Waynesboro Village, L.L.C. v. BMC Properties

• Decision Date: 09 January 1998
• Docket Number: No. 970343,970343
• Citation: 496 S.E.2d 64,255 Va. 75
• Court: Virginia Supreme Court
• Parties: WAYNESBORO VILLAGE, L.L.C. v. BMC PROPERTIES, et al. Record

Page 64

496 S.E.2d 64

255 Va. 75

WAYNESBORO VILLAGE, L.L.C. v. BMC PROPERTIES, et al.

Record No. 970343.

Supreme Court of Virginia.

Jan. 9, 1998.

Victor V. Ludwig (Nelson, McPherson, Summers & Santos, on brief), Staunton, for appellant.

Robert B. Delano, Jr. (John A. Conrad; Sands, Anderson, Marks & Miller, on brief), Richmond, for appellee BMC Properties.

No brief or argument on behalf of appellees Bank of Essex, Alexander F. Dillard, Jr., Trustee and Earl R. Johnson, Trustee.

Present: All the Justices.

HASSELL, Justice.

The primary issue we consider in this appeal is whether a restrictive covenant is enforceable.

The relevant facts are not in dispute. Shenandoah Village Associates, L.P., predecessor in title to appellant, Waynesboro Village, L.L.C., was the original developer of a retail shopping mall in Waynesboro. By recorded deeds of trust, Shenandoah Village conveyed certain real estate, in trust, to secure an indebtedness to Dollar Dry Dock Bank.

Subsequently, BMC Properties executed an agreement with Shenandoah Village to purchase a four-acre tract of land, which was a part of the land encumbered by the deeds of trust. After the deeds of trust were recorded, a certificate of partial release for the four-acre tract was recorded among the land records in Waynesboro. Shenandoah Village conveyed to BMC the four-acre tract of land by a recorded deed dated 1989 which contained the following restriction on the remaining property owned by Shenandoah Village:

"The party of the first part [Shenandoah Village] covenants and agrees (i) not to sell any remaining portion of the property which it acquired from Royal Oaks Investment Corporation for use as a motel, hotel, inn or lodging business or similar facility, (ii) not to allow any remaining portion of the property which it acquired from Royal Oaks Investment Corporation to be used, constructed or improved as a motel, hotel, inn or lodging business or similar facility, and (iii) that no such lodging facility or business shall be allowed to operate or exist within the boundaries of its remaining property. This restriction shall only apply for so long as the property herein conveyed to the party of the second part is being used as a motel, hotel, inn or lodging business or similar facility. Upon the discontinuance of such use, this restriction shall expire."

Also included in the recorded deed to BMC was the following restriction on the use of BMC's property:

"The party of the second part [BMC] covenants and agrees that (i) no factory outlet or discount retail stores or gas station, (ii) no drive-in or fast food restaurant, including but not limited to a McDonald's, Burger King, Wendy's or Roy Rogers, (iii) no free-standing restaurant, except for a free-standing non-drive-in restaurant which is being operated while a motel, hotel, inn or lodge is located and operating on the property herein conveyed, and (iv) no other use not permitted by any master plan adopted (whether now existing or hereafter adopted) and any amendments thereto by the City of Waynesboro shall be constructed or operated upon the property herein conveyed or any portion thereof. This restriction shall only apply for so long as any portion of the remaining property owned by the party of the first part is being used as a factory outlet and/or discount retail stores. Upon the discontinuance of such use this restriction shall expire."

By a recorded deed of trust, BMC conveyed its four-acre tract to Alexander F. Dillard, Jr., and Earl R. Johnson, trustees, to secure payment of an indebtedness to the Bank of Essex.

After Shenandoah Village conveyed the four-acre tract to BMC, the Federal Deposit Insurance Corporation (FDIC) exercised its rights to take control of Dollar Dry Dock Bank as receiver. Apparently, Dollar Dry Dock Bank acquired title to the property that Shenandoah Village Associates had conveyed to the Bank in trust and, by a recorded deed, that property was conveyed to the FDIC. Subsequently, the FDIC, as receiver for the Bank, conveyed 135.801 acres of the property to Waynesboro Village, without reference to the restrictive covenants in the 1989 recorded deed.

BMC is a Virginia partnership which owns, develops, and operates lodging facilities and has plans to develop its four-acre parcel as a motel with a restaurant as permitted by the restrictive covenants. BMC spent $350,000 to purchase the land and has spent at least $93,680 in fees to architects, attorneys, engineers, and surveyors for the planning and future construction of a motel. Additionally, BMC has incurred interest and debt service expense to secure loans to finance the acquisition of the property and construction of a motel on its property.

Waynesboro Village filed its bill of complaint against BMC, the Bank of Essex, and Alexander F. Dillard, Jr., trustee, and Earl R. Johnson, trustee, seeking a decree that the aforementioned restrictive covenants do not prohibit Waynesboro Village from using its property "for a motel, hotel, inn or lodging business or similar facility." The defendants filed numerous responsive pleadings and a cross-bill. Additionally, the defendants filed a motion for summary judgment, asserting that the restrictive covenants contained in the deed from Shenandoah Village Associates, predecessors in title to Waynesboro Village, L.L.C., and BMC Properties, are expressly intended to create a servitude and burden upon their respective properties so long as the proposed uses of the property are maintained and, thus, the covenants run with the title of the respective land as a matter of law and are enforceable. Because there were no material facts in dispute, the trial court considered argument of counsel and certain exhibits, and entered a final decree which granted the defendants' motion for summary judgment and decreed that the covenants are enforceable. Waynesboro Village appeals.

Waynesboro Village argues that the trial court erred "either in its determination that the [restrictive covenants are] not ambiguous or in its determination that the correct interpretation of the [r]estriction is that it currently restricts [Waynesboro Village from] using its land for the development of a hotel, motel, or other lodging facility." Continuing, Waynesboro Village says that the restriction which prohibits it from constructing a motel on its property is ambiguous because it may "be construed to take life at such time (if ever) as BMC actually develops its property for use as a lodging facility. When or if that will occur is not clear from the record. Hence, the [r]estriction, which does not now apply and may never apply by its own terms, yields an anomalous result." Waynesboro Village says that this purported ambiguity renders the restriction unenforceable. ¹

We disagree with Waynesboro Village's contentions. We follow the "plain meaning" rule when construing written instruments:

"[W]here an agreement is complete on its face, is plain and unambiguous in its terms, the court is not at liberty to search for its meaning beyond the instrument itself.... This is so because the writing is the repository of the final agreement of the parties." Berry v. Klinger, 225 Va. 201, 208, 300 S.E.2d 792, 796 (1983) (quoting Globe Iron Const. Co. v. First Nat. Bank of Boston, 205 Va. 841, 848, 140 S.E.2d 629, 633 (1965)).

Capital Commercial Prop. v. Vina Enterprises, 250 Va. 290, 294-95, 462 S.E.2d 74, 77 (1995); Management Enterprises v. The Thorncroft Co., 243 Va. 469, 472, 416 S.E.2d 229, 231 (1992). We have stated that the word "ambiguity" is defined as "the condition of admitting of two or more meanings, of being understood in more than one way, or of referring to two or more things at the same time." Berry, 225 Va. at 207, 300 S.E.2d at 796 (quoting Webster's Third New International Dictionary 66 (3d ed.1976)).

Additionally, and just as important, we stated in Friedberg v. Riverpoint Bldg. Comm., 218 Va. 659, 665, 239 S.E.2d 106, 110 (1977):

"Valid covenants restricting the free use of land, although widely used, are not favored and must be strictly construed and the burden is on the party seeking to enforce them to demonstrate that they are applicable to the acts of which he complains. Riordan v. Hale, 215 Va. 638, 641 212 S.E.2d 65, 67 (1975); Traylor v. Holloway, 206 Va. 257, 259, 142 S.E.2d 521, 522-23 (1965). Substantial doubt or ambiguity is to be resolved against the restrictions and in favor of the free use of property. Schwarzschild v. Welborne, 186 Va. 1052, 1058, 45 S.E.2d 152, 155 (1947).

But if it is apparent from a reading of the whole instrument that the restrictions carry a certain meaning by definite and necessary implication, then the thing denied may be said to be clearly forbidden, as if the language used had been in positive terms of express inhibition. Whitehurst v. Burgess, 130 Va. 572, 576-77, 107 S.E. 630, 631-32 (1921)."

We hold that the restrictive covenants here are unambiguous. It is apparent from a review of the restrictive covenants that they have definite and necessary meanings. The aforementioned reciprocal restrictive covenants were created to establish a general plan of development in which a lodging facility would be developed on the four-acre parcel purchased by BMC and factory outlets, discount retail stores, gas stations and fast food facilities would be developed only on the remaining parcel.

These recorded restrictions are covenants, at common law, which run with the land and are, therefore, enforceable. As we recently stated:

"At common law, a landowner may enforce a covenant...