HELTMAN v. CATANACH

• Decision Date: 27 August 2009
• Docket Number: 613.,No. 28,28
• Citation: 229 P.3d 1239
• Parties: Harriet HELTMAN, Plaintiff-Appellee, v. Albert F. CATANACH, Jr., Defendant-Appellant.
• Court: Court of Appeals of New Mexico

229 P.3d 1239

2010-NMCA-016

2010-NMCA-016

Harriet HELTMAN, Plaintiff-Appellee, v. Albert F. CATANACH, Jr., Defendant-Appellant.

No. 28,613.

Court of Appeals of New Mexico.

August 27, 2009.

Sawtell, Wirth & Biedscheid, P.C., Bryan P. Biedscheid, Santa Fe, NM, for Appellee.

Albert F. Catanach, Jr., Santa Fe, NM, Pro Se Appellant.

OPINION

VANZI, Judge.

{1} Defendant appeals from an order enjoining him from subdividing his property and building a single-family residence on the resulting lot. The district court's order was based on the terms of a restrictive covenant governing the use of the lots in Defendant's subdivision. Defendant raised two equitable defenses to the enforcement of the covenants, but the district court concluded that the evidence did not warrant nonenforcement. As we conclude that the district court erred in refusing to consider relevant evidence in evaluating Defendant's equitable defenses, we reverse and remand for a new trial on the issue of whether those defenses should prevent enforcement of the covenants against Defendant in this case.

BACKGROUND

{2} Plaintiff, Harriet Heltman, and Defendant, Albert Catanach, are the owners of separate residential lots in the Lovato Subdivision No. 1 in Santa Fe, New Mexico (the City). In January 2004, Defendant applied to the City for approval to split his lot. Defendant's home was already positioned on part of the lot, and he hoped to build a residential structure on the resulting new lot after the split. Soon after Defendant filed his application with the City, Plaintiff initiated this lawsuit seeking a declaratory judgment that Defendant's proposed use of the property would violate the restrictive covenants governing the subdivision and seeking an injunction to prevent Defendant from subdividing his lot and building a residence on the resulting lot. In the district court, the parties disputed which of several sets of restrictive covenants actually governed the subdivision, whether the restrictive covenants barred Defendant's proposed use of his property, and whether Defendant's affirmative defenses prevented enforcement of the covenants against him. After a bench trial, the district court entered a judgment declaring that Defendant's proposed subdivision of his lot and construction of a residential structure on the resulting lot would violate the governing restrictive covenants. The district court enjoined Defendant from carrying out his plans.

DISCUSSION

{3} Defendant appeals, arguing: (1) that the district court erred by applying the wrong set of covenants; (2) that even if the district court relied on the correct covenants, those covenants do not expressly prohibit subdivision of Defendant's lot; (3) that the district court erred in limiting the scope of evidence it would consider as relevant to Defendant's affirmative defenses; and (4) that the district court erred in concluding that Defendant's affirmative defenses did not prevent the enforcement of the covenants against him in this case.

The 1940 Covenants Are Controlling

{4} The Lovato Subdivision was originally controlled by a set of restrictive covenants that was recorded in 1936. A second set of covenants purporting to supercede the 1936 covenants was recorded in 1940. In 2005, after this litigation had commenced, Defendant recorded an agreement among a majority of property owners in the subdivision to modify the covenants. Subsequent to Defendant's recorded amendment, Plaintiff recorded her own amendment. The district court determined that the 1940 covenants were applicable to the subdivision and that, to the degree either Defendant's or Plaintiff's amendments were effective, they would not actually take effect until the year 2015. Defendant asserts that the district court erred in applying the 1940 covenants and claims that either the 1936 covenants or his 2005 amendments should control.

{5} A determination of which set of covenants is applicable required the district court to interpret the covenants themselves—a legal determination that this Court reviews de novo. See Baker v. Bennie J. Aday & Dixie J. Aday Revocable Trust, 1999-NMCA-123, ¶ 9, 128 N.M. 250, 991 P.2d 994 (applying de novo review to the district court's interpretation of the terms of a covenant). The 1936 covenants provided that they were to "remain in force until July 1, 1960, and thereafter until such time as the same may be modified or abrogated by a vote of two thirds of the owners of lots within said subdivision." Defendant argues that since the 1940 covenants were recorded prior to July 1, 1960, they were ineffective because they violated the plain meaning of the 1936 covenants' requirement that no amendment take place prior to that date. Plaintiff points out that there was evidence that the 1940 covenants were recorded by unanimous agreement of all the then-owners of the Lovato Subdivision and argues that because it was unanimous, the amendment was effective.

{6} We agree that the unanimous agreement in 1940 of all the then-owners of the property in the subdivision was effective to amend the 1936 covenants. Generally, the "obligation of the burdened party under a covenant can be extinguished by action by the person entitled to enforce the covenant." Gerald Korngold, Private Land Use Arrangements: Easements, Real Covenants, and Equitable Servitudes § 11.03, at 386 (1990). "Termination by release or agreement is based on fundamental principles of contract law, as one entitled to enforce a promise may relieve the promisor of his or her obligation." Id. at 386-87. "As a corollary to the rule that a covenant can be terminated by the agreement of the parties, a covenant may be amended upon agreement of the parties. Under the general rule, all of the parties entitled to enforce the covenant must agree to the amendment." Id. § 11.13, at 419 (footnote omitted).

{7} Where a provision such as the one in the 1936 covenant provides that a covenant shall remain in effect for an initial period, after which it may be modified by less than unanimous consent, courts have interpreted these provisions to simply provide an exception, after a certain number of years, to the general rule that unanimity is required in order to amend a restrictive covenant. See, e.g., Johnson v. Howells, 682 P.2d 504, 505 (Colo.Ct.App.1984) (holding that the district court erred in concluding that the covenant could be amended by sixty percent of the property owners prior to the expiration of the initial twenty-year period and stating that amendment during this period could only be effected by unanimous consent); Kauffman v. Roling, 851 S.W.2d 789, 794 (Mo.Ct.App.1993) (interpreting such a provision to mean that the covenant could be amended during the initial period only by unanimous consent, but could be subsequently amended by the two-thirds majority provided for in the covenant).

{8} Defendant has cited no authority to support his claim that the then-owners of the properties in the Lovato Subdivision could not unanimously agree to enact the 1940 covenants, thereby amending the 1936 covenants. Accordingly, we assume that there is none. See In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d 1329, 1330 (1984). And while we have no quarrel with the case cited by Defendant for the proposition that under a similar provision a covenant cannot be modified by less than unanimous consent during the initial period, see White v. Lewis, 253 Ark. 476, 487 S.W.2d 615, 616 (1972), that is not what occurred here. We hold that the unanimous agreement of the then-owners of the properties in the subdivision amended the 1936 covenants and replaced them with the 1940 covenants.

{9} Defendant asserts that even if the 1940 covenants were valid, the amendments he recorded in May 2005 with the signatures of a majority of the owners were effective to amend the 1940 covenants. With regard to amendments, the 1940 covenants provide:

These covenants are to run with the land and shall be binding on all the parties and all persons claiming under them until January 1, 1965, at which time said covenants shall be automatically extended for successive periods of ten years unless by a vote of the majority of the then-owners of the lots it is agreed to change the said covenants in whole or in part.

The district court determined that under this provision, Defendant's amendments would not go into effect until January 1, 2015. We conclude that the district court was correct that Defendant's amendments—to the degree they were validly enacted and not superceded by Plaintiff's subsequently recorded amendments—would not go into effect until January 1, 2015. We base this conclusion on the duration clause specifying that extensions of the covenant are to last for ten-year periods.

{10} Restrictive covenants "are to be read reasonably but strictly and, to the extent language is unclear or ambiguous, the issue of enforcement of a restriction will be resolved in favor of the free enjoyment of the property and against limitations." Mason Family Trust v. DeVaney, 2009-NMCA-048, ¶ 9, 146 N.M. 199, 207 P.3d 1176. Defendant contends that the covenant is unambiguous and that the language providing that after January 1, 1965, the covenants "shall be automatically extended for successive periods of ten years unless by a vote of the majority of the thenowners of the lots it is agreed to change the said covenants in whole or in part," means that after January 1, 1965, a majority of owners could agree to modify the covenants at any time. We disagree. While we recognize that Defendant's proposed interpretation has some logical force, since the covenant provides that the ten-year extensions will remain in place unless the majority chooses to modify them, to interpret the language as Defendant proposes would render meaningless the portion clearly providing that extensions of the covenant would be for ten-year periods. Defendant effectively asks this Court to interpret the language as if it...