Red Rock Granite, Inc. v. Kafka Props., LLC

396 Wis.2d 703

958 N.W.2d 165 (Table)

2021 WI App 20

RED ROCK GRANITE, INC., Plaintiff-Appellant,

v.KAFKA PROPERTIES, LLC, Defendant-Respondent.

Appeal No. 2019AP1633

Court of Appeals of Wisconsin.

February 9, 2021

PER CURIAM.

¶1 Red Rock Granite, Inc., (Red Rock) appeals from a summary judgment that dismissed its claim seeking enforcement of a restrictive covenant against Kafka Properties, LLC. We conclude that Red Rock's materials filed in opposition to summary judgment failed, as a matter of law, to establish a violation of the restrictive covenant. Accordingly, we affirm.

BACKGROUND

¶2 The restrictive covenant at issue in this case was agreed upon and recorded by predecessors in interest to the current parties. The covenant provides, in relevant part, that the owner of the property subject to the covenant agrees "not to mine, excavate, sever, sell or remove nonmetallic minerals upon, within or under the surface" of the property.

¶3 In 2018, Kafka Properties, LLC, purchased a portion of the property subject to the restrictive covenant, referred to as Lot One. A related entity, Kafka Granite, LLC, (Kafka) thereafter took possession of Lot One and constructed a mineral fabrication facility upon it. At the facility, Kafka processes large blocks of granite, marble and quartz quarried off-site into finished products, such as stone veneer, for use in building construction projects. Kafka stores the finished products on Lot One for some time before transportation to other locations for distribution or sale. Both finished and unfinished rocks stored outside on Lot One are visible from an adjacent state highway.

¶4 Kafka does not conduct any ongoing mining or quarrying activities on Lot One. However, during the construction of the facility and an adjacent parking lot, Kafka excavated a substantial amount of dirt containing nonmetallic minerals from Lot One and transported the excavated dirt to a nearby property that it also owns. Kafka crushes and sells rock on that nearby property.

¶5 Red Rock sued Kafka alleging an ongoing violation of the restrictive covenant. Kafka moved for summary judgment supported by an affidavit denying that it was engaging in any of the activities prohibited by the restrictive covenant. Red Rock did not conduct any discovery, but it filed affidavits opposing the motion. In its affidavits, Red Rock asserted that: (1) the intent of the restrictive covenant was to "prohibit all commercial activity on the Restricted Property that would adversely impact ... [Red Rock] in any way"; (2) splitting larger rocks into smaller pieces by a mechanical means is an "integral part of mining and selling rock to the general public"; and (3) the only purpose for displaying finished and unfinished rock to the public along the highway is to advertise products as part of the sales process.

¶6 The circuit court rejected Red Rock's proposed construction of the restrictive covenant as prohibiting "all commercial activity" adversely impacting Red Rock in any way, characterizing it as an overly broad expansion of the specifically enumerated prohibited activities. The court concluded that none of the activities Kafka was engaged in constituted any of those enumerated activities. It explained:

Mining is the process by which rock is removed from the earth. Selling is the transaction by which ownership of the rock is transferred. Finishing the rock can only happen after the rock has been mined, and it will generally happen before the rock has been sold. (In any event, the finishing process has no effect on ownership.) Likewise, "selling" cannot reasonably be viewed as including the act of storing or displaying rock on the property. Selling refers to the transfer of ownership, not the steps that might precede such a transfer, including advertising or display.

....

[T]he term "sever" must, in [the context of the list in which it appears] refer to severing minerals from the property.

¶7 The circuit court further determined that to the extent the term "sever" was subject to an alternative, albeit "strained," reading proposed by Red Rock that would include severing minerals from themselves, the restrictive covenant was ambiguous and unenforceable. The court then granted summary judgment in Kafka's favor and dismissed Red Rock's claim.

DISCUSSION

¶8 This court reviews a summary judgment decision de novo, using the same methodology as the circuit court. Water Well Sols. Serv. Grp. v. Consolidated Ins. Co. , 2016 WI 54, ¶11, 369 Wis. 2d 607, 881 N.W.2d 285. We examine the parties’ submissions in support of and in opposition to the summary judgment motion to determine whether the movant has made a prima facie case for judgment and, if so, whether there are any material facts in dispute that would entitle the opposing party to a trial. Frost v. Whitbeck , 2001 WI App 289, ¶6, 249 Wis. 2d 206, 638 N.W.2d 325 ; see also WIS. STAT. § 802.08(2) (2017-18).¹

¶9 When a motion for summary judgment is made and supported with appropriate evidentiary materials, "an adverse party may not rest upon the mere allegations or denials of the pleadings." WIS. STAT. § 802.08(3). If the adverse party does not respond with affidavits made upon personal knowledge, answers to interrogatories, and other documents or materials that would be admissible in evidence, summary judgment shall be entered against such party. Id.

¶10 Generally speaking, "[c]ourts use the rules of contract interpretation to ascertain the meaning of restrictive covenants." Solowicz v. Forward Geneva Nat'l , 2009 WI App 9, ¶42, 316 Wis. 2d 211, 763 N.W.2d 828 (2008), aff'd , 2010 WI 20, 323 Wis. 2d 556, 780 N.W.2d 111. When the meaning of a contract can be determined from its face with "reasonable certainty," a court need not consider evidence beyond the contract and should enforce the clear language itself. Id. Deed restrictions, however, are generally disfavored by Wisconsin law. Public policy therefore requires that the language in a restrictive covenant "be strictly construed to favor unencumbered and free use of property." Forshee v. Neuschwander , 2018 WI 62, ¶16, 381 Wis. 2d 757, 914 N.W.2d 643 (citation omitted).

¶11 Here, both parties contend that the terms of the restrictive covenant are clear and unambiguous, even though they each advance different interpretations of the covenant and its application to the facts of this case....