DeWolf v. Usher Cove Corp.

• Decision Date: 04 August 1989
• Docket Number: Civ. A. No. 88-0289 P.
• Citation: 721 F. Supp. 1518
• Parties: Nancy W. DeWOLF v. USHER COVE CORP.
• Court: U.S. District Court — District of Rhode Island

721 F. Supp. 1518

Nancy W. DeWOLF v. USHER COVE CORP.

Civ. A. No. 88-0289 P.

United States District Court, D. Rhode Island.

August 4, 1989.

COPYRIGHT MATERIAL OMITTED

Mark Freel, of Edwards & Angell, Providence, R.I., for plaintiff.

Stephen Rodio, and Gregory Benik, Providence, R.I., for defendant.

OPINION AND ORDER

PETTINE, Senior District Judge.

Pursuant to 28 U.S.C. Sections 1332 and 2201, the plaintiff seeks a declaration of her rights regarding certain restrictive covenants purporting to control the construction of a house on her lot of land. Specifically, the plaintiff seeks to avoid being required to utilize a designated architect for the preparation of the architectural and landscaping plans and specifications for her home, and further asks this Court to declare that the plans and specifications that she has already purchased from the architect of her choice may be presumed to have been approved by the developer by virtue of its failure to respond to her request for approval within the 30 day response period specified by the covenants. Plaintiff also seeks a declaration that the defendant's option to repurchase plaintiff's lot because plaintiff failed to commence construction of her house within three years of the lot's purchase has not yet matured because the three year time period has been tolled by this conflict over the approval of her plans and specifications. In the alternative, plaintiff prays that, should the defendant now be allowed to exercise its option to repurchase the lot by virtue of plaintiff's failure to build within three years, the developer be required to repurchase the lot at fair market value not at purchase price plus 10% as specified in the covenants.

For the reasons which follow, judgment is entered for the defendant on all issues save that of the time frame within which defendant's preemptive repurchase right operates and the repurchase price for plaintiff's lot.

I. FINDINGS OF FACT

This controversy concerns the development of a beautiful and unique shore area, referred to as Case Farm Estates, located in Bristol, Rhode Island, on a finger of land, Poppasquash Point, extending into Rhode Island's jewel of nature, Narragansett Bay. The developer's accent on exclusivity is manifest by a guarded gate barring access to a private road which extends the full length of the property.

The Case Farm Estates was purchased in 1982 by Eleanor Gustafson and her husband, Clifford S. Gustafson, in the hope of fulfilling a dream, born of their long professional experiences as, respectively, a real estate broker and construction contractor, to someday "do a development and do something really great." (Testimony of E. Gustafson, Tr. Vol. II, p. 91.) Following the purchase of the land and its approval for development as a rather up-scale subdivision "with open meadows and ... as few houses as possible" (Testimony of E. Gustafson, Tr. Vol. II, p. 93), the Gustafsons together formed the Usher Cove Corporation to implement their vision, issuing 100% of the stock to themselves, presumably in exchange for the transfer of the land to the corporate entity. Subsequently, 75 of the Estates' approximately 100 acres were divided into 20 individual house lots and offered for sale, with the remaining 25 acres together with the main house being retained by the Gustafsons.

In the late summer and again in the fall of 1984, the plaintiff, Nancy W. DeWolf, and her husband, Walter DeWolf, who live in Colorado and plan to retire to Rhode Island, paid two visits to the Case Farm Estates and, as Mrs. DeWolf stated, "fell in love" (Testimony of N. DeWolf, Tr. Vol. I, p. 26) with a specific section designated as Lot No. 8, which encompasses a sort of knoll with an inspiring vista of the Narragansett Bay. Based upon these visits, Mrs. Gustafson and the DeWolfs entered into an oral agreement for the purchase of the lot, deferring the formalization of the purchase and sale to a later date. Before the formalization of the deal, however, the DeWolfs received at their home in Colorado an undated and unsigned copy of a document entitled "Declaration of Restrictions and Protective Covenants Imposed Upon Case Farm Estates Bristol, Rhode Island." Although all involved agree that the DeWolfs secured this draft of the restrictive covenants in question in December 1984 or January 1985,¹ there is uncertainty in the record as to how the document came to be in the DeWolfs' possession, with Mr. DeWolf asserting that it was provided to them by the Gustafsons (Testimony of W. DeWolf, Tr. Vol. II, p. 11), Mrs. Gustafson alleging that they were provided by the DeWolfs' real estate broker, Mary Jane Sheridan (Testimony of E. Gustafson, Tr. Vol. II, p. 118), and Ms. Sheridan stating that, "I don't recall sending them restrictions, I might have" (Testimony of M.J. Sheridan, Depo. Tr. p. 24).

However this draft found its way to the DeWolfs, it is unquestionably the version of the covenants on which the plaintiffs relied throughout their subsequent dealings with the Gustafsons (Testimony of W. DeWolf, Tr. Vol. I, p. 11.), despite the fact that these covenants were never recorded by the developer. In addition to the developer's statement of intent in the document's preamble,² five paragraphs are of such significance to the dispute that has since arisen between these parties that I reproduce them in their entirety, highlighting those portions that were subsequently changed in the recorded covenants. See Joint Exhibit (hereinafter "J. Ex.") 2.

Paragraph 4 reserved a far-reaching power of approval to the developer, vesting in Usher Cove Corporation the "absolute and exclusive right" to refuse to approve any building or landscaping plans which were not "in his opinion, suitable or desirable for any reason, including purely aesthetic reasons...." This proviso also appointed a Boston, Massachusetts architectural firm as the developer's agent with respect to all such approvals. Paragraph 4 states in its entirety:

4. All Structures to be Approved by Developer. For the purposes of assuring the development of the Plat as a residential area of highest quality and standards, and in order that all improvements on each Lot shall present an attractive and pleasing appearance from all sides of view, the Developer reserves the exclusive right and discretion to control and approve the construction of all buildings, structures, and other improvements on each Lot in the manner and to the extent set forth herein. No building, fence, wall, driveway, swimming pool, or other structure or improvements, regardless of size or purpose, whether attached to or detached from the main residence, shall be commenced, placed, erected, or allowed to remain on any Lot, nor shall any additions to or exterior change or alteration thereto be made, unless and until building plans and specifications covering same, showing the nature, kind, shape, heights, size, materials, floor plans, exterior color schemes, location and orientation on the Lot, plans for the grading and landscaping of the Lot showing any changes proposed to be made in the elevation or surface contours of the land, approximate square footage, construction schedule, and such other information as the Developer shall reasonably require, have been submitted to and approved in writing by the Developer, his agent, or nominee, which approval shall be in recordable form. The Developer shall have the absolute and exclusive right to refuse to approve any such building plans and specifications and Lot-grading and landscaping plans that are not, in his opinion, suitable or desirable for any reason, including purely aesthetic reasons and reasons connected with future developments plans of the Developer of the Plat or contiguous lands. In passing upon such building plans and specifications and Lot-grading and landscaping plans, the Developer may take into consideration the suitability and desirability of proposed construction, the quality of the proposed workmanship, and quality of the materials proposed to be used. The Developer hereby appoints Royal Barry Wills Associates, Boston, Massachusetts, as its agent with respect to all approvals required herein.

Paragraphs 34 and 35 spelled out exactly how the approvals delineated in Paragraph 4 were to be obtained and evidenced. In essence, these provisions spelled out a formal approval process that was to be conducted, from initiation to completion, in writing:

34. Approval of Developer. Whenever the approval of the Developer is required by these Covenants and Restrictions, no action requiring such approval shall be commenced or undertaken until after a request in writing has been submitted to the Developer. The request shall be sent to Developer by Registered or Certified Mail with return receipt requested. If the Developer fails to act on any such written request within thirty (30) days after the date of receipt by the Developer, the approval of the Developer to the particular action sought shall be presumed; however, no action shall be taken by or on behalf of the person or persons submitting the written request which violates any of these Covenants and Restrictions.

35. Evidence of Approval. Whenever approval by Developer is required in these Covenants and Restrictions, same shall mean approval of any officer of Developer as evidenced by a certificate or other writing signed by an officer of Developer.

Paragraph 9 further reserved to the developer the right to repurchase any lot whose owner failed to commence construction of the main residence on the lot within three years of the date of purchase:

9. Developer's Right to Repurchase. If the owner of any Lot does not commence construction of the main residence on such Lot within three (3) years of the date of purchase of such Lot, then after such three (3) year period the owner of such Lot shall not convey, sell, or transfer title to such Lot without first giving the Developer, its successor, or assigns notice in

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