State of Maine v. Moosehead Mountain Resort

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STATE OF MAINE SUPERIOR COURT

KENNEBEC, SS. CIVIL ACTION

DOCKET NO. CV-2016-147

STATE OF MAINE,

AARON M. FREY, ATTORNEY

GENERAL, BUREAU OF PARKS

AND LANDS, and LAND USE

PLANNING COMMISSION,

Plaintiffs

DECISION AND ORDER

V.

MOOSEHEAD MOUNTAIN

RESORT and OFLC, INC.,

Defendants

and .

CARMEN REBOZO FOUNDATION,

INC.,

Party-in-Interest

and

PISCATAQUIS COUNTY C0Iv1M1SSIONERS,

Intervenors

INTRODUCTION AND PROCEDURAL HISTORY

Before the court for resolution is the Motion for Summary Judgment filed by

the Plaintiffs - the State of Maine, Attorney General Aaron Frey, the Bureau of Parks

and Lands and the Land Use Planning Commission (hereinafter referred to as the

State) - on Counts I, II, III and V of the complaint . 1

, Count IV, alleging Breach of Contract, was previously withdrawn by the State. Count V,

alleging Unjust Enrichment, has been pleaded in the alternative and need not be addressed by the

court unless it rules against the State on Counts JI and lIJ.

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This action was commenced by the State on August 1, 2016 with the filing

of a five-count complaint seeking to enforce what are described as "deed

restrictions" and ''public servitudes" that allegedly burden the land of Defendant

Moosehead Mountain Resort (MMR) on Big Moose Mountain (f/k/a Big Squaw

Mountain) in Greenville. The land in question was formerly owned by the State of

Maine and was conveyed to MMR's predecessor in title in 1986.

·count I alleges that MMR and Defendant OFLC, Inc., conducted timber

harvesting within a General Development subdistrict without first obtaining a permit

from the Land Use Planning Commission.

Count II alleges that MMR conducted timber harvesting in violation of certain

deed restrictions applicable to the land owned by MMR, which were imposed for the

benefit of the State of Maine.

Count III alleges that MMR has failed to comply with certain public servitudes

imposed on the property owned by MMR, including that designated ski trails and

lifts be subject to "continued public use."

Count V seeks damages on a theory of unjust enrichment.

In a Decision and Order dated May 7, 2018, the court denied MMR's motion

for Summary Judgment as to Counts II, III and V. Many of the undisputed facts

referred to in the court's prior Decision and Order are still undisputed for purposes

of this motion for summary judgment. Oral argument on the Plaintiffs' Motion for

Summary Judgment was held remotely on September 4, 2020.

FACTUAL BACKGROUND

Big Moose Mountain (f/k/a Big Squaw Mountain) began operating as a ski

resort in 1963. Scott Paper Company purchased the ski area in 1970 and operated it

until approximately 1974. In late 1974, the ski area was transferred to the

Moosehead Resort Corporation (MRC), which was wholly owned by the State of

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Maine. In 1975, MRC conveyed the ski area to the State of Maine and the Bureau

of Parks and Recreation (n/k/a Bureau of Parks and Lands).

The State of Maine owned the ski area for over ten years. In May 1986, a

request for proposals was issued and advertised for the sale of the ski area and resort.

Only one proposal was submitted, A proposal from the Big Squaw Mountain

Corporation (BSMC) was the only one submitted. On October 17, 1986, then

Governor Joseph E. Brennan approved Financial Order 04350 F6 authorizing the

Director of the Bureau to convey the ski area and resort to BSMC. The "Statement

of Fact" accompanying the Financial Order acknowledged that "[e]xtensive repair

and improvements of the resort facility are necessary to keep it available to the public

and assure its viability as an attractive and safe resort, benefiting the people of

Maine."

The Financial Order described State policy at the time as recognizing that

private capital was "the most appropriate and feasible means of assuring that the

needed repairs and improvements are made in the future." Accordingly, it was

deemed necessary that the property, including the ski area and resort, would be held

in private ownership and that the State's conveyance of the property (and an option

to purchase additional property) "is being done exclusively for public purposes."

The sale to BSMC. involved the payment to the State of Maine of $300,000

(wel1 below its market value at the time). The buyer (BSMC) was required to invest

$700,000 in improvements to the facility. Moreover, the Financial Order provided:

The resort and ski area will be sold with restrictions on timber

harvesting to prevent waste, a requirement for continued public use of

the ski area, and a restriction preventing subdivision and alienation of

the shoreland parcel on Moosehead Lake from the resort property.

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The Agreement to Purchase between the State of Maine and BSMC dated

November 5, 1986 recited that the deed to the "Ski Area and Resorf' would contain

the "restrictions" referred to above. The Release Deed, also dated November 5,

1986, is at the center of this litigation. The deed emphasizes that the conveyances

of the property and the options to BSMC were "done exclusively for public

purposes." To drive home this point, the deed provides:

Without limiting the definition of 'public purposes,' it is expressly

understood that 'public purposes' shall include the maintenance,

expansion, and operation of the Ski Area and Resort on the premises

hereby conveyed, and the construction of transient accommodations

and vacation homes for lease or sale.

The deed conveyed the land, buildings and improvements as described in Schedule

A. The restrictions mentioned in the Financial Order and Agreement to Purchase

were described in greater detail in the Release Deed as follows:

Timber shall not be harvested from parcels FIRST and

SECOND, hereby conveyed, except (1) where necessary for trails, lifts,

snow-making facilities, construction of transient accommodations and

vacation homes for lease or sale, and all related improvements,

including roadways, serving the same and the Ski Area and resort, (2)

for firewood or lumber for such resort and improvements, and (3) for

the harvest of dead or dying timber and blowdowns.

This conveyance is conditioned upon the continued public use of

the Ski Area highlighted on attached Schedule B, which Ski area

includes only the ski trails and lift lines in existence as of the date hereof

and further listed on Schedule C hereof.

Schedule C listed a total of 17 ski trails and lift lines, designated A through Q. The

lifts were described as: 3000' T-Bar (C); 2000' T-Bar (F); 6000' Double Chair Lift

(N), and; Pony Lift (Q). The ski trails were designated by specific names.

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It is significant to note that prior to the final conveyance of the property, and

as part of the negotiations between the State and BSMC, the latter sought to have a

provision included that "the restrictions will be removed if after ten years, use of the

property as a ski area is deemed to be uneconomical to operate." See Exhibt V to

Vogel Affidavit. This proposed provision was not accepted by the State.

At the time of the conveyance to BSMC, the State of iVlaine retained

approximately 2 % acres at the summit of Big Moose iVIountain (the Summit Parcel),

which abuts the Resort. Additional parcels of land were acquired by the State that

comprise the Little Moose Unit of public reserved lands. Together with the Summit

Parcel, the Little Moose Unit constitutes a one-mile shared boundary with the Resort.

BSMC filed for bankruptcy in 1990. Fleet Bank foreclosed on the property

and conveyed it to the Trustees of the Big Squaw iVIountain Realty Trust. That deed

of conveyance was virtually identical to the 1986 Release Deed and contained the

restrictions and conditions set forth above. In 1995, the remaining Trustee of the

Realty Trust conveyed the Resort to The Mountain, Inc., (now known as Moosehead

Mountain Resort - MMR) for the sum of $500,000, also below its market value at

the time. The 1995 deed to MMR is also virtually identical to the 1986 and 1990

deeds and restates in full the restrictions and conditions quoted above. MMR is

owned 100% by James Confalone. OFLC, which owns property abutting the Resort,

is owned by ~fr. Confalone and his wife, Karen.

In 2004, the 1967 Stadeli double chair lift (Non Exhibit C) was taken out of

service following an accident in which four people were injured. That double

chairlift has not operated since. MMR has not replaced the lift serving the upper

mountain trails. The lower mountain was also closed for a few seasons prior to

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2013.2 In 2006, MlVIR mortgaged the property to secure a $6,350,000 loan from

Machias savings Bank (the MSB loan). Although the loan proceeds would have

more than covered the cost of repairing or replacing the lift serving the upper

mountain, the loan was ptimarily used to refinance prior indebtedness on OFLC

property and the Resort and to pay other debts.

In 2010-2011, an agent acting on behalf of Mr. Confalone, retained a logging

company to harvest timber on the property owned by OFLC. The stumpage value

of the harvested timber was paid directly to Machias Savings Bank to make interest

payments on the $6,350,000 loan. At least some of the timber harvested on OFLC

property was harvested within the D-GN subdistrict without a permit from the Land

Use Planning Commission. In addition, the logging company crossed the property

line onto the Resort and harvested timber within a D-GN and 1\11-GN subdistrict, also

without a permit from the Commission. The areas where the timber was harvested

on the Resort were within the parcels FIRST and SECOND as described in the 1986

and subsequent deeds. It is undisputed that the estimated mill value of the timber

harvested within the D-GN subdistrict was $136,277.64.

DISCUSSION

Summary judgment is appropriate if, reviewing the evidence in the statements

of fact and record references in the light most favorable to the non-moving pa11y,

there is no genuine issue of material fact and the moving party is entitled to judgment

as a matter of law. M.R. Civ. P. 56(a), (c); Platz Assocs. v. Finley, 2009 IVIE 55, ~

10, 973 A.2d 743 (internal citations omitted). A fact is material if "it has the

potential to affect the outcome of the suit." Id. "A genuine issue of material fact

'Since at least 2013, the Friends of the Mountain, a non-profit organization, have leased the

Resort and have operated the lower mountain only on a limited basis. As a result, the condition of

the lower mountain has improved. The condition of the upper mountain, however, has continued

to deteriorate.

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exists when the fact finder must choose between competing versions of the truth."

Id. To withstand a motion for summary judgment, the non-moving party must

present sufficient admissible evidence to establish a prima facie case for each

element of the claim or defense. Watt v. UniFirst Corp., 2009 ME 47,, 21, 969

A.2d 897.

COUNT!

The Land Use Planning Commission (Commission) is "the planning and

zoning board for the unorganized areas and deorganized areas in the State." 12

M.R.S. §§ 681, 682(1), 683-A. The Commission has zoned the unorganized areas

into various zoning subdistricts and prescribed land use standards for each

subdistrict. 12 M.R.S. § 685-A(l) & (3); 01-672 C.Nl.R. ch. 10. "A person may not

commence any construction or operation of any development without a permit

issued by the commission," except as otherwise provided by statute or rule. 12

M.R.S. § 685-B(l)(C). See also 12 M.R.S. § 682(7) (definition of development).

Timber harvesting is a "development" that requires a permit in the D-GN subdistrict.

01-672 C.M.R. ch. 10, § 2l(C)(3)(C)(22). Timber harvesting is defined to mean

"[t]he cutting and removal of trees from their growing site, and the attendant

operation of mobile or portable chipping mills and of cutting and skidding

machinery, including the creation and use of skid trails, skid road, and winter haul

roads, but not the construction or creation of land management roads." 01-672-

C.M.R. ch. 10, § 2(207).

Mr. Confalone, as the landowner, and S.D.R. Logging as his designated agent,

submitted a Forest Operations Notification (FON) to conduct a timber harvest from

January 12, 2010 to January 12, 2012, on OFLC property abutting the Resort.

According to the FON, Mr. Confalone and S.D.R. Logging did not propose to

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harvest timber within the D-GN subdistrict on OFLC property. 3 In 2010 or 2011

S.D.R. Logging harvested timber within the D-GN subdistrict on OFLC property

and within the D-GN subdistrict on the Resort. A pennit was not obtained from the

Commission to conduct such timber harvesting within the D-GN subdistrict on

OFLC's property or on ~he Resort property. As a result, those timber harvesting

activities violated 12 NLR.S. § 685-B(l)(C) and the Commission rules. As the

landowners of the property on which the timber harvest occurred without the

required permit, OFLC and MMR are liable for those statutory and rule violations.

The Affidavit of Debra Kaczowski establishes the Plaintiffs' entitlement to summary

judgment on this count of the complaint. The Defendants have not generated a

genuine issue of material fact that they have violated state law and Commission rules

by conducting timber harvesting in the G-NP subdistrict without a permit.

The Plaintiffs are entitled to summary judgment on Count I of the complaint.

Title 12 M.R.S. § 685-C(8) provides for a civil penalty payable to the State "of not

more than $10,000 for each day of violation.'' The summary judgment record is not

sufficient, however, for the court to determine how many days of violation occurred

with the timber harvesting within the D-GN subdistrict as alleged in Count I, or what

amount the State is seeking as a penalty. A further hearing will be necessary for the

court to determine the appropriate civil penalty.

COUNTS II AND III

The State Plaintiffs have argued that the deed restrictions at issue here may be

enforced against MMR as covenants in gross, covenants appurtenant and/or as

, There is a mystery of sorts surrounding the FON. Question 16(a) on the FON asks for a list

of the zones where harvesting will occur. D-GN is included in the zones to harvested, but it was

crossed out and the words "remove D-GN" written above the box. The summary judgment record

provides no evidence as to who made the cross-out or who wrote the "remove D-GN" language.

Regardless of who made these changes in the FON, no evidence was presented that any permit

was obtained to allow harvesting in the D-GN subdistrict.

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equitable servitudes. A covenant in gross "means that the benefit or burden of a

servitude is not tied to ownership or occupancy of a particular unit or parcel of

land."4 Lynch v. Town of Pelham, 104 A.3d 1047, 1053 (N.H. 2014). The State

Plaintiffs acknowledge that, historically, there had to be a benefiting parcel in order

for a covenant to be enforced at law against the burdened parcel. Moreover, all

parties seem to agree that whether a covenant in gross can "run with the land" where

the benefit is personal (non-transferable), is a question of first impression in Maine. 5

See Andersen v. Bangor Hydro-Electric Company, supra.

On this issue, the State Plaintiffs point out that the modem and better view is

that the common law requirement that there must be an abutting, benefitted parcel

in order to enforce deed restrictions, is arbitrary, obsolete and of little practical value

today. See Restatement (Third) of Property: Servitudes §2.6, Reporter's Notes and

Comments. Moreover, the Plaintiffs emphasize that even if the common law

requirement of an abutting parcel is still viable generally, it has no applicability to

the sovereign. Restatement (Third) of Property: Servitudes §2.18. Cf. Bennett v.

Commissioner ofFood & Agriculture, 576 N.E.2d 1365, 1366 (Mass. 1991) ("Where

the beneficiary of the restriction is the public and the restriction reinforces a

legislatively stated public purpose, old common law rules barring the creation and

enforcement of easements in gross have no continuing force."). In the court's view,

the common law requirement that there be an abutting, benefitted parcel in order for

a covenant in gross to run with the land, makes no sense when the State is acting to

• A covenant appurtenant, by contrast, exists where the rights and obligations of the servitude

are tied to a particular parcel or unit of land. Lynch v. Town of Pelham, 104 A.3d at 1053.

'In Stickney v. City of Saco, 2001 ME 69, ~ 32, 770 A.2d 592 the Law Court noted that an

easement in gross is a personal right and generally terminates upon the death of the individual for

whom it was created. In Lynch v. Town of Pelham, supra the court indicated that a covenant in

gross can be either personal or could run with the land, meaning it passes automatically to

successors.

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impress on land it formerly owned public servitudes and covenants that are designed

to benefit the public indefinitely .6

"For the burden of a restrictive covenant to run at law the covenant must (1)

touch and concern the land; (2) be intended to run by the original parties; and (3)

there must be privity of estate." Anderson v. Bangor Hydr-Elec. Co. 2012 WL

10467424, at *2 (Me. Super. Ct) (09/21/2012) (Anderson, J.). As observed in Stern

v. Metro. Water Dist. ofSalt Lake & Sandy, 274 P.3d 935, 947 (Ut. 2012), to touch

and concern the land means that the covenants "must be of such character that [their]

performance or nonperformance will so affect the use, value, or enjoyment of the

land itself that it must be regarded as an integral part of the property." (citation

omitted). The deed restrictions at issue here meet that standard because they limit

the use of the property and affect its market value, among other things. The element

that there must be privity of estate is also satisfied here because rvIMR is the

successor-in-interest of BSMC and took ownership of the property subject to the

same deed restrictions.

1\/loreover, it is clear from the 1986 deed and the Financial Order authorizing

the sale of the Resort that the State and BSMC intended the deed restrictions to run

with the land. The deed restrictions, which use the passive voice and do not

reference BSMC, were intended to fulfill the requirements of the Financial Order

preventing waste of the property's timber resources and enstiring that the specifically

identified ski rails and lift lines would remain available for public use. Those

purposes could not be achieved if the deed restrictions were merely personal to

BSMC. Even if there were some ambiguity in the intent of the State and BSMC that

the restrictions were to run with the land, any ambiguity should be resolved in favor

• Nevertheless, the State Plaintiffs contend that if the State is required to have an abutting,

benefitted parcel in order to enforce the deed restrictions, it does in fact own such a parcel, namely,

the Summit Parcel. The court agrees.

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of the State. Great Cove Boat Club v. Bureau of Public Lands, 672 A.2d 91, 94 (Me.

1996) (public grants are "strictly construed" against the grantee); Cushing v. State,

434 A.2d 486,500 (lVle. 1981). See also Home/or Aged Women v. Commonwealth,

89 N .E. 124, 129 (Mass. 1909).

The language of the public use restrictions in the deeds conveying the Resort

to the State, coupled with the 1986 RFP, the purchase agreement, the financial order,

internal State communications and communications between BSMC and the State -

particularly BSMC's request (rejected by the State) that the public use restrictions

be limited to ten years - reinforce the language of the deed itself, namely, the State

and BSMC intended the timber harvesting restriction and the public use restriction

to run with the land and to last indefinitely. Because the State may create

enforceable covenants in gross, and because the summary judgment record

establishes that the timber harvesting and public use restrictions touch and concern

the Resort, were intended by the State and BSMC to run with the land, and that

privity of estate exists, the deed restrictions are enforceable against MMR at law.

The deed restrictions are also enforceable in equity because the restrictions:

( 1) touch and concern the land; (2) were intended to run with the land by the original

parties, and; (3) the successor-in-interest (MMR) to the burdened land had notice of

the restrictions. See Anderson, 2012 WL 10467424, *3. Moreover, the deed

restrictions are reasonable. See Dale Henderson Logging, Inc., 2012 ME 99,, 27,

48 A .3d 233. The restrictions are reasonable because: they do not require

maintenance or operation of the hotel; they do not require any additional ski trails or

lifts; they do not require that public access be free of charge, and; they permit timber

harvesting for specified reasons and purposes related to the operation of the Ski Area

and the Resort.

Finally, the summary judgment record establishes that MMR has breached the

timber harvesting and public use resttictions. During 2010-2011, timber was

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harvested from several distinct areas on the Resort property, each of which was

within parcel FIRST and/or SECOND as those parcels are described in the 1986 and

1995 deeds. Accordingly, and because the summary judgment record does not

establish that the timber harvesting that was done fell within one or more of the

exceptions to the timber harvesting restrictions, the State is entitled to summary

judgment on Count II of the complaint. See Androkites v. White, 2010 iVIE 133, ~

19, 10 A.3d 677 ("[I]n a civil case, the party to a proceeding who has better access

to information and is seeking the benefit or protection of a law has the burden of

proof on that point.").

Regarding the public use restrictions, the lift serving the upper mountain has

not operated since 2004, nor has it been replaced with another lift serving the upper

mountain trails as delineated and depicted in Exhibits B and C to the 1986 deed and

in subsequent deeds. The lower mountain was closed for several seasons prior to

2013, at which time the non-profit Friends of the iVIountain began operating the

lower mountain only on a limited basis. Such use, particularly the complete closure

of the upper mountain, falls short of providing the public continued access to the

trails and lift lines expressly depicted in Exhibits B and C to the deed. As a result,

the State is entitled to summary judgment on Count III of the complaint.

WAIVER, LACK OF DEMAND AND LACHES

MMR has raised the defense of waiver, claiming that the State waived its right

to sue to enforce the deed restrictions by not rigorously enforcing them against prior

owners of the Resort. This argument is unconvincing. First, the defense of waiver

was not raised as a defense in MMR's answer. Second, waiver requires a clear and

unequivocal abandonment. Here, the fact that the State allowed time to pass to

permit Ml\!IR to voluntarily come into compliance with the deed restrictions does

not establish a waiver.

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Next, MMR claims that the State wa~ required to make a demand upon it to

comply with the deed restrictions prior to commencing suit. These restrictions are

public use restrictions and, as such, the right of the State to seek to enforce them is

not dependent on a formal demand.

Finally, MMR asserts the equitable defense of laches. The Law Court has

recently reaffirmed that "[l]aches cannot be predicated on passage of time alone."

Quirk v. Quirk, 2020 l\lIE 132, ~ 12, _A.3d _ . The delay must be unreasonable

and unexplained. Moreover, there must be a showing of prejudice to the adverse

party and it must be inequitable to enforce the right. The passage of time involved

here is not unreasonable when it comes to the enforcement of public use restrictions.

Moreover, l\lIMR has not shown that it has been prejudiced in any way.

REMEDIES

Summary judgment will be granted to the State Plaintiffs on Counts I, II and

III of the complaint. Since Count V (Unjust Enrichment) was pled in the alternative

to Counts II and Ill, it is now moot.

As to Count I, the court finds that MMR and OFLC, Inc. engaged in timber

harvesting within D-GN subdistricts without a permit from the Land Use Planning

Commission in violation of 12 M.R.S. § 685-B(l)(C). A further hearing is necessary

for the court to determine the appropriate civil penalty pursuant to 12 M.R.S. § 685-

C(8).

As to Count II, the court declares that Ml\lIR violated the timber harvesting

deed restrictions and the State is entitled to the estimated mill value of the timber

harvested in violation of those deed restrictions, namely, $136,277.64.

As to Count III, the court declares that MMR is in violation of the public use

deed restrictions. The State Plaintiffs have requested the court to order MMR to pay

into an escrow account, administered by the State, an amount sufficient to bring the

Resort into compliance with the public use restrictions, and to post a performance

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bond of $1,000,000 conditioned upon MMR bringing the Resort into compliance

with the public use restrictions. An additional hearing will be necessary for the court

to receive evidence and information from the parties as to the appropriate amount to

be deposited into an escrow account and the size of any performance bond to be

posted by lVIMR.

CONCLUSION

The entry is:

Plaintiffs' IVlotion for Summary judgment as to Counts I, II and III of the

complaint is GRANTED. Count V of the complaint is MOOT.

The Clerk shall consult with counsel for the parties and shall schedule a

hearing, via video, to address: (a) the amount of any civil penalty under Count I, and

(b) the amount MMR will be required to deposit into an escrow account and the size

of any petformance bond to be posted by MMR.

The Clerk is directed to incorporate this Order into the docket of this case by

reference in accordance with M.R. Civ. P. 79(a).

Date: November 17, 2020

'.:ntered on the docket I/ f I ] I JQj_·c)

I t Justice, Superior Court

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STATE OF MAINE SUPERIOR COURT

KENNEBEC, SS. CIVIL ACTION

DOCKET NO. CV-2016-147

STATE OF MAINE,

JANET T. MILLS, ATTORNEY

GENERAL, BUREAU OF PARKS

AND LANDS, and LAND USE

PLANNING COMMISSION,

Plaintiffs

DECISION AND ORDER

V.

MOOSEHEAD MOUNTAIN

RESORT and OFLC, INC.,

Defendants

and

CARMEN REBOZO FOUNDATION,

INC.,

Party-in-Interest

INTRODUCTION

This matter is before the court on the motions of Defendant Moosehead

Mountain Resort (MMR) for judgment on the pleadings and for summary judgment

as to Counts II, III, IV and V of the complaint. Party-in-Interest Carmen Rebozo

Foundation, Inc., has joined in the motion for summary judgment. The Plaintiffs

have informed the court that they are no longer pursuing Count IV of the complaint

alleging breach of contract, and the court considers this cause of action withdrawn.

This action was commenced by the Plaintiffs 1 on August 1, 2016 with the

filing of a five-count complaint seeking to enforce what are described as "deed

restrictions" and "public servitudes" that allegedly burden the land of MMR on Big

Moose Mountain (f/k/a Big Squaw Mountain) in Greenville. The land in question

was formerly owned by the State of Maine and was conveyed to MMR's predecessor

in title in 1986. The complaint also seeks monetary damages.

Count I alleges that Defendants MMR and OFLC, Inc., conducted timber

harvesting within a General Development subdistrict without first obtaining a permit

from the Land Use Planning Commission. Count I is not included in MMR's

motions.

Count II alleges that MMR conducted timber harvesting in violation of certain

deed restrictions applicable to the land owned by MMR, which were imposed for the

benefit of the State of Maine.

Count III alleges that MMR has failed to comply with certain public servitudes

imposed on the property owned by MMR, including that designated ski trails and

lifts be subject to "continued public use."

Count V seeks damages on a theory of unjust enrichment.

•The Plaintiffs are the State of Maine, the Attorney General for the State of Maine, the Bureau of Parks

and Lands, and the Land Use Planning Commission.

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MMR filed a timely answer and counterclaim on August 25, 2016. In its

counterclaim MMR alleges that the deed restrictions do not apply to it because they

"do not run with the land."

On December 27, 2017, MMR moved for summary judgment and for

judgment on the pleadings. 2 The Plaintiffs filed their opposition on February 28,

2018. Amicus Curiae Town of Greenville and Moosehead Lake Region Economic

Development Corporation filed their joint opposition brief on March 26, 2018.

MMR's reply was filed on April 5, 2018. Oral argument on the motions was held

on April 6, 2018.

FACTUAL BACKGROUND

The following undisputed factual description is based upon the summary

judgment record.

Big Moose Mountain (f/kJa Big Squaw Mountain) began operating as a ski

resort in 1963. Scott Paper Company purchased the ski area in 1970 and operated it

until approximately 1974. In late 1974 the ski area was transferred to the Moosehead

Resort Corporation (MRC), which was wholly owned by the State of Maine. In

1975 MRC conveyed the ski area to the State of Maine and the Bureau of Parks and

Recreation (n/k/a Bureau of Parks and Lands).

, Since matters outside the pleadings were presented and not excluded by the court, the motion for

judgment on the pleadings will be treated as one for summary judgment. M.R.Civ.P. 12(c).

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The State of Maine owned the ski area for over ten years. In May 1986 a

request for proposals was issued and advertised for the sale of the ski area and resort.

Only one proposal was submitted, from the Big Squaw Mountain Corporation

(B SMC). On October 17, 1986 then Governor Joseph E. Brennan approved

Financial Order 04350 F6 authorizing the Director of the Bureau to convey the ski

area and resort to BSMC. The "Statement of Fact" accompanying the Financial

Order acknowledged that "[e]xtensive repair and improvements of the resort facility

are necessary to keep it available to the public and assure its viability as an attractive

and safe resort, benefiting the people of Maine."

The Financial Order described State policy at the time as recognizing that

private capital was "the most appropriate and feasible means of assuring that the

needed repairs and improvements are made in the future." Accordingly, it was

deemed necessary that the property, including the ski area and resort, would be held

in private ownership and that the State's conveyance of the property (and an option

to purchase additional property) "is being done exclusively for public purposes."

The sale to BSMC involved the payment to the State of Maine of $300,000

(well below its market value at the time of between $3 .5 million to $4 million). The

buyer (BSMC) was required to invest $700,000 in improvements to the facility.

Moreover, the Financial Order provided:

The resort and ski area will be sold with restrictions on timber

harvesting to prevent waste, a requirement for continued public use of

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the ski area, and a restriction preventing subdivision and alienation of

the shoreland parcel on Moosehead Lake from the resort property.

The Agreement to Purchase between the State of Maine and BSMC dated

November 5, 1986 recited that the deed to the "Ski Area and Resort" would contain

the "restrictions" referred to above. The Release Deed, also dated November 5,

1986, is at the center of this litigation. The deed emphasizes that the conveyances

of the property and the options to BSMC were "done exclusively for public

purposes." To drive home this point, the deed provides:

Without limiting the definition of 'public purposes,' it is expressly

understood that 'public purposes' shall include the maintenance,

expansion, and operation of the Ski Area and Resort on the premises

hereby conveyed, and the construction of transient accommodations

and vacation homes for lease or sale.

The deed conveyed the land, buildings and improvements as described in Schedule

A. The restrictions mentioned in the Financial Order and Agreement to Purchase

were described in greater detail in the Release Deed as follows:

Timber shall not be harvested from parcels FIRST and

SECOND, hereby conveyed, except (l)where necessary for trails, lifts,

snow-making facilities, construction of transient accommodations and

vacation homes for lease or sale, and all related improvements,

including roadways, serving the same and the Ski Area and resort, (2)

for firewood or lumber for such resort and improvements, and (3) for

the harvest of dead or dying timber and blow downs.

This conveyance is conditioned upon the continued public use of

the Ski Area highlighted on attached Schedule B, which Ski area

includes only the ski trails and lift lines in existence as of the date hereof

and further listed on Schedule C hereof.

5

Schedule C lists 17 ski trails and lift lines .3

It is undisputed that at the time of the conveyance to BSMC, the State of

Maine retained approximately 2 % acres at the summit of Big Moose Mountain (the

Summit Parcel), which abuts the Resort. Additional parcels of land were acquired

by the State that comprise the Little Moose Unit of public reserved lands. Together

with the Summit Parcel, the Little Moose Unit constitutes a one-mile shared

boundary with the Resort.

BSMC filed for bankruptcy in 1990. Fleet Bank foreclosed on the property

and conveyed it to the Trustees of the Big Squaw Mountain Realty Trust. That deed

of conveyance was virtually identical to the 1986 Release Deed and contained the

restrictions and conditions set forth above. In 1995, the remaining Trustee of the

Realty Trust conveyed the Resort to The Mountain, Inc., (now known as Moosehead

Mountain Resort - MMR) for the sum of $500,000, below its market value of $1.1

million to 1.5 million . The 1995 deed to MMR is also virtually identical to the 1986

and 1990 deeds and restate in full the restrictions and conditions quoted above.

The parties agree that when MMR purchased the property in 1995 it had four

(4) lifts operating with trails covering 200 acres, with an operational snowmaking

system. In 2001, however, the hotel was closed and in 2004 the 1967 Stadeli double

'There are other conditions in the Release Deed that pertain to parcel FOURTH, but they are not the

subject of the pending motions.

6

chair lift was taken out of service following an accident in which four people were

injured. That double chairlift has not operated since. Virtually all of the equipment

has been liquidated and there is little equipment to perform summer maintenance.

The trails on the upper mountain have not been maintained since 2004. The pony

tow has also not operated in years.

There is a factual dispute as to whether the Defendant - MMR - harvested

timber on property subject to the timber harvesting restrictions.

DISCUSSION

The Plaintiffs and amici curiae contend that MMR has failed to comply with

the restrictions and conditions in the Release Deed and all subsequent deeds that (1)

require "the continued public use of the Ski Area" as defined and (2) prohibit timber

harvesting on certain conveyed parcels except in limited circumstances. MMR

maintains that the restrictions and conditions of the Release Deed of 1986 are

ineffective, as a matter of law, to bind it because they do not and were not intended

to "run with the land," and do not satisfy the technical requirements for having

restrictive covenants enforceable against a subsequent owner of the property who

was not an original party to the purchase and sale and conveyance. Accordingly,

MMR seeks summary judgment as to Counts II and III of the complaint. MMR also

seeks summary judgment as to Count V (unjust enrichment) because, it claims, the

7

State of Maine never conferred a benefit upon it, an essential element of an unjust

enrichment cause of action.

Summary judgment is appropriate if, reviewing the evidence in the statements

of fact and record references in the light most favorable to the non-moving party,

there is no genuine issue of material fact and the moving party is entitled to judgment

as a matter of law. M.R. Civ. P. 56(a), (c); Platz Assocs. v. Finley, 2009 ME 55, ~

10, 973 A.2d 743 (internal citations omitted). A fact is material if "it has the

potential to affect the outcome of the suit." Id. "A genuine issue of material fact

exists when the fact finder must choose between competing versions of the truth."

Id. To withstand a motion for summary judgment, the non-moving party must

present sufficient admissible evidence to establish a prima facie case for each

element of the claim or defense. Watt v. UniFirst Corp., 2009 ME 47, ~ 21,969

A.2d 897.

A. Counts II and III

With respect to Counts II and III of the complaint MMR argues that it is

entitled to judgment as a matter of law because there is no dominant and servient

parcel of land that is benefitted and burdened by the restrictive covenants. In

advancing this argument MMR is relying upon a traditional view of the law as

explained in Brown v . Heirs of Fuller, 347 A.2d 127 (Me . 1975).

8

In Brown the decedent, Maria Fuller, devised land in Augusta subject to the

restrictions that it remain residential and that no structure be built that was materially

higher than the buildings in existence at the time of her death in 1936. By a series

of conveyances, the property passed to the plaintiff, Brown, who wanted to operate

commercial enterprises on the land. In finding that the restrictions were ineffective,

the Law Court stated:

It has long been thought contrary to public policy, however, to enforce

as an equitable servitude a restriction imposed for the benefit of land in

which, at the time of the origin of the restriction, the person creating it

lacks a legally cognizable interest

Since Maria Fuller did not retain any land that was benefitted by the

conditions in her will, the restrictive covenants could not be enforced against the

subsequent owner of the property. In relying on Brown v. Heirs of Fuller, MMR is

arguing that the restrictions and conditions in the 1986, 1990 and 1995 deeds were

unenforceable from their inception because they did not satisfy the technical

requirements for a restrictive covenant to "run with the land" and be enforceable

against it as a subsequent owner of the property.

"For the burden of a restrictive covenant to run at law 4 the covenant must (1)

touch and concern the land; (2) be intended to run by the original parties; and (3)

, A covenant that is enforceable at law allows for the award of money damages, as opposed to a covenant

that is enforceable at equity but does not permit the awarding of money damages. The latter are referred to

as equitable servitudes. See Lane v. Derocher, 360 A.2d 141, 143 (Me. 1976).

9

there must be privity of estate." Andersen v. Bangor Hydro-Electric Company, 2012

WL 10467424 *2 (September 21 , 2012) (Anderson, J) citing 9 Powell on Real

Property §60:04(2). MMR maintains that the State does not meet all of these

requirements because the State does not own or have a possessory interest in a parcel

of land that is benefitted by the restrictive covenants and, therefore, the covenants

do not "touch and concern" the land and there is no privity of estate.

The Plaintiffs respond by asserting that there are disputed issues of material

fact that preclude the granting of summary judgment in MMR's favor. The Plaintiffs

contend that, at a minimum, there are factual issues as to whether the deed

restrictions qualify as: (1) a conservation easement pursuant to 33 M.R.S. §§476 et

seq; (2) a covenant in gross; (3) a covenant appurtenant, or; (4) an equitable

servitude.

In their opposition to the summary judgment motion the Plaintiffs, for the first

time, raised the issue that the deed restrictions constituted a conservation easement.

Title 33 M.R.S. §476(1) defines a "conservation easement" as

. . . a nonpossessory interest of a holder in real property imposing

limitations or affirmative obligations the purposes of which include

retaining or protecting natural, scenic or open space values of real

property; assuring its availability for agricultural, forest, recreational or

open space use; protecting natural resources ; or maintaining or

enhancing air or water quality of real property.

A governmental body can be a holder of a conservation easement. 33 M.R.S.

§476(2)(A). It can be created in the same manner as other easements are created by

10

means of a written instrument. 33 M.R.S. §477(1). It can be judicially enforced and

both equitable relief and damages may be awarded. 5 33 M.R.S. §478(3). By law, a

conservation easement is valid notwithstanding the fact that: (a) it does not run with

~he land; (b) it is not recognized in common law; (c) it does not touch or concern the

land, or; (d) there is no privity of estate. 33 M.R.S. §§479(1), (3), (6) & (7). Finally,

the statutory scheme regarding conservation easements, which was enacted in 1985,

"applies to any interest created after its effective date which complies with this

subchapter, whether designated as a conservation easement or as a covenant,

equitable servitude, restriction, easement or otherwise." 33 M.R.S. §479-A(l).

In view of the foregoing, the Plaintiffs assert that summary judgment cannot

be granted to MMR because a genuine issue exists as to whether the deed restrictions

constitute conservation easements. MMR appears to agree. See MMR Reply

Memorandum at 5-7.

In addition, the Plaintiffs have argued that the deed restrictions at issue here

may be enforced against MMR as covenants in gross, covenants appurtenant and/or

equitable servitudes.

, In a previous order, the court denied the Town of Greenville's request to intervene in this matter. At

that time, however, none of the participants raised the issue that the deed restrictions involved here might

qualify as a conservation easement under Title 33. The law on conservation easements has a provision

specifically addressing the permissive intervention of a political subdivision of the State in an action

affecting a conservation easement. 33 M.R.S. §478(2).

11

A covenant in gross "means that the benefit or burden of a servitude is not tied

to ownership or occupancy of a particular unit or parcel of land." 6 Lynch v. Town of

Pelham, 104 A.3d 1047, 1053 (N.H. 2014). The Plaintiffs acknowledge that,

historically, there had to be a benefiting parcel in order for a covenant to be enforced

at law against the burdened parcel. See Plaintiffs' Opposition to Summary Judgment

at 10. Moreover, all parties seem to agree that whether a covenant in gross can "run

with the land" where the benefit is personal (non-transferable), is a question of first

impression in Maine. 7 See Andersen v. Bangor Hydro-Electric Company, supra.

On this issue, the Plaintiffs point out that the modem and better view is that

the common law requirement that there must be an abutting, benefitted parcel in

order to enforce deed restrictions, is arbitrary, obsolete and of little practical value

today. See Restatement (Third) of Property: Servitudes §2.6, Reporter's Notes and

Comments. Moreover, the Plaintiffs emphasize that even if the common law

requirement of an abutting parcel is still viable generally, it has no applicability to

the sovereign. Restatement (Third) of Property: Servitudes §2.18. Cf. Bennett v.

Commissioner ofFood & Agriculture, 576 N.E.2d 1365, 1366 (Mass. 1991) ("Where

"A covenant appurtenant, by contrast, exists where the rights and obligations of the servitude are tied to

a particular parcel or unit of land. Lynch v. Town of Pelham, 104 A.3d at 1053.

' In Stickney v. City of Saco, 2001 ME 69, ~ 32, 770 A .2d 592 the Law Court noted that an easement in

gross is a personal right and generally terminates upon the death of the individual for whom it was created.

In Lynch v. Town of Pelham, supra the court indicated that a covenant in gross can be either personal or

could run with the land, meaning it passes automatically to successors.

12

the beneficiary of the restriction is the public and the restriction reinforces a

legislatively stated public purpose, old common law rules barring the creation and

enforcement of easements m gross have no continuing force.").

Alternatively, or perhaps additionally, the Plaintiffs contend that if the State

is required to have an abutting, benefitted parcel of land in order to enforce the deed

restrictions, it does in fact own such a parcel, namely, the Summit Parcel.

Accordingly, the Plaintiffs contend that the deed restrictions qualify as covenants

appurtenant. MMR, on the other hand, claims that simply owning a nearby lot is

insufficient to satisfy the "benefit and burden"/ "touch and concern" requirement.

MMR's reply at 12.

Finally, the Plaintiffs allege that the deed restrictions are enforceable as

equitable servitudes that may be enforced as a matter of equity since they (1) touch

and concern the land, (2) were intended to run with the land by the original parties,

and (3) the successor-in-interest (MMR) to the burdened land had notice of the

restrictions. See Andersen, 2012 WL 10467424, at *3. The Plaintiffs also maintain

that the deed restrictions are reasonable. See Dale Henderson Logging, Inc. v.

MDOT, 2012 ME 99, ~ 27, 48 A.3d 233.

For its part, MMR insists that the Plaintiffs cannot meet the "touch and

concern" element because it does not own an abutting parcel that was intended to be

benefited by the restrictions.

13

(

The court concludes that there are genuine issues of material fact that remain

unresolved at this stage of the litigation such that summary judgment cannot be

granted to MMR on Counts II and III.

As noted above, the Plaintiffs and MMR appear to be in agreement that the

Plaintiffs' claim that the deed restrictions constitute conservation easements is one

that survives MMR' s summary judgment challenge.

Whether the deed restrictions also qualify as a covenant in gross that "runs

with the land" cannot be resolved on summary judgment either. It is an open

question whether the common law requirements normally applicable to covenants in

gross should be imposed upon the State when it purports to create public servitudes

on land it has conveyed for public purposes. In this court's view, they should not.

MMR insists that "touch and concern" requires an abutting, benefitted parcel. But

that requirement makes no sense when the State is acting to impress on land it

formerly owned public servitudes and covenants that are designed to benefit the

public indefinitely. As noted in Stern v. Metro. Water Dist. of Salt Lake & Sandy,

274 P.3d 935,947 (Ut. 2012), to touch and concern the land means that the covenants

"must 'be of such character that [their] perlormance or nonperlormance will so affect

the use, value, or enjoyment of the land itself that it must be regarded as an integral

part of the property."' (citation omitted). The deed restrictions at issue here would

seem to meet that standard. The element that there must be privity of estate may be

14

satisfied here because MMR is the successor-in-interest of BSMC and took

ownership of the property subject to the same deed restrictions. The requirement that

the original parties intended the deed restrictions to run with the land raises a

question of fact that cannot be determined on summary judgment. 8

The same conclusion applies as to whether the deed restrictions are covenants

appurtenant or equitable servitudes. Assuming the State needs an abutting,

benefitted parcel, there is a question of fact whether the Summit Parcel and the Little

Moose Unit satisfy that need. Moreover, the intent of the original parties that the

deed restrictions run with the land and be enforceable against successors-in-interest

is a factual question.

On the question of the parties' intent, MMR points to the language in the

Release Deed specifying that: "This conveyance is conditioned upon the continued

public use of the Ski Area ...." MMR contends that this language shows that the

deed restrictions were limited to the transaction between the State of Maine and

BSMC in 1986 and were not intended to run with the land. Although it is true that

the Release Deed did not use the phrase "run with the land" or similar language in

describing the deed restrictions, that is not controlling or determinative. Stickney v.

, MMR argues that if the comt is inclined to recognize covenants in gross, it should apply the same rule

that applies to easements in gross as articulated in Sabattus v. Bilodeau, 391 A.2d 357 (Me. 1978). That

case, however, is distinguishable. In Sabattus the town had the right, but not the duty, to maintain and

repair a dam. Here, it is at least arguable that the deed restrictions require MMR to do what is necessary to

maintain the "Ski Area" as defined for "continued public use."

15

City of Saco, 2001 ME 69, ~ 36. The ultimate goal is to give effect to the intent of

the original parties. The use of the phrase "this conveyance" is ambiguous and,

therefore, extrinsic evidence of the parties' intent may be considered. Based on the

summary judgment record, the court cannot say, as a matter of law, that the intent of

the parties was to limit the deed restrictions to the singular transaction between the

State and BSMC in 1986.

One additional aspect of MMR's summary judgment motion must be

addressed. In Count III of the complaint (~ 81) the Plaintiffs have alleged that MMR

has violated the public servitudes that burden the property in question by, among

other things, failing "to maintain, repair and operate the resort's hotel, base lodge,

ski area, and ski lift that serves the upper portion of Moose Mountain."

MMR asserts that, as a matter of law, whatever deed restrictions are

enforceable against it do not include the obligation to maintain, repair and/or operate

the resort, a hotel or the base lodge. Rather, MMR contends that the deed restrictions

are limited to the prohibition against timber harvesting (except for the allowable

purposes) and "the continued public use of the Ski Area highlighted on attached

Schedule B, which Ski area includes only the ski trails and lift lines in existence as

of the date hereof and further listed on Schedule C hereof."

In its opposition to the summary judgment motion, and during oral argument,

the Plaintiffs did not disagree with MMR' s position on this issue. It appears clear to

16

the court that the deed restrictions/conditions do not include the obligation to

maintain, repair and operate the Resort, the resort hotel or the base lodge.

Maintenance of the Resort and the construction of transient accommodations and

vacation homes for lease or sale, were expressly declared to be "public purposes"

permitting the conveyance of State-owned property to a private owner at a below

market pnce. But those activities were not included m the deed

restrictions/conditions that are arguably enforceable against MMR. Since there is

no genuine issue of material fact on this issue and MMR is entitled judgment as a

matter of law on this point, summary judgment will be granted to the extent that the

deed restrictions/conditions in the Release Deed do not include the obligation to

'

maintain, repair or operate the Resort, resort hotel or the base lodge. In all other

respects the motion for summary judgment as to Counts II and III will be denied.

B. Count V (Uniust Enrichment)

To prevail on a claim for unjust enrichment a plaintiff must show that: (1) it

conferred a benefit on the other party; (2) the other party had appreciation or

knowledge of the benefit and; (3) the acceptance or retention of the benefit was under

such circumstances as to make it inequitable for it to retain the benefit without

payment of its value. Forrest Assocs. v. Passamaquoddy Tribe, 2000 ME 195, ~ 14.

Unjust enrichment permits recovery for the value of the benefit conferred "when, on

17

the grounds of fairness and justice, the law compels performance of a legal and moral

duty to pay ...." Paffhausen v. Balano, 1998 ME 47, ~ 6.

As the Plaintiffs recognize, its unjust enrichment claim only becomes meaningful

if it fails on its claims under Counts II and III. Nevertheless, MMR argues that it is

entitled to summary judgment on Count V because the State did not confer any

benefit on it.

Summary judgment on Count V is not appropriate at this point in the case .

Whether the State conferred a benefit on MMR and what that benefit was, are

questions of fact. Given the unique nature of the property and the public purposes

for which it was conveyed, it is a question of fact whether MMR's subsequent

purchase of the property with knowledge of the potential public servitudes on it,

constitutes a benefit. Moreover, it is a question of fact as to whether it is inequitable

for MMR to retain the benefit, while not complying with the public servitudes,

without payment for the value of the benefit conferred. Because there remain

genuine issues of material fact with respect to the unjust enrichment cause of action,

summary judgment will be denied as to Count V.

CONCLUSION

The entry is:

The Motion for Summary Judgment filed by Defendant Moosehead Mountain

Resort is DENIED as to Counts II and III of the Complaint except to the extent that

18

the deed restrictions/conditions in the Release Deed do not include the obligation to

maintain, repair or operate the Resort, the resort hotel or the base lodge.

The Motion for Summary Judgment filed by Defendant Moosehead Mountain

Resort is DENIED as to Count V of the Complaint.

The Clerk is directed to incorporate this Order into the docket of this case by

reference in accordance with M.R. Civ. P. 79(a).

Date: May 7, 2018 '

William R. Stokes

Justice, Superior Court

19