Lakewood Racquet Club Inc v. Jensen

Decision Date18 May 2010
Docket NumberNo. 38906-1-II.,38906-1-II.
Citation232 P.3d 1147,156 Wash.App. 215
PartiesLAKEWOOD RACQUET CLUB, INC., a Washington corporation, Appellant,v.Mary Margaret JENSEN; A. Dwight Orr, Jr.; and Michael Scott Orr; being the heirs of A.D. Orr and Margaret Orr, deceased, Respondents.
CourtWashington Court of Appeals

Steven Leonard Larson, Attorney at Law, Scott David Winship, Vandeberg Johnson & Gandara, Tacoma, WA, for Appellant.

Clayton Arthur Hill, The Gosanko Law Firm, Mercer Island, WA, Heidi Moldenhauer York, The York Law Firm PLLC, Seattle, WA, for Respondents.

PENOYAR, J.

¶ 1 In 1962, A. Dwight Orr, Sr. sold about ten acres of undeveloped land near his family's home to the Lakewood Racquet Club. Covenants in the real estate contract and fulfillment deed forbid the Club from subdividing, building residences, or using the land for any purpose besides a “tennis, swimming, and squash club” without the consent of Orr or his heirs. In 1976, Orr's heirs sold the remaining family property to third parties. In 2007, the Club sued Orr's heirs after they withheld consent to the Club's plan to build 24 residences on the ten acres. The trial court declared that the restrictive covenants were valid and enforceable. We reverse and remand for entry of a declaratory judgment that Orr's heirs lack standing to enforce the covenants.

FACTS

¶ 2 In 1939, Orr purchased about 45 acres of land in present-day Lakewood (Orr property). Orr lived in the historic Boatman-Ainsworth house on the property with his wife Margaret,1 and his three children, A Dwight, Jr., Mary, and Michael. In the 1950s, Orr sold two tracts of land from the southern portion of the property to third parties.2 Those properties now contain single-family homes.

¶ 3 In 1962, James Griffin and other local tennis players incorporated Lakewood Racquet Club. The Club's primary objective was to make tennis available year round in Pierce County. Orr's children had played high school tennis, and Orr supported the Club's objective. Orr agreed to sell about 10 acres in the northeastern portion of the Orr property to the Club for $30,000.

¶ 4 On May 16, 1962, Orr and the Club signed a real estate contract with the following restrictive covenants, which Orr insisted on:

This land and the improvements to be placed thereon shall be used for the purposes of a tennis, swimming, and squash club, and shall be used for no other purpose. No residence shall be erected thereon other than a dwelling and outbuilding for the
use of a caretaker, nor shall the land be subdivided and sold in tracts, without the consent of the sellers, their heirs, and assigns.

Clerk's Papers (CP) at 42. That same day, Orr executed a statutory warranty deed that transferred title to the Club for about 3 acres, which allowed the Club to obtain financing for improvements. In 1964, Orr executed another statutory warranty deed that transferred title to the Club for another portion of the property.

¶ 5 Orr died in 1967, and the family sold the Boatman-Ainsworth house four years later. On April 24, 1973, Orr's children, A. Dwight, Jr., Mary, and Michael-as joint trustees of Orr's testamentary trust-and Orr's wife Margaret executed a fulfillment deed that transferred the balance of the property to the Club. This deed contained restrictions identical to those in the real estate contract and noted that such “covenants and restrictions shall run with the land hereby conveyed and shall be binding upon the Grantee herein named, its successors and assigns.” 3 CP at 49-50. In 1976, the family sold the remaining Orr property to CHG International, which built single family homes on the property.

¶ 6 Over the years, the Club constructed six outdoor tennis courts, four indoor tennis courts, a clubhouse, a swimming pool, a fitness facility, a pro shop, an office, and on-site parking. These facilities occupy approximately 50 percent of the Club's property. In 2005, the Club's Board adopted a master plan to construct 24 townhomes/condominiums on its property. The Board planned to use revenues from the residential development to renovate and expand the Club's existing facilities.4

¶ 7 The Club asked Orr's two surviving children,5 A. Dwight, Jr. and Mary, to sign a “Relinquishment and Release of Restrictive Covenants,” but they declined. CP at 108. Mary apparently lives in Nevada. During the lawsuit, Mary assigned 6 her interest in the restrictive covenants to her daughter Chris Jensen, who also apparently lives in Nevada. A. Dwight, Jr. continues to live in Pierce County. CP at 109. The record does not reveal where Michael's son, Michael Scott Orr, lives. We refer collectively to A Dwight, Jr., Chris Jensen, and Michael Scott Orr as “Orr's heirs.” 7

¶ 8 On April 25, 2007, the Club filed a complaint for declaratory and injunctive relief. The Club asked the trial court to enter a declaratory judgment that Orr's heirs lost standing to enforce the covenants when they sold the remaining Orr property in 1976. Subsequently, the Club moved for summary judgment.

¶ 9 In opposing the summary judgment motion, A. Dwight, Jr. and Mary submitted declarations stating that, as Orr's adult children, they actively participated in Orr's decision to sell the property to the Club in 1962. According to them, Orr did not want the Club's 10-acre property “used for land development, land speculation or sprawling multi-unit housing.” CP at 107, 112. Rather, Orr negotiated the restrictive covenants in order to provide “an area for public recreation and an open space preserve for future generations.” CP at 112.

¶ 10 On February 22, 2008, the trial court denied the Club's summary judgment motion. In a short oral ruling, the trial court stated that Orr's heirs' intent was “reasonable, appropriate, [and] articulate in the covenants,” and it noted that the covenants constituted a reasonable restraint on alienation. CP at 214.

¶ 11 On March 17, 2008, Orr's heirs filed an amended answer with two counterclaims. They sought a declaratory judgment that the covenants remained valid and damages for the Club's breach or anticipatory repudiation of the restrictive covenants. Orr's heirs moved for declaratory judgment, which the trial court granted on February 13, 2009. The trial court's amended order, issued in April, stated that the restrictive covenants were “valid and enforceable.” CP at 378. The trial court did not rule on Orr's heirs' claim for damages.

¶ 12 The Club appeals. The Club seeks review of the trial court's declaratory judgment and its order denying the Club's motion for summary judgment.

ANALYSIS
Standing to Enforce Restrictive Covenants

¶ 13 The Club presents three interrelated arguments that Orr's heirs lack standing to enforce the covenants. First, the Club argues that Orr's heirs lack standing under the Uniform Declaratory Judgment Act (UDJA) 8 because they will not suffer an “injury in fact” if the covenants are invalidated. Appellant's Br. at 13. Second, the Club contends that the common law of property does not permit covenantees to enforce restrictive covenants once they have sold the benefited property. Finally, the Club asserts that Orr's heirs have no right to enforce the covenants under the Restatement (Third) of Property: Servitudes (2000) because their benefit is appurtenant to the Orr property rather than being held “in gross.” Appellant's Br. at 19. We agree that Orr's heirs lack standing to enforce the covenants because they sold the benefited property.

A. Standard of Review

¶ 14 A trial court's determination about a party's standing to enforce a restrictive covenant is a conclusion of law that we review de novo. See Mack v. Armstrong, 147 Wash.App. 522, 527, 195 P.3d 1027 (2008). Restrictive covenants are enforceable promises relating to the use of land. Viking Props., Inc. v. Holm, 155 Wash.2d 112, 119, 118 P.3d 322 (2005). Covenants are useful “because they create land-use arrangements that remain intact despite changes in ownership of the land.” Lake Limerick Country Club v. Hunt Manufactured Homes, Inc., 120 Wash.App. 246, 252, 84 P.3d 295 (2004) (quoting Restatement (Third) of Property: Servitudes § 1.1 cmt. a at 9 (2000)). Because restrictive covenants derogate an owner's common law right to use land for all lawful purposes, however, we will not extend them to any use not clearly expressed. Riss v. Angel, 131 Wash.2d 612, 621, 934 P.2d 669 (1997). Our primary objective in interpreting a restrictive covenant is ascertaining the intent of the original parties to the covenants. Viking Props., 155 Wash.2d at 120, 118 P.3d 322. In determining intent, we give language its ordinary and common meaning. Riss, 131 Wash.2d at 621, 934 P.2d 669. We resolve any doubts in favor of the free use of land. Riss, 131 Wash.2d at 621, 934 P.2d 669.

¶ 15 We review an order of summary judgment in a declaratory judgment action de novo. McNabb v. Dep't of Corrs., 163 Wash.2d 393, 397, 180 P.3d 1257 (2008). We consider facts and reasonable inferences in the light most favorable to the nonmoving party, and we review all questions of law de novo. Hollis v. Garwall, Inc., 137 Wash.2d 683, 690, 974 P.2d 836 (1999).

B. Timeliness

¶ 16 As a preliminary matter, we note that Orr's heirs' counsel originally asserted that the Club failed to preserve the standing issue for review because the Club did not appeal the trial court's order denying its summary judgment motion. At oral argument, however, Orr's heirs' counsel acknowledged that this argument was “misguided.” 9 Oral Argument (Jan. 7, 2010) at 16:35. We note that an order denying summary judgment is generally not an appealable “final judgment” under RAP 2.2(a)(1) whereas a declaratory judgment is an appealable “final judgment.” DGHI Enters. v. Pac. Cities, Inc., 137 Wash.2d 933, 949, 977 P.2d 1231 (1999); Wooh v. Home Ins. Co., 84 Wash.App. 781, 783-84, 930 P.2d 337 (1997).

C. Uniform Declaratory Judgment Act

¶ 17 The Club argues that Orr's heirs lack standing under the UDJA. Our jurisdiction under the UDJA...

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