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Estates at Prairie Ridge Homeowners Association v. Korth

Supreme Court of Nebraska

December 1, 2017

THE ESTATES AT PRAIRIE RIDGE HOMEOWNERS ASSOCIATION.
v.
DUANE R. KORTH AND KATHRYN A. KORTH, HUSBAND AND WIFE, APPELLANTS. A NEBRASKA NONPROFIT CORPORATION, APPELLEE,

         1. Restrictive Covenants: Equity. An action to enforce restrictive covenants is equitable in nature.

         2. Equity: Appeal and Error. On appeal from an equity action, an appellate court decides factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the trial court's determination.

         3. Restrictive Covenants: Intent. Restrictive covenants are to be construed so as to give effect to the intentions of the parties at the time they agreed to the covenants.

         4. Restrictive Covenants. The language of restrictive covenants must be interpreted in its entirety.

         5. __ .If the language of a restrictive covenant is unambiguous, the covenant shall be enforced according to its plain language, and the covenant shall not be subject to rules of interpretation or construction.

         6. Contracts: Restrictive Covenants. As in the interpretation of a contract, a court must first determine, as a matter of law, whether the language of restrictive covenants is ambiguous.

         7. Contracts: Words and Phrases. Ambiguity exists in a document when a word, phrase, or provision in the document has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.

         8. Restrictive Covenants. Restrictive covenants are not favored in the law and, if ambiguous, should be construed in a manner which allows the maximum unrestricted use of the property.

         9. Restrictive Covenants: Intent. Extrinsic evidence is not permitted to explain the terms of restrictive covenants where they are not ambiguous. Instead, the intentions of the parties must be determined from the document itself.

          [298 Neb. 267] 10. Summary Judgment: Appeal and Error. The denial of a motion for summary judgment is neither appealable nor reviewable.

         Appeal from the District Court for Sarpy County: George A. Thompson, Judge. Reversed and remanded with directions.

          John M. Walker, of Lamson, Dugan & Murray, L.L.P., for appellants.

          Larry R. Forman, of Hillman, Forman, Childers & McCormack, for appellee.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ.

          Cassel, J.

         I. INTRODUCTION

         After homeowners repainted their residence in a blue color, a homeowners association sued to enforce restrictive covenants and the district court decreed that the house be repainted in an "earth tone." The homeowners' appeal turns on the covenants' plain language, which does not control the color of repainting. Because the covenants were not ambiguous and did not prohibit the homeowners' action, we reverse, and remand with directions.

         II. BACKGROUND

         1. Restrictive Covenants The Estates at Prairie Ridge, LLC (Developer), filed the restrictive covenants at issue in 2003. The covenants included prohibitions of certain "external improvement[s]" (except those specifically approved by Developer), as well as storage of anything that would be "obnoxious to the eye." They also specified that "[n]o objectionable, unlawful or offensive trade or activity shall be carried on upon any Lot nor shall anything be done thereon which may be or become a nuisance or annoyance to the neighborhood or surrounding Lots."

          [298 Neb. 268] In 2004, Duane R. Korth and Kathryn A. Korth (Homeowners) purchased a residential lot from Developer which was subject to the restrictive covenants. Homeowners submitted plans for construction of a residence on their purchased lot to Developer as required by the covenants. After the residence was built, Homeowners spoke to Developer and proposed to paint their residence blue. Developer denied this proposal and recommended that they choose an earth-tone color instead. Homeowners ultimately painted their residence in an earth-tone color.

         2. Alleged Violations

         Ten years later, Homeowners informed a member of The Estates at Prairie Pudge Homeowners Association (the HOA) of their decision to repaint their residence a shade of blue. The parties disagreed as to whether the restrictive covenants required approval of the new paint color, and conflict ensued. Homeowners ultimately repainted their residence blue, without seeking or acquiring approval of their chosen paint color.

         After the house was repainted, Developer assigned its interests under the restrictive covenants to the HOA pursuant to article II, section 1, of the covenants. As Developer's successor in interest, the HOA filed a lawsuit requesting the court to, among other things, (1) declare Homeowners to be in willful violation of certain provisions of the restrictive covenants, (2) order Homeowners to submit a substitute earth-tone color to be approved by the HOA, and (3) order Homeowners to repaint their residence in the approved color.

         3. Motions for Summary Judgment

         Before filing an answer, Homeowners filed a motion to dismiss, which was converted to a motion for summary judgment.[1] The HOA then filed its own motion for summary judgment. At a hearing, both parties presented evidence and argued that there was no genuine issue of material fact.

          [298 Neb. 269] However, the court disagreed and overruled both motions. It identified issues of fact regarding the HOA's level of control over color under the restrictive covenants and whether the particular color violated the restrictive covenants.

         Both parties moved for reconsideration of their motions for summary judgment. At the hearing, Homeowners principally argued that the HOA had no control over the color of their residence, because the restrictive covenants did not specifically refer to exterior paint as an improvement. The court took the matter under advisement and reviewed Kalkowski v. Nebraska Nat. Trails Museum Found.[2] and Tyler v. Tyler[3] to determine that painting the exterior of a residence can be an improvement or an ordinary repair, depending on the factual circumstances of the case. After concluding that this was a disputed factual issue, the court overruled the parties' motions. The court later overruled Homeowners' renewed motion for summary judgment on these same grounds.

         4. Trial

         At trial, an agent of Developer testified over Homeowners' objection that the intent and purpose of the restrictive covenants was to give Developer "fairly broad authority to deal with matters in [the] subdivision" and that Developer "was to be able to control color." He further testified that it was the intent of Developer to keep the development "a very natural, earth tone environment" in line with its name, The Estates at Prairie Pudge (Prairie Ridge), and have residences "blend in with the environment." However, he admitted that there ...


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