Monday, October 17, 2011

The Supreme Court of Virginia on Exclusive Easements: McCarthy Holdings, LLC v. Burgher

Happy fall!

It was a beautiful weekend in central Virginia, but as the work-week begins it's time to hit the law books. And what better place to dive back in than the always-fascinating world of easements?!


In McCarthy Holdings, LLC v. Burgher (September 16, 2011, Record No. 10-1031), the Supreme Court of Virginia addressed whether the grant of an exclusive easement transfers a fee simple interest to the easement-grantee. You can read Justice Goodwyn's decision (and Justice Mims's pointed dissent) in McCarthy, here.


When a property owner conveys an easement to someone, the landowner grants the easement-holder the right to use property that the easement-holder does not own (for a discussion of the subtle differences between an easement and a license, see our post about the 2010 Supreme Court decision Station #2 LLC v. Lynch, here).

As with all-things-legal, the particular language in the easement is critical. For instance, if Bob grants a utility easement to Acme Electric for the installation, maintenance and repair of power lines, but later Bob becomes angry because Acme's heavy equipment ruins Bob's azaleas while repairing the lines, the question of whether or not Acme is legally obligated to reimburse Bob for the azaleas will depend on the specific provisions in the instrument that created the easement.


The vast majority of easements limit the easement-holder to using the eased-property in particular ways. For instance, an electric company may have the limited right to install power lines, or a neighbor may have the limited right to drive across the easement-grantor's property in order to reach his house.  In these instances, the electric company does not have the right to to dig a well in the easement-grantor's front yard, and the neighbor does not have the right to park his Chevy Silverado on the easement-grantor's driveway.


Additionally, most easements are non-exclusive, which means that the person granting the easement reserves the right (1) to use the property himself and (2) to give other individuals the right to use the eased property as well.

Sometimes, however, an easement states that the easement-holder has the exclusive right to use the property that he does not own.  In McCarthy Holdings, the Supreme Court of Virginia examined the question: just how exclusive is an exclusive easement?

The facts in McCarthy Holdings are relatively straightforward.

Burgher granted an easement, to McCarthy's predecessor-in-interest, to use 488 square feet located on Burgher's land in Alexandria. The easement agreement included the following language: "The Grantee shall have exclusive use of the land set forth in the Easement Area."

A dispute arose because McCarthy believed that the easement gave him the right to prohibit Burgher from using the 488 square feet for any purpose at all. McCarthy's position seems logical: exclusive use means exclusive use, which means that no one (including the property owner) should have the right to use the 488 square feet without McCarthy's permission.

Alas for McCarthy, the Supreme Court said that the analysis is not quite so straightforward.  In particular, the Court cited its opinion in Walton v. Capital Land, Inc. for the proposition that "the term 'exclusive' in an easement agreement does not deny the servient estate its right to use the easement area, unless such use unreasonably interferes with the use and enjoyment of the easement." Unfortunately, the Court arrives at its conclusion without providing a great deal of insight into why the word "exclusive" does not retain its plain language meaning when used in a legal instrument.


The Court is more convincing when it states that easement conveyances that "effectively transfer a fee ... are not favored." In other words, if McCarthy had intended to obtain the right to exclude Burgher from the easement area, then McCarthy should have insisted on a fee simple conveyance, rather than merely an easement.  By agreeing to accept an easement rather than the fee simple, McCarthy (or, more precisely, its predecessor-in-interest) acknowledged that Burgher retained some rights to use the 448 square feet.


The practical take-away from McCarthy seems relatively clear: if an individual intends to obtain true exclusivity with respect to the use of property, then he or she needs to obtain a fee simple interest -- or at least an easement grant that clearly prohibits any use by the servient estate.

And if you can't get an exclusive easement, then you might try a bouncer and a rope line...