Vanderwood v. Woodward, 2019 UT App 140 (abandonment, CC&R interpretation, injunctive relief).

2019 UT App 140

Robert Vanderwood and Lorraine Vanderwood, Appellees,
v.
Kenneth D. Woodward, Appellant.

No. 20180503-CA.

Court of Appeals of Utah.
Filed August 22, 2019.

Appeal from Second District Court, Ogden Department, The Honorable Mark R. DeCaria, No. 160904934. Brad C. Smith, Attorney for Appellant. Jason M. Yancey, Richard W. Jones, and Taylor R. Jones, Attorneys for Appellees. JUDGE RYAN M. HARRIS authored this Opinion, in which JUDGES DAVID N. MORTENSEN and DIANA HAGEN concurred.

Opinion

HARRIS, Judge.

¶1 Kenneth D. Woodward built a large detached garage (Garage) behind his house. This infuriated his next-door neighbors, Robert and Lorraine Vanderwood (the Vanderwoods), who consider the structure an eyesore and not in keeping with the subdivision's restrictive covenants, known as the Declaration of Building and Use Restrictions (Restrictions). The Vanderwoods sued Woodward, seeking (among other things) a judicial order commanding Woodward to tear down the Garage. After entertaining cross-motions for summary judgment, the district court declared the Garage out of compliance with the Restrictions, and ordered Woodward to tear it down. Woodward now appeals, and we reverse.

BACKGROUND[1]

¶2 The parties own adjacent homes in the Country Haven Subdivision No. 3 (Subdivision) in Weber County, Utah, with the Vanderwoods living immediately to the north of Woodward. Each lot in the Subdivision is subject to the Restrictions, which the Subdivision's original developer duly recorded in May 2003, before any of the parties purchased property within the Subdivision. Among other things, the Restrictions contain a number of covenants that control not only the type of structures that can be built within the Subdivision, but also control, to some extent, the type of material that can be used to build them and where they may be built. The Restrictions also require that all construction plans be approved by an "Architectural Control Committee" (ACC), which was to be established and operated pursuant to the Restrictions.

¶3 The original developer named members of the original ACC, but these individuals did not actually function as an ACC, and never provided any approvals or disapprovals of designs or plans for any structures within the Subdivision. The developer transferred all of the lots to new owners by 2003 or 2004, and since then the Subdivision's homeowners have had the right to reform the ACC and make it functional, but they never have. There are twenty-three lots in the Subdivision, all of which are built out, and no proposed building or structure has ever been reviewed, let alone approved or disapproved, by an ACC. Indeed, prior to the instant suit, not only had both Woodward and the Vanderwoods built houses on their respective properties without seeking the approval of any ACC, but both had also constructed some type of outbuilding (Woodward had built a shed; the Vanderwoods a detached garage) on their properties without bothering to obtain ACC approval. The other residents of the Subdivision acted similarly; all have built something on their property without obtaining approval from anyone, and the record does not contain evidence of any objection—prior to the events giving rise to this lawsuit—by any homeowner to any other homeowner's proposed construction, whether on the basis of lack of ACC approval or for any other reason.

¶4 In May 2016, Woodward hired a local construction company (Builder) to construct a "pole garage" on his lot that he could use as a workshop to restore automobiles and build hot-rods. A few weeks later, Woodward applied for a building permit from West Haven City for the project. As part of the permitting process, a city building inspector (Inspector) visited Woodward's lot and reviewed the plans and the proposed placement. Inspector and Woodward also discussed the Restrictions, and Inspector explained that, because "there had never been an [ACC] functioning in [the Subdivision]," it was "not only impossible, but unnecessary for [Woodward] to receive approval" from the ACC. After meeting with Woodward and reviewing the plans, Inspector issued Woodward a building permit for the Garage, and construction commenced.

¶5 In August 2016, while the Garage was still under construction, the Vanderwoods approached Woodward and provided him a letter objecting to the construction of the Garage, and stating their belief that the building materials being used— metal siding for the exterior walls and a metal roof—were in violation of the Restrictions. Specifically, they asserted that both houses and outbuildings must "match in materials," and that "[b]rick, stone or stucco" must be used for the exterior walls of the structure, and "[c]edar [s]hake, [t]ile, or [a]rchitectural shingles" must be used for the roof. The letter voiced no objection to the Garage's location or placement. In response, Woodward invited the Vanderwoods to meet with Builder "to address any aesthetic concerns," but the parties were unable to come up with a mutually satisfactory solution. Thereafter, and with only the Garage's roof left to be installed, the Vanderwoods filed this lawsuit.

¶6 In their complaint, the Vanderwoods made several specific claims that Woodward's Garage was in violation of the Restrictions. First, they alleged that the Garage was out of compliance because Woodward had not first obtained ACC approval for the construction. Second, they complained that the Garage was "not in harmony" with other buildings in the Subdivision. Third, they asserted that the Garage was constructed with materials not allowed by the Restrictions. And finally, they claimed that the Garage was located in a position that violated the Restrictions' setback requirements.

¶7 Following discovery, the Vanderwoods filed a motion for partial summary judgment with regard to liability, seeking an order declaring that the Restrictions constitute a valid and enforceable contract and that, by building the Garage, Woodward had violated the terms of that contract. Woodward responded by filing a summary judgment motion of his own, asking the court to declare that the Subdivision homeowners had abandoned the Restrictions and that he had therefore not violated them. Both sides also sought attorney fees.

¶8 Both sides filed sworn declarations in support of their motions for partial summary judgment. Attached to the Vanderwoods' first declaration are a number of photographs depicting outbuildings in the Subdivision that appear to be in violation of the side and rear yard setback requirements. Woodward noted this in his responsive declaration, stating that the "side and rear setback requirements have been routinely disregarded in [the S]ubdivision," and specifically noting seven homeowners who he thought had done so. In a rebuttal declaration, the Vanderwoods acknowledged that "there are a handful of" homeowners in the Subdivision who "have violated the side yard setback requirements."

¶9 After briefing and oral argument, the district court granted the Vanderwoods' motion and denied Woodward's. In so ruling, the court concluded, among other things, that (1) "the requirement that all buildings get ACC approval has been abandoned," but that the remainder of the Restrictions had not been abandoned and were enforceable; (2) the Garage's metal roof and metal exterior violates the Restrictions; and (3) the Garage's location violates "the side-yard setback provision" of the Restrictions.

¶10 Soon thereafter, the Vanderwoods filed a second motion for summary judgment, this time asking the district court to impose a remedy. Specifically, they asked the court to enforce the Restrictions by ordering that the Garage "be immediately disassembled and moved to comply with the setback requirements" and, if rebuilt, to comply with the Restrictions' roofing and exterior material requirements. Woodward opposed the motion, arguing that injunctive relief was improper. The court again granted the Vanderwoods' motion, and issued the requested injunction.^[2] Pursuant to the terms of the Restrictions, the court also ordered Woodward to pay the Vanderwoods their attorney fees they had accrued in bringing the lawsuit.

ISSUES AND STANDARDS OF REVIEW

¶11 Woodward now appeals, and asks us to consider five issues. The first three issues consist of challenges to the district court's first grant of summary judgment. First, Woodward contends that the Restrictions have been abandoned in their entirety and are therefore unenforceable. Second, Woodward contends that the provisions in the Restrictions regulating building materials apply only to dwellings, and that therefore the Restrictions do not forbid the construction of a metal outbuilding. Third, Woodward contends that the Vanderwoods have failed to adequately establish that the Garage is in violation of the setback Restrictions. Summary judgment is proper when "the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). "When reviewing a district court's denial of summary judgment, we grant no deference to the district court's legal conclusions and review them for correctness." Anderson Dev. Co. v. Tobias, 2005 UT 36, ¶ 19, 116 P.3d 323 (quotation simplified).

¶12 Fourth, Woodward contends that the district court's grant of injunctive relief in favor of the Vanderwoods was improper. "On appellate review, a grant of injunction is overturned only upon showing that the district court abused its discretion or that the decision is clearly against the weight of evidence." Carrier v. Lindquist, 2001 UT 105, ¶ 26, 37 P.3d 1112.

¶13 Fifth, Woodward challenges the district court's award of attorney fees to the Vanderwoods as the prevailing party. "Whether a party is the prevailing party in an action is a decision left to the sound discretion of the trial court and reviewed for an abuse of discretion." Larry J. Coet Chevrolet v. Labrum, 2008 UT App 69, ¶ 16, 180 P.3d 765 (quotation simplified).

ANALYSIS

I. The Restrictions

¶14 Woodward first contends that the district court erroneously entered summary judgment in favor of the Vanderwoods on their claim that Woodward breached the terms of the Restrictions. This is a claim for breach of a contract. See Swenson v. Erickson, 2000 UT 16, ¶ 11, 998 P.2d 807 (stating that "interpretation of [restrictive] covenants is governed by the same rules of construction as those used to interpret contracts"). A breach of contract claim has four elements: "(1) a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other party, and (4) damages." America West Bank Members, LC v. State, 2014 UT 49, ¶ 15, 342 P.3d 224 (quotation simplified). Woodward offers three reasons why he believes the Vanderwoods' breach of contract claim fails, either in whole or in part. First, he asserts that the Restrictions—most notably the requirement that all construction projects be reviewed and approved by an ACC—have been abandoned, and that neither he nor any other homeowner in the Subdivision remains bound by them. Second, he contends that the Restrictions' provision governing building materials applies only to dwellings, and not to his detached Garage. Third, he claims that the Vanderwoods have not provided sufficient evidence in support of their claim that the Garage violated the Restrictions' setback requirements.

A. Abandonment of the ACC Procedures

¶15 Woodward first argues that the Restrictions' advance-ACC-approval requirement (Part B.2), including its provision requiring external "harmony" between structures, has been abandoned. In his briefs, he further asserts that the abandonment of this covenant renders the Restrictions as a whole unenforceable. In response, the Vanderwoods contend that, even if "the requirement to obtain prior approval from the ACC has been abandoned or waived," that provision can be severed from the Restrictions without invalidating the Restrictions in their entirety. While we agree with Woodward that Part B.2 has been abandoned, abandonment must be analyzed on a provision-by-provision basis, and the Subdivision's collective abandonment of the ACC provisions does not mean that the Restrictions have been abandoned in their entirety.

¶16 Property owners who purchase land subject to restrictive covenants "have a right to enforce such covenants against other owners who violate them." Swenson, 2000 UT 16, ¶ 21. However, "property owners may lose this right if the specific covenant they seek to enforce has been abandoned." Fink v. Miller, 896 P.2d 649, 652 (Utah Ct. App. 1995). Abandonment of a covenant occurs when there is "substantial and general noncompliance with the covenant." Swenson, 2000 UT 16, ¶ 22 (quotation simplified). Conversely, abandonment has not occurred if the violations "are slight, unimportant, and unsubstantial," "are of a minor nature and do not destroy the general building scheme," or are "inoffensive." Id. ¶ 23 (quotation simplified). Simply put, abandonment has occurred "when the average person, upon inspection of a subdivision and knowing of a certain restriction, will readily observe sufficient violations so that he or she will logically infer that the property owners neither adhere to nor enforce the restriction." Fink, 896 P.2d at 653.

¶17 Our supreme court has adopted a three-part test for determining whether a specific covenant has been abandoned. Under this test, courts "examine: (1) the number, nature and severity of the then existing violations; (2) any prior act of enforcement of the restriction; and (3) whether it is still possible to realize to a substantial degree the benefits intended through the covenant." Swenson, 2000 UT 16, ¶ 27 (quotation simplified). Furthermore, "[a]bandonment of one covenant does not suggest abandonment of other, albeit similar, covenants in the agreement," Fink, 896 P.2d at 655, and "[e]vidence of abandonment must be established by clear and convincing evidence," Swenson, 2000 UT 16, ¶ 22.

¶18 One of the covenants at issue here is the provision requiring that all construction within the subdivision be approved in advance by an ACC. Part B.2 of the Restrictions provides in relevant part as follows:

No building, structure or wall shall be erected, placed or altered on any lot until the construction plans and specifications and a plan showing the location of the structure have been approved by the [ACC] as to quality of workmanship and materials, harmony of external with existing structures, and as to location with respect to placement on lot, topography and finish grade elevation.

¶19 After reviewing the evidence submitted to it on summary judgment, including the undisputed facts that no ACC had ever functioned in the Subdivision, and that no homeowner in the Subdivision had ever obtained approval for any construction from any ACC, the district court determined that "the requirement that all buildings get ACC approval has been abandoned," and no party challenges that determination on appeal. We therefore credit the district court's determination in this regard, and consider the ACC-approval requirement to have been abandoned.

¶20 The Vanderwoods argue, however, that abandonment of the ACC-approval requirement does not necessarily mean that all of Part B.2 must fall. Specifically, they argue that Part B.2's language mandating that the ACC review proposed construction projects for, among other things, "harmony of external" constitutes a substantive requirement that buildings within the Subdivision be in harmony with each other.^[3] We simply