January 31 2012
DA 11-0335
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 19
MARK D. WAGNER,
Plaintiff and Appellant,
v.
BRIAN WOODWARD,
Defendant, Third Party Plaintiff,
Appellee, and Cross-Appellant,
v.
TAUNJA L. WAGNER,
Third Party Defendant and Appellant.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV 09-1239(C)
Honorable Stewart E. Stadler, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
John M. Wagner, Wagner Law Firm, P.C., Whitefish, Montana
For Appellee:
Michael A. Ferrington, Attorney at Law, Whitefish, Montana
Submitted on Briefs: December 21, 2011
Decided: January 31, 2012
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Mark and Taunja Wagner (Wagners) own property (Lot 2) along Whitefish River
in Whitefish, Montana, which is subject to restrictive covenants. Brian Woodward
purchased adjacent property (Lot 1) that is subject to the same covenants. Woodward
added onto the deck of the home he purchased and built a split-rail fence along his east
and west property lines. Wagners sued, claiming Woodward’s additions violated the
restrictive covenants. The Eleventh Judicial District Court determined that the fences did
not violate the covenants but the deck addition did. The court ordered Woodward to
remove the deck addition. Wagners appeal the District Court’s fence ruling and
Woodward cross-appeals the deck ruling. We affirm in part and reverse in part.
ISSUES
¶2 A restatement of the dispositive issue on appeal and cross-appeal is whether the
District Court erred in its interpretation and application of the restrictive covenants.
¶3 Additionally, both parties appeal the District Court’s denial of attorney fees and
costs.
FACTUAL AND PROCEDURAL BACKGROUND
¶4 In 1994, Taunja’s parents, Lyle and Judy Phillips, owned property designated as
Lot 1 and Lot 2 of Lyle’s Addition along the Whitefish River in Whitefish, Montana. On
August 29, 1994, with the assistance of their lawyer, the Phillips executed restrictive
covenants that ran with these adjacent parcels. These covenants were recorded on
September 1, 1994, and contained four restrictions:
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(1) The southern most part of any structure or improvement built on Lot 1 must
be built or placed within 90 feet south of the north boundary of Lot 1.
(2) Lot 1 is for single-family residential purposes.
(3) The existing trees and shrubs shall be left along the north boundary of that
part of Lot 1 which is the driveway leading from Park Avenue into the main part
of Lot 1.
(4) No fences or trees and shrubs shall be constructed or planted on either lot
so as to interfere with the view to the river by one lot across the other lot as said
view now exists, unless such is approved in writing by the owners of both lots.
¶5 It is unclear how long the Phillips owned these parcels but at some time between
August 1994 and December 2003, the Wagners took ownership of Lot 2. Additionally,
the record reveals that in 2000, a single-family residential home was built on Lot 1. The
owner of Lot 1 at that time asked Wagner to allow him to build further south on his lot—
in other words, outside of the 90-foot building envelope required by covenant #1 set forth
above. Wagner denied permission and the owner assured Wagner that he would
construct his home within the 90-foot building allowance. Between 2000 and January
2009 when Woodward purchased Lot 1, ownership of Lot 1 had changed several times.
¶6 In December 2003, Wagners subdivided Lot 2 of Lyle’s Addition into two lots
designating the parcels Lot 1 and Lot 2 of River Bend. Currently, Wagners retain
ownership of both Lots 1 and 2 of River Bend. The Wagner and Woodward homes
generally face northward and each sits atop a small rise allowing views of Whitefish
River from the south side of their homes. The southern part of both lots creates large,
open backyards that terminate at the river. Wagners’ home is to the east of Woodward’s
and the homes are separated by a mature stand of spruce trees.
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¶7 In June 2009, Woodward remodeled the existing deck on the south side of his new
home and extended it by two feet, taking the deck addition out to the same extension as
the eaves of the house. In July 2009, Woodward constructed a 30-inch tall, two-rail, split
cedar fence along the west boundary of his property. The following month, he
constructed an identical fence along the east boundary of his property—the boundary line
shared with the Wagners. There is nothing in the record indicating that Wagners objected
to these construction projects while they were underway.
¶8 In October 2009, Mark Wagner, individually, filed a complaint against Woodward
seeking declaratory judgment and a future injunction. Wagner asked the court to declare
that the above-listed covenants applied to Woodward’s property and that Woodward had
violated covenants #1 and #4. Wagner claimed that the fences interfered with his view of
the river in violation of covenant #4 and that Woodward’s deck addition extended outside
the 90-foot building allowance in violation of covenant #11 as well. He based this claim
upon his belief that the foundation footprint of Woodward’s house was within 90 feet of
the northern property boundary and the deck extended out beyond the house’s foundation
footprint. Wagner asked that the fences and the deck addition be removed and that
Woodward be enjoined from additional and future violations of the covenants. Wagner
sought attorney fees and costs as well.
¶9 Woodward answered the Complaint and filed a counterclaim and a third-party
complaint against Taunja, bringing her into the lawsuit. Woodward counterclaimed,
arguing that his fences did not obstruct the Wagners’ view of the river, and therefore
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Wagners later claimed the fences also violated covenant #1.
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written authorization or Wagners’ approval under the covenants was not required. He
further counterclaimed that the covenants restricting Lot 1 were more onerous than those
restricting Wagners’ Lot 2 and were therefore unfair and unenforceable. He also claimed
that Wagners’ subdivision of Lot 2 “violate[d] the purpose and intent of the restrictive
covenants.” He requested dismissal of the action and his attorney fees and costs.
¶10 Both parties filed motions for summary judgment and Woodward also filed a
cross-motion for partial summary judgment. Woodward argued the material facts were
not in dispute, and therefore the court need only decide the legal issues pertaining to
whether the covenants were violated. He asserted that the extended deck did not extend
beyond the eaves of house, and that if the eaves of his house violated the covenants, such
a violation occurred 10 years before he purchased the property. He argued that Wagners
were estopped under the equitable theory of laches from claiming that either the eaves of
his house or the deck addition violated the covenants. Woodward also submitted that
because there were no river views on the west side of his west fence, the west fence could
not be in violation of the covenants. He further asserted that his east fence did not
obstruct Wagners’ views of the river.
¶11 Wagners countered that Woodward knew of the restrictive covenants when he
purchased his property and that the photographic evidence presented to the court
illustrated that Woodward had violated those covenants. Wagners demanded that both
fences be removed. Wagners also submitted that if the eaves of Woodward’s house
extended beyond the 90-foot restriction they “must be removed” as must the matching
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deck extension. They claimed Woodward’s laches defense was inapplicable for lack of
notice.
¶12 Wagners hired a surveyor in June 2010 who swore by affidavit that the eaves of
Woodward’s house extended beyond and outside of the 90-foot building allowance
established by the covenants. As a result, Woodward’s deck extension was outside the
allowance as well.
¶13 After conducting an oral argument, the court issued its Order and Rationale on
Pending Motions on October 28, 2010. The District Court dismissed Woodward’s
counterclaim and ruled Woodward’s deck addition violated the covenants, and ordered it
removed. The District Court granted Woodward’s motion for summary judgment as to
his fences, allowing them to remain. The court further ruled that the equitable concept of
laches prohibited Wagners from seeking enforcement of the restrictive covenants as they
pertained to the eaves of Woodward’s home. Lastly, the court determined there was no
basis for an award of attorney fees to either party.
¶14 The District Court issued it Final Judgment on May 17, 2011, wherein it ordered
Woodward to reduce his deck to within 90 feet of the north property line within 180 days
of the Final Judgment. Woodward claims in his brief on appeal that the District Court
granted a post-notice-of-appeal stay on the removal of his deck addition until this Court
issues its ruling.
¶15 Wagners appeal and Woodward cross-appeals.
STANDARD OF REVIEW
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¶16 This Court reviews a district court’s decision on summary judgment using the
same standards as the district court under M. R. Civ. P. 56. Where there are
cross-motions for summary judgment and the district court is not called upon to resolve
factual issues, but only to draw conclusions of law, we review to determine whether those
conclusions are correct. Accordingly, a moving party is entitled to summary judgment
when there are no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law. Western Tradition P’ship v. AG, 2011 MT 328, ¶ 3, 363
Mont. 220, ___ P.3d ___.
¶17 A district court’s interpretation of a restrictive covenant is a conclusion of law
which we review for correctness. Czajkowski v. Meyers, 2007 MT 292, ¶ 12, 339 Mont.
503, 172 P.3d 94.
¶18 We review for correctness a district court’s decision as to whether legal authority
exists to award attorney fees. We review for an abuse of discretion a district court’s
order granting or denying attorney fees if legal authority exists for the fees. Hughes v.
Ahlgren, 2011 MT 189, ¶ 10, 361 Mont. 319, 258 P.3d 439. We also review a district
court’s denial of costs for an abuse of discretion. Hansen v. Granite Co., 2010 MT 107,
¶ 55, 356 Mont. 269, 232 P.3d 409. An abuse of discretion occurs when the court acts
arbitrarily without conscientious judgment or exceeds the bounds of reason. Harmon v.
Fiscus Realty, Inc., 2011 MT 232, ¶ 7, 362 Mont. 135, 261 P.3d 1031.
DISCUSSION
¶19 Did the District Court err in its interpretation and application of the restrictive
covenants?
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¶20 General rules of contract interpretation apply to restrictive covenants. Brewer v.
Hawkinson, 2009 MT 346, ¶ 22, 353 Mont. 154, 221 P.3d 643. We generally interpret
the words of a contract in their ordinary and popular sense. Creveling v. Ingold, 2006
MT 57, ¶ 10, 331 Mont. 322, 131 P.2d 531; § 28-3-501, MCA.
¶21 The District Court concluded that covenant #1 restricted structures and
improvements from being built more than 90 feet south of the northern property
boundary. The court ruled that covenant #1 did not apply to Woodward’s fences because
covenant #4 expressly addressed fences and the only restriction pertaining to fences was
that they do not “interfere with the view to the river.”
¶22 Woodward’s fence could be both a structure and an improvement under the
general meanings of those words contained in covenant #1. A “structure” is something
built or constructed. Random House Webster’s Unabridged Dictionary 1887 (2nd ed.,
Random House 2001). An “improvement” is “a change or addition by which a thing is
improved.” Random House Webster’s Unabridged Dictionary at 963. These two words
are very general in nature and could certainly include a fence. However, a careful
reading of the covenants as a whole as required by § 28-3-202, MCA, leads us to agree
with the District Court that covenant #1 does not apply to Woodward’s fences because
covenant #4 expressly applies. If Woodward was restricted from constructing any fence
beyond the 90-foot building allowance in covenant #1 there would be no reason to
separately reference fences in covenant #4. The only fences Woodward could construct
if limited by covenant #1 would be a fence from the northern boundary of his lot to 90
feet south. Such a fence could not possibly interfere with views of the river; in fact, such
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a fence would probably not be visible from Wagners’ home at all. For any fence to
potentially obscure the view of the river, it must extend beyond the 90-feet building
allowance. Under these circumstances, it would be an unreasonable interpretation to
apply covenant #1 to fences. We therefore affirm the District Court’s conclusion that
covenant #1 does not apply to Woodward’s fences.
¶23 We next address whether Woodward’s fences interfered with Wagners’ view of
the river and whether Woodward violated covenant #4 by not obtaining written
permission from Wagners prior to building his fences. As noted above, Woodward’s
fence is a two-rail fence that is 30 inches tall and made of split cedar logs. From the
photographic evidence, it is a fence very similar if not identical to Wagners’ east property
line fence. The fence that runs between Wagners’ and Woodward’s property appears to
have approximately 14 or 15 fence posts. A few of the posts have birdfeeders or
birdhouses mounted on the top. There is no obstructive material between the ground and
the lower railing nor is there any obstructive material between the lower railing and the
top railing. Other than the wooden posts and the two rails, visibility is completely
unobscured.
¶24 The District Court, based upon the definition of “interfere” meaning “to put
between in a way that hinders or impedes,” ruled that Woodward’s “fence has minimal
impact and does not hinder or impede the view of the river.” We agree. The covenants
do not prohibit all fences—they simply require that fences, shrubs, and trees not interfere
with the view to the river. Had the original owners wished to prohibit any fencing of the
property, or wished to maintain both backyards as a single large open area, such language
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could, and should, have been part of the covenants. The covenants allow fencing, and we
cannot conceive of a less intrusive design of fencing than that utilized by Woodard. We
cannot add words to the covenant to achieve the Wagners’ goal of preserving a
completely open space between their home and the river. Section 1-4-101, MCA. The
District Court did not err in so ruling.
¶25 Woodward argues on cross-appeal that the District Court erred in concluding that
his deck addition violated covenant #1 and must be removed. Woodward asserted early
in the proceeding that he believed his eaves were in compliance with the covenants, and
therefore he extended his deck addition to the same reach as the eaves. It was
Woodward’s intention to comply with the covenants yet improve his property in a
manner that would enhance its value and utility. Shortly before the District Court held
oral arguments on the parties’ motions, Wagners submitted the affidavit of Jeff Larsen, a
property surveyor, who disclosed that the eaves of Woodward’s home were outside the
90-foot building allowance and in violation of the covenants. As such, the court
acknowledged the survey’s findings and applied the theory of laches vis-à-vis the
covenant violation occasioned by the reach of the eaves of the house.
¶26 The District Court was justified in ruling that laches precluded Wagners from
seeking enforcement of the covenants vis-à-vis the eaves of Woodward’s home, which
had been in place without protest for 10 years. However, the court determined that
because the deck addition extended beyond the 90-foot building allowance and was a
recent addition, laches did not apply and Wagners were entitled to enforce the covenants
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as they pertained to the deck addition. The court ordered Woodward to remove the deck
addition.
¶27 In Cole v. State ex rel. Brown, 2002 MT 32, 308 Mont. 265, 42 P.3d 760, we
explained:
Laches is a concept of equity that can apply when a person is
negligent in asserting a right. Laches exists where there has been an
unexplainable delay of such duration or character as to render the
enforcement of an asserted right inequitable, and is appropriate when a
party is actually or presumptively aware of his [or her] rights but fails to
act. A party is held to be presumptively aware of his or her rights; where
the circumstances of which he [or she] is cognizant are such as to put a
[person] of ordinary prudence on inquiry.
We have repeatedly stated that in order to apply the doctrine of
laches, a showing must be made that the passage of time has prejudiced the
party asserting laches or has rendered the enforcement of a right
inequitable. Laches is not a mere matter of elapsed time, but rather, it is
principally a question of the inequity of permitting a claim to be enforced.
Hence, the doctrine of laches is the practical application of the maxim—
Equity aids only the vigilant.
Cole, ¶¶ 24-25 (internal citations and quotations omitted). For the following reasons, we
conclude that equity requires we apply laches to the deck addition as well.
¶28 Attached to Wagner’s Complaint is a letter to Woodward from Wagner’s attorney,
written before suit was filed. In this letter, counsel states that Woodward’s house
“foundation appears to be 90 feet south of the north boundary of Lot 1. Therefore, your
deck extension is in violation of the covenants.” In other words, before the survey was
performed, Wagners concluded the deck addition was outside of the 90-foot building
envelope because they believed the foundation wall on the south side of Woodward’s
house marked the southernmost edge of the building envelope. Wagner claimed that if
the eaves of Woodward’s house were outside the building allowance, he “lacked notice”
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of such non-compliance and therefore laches could not be used to preclude him from
enforcing the covenants as applied to the eaves. Wagner cannot have it both ways. If he
believed, prior to the survey, that Woodward’s house foundation wall delineated the
90-foot mark, then he knew, or at least was on notice, that for the past 10 years the eaves
of the home were outside the building envelope. Conversely, if he believed the eaves
were inside of the building envelope, then his suit against Woodward based upon the
deck addition was frivolous and without merit.
¶29 Nonetheless, as Woodward relied upon the reach of the eave to construct his deck
addition, and Wagner never previously challenged the eaves as being in violation of the
covenants, Woodward was indisputably prejudiced by Wagners’ failure to timely seek to
enforce the covenants. Moreover, there is nothing in the record to indicate that Wagners
were not aware of Woodward’s construction projects. The deck extension occurred in
June, the west fence in July and the east fence in August. Nothing in the record indicates
that Wagners notified Woodward that they believed his projects violated the covenants;
rather, they waited until the projects were completed before bringing this action.
¶30 Lastly, Wagners have not argued or established damages resulting from
Woodward’s deck addition. In fact, given the tree barrier between the homes, Wagners
cannot see Woodward’s deck addition from their home. Therefore, any violation of the
covenant is de minimus. Given Woodward’s detrimental reliance on Wagners’ failure to
timely enforce the covenants as they pertain to the eaves of his home and the absolute
absence of damages to the Wagners, it would be inequitable to compel removal of the
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deck addition. We therefore reverse the District Court’s ruling that Woodward’s deck
addition must be removed.
¶31 We affirm the court’s ruling that neither party receive attorney fees or costs. As
there is no written attorney fee provision between the parties or statutory requirement that
fees and costs be awarded, such an award is within the discretion of the court in a
declaratory judgment action under our ruling in Trs. of Ind. Univ. v. Buxbaum, 2003 MT
97, ¶ 42, 315 Mont. 210, 69 P.3d 663 ([Section] 27-8-313, MCA, authorizes a court to
award attorney fees when the court, in its discretion, deems such an award “necessary or
proper.”). In the case before us, the court did not abuse its discretion in denying fees and
costs to both parties.
¶32 Finally, having granted Woodward the relief he seeks, we need not address the
District Court’s dismissal of his counterclaim.
CONCLUSION
¶33 For the foregoing reasons, we affirm the District Court’s rulings on denial of
attorney fees, its decision to grant Woodward’s summary judgment as to his fences, and
its application of laches to Wagner’s claim of covenant violation as it pertains to the
eaves of Woodward’s home. We reverse its ruling that Woodward’s deck extension
violated the covenants and vacate its order requiring Woodward to remove the deck
addition from his home.
/S/ PATRICIA COTTER
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We concur:
/S/ MIKE McGRATH
/S/ JAMES C. NELSON
/S/ JIM RICE
Justice Brian Morris dissents.
¶34 I would affirm entirely the District Court’s order. I dissent.
/S/ BRIAN MORRIS
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