Maatta v. Dead River Campers, Inc.

• Decision Date: 19 May 2004
• Docket Number: Docket No. 248848.
• Citation: 263 Mich. App. 604,689 N.W.2d 491
• Parties: Roger MAATTA, Larry Nault, and Arthur Mann, Plaintiff-Appellants, v. DEAD RIVER CAMPERS, INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

689 N.W.2d 491

263 Mich. App. 604

Roger MAATTA, Larry Nault, and Arthur Mann, Plaintiff-Appellants, v. DEAD RIVER CAMPERS, INC., Defendant-Appellee.

Docket No. 248848.

Court of Appeals of Michigan.

Submitted May 19, 2004, at Marquette.

Decided September 21, 2004, at 9:10 a.m.

Murphy & Clark (by Thomas H. Clark), Marquette, for the plaintiffs.

McDonald, Marin & Kipper, L.L.P. (by William I. McDonald), Marquette, for the defendant.

Before: WHITBECK, C.J., and GRIFFIN and BORRELLO, JJ.

PER CURIAM.

In this case of first impression, plaintiffs appeal as of right the trial court's order dismissing their complaint and dissolving a temporary injunction against defendant. Plaintiffs, who sought a permanent injunction preventing the use of a lot in the Dead River Basin development as a public access site, alleged that defendant's use of the site violated a restrictive covenant limiting the use of lots in the development to "single-family residential purposes and incidental recreational uses," and another forbidding activities that are offensive, annoying, or a nuisance. Because we find that the trial court erred by holding that defendant could, by supermajority vote, revoke a restrictive covenant regarding one particular lot, we reverse.

I. Background

This case arises from plaintiffs' effort to enforce restrictive covenants against defendant, a corporate association of property owners, in a 375-lot residential development next to the Dead River Basin, a reservoir created by the Hoist Dam in Marquette County in Michigan's Upper Peninsula. Defendant is a closed corporate association that bought three thousand to four thousand acres of land near the Dead River Basin. Defendant subdivided and sold lots and a corresponding share in the association. Most buyers had maintained "camps" or cabins on the land under license from the previous owner, Longyear Realty Corporation, for many years. Plaintiffs bought several of the seven lots shown on Assessor's Plat 23. Defendant retained ownership of lot 4 in plat 23, which had been used since the mid-to late-1970s as a public access site. Lot 4 is equipped with a concrete boat launch ramp, pit toilets, and a parking lot.

In the summer of 2001, after experiencing numerous problems because of the public accessing lot 4, plaintiffs attempted to pass a shareholder resolution closing it. The resolution failed. Plaintiffs then sought a permanent injunction against public access to lot 4, claiming that it violated covenant 4.1, which required that lots in the development be used only for residential and incidental recreational purposes, and covenant 4.2, which forbade activities within the development that were offensive or annoying or created a nuisance.

On November 21, 2001, the trial court entered a stipulated temporary injunction closing lot 4 until the litigation was resolved. In December 2002, defendant drafted a proposed shareholder resolution to exempt lot 4 from covenant 4.1, which resolution stated that the lease of lot 4 to the state would require the state to construct an alternate access road to the site. The covenants allowed amendments by affirmative vote of two-thirds of the 375 lot owners, or 250 owners. Two hundred sixty-six members voted in favor of the resolution.

At the end of a bench trial, the court ruled that the resolution exempted lot 4 from covenant 4.1. The court also ruled that covenant 4.2, "which limit[ed] activities and uses that would be annoying, offensive or a nuisance, in a lay sense, to the other lot owners require[d] the use of a community standard or a reasonable lot owner standard and not a subjective individual standard." The trial court then held that "[o]bjections by the plaintiffs to lawful recreational activities by members of the public who use the access for fishing and hunting and boating do not in this Court's opinion meet the reasonable lot owner test or community standard that I think has to apply." The court continued: "Anyway, I am going to do a balancing test, just so that review in this case can be complete, if necessary. And I think that will lead ultimately to this Court's conclusion that my decision to find against the plaintiffs is the fair thing to do." The court discussed the factors weighing against closure of lot 4 before concluding "the fair thing to do is to deny the plaintiffs relief." The trial court denied plaintiffs' subsequent motion for a new trial or a judgment notwithstanding the verdict, and plaintiffs now appeal.

II. Standard of Review

This Court reviews de novo equitable actions. We review the findings of fact supporting the decision for clear error. Webb v. Smith (After Second Remand), 224 Mich.App. 203, 210, 568 N.W.2d 378 (1997).

III. Amendment of the Restrictive Covenant

Plaintiffs raise an issue of first impression in our state. Specifically, plaintiffs argue that defendant was not permitted to amend the restrictive covenants to remove restrictions from one lot while leaving them intact for the remaining lots. Plaintiffs contend that because the restrictive covenants were created and imposed uniformly on the lots they were intended to protect, property owners who assumed the burden of complying with restrictive covenants were entitled to receive the corresponding benefit of their neighbors' compliance unless the covenants stated otherwise. Plaintiffs state that although they were aware that the covenants at issue could be amended, they were entitled to — and did — rely on this principle of uniformity because the amendment procedure did not address or permit non-uniform amendments or exceptions. Plaintiffs argue that because nothing in the declaration of covenants permitted non-uniform amendments or exemptions, and because the declaration requires that "all buyers and subsequent owners must accept the Lots subject to the use restrictions set forth in this Declaration," the amendment procedure may only be used for uniform changes applicable to all lots. Plaintiffs contend that where another, non-uniform amendment or waiver, such as the single-lot exemption at issue here, is desired, the amendment requires the unanimous agreement of affected property owners.

The covenant at issue, § 4.1, states:

Lots shall be used solely for the construction of one single-family residence and structures and outbuildings incidental to the use of it (including, without limitation, barns, stables and garages for private, and not public or commercial, use) and shall be limited in use to single-family residential purposes and incidental recreational uses.

Further, the provision governing the amendment procedure, § 10, reads:

The covenants and restrictions set forth in this Declaration shall run with the land and be binding until ten (10) years from the date of this Declaration and shall be automatically extended for successive periods of ten (10) years each, unless prior to any such expiration date, two-thirds (2/3) of the Lot Owners shall by affirmative written action vote to allow the same to expire. These restrictions may be amended by the affirmative written action of two-thirds (2/3) of the Lot Owners. So long as the Association owns an interest in the Development, this instrument may not be amended at any time without the consent of the Association. Any amendments shall become effective ten (10) days after notice of adoption of the amendment, together with a copy of the recorded amendment, is mailed to all Lot Owners.

Plaintiffs and defendant discuss two relevant Michigan cases, each side taking from them rules favorable to their position at trial: Ardmore Park Subdivision Ass'n, Inc. v. Simon, 117 Mich.App. 57, 323 N.W.2d 591 (1982), and McMillan v. Iserman, 120 Mich.App. 785, 327 N.W.2d 559 (1982). In Ardmore Park, a covenant amendment uniformly prohibited all fences more than four feet tall. The circuit court refused to enforce the covenant against an owner who purchased property in the subdivision, after the amendment was passed, from an owner who had not supported the covenant amendment. This Court reversed, holding that "where a deed restriction properly allows a majority, or a greater percentage, of owners within a particular subdivision to change, modify or alter given restrictions, other owners are bound by properly passed and recorded changes in the same manner as those contained in any original grant and restriction." 117 Mich.App at 62,323 N.W.2d 591. The Court also quoted from Montoya v. Barreras, 81 N.M. 749, 751, 473 P.2d 363 (1970):

"Thus, the covenants may be changed in whole or in part, but we cannot construe this language as permitting any such change or changes to apply to only a portion of the lots on which the restrictions were imposed. Nor is there anything in the covenants themselves which can be construed as either expressly or impliedly modifying or changing the granting clause itself, which expresses the intent and purpose that all of the described property is encumbered by the restrictions, whether they remain as originally stated or are subsequently changed in whole or in part. The original restrictions were clearly imposed on all of the described property, and though the restrictions themselves may be changed in whole or in part, the change or changes which might be made must affect all of the described property."

See, also, Riley v. Boyle, 6 Ariz.App. 523, 434 P.2d 525 (1967), Zent v. Murrow, 476 S.W.2d 875 (Tex.Civ.App., 1972), Valdes v. Moore, 476 S.W.2d 936 (Tex.Civ.App., 1972), Warren v. Del Pizzo, 46 Or.App. 153, 611 P.2d 309 (1980), and the cases collected at 4 ALR3d 570, 582-586.

Not quoted in Ardmore Park, but especially relevant to facts of this case, the Montoya court continued:

Historically, restrictive covenants have been used to assure uniformity of development and use of a residential area to give the owners of lots within such an area some degree of environmental stability. To permit individual lots within an area to be relieved of the burden of such covenants, in

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