Fjords North, Inc. v. Hahn

• Citation: 710 N.W.2d 731
• Decision Date: 10 March 2006
• Docket Number: No. 04-0564.,04-0564.
• Parties: FJORDS NORTH, INC., Appellant, v. Randy HAHN, Susan Hahn and H & H Homebuilders, Appellees.
• Court: United States State Supreme Court of Iowa

710 N.W.2d 731

FJORDS NORTH, INC., Appellant, v. Randy HAHN, Susan Hahn and H & H Homebuilders, Appellees.

No. 04-0564.

Supreme Court of Iowa.

March 10, 2006.

Daniel DenBeste and Robert M. Hogg of Elderkin & Pirnie, P.L.C., Cedar Rapids, for appellant.

Michael J. Pitton of Martinek & Pitton, Iowa City, for appellees.

CADY, Justice.

This case stems from a dispute between a real estate developer and an owner of a lot in its development over the construction of a house claimed to be in violation of restrictive covenants recorded by the developer in 1980. The developer brought an action to enjoin the homeowner's construction. The homeowner moved for summary judgment, claiming the applicable limitation period to bring the action had expired. The district court agreed and granted summary judgment in the homeowner's favor. The developer appeals.

I. Background Facts and Proceedings

Fjords North, Inc. is the developer of a subdivision near North Liberty, Iowa named Fjords North Addition. H & H Home Builders, Inc., a corporation partially owned by Randy and Susan Hahn, is the owner of lot 52 in the Fjords North Addition.

Fjords North filed a set of restrictive covenants for the development on March 26, 1980 with the Johnson County recorder. One of the covenants provided:

No building shall be erected on any lot unless the design and location is in harmony with existing structures and locations. Plans and specifications of proposed houses and their locations on the site shall be submitted to Fjords North, Inc., the developer, for its written approval before commencement of construction. This restriction is to apply to all future home owners in this area. In any case no dwelling shall be permitted on any lot described herein having total living area of less than 2,000 square feet.

The covenants further stated:

[T]hese covenants are to run with the land and shall be binding upon all of the parties and all persons claiming under them for ten (10) years, at which time said covenants shall automatically be extended for successive periods of ten (10) years unless by vote of the majority of the owners of the lots it is agreed to change said covenants in whole or in part.

The first lot in the development was sold by deed recorded on April 2, 1980, and the developer has been selling other lots since that time.

On March 22, 2001, Mark Pattison, an officer of the Fjords North Homeowners' Association, filed a document with the Johnson County recorder entitled "Claim to Extend Use Restrictions Pursuant to § 614.24 of the Iowa Code." The claim indicated it was filed for the purpose of extending the time to bring an action to enforce the use restrictions for the development an additional twenty-one years. See Iowa Code § 614.24 (2001) ("No action based on any claim arising or existing by reason of the provisions of any ... contract... reserving or providing for ... use restrictions in and to the land therein described shall be maintained either at law or in equity ... after twenty-one years from the recording of such ... contract... unless the claimant shall ... file a verified claim with the recorder of the county wherein said real estate is located within said twenty-one year period."). It further stated that Pattison held a present fee simple interest in lot 51 of the development, platted and recorded in book 19, page 67 of the Johnson County plat records, and that the use restrictions were set forth in restrictive covenants dated January 31, 1980 and recorded March 26, 1980 in book 570, page 14.

On December 29, 2002, Randy Hahn submitted plans for a house he planned to build on lot 52 to the Homeowners' Association for approval. After Hahn failed to receive a prompt response to the plans from the Homeowners' Association, he began construction on January 7, 2003 by digging and pouring the foundation for the house. The association then objected to Hahn's plans and opined that the proposed home was not in harmony with the existing homes in the development, in violation of the restrictive covenants. The Association, through its attorney, demanded that Hahn cease construction. Hahn continued to build the house.

On January 21, 2003, Fjords North filed a petition in district court seeking damages and temporary and permanent injunctive relief. The Hahns answered the petition. They asserted they complied with the covenants, Fjords North unreasonably failed to timely approve their plans, and the covenants had expired. The court held a hearing on Fjords North's application for a temporary injunction on March 19. On March 20, the court denied the application on three grounds. The court found no evidence that Fjords North would be irreparably harmed if construction continued, no evidence that other remedies were inadequate, and no likelihood that Fjords North would succeed on the merits.

The Hahns then moved for summary judgment. They asserted the verified claim filed by Pattison failed to comply with the statutory requirement that a claim to extend the time to file an action set forth the "time and manner" in which the claimant's interest was acquired. They pointed out the claim only identified the date the subdivision's original restrictive covenants were recorded, without further describing the time and manner that Pattison's interest in the restrictive covenants was acquired.

Fjords North resisted the summary judgment motion on three alternative grounds. First, it argued that the "time and manner" requirement did not apply to claims filed after July 4, 1966. Second, it asserted the claim substantially complied with the "time and manner" requirement. Third, it argued that the notice should be reformed to cure any defects. The district court granted summary judgment, and Fjords North appealed.

II. Standard of Review

The standard of review for rulings granting summary judgment is well known:

"We review a ruling on a motion for summary judgment for correction of errors at law. `A motion for summary judgment should only be granted if, viewing the evidence in the light most favorable to the nonmoving party, `he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'"

Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005) (citations omitted).

III. Discussion

Iowa Code section 614.24, also known as the Stale Uses and Reversions Act (SURA), provides, in relevant part:

No action based on any claim arising or existing by reason of the provisions of any deed or conveyance or contract or will reserving or providing for any reversion, reverted interests or use restrictions in and to the land therein described shall be maintained either at law or in equity in any court ... after twenty-one years from the recording of such deed of conveyance or contract or after twenty-one years from the admission of said will to probate unless the claimant shall, personally, or by the claimant's attorney or agent, . . . file a verified claim with the recorder of the county wherein said real estate is located within said twenty-one year period. In the event said deed was recorded or the will was admitted to probate more than twenty years prior to July 4, 1965, then said claim may be filed on or before one year after July 4, 1965. Such claims shall set forth the nature thereof, also the time and manner in which such interest was acquired.¹

Iowa Code § 614.24. If a claim is properly filed, it extends or preserves the time to bring an action on the claim for an additional twenty-one years. See id. § 614.25 ("The filing of such claim shall extend for a further period of twenty-one years the time within which such action may be brought by any person entitled thereto, and successive claims for further like extensions may be filed." (Emphasis added.)). We have said the purpose of this statute was to simplify land transfers in Iowa by shortening the title-search period for these types of claims. Compiano v. Kuntz, 226 N.W.2d 245, 248 (Iowa 1975); Presbytery of Se. Iowa v. Harris, 226 N.W.2d 232, 235 (Iowa 1975). Yet, the statute allows interested persons to keep stale reversionary and use restrictions alive if they desire. See H.F. 115, 61st Gen. Assemb., Reg. Sess. (Iowa 1965). The statute is to be applied liberally to further its purposes. Calamus Cmty. Sch. Dist. v. Rusch, 299 N.W.2d 489, 490 (Iowa 1980).

Restrictive covenants are contracts. Compiano, 226 N.W.2d at 249; 20 Am. Jur.2d Covenants, Etc. § 149, at 668 (2005). Consequently, they are covered by section 614.24. As one commentator explained Covenants, especially neighborhood planning covenants, generating proprietary rights in equity frequently outlive their utility and if unlimited as to time, become mere clogs on title. Such interests are ordinarily beneficial either to the land affected or to adjacent lands, facilitating the highest and best use, when created, and may remain beneficial for more than a century.... Limitations on land use running in perpetuity may well become not only clogs on title, but clogs on alienation and utilization of land.

Arthur E. Ryman, Jr., The Iowa "Stale Uses and Reversions Statute": Parameters and Constitutional Limitations, 19 Drake L.Rev. 56, 60-61 (1969).

We begin our analysis of the issues on appeal by examining the statute. The complete statute is written in two paragraphs, but only the first paragraph is relevant to this appeal.² The first sentence of this paragraph sets forth the objective and scope of the statute. See Iowa Code § 614.24, para. 1 ("No action based upon any claim arising or existing by reason of the provisions of any deed or conveyance or contract or will reserving or providing for any reversion, reverted interests or use restrictions in and to the land therein described shall be maintained either at law or in equity in any c...