Concrete wall 9 feet high, 800 feet long just may be a spite fence

by Hannah Dankbar and Gary Taylor

Bennett, et al,  v Hill
Montana Supreme Court, February 3, 2015

Lot owners of the Lake Hills Subdivision complained about a wall constructed by Lake Hills Golf Course, LLC. The wall is located within the subdivision and adjacent to the lot owners’ properties.

The “Declaration of Restrictions” for the subdivision was created and approved in 1958. Any lot owner has power to enforce the restrictions. Lake Hills Golf, LLC got their land in the subdivision through a warranty deed in 2009. Part of the deed specified that the golf course be subject to the restrictions and any amendments.

In early 2011 Hill, the owner of the Golf Course applied for a zoning change to multiple lots he owned in Lake Hills Subdivision. Other lot owners in the subdivision opposed the change in zoning, resulting in Hill withdrawing his application. The lot owners said their relationship with Hill was damaged.

Late in 2012, Hill applied for a building permit from the City of Billings. He wanted to build the wall that is the subject of this case. He received the permit and built a $40,000 wall of concrete and rebar. The wall is nine feet tall and is set approximately ten feet from the border between the Golf Course property and the opposed lot owners’ property. The wall runs parallel to the properties and is approximately 800 feet long, with a 2-foot jog perpendicular to its length at 40-foot intervals. The lot owners claimed that the wall violated the Restrictions, the wall constituted a nuisance, and also constituted a spite fence.  The lot owners sued Hill in district court, but lost on all issues on summary judgment.  The property owners appealed the court ruling.

On appeal the Montana Supreme Court considered multiple issues:

1.Did the District Court err by granting summary judgment in favor of Hill on the issue of whether the wall constituted a spite fence?

A “spite fence” is one that provides no benefit to the person erecting the fence (erected solely for spite).   The district court found that the wall benefited the golf course by discouraging trespassers and preventing trash from blowing onto the course. The Supreme Court noted, however, that the lot owners presented affidavits that they had never observed trespassers or trash cross the golf course property from their properties, and they never received complaints of this happening. One of the Plaintiffs also stated that Hill had told him that the wall was built because the Plaintiffs’ properties were unattractive. Viewed in a light most favorable to the property owners, the district court should have allowed the spite fence claim to proceed to trial.

2. Did the District Court err by granting summary judgment in favor of Hill on the issue of whether the wall constituted a nuisance?

The district court found that since there was no issue of the wall serving a “reasonable purpose”(stopping trash and trespassers) there is no legal argument that it constitutes a nuisance. The Supreme Court found this to be an incorrect interpretation of the law. The Court stated:

A beneficial or reasonable purpose will not immunize something that would otherwise constitute a nuisance from being ruled a nuisance. Montana statute states that “[a]nything that is injurious to health, indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property . . . is a nuisance.” Section 27-30-101(1), MCA (emphasis added). Although there are exceptions for farming operations, activities authorized by statute, and noises from shooting activities at shooting ranges, Montana statute does not otherwise limit this broad definition of what may or may not constitute a nuisance.

The Supreme Court was unwilling to rule that anything that has a beneficial or reasonable use cannot also be a nuisance (at the same time noting that the question of the fence being a reasonable use was still unresolved), and reversed the district court on its grant of summary judgment on the nuisance claim.

3. Did construction of the wall violate the Subdivision Restrictions?

Paragraph 6 of the Restrictions states:

6. No fence or wall shall be erected or maintained on any lot, nor any hedge planted or maintained on any lot until written authority therefore has been secured from the Architectural Control Committee (ACC), which shall have authority to prescribe the location, height, design and materials used.

Hill claimed that the provisions of paragraph 6 of the Restrictions have been waived and are therefore unenforceable against them. To prove waiver of a covenant, it must be demonstrated that the other party knew of and acted inconsistently with the covenant, and that prejudice resulted to the party asserting waiver.  It may be either express or demonstrated by a course of conduct. If demonstrated by a course of conduct, waiver will “depend upon the circumstances of each case and the character and materiality of the permitted breach.”  Despite that fact that the ACC had never met or approved a construction project of any kind, and “the vast majority of the residences and structures within the subdivision were built without approval from the ACC,” such facts do not establish that breaches occurred of the character and materiality necessary to establish waiver.  Indeed, there was no indication that any fences, walls or hedges had ever been constructed (or even exist) in the subdivision.

Finally Hill argued that paragraph 16 is an exception to paragraph 6 and allows them to build the wall. Paragraph 16 reads:

16. If used as a public or private golf course, country club, or park, any structure incidental to such use, including but not limited to clubhouse, swimming pool, tennis courts and other recreational facilities, storage shops, and repair and maintenance facilities and shops, may be maintained and erected on any of the said tracts.

The Supreme Court found that it was a genuine issue of material fact as to whether the wall was “incidental” to the use of the property as a golf course, noting again the lack of evidence that trash or trespassers had ever crossed the property.

The Supreme Court reversed all of the district court’s rulings favoring Hill, and remanded for trial.

To prove covenants were abandoned, landowner must show change to the neighborhood “of a radical and permanent nature” resulted from ignoring covenants

by Hannah Dankbar and Gary Taylor

Moore v Wolitich
Wyoming Supreme Court, January 15, 2015

The residents of Milatzo Subdivision in Cheyenne, Wyoming filed a complaint against Jennifer Moore who ran Silly Bear Daycare for operating a daycare out of her home in the subdivision. The district court found that the daycare violated the protective covenants of the subdivision. Moore appealed.

The covenants in question were adopted on June 27, 1979 and state: “[n]o lot shall be used except for residential purposes,” and that “[n]o residential lot shall be used as a business.” In September 2012 Jennifer Moore began operating Silly Bear Daycare out of her home that was purchased earlier in the year. In October 2012 multiple residents in the subdivision filed a complaint. The Moore’s did not contest the finding that they were running a business; rather, the Moores advanced two arguments on appeal: (1) that the covenants had been abandoned and were therefore unenforceable, and (2) that the activities of the other landowners left them with “unclean hands” and therefore unable to enforce the covenants.

Abandoned covenants.  Under Wyoming caselaw, to find that a covenant has been abandoned the violations of that covenant that have been acquiesced to by the subdivision’s landowners “must be so substantial as to support a finding that the usefulness of the covenant has been destroyed, or that the covenant has become valueless and onerous to the property owner.”  The abandoned covenants must also result in a change to the neighborhood “of a radical and permanent nature.”  To prove their point the Moores cited other covenant violations that take place in the subdivision, including numerous trailers, sheds, boats, unregistered vehicles and other items on various properties throughout the subdivision in violation of the covenants.  The Moores also pointed to a babysitting business and an identity theft victim assistance business being run from homes in the subdivision, as well as parking numerous business-associated vehicles and trailers at other homes.  The covenants also create a Building and Covenants Committee to resolve issues and violations, but the committee does not exist.

The Wyoming Supreme Court disagreed that these activities amounted to abandonment of the covenants.  The evidence presented at district court was that the other business activities were occasional or incidental, and not the type of substantial, routine, and permanent business activities that would change the nature of the neighborhood.  Moreover, the Moores failed to produce evidence concerning how long the trailers, sheds, and other items of concern had been present, or how they impacted the neighborhood in a way that was “so great, or so fundamental or radical as to neutralize the benefits of the restrictions to the point of defeating the purpose of the covenants.”

Doctrine of “unclean hands.”   The court found that the Moore’s were aware of the covenants when they bought the home and signed the covenants.  They did not consult an attorney or their neighbors in the subdivision to determine whether the covenants had been abandoned.  They were aware of the covenants and flagrantly ignored them by opening the daycare.  The Supreme Court affirmed the district court’s finding that the equities of the case weighed against the Moores for this reason.

Private covenants requiring improvements to be harmonious with surrounding structures are not per se ambiguous

by Hannah Dankbar

Curtis Acres Association v Stephan Hosman
Nebraska Court of Appeals, January 13, 2015

Hosman began construction of a boathouse in Douglas County, Nebraska. Curtis Acres Association manages the properties where Hosman’s property is located. The Association filed suit against Hosman asking the court to make Hosman stop construction and remove the boathouse because he was violating multiple restrictive covenants.

Before Hosman bought his property in the Curtis Acres subdivision in 1990 the Association had filed a “Declaration of Covenants, Conditions, Restrictions and Easements” (CCR). Part of this document requires residents to get pre-approval of any improvements on their lots. Hosman submitted three sets of plans for his residence before being approved. The Association’s CCRs were amended four times subsequent to this. One of the amendments required residents to submit two plans in order to get approved and if approval was not granted within thirty days the plans were deemed disapproved. This amendment was added to ensure that future projects were in alignment with Nebraska law and with the master plan for the subdivision.

Three years after the amendment was added Hosman began construction of a boathouse on his lot, approximately 15 feet from the edge of the lake. The Association sent Hosman a letter telling him sought approval of his plans before beginning construction. Hosman submitted a one-page hand drawn picture of his boathouse. Hosman included dimensions, color and materials on the page, noting that the siding would be the same as on his residence and the roof was to be blue in color. The Association informed him that his drawing was insufficient, and that “a blue standing seam roof is not acceptable.”  The Association further informed him that “structures will be set back from the shoreline so as not to impede one’s neighbor’s views.  We suggest 100′.”  Hosman continued construction and in October 2010 the Association filed a complaint against him. In summary judgment the court found that the Association can enforce their covenants and required Hosman to stop construction.  Hosman appealed that ruling.

Hosman claiming that the court was wrong in deciding, “(1) that the covenants provide a clear, articulable standard for approval of building projects; (2) that the enforcement of the covenants against Hosman was reasonable; (3) that the Association did not have unclean hands in the administration of its covenants.” Hosman does not fight the fact that he is not obeying the covenant.

As for Hosman’s first argument, the Nebraska Court of Appeals decided that the relevant covenants were not ambiguous and gave a ‘sufficient’ standard for approval. In Normandy Square Assn. v. Ells the Nebraska Supreme Court held that “restrictive covenants that permit a homeowners association to approve or disapprove improvements based on a standard of whether such improvements conform to the harmony of external design and location in relation to surrounding structures are not per se ambiguous; rather, such covenants are enforceable provided that the authority is exercised reasonable within the framework of the covenants’ stated purposes.” Following the ruling in Ells the court found that in this case the covenants are enforceable because the stated purpose is to “protect the value, character and residential quality of all lots.”  According to the court this statement does not create ambiguity and the Association had the power to disapprove the boathouse.

Next is the question of whether the authority was reasonable exercised. The Association decided that the blue roof did not meet the standards of the neighborhood, and the boathouse was too close to the shore. Hosman argued that there are other boathouses within 100 feet of the shore, so he should be allowed to have his that close as well. The Association allowed the houses to be that close before changing the rule. Since the rule changed no new boathouses have been built that close to the shore, and Hosman did not show that any of the other boathouses have blue roofs. The Association properly changed the rule, and properly enforced the rule once it had been changed.

Third, Hosman argued that the Association inconsistently enforced the covenants. The Association admitted that under extenuating circumstances there were two incidences where residents were given extensions on timeframes set forth in the covenants; however, the covenants themselves allowed for such a deviation.  The court found no merit to Hosman’s argument.

Lastly, Hosman argued that the Association treats him differently because they do not like him. There was evidence to this effect, including a letter one member of the Association sent to Hosman’s home containing derogatory comments and insinuations about Hosman’s character.  Hosman failed to demonstrate, however, any link between the actions of individual members of the Association expressing their dislike towards him and the decision making process of the Association as a whole.

The Court of Appeals affirmed the decision of the trial court to order Hosman to remove his boathouse from his property.

Covenants on homeowners in PUD are lawful and binding

by Gary Taylor

Wheeler v. Southport Seven PUD
(North Dakota Supreme Court, September 28, 2012)

In August 1997, the Southport Development Limited Liability Company filed an amended declaration for the Southport Development PUD Project I in south Bismarck.  The amended declaration states “[n]o portion of the subject project may be removed from the project by vacation or partition, except by the unanimous consent of all record title owners of all of the PUD lots and the holders of all mortgages which constitute mortgage liens upon the subject PUD lots and tracts.” The amended declaration also provides for a Southport association of owners, with each unit owner deemed a member of the association.

In September 2005, Wheeler purchased a home in Southport by warranty deed.   In 2005 and 2006, Wheeler paid Southport fees, dues, and assessments, including fees for snow removal and lawn care. Wheeler, however, was not satisfied with either the snow removal or the lawn care provided by Southport, and in about 2006, she sent a letter to the Southport association, indicating she no longer wanted, and would not pay for, snow removal or lawn care. Wheeler paid for snow removal on one occasion in 2007. In 2007, the Southport association initially filed a lien against Wheeler’s property for unpaid assessments, but later withdrew the lien because of a failure to send notice to Wheeler by certified mail. In 2008, Southport filed another lien on her property after notice was given by certified mail. That lien later was released when Wheeler paid funds into escrow.  In 2009, Wheeler commenced this action against Southport seeking relief from the imposition of dues, fines, and liens filed by Southport against her property and seeking damages for slander to title. Southport answered and counterclaimed for unpaid assessments. The district court ruled that Wheeler was obligated to pay assessments set by the association because her lot was within Southport PUD Project I and awarded Southport a judgment for $2,124.22. Wheeler appealed.

The North Dakota Supreme Court observed that a planned unit development or PUD is a specialized form of zoning ordinance.  Although zoning ordinances are not the same as restrictive covenants running with the land and binding subsequent purchasers, the court explained there is little real difference:

A covenant is a contract and an ordinance isn’t–though a PUD is very close to being a covenant because . . . it is the product of a deal between a developer and a municipality. No matter; a zoning ordinance has the same effect as a covenant because, unless worded to bind only the current owner, it limits the use of the land by whoever owns it, not just whoever owned it when the ordinance was enacted. . . . [A] zoning variance creates a restriction that runs with the land, just like a covenant; and there is no relevant difference between a variance and a PUD.

“As a matter of law, covenants for payment of annual assessments for operation of property owners associations are covenants running with the land,” which “may be enforced by subsequent assignees or successors in title to the original parties.” Deed restrictions and covenants are vital to the existence and viability of PUDs, and “if clearly established by proper instruments, are favored by definite public policy.”  The Court ruled that Wheeler could not opt out of payment of Southport’s annual assessments.  The Court also dismissed Wheeler’s claim that the amended declaration is a “contract of adhesion and contains oppressive and unconscionable terms, and that, as interpreted by the association and the district court, there is no enforcement of the duty on the part of Southport to provide any services.”  The Court reiterated that Wheeler’s obligations to Southport are imposed by the covenants running with the land and she is bound by the amended declaration’s relevant provisions by the purchase of her property within the development.

Lakeway easement interpreted as providing access, not a park

by Victoria Heldt

Bedford, et. al., v. Joan Yvonne Rogers, Joan Yvonne Rogers Trust
(Michigan Court of Appeals, April 17, 2012)

The long list of plaintiffs in this case is comprised of property owners within the Glen Eyrie subdivision located on Crystal Lake.  The plat (recorded in 1920) and the parties’ deeds established a 100-foot wide strip of land designated as the “lakeway” between the plaintiffs’ property and the edge of Crystal Lake.  The lots do not extend all the way to the water.  The lakeway was to be “dedicated to the common use of property owners in Glen Eyrie plat.”  Sometime after 1920, Crystal Lake Drive was constructed parallel to, and partially within, the lakeway.  Surveys done in 2001 and 2010 indicated that the border separating the property owners’ lots and the lakeway is located near the center line of Crystal Lake Drive.

Historically, some of the property owners built boathouses or storage units in the lakeway.  When Rogers purchased her lot in 1987 a 20 x 28-foot boathouse was built in the lakeway in front of her property.  In September 2009 she applied to the township for a permit to build a new 28 x 34-foot boathouse to replace the existing one.  The township granted the permit and Rogers began construction in October 2009.  The new “boathouse” was to include running water, heat, toilet facilities, a kitchenette, a workshop, and a second floor cupola.

As Rogers’ construction was in its early stages, the plaintiffs wrote a letter through an attorney asking Rogers to cease construction since the lakeway was reserved for the common use of property owners.  Rogers refused to stop the construction.  In December 2009 the Lake Township Zoning Administrator wrote her a letter stating the building violated the township’s zoning ordinance since it “includes substantial space designated by the Building Department as living quarters” and issued a stop work order.  Rogers appealed the administrator’s opinion and, in April 2010, the Board of Appeals voted that the boathouse constructed should be “allowed as a compatible non-commercial recreational facility.”  The Board did place certain conditions on the property that included the removal of certain residential features (e.g. a tub, shower, and certain fixed kitchen appliances).

In trial court, the plaintiffs filed a request for summary disposition citing trespass and nuisance.  They argued that the plat dedication granted property owners an “irrevocable easement over the lakeway property and prevented defendant from exclusively using the portion of the lakeway in front of her lot by constructing a new structure that expanded the footprint of the old boathouse.”  Rogers also filed for summary disposition, arguing she owned the portion of the lakeway in front of her property and had the right to make use of it.  The court noted that a tacit agreement existed among land owners that 100% of the lakeway was not dedicated for common use since most property owners built boathouses for personal use.  History supported that claim since most of the structures had existed for over 40 years.  The court acknowledged that the expansion of this boathouse by several feet would not further prevent other land owners from using and enjoying the lakeway.  It determined the expansion should be allowed.

On appeal the Court of Appeals first noted that a use under a plat dedication must be within the scope of the dedication and must not interfere with the owners’ use and enjoyment of the property.  In this case, the plaintiffs interpreted the plat dedication to create a park for common use by the lot owners.  This Court of Appeals disagreed.  The dedication stated that “the drive, court, spring road and lakeway” were dedicated for common use.  When interpreting language like this, it is in accordance with precedent to treat word groups in a list as having related meanings.  The drive, court, and spring road are all used as right-of-ways (access) for lot owners to travel to, from, and within the plat, not as a park (which implied open space without obstructions).  The Court stated that the lakeway is to be considered similar; i.e., as a right-of-way.  The Court further noted that the term “lakeway” suggests it should be used as a right-of-way rather than a park (since the word “way” is found within the term.)

Subsequently, the Court determined that “the scope of the dedication created an easement within the lakeway for common use of lot owners of the land as a right-of-way that allows lot owners to use the lakeway in the same manner as the drive, court, and spring road.”  Since Crystal Drive, which runs through the lakeway, satisfies the purpose of a right-of-way providing access, there is no need to prohibit obstructions such as boathouses from the lakeway.   The Court determined that the slightly larger boathouse would not prevent residents from using and enjoying the lakeway for its purpose as right-of-way any more so than the previous boathouse did.  Thus, it affirmed the trial court’s decision.

Documents insufficient to extend HOA covenants beyond 21 years

by Gary Taylor

Chipman’s Subdivision HOA v. Carney and Carney
(Iowa Court of Appeals, February 29, 2012)

In the 1960s, Carroll and Daisy Chipman developed fifteen lots (Chipman’s Subdivision) in rural Johnson County.  E.R. Carney and Kathy Mickalson Carney purchased three lots located in the subdivision in December 1997. In 2010, Chipman’s Subdivision Homeowners Association, Inc. (HOA) commenced a small claims action against the Carneys, claiming the Carneys owed association dues in the amount of $1820 pursuant to covenants originally recorded in 1969 and revised in 1986 and 2003. A member of the HOA board of directors testified that the HOA sought to recover dues under the 1969 covenants, which were amended in 1986 and again in 2003. The document entitled “Protective Covenants and Restrictions” was recorded on April 8, 1969, and specified that any change to the covenants required a majority vote by current lot owners. A document entitled “Covenant” was recorded on January 27, 1986, and stated the intent to establish a homeowners association for the express purpose of “maintenance, repair, upkeep and management of the roads within the Chipman’s Subdivision.”  Further, it set forth a “dues structure,” requiring a new resident to pay a one-time fee equal to one-half the annual dues and all residents to pay ten dollars per month. Five property owners signed the document. The document entitled “Revised and Restated Covenants and Restrictions” was recorded on May 22, 2003, and stated that pursuant to the 1969 covenants the majority of homeowners adopted the revised and restated covenants set forth. One provision extended the obligation to pay dues from only the owners who had a home in the subdivision to those who owned lots in the subdivision. The HOA director testified the Carneys owed dues for the maintenance and repair of the common road in the subdivision.  E.R. Carney testified he purchased the lots in 1997 from a real estate attorney who had informed him the 1969 covenants had expired and the HOA had no legal authority. Carney argued that the covenants recorded in 1969 had expired on April 8, 1990, pursuant to the twenty-one year limitations period set forth in Iowa Code 614.24, and that the document recorded in 1986 was insufficient to extend the covenants.  The district court found the 1986 document was valid and ruled in favor of the HOA.

The Court of Appeals, however, agreed with the Carneys that the 1986 document was inadequate to extend the limitations period.  Specifically the 1986 document did not meet the requirements of Iowa Code 614.24. It did not set forth the nature of the interest as a use restriction previously created, nor did it identify the 1969 covenants that created the use restriction or the date the 1969 covenants were recorded. The 1986 document was not indexed in the claimant’s book.  Finally, the 1986 document was not acknowledged or notarized. The district court found that because the documents were recorded, they were enforceable; however, the recording of a document does not demonstrate its validity.  As the covenants expired because of the invalidity of the 1986 document, the 2003 covenants could not extend the limitations period. The HOA was therefore precluded from recovering the dues it claimed were owed.

Tear down your 9,000 sq. ft. mansion (and Happy Valentines Day!)

by Gary Taylor

Thom and Lockwood Hills HOA v. Palushaj
(Michigan Court of Appeals, February 14, 2012)

The Thoms live in the Lockwood Hills development in Macomb County. The Palushajs purchased the parcel of land adjacent to the Thoms. Several deed restrictions apply to the lots in Lockwood Hills. The relevant restrictions provide that any home built must be a minimum of 100 feet from any adjacent homes, and that any home built must be a minimum of 40 feet from the side lot line.
During construction of the Palushaj’s 9,000 square foot mansion, the Thoms approached them with concerns that the new home potentially violated these deed restrictions.  The Palushajs apparently sought the advice of counsel and concluded that the restrictions were no longer valid and did not apply to their planned construction. They proceeded with construction of their home as planned, which ended up located 80 feet from the Thom’s home and approximately 28 feet from the side lot line.  After litigation spanning years, the Court of Appeals in this case was faced with the question of the appropriate remedy for the violation of the deed restriction.  The court observed that

[D]eed restrictions are a form of a contractual agreement and create a valuable property right. If a deed restriction is unambiguous, we will enforce that deed restriction as written unless the restriction contravenes law or public policy, or has been waived by acquiescence to prior violations, because enforcement of such restrictions grants the people of Michigan the freedom ‘freely to arrange their affairs’ by the formation of contracts to determine the use of land.

The court emphasized that it was “not faced with a situation where by innocent mistake a house was built that slightly encroached into the setback zone. Rather, we have a substantial,
intentional and flagrant violation of the setback requirements…”  In light of this, the court determined that demolition of all or part of the home to bring it into compliance with the deed restrictions was the only adequate remedy available to be imposed by the courts.

OBSERVATION:  This is a case involving violation of home owners association covenants.  Would the court have been as merciless if it were a zoning violation?

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