Kline v. Shearwater Ass'n, Inc., 04-P-89.

• Decision Date: 11 July 2005
• Docket Number: No. 04-P-89.,04-P-89.
• Parties: Donald KLINE v. SHEARWATER ASSOCIATION, INC., & others.<SMALL><SUP>1</SUP></SMALL>
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

830 N.E.2d 235

63 Mass. App. Ct. 825

Donald KLINE v. SHEARWATER ASSOCIATION, INC., & others.¹

No. 04-P-89.

Appeals Court of Massachusetts, Barnstable.

Argued January 6, 2005.

Decided July 11, 2005.

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Juliane Balliro, Boston, for the plaintiff.

Adrienne M. Markham, Boston (L. Jason Law with her) for the defendants.

Present: ARMSTRONG, C.J., CYPHER, & KANTROWITZ, JJ.

KANTROWITZ, J.

In this case we review a number of issues related to restrictive covenants applicable to a Cape Cod development. Specifically, we consider (1) whether the trial court judge's finding that those covenants were enforceable was erroneous; (2) whether the trial judge erred in finding that a proposal by Donald Kline violated the covenants; (3) whether the judge's finding that the directors of the Shearwater Association, Inc. (association), owed no fiduciary duty to Kline was error; and, on cross appeal, (4) whether the trial judge erred by excluding evidence of the association's legal fees in connection with its counterclaim for abuse of process resulting in a directed verdict against it. We affirm.

Facts. In 1978, Harold Harris established the Shearwater subdivision in the Cape Cod town of Truro, laying out a total of sixty lots, and setting aside a twenty-one acre lot for himself. On that lot, which overlooked Cape Cod Bay, he built his own home and a separate one-room artist's studio.² The floor area of the main home totaled 2,950 square feet, while that of the studio totaled 530 square feet.

When he established the Shearwater subdivision, Harris drafted and recorded a declaration of protective covenants (Shearwater covenants) to govern its development.³

Three of the restrictive covenants are of particular significance here: (1) article III, sections 2 and 3, limiting each lot to one single family residential dwelling no larger than 4,000 square feet⁴; (2) article IV section 1(b), prohibiting "excavation or fill which would be visible from neighboring property and which would change the topography of the Lot" except as necessary during approved construction; and (3) article IV, section 1(h)(7), requiring that the "massing and height ... of structures shall conform to the Developer's guidelines which shall include considerations for the views of other Lots in the subdivision and the effect of the proposed structure on the rest of the subdivision." Neither the "guidelines," nor "construction specifications" mentioned elsewhere in the covenants,⁵ were ever established.

Harris oversaw the development and enforced the Shearwater covenants until the mid-1990's, when he transferred his authority to the newly incorporated Shearwater Association, Inc.⁶ The association was managed by a board of directors (board) which operated pursuant to the association's bylaws and oversaw the approval process for construction by owners in the subdivision. The board established a design review committee (committee) to administer the review process. Article V, section 1(a), of the Shearwater covenants provided that payments from lot owners would cover expenses incurred in the enforcement of the covenants.

When Harris sold his twenty-one acre lot at Shearwater to Donald Kline in 1997, twenty years of exposure to the elements had taken their toll on the property. As the trial judge described it, "[t]he studio was close to toppling over the bank to the beach below" and "[c]oastal erosion had eaten away at the bank to the very edge of the deck on the main residence. The wind and sand had buffeted both structures."

After acquiring the Harris property, Kline applied to the committee for permission to remove the studio, and replace it with a 1,284 square foot⁷ structure sixty feet back from the shore. The committee, composed of association members Murray Sackman, Phil Nexon, and Alan Marasco,⁸ was skeptical that Kline intended to maintain the structure as an artist's studio, since the proposed structure contained multiple rooms with undesignated purposes. Suspecting that Kline had future plans for the entire property, the committee eventually demanded that Kline submit his plans not only for the studio, but also for the main house. Kline maintained that he had no plan for the main house. In fact, Kline had already employed the design firm Geiger-Phillips to prepare detailed plans for a guest house that would replace the artist's studio, and preliminary plans for an entirely new main house.

The committee ultimately denied approval for the proposed studio in December, 1997. Kline submitted another application in January, 1998, which the committee also rejected. Kline, who had obtained building permits from the town decided to go forward with his plan without the committee's approval and began construction in February, 1998. The association sought a preliminary injunction and a declaratory judgment. A Superior Court judge denied that request,⁹ with the proviso that Kline might be required to remove the structure if he lost at trial, and Kline completed the guest house. The 1,320 square foot structure contained two bedrooms, two bathrooms, a large living/dining room area, and a full kitchen.¹⁰

Kline revealed his plan for the main house to the committee in October, 1998. The plan described the complete removal of the original house, and its replacement with a larger two-level structure. The first level of the structure, which the plan described as a "basement," was to be built on the same level as the existing structure. Kline would bring in approximately 10,225 cubic yards of fill to cover all sides of the building's first floor, except for the southernmost corner containing the garage. All residential functions would be on the building's second level. The site plan showed that the main house would ultimately be connected to the guest house by large areas of decking with a pool in the middle. Additionally, as proposed, the roof of the new residence would be higher than the existing structure by several feet, affecting the water views of many of the Shearwater subdivision's residents.

After extensive consideration of his application, the committee rejected Kline's plan in December, 1998, and January, 1999, on the basis of noncompliance with the covenants.¹¹ The committee obtained the advice of architects and designers, and went to great lengths to determine the space that would be occupied by Kline's proposed building so that the affected homeowners could visualize its impact. In order to pay the fees for these services, members of the committee contributed their own money as gifts or loans to the association. Committee member Sackman, who on two prior occasions had given money to the association for similar purposes in cases not involving Kline, alone contributed over $75,000.

In August, 1999, Kline filed an eight-count complaint against the association and individual members of its board of directors.¹² The judge dismissed various counts from which Kline does not appeal,¹³ leaving only Kline's claims for civil conspiracy, ultra vires acts, breach of fiduciary duty and an accounting. The association filed counterclaims for a declaratory judgment that the covenants were valid and applicable to Kline's property, and for abuse of process. The parties' claims were bifurcated, with the cross claims for declaratory judgment and the breach of fiduciary duty claim to be heard jury-waived, and Kline's civil conspiracy and the association's abuse of process claims to be tried to a jury.

The nonjury claims were heard over the course of thirteen days. During the trial, the judge took an extensive view of the property. He issued a detailed and well-reasoned decision, declaring that the covenants were valid and enforceable against Kline, that his proposal was prohibited by the covenants, and that the association and its members had not violated a fiduciary duty owed to Kline, or committed any ultra vires acts.¹⁴ On the accounting claim, the judge concluded Kline had been given an accounting, and adjudged the claim moot.

On the remaining jury claims, both parties filed motions for summary judgment. The association's motion was allowed (dismissing count 4, the civil conspiracy claim), while Kline's was denied, and the association's abuse of process claim proceeded to a jury trial, which concluded in the allowance of Kline's motion for a directed verdict, at the close of the association's case.

Both parties filed timely notices of appeal.¹⁵

Validity of the Shearwater covenants. We begin with Kline's argument that the trial judge applied the wrong legal standard in determining that the Shearwater covenants were valid. Kline also contends that the judge misapplied the factors outlined in G.L. c. 184, § 30. We disagree and hold that the Shearwater covenants are enforceable.

"[R]estrictions on land are disfavored, and they `in general are to be construed against the grantor.'" Stop & Shop Supermarket Co. v. Urstadt Biddle Properties, Inc., 433 Mass. 285, 290, 740 N.E.2d 1286 (2001), quoting from Ward v. Prudential Ins. Co., 299 Mass. 559, 565, 13 N.E.2d 411 (1938). Nonetheless, "they have to be construed `with a view of avoiding results which are absurd, or inconsistent with what was meant by the parties to or the framers of the instrument.'" Maddalena v. Brand, 7 Mass.App.Ct. 466, 469, 388 N.E.2d 337 (1979) quoting from Chase v. Walker, 167 Mass. 293, 297, 45 N.E. 916 (1897).

In determining whether a restrictive covenant is enforceable, a reviewing court must look to the statutory factors delineated in G.L. c. 184, § 30, inserted by St.1961, c. 448, § 1. First, the court must determine if the restriction in question is "of actual and substantial benefit to a person claiming rights of enforcement." Ibid. Even if the court finds such a benefit, it must still determine if any of the five statutory exceptions are applicable.¹⁶ See Connaughton v. Payne, 56 Mass.App.Ct. 652, 655-656, 779 N.E.2d 683 (2002).

With...