Country Estates Homeowners Ass'n v. McMillan

No. 95-443
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996

COUNTRY ESTATES HOMEOWNNERS ASSOCIATION, INC.,
a Montana corporation,

APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Ted 0. Lympus, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Richard R. Buley; Tipp & Buley, Missoula, Montana

For Respondent:
E. Eugene Atherton, Attorney at Law, Kalispell,
Montana

Submitted on Briefs: March 28, 1996
Decided: April 26, 1996
Filed:
Justice W. William Leaphart delivered the Opinion of the Court.

George McMillan, Eloise McMillan, and Vance McMillan
(McMillans) appeal from the Final Judgment and Order for Injunctive
Relief of the Eleventh Judicial District Court, Flathead County,
granting Country Estates Homeowners Association's (Country Estates)
request for a mandatory injunction and awarding costs and
attorney's fees. We reverse.
The following issues are raised on appeal:
1. Does the statute of limitations bar Country Estates'
action for breach of the restrictive covenants?
2. Does Country Estates have standing to bring this action?
3. Did the District Court err in granting Country Estates a
mandatory injunction?
This is the second appeal arising out of Country Estates'
efforts to enforce restrictive covenants against the McMillans. In
the first appeal, this Court remanded for a hearing after proper
notice to the McMillans of the type of relief being sought in the
proceedings. Country Estates v. McMillan (1994), 269 Mont. 131,
134, 887 P.2d 249, 251. On remand, Country Estates filed an
amended complaint seeking a mandatory injunction, which, following
a hearing, the District Court granted.
The McMillans own Lot 2 of Country Estates Unit No. 1, which
is subject to restrictive covenants. The two pertinent covenants
provide in relevant part that I1 [al11 construction shall be complete
within one year from the date construction begins" and that "[al11
lots shall be landscaped to the paved street." The McMillans began
constructing a house in the early 1980s. George McMillan testified
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that construction began in 1981, and in arguing its position,
Country Estates adopted 1981 as the year construction began. The
District Court found that construction began "[in] approximately
1982 or 1983." At the time of the District Court's decision,
neither the home nor the landscaping had been completed. The
District Court determined that the McMillans had violated both
restrictive covenants and issued a mandatory injunction requiring
the McMillans to either complete the house and landscape the lot
within 90 days or remove the violating structure within 90 days.
The McMillans appeal from this determination.
1. Does the statute of limitations bar Country Estates'
action for breach of the restrictive covenants?
In reviewing the district court's conclusions of law, we
determine whether the court's conclusions are correct. Maloney v.
Heer (1993), 257 Mont. 500, 504, 850 P.2d 957, 959 (citing Steer,
Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803
P.2d 601, 603). Section 27-2-202, MCA, provides that an action
upon any obligation founded upon an instrument in writing must be
commenced within eight years. This Court has held that the eight-
year statute of limitations set forth in § 27-2-202, MCA, applies
to cases involving covenants. Scherpenseel v. Bitney (1993), 263
Mont. 68, 74, 865 P.2d 1145, 1149 (citing Majers v. Shining
Mountains (19861, 219 Mont. 366, 372, 711 P.2d 1375, 1378-79).
From the record it is clear that construction had commenced by
1983 at the latest. Thus, the statute of limitations began to run
upon expiration of the one-year period following the commencement
of construction.
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 The District Court concluded, relying on Graveley Ranch v.
Scherping (19891, 240 Mont. 20, 782 P.2d 371, that "the pled
affirmative defense of Statute of Limitations is inapplicable since
each day of non-compliance, up to the present, constitutes a new
violation of the Declaration of Covenants, Conditions, and
Restrictions and starts the Statute of Limitations running anew."
However, Gravelev Ranch involved the application of the statute of
limitations to a continuing nuisance. In contrast, the present
case requires us to apply the eight-year statute of limitations,
set forth in § 27-2-202, MCA, to covenants. Maiers, 711 P.2d at
1378-79.
Country Estates brought suit to obtain a mandatory injunction
requiring the McMillans to comply with the restrictive covenants.
The instant action is based on the breach of the restrictive
covenants not on a nuisance theory. Thus, our opinion in Gravelev
is inapplicable to the issues raised in the instant case.
Accordingly, the District Court erred in relying on Gravelev as
authority for its conclusion that each day of non-compliance with
the restrictive covenants starts that statute of limitations
running anew. While this may be true with respect to a continuing
nuisance, it is incorrect with respect to restrictive covenants.
Maiers, 711 P.2d at 1378-79.
Country Estates also asserts that our opinion in Scheruenseel
controls and argues that the statute of limitations does not begin
to run until the date on which an actual demand for performance is
made. ScherDenseel, 865 P.2d at 1150. However, SCherDenSeel iS

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not on point with the instant case. In Scherwenseel, we recognized
that in many instances a developer's obligation to comply with
affirmative covenants is open ended because:
developers of real property often enter into affirmative,
written covenants and agreements as a part of the
subdivision process in order to obtain the approval of
the governing body to file a subdivision plat. In many
cases, roads and other improvements required by the local
government, by applicable laws or rules and/or by the
developer's covenants and agreements are not made
immediately, but, rather, are constructed over a period
of time as parcels or units of the subdivision are sold.
Scheroenseel, 865 P.2d at 1149. In addition, we noted that:
[the rule] best effectuates the purposes and public
policy of the [Montana Subdivision and Platting] Act,
while, coincidentally, providing a definite and easily
determinable time frame within which actions must be
commenced to enforce affirmative, written covenants
running with the land.
iPjublic policy, as expressed in the Act, demands that
real estate developers be strictly held to their
covenants and agreements, and that they not be allowed to
gain the advantage of their failure to perform by the
fortuitous passage of time.
Scherwenseel, 865 P.2d at 1149-50. In Scherwenseel, we were
confronted with an affirmative covenant which did not specify a
deadline for compliance. Under those facts, we held that the
statute of limitations under 5 27-2-202, MCA, did not begin to run
until such time as there had been a demand for performance. In
contrast, the restrictive covenants at issue here provide a
definite and readily determinable time frame. The house must be
completed "within one year from the date construction begins."
Thus, the statute of limitations set forth in 5 27-2-202, MCA,
began to run upon expiration of that one-year period, that is,
sometime in 1984. Accordingly, the eight-year statute of
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limitations ran in 1992. Country Estates did not bring this action
until 1993.
Thus, we determine that the District Court erred in concluding
that the statute of limitations did not operate to bar Country
Estates' cause of action. Based on our resolution of issue one, it

is unnecessary for the Court to address issues two and three.
Reversed.

We concur:

Chief Justice