Royal Oaks Vista, L.L.C. v. Maddox

• Decision Date: 17 January 2008
• Docket Number: No. 07-542.,07-542.
• Citation: 271 S.W.3d 479,372 Ark. 119
• Parties: ROYAL OAKS VISTA, L.L.C. and John Hawks, Jr., Appellants, v. James MADDOX, Jean Maddox, Lynn A. Rice, Gary L. Yeager and Mary L. Yeager, Appellees.
• Court: Arkansas Supreme Court

271 S.W.3d 479

372 Ark. 119

ROYAL OAKS VISTA, L.L.C. and John Hawks, Jr., Appellants, v. James MADDOX, Jean Maddox, Lynn A. Rice, Gary L. Yeager and Mary L. Yeager, Appellees.

No. 07-542.

Supreme Court of Arkansas.

January 17, 2008.

Holly L. Meyer, Heber Springs, for appellants.

Richard Hartley Mays, Heber Springs, for appellees.

JIM HANNAH, Chief Justice.

This appeal concerns the validity and enforcement of a bill of assurance for Royal Oaks Vista subdivision filed in 1972 and an attempted replat of the subdivision in 2004. Appellants are Royal Oaks Vista, LLC and John Hawks, Jr. (collectively referred to as ROV), and appellees are James Maddox, Jean Maddox,¹ Lynn Rice, Gary L. Yeager, and Mary L. Yeager. The Cleburne County Circuit Court found that the 2004 replat was invalid and enforced the restrictions contained in the original bill of assurance. In addition, the circuit court ordered removal of all structures built in violation of the restrictions. ROV argues that the circuit court erred in finding that the replat was invalid. Specifically, ROV contends that the doctrine of laches should have been applied, that the temporary septic easement across lot 56 did not violate the restrictive covenant, and that the covenant restricting the use of lots to residential purposes was an unreasonable restraint on the alienation of property.

In January 1972, a plat and bill of assurance were filed for Royal Oaks Vista subdivision located in Cleburne County. The plat laid out twenty-one lots and streets for the subdivision. The bill of assurance provided that all lots were to be residential, that no lots were to re-subdivided, and that "[n]o noxious or offensive trade or activity shall be carried on upon any lot, nor shall anything be done thereon which may be or become an annoyance to the neighborhood." Further, the bill of assurance provided that "[n]o structure shall be erected, altered, placed or permitted to remain on any residential building plot other than a single family dwelling, not to exceed two stories in height, and a private garage and any outbuildings incidental to the residential use of the lot."

Appellee Lynn Rice and her then-husband acquired lot 1 in the subdivision in 1987. Rice acquired sole ownership of the lot in 1997. In April 1993, appellees Jean and James Maddox purchased lots 2, 3, and 4 in the subdivision. ROV acquired the remaining lots (lots 5 through 21) by deed dated August 12, 2004. On August 18, 2004, ROV filed both a replat of the subdivision and an amended bill of assurance for the new subdivision. The replat created lots 7 through 18 and lot 56 from lots 5 through 21 of the original subdivision.

While ROV was preparing the replat and new bill of assurance for the subdivision, it was proceeding with the development of streets and other infrastructure in the subdivision. In addition, ROV proceeded with the sale of four lots. Among the lots sold by ROV was replatted lot 8, which was sold to David Tindall. Tindall built a house on replatted lot 8 that was later conveyed to appellees Mary and Gary Yeager. The Maddoxes and Rice became aware of ROV's activities during July and August 2004, when ROV was seeking to have the original streets in the subdivision declared abandoned by the Greers Ferry City Council. The city council granted ROV's request in August 2004.

The Maddoxes, Rice, and the Yeagers filed a complaint, later amended, seeking injunctive relief and damages against ROV on September 20, 2005. They asserted in the complaint that the replat and new bill of assurance were in violation of the original bill of assurance's prohibition against resubdividing lots. The Yeagers added an additional claim for damages against David Tindall, contending that if the Maddoxes and Rice were successful in their claim against ROV, Tindall breached the warranties in the deed conveying the property to the Yeagers, as the conveyance occurred after the replat and new bill of assurance were filed.

ROV denied the material allegations of the complaint. It also claimed that the original bill of assurance violated the rule against perpetuities and was an unreasonable restraint on alienation. ROV asserted the affirmative defenses of laches, waiver, and estoppel, and it filed a counterclaim for declaratory relief, asserting that the original bill of assurance was an unreasonable restraint on alienation.

After a hearing, the circuit court found that the replat was in violation of the original bill of assurance. The circuit court also found that the defense of laches did not apply and that the rule of perpetuities was not violated. The court granted the request for an injunction, and it ordered that the original bill of assurance would control the subdivision. Further, ROV was ordered to remove any structures built in violation of the restrictive covenants. The court specifically reserved the claims of Mary and Gary Yeager.²

ROV appealed the circuit court's decision to the Arkansas Court of Appeals, which affirmed the circuit court in an unpublished opinion. Royal Oaks Vista, LLC v. Maddox, CA 06-738, 2007 WL 1347660 (Ark.App. May 9, 2007). ROV petitioned this court for review, which we granted pursuant to Ark. Sup.Ct. R. 2-4. Upon the grant of a petition for review, we consider the case as though it had been originally filed in this court. Rodriguez v. Ark. Dep't of Human Servs., 360 Ark. 180, 200 S.W.3d 431 (2004). We affirm the circuit court and affirm the court of appeals.

Where a case is tried with the circuit court sitting as the trier of fact, the standard of review on appeal is not whether there is substantial evidence to support the finding of the court, but whether the judge's findings were clearly erroneous or clearly against the preponderance of the evidence. White v. McGowen, 364 Ark. 520, 222 S.W.3d 187 (2006). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a firm conviction that a mistake has been committed. Id. Disputed facts and determinations of credibility are within the province of the fact-finder. Id.

At issue in this case is the interpretation of a protective or restrictive covenant on the use of land. Restrictions upon the use of land are not favored in the law. Id.; Forrest Constr. Co. v. Milam, 345 Ark. 1, 43 S.W.3d 140 (2001). Further, a restrictive covenant will be strictly construed against limitations on the free use of land. White, supra; Forrest, supra. All doubts are resolved in favor of the unfettered use of land. White, supra; Forrest, supra.

Any restriction on the use of land must be clearly apparent in the language of the asserted covenant. White, supra; Forrest, supra. Where the language of the restrictive covenant is clear and unambiguous, application of the restriction will be governed by our general rules of interpretation; that is, the intent of the parties governs as disclosed by the plain language of the restriction. White, supra; Forrest, supra.

The circuit court concluded that, pursuant to Ark.Code Ann. § 18-12-103 (Repl.2003),³ ROV's actions in replatting the lots in Royal Oaks Vista subdivision and in filing a new bill of assurance without the consent of appellees Maddox and Rice constituted an "abject violation" of the original 1972 bill of assurance and plat for the subdivision. ROV does not challenge these findings; rather, ROV contends that the circuit court erred in ruling that the appellees' claims were not barred by the doctrine of laches. In Summit Mall Co. v. Lemond, 355 Ark. 190, 206, 132 S.W.3d 725, 735 (2003), we stated:

This court has summarized the laches defense by stating that it is based on the equitable principle that an unreasonable delay by the party seeking relief precludes recovery when the circumstances are such as to make it inequitable or unjust for the party to seek relief. See Anadarko Petroleum Co. v. Venable, 312 Ark. 330, 850 S.W.2d 302 (1993). The laches defense requires a detrimental change in the position of the one asserting the doctrine, as well as an unreasonable delay by the one asserting his or her rights against whom laches is invoked. See Worth v. Civil Serv. Comm'n of El Dorado, 294 Ark. 643, 746 S.W.2d 364 (1988). See also Goforth v. Smith, 338 Ark. 65, 991 S.W.2d 579 (1999).

In addition, the application of the doctrine to each case depends on its particular circumstances. Cochran v. Bentley, 369 Ark. 159, 251 S.W.3d 253 (2007) (citing Self v. Self, 319 Ark. 632, 893 S.W.2d 775 (1995)). The issue of laches is one of fact. Self, supra. A reviewing court does not reverse the circuit court's decision on a question of fact unless it is clearly erroneous. Ark. R. Civ. P. 52(a); Self, supra.

ROV argues that the doctrine of laches should apply in this case because Rice and the Maddoxes were aware of the replat and new bill of assurance in June, July, and August 2004, yet they did not file suit until September 2005. ROV asserts that, as a result of the appellees' failure to act as they observed the development of the property based on the replat, ROV had good reason to believe that the appellees were abandoning their right to challenge the replatting of the subdivision and, therefore, ROV continued to develop the property. Appellees argue that, in this case, there was no detrimental change in ROV's position in reliance upon the action or inaction of the appellees because most of the work done in the subdivision was done prior to ROV's filing of the replat and new bill of assurance in August 2004.

The record reflects that Rice was the Recorder/City Treasurer for the City of Greers Ferry during the summer of 2004 and, as such, was aware of ROV's request to have the streets declared abandoned. Rice testified that, upon learning of ROV's plans, she voiced her objections at a city council meeting. She testified she was aware that, in June 2004, crews had begun clearing trees, building roads, and installing electrical and...