No. 89-172
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
ROLAND C. BENSON and ARMONIA A.
BENSON,
Plaintiffs and Appellants,
-vs-
CLARK PYFER and PAUL KLEFFNER, d/b/a
INTERCITY DEVELOPMENT COMPANY,
Defendants and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Gordon Bennett, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John L. Hollow, Helena, Montana
For Respondent:
+- Jacqueline N. Terrell, Helena, Montana
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Submitted on Briefs: Oct. 13, 1989
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L ' Decided : December 6, 1989
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Justice Diane G. Barz delivered the Opinion of the Court.
Appellants appeal from an order of the District Court
of the First Judicial District, Lewis and Clark County,
granting respondents' motion for summary judgment. We
affirm.
In January of 1979, respondents received approval of a
preliminary plat of the Intercity Commercial Subdivision
located in Lewis and Clark County. Respondents recorded the
final plat on June 26, 1979. On September 10, 1979, the City
of Helena created SID # 354 for construction of streets in
Block 1 of Intercity Commercial Subdivision. Respondents at
that time intended to construct privately the sewer and water
facilities necessary for Block 1.
Appellants purchased Lot 2 of Block 1 by contract for
deed dated September 13, 1979. Pursuant to the contract,
appellants purchased Lot 2 "as is" but agree to pay their pro
rata share of the cost of installing water and sewer
facilities and paved streets. Respondents retained sole
discretion to either construct such improvements themselves
or obtain approval of an SID for the same. The City of
Helena resolved to create an SID for the construction of
water and sewer facilities on November 24, 1980. Neither
sewer and water facilities were constructed in Block 1.
Appellants discontinued making payments required by the
contract for deed in August of 1984. One month later,
through their attorney, appellants made an offer of
rescission to respondents based on the lack of facilities in
Block 1 and the inflated purchase price of Lot 2 compared
with the value of nearby lots being sold by the City of
Helena. Respondents declined this offer. Appellants'
complaint filed January 7, 1986, prayed for rescission of the
contract for deed founded in respondents' failure to perform
their contractual obligations.
Appellants alleged respondents breached the contract by
not connecting the property to water and sewer facilities or
building access roads. Appellants additionally claimed the
property was subject to SIDs substantially exceeding the
$0.21 per square foot represented by respondents. On March
1, 1988, appellants filed an amended complaint seeking
rescission or damages based on respondents' use of plats in
inducing appellants' purchase of Lot 2. Respondents moved
for summary judgment on May 16, 1988. Appellants appeal from
the District Court's grant of that motion. We affirm.
Appellants raise two issues on appeal:
1. Did the District Court erroneously conclude that
appellants raised no qenuine issues of material fact?
2. Did the District Court err in finding appellants'
claim for rescission barred by laches?
Appellants contend the District Court erred in its
grant of summary judgment to respondents because genuine
issues of material fact remain.
Summary judgment is properly granted when "there is no
genuine issue as to any material fact and . . .
the moving
party is entitled to a judgment as a matter of law." Rule
56 (c), M.R.Civ. P. The moving party initially must prove
there are no genuine issues of material fact. Pretty on Top
v. City of Hardin (1979), 182 Mont. 311, 315, 597 P.2d 58,
60; Eitel v. Ryan (Mont. 1988), 751 P.2d 682, 684, 45 St.Rep.
521, 524. "However, where the record discloses no genuine
issue of material fact, the burden of proof shifts to the
party opposing the motion, who must come forward with
substantial evidence raising an issue of fact." Kaiser v.
Town of Whitehall (1986), 221 Mont. 322, 325, 718 P.2d 1341,
1342; Mayer Bros. v. Daniel Richard Jewelers, Inc. (19861,
223 Mont. 397, 399, 726 P.2d 815, 816.
Appellants contend the affidavit of Dick Nesbit and
certain discovery filed by the respondents after respondents'
motion for summary judgment raised genuine issues of material
fact. However, appellants fail to disclose exactly what
factual issues are raised by these documents. Mere
speculation and conclusory statements are insufficient to
meet the non-moving party ' b-urden. Fauerso v. Maronick
s
Constr. Co. (1983), 203 Mont. 106, 112, 661 P.2d 20, 23;
Brothers v. General Motors Corp. (1983), 202 Mont. 477, 481,
658 p.2d 1108, 1110; Eitel v. Ryan (Mont. 19881, 751 P.2d
682, 684, 45 St.Rep. 521, 524. We find appellants'
contention in this regard without merit.
Appellants further assert that the District Court
presumed the existence of certain facts which were never at
issue. The lower court in its opinion stated:
The question here arises from
[appellants' 1 theory that the documents
associated with the preliminary filing,
but not with the final one, somehow bound
the [respondents] to build, and, we
presume pay, for the SID1s [sic] in
question.
The record does not reflect any claim by appellants that
respondents should pay for improvements to Block 1. In any
case, as appellants seek rescission, not specific
performance, the issue of financial responsibility for
improvements to Block 1 is not material.
Appellants finally assert that the District Court erred
in concluding no genuine issue of material fact existed
regarding the use of respondents' plats in inducing
appellants' purchase of Lot 2.
Appellants rely on our holding in Majers v. Shining
Mountains (1986), 219 Mont. 366, 711 P.2d 1375, for the
contention that representations contained in plats used to
induce the sale of subdivision lots create implied covenants
binding upon the seller. Shining Mountains recorded plats
containing. designated roads and common areas for a
subdivision of approximately 7,000 acres. Majers, 711 P.2d
at 1376. The plats were filed before the Subdivision and
Platting Act, codified at 76-3-101 et seq., MCA, became
effective in 1973. Majers, 711 P.2d at 1376. Majers
purchased a lot within the subdivision pursuant to a sales
agreement providing that Shining. Mountains would form a
nonprofit association to oversee development of the
subdivision but containing no commitment to actually
construct anything. Majers, 711 P.2d at 1376.
We affirmed the district court's grant of summary
judgment to Majers based on its ruling that "reservation of
easements for roadways in subdivision plats creates an
implied common-law covenant by the lot seller to open and
construct roadways . . . " Majers, 711 P.2d at 1376. We
further found that
[Wlhere land is sold with reference to a
map or plat showing a park or like open
area, the purchaser acquires a private
right, generally referred to as an
easement, that such area shall be used in
the manner designated.
However,
Whether there is any legally enforceable
right to have the roads constructed
depends not on the designation in the
plats but on the use of those plats in
inducing purchases.
Majers, 711 P.2d at 1378 (quoting Ute Park Summer Homes
Ass'n. v. Maxwell Land Grant Co. (N.M. 1967), 427 P.2d 249,
253).
Section 76-3-304, MCA, provides that when land is sold
with reference to a properly recorded plat, the plat becomes
part of the document conveying the interest in land. The
effect of this section is not to create an obligation upon
the seller to construct improvements represented on the plat
but merely to create an easement for the purchaser's benefit.
Majers, 711 P.2d at 1377. Respondents contend that our
holding in Majers is inapplicable to the case at hand because
the respondents are subject to the provisions of the
Subdivision and Platting Act while the sellers in Majers were
not.
The rule proposed by respondents would deny recovery to
purchasers of subdivision lots for fraudulent misrepresenta-
tions made by the sellers of those lots. We decline to adopt
such a rule. Recently we held that when a seller of land,
not subject to the provisions of the subdivision statutes,
made representations to the buyer regarding improvements to
access roads, the nature of those representations and their
effect in inducing the purchase were a submissible jury
issue. Dew v. Dower (Mont. 1989), 774 P.2d 989, 991, 46
St.Rep. 981, 985. The purpose of the Subdivision and
Platting Act is not to shield sellers from liability for
their fraudulent misstatements. Majers, 711 P.2d at 1377.
Appellants make the bare, conclusory statement that
respondents used the plats to induce appellants' purchase of
Lot 2. They introduce no facts to support this contention.
In - two plaintiffs testified as to the defendant's
Dew,
representations, all the male plaintiffs stated they had been
shown a certificate of survey which was also referred to in
the contract for deed, a realtor stated the defendant showed
him stakes defining the boundary of an improved road and the
defendant admitted she made certain representations regarding
the road. - 774 P.2d at 990-91. The plaintiffs in Majers
Dew,
stated that not only did defendant's agents affirmatively
assure them certain improvements would be made but that
defendant refused to make the improvements after repeated
requests. Majers, 711 P.2d at 1376.
Appellants make no similar factual allegations. We
will not speculate as to the possible inducement alleged by
appellants nor will we infer facts from appellants'
conclusory statements.
Appellants further contend that the District Court
erred in dismissing their claim for rescission based on
laches. Laches is an equitable remedy the propriety of which
we will determine on a case by case basis. Matter of Estate
of Winter (Mont. 1987), 734 P.2d 178, 180, 44 St.Rep. 430,
433. Section 28-2-1713, MCA, requires a party seeking
rescission to use reasonable diligence in asserting its claim
once its right to rescind is apparent. Therefore the
question before us is whether appellants were reasonably
forthcoming in demanding rescission from respondents or
whether their claim should be barred by laches.
Appellants claim they were not aware until 1986 that
they could not obtain a building permit for Lot 2 because the
entire block lacked streets and water and sewer facilities.
In addition, they claim that "what appeared to be
construction of sewer and water had occurred after the
contract was signed ... [i]t turned out to be an outfall
line from a subdivision above Intercity." There is
conflicting evidence that this outfall line was constructed
prior to appellants' purchase of their lot. Furthermore, the
City of Helena Commission voted to abandon the SID for
construction of improvements on Block 1 in November of 1981.
Appellants contend respondents proclaimed that
"connection of the property to utilities was imminent and
that a paved access road would soon be built to the
property." Despite obvious indications that these
improvements had not been made, appellants continued making
payments on the contract for deed for five years. Knowledge
of the existence of a claim will be imputed to a party who
has sufficient information to put it on inquiry notice of
that claim. McGregor v. Momrner (1986), 220 Mont. 98, 108,
714 P.2d 536, 542. The District Court had sufficient
evidence with which to impute appellants' knowledge of this
claim.
The plaintiff in McGregor purchased a wholesale and
retail gasoline business from defendants. McGregor, 714 P.2d
at 539. Although the District Court found the plaintiff had
inquiry notice of defendants' negligent misrepresentation as
early as 1977, plaintiff continued making payments on the
purchase contract until 1981. McGregor, 714 P.2d at 542. We
found the district court erroneously permitted the jury to
consider rescission as a remedy when the plaintiff failed to
assert its claim promptly and with reasonable diligence.
McGregor, 714 P.2d at 542. Similarly, appellants in the case
at hand failed to demand rescission within a reasonable time.
The District Court did not err in finding the appellants'
claims barred by laches.
Affirmed.
We concur: