Fox Farm Estates Landowners Ass'n v. Kreisch

97-057

No. 97-057

IN THE SUPREME COURT OF THE STATE OF MONTANA

1997

FOX FARM ESTATES LANDOWNERS
ASSOCIATION, a Montana non-profit corporation,

Plaintiff and Appellant,

TROY L. KREISCH and DENISE A. KREISCH,

Defendants and Respondents.

APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas M. McKittrick, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Timothy J. Wylder, Special Counsel, Patrick R. Watt;
Jardine, Stephenson, Blewett & Weaver, Great Falls, Montana

For Respondents:

Gregory J. Hatley; Davis, Hatley, Haffeman & Tighe, Great Falls,
Montana

For Amicus:

Brenda R. Gilbert; Swandal, Douglass, Frazier & Gilbert, Livingston,
Montana (for Montana Manufactured Housing and RV Association)

Submitted on Briefs: July 23, 1997

Decided: October 30, 1997
Filed:

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__________________________________________
Clerk

Justice W. William Leaphart delivered the Opinion of the Court.

Fox Farm Estates Landowners Association (Fox Farm), appeals from the decision
of the Eighth Judicial District Court, Cascade County, denying Fox Farm's action to
enjoin preliminarily and permanently Troy and Denise Kreisch's (Kreisches')
installation
of a manufactured home contrary to a restrictive covenant prohibiting temporary
structures. We reverse and remand.
Fox Farm raises two issues on appeal. We conclude that the first issue is
dispositive and, therefore, do not reach the second issue.
Issue Presented
Did the District Court err in holding that Kreisches' factory built
"manufactured
home" was not a mobile home prohibited by the applicable restrictive covenants?
Standard of Review
Fox Farm appeals only the District Court's conclusions of law. The standard of
review of a district court's conclusions of law is whether the court's
interpretation of the
law is correct. Knudson v. McDunn (1995), 271 Mont. 61, 64, 894 P.2d 295, 297
(citing J.M., Jr. v. Montana High School Ass'n (1994), 265 Mont. 230, 235, 875 P.2d
1026, 1030).
Background
In 1996, the Kreisches purchased a lot in Ptarmigan Acres (the lot), a
subdivision
of Cascade County managed by Fox Farm. Ptarmigan Acres, including the Kreisches'
lot, is subject to restrictive covenants which prohibit temporary structures
including
mobile homes. The Kreisches, fully aware of the restrictive covenants, purchased a
manufactured home from a Great Falls mobile home dealer, The Home Place. They
intended to install their new home on the lot.
The home consists of two mobile units, each with permanent steel chassis, and a
special framing that allows for the installation of springs, axles, wheels, a tongue
mechanism and other accessories associated with mobile homes which allow the units to
be towed from one location to another. The Kreisches arranged to have the retailer
haul
the units to the lot and place them on a concrete foundation. The units would then
be
bolted and welded together pursuant to the manufacturer's suggestions. Electrical
services would be installed with the meter on a utility pole, instead of on the home
itself,
because of the mobile quality of the home. Finally, upon completion of their
purchase,
the Department of Justice, Motor Vehicle Division would issue a Certificate of
Ownership
to the Kreisches.
Fox Farm, contending that the manufactured home violates the restrictive

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covenants, filed for a Temporary Restraining Order (TRO) to enjoin the Kreisches from
moving the home onto the lot. The District Court entered a TRO and held a hearing to
show cause why a preliminary injunction should not be granted pending a full trial
on the
merits. Following the hearing, the District Court denied Fox Farm's prayer for
preliminary injunction and dissolved the TRO concluding that the manufactured home
was
not a "mobile home" and, thus, did not violate the restrictive covenants. The
District
Court also held that Fox Farm failed to show that irreparable injury would result
from
its denial of the preliminary injunction.
Discussion
In two recent decisions, Newman v. Wittmer (1996), 277 Mont. 1, 917 P.2d 926,
and Toavs v. Sayre (Mont. 1997), 934 P.2d 165, 54 St.Rep. 155, this Court interpreted
restrictive covenants similar to those presented in this case. The Kreisches
contend,
however, that the facts of this case are distinguishable from Newman and Toavs, but
suggest that, if not distinguishable, this Court should reexamine those decisions.
We
recognize that with the increase in popularity of prefabricated and manufactured
housing,
the amount of litigation regarding such structures has also increased and that there
is a
split of authority among courts. See, e.g., Starr v. Thompson (N.C. App. 1989), 385
S.E.2d 535 (holding that whether a dwelling is a mobile home under a covenant depends
on its characteristics and a factory built dwelling, designed and constructed to
travel on
wheels from place to place is a "mobile home"); Albert v. Orwige (Tenn. App. 1987),
731 S.W.2d 63 (holding that a structure was a "mobile home" notwithstanding that it
might be a "double-wide" mobile home and notwithstanding the fact that it may be
constructed of different materials than many mobile homes); Atkins v. Fine (Tex. App.
1974), 508 S.W.2d 131 (focusing on a ready built home's "conventional construction,"
the court held that a mobile home violated a restrictive covenant providing that "no
buildings . . . are to be moved onto said property . . . except new ready built
homes);
Parry v. Hewitt (Wash. Ct. App. 1992), 847 P.2d 483 (finding that the mobile home is
of the same quality and size as stick built homes and is therefore not prohibited by
restrictive covenants prohibiting structures of a temporary character). However, we
reaffirm our decisions in Newman and Toavs and determine that those decisions control
the resolution of this appeal.
An applicant seeking a preliminary injunction for a violation of a restrictive
covenant must "establish a prima facie case, or show that it is at least doubtful
whether
or not he will suffer irreparable injury before his rights can be fully litigated."
Porter
v. K & S Partnership (1981), 192 Mont. 175, 181, 627 P.2d 836, 839. Additionally, in
determining whether an applicant has established a prima facie case, "the court
should
decide merely whether a sufficient case has been made out to warrant the preservation
of the property or rights in status quo until trial, without expressing a final
opinion as to

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such rights. An applicant need not make out such a case as would entitle him to
final
judgment on the merits." Porter, 627 P.2d at 840.
This Court interprets restrictive covenants by looking first to the language of
the
covenant to ascertain its meaning. If the language is clear and explicit, the
language will
govern. The language of restrictive covenants should be understood in its ordinary
and
popular sense. Toavs, 934 P.2d at 166-67. Restrictive covenants should be strictly
construed and ambiguities resolved to allow free use of the property. Newman, 917
P.2d
at 929. However, such free use must be balanced against the rights of other
purchasers.
Newman, 917 P.2d at 929. Generally, restrictive covenants are considered valid if
they
maintain or enhance the character of the subdivision. Newman, 917 P.2d at 929.
The relevant portions of the restrictive covenants at issue in this case state:
I. Statements of Purpose and Application. The purpose of the
following covenants and provisions is to insure the use of the real property
herein described for attractive and comfortable suburban residential
community for dwellings and local business of conventional construction,
and to assure its occupants a quality environment. . . .
. . . .

Use Restrictions. IV.
. . . .
6. Temporary Structures, Trailers Forbidden. No structure of a
temporary character, mobile home, trailer, basement, tent, shack, garage,
barn or any other out building shall be used on any Block at any time as a
residence, either temporarily or permanently. All structures must be of
new materials . . . .

The restrictive covenants pertaining to Kreisches' lot are nearly identical to those
at issue
in Newman and have the same purpose: Prohibiting temporary structures such as mobile
homes.
The Kreisches contend that Ptarmigan Acres' restrictive covenants are ambiguous
and should be resolved to allow free use of the property. However, in Newman, 917
P.2d at 930, we determined that the restrictive covenants, nearly identical to
Ptarmigan
Acres' restrictive covenants, were not ambiguous but, rather, could be understood in
their
ordinary and popular sense. In order to define covenant terms that were used, but
not
defined in the restrictive covenants, we looked to statutory definitions for
guidance,
namely õõ 15-1-101(k) [now (l)] and 15-24-201(3), MCA, regarding taxation of mobile
homes, and õ 61-1-501, MCA, regarding the classification of mobile homes as motor
vehicles. See Newman, 917 P.2d at 930-32. Those same definitions can be applied
when interpreting the terms in Ptarmigan Acres' restrictive covenants.
The District Court, however, relied on an additional statute that had not been

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mentioned in our previous decisions: õ 76-2-202, MCA. This section of the code is
found in the county zoning portion of Montana Code Annotated and states:
(6) As used in this section, "manufactured housing" means a single-
family dwelling, built offsite in a factory on or after January 1, 1990, that
is placed on a permanent foundation, is at least 1,000 square feet in size,
has a pitched roof and siding and roofing materials that are customarily, as
defined by local regulations, used on site-built homes, and is in compliance
with the applicable prevailing standards of the United States department of
housing and urban development at the time of its production. A
manufactured home does not include a mobile home, as defined in 61-4-
309, or a housetrailer, as defined in 61-1-501.

Section 76-2-202(6), MCA (1995). The District Court, relying on this code section
and
considering factual differences (Kreisches' home will be placed on a permanent
foundation and thus classified for tax purposes as an improvement to real property),
concluded that the Kreisches' manufactured home was not a mobile home in the ordinary
and popular sense. We hold that the District Court misinterpreted the law in making
that
conclusion.
As we stated in Newman, "we are not applying one part of the code to a different
part of the code. Rather, . . . we look to all the statutory definitions of mobile
home for
guidance in interpreting the popular and ordinary meaning of mobile homes in the
restrictive covenant." Newman, 917 P.2d at 931 (citations omitted). Thus, õ 76-2-
202,
MCA, which pertains to zoning, is not determinative of the ordinary and popular
meaning
of manufactured home but, rather, is simply just one more code section that guides
our
interpretation of the restrictive covenants. Moreover, the District Court failed to
consider
subsection (7) of õ 76-2-202, MCA, which states that "[n]othing contained in this
section
may be construed to limit conditions imposed in . . . existing covenants . . . ."
The
District Court misinterpreted the law by relying solely on the zoning definition of
manufactured home to determine whether Kreisches' manufactured home was a temporary
structure that violated the restrictive covenants.
In Newman, in addition to looking to statutory definitions for guidance, we
noted
certain characteristics that led the district court to conclude that the Wittmers'
manufactured home was a mobile home, including:
[T]he Wittmers completed a "Mobile/Manufactured Home Movement
Declaration" before moving their home; the home is described as a
"Manufactured Home by Fleetwood;" the home was issued a Montana
Motor Vehicle Certificate of Title number and a vehicle identification
number; the home is listed as a "trailer" on the Certificate of Title; the
home was brought to the lot in two separate units and then joined together;
the home has its own steel frame undercarriage and uses axles and wheels
for the purpose of transport; the home has metal joists; the home is taxed
as personal property; the home is not set on a permanent foundation; and

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the home is designed to be moved from one place to another by
"independent power connected thereto."
Newman, 917 P.2d at 930. Likewise, the Kreisches' home was built at the Friendship
Homes' factory in Minnesota where it was divided into two units each of which was
equipped with appropriate accessories, such as axles and wheels, for hauling it
across
public highways. The characteristics of the Kreisches' home are nearly identical to
those
reviewed in Newman.
The Kreisches, however, argue that their manufactured home can be factually
distinguished from the homes in Newman and Toavs because 1) it is being placed on a
permanent foundation, and 2) it will be taxed as real property. We disagree. The
type
of foundation and tax classification were only two of many characteristics this Court
considered in determining that the manufactured home in Newman was a mobile home
prohibited by the restrictive covenants. Newman, 917 P.2d at 930. In fact, it is
the
placing of the Kreisches' home on a permanent foundation, rather than cement blocks,
that leads to its taxation as real rather than personal property. Therefore, the
two factual
distinctions are interrelated.
We follow the reasoning in Timmerman v. Gabriel (1970), 155 Mont. 294, 470
P.2d 528, where this Court held that "the fact that the trailer was placed on a
foundation
and connected to utilities [did not] transform it to a permanent residence within the
meaning of the covenant. We held that the restrictive covenant prohibited a type of
structure and that the nature of the construction of the home rather than its
subsequent
mobility was determinative." Newman, 917 P.2d at 931 (citing Timmerman, 470 P.2d
at 530). We conclude, as we did in Timmerman and reaffirmed in Newman, that the
Kreisches' manufactured home cannot be transformed from temporary to permanent
simply because it is placed on a foundation. See Newman, 917 P.2d at 931 (citing
Timmerman, 470 P.2d at 530). Furthermore, a tax classification as real property does
not change the physical characteristics of the home; i.e., that it was constructed
off site
and designed to be transported.
Finally, Article I of Ptarmigan Acres' restrictive covenants states the purpose
of
the covenants is to assure its occupants a quality environment by limiting the
suburban
residential community to dwellings of conventional construction, thus, focusing on
the
method of construction. The District Court found the term "conventional
construction"
to be an ambiguous term and resolved the ambiguity in favor of the free use of the
property.
The restrictive covenants do not define "conventional construction." Relying on
the Federal Housing Administration expert who testified at the hearing, Fox Farm
argues
that "conventional construction" means on-site construction using the "stick by
stick"
method of construction. The Kreisches contend that their home was built using

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"conventional construction" methods including a shingled roof, wood siding, and wall
framing using 2 x 6 dimensional lumber. In addition, the Kreisches claim that once
their
home is placed on the foundation, it will be no more mobile than stick built homes.
However, the Kreisches concede that their particular home was manufactured at an
assembly plant in Minnesota and was transported by truck in two pieces to the mobile
home dealer. They also admit that the home contains a steel frame and an I-beam for
additional support and to allow installation of springs, axles, wheels and a tongue
mechanism for towing. In other words, although the Kreisches' home may contain some
conventional materials, it was constructed off site and designed to be transported
on the
highway to the residential site. We interpret the term "conventional construction"
in its
ordinary and popular sense and hold that such construction does not include
structures
that are manufactured and assembled at one site and designed to be transported to
another
site. Therefore, we hold that the District Court erred in holding that Kreisches'
factory
built "manufactured home" was not a mobile home prohibited by the applicable
restrictive
covenants.
We reverse and remand with instructions to the District Court to issue
injunctive
relief consistent with this opinion.

/S/ W. WILLIAM LEAPHART

We concur:

/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ TERRY N. TRIEWEILER

Chief Justice J.A. Turnage, dissenting.

By construing ambiguous restrictive covenants broadly, the majority
unnecessarily
limits the Kreischesþ right to place affordable housing upon their property. This
derogates public policy and flies in the face of the rule of construction noted in
Newman
that ambiguities in a covenant should be strictly construed so as to allow free use
of
property. I must respectfully dissent.
Unlike in Newman and Toavs, both of which opinions I signed, the manufactured
home in the present case would be permanently attached to a foundation, with the
result
that it would be taxed as real property. In Newman, the home at issue was attached
to
a concrete pad and fitted with skirting; in Toavs, the home was placed on cement

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blocks.
Both were taxed as personal property. The contemplated permanent attachment to a
foundation removes the Kreisches' manufactured home from the characterization as a
"temporary structure"--the type of housing prohibited under the covenants. I
therefore
disagree with the majority that Newman and Toavs control.
The District Court concluded that the Kreisches' manufactured home satisfied the
stated purpose of the Fox Farms restrictive covenants to "insure the use of the real
property . . . for attractive and comfortable suburban residential community for
dwellings
. . . of conventional construction[.]" The court found that the Kreisches' home
"basically, is built using conventional materials, methods, tools and equipment."
The
home has 2,100 square feet of living space. The court pointed out that the Kreisches'
home has a shingled roof, wood siding, and is constructed with a fully insulated wall
frame using 2x6 dimension lumber. The court reasoned that the only material
difference
between the Kreisches' home and allowable stick built homes was that the Kreisches'
home was built elsewhere and moved onto its foundation rather than being built on top
of the foundation. I agree.
At Article IV, USE RESTRICTIONS, Section 1, Residential Use, the Fox Farm
covenants allow structures which are erected, "placed," or permitted upon the
subject real
property. No mention was made of similar language in the covenants at issue in
Newman, Toavs, or Timmerman. Clearly, if one may place a structure on its
foundation,
it cannot be said that it was not contemplated that structures might be moved either
in
whole or in part to their homesite for the completion of final construction. If
nothing
else, the use of the word "placed" creates an ambiguity which must be resolved in
favor
of the Kreisches.
As the District Court correctly ruled, the plaintiffs have not established a
prima
facie case that the Kreisches' home would violate the covenants. I would affirm the
decision of the District Court denying the request for a preliminary injunction.

/S/ J. A. TURNAGE

Justice Karla M. Gray and Justice William E. Hunt, Sr., concur in the dissent of
Chief
Justice Turnage.

/S/ KARLA M. GRAY
/S/ WILLIAM E. HUNT, SR.

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