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Burcalow Family, LLC v. The Corral Bar, Inc.

Supreme Court of Montana

November 14, 2013

BURCALOW FAMILY, LLC, Plaintiff and Appellant,
v.
THE CORRAL BAR, INC., Defendant, Appellee and Cross-Appellant.

Submitted on Briefs: September 18, 2013

APPEAL FROM: District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV 10-379B Honorable Mike Salvagni, Presiding Judge.

For Appellant: Michael J. Lilly, Berg, Lilly & Tollefsen, P.C.; Bozeman, Montana.

For Appellee: Arthur V. Wittich, Margaret M. Reader, Wittich Law Firm, P.C.; Bozeman, Montana.

OPINION

Brian Morris Justice

¶1 Appellant Burcalow Family, LLC, (Burcalow) appeals the decision of the Eighteenth Judicial District Court, Gallatin County, that determined that The Corral Bar, Inc. (the Corral) possesses a prescriptive easement over Burcalow property and that entitled the Corral to rescind a license agreement between the parties. T he Corral cross-appeals that the District Court has not entered a final judgment. We reverse and remand.

¶2 We address the following issues on appeal:

1. Whether the Corral possesses a prescriptive easement over Burcalow's property.
2. Whether allegedly fraudulent representations by Burcalow's counsel entitled the Corral to rescind the parties' license agreement.
3. Whether the November 2, 2012, judgment constituted a final judgment.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 The Corral Bar sits in the Gallatin Canyon along Highway 191 to the south of the popular skiing destination at Big Sky, Montana. The Corral property consists of a bar, restaurant, and motel on 0.563 acres of land. The bar and restaurant have been in operation since the 1940s. The Corral Bar employs between 35 and 40 people. It serves annually approximately 50, 000-80, 000 patrons.

¶4 The Corral purchased the Corral Bar and motel property in 1988. The property sits contiguous to property formerly owned by the United States Forest Service (Forest Service). In fact, part of the restaurant building, a storage shed, a well and water transmission line, a satellite television system, a propane tank, and a sanitation system consisting of a dosing tank actually sit on property formerly owned by the Forest Service. The Corral obtained a special use permit from the Forest Service to use this land.

¶5 The United States Congress in the 1990s authorized the Forest Service to trade property in the Big Sky area with private property owners. The Forest Service and Big Sky Lumber Company entered into an exchange agreement pursuant to these acts. The Forest Service agreed to trade property that it owned in exchange for land that the Big Sky Lumber Company owned. The Forest Service included in the exchange with Big Sky Lumber Company property that the Corral used pursuant to its special use permit. T he Forest Service advised the Corral of the proposed exchange in December 1998. The Forest Service informed the Corral that its special use permit would be terminated as of December 31, 1998.

¶6 Burcalow purchased certain lots in Section 28 and additional adjoining property from the Big Sky Lumber Company on September 1, 1999. This property sits adjacent to the Corral Bar and includes the former Forest Service land that the Corral had been using. After Burcalow's purchase of the land, Larry Burcalow (Larry), an owner of Burcalow, and the Corral discussed the Corral's possible purchase of the property used by the Corral. Larry also had conversations with Devon White (Devon), an owner of the Corral, and Devon's business partner, David House, before September 1, 1999, in which Larry assured the two that the parties could reach an agreement for the purchase of a portion of Section 28 so that the Corral could complete its expansion plans. Larry testified at trial that he told Devon that if Burcalow bought Section 28, he would "make it right" with the Corral.

¶7 The parties eventually agreed to a common boundary realignment. The Corral exchanged the north and south corners of its land for a similar area of Burcalow's land to the west of the Corral's property. The Corral's property included in this trade to Burcalow enjoyed direct access to Highway 191. The Corral used the land that it acquired from Burcalow to expand its kitchen. This exchange did not provide the Corral with sufficient land, however, for its drain field or well. The Corral nevertheless continued to use the land with its drain field and well.

¶8 Burcalow's counsel wrote to the Corral on July 6, 2004. Burcalow's counsel informed the Corral that its special use permit had expired on the date that the Forest Service conveyed its interest in the land to a private entity. As a result, the letter pointed out that the Corral "ha[d] been using the 1.79 acres covered by the special use permit without express authority to do so."

ΒΆ9 Burcalow's counsel proposed that the Corral and Burcalow execute an agreement for the Corral's continued use of that 1.79 acres. T he letter warned, however, that the Corral and Burcalow must reach an agreement "or a lawsuit [will be] filed to quiet the title to the property not later than August 15, 2004." T he letter concluded with counsel's assurance that Burcalow was "interested in amicably working out an agreement" for the Corral's continued use of the land in question. Burcalow's counsel cautioned the Corral that Burcalow ...


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