Plaintiff Below, Appellant
ORCHARD DEVELOPMENT COMPANY, LLC, a West Virginia Limited Liability
Company, and PETELER, LLC, a West Virginia Limited Liability Company,
Defendant Below, Appellee
Appeal from the Circuit Court of Berkeley County
The Honorable David H. Sanders, Judge
Civil Action No. 08-C-792
Submitted: September 7, 2010
Filed: November 23, 2010
| Gregory A. Bailey, Esq.
Christopher P. Stroech, Esq.
Arnold & Bailey, PLLC
Shepherdstown, West Virginia
Attorneys for Appellant
| Joseph L. Caltrider, Esq.
Bowles, Rice, McDavid, Graff & Love
Martinsburg, West Virginia
Attorney for Appellee Orchard
Development Company, LLC
The Covenants also reserved certain rights to the Orchard Development, which must be exercised within 15 years after the recording of the Covenants. These rights were enumerated in Section VIII as follows:
Development Rights and Other Special Declarant Rights
Section 8.1 Reservation of Development Rights. The Declarant reserves the following Development Rights which may be exercised individually or in any combination:
(a) The right by amendment to add real estate to the Common Interest Community.
(b) The right by amendment to create Units, Common Elements, or Limited Common Elements
within the Common Interest Community.
(c) The right by amendment to subdivide and combine Units or convert Units into Common Elements.
(d) The right by amendment to withdraw real estate from the Common Interest Community.
(e) The real estate to which the Development Rights specified in Paragraph D is shown on
Schedule 7. (See footnote 3)
Section 8.4 reserved Special Declarant Rights, including the right to appoint or remove an officer of the Association or Master Association or an Executive Board or Master Executive Board member during a period of Declarant control subject to the provisions of 8.10 of the Covenants.
The Covenants also established land use and restriction rules in Article X, Section 10.1. The first restriction is that All units shall be used for single-family residences only. No commercial or retail businesses shall be permitted on any Unit. Also restrictions included prohibitions against subdivision of lots, commercial vehicles, unregistered vehicles, campers, above-ground storage tanks, yard art, clotheslines as well as other requirements.
The Covenants detailed a mechanism by which the covenants themselves could be modified. In Article XIV, Section 14.1 of the Covenants the amended procedure is as follows:
[T]his Declaration, including the Plan and Plans, may be amended only by vote or agreement of Unit Owners of Units to which at least sixty-seven percent (67%) of the votes in the Association are allocated.
In Article XIV, Section 16.4(a) of the Covenants, document amendment is detailed as follows:
Document changes. Notwithstanding any lower requirement permitted by this Declaration or the Act, no amendment of any material provision of the Documents by the Association or Unit Owners described in this Subsection 16.4(a) may be effective without the vote of at least sixty-seven percent (67%) of the Unit Owners.
The word documents is defined in Article 1, Section 1.16 of the Covenants as:
The Declaration, Plan and Plans recorded and filed pursuant to the provisions of the Act, the Bylaws, Articles and the Rules of the Association as they be amended from time to time. Any exhibit, schedule or certification accompanying a Document is part of that Document.
The Covenants themselves did not reference minimum unit size or other particulars about the construction of homes in The Gallery Subdivision. Instead, the Covenants established a committee known as The Gallery Subdivision Architectural and Development Review Committee, known generally as the Review Committee, in Article I, Section 1.32, as the entity responsible for approving the plans for each unit with The Gallery Subdivision. The Executive Board of the Association was charged with establishing the Review Committee. Article XXIV, Section 24.2 of the Covenants provides that more than one-half of the members [of the Review Committee] shall be appointed by [Orchard Development] and the remaining members appointed by the Association. As such, Orchard Development controlled the composition of the Review Committee. Moreover, during this period, Orchard controlled the Executive Board of the Association pursuant to the Covenants.
The duties of the Review Committee were in part to approve building plans within The Gallery, utilizing a set of Design Development Guidelines, (hereinafter referred to as Design Guidelines. The Design Guidelines are defined in Section 1.13 of the Covenants as [t]he design guidelines established by the Unit Owners Association for the design and construction of improvements on individual units. It is in the Design Guidelines that the first mention of minimum square footage is made. As for the intent of the Design Guidelines, it is stated:
The primary areas of concern addressed by these Guidelines are Site Development and Architectural Appearance, especially as these relate to harmonious relationships with the existing terrain and among neighboring structures. In general, the goals are to minimize harsh contrasts in the landscape and architectural context, to conserve pleasing and significant natural systems and to encourage unassuming architecture appropriate to this unique environment.
Within the Design Guidelines was a statement that the guidelines apply to all properties within The Gallery subdivision, and that they are subject to federal, state and city regulations, as well as zoning and subdivision requirements and building codes, whichever criteria are most restrictive. The Design Guidelines also contain a statement that they may be revised as changing conditions and priorities dictate, in order to maintain maximum real and aesthetic benefits to The Gallery property.
Unlike the Covenants, the Design Guidelines were not recorded in the county clerk's office. However, the Design Guidelines are referenced throughout the Covenants. The Design Guidelines establish a design review process, by which a lot owner would have to seek prior approval of the Review Committee of any home building or renovation plans. The Design Guidelines begin with the aforementioned Intent section and a recommendation that all persons proposing any construction seek the assistance of a qualified design professional, such as an architect, landscape architect, civil engineer or surveyor. They next include a series of general rules, the first of which addresses the minimum size of all single-level homes. These Design Guidelines state that the ground floor area of all single-level homes or residences shall contain a minimum area of One Thousand Seven Hundred (1,700) square feet, exclusive of garage and porches, and the entire floor area of all homes or residences of more than one (1) level or story shall contain a minimum area of One Thousand Seven Hundred (1,700) square feet, exclusive of garage and porches. As is the case with the Covenants, the Design Guidelines detail many restrictions over what may be built, including a prohibition on mobile, manufactured, prefabricated or modular homes, a ban on above-ground swimming pools and no construction of anything at all, even a mailbox post, without written approval by the Developer or Architectural Review Committee, as controlled by the Declaration of Covenants and Restrictions.
In a Summary section of the Design Guidelines, the goals, purposes and intentions of the Design Guidelines was stated to be:
[T]he intent of these standards is to provide a basis for harmonious treatment of visible development within this unique environment, so that all who live here can expect to continue to enjoy their surroundings. At the same time, the desire of individuals to develop a living space that contains some personal expression must be considered. Accordingly, these Design Guidelines have been developed with a great deal of attention paid to goals and concepts and less attention to detail, except where such detail is considered essential. It will be the difficult duty of the Review Committee to interpret those goals and concepts in a consistent manner, always attempting to keep the best interest of The Gallery community in mind.
The legal authority for the Design Guidelines was set forth within the document itself. The declaration was:
Authority for design review is grounded in the governing document for The Gallery Subdivision community, the Declaration of Covenants, Conditions and Restrictions of the Gallery Subdivision. Article XXIV of the Declaration of Covenants, Conditions and Restrictions of The Galley Subdivision hereby adopts these Design Guidelines as the basis for all design review. Should these Guidelines be revised, such revisions shall then take precedence over previous guidelines.
The Design Guidelines were, as indicated above, subject to revision. Within
the Design Guidelines was the mechanism for the Association, through the Review
Committee, to revise these Design Guidelines as well as to interpret their application. Prior
to the instant dispute, the Review Committee made what the circuit court deemed on-the-
fly and unilateral revisions to the Design Guidelines, without formally complying with the
procedures proscribed by the Design Guidelines themselves, under the belief that since they
constituted the entire voting majority of the Association and Review Committee, they did
not need to proceed with the formal mechanism to make changes. One example of the
changes allowed was to increase the height of privacy fencing at the rear of each lot from
four feet to no more than eight feet, in September of 2005.
The circuit court found that prior to closing, purchasers of residential units in The Gallery were provided copies of the Covenants, the Design Guidelines and possibly other documents, including a plat of the subdivision. The appellant admitted that he received these documents.
The Covenants as well as the Design Guidelines were summarized in a one- page document entitled Brief of building requirements for The Gallery (single family) dated June 25, 2004. This summary stated that it was merely a quick reference and was not a part of the actual binding documents. The summary included a statement that [t]he covenants and design guidelines control the actual requirements and should be referred to for the actual requirements. The summary included the minimum square footage requirement of 1,700 square feet of living space, excluding garages, porches and decks as well as other building requirements.
On April 23, 2008, the appellee Peteler purchased seven lots in The Gallery Subdivision, with intentions of building 100 studio town homes. The initial number to be built was seven. These town homes were smaller than other existing townhouses in the subdivision. The proposed size of each of these townhomes was 800 square feet. On April 30, 2008, the Review Committee, which was still controlled by Orchard, approved Peteler's proposal to construct seven studio townhouses on these lots. Construction commenced in May of 2008. At this same time, Peteler began advertising the availability of these studio townhomes for sale. The advertised price of each studio townhome was $124,500, and each unit consisted of 800 square feet of living space, with two bedrooms and one and a half
baths. With the start of construction and advertisement of the small studio townhomes, the appellant on May 27, 2008, wrote a letter to the appellees demanding that the construction on units cease as he contended they were not in compliance with the minimum square footage requirement required by the Covenants and stated in the Design Guidelines.
Under this threat of litigation, the Executive Board of the Property Owners Association proposed a Consent Resolution. This resolution stated that the Directors of the Executive Board of The Gallery Subdivision Unit Owners Association, Inc., hereby express their unanimous agreement in writing to the following corporate actions and direct that this consent be filed with the minutes of the proceedings of the Board of Directors of the Corporation. This resolution stated that in order to clarify the Design Development Guidelines for multi-family attached structures in The Gallery Subdivision, the Design Guidelines General Rules, Section 1 would have to be amended to eliminate the following sentence: The ground floor area of all single-level homes or residences shall contain a minimum area of One Thousand Seven Hundred (1,700) square feet, exclusive of garage and porches, and the entire floor area of all homes or residence of more than one (1) level or story shall contain a minimum area of One Thousand Seven Hundred (1,700) square feet, exclusive of garage and porches.
As amended, the new Section 1 of the General Rules of the Design Development Guidelines, would read as follows: Each structure placed on each individual lot in The Gallery Subdivision, except for approved outbuildings, shall contain the following minimum finished living area, exclusive of garages and porches:
Type Of Structure
Minimum Finished Living Area
| Single Family Structures:
|Single Family Home (one story)||1700 sq. ft. (ground floor area)|
|Single Family Home (two or more stories)|| 1700 sq. ft. (total floor area)
| Multi-Family Structures:
|Town Home (three or more stories)||1200 sq. ft. (total floor area for each unit)|
|Studio Town Home (two stories)||750 sq. ft. (ground floor area for each unit)|
|Villa / Duplex (one story)||750 sq. ft. (ground floor area for each unit)|
|Villa/ Duplex (two or more stories)||750 sq. ft. (total floor area for each unit)|
When the Court views the entire scheme for The Gallery created by Orchard Development through the recorded Covenants and the separate, unrecorded Design Guidelines, and against the backdrop of the pattern of development within The Gallery where the living space minimums as expressed in the Design Guidelines have been historically applied only to detached single-family houses, the Court finds that these documents are unambiguous and were intended to provide Orchard Development and the Review Committee with flexibility, enough flexibility to allow Peteler's eight hundred (800) square foot studio town homes as part of The Gallery.
The circuit court's order also found that the Design Guidelines unequivocally
anticipated revisions when the Review Committee's rights to revise the Design Guidelines
as changing conditions and priorities dictate, in order to maintain maximum real and
aesthetic benefits to The Gallery property. And while noting that the amendments to the
Design Guidelines took place against the threat of litigation, and were not final until after
the instant litigation was commenced, the lower court found that the Review Committee
explicit adoption of the new Design Guidelines was an affirmation and approval of the
appellee Peteler's plan to build smaller town homes within the subdivision and the Review
Committee's rights to revise the Design Guidelines as well as to interpret the guidelines in
effect at the time.
The lower court found that the appellees properly amended the Design Guidelines, even while the litigation was pending, through the procedure pronounced in the Design Guidelines themselves. The appellant had argued that the Design Guidelines, being part of the Covenants, were subject to the amendment process for the Covenants that required the vote of at least sixty-seven percent (67%) of the unit owners. The circuit court found that the Design Guidelines were not part of the Declaration, Plat and Plans of The Gallery, and also found that the Design Guidelines did not fall with the definition of Documents, and therefore, changes in the Design Guideline were intentionally excluded from the amendment process detailed in the Covenants.
The circuit court found that there was no issue of fact for a jury to determine whether the Review Committee's revisions did maintain maximum real and aesthetic benefits to The Gallery's property because that was not an issue before the lower court. The issue before the circuit court was whether the Review Committee gave consideration to whether Peteler's studio town homes maintain maximum real and aesthetic benefits to the Gallery Property. The Design Guidelines gave this discretion to the Review Committee, and the circuit court found that submitting this subjective standard to a jury would invite the jury to substitute its judgment for that of the Review Committee, obviating the discretion specifically granted to the Review Committee. Any time a unit owner would disagree with the Review Committee's actions, he or she could undermine the authority of the Review Committee by filing suit and demanding a jury trial. Relying upon the testimony of Mr. Didden and Mr. Shaw, the lower court found that the Review Committee gave due consideration to maximum real and aesthetic benefits to The Gallery property, which was all that was required under the Design Guidelines. As such, there was no genuine issue of material fact barring entry of an order of summary judgment.
On the issue of the appellant's fear of diminished value of his real estate, the circuit court found that the appellant's fears that the smaller town homes would completely change the character of the community by devaluating the property of other unit owners was subjective and not supported by the objective testimony contained in the record. The lower court relied upon the testimony of local realtor, Gregory J. Didden. Mr. Didden testified that he did not believe that the smaller town homes would diminish the value of the surrounding units and could increase their value.
The lower court also rejected the argument of Foster that the ability of Orchard to unilaterally amend or in any manner alter the Design Guidelines is unconscionable and therefore void, within the definition of West Virginia Code § 36B-1-111(b). The circuit court found that the development scheme for this subdivision, with control being retained by Orchard, was not unusual for this type of real estate development and further, that this scheme was known or available to the appellant before he purchased his home. Thus, the Covenants and Design Guidelines were not unconscionable.
The granting or refusal of an injunction, whether mandatory or preventive, calls for the exercise of sound judicial discretion in view of all the circumstances of the particular case; regard being had to the nature of the controversy, the object for which the injunction is being sought, and the comparative hardship or convenience to the respective parties involved in the award or denial of the writ. Syllabus Point 4, State ex rel. Donley v. Baker, 112 W.Va. 263, 164 S.E. 154 (1932).
Unless an absolute right to injunctive relief is conferred by statute, the power to grant or refuse to modify, continue, or dissolve a temporary or a permanent injunction, whether preventative or mandatory in character, ordinarily rests in the sound discretion of the trial court, according to the facts and the circumstances of the particular case; and its action in the exercise of its discretion will not be disturbed on appeal in the absence of a clear showing of an abuse of such discretion. Syllabus Point 11, Stuart v. Lake Washington Realty, 141 W. Va. 627, 92 S.E.2d 891 (1956).
Once the circuit court determined that the Design Guidelines were to be separately construed from the Covenants, and that the amended Design Guidelines authorized the smaller townhouses, the appellant's claim for injunctive relief diminished. The appellant did not have the absolute right to the relief requested. The appellant could also not counter the appellee's witness regarding the alleged diminution of the value of the appellant's home as a direct and proximate result of the building of the smaller townhouses. Instead, the appellee's witness opined that the building of these townhouses might act to increase the value of properties within The Gallery subdivision. We conclude that the circuit court properly exercised its discretion in denying the injunction to stop the building of Peteler's townhouses and will not disturb that finding upon appeal.
The appellant also sought damages from the appellees for violations of these covenants. The circuit court addressed these claims by granting summary judgment in favor of the appellees. We have held that [a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law. Syllabus Point 3, Aetna Cas. & Sur. Co. v. Federal Ins. Co. Of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963). Further, [t]he question to be decided on a motion for summary judgment is whether there is a genuine issue of fact and not how that issue should be determined. Syllabus Point 5, Aetna Cas. & Sur. Co. v. Federal Ins. Co. Of New York, 148 W. Va. 160, 133 S.E.2d 770 (1963).
Having resolved that the Covenants and Design Guidelines are separate and distinct documents, and further, having affirmed the circuit court's rulings on whether Orchard could alter the terms of the Design Guidelines to allow for the construction of these smaller townhouses, we see no genuine issue of fact left to be tried. The circuit court correctly denied the appellant's requested injunction, and we affirm the lower court's ruling.