Town & Country Estates Ass'n v. Slater, 87-91

• Decision Date: 28 July 1987
• Docket Number: No. 87-91,87-91
• Citation: 227 Mont. 489,740 P.2d 668,44 St.Rep. 1257
• Parties: TOWN & COUNTRY ESTATES ASSOCIATION, Plaintiff and Respondent, v. Ken SLATER and Alice D. Slater, Defendants and Appellants.
• Court: Montana Supreme Court

Page 668

740 P.2d 668

227 Mont. 489

TOWN & COUNTRY ESTATES ASSOCIATION, Plaintiff and Respondent, v. Ken SLATER and Alice D. Slater, Defendants and Appellants.

No. 87-91.

Supreme Court of Montana.

July 28, 1987.

Pedersen & Conrad; Carol Hardy Conrad, Billings, for defendants and appellants.

Gary Beiswanger, Billings, for plaintiff and respondent.

TURNAGE, Chief Justice.

Defendants Ken and Alice Slater appeal a November 5, 1986 permanent injunction by the Thirteenth Judicial District Court, Yellowstone County. The injunction prevented the Slaters from building a house in Town & Country Estates until a Design Review Committee approves the Slaters' building plans and specifications. We reverse and vacate the injunction.

The Slaters present three issues for our review:

1. Did the District Court err in finding that a restrictive covenant which allows a Design Review Committee (DRC) to disapprove house plans and prevent construction is enforceable, when the disapproval is based upon "harmony of external design?"

2. Did the District Court err in finding that the covenant had not been abandoned, although none of the plans for previously-constructed houses had been approved by the DRC?

3. Did substantial credible evidence support the District Court's findings that the DRC acted reasonably, in good faith, and not arbitrarily or capriciously?

Town & Country Estates Association (TCE) is a subdivision in Billings, Montana. TCE contains sixteen single-family houses, one duplex, and several vacant lots. The deeds to the TCE lots incorporate by reference a "Declaration of Covenants, Conditions and Restrictions," which was publicly recorded on December 20, 1973.

The Declaration, in Article V, grants architectural control to the DRC and outlines relevant aesthetic factors.

No residential ... structure ... shall be made ... upon the Properties ... until plans and specifications showing the nature, kind, shape, height, materials, colors and location of the same shall have been submitted to and approved in writing as to harmony of external design, location and relation to surrounding structures and topography, the construction, colors, and the materials to be used in the construction have been approved in writing by a Design Review Committee consisting of five members appointed by the Board of Directors of Town & Country Estates Association. [Emphasis added.]

Article V does not place a minimum value on TCE houses, which vary in size, shape, color, building materials, and architectural style. However, the TCE houses all have a minimum of 2,400 square feet and shake roofs.

Prior to 1986, all TCE houses had either been built or approved by the developer of the subdivision. In early 1986, the Slaters expressed an interest in a TCE lot. They were aware of the prior approval restriction of Article V. In April of 1986, they learned that the developer had left the area, and that a five-member DRC was being formed to review Slaters' house plan. The plan was the first to be reviewed by the newly-formed DRC. Slaters' proposed house had a shake roof, wood siding, and 2,600 square feet of living space.

On May 1, 1986, Slaters bought the TCE lot before receiving approval of their house plan. On May 19, 1986, Slaters received a letter from DRC rejecting Slaters' plan because the house did not "conform to the general tone of the area." The letter also stated, "We would suggest that the price of the lot commands a residence more near the size of houses in the surrounding area. As you know, the neighborhood consists of $200,000 plus homes, and this is the kind of conformity that you should look to." Without approval, Slaters began house construction on August 5, 1986.

On August 6, 1986, TCE obtained a temporary restraining order prohibiting the Slaters from building, alleging that Slaters' house violated the minimum size restrictions contained in the Declaration. Based on the court's order, Slaters resubmitted their plans to DRC. On August 26, 1986, the DRC again rejected the plan and stated, "we find that the structure is not in harmony of external design to surrounding structures and topography as specified in [the Declaration]." (Emphasis added.) On November 5, 1986, the District Court granted a permanent injunction against Slaters, until they complied with the TCE Declaration.

Issue 1

Did the District Court err in finding that a restrictive covenant which allows a Design Review Committee to disapprove house plans and prevent construction is enforceable, when the disapproval is based upon "harmony of external design?"

The District Court based its permanent injunction on the fact that the Slaters had not complied with Article V. The court held that the restrictive covenant was enforceable, and that the committee's review was performed in good faith and not unreasonable.

Slaters contend that a prior approval covenant is not enforceable if it contains no specific objective standards. Slaters argue that the term "harmony of external design" is too vague and ambiguous to be enforceable. Slaters further argue that their house has major features found in existing TCE houses, and therefore their house would not differ in aesthetic merit from the other houses.

TCE contends that Article V is enforceable, even without...