Hill of Portsmouth Condo v. Parade CV-04-403-SM 12/23/04 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

The Hill of Portsmouth Condominium Association, Plaintiff

v. Civil No. 04-403-SM Opinion No.

Parade Office, LLC, Defendant

O R D E R

The Hill of Portsmouth Condominium Association (the

"Association") brings this petition for declaratory judgment,

seeking a judicial declaration that its members, as owners of the

condominium property, hold a parking easement on adjacent

property owned by defendant. Parade Office, LLC. See generally

. Parade Office moves the court to abstain from

exercising jurisdiction over the petition and says the petition

should be dismissed. It asserts that the issue raised in this

proceeding is also pending before the New Hampshire Supreme Court

in a parallel action. Conseguently, says Parade Office,

principles of comity and judicial economy counsel in favor of

dismissing the Association's federal petition. The Association

obj ects. Standard of Review

When ruling on a motion to dismiss under Fed. R. Civ. P.

12(b)(6), the court must "accept as true the well-pleaded factual

allegations of the complaint, draw all reasonable inferences

therefrom in the plaintiff's favor and determine whether the

complaint, so read, sets forth facts sufficient to justify

recovery on any cognizable theory." Martin v. Applied Cellular

Tech., Inc.,

(1st Cir. 2002) . Dismissal is

appropriate only if "it clearly appears, according to the facts

alleged, that the plaintiff cannot recover on any viable theory."

Langadinos v. American Airlines, Inc.,

(1st Cir.

2000) . See also Gorski v. N.H. Dep't of Corr.,

(1st Cir. 2 002).

Here, in support of its motion to dismiss. Parade Office

relies upon various pleadings submitted in related state-court

litigation, as well as a decision issued by the Rockingham County

Superior Court. Typically, a court must decide a motion to

dismiss exclusively upon the allegations set forth in the

complaint (and any documents attached to that complaint) or

convert the motion into one for summary judgment. See Fed. R.

2 Civ. P. 12(b). There is, however, an exception to that general

rule:

[CJourts have made narrow exceptions for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.

Watterson v. Page,

(1st Cir. 1993) (citations

omitted). See also Beddall v. State St. Bank & Trust Co.,

(1st Cir. 1998). Since the Association does not

dispute the authenticity of the documents upon which Parade

Office relies, the court may properly consider those documents

without converting Parade Office's motion into one for summary

judgment.

Background

Crediting the allegations set forth in the complaint as

true, and in light of the documents submitted by Parade Office,

the material facts appear as follows. The Association and Parade

Office own adjacent parcels of land in Portsmouth, New Hampshire.

Prior to the events giving rise to this litigation, Barnett

Mortgage Trust owned those two properties as a single parcel. In

3 1997, Barnett subdivided the property and submitted what is now

the Hill of Portsmouth Condominium to the provisions of New

Hampshire's Condominium Act, N.H. Rev. Stat. Ann. ch. 356-B, by

recording in the registry of deeds a declaration of condominium.

Barnett also created a parking easement on the adjacent parcel

for the benefit of the condominium property. The "Declaration of

Easement" recorded in the registry of deeds describes the

condominium property as the dominant tenement and the adjacent

property as the servient tenement. Subseguently, Parade Office

purchased the adjacent parcel, now known as the Parade Mall

property. Accordingly, Parade Office took title to that parcel

of land, subject to the condominium property's parking easement.

In 2000, Makrie LLC acguired the condominium property by

warranty deed, which specifically identified and included the

parking easement. The deed to Makrie also provided that the

property was subject to the previously recorded declaration of

condominium (each of Makrie's predecessors in title also took the

property with the benefit of the easement, and subject to the

declaration of condominium).

4 By early 2001, no units had been constructed (or sold) on

the condominium property. At that time, Makrie, as the sole

title holder to the property, amended the condominium declaration

by recording a "Restated and Amended Condominium Declaration."

That amended declaration does not, however, reference the parking

easement. Makrie also amended the condominium documents to

include, as a common expense to be borne by all unit owners,

"parking lease payments." Finally, Makrie recorded a revised

site plan which included a revision note that stated: "remove

parking easement & note parking encroachment per attorney

reguest." Thus, it appears that Makrie believed it could retain

independent "title" to the parking easement by simply amending

the declaration of condominium and severing the easement from the

dominant estate. And, it appears that the Association did not

guestion Makrie's right to charge its members a fee for parking

on the land owned by Parade Office, which is (or was) subject to

the easement.

Eventually, Parade Office filed a petition for declaratory

judgment in state court, asserting that the parking easement was

extinguished when Makrie purposefully excluded it from the

5 restated and amended declaration of condominium. Parade Office

sought a judicial declaration that Makrie had no legal or

eguitable interest in its property. Neither the Association nor

any of its members were party to that proceeding.

The state trial court agreed with Parade Office:

When [Makrie] resubmitted the property to condominium, . . . it purposely excluded the parking easement from the Hill property. . . . Thus, [Makrie] severed the easement from the dominant tenement and attempted to retain the easement for itself.

However, an easement appurtenant cannot exist separate from the dominant tenement. [Makrie] no longer owns the Hill property, having sold all of the condominium units. Therefore, the court finds respondent extinguished the parking easement when it excluded it from the Amended Condominium Declaration and subseguently sold all of the condominium units.

Parade Offices, LLC v. Makrie, LLC, 03-E-0449, slip op. at 2-3

(N.H. Super. C t . Feb. 23, 2004). Makrie appealed the Superior

Court's decision to the New Hampshire Supreme Court. That appeal

is pending.

In connection with that appeal, the Association sought (and

was granted) permission to file an amicus brief. In its brief.

6 the Association asserts that it "does not seek a resolution of

its members' claim to the parking easement." Instead, says the

Association, the purpose of its brief "is to protect against any

such resolution by demonstrating that certain 'extinguishment'

language in the Superior Court's decision was unnecessary dicta

and, further, that the Superior Court could not properly have

resolved the claimed interest of non-parties (the Association's

members)." In other words, the Association claims the state

trial court went too far in concluding that Makrie extinguished

the parking easement (thereby prejudicing any claim by the

Association to the benefits of that easement); instead, says the

Association, the trial court should have ruled that, with respect

to Parade Office, Makrie had no enforceable interest in that

portion of Parade Office's property which was subject to the

easement.

The Association asserts that the issue presented in this

case is guite distinct from that presented in the state case.

The Association says in this case the court must determine the

relative rights of the Association and Parade Office in the

disputed parcel of land. In the state court proceeding, however.

7 the Association says its rights under the parking easement are

not at issue; instead, that dispute is solely between Parade

Office and Makrie.

It probably bears noting, however, that if the New Hampshire

Supreme Court concludes that Makrie extinguished the parking

easement prior to (or as part of) creating the Hill Condominium,

then the Association, as Makrie's successor-in-title, necessarily

did not acguire the benefits of that easement. In short, the

Association could take only that interest which Makrie had to

convey. In all likelihood, the state supreme court will resolve

that very guestion.

Discussion

The Declaratory Judgment Act provides, in relevant part,

that:

In a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration . . . .

(a) (emphasis supplied). The unambiguous text of

that statute makes plain that a federal court's exercise of

jurisdiction over a petition for declaratory judgment is

permissive, rather than mandatory.

We have repeatedly characterized the Declaratory Judgment Act as an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant. •k -k -k

By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the district court's guiver; it created an opportunity, rather than a duty, to grant a new form of relief to gualifying litigants. Consistent with the nonobligatory nature of the remedy, a district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment before trial or after all arguments have drawn to a close. In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration.

Wilton v. Seven Falls Co.,

(1995) (citation,

footnote, and internal punctuation omitted). See also Brillhart

v. Excess Ins. Co. of America,

(1942).

The litigation between Makrie and Parade Office pending

before the state supreme court faces three possible outcomes: 1. First, the court may hold that Makrie purposely severed the easement from the dominant estate, thereby causing the easement to lapse or extinguish;

2. Alternatively, the court may hold that Makrie has no interest in the easement because its efforts to severe it from the dominant estate were ineffective and, therefore, the easement passed with title to the dominant estate (i.e., to the Association).

3. Finally, the court might agree with Makrie's position, holding that it does retain an exclusive interest in the easement - an interest that did not pass with title to the dominant estate.

Only if the court adopts the second view will the Association

have a viable claim that: (a) the easement survived Makrie's

recordation of the amended declaration of condominium; and (b)

the easement passed along with the dominant estate when the

Association acguired title to the condominium property. If the

court resolves the case in a manner consistent with either the

first or third possibility outlined above, the Association will

not, as a matter of law, have any basis upon which to assert that

it holds a parking easement on the property owned by Parade

Office.

10 Given the pendency of the state court action, prudence

counsels a stay of all proceedings in this case, until the state

court matter has been resolved. See, e.g., Brillhart,

("Ordinarily it would be uneconomical as well as vexatious

for a federal court to proceed in a declaratory judgment suit

where another suit is pending in a state court presenting the

same issues, not governed by federal law, between the same

parties. Gratuitous interference with the orderly and

comprehensive disposition of a state court litigation should be

avoided."). While the Association is not a party to the ongoing

state litigation, it is in privity with Makrie, the entity from

which it took title to the subject property. Accordingly, it is

entirely possible (if not likely) that the state supreme court's

resolution of the case presently before it will fully and finally

determine the rights of all parties interested in the easement,

including the Association.

Conclusion

In the exercise of its discretion, the court concludes that

principles of comity, as well as the wise and efficient use of

judicial resources, counsel in favor of staying this declaratory

11 judgment action pending final resolution of the matter currently

before the New Hampshire Supreme Court. The legal issues in both

this case and the pending state case involve potentially

dispositive guestions of state property law - guestions which the

state supreme court is uniguely suited to resolve. Additionally,

if this court were to accept Parade Office's invitation to

immediately resolve the relative rights of the parties involved,

this court and the state supreme court might reach conflicting

conclusions - a decidedly undesirable outcome. Parade Office has

not identified any way in which it might be prejudiced by a

modest delay pending the outcome of the ongoing state litigation,

and the court does not foresee any prejudice.

Defendant's motion to dismiss (document no. 5) is denied,

without prejudice. This suit is, however, stayed pending the

state supreme court's resolution of the related litigation

currently before it.

The Clerk of Court shall administratively close the case,

pending notification from the Association that it wishes to

reopen the matter. That notification shall include a

12 certification that: (1) the New Hampshire Supreme Court has

issued its opinion in the related state court proceeding; and (2)

the state court's opinion does not resolve the current dispute

between the Association and Parade Office and leaves open the

possibility for the Association to claim, in good faith, that it

holds an enforceable interest in a parking easement on the

adjacent property owned by Parade Office. At that point, the

court shall reopen this matter and, if appropriate, issue a

scheduling order or schedule a pre-trial conference with the

parties .

SO ORDERED.

S/ceven J/McAuliffe 'Chief Judge

December 23, 2004

cc: Timothy A. Gudas, Esq. Paul McEachern, Esq.

13