Heltman v. Catanach

Certiorari Denied, January 6, 2010, No. 32,003

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2010-NMCA-016

Filing Date: August 27, 2009

Docket No. 28,613

HARRIET HELTMAN,

Plaintiff-Appellee,

v.

ALBERT F. CATANACH, JR.,

Defendant-Appellant.

APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Timothy L. Garcia, District Judge

Sawtell, Wirth & Biedscheid, P.C.
Bryan P. Biedscheid
Santa Fe, NM

for Appellee

Albert F. Catanach, Jr.
Santa Fe, NM

Pro Se Appellant

OPINION

VANZI, Judge.

{1} Defendant appeals from an order enjoining him from subdividing his property and building
a single-family residence on the resulting lot. The district court’s order was based on the terms of
a restrictive covenant governing the use of the lots in Defendant’s subdivision. Defendant raised
two equitable defenses to the enforcement of the covenants, but the district court concluded that the
evidence did not warrant nonenforcement. As we conclude that the district court erred in refusing
to consider relevant evidence in evaluating Defendant’s equitable defenses, we reverse and remand

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for a new trial on the issue of whether those defenses should prevent enforcement of the covenants
against Defendant in this case.

BACKGROUND

{2} Plaintiff, Harriet Heltman, and Defendant, Albert Catanach, are the owners of separate
residential lots in the Lovato Subdivision No. 1 in Santa Fe, New Mexico (the City). In January
2004, Defendant applied to the City for approval to split his lot. Defendant’s home was already
positioned on part of the lot, and he hoped to build a residential structure on the resulting new lot
after the split. Soon after Defendant filed his application with the City, Plaintiff initiated this lawsuit
seeking a declaratory judgment that Defendant’s proposed use of the property would violate the
restrictive covenants governing the subdivision and seeking an injunction to prevent Defendant from
subdividing his lot and building a residence on the resulting lot. In the district court, the parties
disputed which of several sets of restrictive covenants actually governed the subdivision, whether
the restrictive covenants barred Defendant’s proposed use of his property, and whether Defendant’s
affirmative defenses prevented enforcement of the covenants against him. After a bench trial, the
district court entered a judgment declaring that Defendant’s proposed subdivision of his lot and
construction of a residential structure on the resulting lot would violate the governing restrictive
covenants. The district court enjoined Defendant from carrying out his plans.

DISCUSSION

{3} Defendant appeals, arguing: (1) that the district court erred by applying the wrong set of
covenants; (2) that even if the district court relied on the correct covenants, those covenants do not
expressly prohibit subdivision of Defendant’s lot; (3) that the district court erred in limiting the
scope of evidence it would consider as relevant to Defendant’s affirmative defenses; and (4) that the
district court erred in concluding that Defendant’s affirmative defenses did not prevent the
enforcement of the covenants against him in this case.

The 1940 Covenants Are Controlling

{4} The Lovato Subdivision was originally controlled by a set of restrictive covenants that was
recorded in 1936. A second set of covenants purporting to supercede the 1936 covenants was
recorded in 1940. In 2005, after this litigation had commenced, Defendant recorded an agreement
among a majority of property owners in the subdivision to modify the covenants. Subsequent to
Defendant’s recorded amendment, Plaintiff recorded her own amendment. The district court
determined that the 1940 covenants were applicable to the subdivision and that, to the degree either
Defendant’s or Plaintiff’s amendments were effective, they would not actually take effect until the
year 2015. Defendant asserts that the district court erred in applying the 1940 covenants and claims
that either the 1936 covenants or his 2005 amendments should control.

{5} A determination of which set of covenants is applicable required the district court to interpret
the covenants themselves—a legal determination that this Court reviews de novo. See Baker v.
Bennie J. Aday & Dixie J. Aday Revocable Trust, 1999-NMCA-123, ¶ 9, 128 N.M. 250, 991 P.2d

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994 (applying de novo review to the district court’s interpretation of the terms of a covenant). The
1936 covenants provided that they were to “remain in force until July 1, 1960, and thereafter until
such time as the same may be modified or abrogated by a vote of two thirds of the owners of lots
within said subdivision.” Defendant argues that since the 1940 covenants were recorded prior to
July 1, 1960, they were ineffective because they violated the plain meaning of the 1936 covenants’
requirement that no amendment take place prior to that date. Plaintiff points out that there was
evidence that the 1940 covenants were recorded by unanimous agreement of all the then-owners of
the Lovato Subdivision and argues that because it was unanimous, the amendment was effective.

{6} We agree that the unanimous agreement in 1940 of all the then-owners of the property in the
subdivision was effective to amend the 1936 covenants. Generally, the “obligation of the burdened
party under a covenant can be extinguished by action by the person entitled to enforce the
covenant.” Gerald Korngold, Private Land Use Arrangements: Easements, Real Covenants, and
Equitable Servitudes § 11.03, at 386 (1990). “Termination by release or agreement is based on
fundamental principles of contract law, as one entitled to enforce a promise may relieve the promisor
of his or her obligation.” Id. at 386-87. “As a corollary to the rule that a covenant can be terminated
by the agreement of the parties, a covenant may be amended upon agreement of the parties. Under
the general rule, all of the parties entitled to enforce the covenant must agree to the amendment.”
Id. § 11.13, at 419 (footnote omitted).

{7} Where a provision such as the one in the 1936 covenant provides that a covenant shall
remain in effect for an initial period, after which it may be modified by less than unanimous consent,
courts have interpreted these provisions to simply provide an exception, after a certain number of
years, to the general rule that unanimity is required in order to amend a restrictive covenant. See,
e.g., Johnson v. Howells, 682 P.2d 504, 505 (Colo. Ct. App. 1984) (holding that the district court
erred in concluding that the covenant could be amended by sixty percent of the property owners
prior to the expiration of the initial twenty-year period and stating that amendment during this period
could only be effected by unanimous consent); Kauffman v. Roling, 851 S.W.2d 789, 794 (Mo. Ct.
App. 1993) (interpreting such a provision to mean that the covenant could be amended during the
initial period only by unanimous consent, but could be subsequently amended by the two-thirds
majority provided for in the covenant).

{8} Defendant has cited no authority to support his claim that the then-owners of the properties
in the Lovato Subdivision could not unanimously agree to enact the 1940 covenants, thereby
amending the 1936 covenants. Accordingly, we assume that there is none. See In re Adoption of
Doe, 100 N.M. 764, 765, 676 P.2d 1329, 1330 (1984). And while we have no quarrel with the case
cited by Defendant for the proposition that under a similar provision a covenant cannot be modified
by less than unanimous consent during the initial period, see White v. Lewis, 487 S.W.2d 615, 616
(Ark. 1972), that is not what occurred here. We hold that the unanimous agreement of the then-
owners of the properties in the subdivision amended the 1936 covenants and replaced them with the
1940 covenants.

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{9} Defendant asserts that even if the 1940 covenants were valid, the amendments he recorded
in May 2005 with the signatures of a majority of the owners were effective to amend the 1940
covenants. With regard to amendments, the 1940 covenants provide:

These covenants are to run with the land and shall be binding on all the
parties and all persons claiming under them until January 1, 1965, at which time said
covenants shall be automatically extended for successive periods of ten years unless
by a vote of the majority of the then[-]owners of the lots it is agreed to change the
said covenants in whole or in part.

The district court determined that under this provision, Defendant’s amendments would not go into
effect until January 1, 2015. We conclude that the district court was correct that Defendant’s
amendments—to the degree they were validly enacted and not superceded by Plaintiff’s
subsequently recorded amendments—would not go into effect until January 1, 2015. We base this
conclusion on the duration clause specifying that extensions of the covenant are to last for ten-year
periods.

{10} Restrictive covenants “are to be read reasonably but strictly and, to the extent language is
unclear or ambiguous, the issue of enforcement of a restriction will be resolved in favor of the free
enjoyment of the property and against limitations.” Mason Family Trust v. DeVaney,
2009-NMCA-048, ¶ 9, 146 N.M. 199, 207 P.3d 1176. Defendant contends that the covenant is
unambiguous and that the language providing that after January 1, 1965, the covenants “shall be
automatically extended for successive periods of ten years unless by a vote of the majority of the then[-
]owners of the lots it is agreed to change the said covenants in whole or in part,” means that after
January 1, 1965, a majority of owners could agree to modify the covenants at any time. We
disagree. While we recognize that Defendant’s proposed interpretation has some logical force, since
the covenant provides that the ten-year extensions will remain in place unless the majority chooses
to modify them, to interpret the language as Defendant proposes would render meaningless the
portion clearly providing that extensions of the covenant would be for ten-year periods. Defendant
effectively asks this Court to interpret the language as if it simply reads that the covenants “shall be
automatically extended unless by a vote of the majority of the then[-]owners of the lots it is agreed
to change the said covenants in whole or in part.” He does not explain what purpose the specific
ten-year duration clause would serve under such an interpretation, and we can think of none.
Therefore, we do not find this provision to be as clear as Defendant asserts. Nevertheless, we
conclude that this is not a case in which the rule of construction favoring the unencumbered use of
property should apply. This Court “will not construe a deed restriction so as to create an illogical,
unnatural, or strained construction,” and “[w]e will give words in a deed restriction their ordinary
and intended meaning.” Id. Applying these rules of construction, we decline to adopt a reading of
this provision that eliminates the ten-year period for extensions that is plainly specified in the
covenant.

{11} A number of other courts have interpreted similar language, and it appears that all but one
have determined that modifications by less than unanimous agreement can only take place at the
start of the next of the “successive periods of [ten] years.” See Swenson v. Erickson, 998 P.2d 807,

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815 (Utah 2000) (internal quotation marks omitted) (holding that an agreement that attempted to
terminate a subdivision’s restrictive covenants was ineffective, where the covenants specifically
provided that they would be terminated by a majority vote of subdivision property owners only at
specific ten-year intervals); see also Scholten v. Blackhawk Partners, 909 P.2d 393, 396-97 (Ariz.
Ct. App. 1995) (holding that an otherwise valid amendment was ineffective until the beginning of
the next ten-year period); Mauldin v. Panella, 17 P.3d 837, 839 (Colo. Ct. App. 2000) (holding that
the district court erred in concluding that an amendment could be passed at any time, rather than at
the beginning of the successive ten-year period); In re Wallace’s Fourth Southmoor Addition to the
City of Enid, 874 P.2d 818, 820-21 (Okla. Civ. App. 1994) (same). But see Hill v. Rice, 505 So. 2d
382, 385 (Ala. 1987) (holding that an amendment could be passed at any time after the initial period
by the agreement of the specified majority, without addressing the purpose of the clause regarding
the ten-year periods).

{12} We agree with those courts that have concluded that “in order to give meaning to all of its
provisions, we [must] hold that the duration clause requires that an amendment approved [by the
specified majority, rather than unanimously] during the running of an extension period become[s]
effective only at the start of the next successive period.” Scholten, 909 P.2d at 396. Here,
Defendant’s May 2005 amendments came too late to meet the January 1, 2005 deadline, and
therefore, if valid, would not take effect until January 1, 2015. Accordingly, the district court
correctly concluded that the 1940 covenants governed the subdivision property for purposes of this
litigation.

The 1940 Covenants Prohibit Defendant’s Proposed Subdivision of His Property

{13} Defendant contends that the 1940 covenants “do not prevent subdivision [of his lot] and
construction of an additional building on the subdivided lot.” We cannot agree. Defendant’s lot is
.511 acres, and the proposed split would result in a .215-acre lot and a .294-acre lot, each with a
single-family home on it. Section 2(D) of the 1940 covenants provides that “[n]o residential
structure shall be erected or placed on any building plot, which plot has an area of less than one half
acre . . . .” That provision clearly prohibits Defendant from dividing his lot into two lots that are less
than one-half acre and maintaining a residential structure on each lot.

{14} Defendant relies on two Illinois cases in support of his argument that the 1940 covenants do
not prohibit the proposed use of his property in this case. However, the cases are not persuasive
because the language of the covenants in each is meaningfully different from the language in the
1940 covenants. In Sadler v. Creekmur, the covenant stated that “[n]o building shall be erected .
. . or permitted to remain on any lot other than one single family dwelling . . . .” 821 N.E.2d 340,
343 (Ill. App. Ct. 2004) (internal quotation marks omitted). The Illinois Appellate Court held that
this language did not prohibit an owner from subdividing his lot and building a second residence on
the resulting half of the subdivided property. Id. at 348. Sadler is clearly distinguishable, since
there, the covenant did not define the term “lot” or place any acreage requirements on land used for
placement of a residential structure. Id. at 343.

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{15} In Paquette v. Coble, the restrictive covenant provided that “[n]o more than one single family
residence or dwelling house shall be built or erected upon any piece or parcel of the above premises,
having an area of less than two and one-quarter acres.” 653 N.E.2d 1262, 1264 (Ill. App. Ct. 1995)
(internal quotation marks omitted). The plaintiffs sought to subdivide a lot that was approximately
2.07 acres. Id. The Illinois Appellate Court held that, since there was nothing in the covenant
providing for a minimum residential lot size, the covenant did not prohibit subdivision of the lot, and
instead only limited the number and type of structure that could be built on the resulting new parcel
if it was less than two and a quarter acres. Id. at 1265-66. Therefore, subdivision of the lot was
permitted, so long as only no more than one single-family dwelling was built on the resulting lot.
Id.

{16} Here, in contrast to Sadler and Paquette, the 1940 covenants do provide for a minimum
residential lot size, since they prohibit the construction of a residential structure on any lot smaller
than one-half acre. As Defendant’s proposed subdivision would result in two lots smaller than one-
half acre, each with a single-family residence, the 1940 covenants prohibit Defendant’s proposed
use of his property.

Evidence of Other Covenant Violations Is Relevant to Defendant’s Defense of Changed
Conditions

{17} Even though we hold that the 1940 covenants expressly prohibit Defendant’s proposed use
of his property, New Mexico law recognizes that there are certain circumstances under which it is
inequitable to enforce a restrictive covenant. In the district court, Defendant asserted that it would
be inequitable to enforce the covenants against him because of changed conditions of the
neighborhood. Restrictive covenants “have historically 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.” Jones v. Schoellkopf, 2005-NMCA-124, ¶ 9, 138 N.M. 477, 122 P.3d
844 (internal quotation marks and citation omitted). In some cases, when that uniformity has been
destroyed by other violations of a covenant or when other changes in the neighborhood have
undermined the original purpose of the covenant, the covenant may be set aside. See id. ¶ 13. In
order to warrant setting aside the covenant, “the degree of change must be so significant and so
radical as to frustrate the original purpose of the grantors such that the original intent can no longer
be carried out.” Id.

{18} The 1940 covenants are generally directed at ensuring that the subdivision contains only
single-family residences on lots that are at least one-half acre. The relevant sections of the 1940
covenants provide:

[2(A)] All lots in the tract shall be known and described as residential lots.
No structures shall be erected, altered, placed or permitted to remain on any
residential building plot other than one detached single-family dwelling not to
exceed two stories in height and a private garage for not more than three cars and
other outbuildings, incidental to residential use of such tract.

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 ....

[2(D)] No residential structure shall be erected or placed on any building plot,
which plot has an area of less than one half acre. . . .

....

[2(G)] No trailer, basement, tent, shack, garage, barn or other outbuilding
erected in the tract shall at any time be used as a residence temporarily or
permanently, nor shall any structure of a temporary character be used as a residence.

....

[2(L)] Invalidation of any one of these covenants by judgment or court order
shall in no [way] affect any of the other provisions which shall remain in full force
and effect.

{19} On the first day of the bench trial when the parties were offering their exhibits, Defendant
indicated that most of his evidence related to the fact that a significant number of lots in the
subdivision contained either (1) multifamily residences, (2) primary single-family residences with
guest houses on the lots that were being used as additional single-family residences, rather than as
temporary places for guests of the primary residences, or (3) non-residential structures, such as
churches, all in violation of the covenants. The district court indicated that because Defendant
wanted to split his lot into two parcels smaller than a half acre and with a residence on each in
violation of Section 2(D), the only relevant evidence of changed conditions was whether there were
other lot splits that resulted in lots smaller than one-half acre in violation of Section 2(D); evidence
of multifamily dwellings and guest houses used as residences would only be evidence of violations
of Section 2(A) or 2(G), which the district court did not consider to be relevant. Defendant
explained that he believed that evidence of the multifamily dwellings and the guest houses was
relevant to his defenses because this evidence demonstrated that many of the lots in the subdivision
contained more than one residence per half-acre lot. Defendant argued that reading the 1940
covenants as a whole, it is clear that the purpose is to ensure that there is only one single-family
residence per half-acre lot, and that this intent had not been followed in much of the subdivision,
such that the covenant should not be used to bar him from subdividing his lot and placing a second
single-family residence on it. The district court stated that it did not see a connection between the
provision governing the number of single-family residences on a lot and the provision governing the
size of each lot. As a result, the district court indicated that Defendant should not spend much time
introducing evidence relating to the guest houses and multifamily dwellings.

{20} After trial, in the district court’s findings and conclusions, it found that there were “[s]everal
guest houses, duplexes or other multifamily residences,” as well as nonresidential buildings such
as churches that had been built on lots in the subdivision, but that there had been only one lot split
that resulted in two lots smaller than one-half acre. The district court found that the single lot split

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did not significantly alter the character of the neighborhood so as to render the covenant
unenforceable. It also found that while

[t]he construction of numerous guest houses and other multifamily units on
existing one-half (½) acre lots . . . would raise issues regarding the validity and
enforceability of Section 2(G) of the 1940 Restrictive Covenants, . . . the severability
provisions set forth in Section 2(L) . . . would prevent such violations from affecting
the validity of the remaining covenants, specifically the one-half (½) acre minimum
residential lot size requirement in Section 2(D) . . . .

We hold that the district court erred in so narrowly limiting the scope of the evidence it would
consider in evaluating Defendant’s argument regarding changed conditions.

{21} Generally, when a court determines whether changed conditions will prevent a covenant
from being enforced, it looks to all conditions relevant to the use of the property that is sought to be
enjoined—not just to other violations of the same provision of the covenants. See, e.g., Mason v.
Farmer, 80 N.M. 354, 355-57, 360, 456 P.2d 187, 188-90, 193 (1969) (holding that changed
conditions rendered it inequitable to enforce a restrictive covenant limiting a property to residential
uses and relying in part on conditions other than the violation of the same provision of the
covenant); Mershon v. Neff, 67 N.M. 311, 318, 355 P.2d 128, 132-33 (1960) (remanding to the
district court to consider changes that included both violations of the relevant covenant and a factor
not governed by the covenants—increased traffic); Jones, 2005-NMCA-124, ¶¶ 15-16 (considering
evidence of factors not governed by the covenants—crime rates and neighborhood safety—in
determining whether a wall height restriction should be enforced and concluding that there was
insufficient evidence of a significant change in those conditions to warrant the district court’s refusal
to enforce the covenant). Although the district court concluded that the severability clause in the
1940 covenants controlled what evidence would be relevant to the issue of changed conditions, we
find nothing in that clause to support such an interpretation, and neither of the parties has cited any
authority that would suggest that a severability clause should be so interpreted.

{22} In this case, where the covenants seek to ensure that all properties contain only a single-
family residence on a lot of at least one-half acre, evidence that other properties had either
multifamily residential structures, multiple residential structures on lots not large enough to provide
at least one-half acre per residence, or nonresidential structures would be relevant to the question
of whether it is equitable to enforce the covenants against Defendant in this case. Defendant’s
proposed use of his property would apparently result in a use that is consistent with the use of a
significant number of other lots in the subdivision—more than one residence in an area of less than
one-half acre per residence. Although Defendant’s proposed use of the property is different from
some of the other violating residential lots—since he intends to actually split his lot and place
another residence on the resulting new lot, rather than simply placing an additional residence on the
existing lot—in light of New Mexico case law indicating that the scope of evidence relevant to
changed conditions is relatively broad, we cannot conclude that this difference warranted the district
court’s refusal to consider evidence of other violations that did not involve lot splits. The evidence
of the use of the other lots possessing multifamily residences, multiple residential structures per lot,

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or nonresidential structures was relevant to Defendant’s claim of a changed condition, and the
district court erred in declining to consider it for that purpose.

Evidence of Plaintiff’s Acquiescence in Other Covenant Violations Is Relevant to Defendant’s
Claim that Plaintiff Waived Her Right to Enforce the Covenant

{23} New Mexico courts have also recognized that a covenant should not be enforced by one who
has acquiesced in prior violations of the covenant. See Neff v. Hendricks, 57 N.M. 440, 442-43, 259
P.2d 1025, 1026-27 (1953) (concluding that defendants had not waived by acquiescence their right
to enforce the relevant covenants since prior violations had been minor and defendants had actively
sought to enforce other violations of the restrictions). Waiver by acquiescence requires “a showing
that the part[y] presently trying to enforce the covenant had previously acquiesced in a violation of
the same or a different covenant on another restricted lot.” Jay M. Zitter, Annotation, Waiver of
Right to Enforce Restrictive Covenant by Failure to Object to Other Violations, 25 A.L.R. 5th 123,
§ 2[a] at 144 (1994). Relevant considerations, among others, include whether the party seeking to
enforce the covenant had actual or constructive knowledge of the prior violations, the magnitude of
the current violation as compared to prior violations, and whether the prior violations were
temporary, occasional, or permanent. Id.

{24} In the district court’s findings and conclusions, it stated that Plaintiff’s failure to prevent the
single lot split that had occurred in the subdivision did not constitute acquiescence in the split
sufficient to waive Plaintiff’s ability to enforce the covenant against Defendant’s proposed lot split
in this case. The district court apparently did not consider Plaintiff’s failure to enforce the covenants
against the other violations of those provisions intended to ensure that each lot possesses only a
single-family residence on a lot of a minimum of one-half acre. For the same reasons we have
concluded that the evidence of the multifamily residences, multiple residences on a single lot, and
nonresidential structures was relevant to the question of whether changed conditions prevented
enforcement of the covenants against Defendant, we conclude that this evidence was relevant to the
issue of whether Plaintiff had acquiesced in other relevant violations of the 1940 covenants, such
that she should not be permitted to enforce the covenants against Defendant. See Mason, 80 N.M.
at 359, 456 P.2d at 192 (“[W]e have recognized the importance of changed conditions and
circumstances in deciding whether restrictive covenants have been waived, or should be enforced.”);
Korngold, supra, § 11.05, at 392-93 (noting that the question of waiver often involves a factual
inquiry similar to that involved in the question of changed conditions).

{25} Although often a party’s acquiescence in the violation of one provision of a covenant will
not constitute acquiescence in the violation of another provision, see generally, Zitter, supra (citing
cases in which acquiescence to a violation of one provision in a covenant is held to not constitute
acquiescence to another provision), here the provisions relating to lot size and to the number of
dwellings per lot are all intended to achieve the same purpose: a residential community in which
all properties contain a single-family dwelling on a lot with a minimum size of one-half acre.
Therefore, evidence of Plaintiff’s acquiescence in the properties containing multifamily residences,
multiple residences, and nonresidential structures is relevant to whether it is inequitable to permit
her to enforce the covenant in this case. See Restatement (Third) of Property: Servitudes § 8.3 cmt.

9
f at 501 (2000) (“Waiver usually involves a failure to object to other violations of the same or
similar servitudes such that it would be unfair to allow the claimant to enforce the servitude against
the current violation.” (Emphasis added)). Therefore, the district court erred in failing to consider
this evidence in determining whether Plaintiff acquiesced in these prior violations and, if so, whether
such acquiescence should bar her from enforcing the covenants against Defendant in this case.

CONCLUSION

{26} Because we conclude that the district court erred in failing to consider certain evidence of
other violations of the 1940 covenants as relevant to Defendant’s equitable defenses of changed
conditions and waiver by acquiescence, we reverse and remand for a new trial on those defenses.

{27} IT IS SO ORDERED.

____________________________________
LINDA M. VANZI, Judge

WE CONCUR:

____________________________________
JAMES J. WECHSLER, Judge

____________________________________
RODERICK T. KENNEDY, Judge

Topic Index for Heltman v. Catanach, No. 28,613

AE APPEAL AND ERROR
AE-PR Pro Se Representation on Appeal
AE-RM Remand

CP CIVIL PROCEDURE
CP-EQ Equitable Claims or Defenses
CP-WA Waiver

PR PROPERTY
PR-CN Covenants
PR-RC Restrictive Covenants
PR-SU Subdivisions

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