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Essex Holding, LLC v. Basic Properties, Inc.

Supreme Court of Wyoming

September 26, 2018

ESSEX HOLDING, LLC, Appellant (Plaintiff),
BASIC PROPERTIES, INC., a Wyoming corporation Appellee (Defendant).

          Appeal from the District Court of Sweetwater County The Honorable Richard L. Lavery, Judge

          Representing Appellant: Judith A.W. Studer, Schwartz, Bon, Walker & Studer, LLC, Casper, Wyoming.

          Representing Appellee: Clark D. Stith, Stith Law Office, Rock Springs, Wyoming.

          Before, DAVIS, C.J., and BURKE[*], FOX, KAUTZ and BOOMGAARDEN, JJ.

          FOX, Justice.

         [¶1] Essex Holding, LLC (Essex) and Basic Properties, Inc. (Basic) each own lots in a shopping center subject to restrictive covenants. Basic requested Essex's consent to amend the covenants to allow Basic to develop one of its lots. Essex refused, litigation ensued, and a jury awarded Basic $200, 000 in damages. The district court also awarded attorney fees and costs to Basic. Essex filed post-trial motions which the district court denied, and Essex filed its appeal within 30 days of that denial. Essex challenges the verdict and damages award, along with several of the district court's rulings and orders. We affirm.


         [¶2] We restate and reorder the issues Essex has raised:

1. Did Essex timely file its Notice of Appeal?
2. Did Basic have standing to assert its counterclaim?
3. Did the district court err when it submitted Basic's counterclaim for breach of contract to the jury?
4. Did jury instructions which rejected Essex's theory regarding the void 1993 Amendment constitute plain error?
5. Did cumulative error result in an excess verdict or a verdict contrary to law?
6. Did the district court properly grant Basic's motion for judgment as a matter of law on Essex's anticipatory repudiation claim?
7. Did the district court err in its award of attorney fees and costs to Basic?
8. Did the district court properly deny Essex's W.R.C.P. 60(b) motion?


         [¶3] Essex and Basic each own parcels of land in the Flaming Gorge Shopping Center in Green River, Wyoming, subject to restrictive covenants (the ECRs) recorded by the developer in 1975. The ECRs grant each parcel owner an access easement for the common areas, largely consisting of ingress and egress to the parking lot. They may be modified with the "written consent of all record owners of Parcels I, II, and III," which consent "shall not be unreasonably withheld."

         [¶4] The developer attempted to modify the ECRs in 1993, before Essex and Basic acquired their parcels, in conjunction with subdividing Parcel II into Parcel II-A and Parcel II-B. The developer recorded a Modification and Amendment of Easements with Covenants and Restrictions Affecting Land on December 14, 1993 (1993 Amendment) for this purpose.

         [¶5] Essex acquired Parcel I in 1999, and Basic acquired Parcel II-B in 1998, Parcel II-A in 1999, and Parcel III in 2003. In 2008, Basic enlarged and renamed Parcel II-B as Parcel II-D. In 2012, Basic sold Parcel II-A to David and Lynda Laughlin (Laughlins).

         [¶6] On November 17, 2011, Basic contracted to sell Parcel II-D to O'Reilly Automotive Store, Inc. (O'Reilly) for the construction of an auto parts store. Basic and O'Reilly believed that the 1993 Amendment permitted construction of a building along the eastern boundary of Parcel II-D. In the spring of 2012, Basic and O'Reilly realized that there were access problems along the eastern boundary and wished to move the parcel's building area to the southern boundary. The change would require further amendment of the ECRs.

         [¶7] Around April 2012, Basic's president, Don Johnson, contacted Essex's managing member, Mark Langfan, to discuss amending the ECRs. On May 8, 2012, Basic's attorney expressly requested Essex's consent to amend the ECRs and provided a proposed written amendment to the 1993 Amendment.

         [¶8] After receiving no response, Basic's attorney made several phone calls and sent several follow-up emails to Essex on June 14, 19, and 27, 2012, and July 12, 2012, providing O'Reilly's site plan, additional copies of the ECRs, prior amendments, and the proposed written amendment. Essex did not respond to any email and did not provide any substantive comments about the proposed development during any of the telephone calls.

         [¶9] On July 2, 2012, O'Reilly's realtor emailed photographs of the proposed development to Essex and requested Essex's consent to the plan. Essex provided the photographs to its tenant and property manager, Ace Hardware, requesting its feedback. Ace Hardware informed Essex that the proposed O'Reilly building would benefit its business by increasing traffic to the shopping center.

         [¶10] On August 13, 2012, Mr. Johnson emailed Essex requesting a time to discuss the amendment. Essex replied two days later, stating: "You only sent us some of the documents. Where are all of the easement documents for the property?" Basic's attorney re-sent copies of the ECRs and all amendments to Essex. Mr. Johnson explained that the proposed development would have little impact on Essex's parcel and, instead, would increase traffic and the value of the parties' respective properties. Mr. Johnson offered to pay Mr. Langfan's expenses to come to Wyoming to view the site.[1]

          [¶11] On or about August 24, 2012, however, Essex discovered that the 1993 Amendment was missing a required signature and could be invalid. Thus, instead of responding to Mr. Johnson's email, Essex informed Basic's attorney of the missing signature. Basic's attorney acknowledged that the 1993 Amendment did not contain a required signature, but continued to request Essex's consent to amend the covenants:

As I mentioned in my prior email, I had thought that the putative 1993 Amendment (that I first sent to you on June 19, 2012) was valid, but it appears that perhaps it is not, because no representative from Parcel I signed it.
Please let us know under what conditions, if any, Essex Holding is willing to sign the proposed amendment.

(Emphasis added.)

         [¶12] On September 6, 2012, having received no substantive response to Basic's request, Mr. Johnson emailed Essex asking for help in understanding Essex's reluctance to approve the amendment. Mr. Langfan replied, "I was given false information to begin with that I was obligated to the building area. Secondly, from the plan alone, the ingress is impeded by what would parking stalls on and out [sic] that I believe is dangerous." Essex retained an attorney, considered itself in "litigation mode," and remained unwilling to negotiate or sign any proposed amendment.

         [¶13] On September 14, 2012, O'Reilly's realtor informed Essex by email that a new proposed development option would be forthcoming. Essex responded the same day, stating:

The issue is there is no right to build to begin with. I was first incorrectly told there was a right, and was sent a false graphic depicting the false statement. Then, I had to do my own research which proved there wasn't any such right. Then, I discovered there was a false document recorded against my title. That document must be removed immediately.

         The "false document" Essex referred to was the 1993 Amendment.

         [¶14] Following this exchange, the attorneys for Basic and Essex continued to correspond. Basic's attorney renewed Basic's request for consent, reminding Essex's attorney that the ECRs prohibited the unreasonable withholding of consent. Basic's attorney urged Essex's attorney to "clean up the record and make clear that building is allowed on this particular corner that is furthest from Essex Holding's property." Essex's attorney did not respond to the consent issue. Instead, he claimed that Basic breached the

         ECRs and asked Basic to remove the 1993 Amendment from the record. Basic's attorney countered that Essex was in breach of the ECRs and not acting in good faith, and documented Basic's attempts to secure Essex's consent to an ECR amendment:

I called Mr. Langfan multiple times in May and June but could not get a response from him one way or the other. I sent follow up emails to Langfan on May 14, June 14, June 19, June 27, July 12 and August 1, 2012. As you are aware, Essex Holding initially took no position on the proposed new amendment and then ultimately refused to consent to any amendment that would allow construction on Parcel II-D. During a separate email exchange between Don Johnson and Mark Langfan on September 6, 2012, Langfan expressed concerns about ingress and egress.
Essex Holding has never given any coherent reason for refusing to sign the proposed amendment. Its claim that ingress and egress would be adversely affected is not well founded as O'Reilly Auto Parts would be adding an additional ingress and egress point, thus improving not degrading access to the shopping center.
This letter provides notice that Essex Holding is in violation of Section 8(a) of the ECRs for its unreasonable withholding of consent to the proposed amendment to the ECRs that would allow construction of an O'Reilly Auto Parts store on Parcel II-D.

         Essex's counsel responded in writing by simply stating:

I have received your letter dated November 1, 2012, in which you make several assertions that Essex Holding, LLC rejects and which we will not take the time to respond to at this point. I will, however, reiterate that Essex Holding, LLC has valid and legitimate business reasons for withholding consent to modify the Easements with Covenants and Restrictions Affecting Land [].

         [¶15] On October 31, 2012, Mr. Johnson informed Mr. Langfan that O'Reilly had extended the contract through the end of December and was willing to adjust the site plan to address any safety concerns with the ingress and egress points. Mr. Johnson offered to pay Mr. Langfan for his time to resolve the issue. Mr. Langfan responded by directing Mr. Johnson to Essex's attorney.

         [¶16] On December 14, 2012, Basic made a final attempt to secure Essex's consent. Basic warned Essex's attorney that Basic would likely lose the O'Reilly sale if Essex refused to sign a proposed amendment. Essex did not respond. O'Reilly terminated its contract with Basic on December 31, 2012.

         [¶17] In the spring of 2013, Overland Development Corporation (Overland) contacted Essex about its desire to purchase Parcel II-D to develop and lease to O'Reilly. Essex refused to consent to any proposed development, and Overland terminated its purchase contract with Basic.

         [¶18] On October 15, 2013, Essex filed suit in district court against Basic and the Laughlins. Essex sought to quiet title in Essex's easement in the common parking area, a declaratory judgment invalidating the 1993 Amendment, and damages for Basic's alleged anticipatory repudiation of the ECRs. Basic counterclaimed, asserting breach of contract and tortious interference with the O'Reilly and Overland sales contracts. Basic also sought declaratory and injunctive relief for Essex's unreasonable withholding of consent to modify the ECRs.

         [¶19] The parties stipulated to entry of an order that declared the 1993 Amendment void ab initio. The district court then dismissed the Laughlins from the litigation, and dismissed Essex's claims for declaratory judgment and quiet title, leaving only its anticipatory repudiation claim against Basic. Essex moved for summary judgment on Basic's counterclaims. Basic filed a cross-motion for summary judgment on Essex's anticipatory repudiation claim. After full briefing and a hearing, the district court granted Essex's motion for summary judgment on Basic's tortious interference claim, but otherwise denied the parties' motions.

         [¶20] Before trial, Essex filed a motion in limine to exclude Basic's evidence of damages and Basic's land valuation expert testimony. Essex claimed that monetary damages were not permitted because (1) the ECRs are equitable servitudes, not real covenants; (2) the terms of the ECRs did not permit monetary damages; and (3) the damages sought were unforeseeable consequential damages. Essex also asserted that Basic, as the sole owner of Parcel III, could not claim damages pertaining to Parcel II because the Laughlins did not join in the counterclaim as Essex alleged the ECRs required. In its Order After Pretrial Conference, the district court denied Essex's motion and determined that the ECRs permitted monetary damages if necessary for "full and adequate relief"; the damages were foreseeable; and Basic, as the sole owner of Parcel III, had standing to bring its counterclaims.

         [¶21] At the close of the five-day jury trial, Essex moved for judgment as a matter of law, arguing that Basic lacked standing. The court denied the motion. Basic moved for judgment as a matter of law on Essex's claim for anticipatory repudiation, which the district court granted. Essex then requested that the court instruct the jury to disregard any evidence of damages because the Laughlins were not joined in the counterclaim as co-owners of Parcel II. The district court did not act on Essex's request.

         [¶22] During the final jury instruction conference, the district court overruled Essex's objection to Jury Instruction No. 12, addressing damages, and declined to give Essex's proffered instruction regarding the void 1993 Amendment. The court reasoned that the parties' stipulated facts adequately addressed the status of the 1993 Amendment and Essex could reference the stipulation during its closing argument.

         [¶23] The jury returned its verdict on October 28, 2016, finding that Essex unreasonably withheld its consent to the proposed amendment to modify the covenants. Although Basic requested damages of $315, 000, the amount of the O'Reilly contract, the jury awarded $200, 000.

         [¶24] The district court requested briefing and closing argument on Basic's claim for injunctive relief. Basic requested attorney fees and costs, and Essex renewed its motion for judgment as a matter of law seeking dismissal of Basic's counterclaim because it did not own all of Parcel II. During a February 2017 hearing on the pending motions, Basic voluntarily withdrew its claim for injunctive relief. The district court entered a Judgment in favor of Basic for $200, 000 on March 3, 2017. The court entered a Corrected Judgment on March 7, 2017, to correct a clerical error. On March 10, 2017, the district court entered its Order on Post Trial Motions, denying Essex's renewed motion for judgment as a matter of law, dismissing Basic's claim for injunctive relief, and awarding attorney fees and costs to Basic.

         [¶25] On March 17, 2017, Essex filed its Motion by Plaintiff Essex Holding, LLC Pursuant to Rule 59 and Rule 60 of the Wyoming Rules of Civil Procedure (Rule 59 and 60 motion) requesting that the district court alter or amend the judgment or, alternatively, grant relief from the judgment. Basic opposed the motion, contending it essentially repeated arguments the district court had previously rejected. Basic asserted that the only "new argument" in the motion-that there was insufficient evidence to support the jury's damages award-lacked merit. The district court denied Essex's Rule 59 and 60 motion by its Order Denying Second Post Trial Motion, filed on May 4, 2017.

         [¶26] Essex filed its Notice of Appeal on May 26, 2017. The district court entered a Corrected Order on Post Trial Motions and Judgment on May 31, 2017, fixing a clerical error and modifying the title. Essex amended ...

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