Opinion
No. 25996-6-II.
Filed: May 25, 2001. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION.
Appeal from Superior Court of Mason County, No. 97-2-00726-1, Hon. Toni A. Sheldon, May 1, 2000, Judgment or order under review.
Counsel for Appellant(s), Jack W. Hanemann Jr., Hanemann Bateman Jones Bardwil, 2120 State St. NE, Suite 101, Olympia, WA 98506.
Silvia A. San Nicolas, Freeley San Nicolas Pllc, 2120 State Ave NE, Olympia, WA 98506.
Jack W. Hanemann Jr., Hanemann Bateman Jones Bardwil, 2120 State St. NE, Suite 101, Olympia, WA 98506.
Silvia A. San Nicolas, Freeley San Nicolas Pllc, 2120 State Ave NE, Olympia, WA 98506.
Counsel for Respondent(s), Mark R. Roberts, Brown Davies Roberts, Ste 202, 7525 Pioneer Way, Gig Harbor, WA 98335.
George Osborne sold real property to Scott Akre and Peter Moser in 1989. Osborne claims that the parties agreed to certain restrictive covenants, which he now seeks to enforce. When Akre and Moser refused to abide by the covenants, Osborne sued to enforce them. After denying Osborne's motion to compel discovery and to continue the summary judgment hearing, the trial court granted summary judgment for Akre and Moser. On appeal, Osborne contends that either the short plat, the purchase agreement, or the deed of trust contained sufficient language to create the covenants.
Further, Osborne argues that the covenants bound Akre and Moser because they were active in the homeowners association and participated in amending the covenants. We find that there are issues of material fact as to whether Akre and Moser agreed to the covenants and, accordingly, reverse and remand for further proceedings.
FACTS
In 1987, appellant George Osborne short-platted two undeveloped lots in Mason County, creating an eight-lot development. The short plats contained the following notation:
Notes: (1) All property owners must belong to Pine Tree Cove Homeowners Association. (2) Operation and maintenance of well, road, septic area and other community functions will be governed by the Pine Tree Cove Homeowners Association. (3) CCR's to restrict septic discharge to specified dedicated septic easement area only and subject to design constraints attendant thereto.
CP at 161.
Osborne filed the short plats in March 1987. In the summer of 1987, Osborne created a Declaration of Covenants, Conditions, and Restrictions (CCRs), but never recorded it. At that time, Osborne also formed and held an annual meeting of the Pine Tree Cove Homeowners Association (PTCHA). PTCHA's officers and board of directors, as well as the Architectural Control Committee authorized by the CCRs, consisted of Osborne, his wife Mary Lou, and their daughter Lynda Hainer. Although PTCHA adopted Articles of Incorporation and bylaws at that time, Osborne did not file them with the Secretary of State until 1993.
Respondents Akre and Moser purchased one of the platted lots from Osborne in 1989. The purchase and sale agreement included a provision stating: 'Seller to provide purchasers with RR program for their acceptance.' CP at 338. Osborne understood this provision to mean that he had to provide Akre and Moser with all PTCHA's rules and regulations, CCRs, and bylaws. Osborne provided a copy of the CCRs to Akre and Moser before closing the sale. But he never provided them with a copy of the PTCHA bylaws.
Osborne states that Akre and Moser attended a PTCHA meeting in June 1990, and that he reminded all members present of the need to comply with the CCRs. The record contains no minutes of PTCHA meetings from 1990 until July 1995. Akre and Moser attended two PTCHA meetings in 1995. At the 1996 meeting, Scott and Stacy Akre were elected vice-president and secretary, respectively. From July 1995 through 1997, PTCHA members questioned PTCHA's authority and the CCRs' and bylaws' enforceability.
Osborne notified Akre and Moser in 1996 that conditions and structures on their lot violated PTCHA rules, and that fines would result. In November 1997, Osborne sued Akre and Moser, seeking a declaratory judgment of the CCRs' and bylaws' enforceability, an injunction prohibiting Akre and Moser from violating the terms of these documents, and an award of fines and attorney fees.
The trial was set for February 23-25, 2000. The cutoff for discovery was to be July 31, 1998, but the parties' counsel agreed to continue discovery past that date. Akre and Moser deposed George Osborne on October 12, 1999. On October 28, 1999, Osborne's counsel announced his intent to withdraw from the case effective November 8, 1999. New counsel appeared for Osborne in December 1999 and January 2000. Shortly after that, the trial judge granted summary judgment to Akre and Moser.
New counsel sought to depose Akre and Moser. The trial judge refused to allow the depositions because the discovery cutoff date had passed. Osborne assigns error to this. Because we reverse and remand for trial, we assume the court will set a new discovery schedule. Accordingly, we do not address this assignment of error.
ANALYSIS I. Summary Judgment A. Standard of Review
When reviewing an order for summary judgment, we engage in the same inquiry as the trial court. Mountain Park Homeowners Ass'n, Inc. v. Tydings, 125 Wn.2d 337, 341, 883 P.2d 1383 (1994). Summary judgment is appropriate only if the pleadings, affidavits, depositions, and admissions on file demonstrate the absence of any genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. CR 56. We consider all facts and reasonable inferences in the light most favorable to the nonmoving party. Mountain Park, 125 Wn.2d at 341. We uphold an order granting summary judgment only if, from all the evidence, reasonable persons could reach only one conclusion. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982).
B. Was an Enforceable Covenant Formed?
Osborne argues that an equitable restriction on the property binds Akre and Moser. To show an equitable restriction, Osborne must establish:
(1) a written enforceable promise between the original parties, (2) that touches and concerns the land or that the parties intend to bind successors, (3) that an original party or successor seeks to enforce against an original party or successor, (4) who had notice of the covenant. Hollis v. Garwall, Inc., 137 Wn.2d 683, 691, 974 P.2d 836, reconsideration denied, (1999).
At issue here is whether Osborne produced evidence of a written promise that binds the parties. Akre and Moser argue that he did not because there is no evidence that they signed any agreement to have the covenants bind them. But Akre and Moser misconstrue the nature of the document or documents required to create a binding covenant.
At least three types of documents will satisfy the requirement of a written promise: (1) a recorded declaration of covenants; (2) a deed containing the restrictions that conveys an interest in property; and (3) a restriction contained on the face of a subdivision plat. Hollis, 137 Wn.2d at 691. The covenants at issue in Hollis were written on the face of the filed subdivision plat and all original owners of the subdivided property had signed it; thus, the court found that the first element of an equitable restriction — the enforceable written promise — was met. Hollis, 137 Wn.2d at 692.
Osborne contends that Akre and Moser, by signing the deed of trust, agreed to the restrictive covenants. As Akre and Moser correctly argue, the deed of trust is a form document that contains standard language requiring the deed-of-trust grantors (Akre and Moser) to 'comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the property.' CP at 193.
But where a deed has been held to create enforceable restrictions, the deed language has specifically stated the restrictions on land use. For example, in Johnson v. Mt. Baker Park Presbyterian Church, 113 Wn. 458, 459-60, 194 P. 536 (1920), conveyance deeds to residential lots restricted land use to single-residence homes only. In Ronberg v. Smith, 132 Wn. 345, 346, 232 P. 283 (1925), conveyance deeds restricted the use of property, as well as the size and value of buildings on property. Similarly, in Leighton v. Leonard, 22 Wn. App. 136, 137, 589 P.2d 279 (1978), the warranty deed contained the restrictive covenants containing building height restrictions. In contrast, Akre and Moser's boilerplate deed-of-trust document creates no enforceable covenants.
But the 1987 short plat and the purchase and sale agreement Akre and Moser signed does provide sufficient evidence of an enforceable written promise to survive summary judgment. The notes on Osborne's filed short plats require all owners to belong to the homeowners association and provide that the association will control all common areas and community functions. Further, the notes refer to CCRs that control septic discharge and a septic easement. The scope of the CCRs is not at issue here. At trial, the court can consider extrinsic evidence as to what the parties intended by this language. Riss v. Angel, 131 Wn.2d 612, 623, 934 P.2d 669 (1997); Berg v. Hudesman, 115 Wn.2d 657, 667, 801 P.2d 222 (1990).
Akre and Moser argue, however, that because they did not agree to these notes, the notes are unenforceable. A developer does not create a covenant merely by recording a declaration of restrictions; rather, the covenant arises only when the property is conveyed, the contract or deed of conveyance expressly refers to the recorded restrictions, and there is a discernible intent by one or both parties to be bound. 17 William B. Stoebuck, Washington Practice: Real Estate: Property Law § 3.2, at 124 (1995). Nevertheless, where restrictions have been recorded, a later conveyance that did not refer to the restrictions has been held sufficient to bind a later owner. Thorstad v. Federal Way Water Sewer Dist., 73 Wn. App. 638, 642-43, 870 P.2d 1046 (1994). Other courts, without mentioning whether a later deed refers to or incorporates the plat restrictions, have enforced restrictive covenants contained in recorded plat documents. See Shafer v. Bd. of Trs. of Sandy Hook Yacht Club Estates, Inc., 76 Wn. App. 267, 269, 883 P.2d 1387 (1994); Hagemann v. Worth, 56 Wn. App. 85, 86-87, 782 P.2d 1072 (1989).
In any event, there is more than simply a later conveyance here. Akre and Moser signed a purchase and sale agreement that stated, 'Seller to provide purchasers with RR program for their acceptance.' CP at 338. The Hollis court did not include a purchase and sale agreement in its list of documents that would satisfy the writing requirement, but the court did not state that its list was exhaustive. See Hollis, 137 Wn.2d at 691. Moreover, the question is essentially whether Akre and Moser agreed in writing to Osborne's covenants. This is a contract issue that turns, not on the form of the written agreement, but on whether there is some evidence that Akre and Moser agreed in writing to be bound by the covenants. Reasonable minds could differ as to whether the note 'Seller to provide purchasers with RR program for their acceptance' — indicated Akre and Moser's intent to be bound to the CCRs Osborne gave them. CP at 338. Again, the trial court can consider extrinsic evidence as to what the parties intended by this language. Construing the evidence in favor of Osborne, it is sufficient to survive summary judgment. The trial court erred in granting summary judgment.
1515-1519 Lakeview Boulevard Condo. Ass'n v. Apartment Sales Corp., 102 Wn. App. 599, 604, 9 P.3d 879, as amended on denial of reconsideration, 17 P.3d 639 (2000) (covenants must be enforceable as a contract between the original parties); Stoebuck, Washington Practice, § 3.11, at 144.
C. Has Osborne Abandoned the Covenant?
Akre and Moser argue that even if a valid covenant was formed when they purchased their property from Osborne, Osborne has abandoned the covenant and should not now be allowed to enforce it. Washington courts have refused to enforce a covenant when the covenant has been 'habitually and substantially violated so as to create an impression that it has been abandoned.' Sandy Point Improvement Co. v. Huber, 26 Wn. App. 317, 319, 613 P.2d 160 (1980). Although Akre and Moser's argument is persuasive — the record reflects no enforcement action by PTCHA or Osborne from 1990 to 1995, whether a party is estopped from enforcing covenants is a question of fact. Sandy Point, 26 Wn. App. at 319.
Courts generally consider the relative number of subdivision lots that violate the covenant and the extent of the violations. See, e.g., White v. Wilhelm, 34 Wn. App. 763, 769-70, 665 P.2d 407 (1983) (citing Washington State Bar Ass'n, Real Property Deskbook § 15.21 (1979)); Sandy Point, 26 Wn. App. at 319. In Mt. Baker Park Club, Inc. v. Colcock, 45 Wn.2d 467, 471-72, 275 P.2d 733 (1954), the trial court also considered the location of the nonconforming garages and the manner of construction; the trial court in White, 34 Wn. App. at 770, noted that there had been no Architectural Control Committee in existence for several years before plaintiffs sued. Finally, to find abandonment of a restrictive covenant, the violations must be material to the covenant's overall purpose and minor violations are insufficient to show abandonment. Mountain Park, 125 Wn.2d at 342. These are all factual issues that must be resolved at trial.
D. Ratification
Osborne claims that, even if the parties never formed an enforceable covenant, he produced evidence that Akre and Moser ratified the CCRs by participating in PTCHA. Osborne groups two arguments under the heading of 'ratification.' First, he argues that Akre and Moser, 'by their silence prior to closing,' ratified a previously voidable contract. We disagree. 'Ratification may confirm a voidable act, but not one utterly void.' Moore v. Los Lugos Gold Mines, 172 Wn. 570, 596, 21 P.2d 253 (1933) (quoting Schwab v. E. G. Potter Co., 87 N.E. 670, 673 (N.Y 1909)). Here, if the documents existing at closing were not sufficient to constitute an enforceable written agreement, the agreement was void, not voidable. Thus, as an alternative theory to finding an enforceable written agreement, this theory fails.
Second, Osborne argues that Akre and Moser ratified the CCRs by their conduct subsequent to closing, specifically their participation in PTCHA.
In Riss, the Supreme Court held that individual members of a homeowners group could be jointly and severally liable for the Board of Directors' wrongful acts, but only if they ratified the Board's decision. Riss, 131 Wn.2d at 636-37. In reaching this conclusion, the court applied agency principles: 'Under agency law, '[r]atification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him." Riss, 131 Wn.2d at 636 (quoting Nat'l Bank of Commerce v. Thomsen, 80 Wn.2d 406, 413, 495 P.2d 332 (1972)).
Under Riss, Akre and Moser could be liable for the wrongful acts of PTCHA's Board of Directors, but only if they affirmed the acts; this requires that they 'act with full knowledge of the facts, accept the benefits of the acts, or without inquiry assume an obligation imposed.' Riss, 131 Wn.2d at 636. Riss did not discuss the difference between void and voidable acts. But clearly, the Board's acts in Riss were not void; there was no question that an enforceable set of covenants bound the individual homeowners. And the Board had authority under the covenants to approve or disapprove the plaintiff's building plans, it simply exercised the power wrongfully. The plaintiff, who had been denied permission to build by the Board, sought to impose attorney fees against individual members of the homeowners group. To do so, the plaintiff argued that the members had ratified the Board's wrongful denial.
Here, Osborne contends that Akre and Moser are bound to an entire set of covenants by ratifying the acts of a homeowners association. But if the original documents did not create binding covenants, the association had no authority to act at all. Thus, Osborne seeks to ratify void, not merely voidable, acts. Riss does not extend so far. Osborne cites no Washington authority for this broad proposition and we have found none. The trial court did not err in dismissing Osborne's ratification claim.
Reversed and remanded for trial.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
WE CONCUR: BRIDGEWATER, J., HUNT, J.