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Hoffman v. Bob Law, Inc.

Supreme Court of South Dakota

December 14, 2016

2016 S.D. 94
BOB LAW, INC. and BOB LAW, individually, Defendants and Appellants. KENNETH HOFFMAN, Plaintiff and Appellee,



          DANIEL K. BRENDTRO DENNIS DUNCAN AMANDA W. ENGEL of Zimmer, Duncan & Cole, LLP Sioux Falls, South Dakota Attorneys for plaintiff and appellee.

          MARK D. FITZGERALD RONALD E. TEMPLE of Fitzgerald, Vetter, Temple & Bartell Norfolk, Nebraska Attorneys for defendants and appellants

          ZINTER, Justice

         [¶1.] A homeowner whose fixtures encroached on adjoining landowner's property sued for an implied easement to keep the encroachments on the adjoining property. The adjoining landowner counterclaimed for trespass and sought a mandatory injunction to compel removal of the encroachments. The circuit court denied the homeowner's claim for an implied easement. On the adjoining landowner's counterclaim, the court ruled the encroachments constituted a trespass. Nevertheless, the court denied the adjoining landowner's request for a mandatory injunction to remove the encroachments. The court awarded the adjoining landowner nominal damages and ordered removal if the encroachments became subject to relocation in the future. Adjoining landowner appeals the denial of its request for the mandatory injunction and the order allowing the encroachments to remain until they are relocated in the future. We affirm in part, reverse in part, and remand.

         Facts and Procedural History

         [¶2.] Bob Law, Inc. (the "Corporation"), owned by Bob Law, is an excavation and land development company that owned a real estate development west of Yankton known as the Crestview Addition. The Corporation entered into an agreement with Rick DeJager to jointly develop Crestview. DeJager was the general contractor responsible for the construction and sale of the homes and lots. The Corporation was to grade the roads and do all the dirt and excavation work. The development was surveyed, and seven pins were placed to mark the boundaries of Lot 3. The pin marking the southwest corner of the lot was subsequently lost. Lot 3 is burdened by a ten foot utility easement on the west side. The Corporation owns the unplatted lot west of Lot 3, which is referred to by the parties as Lot 4.

         [¶3.] Construction on Lot 3 began in October 2003 when the Corporation still owned the lot. The Corporation excavated the basement for a house and it graded a dirt driveway. Due to construction difficulties, the Corporation placed the basement twenty feet west of its planned location.[1] In November 2003, the Corporation directed an electrical contractor to place a transformer on the property line between Lots 3 and 4. However, the transformer was mistakenly placed on Lot 4, outside of the utility easement, fourteen feet west of the property line. Both the Corporation and DeJager continued building under the mistaken belief that the transformer marked the property line.

         [¶4.] After the basement was excavated, the Corporation roughed in a water line. A septic system was also installed. The parties disputed when the system was installed and who installed it. After the Corporation conveyed Lot 3 to DeJager and his wife on December 30, 2003, DeJager installed a concrete retaining wall, concrete pad, and lamp pole.[2] He also poured concrete for the driveway that had been graded by the Corporation. Parts or all of these improvements were mistakenly located on Lot 4 instead of Lot 3. DeJager and his wife lived in the home until 2009 or 2010 when they defaulted on their loan and declared bankruptcy. Lot 3 was subsequently conveyed to the bank that held the mortgage.

         [¶5.] In May 2011, Appellee Kenneth Hoffman entered into an agreement to purchase Lot 3 from the bank. Although Hoffman could have had the lot surveyed at no expense, he was in a hurry to close on the home and decided to forego a survey. Closing took place on June 10. Hoffman testified that the day after closing, Law contacted Hoffman and informed him that there was an encroachment on Lot 4.[3] The two met on June 12. Law measured the property lines and noted the encroachments on Lot 4. After the meeting, Law proposed to move the septic system's leach field for $150, 000 and sell Hoffman an easement for the septic tank for $25, 000.[4] Hoffman testified that when he did not immediately accept this proposal, Law threatened to dig out the septic system.

         [¶6.] Hoffman obtained a temporary restraining order (and later a preliminary injunction) prohibiting Law and the Corporation from removing the septic system. Hoffman's underlying complaint claimed that he had acquired an implied easement on Lot 4 for the encroachments. The Corporation counterclaimed for trespassing.[5] The Corporation sought money damages (rental value and diminution in value of the lot) as well as a mandatory injunction to remove the encroachments.

          [¶7.] A two-day court trial was held in December 2015. A survey showed that the septic tank, propane tank, concrete pad for the propane tank, lamp pole, and portions of the concrete retaining wall and driveway encroached on a small portion of Lot 4. The circuit court found that the septic system was installed by the Corporation before the lot was conveyed to DeJager and that DeJager installed the other encroachments.

         [¶8.] The court denied Hoffman's claim for an implied easement, a ruling that he does not appeal.[6] On the Corporation's counterclaim, the court ruled that the encroachments constituted a trespass. But because the Corporation failed to present evidence of damages, [7] the court awarded $1 in nominal damages. The court also denied the Corporation's request for an injunction. It reasoned that the Corporation had an adequate remedy at law (damages); the encroachments were on a small sliver of land that could not be used due to the utility easement; Hoffman did not install the encroaching items; and the cost to remove the encroachments would be disproportionate to any benefit to be gained by the Corporation. The court further ordered that the encroachments would not be ...

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