennett 20 Albuquerque, NM 21 for Appellant 1 Martin, Dugan & Martin 2 W.T. Martin, Jr. 3 Carlsbad, NM 4 for Appellee Ponderosa Pines Property Owners Association 5 MEMORANDUM OPINION 6 HANISEE, Judge. 7 {1} Ponderosa Pines Golf Course, LLC (Plaintiff) sought and was denied 8 declaratory judgment allowing it to convert the golf course it owns and operates 9 within the Ponderosa Pines subdivision into some other use. Plaintiff now appeals the 10 district court’s final judgment that the Ponderosa Pines property owners have the right 11 to require that the property at issue remain a golf course. Because of the 12 representations made to initial purchasers in the Ponderosa Pines development, we 13 affirm. 14 I. BACKGROUND 15 {2} Plaintiff owns a thirty-seven acre golf course located in the Ponderosa Pines 16 subdivision in Otero County. The subdivision was created and developed in 1973 by 17 El Dorado Land Corporation (El Dorado), and contains 125 building lots, on which 18 fifty homes have been built. Plaintiff purchased the golf course in 2005. Despite its 19 efforts to advertise and promote the golf course, Plaintiff has operated the golf course 20 at a loss over the last five years (losing in excess of $200,000 according to Plaintiff’s 21 complaint). [2] 1 {3} Plaintiff sought declaratory judgment against the Ponderosa Pines Property 2 Owners Association (the Association) and owners of lots within the subdivision 3 (collectively, Defendants) to convert use of the property in question from a golf course 4 into something more profitable. In a motion for summary judgment, Defendants 5 argued that under Huning v. Potts, 90 N.M. 407 , 564 P.2d 612 (1977); Ute Park 6 Summer Homes Ass’n v. Maxwell Land Grant Co., 77 N.M. 730 , 427 P.2d 249 (1967); 7 Cree Meadows, Inc. v. Palmer, 68 N.M. 479 , 362 P.2d 1007 (1961); and Knight v. 8 City of Albuquerque, 110 N.M. 265 , 794 P.2d 739 (Ct. App. 1990), an equitable 9 servitude in favor of the individual subdivision property owners precluded Plaintiff 10 from changing the use of the golf course. Defendants contended that because El 11 Dorado induced purchasers to buy lots by representing that the golf course would be 12 part of the subdivision, an equitable servitude in favor of the individual property 13 owners was created that required the golf course property to remain a golf course or 14 open space in perpetuity. See Knight, 110 N.M. at 266 , 794 P.2d at 740 (holding that 15 any property denominated on subdivision plats as part of a golf course must remain 16 either a golf course or open space). 17 {4} Plaintiff opposed the motion, arguing, among other things, the existence of 18 disputed material facts. The district court granted summary judgment in favor of 19 Defendants. Citing Plaintiff’s own brief, the district court found that, “[s]ome of the [3] CORRECTION PAGE: Pg. 4, line 3, Ponderosa Pines Golf Course v. Ponderosa Pines Property, 31489 HnKV, Filed 5/2/13: Changed “(I)” to “(i)” 1 people who ultimately bought lots in the Ponderosa Pines development were told by 2 [El Dorado] that the golf course would remain a golf course, some were told the golf 3 course would remain a golf course by realtors, and others assumed the golf course 4 would remain a golf course.” The district court concluded that “by reason of rights 5 created by (i) implied grant, (ii) implied covenant, (iii) easement, and/or (iv) estoppel, 6 . . . Defendants and other Ponderosa Pines property owners have the right to have the 7 Ponderosa Pines Golf Course remain a golf course in perpetuity and that the property 8 be maintained “in a condition of natural beauty and view at least equivalent to that of 9 a golf course.” Plaintiff now appeals. 10 II. DISCUSSION 11 {5} The central question in our review of the district court’s order granting 12 summary judgment to Defendants is whether the district court properly found that the 13 developer of the Ponderosa Pines subdivision, El Dorado, induced purchasers to buy 14 lots by representing that the golf course would be part of the subdivision. Plaintiff 15 also challenges the type of evidence produced at summary judgment, the district 16 court’s taking of judicial notice regarding the general desirability of a golf course, and 17 Defendants’ effectuation of service of its motion for summary judgment. 18 {6} “Summary judgment is appropriate where there are no genuine issues of 19 material fact and the movant is entitled to judgment as a matter of law.” Self v. United [4] 1 Parcel Serv., Inc., 1998-NMSC-046, ¶ 6 , 126 N.M. 396 , 970 P.2d 582 . “We review 2 these legal questions de novo.” Id. “On appeal from the grant of summary judgment, 3 we ordinarily review the whole record in the light most favorable to the party 4 opposing summary judgment to determine if there is any evidence that places a 5 genuine issue of material fact in dispute.” City of Albuquerque v. BPLW Architects 6 & Eng’rs, Inc., 2009-NMCA-081, ¶ 7 , 146 N.M. 717 , 213 P.3d 1146 . “The movant 7 need only make a prima facie showing that he is entitled to summary judgment. Upon 8 the movant making a prima facie showing, the burden shifts to the party opposing the 9 motion to demonstrate the existence of specific evidentiary facts which would require 10 trial on the merits.” Roth v. Thompson, 113 N.M. 331, 334-35 , 825 P.2d 1241 , 1244- 11 45 (1992) (citation omitted). 12 {7} Judicial notice is an issue of law, which we review de novo. City of Aztec v. 13 Gurule, 2010-NMSC-006, ¶ 5 , 147 N.M. 693 , 228 P.3d 477 . This Court applies a de 14 novo standard of review when considering legal questions concerning a district court’s 15 application of the law to the facts of this case. State v. Foster, 2003-NMCA-099, ¶ 6 , [16] 134 N.M. 224 , 75 P.3d 824 . 17 A. Disputed Material Facts Did Not Preclude Summary Judgment 18 {8} Defendants moved for summary judgment under the theory that a private right 19 rooted in equity precluded Plaintiff from converting the golf course into something [5] 1 else. The New Mexico Supreme Court has established that “where land is sold with 2 reference to a map or plat showing a park or like open area, the purchaser acquires a 3 private right, generally referred to as an easement, that such area shall be used in the 4 manner designated.” Ute Park, 77 N.M. at 735 , 427 P.2d at 253 . Our Supreme Court 5 clarified that, “this is a private right, and it is not dependent on a proper making and 6 recording of a plat for purposes of dedication.” Id. Our Supreme Court explained that 7 [t]he rationale of the rule is that a grantor, who induces purchasers, 8 by use of a plat, to believe that streets, squares, courts, parks, or other 9 open areas shown on the plat will be kept open for their use and benefit, 10 and the purchasers have acted upon such inducement, is required by 11 common honesty to do that which he represented he would do. It is the 12 use made of the plat in inducing the purchasers, which gives rise to the 13 legally enforceable right in the individual purchasers, and such is not 14 dependent upon a dedication to public use, or upon the filing or 15 recording of the plat. [16] Id. In other words, “[a] developer may not induce buyers to purchase lots by pointing 17 to the present or planned existence of a park or golf course, while retaining the power 18 to alter the use of the park or golf course.” Knight, 110 N.M. at 266 , 794 P.2d at 740 . 19 {9} In Cree Meadows, our Supreme Court held that “[t]he fee of the golf course 20 area is owned by the plaintiff, but [the] plaintiff’s use thereof must be subordinated 21 to the extent of the easement in favor of the owners of any of the property in the 22 subdivision.” 68 N.M. at 485 , 362 P.2d at 1011 . In Ute Park, 77 N.M. at 737 , 427 23 P.2d at 254, our Supreme Court further elaborated on the nature of its holding in Cree [6] 1 Meadows by stating: 2 [a] reference in the deed to a plat, whether recorded or unrecorded, is 3 unnecessary . . . where[] plats were prepared and used in making the 4 sales, where[] the cabinsites were actually staked or marked upon the 5 ground in accordance with the plats, and where[] representations were 6 made to the purchasers that the golf course area would be used as a golf 7 course, a playground, or a recreation area. 8 (Internal quotation marks and citation omitted.) 9 {10} We too have addressed this line of case law, stating that “[t]he private rights 10 created when buyers purchased their lots with reference to the plat are superior to the 11 developer’s attempt to reserve the power to alter the use of the areas delineated on the 12 plat as golf course tracts.” Knight, 110 N.M. at 266 , 794 P.2d at 740 . As well, we 13 have noted that “it is immaterial whether the private right of action created in 14 circumstances such as [those described above] is termed an implied grant, an implied 15 covenant, an easement, or a right based on estoppel.” Knight, 110 N.M. at 266 , 794 16 P.2d at 740. 17 {11} Thus, the dispositive issue on the motion for summary judgment was whether 18 the developers represented to purchasers that the subdivision included a golf course 19 by reference to a map or plat. As evidentiary support for their motion, Defendants 20 attached the deposition transcript of Gisela E. Melkus, who was a partner in El 21 Dorado. Melkus stated that she personally sold several lots within Ponderosa Pines. 22 Melkus testified that she and her El Dorado partners showed maps of the subdivision [7] 1 demonstrating the location of the golf course to buyers, and that they represented to 2 buyers that the golf course was part of the subdivision. According to Melkus, the golf 3 course was the main selling point for the subdivision. An example of a map like that 4 which Melkus used to sell the Ponderosa Pines subdivision lots was also attached to 5 the motion. It is important to note that this map was not the original used, but rather 6 one that Melkus identified to be like the one she used in selling lots. If undisputed, 7 these facts establish that as a result of the demonstration using the map, that Ponderosa 8 Pines purchasers acquired a private right that the golf course property would be used 9 as a golf course. 10 {12} In response, Plaintiff argued that the existence of disputed material facts 11 precluded summary judgment. Plaintiff’s brief in response to the motion for summary 12 judgment largely argued that evidence existed that indicated the untrustworthiness of 13 Melkus’s testimony, and also asserted that some conflicting evidence existed. Upon 14 examination of the attachments to Plaintiff’s response to Defendant’s motion for 15 summary judgment, we conclude such non-material peripheral evidence is neither 16 sufficient to impeach Melkus’s testimony or character for truthfulness, nor to establish 17 material factual disputes. 18 {13} First, Plaintiff argued Melkus lacked credibility because she was never an 19 owner of Ponderosa Pines because her name was not on the deeds. As pointed out by [8] 1 Defendants, Melkus’s name was not on the deed because she was a part owner of El 2 Dorado itself, the entity that owned and sold the lots within Ponderosa Pines. Plaintiff 3 provided no evidence to contest Melkus’s participation in El Dorado or to challenge 4 her status as an owner or shareholder in that entity. 5 {14} Plaintiff also attempted to impeach Melkus’s testimony by stating that the 6 subdivision had been conceived and platted before Melkus’s association with El 7 Dorado, and therefore she did not know what El Dorado intended to do with the golf 8 course. Plaintiff added that Melkus could not have been present for every sales 9 presentation and therefore could not have known whether developers used maps 10 depicting the presence of the golf course in order to promote the sale of the lots to 11 perspective purchasers. These two arguments are non sequiturs: the dispositive issue 12 is whether, in connection with sales of lots, El Dorado induced purchasers by 13 representing that a golf course was part of the subdivision. Regardless of Melkus’s 14 involvement in the planning of Ponderosa Pines plats, she personally participated in 15 sales on behalf of El Dorado and confirmed that she and other developers used maps 16 with the golf course visually displayed to encourage prospective buyers to purchase 17 the property. Melkus need not have participated in every sales presentation in order 18 for the district court to conclude that the developers (or at least one of them) used the 19 golf course as a selling point for the subdivision. [9] 1 {15} Plaintiff next attacked the map used during Melkus’s deposition, saying that the 2 map was from 1979 and therefore could not have been used in making sales 3 presentations. However, as we have already pointed out, Melkus did not testify that 4 she used that particular map from her deposition in making sales presentations to 5 prospective Ponderosa Pines buyers. Rather, Melkus stated that she showed buyers 6 a map similar to the one used at her deposition. 7 {16} Plaintiff also argued below that Melkus could not accurately remember events 8 occurring at the time of her involvement with El Dorado. Plaintiff stated that evidence 9 of her faulty memory can be found by examining her depositions. Plaintiff asserted 10 that “prior to her deposition being taken[ by Defendants, Melkus had three] or [four] 11 conversations with Defendants’ [c]ounsel, which may account for her comparatively 12 clear memory while being questioned by Defendants’ [c]ounsel, but not when being 13 question by Plaintiff’s [c]ounsel.” Yet, none of Melkus’s testimony in response to 14 questions from Plaintiff’s counsel contradicts responses provided to defense counsel. 15 Based on our review of her deposition testimony, it appears that Melkus recalled 16 sufficient facts regarding her involvement with Ponderosa Pines and the 17 representations regarding the golf course that she and her fellow developers made to 18 buyers at the time. 19 {17} Plaintiff lastly contended that contradictory evidence existed to raise questions [10] 1 of fact regarding what developers actually told buyers about the golf course. Plaintiff 2 mainly pointed to the responses it received from interrogatories that it served on the 3 eighty-seven named Defendants in this case. Plaintiff stated: 4 Of those who did respond to discovery, thirty-three (33), or thirty[-]eight 5 percent (38%) said there had been no representations made to them that 6 the golf course would always remain a golf course. Eight of those are 7 currently represented by the moving attorney. Five claimed that they 8 were told by James Manatt [one of the developers] that the golf course 9 would remain. Ten claimed they were told by realtors not connected to 10 the developers. Four were told by Bill Gayso, who was also a realtor, 11 but one of these said Mr. Gayso sold the property, but made no 12 representations. At least three (3) said that they had dealt with James 13 Manatt and Irene Price, [developers and owners of El Dorado,] but no 14 representations were made. . . . Several said they “assumed” the golf 15 course would always be a golf course. Twenty-two (22) said they 16 received no promotional materials, which would have included any 17 “map” of the subdivision. 18 (Emphasis added.) Initially, Plaintiff failed to identify whether some Defendants 19 responding to the inquiries purchased the lots from the developers; it appears as 20 though many of them purchased their lots from an intermediate owner. Our case law 21 indicates that any private right to enforce an equitable servitude would arise during 22 the purchase of a lot from the developer, here El Dorado, the original common owner 23 of Ponderosa Pines lots and the golf course. This is because we look to whether the 24 developer’s (the grantor’s) representation to buyers created a benefit to the lot owner 25 and a burden on the property designated for the golf course, which the developer also 26 owns and therefore has the right to burden. Knight, 110 N.M. at 266 , 794 P.2d at 740 ; [11] 1 see generally Dunning v. Buending, 2011-NMCA-010, ¶¶ 10-11, 18 , 149 N.M. 260 , [2] 247 P.3d 1145 (describing the requirements of equitable servitudes, also known as 3 covenants which run with the land). 4 {18} Furthermore, in the above excerpt from Plaintiff’s brief to the district court in 5 opposition to Defendants’ motion for summary judgment, Plaintiff stated that some 6 buyers reported that they were told directly by one of the developers that the golf 7 course would remain. This evidence not only corroborates Melkus’s deposition 8 testimony, but further supports Defendants’ motion for summary judgment, 9 particularly because Defendants seek to enforce a private right pursuant to the 10 existence of an equitable servitude. To prove the origin and enforceability of this 11 private right, Defendants only need to show that the developer represented to some of 12 the buyers that the golf course would remain. See Rowe v. May, 44 N.M. 264, 267 , [13] 101 P.2d 391, 393 (1940) (noting that surrounding property owners may enforce a 14 covenant if it runs with the land for the benefit of all property owners within a 15 restricted area). Plaintiff’s remaining evidence that some Defendants did not have 16 representations made to them individually or that some of them assumed but were not 17 told that the golf course would remain fails to materially refute Defendants’ evidence. 18 Plaintiff does not show that these were the original grantees of the lots. Because 19 Plaintiff concedes that some grantees received assurances from El Dorado that the golf [12] 1 course would remain and there is no requirement for Defendants to demonstrate that 2 such an assurance was made to all grantees of the lots, Plaintiff’s argument is 3 insufficient to preclude the imposition of summary judgment in favor of Defendants. 4 {19} Accordingly, it appears that Plaintiff failed to establish the existence of disputed 5 material facts regarding whether El Dorado represented to buyers that Ponderosa Pines 6 was to be a golf course community. The district court’s grant of summary judgment 7 was therefore appropriate. 8 B. Defendants Have Produced Evidence of Representations to Home Owners 9 Regarding the Existence of the Golf Course Sufficient to Create an 10 Equitable Servitude 11 {20} Because Defendants have not produced the actual map used by El Dorado to 12 display the Ponderosa Pines lots and the golf course to buyers, Plaintiff argues that 13 there are only “alleged verbal representations” to prove that the developers induced 14 purchasers with the golf course. Plaintiff contends that verbal representations about 15 the golf course are insufficient to establish the propriety of summary judgment. 16 {21} During the proceedings in district court, Defendants produced Melkus’s 17 testimony which showed that developers made representations to prospective buyers 18 about the golf course using written maps. And, Plaintiff produced interrogatory 19 responses from purchasers stating that developers asserted to them that the golf course 20 would remain part of Ponderosa Pines. As well, an illustrative map was utilized for [13] 1 the purpose of showing the type of document on which the existence and location of 2 the golf course was depicted. 3 {22} Based upon New Mexico’s policy to protect “the right of the defendants and 4 their grantees, who purchased their property in reliance on the existence of the golf 5 course, to have the area preserved as a place of natural beauty and view,” we conclude 6 that this evidence is collectively sufficient to prove that representations about the 7 existence of a golf course were made to buyers and that representations were made in 8 the form of maps. Cree Meadows, 68 N.M. at 484 , 362 P.2d at 1010 . Defendants need 9 not have produced the actual map used in making the sales in order to succeed in 10 summary judgment. 11 C. The District Court Did Not Commit Reversible Error In Taking Judicial 12 Notice About the Presence of a Golf Course Constituting an Inducement 13 to Purchasers 14 {23} In its order of summary judgment, the district court took “judicial notice that 15 the existence of a golf course is an inducement to purchasers of lots abutting the golf 16 course.” Plaintiff argues that this is “a disputed adjudicative fact in this case that was 17 improperly drawn in favor of the moving party Association on summary judgment.” 18 Plaintiff asserts that “a nearby golf course can be a disincentive to purchase to some 19 homebuyers, because of the physical danger and property damage associated with golf 20 balls being hit into private lands, and that other commercially feasible uses would [14] 1 [constitute an] equal or greater attraction.” Assuming without deciding that it was 2 improper for the district court to take judicial notice as it did, reversible error did not 3 result. 4 {24} In Ute Park, our Supreme Court explained that the purchaser’s equitable right 5 to preserve the open space comes into existence as a result of “the representations by 6 the [grantor]’s agents in accomplishing the sales of the lots[.]” Id. at 733, 427 P.2d at 7 252. Later, in Huning, our Supreme Court described the “inducements” involved in 8 Cree Meadows and Ute Park as “private rights to the use of land.” Huning, 90 N.M. 9 at 409, 564 P.2d at 614 . Lastly, in Knight, this Court concluded that it was sufficient 10 that the buyers “relied on the continued existence of the golf course in purchasing 11 their properties from the developer” to prove that a private right in the form of an 12 easement or equitable servitude existed. 110 N.M. at 266 , 744 P.2d at 740. 13 {25} Thus, the taking of judicial notice by the district court in this regard does not 14 bear upon the equitable right of Defendants resulting from existing law applied to the 15 facts of this case. Accordingly, the district court’s taking of judicial notice of the 16 existence of a golf course as an inducement to purchase property was not error. 17 D. The Association’s Failure to Serve All Defendants With the Motion for 18 Summary Judgment Was Not Fatal to the Motion 19 {26} The Association served its motion on all counsel of record in the case, but not 20 on unrepresented Defendants. Plaintiff asserts that the Association’s failure to serve [15] 1 its motion for summary judgment on all individual Defendants was fatal to the motion. 2 {27} “The consequences of a failure to abide by Rule 1-005’s [NMRA] requirement 3 that motions be served on all parties to a lawsuit depend upon the nature of the paper 4 involved.” Western Bank v. Fluid Assets Dev. Corp., 111 N.M. 458, 461 , 806 P.2d 5 1048, 1051 (1991). To determine if the failure is fatal, we consider “whether a failure 6 to serve a particular motion is material in affecting the unnoticed party’s rights.” Id. 7 In Western Bank, the plaintiff’s failure to serve one of the parties “its motion for 8 default and foreclosure . . . caused [that party] to lose the opportunity to attend or 9 prepare for the foreclosure sale.” Id. As a result, the Supreme Court concluded that 10 the failure to serve the motion was fatal. Id. 11 {28} Here, the motion for summary judgment against Plaintiff would not have 12 materially affected the other Defendants, who largely did not respond to the 13 complaint. The motion benefitted all Defendants and did not interfere with their 14 ability to assert their rights in the lawsuit. Thus, the Association’s failure to serve 15 unrepresented co-defendants is not fatal to its motion. We affirm the district court on 16 this ground as well. 17 III. CONCLUSION 18 {29} For the reasons stated herein, we affirm the judgment of the district court. 19 {30} IT IS SO ORDERED. [16] 1 ________________________ 2 J. MILES HANISEE, Judge 3 WE CONCUR: [4] 5 RODERICK T. KENNEDY, Chief Judge [6] 7 MICHAEL E. VIGIL, Judge