Story Bed & Breakfast v. BROWN COUNTY AREA

• Citation: 789 N.E.2d 13
• Decision Date: 21 May 2003
• Docket Number: No. 07A01-0206-CV-201.,07A01-0206-CV-201.
• Parties: STORY BED & BREAKFAST, LLP, Appellant-Plaintiff, v. BROWN COUNTY AREA PLAN COMMISSION, Appellee-Defendant, and Patricia N. March, Intervener-Defendant.
• Court: Indiana Appellate Court

789 N.E.2d 13

STORY BED & BREAKFAST, LLP, Appellant-Plaintiff, v. BROWN COUNTY AREA PLAN COMMISSION, Appellee-Defendant, and Patricia N. March, Intervener-Defendant.

No. 07A01-0206-CV-201.

Court of Appeals of Indiana.

May 21, 2003.

Steven K. Emery, Holly M. Harvey, Bunger & Robertson, Bloomington, IN, Attorneys for Appellant.

David B. Schilling, Bloomington, IN, Attorney for Brown County Area Plan Commission.

Michael A. Mullett, Mullett & Associates Indianapolis, IN, Attorney for Patricia N. March.

OPINION

MATHIAS, Judge.

Story Bed & Breakfast, L.L.P. ("Story") filed a petition for declaratory judgment pursuant to Indiana Code section 34-14-1-1,¹ seeking to preclude the Brown County Area Plan Commission ("Plan Commission") from enforcing land use restrictions imposed by the planned unit development ("PUD") district ordinance governing real property owned by Story.² The Plan Commission counterclaimed, seeking a declaratory judgment that the Story property is subject to PUD land use restrictions and that Story's use of the property violates those restrictions.

The parties present the following restated issues for review:

I. Whether land use restrictions termed "covenants," attached to the Story property PUD and found in the Brown County Zoning Ordinance ("Zoning Ordinance"), are commitments or conditions;

II. Whether the Zoning Ordinance requires PUD covenants to be recorded; and

III. Whether Story's prior knowledge of the Story property PUD renders any potential recording requirement moot.

We conclude that the characterization of the Story property covenants as either a "condition" or a "commitment" to be unhelpful and instead characterize the covenants as "land use restrictions," which we determine must be recorded or otherwise memorialized in a manner reasonably calculated to provide notice to a subsequent bona fide purchaser of real property ("BFP"). We also conclude that the Zoning Ordinance requires PUD land use restrictions to be recorded before they may be asserted against a BFP. Finally, we conclude that Story's prior knowledge of the Story property PUD does not negate the need for recording. Accordingly, we affirm in part and reverse in part.

Facts and Procedural History

On August 3, 1999, Story acquired an interest in twenty-two acres of real property adjacent to the intersection of State Road 135 and Elkinsville Road in Brown County, which it now uses to operate the "Story Inn" and several bed and breakfast units. Richard Hofstetter ("Hofstetter") and Frank Mueller ("Mueller") each own a fifty percent interest in Story. The Plan Commission is the local agency responsible for administering the Zoning Ordinance.

The Plan Commission designated the Story property "PUD" in 1986, pursuant to petition 86-PUD-2A.³ 86-PUD-2A was filed by Story Group, Inc. ("Story Group"), a predecessor in interest to the Story property. Appellant's App. pp. 110-13. 86-PUD-2A included a site plan that described the Story property's existing buildings, proposed buildings, and the planned uses of those buildings. See Appellees and Cross-Appellants' Supp.App. p. 5.

On May 30, 1986, the Plan Commission held a work session regarding 86-PUD-2A, with interested local property owners, Story Group, and Plan Commission members in attendance. In this session the Plan Commission imposed a list of land use restrictions, denominated as "covenants," to 86-PUD-2A. These restrictions, which are reflected in the written minutes of the work session, include no outside audio equipment or speakers, no outside lighting after 10:00 p.m., no overnight camping, no excess noise or lighting, and compliance with the general PUD site plan. Appellant's App. p. 124.

The Plan Commission issued primary approval of 86-PUD-2A on June 24, 1986, subject to the above mentioned covenants. Subsequently, the Brown County Board of Commissioners approved 86-PUD-2A. Neither the covenants nor the PUD designation pursuant to 86-PUD-2A were recorded. Br. of Appellee and Cross-Appellant at 4.

In 1992, Story Group sought approval for a second PUD for a twelve-acre addition to the Story property under petition 92-PUD-2, and the review and approval process proceeded in much the same fashion as that of 86-PUD-2A. On June 23, 1992, the Plan Commission granted primary approval of 92-PUD-2, subject to a list of covenants similar to those attached to 86-PUD-2A. Appellant's App. pp. 131-32. The Board of Commissioners granted primary approval of 92-PUD-2 on July 6, 1992. By September 8, 1992, both the Plan Commission and the Board of Commissioners granted secondary approval of 92-PUD-2. As with 86-PUD-2A, neither the covenants nor the PUD designation pursuant to 92-PUD-2 were recorded, and the only written evidence of the covenants attached to either Story property PUD is found in the files of Plan Commission and Board of Commissioners records. Br. of Appellee and Cross-Appellant at 4.

Prior to its purchase of the Story property, Story hired a third party to conduct a title search. Not surprisingly, this search did not disclose any restrictions affecting the use of the Story property. However, before Story acquired the property, Hofstetter met with Doug Harden of Miller Architects in April of 1999. During a conversation concerning the installation of a septic system, Doug Harden informed Hofstetter of Story property's PUD designation, but said nothing of the land use restrictions included in the Story property PUD.

On September 20, 1999, after Story had invested over $100,000 to improve the Story property⁴ and had conducted musical festivals on the property, Brown County employee Dan Harden advised Hofstetter that a Story property neighbor had filed a noise complaint against Story and had questioned Story's use of the "Old Mill Building" as a bar and grill.⁵ Consequently, Hofstetter wrote Plan Commission Director Joan Wright ("Wright") stating:

Until this morning, [Mueller] and I were unaware of any noise restrictions imposed by the Planning Commission. These restrictions, as you know, were enacted on May 30, 1986. The Bank never furnished us with the list of these restrictions. As a lawyer, I know that ignorance of the law is no excuse, and I apologize for any disturbance to neighbors as a result of the Gospel singers. If you will furnish me with a list of those who complained, I will apologize personally. Please know that we were acting in good faith in bringing in the Gospel singers, and we will abide by the 1986 restrictions in the future, now that we know about them.

Dan [Harden] had some questions about the Old Mill Grill, which, apparently, was not specifically designated as a food and beverage service area in the PUD (though it was designated for retail). We do not believe that this should be a cause for concern at your office.

Tr. pp. 221-22. Wright responded to Hofstetter by letter, dated September 24, 1999, which states:

I encourage you to become familiar with the conditions imposed upon the development of Story Inn through the Planned Unit Development that was approved for it in 1986 and 1992. This knowledge will assist you in the future responsible management of the development, and enable us to help you more effectively. It is the responsibility of our office to enforce the [Zoning Ordiance]; this PUD is considered rezoning and, thus, part of the ordinance. I have enclosed a copy of our enforcement authority.

The PUD does not permit use of the Mill building as a bar and grill. It is designated as a "shop/Office/B & B unit" and any other use of the building violates the terms of the PUD. Further, any use of or on the property which is not specified in the PUD violates the conditions for approval. If you decide to use the property in ways that are not allowed by the PUD, this office will take action under Chapter 4 of the [Zoning Ordinance].

Appellee's App. p. 1. Hofstetter subsequently visited the Plan Commission office and reviewed the Story property PUD approval records, and after becoming aware of the Story property PUD covenants, he and Mueller invested an additional $300,000 in the Story property.

Despite Hofstetter's statement that Story would abide by the Story property PUD covenants, Story proceeded to conduct additional outdoor musical festivals. During these festivals, live musical acts, which lasted until roughly midnight, performed using amplified music and outdoor lights. The music of these festivals could be heard by at least one neighboring property owner. Consequently, owners of neighboring property registered complaints with the Plan Commission. When asked about the festivals, Story informed the Plan Commission that it intended to conduct similar festivals in the future.

Story then brought this action, seeking a declaratory judgment that would preclude the Plan Commission from enforcing the unrecorded Story property land use restrictions. The Plan Commission moved for summary judgment on August 29, 2001, asserting that Story is subject to the land use restrictions imposed by the Story property PUD and that Story's use of the property violated those restrictions. Story filed its cross-motion for summary judgment on September 20, 2001. On March 12, 2002, the trial court issued its order granting in part and denying in part each motion. Consequently, Story moved for certification of the interlocutory order, which was granted by the trial court, and this Court accepted jurisdiction on July 30, 2002.

Discussion and Decision

When reviewing a grant or denial of a motion for summary judgment, our standard of review is the same as it is for the trial court: whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Catt v. Bd. of Comm'rs, 779 N.E.2d 1, 3 (Ind.2002) (citing Ind. Univ. Med. Ctr. v. Logan, 728 N.E.2d 855, 858 (Ind.2000)). Summary judgment is appropriate only where the designated evidence shows there is no genuine issue of material fact and the moving ...