Gouch v. Rotunno

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA23-283

Filed 17 October 2023

Gaston County, No. 21 CVS 1417

HARVEY W. GOUCH, Plaintiff,

v.

CLIFFORD ROTUNNO AND DOLORES ROTUNNO, Defendants.

Appeal by Plaintiff from an order entered 28 December 2022 by Judge Carla

Archie in Gaston County Superior Court. Heard in the Court of Appeals 23 August

2023.

Winfred R. Ervin, Jr. and Isaac Cordero, for Plaintiff-Appellant.

Brett E. Dressler, for Defendants-Appellees.

WOOD, Judge.

Mr. Harvey Gouch (“Plaintiff”) appeals an order granting Clifford and Dolores

Rotunno’s (“Defendants”) motion to dismiss pursuant to Rule 12(b)(6). After careful

review, we reverse the trial court’s order.

I. Factual and Procedural Background

Defendants live in a single-family residence on a lot in the Stoney Brook

Estates subdivision in Gaston County. The issue on appeal is whether Defendants’

lot is subject to certain recorded covenants.

In 2007, Defendants’ lot was part of a larger undeveloped tract previously
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owned by Integrity Builders of NC, LLC (“Integrity”). On 15 March 2007, Integrity

recorded a plat in Book 73 at page 85 of the Gaston County Public Registry,

subdividing its larger tract into sixteen residential building lots. This plat designated

the name of the subdivision as Stoney Brook Estates and depicted the sixteen lots as

Lots 1-11, 30-34. The plat itself does not reference or refer to any type of restrictions.

Defendants are the current owners of Lot 32, a property located in Stoney Brook

Estates, a residential subdivision in Gaston County.

On 15 August 2008, Integrity deeded eleven of the sixteen lots in Stoney Brook

Estates to Plaintiff by deed recorded in Book 4423 at Page 1654 in the Gaston County

Public Registry. Because Integrity conveyed only eleven of the sixteen lots to

Plaintiff, Integrity’s deed to Plaintiff specifically exempts the lots not purchased, lots

6-10:

THERE IS EXCEPTED from this conveyance Lots 6, 7, 8,
9 and 10 as shown on plat of Stoney Brook Estates, Phase
1, which map is recorded in Map Book 73 at Page 85 of the
Gaston County Public Registry.

Nine years later, on 10 July 2017, Plaintiff executed and recorded in the

Gaston County Register of Deeds a “Declaration of Covenants, Conditions and

Restrictions for Stoney Brook Estates” (“Declaration”) which purported to place

restrictions on the lots in “Stoney Brook Estates.” The Declaration states, “[t]he

subdivision of Stoney Brook Estates is made subject to these protective covenants.”

However, the Declaration does not reference the lots within Stoney Brook Estates

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subject to the Declaration, offer the legal description of property comprising Stoney

Brook Estates or reference the 2007 plat recorded by Integrity or any other map. The

Declaration includes a setback covenant, requiring all construction within Stoney

Brook Estates to be built at least 110 feet from the lot’s front property line and

requires the front and sides of each residence be constructed of brick, stone, or a

combination of both. At the time of the recording of the Declaration, Plaintiff

continued to own the same eleven lots in Stoney Brook Estates which it had acquired

from Integrity.

On 8 October 2019, over two years after filing the Declaration, Plaintiff sold

and conveyed Lot 32 of Stoney Brook Estates to Defendants as tenants by the

entirety. The deed contains a description of the land being conveyed, specifically Lot

32, references the 2007 Plat map recorded by Integrity showing Lot 32 as appearing

on page 85 of Plat Book 73, and references the Plat book and page number of the deed

transferring Integrity’s interest to Plaintiff. The deed states, as a general warranty

deed, the “Grantor will warrant and defend the title against the unlawful claims of

all persons whomsoever, other than the following exceptions: Restrictions and

easements of record, and the lien of 2019 ad valorem taxes.” The deed, however, did

not expressly reference Plaintiff’s 2017 Declaration.

In 2020, Defendants constructed their home and garage within the

Declaration’s 110-foot setback. Additionally, the front and sides of their home were

constructed with material other than brick and stone.

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In a letter dated 16 November 2020, Plaintiff provided notice to Defendants of

the purported violations of the Declaration and demanded Defendants bring their Lot

into compliance with the Declaration. Defendants refused to make the requested

changes to Lot 32. Thereafter, Plaintiff filed a summons and complaint for injunctive

relief and monetary damages on 5 April 2021. On 10 June 2021, Defendants filed a

motion to dismiss pursuant to Rule 12(b)(6), alleging the Declaration is not applicable

to Lot 32, “did not create a North Carolina Planned Community, is not enforceable,

and is not enforceable by Plaintiff.”

On 18 October 2021, the trial court filed its order on Defendant’s motion to

dismiss, granting with prejudice Defendant’s motion to dismiss pursuant to Rule

12(b)(2). The trial court’s written order made no reference to Defendant’s Rule

12(b)(6) motion. Plaintiff gave written notice of appeal from the trial court’s order on

9 November 2021. On 4 October 2022, this Court vacated the trial court’s order of

dismissal and remanded the case for further proceedings based upon the discrepancy

between Defendant’s 12(b)(6) motion and the trial court’s order based upon 12(b)(2).

Gouch v. Rotunno, 285 N.C. App. 559, 562, 878 S.E.2d 324, 327 (2022).

On remand, Plaintiff’s counsel issued a notice of hearing on Defendant’s Rule

12(b)(6) motion for 26 October 2022. On 12 December 2022, Defendants filed an

objection to “any judge considering Defendants’ motion to dismiss other than Judge

Carla Archie” which the trial court subsequently granted on 13 December 2022. On

28 December 2022, Judge Archie filed an amended order on Defendant’s motion to

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dismiss. The trial court clarified that the 18 October 2021 order’s reference to Rule

12(b)(2) “was a scrivener’s error” and that the motion to dismiss was pursuant to Rule

12(b)(6). The trial court thus granted with prejudice Defendant’s motion to dismiss.

Plaintiff filed a written notice of appeal on 5 January 2023.

II. Analysis

First, Plaintiff argues the trial court erred in granting Defendants’ motion to

dismiss because the facts alleged in his complaint are sufficient to state a cause of

action to enforce the residential restrictive covenant contained in the Declaration

against Defendants. Plaintiff also contends the trial court treated Defendants’

motion to dismiss as a motion for summary judgment, notwithstanding the absence

of “any evidence presented by either party by way of verified pleadings, affidavits, or

otherwise.” We agree. The trial court erred in granting Defendants’ 12(b)(6) motion

to dismiss because Plaintiff’s complaint sufficiently stated a cause of action upon

which relief may be granted.

A trial court’s order allowing a Rule 12(b)(6) motion to dismiss is

reviewed de novo. Locklear v. Lanuti, 176 N.C. App. 380, 384, 626 S.E.2d 711, 714

(2006). The standard of review of an order allowing a motion to dismiss is whether,

as a matter of law, the allegations of the complaint, treated as true, are sufficient to

state a claim upon which relief may be granted under some legal theory, whether

properly labeled or not. New Bar P’ship v. Martin, 221 N.C. App. 302, 306, 729 S.E.2d

675, 680 (2012) (citation omitted). In ruling upon a motion to dismiss, the complaint

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is to be liberally construed, viewing all permissible inferences in the light most

favorable to the nonmovant, “and the court should not dismiss the complaint unless

it appears beyond doubt the plaintiff could prove no set of facts in support of his claim

which would entitle him to relief.” Id. (citation omitted). A complaint is without

merit if: “(1) there is an absence of law to support a claim of the sort made; (2) there

is an absence of fact sufficient to make a good claim; or (3) there is the disclosure of

some fact which will defeat a claim.” Home Elec. Co. v. Hall & Underdown Heating

& Air Conditioning Co., 86 N.C. App. 540, 542, 358 S.E.2d 539, 540 (1987) (citation

omitted), aff’d, 322 N.C. 107, 366 S.E.2d 441(1988).

While homeowners enjoy certain property rights, these rights can be limited

through restrictive covenants so that homeowners are restrained from making

certain use of their properties. Hair v. Hales, 95 N.C. App. 431, 433, 382 S.E.2d 796,

797 (1989). A restrictive covenant is defined as a “private agreement, usually in a

deed or lease, that restricts the use or occupancy of real property, especially by

specifying lot sizes, building lines, architectural styles, and the uses to which the

property may be put.” Wal-Mart Stores, Inc. v. Ingles Markets, Inc., 158 N.C. App.

414, 420, 581 S.E.2d 111, 116 (2003) (citations omitted). Courts generally enforce

restrictive covenants as it would any other valid contractual relationship. Bodine v.

Harris Vill. Prop. Owners Ass’n, 207 N.C. App. 52, 60, 699 S.E.2d 129, 135 (2010)

(citations omitted).

Our Supreme Court has stated, “Covenants accompanying the purchase of real

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property are contracts which create private incorporeal rights, meaning non-

possessory rights held by the seller, a third-party, or a group of people, to use or limit

the use of the purchased property.” Armstrong v. Ledges Homeowners Ass’n, 360 N.C.

547, 554, 633 S.E.2d 78, 85 (2006) (citations omitted). A restrictive covenant is

enforceable at law if it is made in writing, properly recorded, and does not violate

public policy. Id. at 555, 633 S.E.2d at 85 (citation omitted). While “all ambiguities

will be resolved in favor of the unrestrained use of land,” J.T. Hobby & Son, Inc. v.

Fam. Homes of Wake Cnty., Inc., 302 N.C. 64, 70, 274 S.E.2d 174, 179 (1981) (citations

omitted), restrictive covenants “must be reasonably construed to give effect to the

intention of the parties, and the rule of strict construction may not be used to defeat

the plain and obvious purposes of a restriction.” Black Horse Run Prop. Owners Ass’n.

v. Kaleel, 88 N.C. App. 83, 85, 362 S.E.2d 619, 621 (1987).

Our case law has long held a restraint on a homeowner’s property may not be

effectively imposed except by deed or other writing duly registered in the office of the

Register of Deeds. Davis v. Robinson, 189 N.C. 589, 601, 127 S.E.2d 697, 703 (1925).

Thus, if the restrictive covenant is “contained in a separate instrument or rests in

parol and not in a deed in the chain of title and is not referred to in such deed, a

purchaser has no constructive notice of it and is not bound.” Hair, 95 N.C. App. at

433, 382 S.E.2d at 797. Our law has consistently held “registration is the one and

only means of giving notice of an instrument affecting title to real

estate.” Massachusetts Bonding & Insurance Co. v. Knox, 220 N.C. 725, 730, 18

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S.E.2d 436, 440 (1942). Accordingly, a purchaser of real property “is not required to

take notice of and examine recorded collateral instruments and documents which are

not muniments of his title and are not referred to by the instruments in his chain of

title.” Morehead v. Harris, 262 N.C. 330, 340, 137 S.E.2d 174, 184 (1964).

“A purchaser is chargeable with notice of the existence of the restriction only

if a proper search of the public records would have revealed it, and it is conclusively

presumed he examined each recorded deed or instrument in his line of title to know

its contents.” Turner v. Glenn, 220 N.C. 620, 625, 18 S.E.2d 197, 201 (1942) (citations

omitted). Therefore, a purchaser “has constructive notice of all duly recorded

documents that a proper examination of the title should reveal.” Stegall v. Robinson,

81 N.C. App. 617, 619, 344 S.E.2d 803, 804 (1986) (citations omitted). Plaintiff’s

assertions in his complaint, taken as true, allege Defendants had knowledge of the

existence of the Declaration from both the title search they commissioned on Lot 32

and the title insurance policy purchased in association with the purchase of Lot 32,

which specifically listed the Declaration as “an insured exception upon that Policy.”

Defendants argue the Declaration’s “restrictions do not appear in [their] chain

of title because [Plaintiff] chose not to refer to the restrictions in [their] deed and

chose not to add a legal description or map reference to the Declaration he filed.”

However, the Declaration is a recorded public record with the Gaston County Register

of Deeds. Therefore, a “proper search of the public records pertaining to the

subdivision would have revealed” the Declaration applying to the Stoney Brook

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Estates. Harborgate Prop. Owners Ass’n v. Mt. Lake Shores Dev. Corp., 145 N.C. App.

290, 294, 551 S.E.2d 207, 210 (2001). Furthermore, as Plaintiff notes, Chapter 13 of

the Gaston County Unified Development Ordinance mandates that “names of new

subdivisions and subdivisions roads shall not duplicate or be phonetically similar to

the names of existing subdivisions and road names in Gaston County.” Gaston

County, N.C., Unified Development Ordinance ch. 13, § 13.13A (2023).

By controlling ordinance, there can only be one Stoney Brook Estates

subdivision in Gaston County, the subdivision in question here. There is no

ambiguity regarding the identification of the real property intended to be subject to

the Declaration when there can be no other subdivisions with that name in Gaston

County. The Declaration was made by and recorded by the owner of the lot at issue

prior to the conveyance of the lot to Defendants. Thus, because the Declaration

appears in Lot 32’s chain of title and there are no other subdivisions titled “Stoney

Brook Estates” in Gaston County, the pleadings support a reasonable inference that

Defendants had constructive notice of the restrictive covenant’s existence.

Defendants also contend the Declaration is unenforceable because the

subdivision lots in Stoney Brook Estates are not under a uniform plan of

development. According to Defendants, because Plaintiff “only owned a portion of the

subdivision when the Declaration was recorded, [his] stated purpose in recording the

restrictions is impossible. One-third of the subdivision remains unencumbered and

unrestricted, undermining any argument that there is a common plan or

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development.” In making this assertion, Defendants rely upon Reed v. Elmore for the

proposition that a restrictive covenant must be part of a general plan or scheme of

development “which bears uniformly upon the area affected.” 246 N.C. 221, 233, 98

S.E.2d 360, 369 (1957) (Denny, J. dissenting) (citations omitted). However,

Defendants reliance on Reed is misplaced. Reed states,

Uniformity of pattern with respect to a development
furnishes evidence of the intent of the grantor to impose
restrictions on all of the property and when the intent is
ascertained it becomes binding on and enforceable by all
immediate grantees as well as subsequent owners of any
part of the property; but the fact that there is an absence
of uniformity in the deeds does not prevent the owner of
one lot from enforcing rights expressly conferred upon him
by his contract.

Id. at 226, 98 S.E.2d at 364. Furthermore, “[c]ontractual relations do not disappear

as circumstances change.” Id. (citation omitted).

Here, Plaintiff was conveyed all of Integrity’s interests in Stoney Brook Estates

in 2008. On 10 July 2017, prior to Defendant’s purchase of Lot 32, Plaintiff filed the

Declaration for all remaining parcels of land in the Stoney Brook Estates. Although

Plaintiff did not own five of the lots in Stoney Brook Estates, Plaintiff was permitted

to impose restrictions on the eleven parcels he did own. There is no requirement he

own all of the lots in Stoney Brook Estates in order to impose restrictions on the lots

he does own. The restrictions imposed in the Declaration show his plan to require

structures on the eleven lots he owned to have uniform and defined characteristics.

We agree with Plaintiff that his decision to make “all of his interest in Stoney Brook

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Estates subject to the restriction contained in the Declaration shows evidence of a

general plan and scheme.” Based upon this permissible inference, the pleadings

suggest that a general plan and scheme was intended. Thus, the allegations in

Plaintiff’s complaint, taken as true, are sufficient to state a claim of enforcing the

restrictive covenant against Defendant’s property. New Bar P’ship, 221 N.C. App. at

306, 729 S.E.2d at 680 (citation omitted).

III. Conclusion

Because Plaintiff’s complaint sufficiently stated a cause of action upon which

relief may be granted, we reverse the order granting Defendants’ motion to dismiss

and remand to the trial court for further proceedings.

REVERSED AND REMANDED.

Judges DILLON and ZACHARY concur.

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