Owners’ association could not act unilaterally to terminate an easement
The South Carolina Court of Appeals reversed an easement decision from the Charleston County Circuit Court last week and remanded the case for a new trial on compensatory and punitive damages in a controversy surrounding a drainage easement on Seabrook Island.*
The case involved a dispute between two couples, the Ralphs and the McLaughlins, who owned residential lots on Seabrook Island. In 1984, developer E.M. Seabrook, Jr. recorded a plat depicting blocks 32 and 33 of Seabook Island. To alleviate draining issues concerning several lots in block 32, the plat reflected a 20-foot drainage easement running between lots 21 and 22 and depicted a no-build area across the back of the lots.
The Ralphs bought lot 23 in 1997. The McLaughlins’ predecessors bought Lot 22 a year or so later and, in 2002, approached the Seabrook Island Property Owners Association (SIPOA) about eliminating the easement and no-build area on their lot. The SIPOA agreed and prepared a new plat entitled “Plat Showing Abandonment of an Existing 20’ Drainage Easement, Lot 22, Block 32”. The plat also indicated the no-build area was to be abandoned.
The McLaughlins bought Lot 22 later in 2002. In 2006, they approached SIPOA’s Architectural Review Board about building a house. The plans were approved with several stipulations, including the requirement that the McLaughlins assume the responsibility for the underground drainage line and the abandoned draining easement.
Over the course of the next year the McLaughlins sought financing for their construction. At some point, they received a call from the chair of the SIPOA legal committee indicating there were issues concerning the drainage pipe. A meeting was scheduled for the owners of lots 21 – 28 to discuss the easement, and several neighbors objected to the removal of the pipe because of the potential adverse effects on drainage.
The neighbors continued to express concerns, and on October 22, 2008, SIPOA sent a letter rescinding the resolution abandoning the easement. In December, the McLaughlins emailed the neighboring property owners asserting that there was no easement on their property, stating they had been patient with SIPOA, and they would begin constructing their home. They then authorized their contractor to remove the pipe. They built part of their home over the no-build area and the area formerly containing the pipe.
In 2011, the Ralphs filed a complaint seeking actual and punitive damages alleging the McLaughlins caused flooding and poor drainage on the Ralphs’ property. The McLaughlins filed an answer and a third-party complaint against SIPOA alleging reliance on representations. The McLaughlin’s case centered on the theory that they had justifiably relied on SIPOA and the purported abandonment of the easement in removing the pipe.
The circuit court granted SIPOA’s motion for summary judgment, finding there was no evidence to show SIPOA had made any promises to the McLaughlins and, as a matter of law, the McLaughlins could not have reasonably relied on SIPOA. The circuit court also directed a verdict in favor of the defendants on punitive damages because, he said, Mr. McLaughlin believed he had the right to remove the pipe. At trial, the jury awarded the Ralphs $1,000 in damages for trespass.
The Ralphs argued on appeal that the circuit court failed to apply the findings of fact and conclusions of law in the grant of summary judgment to the SIPOA as the law of the case. The Court of Appeals agreed stating that since the defense was significantly based on the theory that the McLaughlins reasonably relied on SIPOA, the finding that this reliance wasn’t reasonable in the summary judgment motion should have applied to the controversy between the Ralphs and the McLaughlins.
The Court of Appeals also held that the directed verdict as to punitive damages was inappropriate because there was more than one reasonable inference that could be drawn from the evidence that the McLaughlins acted with reckless regard for the property rights of the Ralphs.
Significantly for dirt lawyers, the Court of Appeals held that the SIPOA could not have unilaterally abandoned the drainage easement because every lot owner had an ownership interest in the easement as a result of the plat that originally established the easement and the deeds in the respective chains of title that incorporated the plat by reference. The Court made the point that while it is well settled law that an owner of an easement may abandon the easement, it is also well settled that only easement owners are authorized to take such action.
Since the Ralphs had established an ownership interest in the easement as a matter of law, the Ralphs were entitled to enforce the easement, and the case was sent back to the lower court for a determination of damages by the jury.
* Ralph v. McLaughlin, Court of Appeals Opinion 5681 (August 21, 2019)