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McAdams v. Dagit Brothers Holding Company


February 17, 2010


On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-4895-06.

Per curiam.


Submitted October 20, 2009

Before Judges Parrillo, Lihotz and Ashrafi.

Dagit Brothers Holding Company, LLC, the owner of a man-made, navigable waterway, appeals from an order for summary judgment granting riparian rights to adjoining landowners.

Although Dagit Brothers filed a notice of appeal from the entirety of the summary judgment order, it has abandoned much of its appeal, excepting claims relative to third-party-defendant Thomas J. McGowan. The Law Division granted summary judgment to McGowan determining that he has riparian rights to use of a lagoon and dock owned by Dagit Brothers adjoining his upland lot. We affirm.

The summary judgment record establishes the following undisputed facts. The subject lands are located in Egg Harbor Township, Atlantic County, with navigable access to the Great Egg Harbor Bay. McGowan purchased his property in 1990, Dagit Brothers in 2003. For purposes of summary judgment, McGowan admits that Dagit Brothers owns the land under the waters of the lagoon that is the subject of this litigation.

The respective titles of McGowan and Dagit Brothers trace back to a common owner in the 1950s, when Joseph O'Byrne acquired a tract consisting largely of marshland through a foreclosure proceeding. Portions of the land were conveyed to several corporate entities in the 1950s, including Longport Manor, Inc., a predecessor in title to McGowan's lot and parts of Dagit Brothers' tract. Historical aerial photography shows that the lagoon had been dredged out of the marshlands by 1956, and several docks had been built by that time, including one abutting McGowan's lot.

At about the same time, South Jersey Mortgage Company acquired title by foreclosure judgment to two tracts of land that included McGowan's lot. In 1957, South Jersey Mortgage filed a lis pendens and a lawsuit in the Chancery Division against Longport Manor and others, seeking injunctive relief and declaratory judgment that South Jersey Mortgage and its successors had the right of access to the waters of Great Egg Harbor Bay. On March 13, 1958, a judgment was entered in that lawsuit that granted to South Jersey Mortgage and its successors "the right to use the lagoon for boating, fishing, bathing and other usual uses of such a waterway, with the right and privileges of building and maintaining a bulkhead on the edge of said lagoon abutting said property . . . ." The judgment was never recorded, although it was docketed with the Clerk of the Superior Court. The lis pendens was recorded in the Atlantic County Clerk's Office.

After the litigation, South Jersey Mortgage conveyed McGowan's lot to Longport Manor, which held title for twenty days in 1958 and then conveyed the lot to a Margaret Harris, who in turn conveyed it to Joseph O'Byrne two months later. In 1959, the Egg Harbor Township governing body approved a subdivision plan for parts of the tract adjoining the lagoon. Joseph O'Byrne died intestate the same year, and title in McGowan's lot passed to his widow and children. In December 1990, O'Byrne's heirs and successors conveyed title to McGowan.

When McGowan acquired his property, a dock abutted his lot near its southeasterly corner marker. Aerial photographs in the summary judgment record show that a dock existed at that same location since at least 1963. McGowan moored his boat to the dock and used it continuously until Dagit Brothers purchased the adjoining tracts and intentionally destroyed parts of the dock in 2003.

All the deeds in McGowan's chain of title are silent as to use of the man-made lagoon and dock. They neither make exceptions regarding use of the waters, nor do they affirmatively grant such use and rights. The deeds generally conveyed all "ways, rights, liberties, privileges, hereditaments and appurtenances."

In 2003, Dagit Brothers acquired the lagoon and adjoining land planning to build a 111-boat-slip marina and clubhouse. It applied to the Egg Harbor Township Planning Board and the New Jersey Department of Environmental Protection (DEP) for approval of its development plans. Hearings were held before the planning board in 2006, at which discussion included the conflicting rights of adjoining upland owners to use of the lagoon. The planning board granted approvals subject to the jurisdiction of the Superior Court to determine the relative rights of adjoining landowners. The DEP, however, denied the application of Dagit Brothers for a waterfront development permit. As of the time of the trial court's summary judgment decision, Dagit Brothers was in discussion with the DEP to obtain approval for its development plan.

A number of adjoining landowners filed suit against Dagit Brothers in 2006 seeking a declaration that they were riparian owners of lands adjoining their properties and the lagoon. Dagit Brothers filed an answer, counterclaim, and third-party-complaint against the plaintiffs and other adjoining landowners, including McGowan, to quiet its title. McGowan filed an answer asserting defenses and his own counterclaim against Dagit Brothers for damages and a declaration of his riparian rights.

Judge Nelson C. Johnson of the Law Division heard cross-motions for summary judgment and issued a detailed written decision on April 18, 2008. With respect to the claims between Dagit Brothers and McGowan, Judge Johnson concluded that McGowan had the right to use the lagoon because Dagit Brothers was on constructive or inquiry notice of the 1958 South Jersey Mortgage judgment declaring those rights, and because both N.J.S.A. 46:3- 16 and the common law grant riparian rights to adjoining landowners unless they are excluded by an exception in a deed or other legally binding document of conveyance.

On Dagit Brothers' motion for reconsideration, the judge issued a second written opinion dated June 6, 2008, in which he concluded that McGowan had a common law right to maintain and use the existing dock abutting his land.

We agree with these conclusions.

In reviewing a grant of summary judgment, an appellate court applies the same standard under Rule 4:46-2(c) that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007). The court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In this case, the facts are not genuinely disputed. The issue is a legal one concerning the relative rights of the landowners to use of the lagoon and dock.

Regarding the lagoon, the 1958 judgment affirmatively declared that South Jersey Mortgage, and all its successors and grantees of title to the land, had the right to use the lagoon for recreational and related purposes. The judgment applied to Longport Manor as a defendant in that litigation and to its successors and grantees who had notice of the terms of the judgment. See Palamarg Realty Co. v. Rehac, 80 N.J. 446, 454 (1979).

Although a successor in title to Longport Manor, Dagit Brothers contends it did not have notice of the 1958 judgment because it was not recorded. It argues that New Jersey is a "race/notice" state that awards priority in rights and interests in land to the first party to record an instrument. See id. at 453-54; N.J.S.A. 46:21-1. Dagit Brothers acknowledges, however, that to have priority, it must be a bona fide purchaser for value without actual notice of a conflicting prior claim or interest in the land.

N.J.S.A. 46:22-1 provides in relevant part:

Every deed or instrument . . . shall, until duly recorded or lodged for record in the office of the county recording officer in which the affected real estate or other property is situate, be void and of no effect . . . against all subsequent bona fide purchasers . . . for valuable consideration, not having notice thereof, whose deed shall have been first duly recorded . . . .

The trial court concluded that Dagit Brothers had notice of the rights of adjoining landowners such as McGowan, claiming through the judgment of 1958, both by the open, visible, continuous use of the lagoon and dock, and by the recording of the lis pendens within sixty years of Dagit Brothers' acquisition of title. Although a lis pendens is effective only for five (formerly three) years from the date of its filing, N.J.S.A. 2A:15-11, any person claiming title to or interest in the land described in the notice through a defendant in that action "shall be bound by any judgment entered therein." N.J.S.A. 2A:15-7a; see Manzo v. Shawmut Bank, 291 N.J. Super. 194, 206 (App. Div. 1996).

In this case, Dagit Brothers claims title to and interest in the lagoon through Longport Manor, which was a defendant in the South Jersey Mortgage lawsuit. Therefore, Dagit Brothers is bound by the terms of the judgment against Longport Manor if a "reasonable" search of its chain of title would have led to the judgment. Island Venture Assocs. v. N.J. Dep't of Envtl. Prot., 179 N.J. 485, 493 (2004); Palamarg Realty, supra, 80 N.J. at 456. See also Scult v. Bergen Valley Builders, Inc., 76 N.J. Super. 125, 135 (Ch. Div. 1962) (prospective purchaser is obligated "to make a reasonable and diligent inquiry in connection with claims or rights in and to real estate -- or be charged with facts as such an inquiry would uncover -- . . . where facts are brought to the knowledge of that person which are sufficient to apprise him of the existence of an outstanding title or claim"), aff'd, 82 N.J. Super. 378 (App. Div. 1964).

The trial judge concluded that in New Jersey it is reasonable to search the chain of title for sixty years, both by custom, see Palamarg Realty, supra, 80 N.J. at 460; Pioneer Nat'l Title Ins. Co. v. Lucos, 155 N.J. Super. 332, 336 n.1 (App. Div.), aff'd, 78 N.J. 320 (1978), and by the terms of N.J.S.A. 2A:62-13. Under that statute, a judgment pertaining to interest in land is not effective against a person or party who has not been named as a defendant and whose title, claim, or interest in the land would be disclosed by a title search extending back sixty years. The judge found that Dagit Brothers would have discovered the 1958 judgment had it searched the recorded instruments in its chain of title going back sixty years, which included the lis pendens. The lis pendens should have prompted a further inquiry leading to the terms of the judgment, which bound successor title holders to Longport Manor's lands.

Dagit Brothers contends that even if a sixty-year search would have led it to the 1958 judgment, the rights granted in that judgment were extinguished when South Jersey Mortgage conveyed McGowan's lot to Longport Manor. Dagit Brothers argues that joining its property with McGowan's property in common ownership of Longport Manor caused any easement or rights to cease because one cannot hold an easement in or rights against his own property. See Camp Clearwater, Inc. v. Plock, 52 N.J. Super. 583, 594 (Ch. Div. 1958), aff'd, 59 N.J. Super. 1 (App. Div. 1959); Leasehold Estates, Inc. v. Fulbro Holding Co., 47 N.J. Super. 534, 560 (App. Div. 1957).

Longport Manor, however, retained common ownership of the two properties only for twenty days. It then conveyed title in McGowan's lot to a Margaret Harris, who conveyed it to Joseph O'Byrne two months later. In Pochinski Realty Assocs. v. Puzio, 251 N.J. Super. 388 (App. Div. 1991), we held that an easement that had merged for a limited time into common ownership of the dominant and subservient estates could be revived upon severance of the properties. Whether the easement had been revived depended on the facts of the particular case and the intention of the parties in making the conveyances. See Niestat v. Equitable Sec. Co., 6 N.J. Super. 148, 152-53 (App. Div. 1950).

Also, in A.J. and J.O. Pilar, Inc. v. Lister Corp., 38 N.J. Super. 488, 496 (App. Div.), aff'd, 22 N.J. 75 (1956), we had posited that a "quasi-easement" can exist despite unity of ownership where one part of the land is used for the benefit of another part. In such circumstances, severance of the two parts can create an easement corresponding to the quasi-easement. Ibid. In this case, even during Longport Manor's brief, common ownership of the two adjoining lands, the land under the lagoon had no separate use but to benefit McGowan's land and other adjoining lots, and so, severance of the tracts twenty days later could create rights running with McGowan's lot corresponding to such a "quasi-easement."

Judge Johnson found from the undisputed evidence that "McGowan and his predecessors have all made continuous use of their right of access to the water as contemplated by the final judgment in the South Jersey Mortgage litigation." Their use of the lagoon was open and visible to any purchaser of the lagoon and adjacent land, such as Dagit Brothers. The facts here demonstrated the intention of the parties to retain riparian rights established by the judgment of 1958. No evidence in the record contradicts the judge's conclusion that the right to use the lagoon was not extinguished by the brief common ownership of the McGowan's lot and the land beneath the waters of the lagoon.

As an alternative ground supporting summary judgment, the judge concluded correctly that N.J.S.A. 46:3-16 protects McGowan's riparian right to use of the lagoon. That statute provides:

Every deed conveying land shall, unless an exception shall be made therein, be construed to include all and singular the buildings, improvements, ways, woods, waters, watercourses, rights, liberties, privileges, hereditaments and appurtenances to the same belonging or in anywise appertaining . . . .

None of the deeds in McGowan's chain of title contains an exception regarding use of the adjoining lagoon.

In Panetta v. Equity One, Inc., 190 N.J. 307, 321 (2007), the Court noted that N.J.S.A. 46:3-16 codifies common law rights. The Court discussed the "critical" difference between a riparian grant, which is an actual conveyance of land along a waterway, and a riparian right, which is the incorporeal right of a landowner to make reasonable use of adjacent water. Id. at 317-18. A riparian right can be appurtenant to upland property but a riparian grant cannot. Id. at 322. The Court held that a riparian right "is facially included in N.J.S.A. 46:3-16." Id. at 317. Consequently, if McGowan's predecessors in title had riparian rights to use the waters of the lagoon for recreational purposes, that right was conveyed to McGowan by his deed even though it was not expressly referenced in the deed.

Dagit Brothers argues that the common law did not recognize riparian rights in privately-owned waters. McGowan responds that the site of the lagoon was not separately designated in the tax records of Egg Harbor Township and therefore was not identifiable as private property. He contends that he would not have purchased his property if it did not include the open and visible riparian right to use of the waters of the lagoon. We need not address whether McGowan had an independent common law right to use of the privately-owned lagoon because his right was protected by the South Jersey Mortgage judgment as recognized and applied by all predecessors in title to both properties. The court below concluded correctly that McGowan's riparian rights of access to and use of the lagoon's waters were conveyed to him by his deed because it contained no exception of those rights.

Dagit Brothers contends that, even if McGowan had the right of access to and use of the lagoon's waters for recreation, he had no right to maintain and use the dock abutting his property. It argues that the South Jersey Mortgage judgment only permitted the building and maintenance of a bulkhead adjacent to McGowan's land, not a dock extending into the property of Dagit Brothers.

In his opinion of June 6, 2008, Judge Johnson concluded that McGowan had a common law "right of wharfing out" that was incidental to his right to use of the lagoon.

The common law recognized a right of "wharfing out" to adjacent waterways to gain access to navigable waters. See Bell v. Gough, 23 N.J.L. 624 (E. & A. 1852); Keyport Steamboat Co. v. Farmers Transp. Co., 18 N.J. Eq. 511, 516-17 (E. & A. 1866); Arnold v. Mundy, 6 N.J.L. 1, 10 (Sup. Ct. 1821). See also New Jersey v. Delaware, 552 U.S. 597, ___, 128 S.Ct. 1410, 1421, 170 L.Ed. 2d 315, 327 (2008) ("[A] riparian landowner ordinarily enjoys the right to build a wharf to access navigable waters far enough to permit the loading and unloading of ships.").

Dagit Brothers disputes that McGowan had a common law right to use of the dock as a means of "wharfing out" and argues that such a right is contrary to the statutory framework of N.J.S.A. 12:3-1 to -71 and N.J.S.A. 13:1B-13. Those statutes address the rights of upland owners to erect improvements within State-owned, public waterways. The statutes regulate riparian leases and grants issued by the State for its tidelands and land within the high water mark along public waterways.*fn1 The statutes do not apply to private waterways.

In this case, Judge Johnson relied on the facts establishing the preservation of McGowan's rights of access to and use of the lagoon waters to conclude also that the use of the dock was incidental to those rights. Throughout the forty or more years of continuous use, a dock was apparently available for use by the owner of McGowan's property. The South Jersey Mortgage judgment protected the right of the title holder "to use the lagoon for boating, fishing, bathing and other usual uses of such a waterway." Because a dock had been built and existed at the time of the judgment, it may not have been specifically referenced in the judgment. The judge concluded reasonably that an existing dock is incidental to the boating, fishing, and bathing uses protected by the judgment. In fact, if it was the intent of the judgment not to include use of the existing dock, one would expect that it would be referenced as an exception to the related uses that were listed.

Viewing the summary judgment record as a whole, we see no error in the judge's conclusion that McGowan's riparian rights included use of the dock.


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