Haug v. Carter

Thomas Trotter developed a 27-lot residential community on the south shore of Lake Travis. Trotter and his real estate company represented orally and in written advertisements that the community’s homeowners would have the use of a one-acre park on the lake. The park would allow for a variety of recreational activities like picnicking, swimming, sunbathing, fishing, and boat launching. The declaration of covenants, conditions, and restrictions for the community provided for the developer’s conveyance of a “lake side park area easement and an access easement” to the community’s homeowners (plaintiffs). The easement would exist on a specified lot (lot 18). In 1996, Robert Haug (defendant) purchased lot 18, knowing that the one-acre community park was located on it. The purchase contract between Haug and Trotter reserved a one-acre recreational easement on lot 18 for the benefit of the homeowners’ association, to be reflected in a separate instrument. Prior to closing, Haug requested that certain purchase-contract language be changed from “lake side park easement” to “boat launch easement.” Trotter’s attorney viewed this as a nominal change only. Subsequently, Trotter’s attorney loosely oversaw the preparation of the separate instrument (the grant) by two different surveyors. Neither surveyor reviewed Haug’s purchase contract. The grant was supposed to create the lakeside park, but it referred only to a right-of-way easement and a boat-launch easement. The right-of-way easement was limited to usage for ingress and egress across lot 18. The boat-launch easement, as described, contained about 10,900 square feet as opposed to the 40,000 square feet specified in Haug’s purchase contract. Based on the grant, Haug notified his fellow homeowners that his property could not be used as a park or picnic area. The homeowners sued Haug seeking reformation of the grant. Following a bench trial, the court found that the grant failed to accurately set forth Trotter’s intention of granting an easement for a one-acre recreational park with correct legal descriptions. The court found that there had either been a mutual mistake or a unilateral mistake on Trotter’s side with knowledge and inequitable or fraudulent conduct by Haug. The court accordingly reformed the grant, modifying language to conform to the parties’ intent for a park with recreational activities. Haug appealed, challenging the court’s ability to reform the grant.