February 5, 2014
by Heather Martin-Herron
Wilson & Associates, PLLC – USFN Member (Arkansas, Tennessee)
The Arkansas Supreme Court has clarified a co-tenant’s fiduciary duties that are owed to other co-tenants in a tenancy in common. Skalla v. Canepari, 2013 Ark. 415. Virginia Skalla, Albert McCreary, and Charles McCreary each owned an undivided one-third interest in two tracts of farmland as tenants in common.
In 2004, Joseph Canepari purchased Albert’s one-third interest. A year later, Canepari purchased Charles’s one-third interest. In 2006, Skalla offered to sell her interest to Canepari. Skalla informed Canepari that she intended to make improvements if he did not purchase her interest. No improvements were made to the property, and Canepari declined to purchase the remaining one-third interest. Skalla sued Canepari in 2007 for breach of fiduciary duty and requested a partition of the property.
Skalla contended that when Canepari became a co-tenant with her and Charles in 2004, Canepari owed her a fiduciary duty. Skalla maintained that Canepari breached that duty by acting adversely when he purchased the second one-third interest from Charles. Skalla cited Clement v. Cates, 49 Ark. 242, 4 S.W. 776 (1887) as support for her argument. In Clement, one co-tenant attempted to oust his co-tenant siblings by claiming superior title. It is well-settled law that a co-tenant cannot assert adverse title against his other co-tenants in a tenancy in common.
In a tenancy in common, each co-tenant has the right to occupy the entire property and no co-tenant can lawfully exclude any other co-tenant. If a co-tenant acts in a way that interferes with the other co-tenants’ interests, the interfering co-tenant is in breach of his fiduciary duty. Co-tenants have the right to make improvements on the property, but the improving co-tenant must be indemnified by the remaining co-tenants.
The Clement case did not apply to the situation at hand, as Canepari was not asserting adverse title against Skalla nor was he attempting to oust her. A co-tenant may treat property in any way he or she sees fit, so long as it does not interfere with the rights of the other co-tenants. Canepari had no obligations to contribute to Skalla’s long-term improvement plans and never interfered with Skalla’s rights as a co-tenant. The evidence showed that Skalla was able to lease her interest in the property, collected the rent from those leases, and was never denied access to the property. Although Canepari obtained his two-thirds interest in the property through two separate transactions, Canepari did not act adversely to Skalla when he purchased his second one-third interest. Therefore, because Canepari did not interfere with Skalla’s rights and obligations as a co-tenant, the Supreme Court affirmed the circuit court’s granting of summary judgment in favor of Canepari.
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