RBY&CC East Side Homeowners Association, Inc. v. Patrick Beebe and Tammy Beebe ( 2023 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
RBY&CC EAST SIDE )
HOMEOWNERS ASSOCIATION, )
INC., )
Plaintiff, )
)
v. ) C.A. No. 2022-0433-SEM
)
PATRICK BEEBE and )
TAMMY BEEBE, )
)
Defendants. )
MASTER’S FINAL POST-TRIAL REPORT
Final Report: June 9, 2023
Date Submitted: February 23, 2023
Seth L. Thompson, PARKOWSKI GUERKE & SWAYZE, P.A., Wilmington,
Delaware; Attorney for Plaintiff RBY&CC East Side Homeowners Association, Inc.
Brian E. O’Neill, ELLIOTT GREENLEAF, P.C., Wilmington, Delaware; Attorney
for Defendants Patrick Beebe and Tammy Beebe.
MOLINA, M.
Through this action a homeowners association seeks to enforce the deed
restrictions which have bound its community since 1975. The association contends
new homeowners flouted the restrictions by (1) failing to follow their approved plans
for grading and (2) installing a wooden structure without prior approval. To remedy
these violations, the association seeks injunctive relief requiring the homeowners to
regrade their property and remove the structure. The homeowners dispute these
claims and argue that the deed restrictions are unenforceable as written, arbitrarily
applied to them, or waived by the association. Both sides seek statutory fee shifting
for having to litigate their dispute.
In this post-trial report, I find (1) the restrictions at issue are enforceable and
were reasonably enforced by the association, (2) the homeowners violated the
restrictions, (3) the homeowners failed to prove any of their affirmative defense, and
(4) injunctive relief and fees should be awarded in the association’s favor.
This is my final report.
I. BACKGROUND1
This action is a dispute between RBY&CC East Side Homeowners
Association, Inc. (the “Association”), a homeowners association responsible for a
1
The facts in this report reflect my findings based on the record developed at trial on
November 14, 2022 and November 15, 2022. See Docket Item (“D.I.”) 54. I grant the
evidence the weight and credibility I find it deserves. Citations to the trial transcripts are
in the form “Tr. #.” D.I. 55-56. The parties’ jointly submitted exhibits 1-76, which were
admitted without objection, are cited as “JX __.” Tr. 3:8-14, 77:18-24.
1
neighborhood in Rehoboth Beach, Delaware (the “Community”), and Patrick and
Tammy Beebe (the “Homeowners,” with the Association, the “Parties”) relating to
real property located at 152 East Side Drive, Rehoboth Beach, Delaware 19971 (the
“Property”).2
A. The Community and the Association
The Community is but one section within the greater Rehoboth Beach Yacht
& Country Club area.3 It is located between the Rehoboth Beach Country Club (the
“Country Club”) golf course and the Rehoboth Bay.4 Roughly half of the lots in the
Community back up to the water and half to the golf course.5 Building within the
Community began over twenty-five (25) years ago.6 Of the Community’s eighty-
three (83) lots, only two are currently undeveloped.7
The Association was formed on October 24, 1995, and founded with the
purpose to “maintain, operate and administer the common areas, roads and
community facilities in [the Community,]” and “to enforce applicable covenants and
2
JX 1, Ex. C. JX 1 included the complaint as Exhibit A, the verification as Exhibit B, and
the exhibits to the complaint as Exhibits A-L. To avoid confusion, any citations to the
complaint are to D.I. 1, not JX 1, and citations to Exhibits A-L are JX 1, Ex. __.
3
Tr. 84:13-18.
4
Tr. 85:20-86:2.
5
Tr. 86:3-6.
6
Tr. 117:14-16.
7
Tr. 85:3-6.
2
restrictions[.]”8 The members of the Association are “every owner of a lot” within
the Community.9
On November 18, 1995, the Association adopted bylaws (the “Bylaws”).10
The Bylaws provide that “[t]he property, business and affairs of the Association shall
be managed and controlled by its Board of Directors” the number of which would
grow as more lots were sold.11 During the relevant time, the Association’s board
had nine (9) members: Edgar Thomas (“Thom”) Harvey, III; Rudolph C. Blancke;
Betsy Baumeister; Bob Bolton; Joanne McGregor; Sally Hack; Paul Pfizenmayer;
Joe Ashton; and Laura Grant.12
The Bylaws further provide that “[t]he Board of Directors may delegate
certain items under its authority to various standing or special committees.”13 One
8
JX 1, Ex. A.
9
Id.
10
JX 23.
11
Id.
12
Tr. 128:16-22. Two (2) members of the Association’s board testified at trial: Thom
Harvey and Rudolph Blancke. Mr. Harvey is the Homeowners’ next-door neighbor within
the Community. Tr. 207:22-24. He splits his time between his home in the Community and
Wilmington, spending 40-50% of his year in the Community. Tr. 208:19-24. At the time
of trial, Mr. Harvey had been the president of the Association’s board for eight (8) years.
Tr. 209:23-210:2. He testified that he did not anticipate being on the slate of directors for
an upcoming meeting. Tr. 211:14-20. Rudolph C. Blancke, another homeowner within the
Community, has served on the Association’s board since 2017. Tr. 87:7-13, 88:1-6. Mr.
Harvey and Mr. Blancke were both asked about the term limits in the Association’s bylaws.
See JX 23. These limits have been overlooked. Tr. 141:15-23; Tr. 210:5-13.
13
JX 23.
3
of the Association’s committees is the Architectural Review Committee (the
“ARC”), which is responsible for approving plans and specifications for
construction within the Community.14
Mr. Blancke, who has served on the ARC for about five (5) years, testified as
to its composition and procedures.15 The ARC is made up of four (4) members of
the Association’s board and works with an architect, Susan Frederick.16 In Mr.
Blancke’s time with the ARC, the ARC has reviewed an average of twenty (20)
applications a year.17 Those applications include a variety of requests including
“fence installations, additions, patios, new home builds, additions, renovations, new
windows, [and] driveways.”18 In his time with the ARC, Mr. Blancke has reviewed
five (5) applications from new home builds, including the Homeowners’
application.19
Mr. Blancke further explained the ARC’s process for reviewing a new home
build application. The ARC first confirms that the application is complete, with all
the plans and forms required by the Restrictions and ARC Manual, as defined
14
JX 75, Art. D.
15
Tr. 88:23-89:4.
16
Tr. 89:13-22.
17
Tr. 89:5-11.
18
Tr. 89:15-19.
19
Tr. 89:20-90:1.
4
below.20 If it is not, the ARC will work with the homeowners to complete the
application.21 Once complete, the ARC will direct the homeowners to send the
application to Ms. Frederick with a check for the amount due to her under a set fee
schedule.22 Ms. Frederick then reviews the application and works with the ARC and
homeowner toward final approval.23 In her review, Ms. Frederick uses a form which
tracks the Restrictions, as defined below, and identifies whether the applicant has
met those requirements and, if not, what they can do to correct or supplement the
application.24 Ms. Frederick’s review is then sent to the ARC and Ms. Frederick and
the ARC work with the homeowner toward final approval.25 For final approval,
three (3) members of the ARC and Ms. Frederick must sign off.26
To assist homeowners, the ARC has a guide and new build application (the
“ARC Manual”).27 The ARC Manual provides (1) detail about the documentation
20
Tr. 94:19-95:1.
21
Id.
22
Id.
23
See Tr. 95:2-21.
24
See JX 1, Ex. G.
25
See Tr. 95:2-21.
26
Tr. 100:21-101:2. The ARC has approved landscaping plans for three properties within
the Community: 128 East Side Drive, 166 East Side Drive, and 129 East Side Drive. JX 4,
p. 6. The retaining wall at 129 is wooden. Tr. 154:19-21; JX 35. Exhibits purportedly
showing additional, unapproved structures were introduced and addressed by Mr. Blancke;
for many of the structures, Mr. Blancke could not recall if the structures were approved by
the ARC. See JX 18, 30-33, 36; Tr. 160:19-163:5.
27
JX 59.
5
and plans needed for review; (2) set back and drainage requirements; (3)
specification requirements (including minimum square feet and which direction the
house should face); (4) submission instructions; (5) landscaping and paving
requirements; (6) restrictions specific to fences, walls, decks, and signs; and (7)
construction guidelines.28
The ARC also has an architectural new construction application which
provides time requirements: “All plans are to be submitted to the Architectural
Review Committee (ARC) thirty (30) days prior to the initiation of constructions
for review and approval or disapproval. The ARC will have 30 day[s] to review and
approve/disapprove from receipt of ALL the requested information.”29 The form
application specifies the following attachments, necessary “to fully detail and
describe the new construction[:]”30
1. “Foundation plan, elevations, floor plans and cross section . . . prepared by
a competent architectural designer[;]”31
2. A description of the materials to be used “including color, finish, and
manufacturer’s information[;]”32
28
Id.
29
JX 1, Ex. F (emphasis in original).
30
Id.
31
Id.
32
Id.
6
3. A site plan showing the “home, driveway, walkways, decks, etc.[;]”33
4. “A lot grading plan which includes drainage and soil erosion
considerations[;]”34 and
5. A signed contractor’s agreement, with the contractor’s license and proof of
insurance.35
The form application also addresses a landscape plan, which “should be submitted
with [the] application but must be submitted no later than 60 days prior to completion
of construction.”36
B. The Restrictions
This approval process is set forth in the deed restrictions that bind the
Community. Properties within the Community, including the Property, are subject
to two series of restrictions. The first set of restrictions was recorded with the Sussex
County Recorder of Deeds on March 25, 1975 (the “March Restrictions”).37 Revised
restrictions were then recorded with the Sussex County Recorder of Deeds on
33
Id.
34
Id.
35
Id. The contractor’s agreement requires the contractor to promise to abide by the
Restrictions and maintain their construction in a safe and clean manner. Id. It further
contains an agreement that construction will only be permitted “during the hours of 7:30
am to 5pm and not on Saturday, Sundays and/or Holidays[,]” with some exceptions. Id.
36
Id.
37
JX 75.
7
November 10, 1975 (the “November Restrictions” and together with the March
Restrictions, the “Restrictions”).38
Both the November Restrictions and the March Restrictions contain the
following articles: Article A (Residential Uses), Article B (Prohibited Uses and
Nuisances), Article C (Options to Repurchase), Article D (Approval of Plans and
Specifications), Article E (Use of Roads and Waterways), Article F (Modification
of Restrictions), and Article G (Organization and Operation of Property Owners
Association). The restrictions at issue in this action are contained within Article D,
which is nearly identical in the November Restrictions and the March Restrictions.
Article D of the March Restrictions does, however, contain three (3) paragraphs not
found in Article D of the November Restrictions. These paragraphs govern the
construction of seawalls, the construction of boat landings or docks, and increasing
the size of a lot by filling in water it abuts.39 The third paragraph also contains a
provision that “[t]he elevation of a lot will not be changed so as to materially affect
the surface elevation or natural drainage of surrounding lots” (the “Materially
Affects Provision”).40
38
JX 1, Ex. D.
39
JX 75, Art. D.
40
Id.
8
Article D in the November Restrictions and the March Restrictions (the
“Restrictions”) provides, in pertinent part:
No building, structure, fence, wall, dock, bulkhead, seawall, swimming
pool or other erection, shall be commenced, erected, maintained or
used, nor shall any addition to or change or alterations therein, or in the
use thereof, by made upon any of the lands conveyed by this deed, no
matter for what purpose or use, until complete and comprehensive plans
and specifications, prepared by a competent residential draftsman,
showing the nature, kind, shape, height, materials, floor, elevation,
foundation and footing plans, exterior color scheme, location and
frontage of the lot, approximate cost of such building, structure, or other
erection, and the grading and landscaping plan of the lot to be built upon
or improved, shall have been submitted to and approved in writing by
the party of the first part herein, its successors, assigns, or its Building
Approval Committee provided for in this Article[.]41
Regarding approval, the Restrictions provide that the Association or the ARC:
shall have the right to refuse to approve any such plans or
specifications, or grading or landscaping plans or changes, which are
not suitable or desirable, in its or their sole opinion, for aesthetic, safety,
health, police or other reasons, and in so passing upon such plans and
specifications, or grading and landscape plans or changes, [the
Association or the ARC] shall have the right to take into consideration
such factors which in its or their opinion would affect the desirability
or suitability of such proposed improvements, erection, alteration, or
change.42
The Restrictions further restrict the free construction of certain structures through
clauses providing “[n]o wall or fence of any height shall be constructed on any lot
until after the height, type, design and location therefor shall have been approved in
41
JX 1, Ex. D., Art. D.
42
Id.
9
writing” and “[n]o solid walls shall be erected except in buffer zones shown on the
plot.”43
The Restrictions also expressly permit the creation of a committee like the
ARC and detail the rights and responsibilities of the ARC, if created. Under the
Restrictions, the ARC shall be “composed of three members, one of whom shall be
an architect, of recognized standing in his or her profession[.]”44 The Restrictions
expressly permit the Association to delegate plan review and approval to the ARC
and specify any appeal process for denials by the ARC.45
C. The Homeowners and the Property
Although the Homeowners are new homeowners within the Community, they
are hardly strangers to it. Mr. Beebe is a licensed pilot through the Commonwealth
of Pennsylvania and a partner with the Pilot’s Association for the Bay and River
Delaware.46 A Delaware native, Mr. Beebe has lived in Sussex County and owned
various properties with his wife, Tammy Beebe, throughout the Rehoboth Beach
area.47 Mr. Beebe has also been a member of the Country Club and frequented the
43
Id.
44
Id.
45
Id.
46
Tr. 297:22-298:1.
47
Tr. 299:3-6.
10
Community “every day for the last 20 to 25 years.”48 Further, his parents have
owned property in the Community and been members of the Association since
1998.49
The Homeowners purchased the Property, then a vacant lot, on November 9,
2020.50 The Property is on East Side Drive, which is a paved road, approximately
thirty (30) feet wide, with no curbs or shoulders.51 It backs up to the ninth fairway
of the County Club’s golf course.52 Before the Homeowners purchased the Property,
the Association was responsible for its upkeep, including mowing.53
Historically, stormwater from the street would flow through the Property.54
Those familiar with the Community and the Property testified consistently that, after
heavy rain, the Property was “100 percent submerged[,]” and would have “ducks
swimming on it.”55 The Property was frequently “unable to be mowed because it
48
Tr. 299:7-10.
49
Tr. 300:13-19.
50
JX 1, Ex. C.
51
Tr. 197:11, 208:1-4.
52
Tr. 281:5-9.
53
Tr. 215:14-23.
54
Tr. 187:21-24.
55
Tr. 214:14-16, 266:9-11.
11
was too wet.”56 The Homeowners were aware of this historical ponding when they
purchased the Property.57
The Homeowners’ deed to the Property provides the Homeowners take the
Property subject “to any and all applicable restrictions, reservations, conditions,
easements and agreement of record in the Office of the Recorder of Deeds in and for
Sussex County, Delaware.”58 The Homeowners also received a copy of the ARC
Manual from Mr. Blancke.59 The Homeowners attempted to comply with the
Restrictions and the ARC Manual as they built their home. But the process was
protracted, at times hostile, and ultimately resulted in this litigation.
i. The Application Process
On December 22, 2020, the Homeowners submitted an architectural new
56
Tr. 215:20-23. The Homeowners’ other neighbor, Tucker Kokjohn, agreed and testified
that the Property “was constantly flooded.” Tr. 266:9.
57
Tr. 364:5-14; JX 1, Ex. C. Expert witness, Mark Ziegler, testified that ‘ponding” refers
to standing water, which attracts bugs in warmer weather and creates icing conditions in
the winter. Tr. 54:18-22, 56:20-57:3. DelDOT employee, Matthew Schlitter, testified that
there needs to be positive drainage off the roadway to avoid ponding, which can cause
hydroplaning, “deterioration of the payment,” and can otherwise “cause damage and
become a safety issue for the traveling public.” Tr. 198:2-12. Mr. Harvey explained “the
other problem with ponding is you get cracks in macadam, if you are ponding water, lots
and lots and lots of water goes through. It softens up the underbase and the road begins to
come apart. You get to winter and the freeze/thaw cycle takes place, and it destroys the
road.” Tr. 245:14-20.
58
JX 1, Ex. C
59
Tr. 94:2-13; Tr. 322:17-20.
12
construction application and a contractor’s agreement to the ARC.60 At that time,
the ARC consisted of Mr. Blancke, Paul Pfizenmayer, Joanne McGregor, and the
ARC’s architect, Susan Frederick.61 Mr. Blancke was the chair of the ARC.62 In
that capacity, he reviewed the Homeowners’ completed application with the
contractor’s agreement, signed by Don Lockwood of Lockwood Designs &
Construction.63 On the application, Mr. Blancke checked off the materials submitted
and added various handwritten notes including a note that no construction could
begin until the plans were approved.64 He then directed the Homeowners to submit
the application for Ms. Frederick’s review.65
The Homeowners sent their application, as directed, with the appropriate
fee.66 Ms. Frederick replied via email on January 2, 2021 to Mr. Beebe, noting that
certain required plans were missing.67 Specifically, she asked for a placement
survey, grading plan, landscape place, drainage plan, permit entrance application
60
JX 1, Ex. F; Tr. 102:23-103:1.
61
Tr. 126:11-19.
62
See Tr. 257:1-5.
63
See JX 60.
64
See id.
65
Tr. 94:21-95:7.
66
Tr. 94:19-95:7.
67
JX 25.
13
and/or approval, and an additional fee if the Homeowners were seeking review and
approval of a pool, which was a separate review.68
Without any additional submissions from the Homeowners, on January 24,
2021, Ms. Frederick submitted her completed review to the ARC.69 In her cover
letter, Ms. Frederick identified the documents missing from the submission “a
placement survey, drainage plan, a final grading plan and a landscape plan.”70 Ms.
Frederick further noted that “[a] plan of the intended final grading and how storm
water will be managed is extremely important.”71
To remedy these deficiencies, Mr. Beebe submitted a hand-drawn drainage
plan sketch and landscape plan sketch to Mr. Blancke via email on January 28,
2021.72 Mr. Beebe drew the handwritten plans himself after consulting with
landscapers and planned for runoff from the Property to be conveyed to a catch basin
three lots down, using East Side Drive as a conveyance.73 The plans did not depict
any retaining wall or landscape barrier in the Property’s backyard.74
68
Id. Mr. Beebe emailed Ms. Frederick on January 27, 2021, addressing a follow up
submission, which appears to have been submitted the next day. JX 52.
69
JX 1, Ex. G.
70
Id.
71
Id.
72
JX 53.
73
Id. Tr. 392:13-18.
74
Compare JX 53 with JX 19.
14
On January 29, 2021, the ARC provided the sketches to Ms. Frederick for
review.75 Mr. Blancke instructed Ms. Frederick to expedite her review because he
wanted to provide a timely response to the Homeowners.76 After her expedited
review, Ms. Frederick still had concerns.77 She noted “[a] grading plan is still
missing” and “knowing what the final grading will be is important.”78 She also noted
that “[w]ithout grades, I can only guess that his plan will be executed correctly.”79
Ms. Frederick reflected on the lack of standards for her to judge the plans by, stating
“there aren’t really any standards I can rely on for what an applicant is required to
submit, other than it has to be something that has enough information for me to
review and find to work.”80 But, with the ongoing uncertainty as to the
Homeowners’ definitive plans she recommended that the Homeowners “be put on
notice that any changes to the plan as submitted and reviewed will require [the
Homeowners] to resubmit.”81
Contemporaneously with Ms. Frederick’s review, Mr. Blancke worked to
ensure the ARC could provide their final decision promptly. Consistent with the
75
JX 21.
76
Tr. 100:2-6.
77
JX 21.
78
Id.
79
Id.
80
JX 53.
81
JX 21 (emphasis in original).
15
ARC’s standard practice, three (3) members of the ARC and Ms. Frederick needed
to approve the plans; with one (1) member of the ARC out of town, Thom Harvey
served as a substitute member of the ARC.82
In February 2021, Mr. Blancke, Mr. Beebe, Mr. Beebe’s contractor (Don
Lockwood), and a Delaware Department of Transportation (“DelDOT”) employee,
Matthew Schlitter, met at the Property to discuss “the process, the application, and
the drainage issue.”83 Mr. Blancke recalls those present discussing the need for a
stormwater management plan.84 Mr. Schlitter explained he was working with the
Homeowners on entrance permits required because East Side Drive is a DelDOT
maintained road.85 He attended the meeting at Mr. Beebe’s invitation, to address
drainage and approval of entrances.86 Beforehand, Mr. Schlitter looked at historical
LiDAR maps of the area and noted “existing drainage issues with adjacent
82
See id. Mr. Blancke testified that Joanne McGregor was in Florida and unable to return
and participate as a member of the ARC, creating the gap for Mr. Harvey to fill. Tr. 200:11-
20. See also Tr. 213:23-214:4. Mr. Beebe testified that he never knew Mr. Harvey was
acting as a member of the ARC. Tr. 324:20-23.
83
Tr. 96:22-97:2, 387:11-388:8.
84
Tr. 102:2-7. Per Mr. Blancke, he received drainage plans for the other new builds he
approved as a member of the ARC. Tr. 102:14-18.
85
See Tr. 186:14-188:4.
86
Tr. 186:23-187:6. Mr. Beebe submitted two entrance permits for approval. The first
permit was approved on November 20, 2020, for a single entrance. JX 61. The second
permit was approved on February 18, 2021, for a second entrance. JX 62.
16
properties.”87 Mr. Schlitter also confirmed that the roadside drainage historically
flowed through the Property into the rear of the Property.88 Mr. Schlitter wanted to
discuss those issues with Mr. Beebe to ensure the construction “didn’t create bigger
issues to the State roadway.”89
These requirements and the delay in approval led to contentious discussions
among the Homeowners and members of the ARC. Mr. Blancke testified that he
had “[s]everal conversations” with Mr. Beebe about the outstanding matters that
needed to be resolved for final approval.90 He urged Mr. Beebe to get all the
requested documentation submitted, but Mr. Beebe was resistant and threatened to
refer the matter to his attorney.91 Mr. Harvey likewise communicated the ARC’s
expectations and requirements to Mr. Beebe, but his advice was not well received.92
Mr. Harvey’s discussions with Mrs. Beebe went better.93 Mrs. Beebe
explained that she entered the discussions “hoping to soften some edges” and have
“more reasonable conversations.”94 She “felt like there was a little too much
87
Tr. 187:14-20.
88
Tr. 187:21-24.
89
Tr. 187:24-188:2.
90
Tr. 148:5-11.
91
Tr. 148:14-149:9.
92
Tr. 227:11-19.
93
JX 55.
94
Tr. 455:2-7.
17
testosterone in the room, honestly.”95 And her involvement helped. On February
18, 2021, Mrs. Beebe sent a text message to Mr. Harvey seeking guidance on the
changes that needed to be made to the Homeowners’ application.96 Mr. Harvey
responded that same day explaining the ARC needed “a plan including all
calculations by a registered professional Delaware civil engineer showing the design
of the storm water management plan for your lot. Any registered civil engineer can
create this plan.”97
Mr. Beebe then took that February 18, 2021 text message to several firms to
prepare the requested lines and grades plan.98 One such firm was the Kercher Group,
Inc. (the “Kercher Group”).99 The Kercher Group prepared a grading plan and on
March 4, 2021, the Homeowners submitted that plan (the “Kercher Plan”) to the
ARC.100
Thereafter, the Homeowners expected prompt approval. But they received
additional pushback. Sometime thereafter, Mr. Beebe and Mr. Blancke had another
contentious conversation and Mr. Harvey sent a text message to Mrs. Beebe to
95
Tr. 455:7-8.
96
JX 27.
97
Id.
98
Tr. 403:23-404:5.
99
Tr. 404:6-8.
100
JX 54.
18
intercede.101 In his message, Mr. Harvey explained the Parties could move forward
to get attorneys involved but “it seems silly to go in that direction when [Mr. Harvey
was] ready to approve[.]”102 Despite being ready to approve, Mr. Harvey specified
three (3) things, which he thought would be helpful to the Homeowners and the
Property.103 Mrs. Beebe thanked Mr. Harvey for his suggestions and asked: “So we
have approval?”104 His answer: “When you answer the 3 points with specificity.”105
Mr. Beebe then emailed Mr. Harvey on March 8, 2021 to explain Mr.
Harvey’s “concerns are noted, and have been appropriately addressed[.]”106 But Mr.
Harvey was not satiated; he demanded a response to each of his three (3) points to
“move the ball forward.”107 Less than thirty (30) minutes later, Mr. Beebe responded
point by point.108
101
See JX 27.
102
Id.
103
Id.
104
Id.
105
Id. Mr. Harvey testified that these three (3) items were not requirements of the ARC or
the Association. Tr. 221:15-19. Rather, he contends he was trying to be helpful based on
his experience with construction. Tr. 221:5-7. See also Tr. 221:24-222:5. Mr. Harvey
explained that, by the time he sent these texts, he could no longer trust Mr. Beebe; per Mr.
Harvey, “Mr. Beebe had multiple times lied to [Mr. Harvey].” Tr. 224:20-23. Their issues
started when Mr. Beebe “dug through the utility easement” without first calling the utility
company. Tr. 224:23-225:1. Mr. Harvey tried to inform and teach Mr. Beebe, but Mr.
Beebe was not receptive to the lesson. Tr. 225:6-226:7.
106
JX 28.
107
Id.
108
Id.
19
With those concerns resolved, on March 8, 2021, Mr. Harvey approved the
Kercher Plan; Mr. Blancke and Mr. Pfizenmayer, the other members of the ARC,
approved the next day.109 The Homeowners were notified of the full approval on
March 9, 2021, and signed the approval letter.110 The approval letter included a
requirement that “[a]ny changes to the approved plans submitted will require ARC
review & approval prior to any work beginning.”111 The Homeowners were further
“required to submit an ‘As Built’ Survey & ‘Certificate of Occupancy’ upon
completion of the home construction.”112
ii. The Construction
Although Mr. Lockwood signed the contractor agreement and worked with
the Homeowners and the ARC through the approval process, he did not act as general
contractor for the construction at the Property.113 Rather, Mr. Beebe decided he was
going to act as project manager and work with “several different contractors and a
construction consultant,” like he had done for other construction projects.114 With
109
JX 24.
110
D.I. 41, § 2(S).
111
JX 24.
112
Id.
113
Tr. 102:19-103:6.
114
Tr. 328:12-18. With this new team, the Homeowners made various changes to the plans
submitted. For example, although they originally contemplated building a pool, they
decided not to. Compare JX 53 with JX 20. Mr. Beebe explained that although it looked
good on paper, it was unnecessary, and they decided not to build. Tr. 311:7-16.
20
COVID and supply chain issues, it took eight months to construct the primary
residence on the Property.115 Ultimately, the Homeowners finished construction on
or around December 27, 2021, received their certificate of occupancy on January 18,
2022, and moved in thereabouts.116
The Property was not, however, graded until after construction. For that, the
115
Tr. 327:19-328:13.
During the construction, neighborly tensions increased. The Homeowners,
admittedly, permitted some construction outside the approved hours and the ARC’s
attempts to visit the Property to address those issues and others were rebuffed. Tr. 411:21-
414:14. See also JX 56. On October 11, 2021, Mr. Harvey sent Mr. Beebe a scathing email
regarding this issue, instructing Mr. Beebe to “grow up and stop [his] stupid and empty
threats and try, just try to contain [his] miserable self and follow the rules[.]” JX 16. Mr.
Harvey admitted he “was pretty angry” when he wrote the email; “angry about wasting
time.” Tr. 230:6-10. Mr. Harvey explained that he told Mr. Beebe to “use [his] head” and
“stop the histrionics” because Mr. Beebe had threatened to sue him and Mr. Blancke, called
the police on Mr. Blancke, and filed a trespassing charge against Mr. Blancke when he
tried to do an inspection of the Property. Tr. 227:11-15. See also Tr. 412:8-414:13 (Mr.
Beebe describing the police incident); Tr. 458:7-16 (Mr. Blancke disputing the allegations
of unauthorized entry into the Property); JX 1, Ex. D, Art. D. (providing the Association
or the ARC the “the right from time to time during the period that constriction of any
dwelling progresses and at the completion of any particular dwelling or during the period
of repairs are being made to any dwelling, to go upon the premises where the dwelling is
located and make certain that such construction and/or repairs are in accordance with the
approved plan for said dwelling and not violative of [the Restrictions]”). Mr. Harvey
further admitted that, by the time of trial, he and Mr. Beebe “don’t get along.” Tr. 243:3-
4. Nonetheless, Mr. Harvey believes he was objective in reviewing the Homeowners’
application to the ARC. Tr. 243:23-24. Mr. Beebe described his relationship with his
neighbor as “[s]trained.” Tr. 336:16-19.
116
Tr. 328:15-16, 444:14-19. JX 45. The certificate of occupancy includes a twenty-four
(24) inch high retaining wall (the Structure, as defined herein). JX 45. Mr. Beebe testified
that he asked for that special approval based on the ARC’s concerns and the uncertainty
from the County regarding the definition of a retaining wall. Tr. 445:5-447:8.
21
Homeowners worked with José Diaz.117 Mr. Diaz “did the grading, partial
landscaping.”118 Mr. Diaz was not given the Kercher Plan, nor instructed to follow
the grading outlined therein.119 But Mr. Beebe explained that he told Mr. Diaz “we
need to have swales on the side to get the water from the front of the property to the
– to the back.”120 Mr. Diaz then “graded the entire property and . . . sodded 60
percent of the property.”121 Mr. Beebe sodded the rest.122 By March of 2022, the
Property was fully sodded.123
The Homeowners also did some unapproved landscaping. In mid-November
2021, the Homeowners hired Tommy Engel of Double E Landscaping to install a
landscaping border towards the rear of the Property (the “Structure”).124 Mr. Engel
proposed the Structure as a border to keep water from entering the Property from the
117
Tr. 329:9-16.
118
Tr. 329:10.
119
Tr. 329:17-19.
120
Tr. 329:23-330:2.
121
Tr. 330:10-12. Mr. Beebe could not recall how much he paid Mr. Diaz for his services.
Tr. 450:2-5.
122
Tr. 330:20-21.
123
Tr. 330:23-5. The failure to give Mr. Diaz the Kercher Plan is especially concerning is
light of Ms. Frederick’s January 28, 2022 email to Mr. Beebe reiterating the drainage
concern and the need to stick to the Kercher Plan. JX 58.
124
Tr. 331:7-14; Tr. 332:15-24. Because the Parties dispute whether this is a retaining wall
or a landscape border, I use the more generic term “Structure.”
22
golf course and to keep mulch in place for planting.125 The Homeowners paid Mr.
Engel around $6,000.00 to install the Structure, made of six-by-six wooden beams,
between November 12-15, 2021.126 Initially, the Structure was eighteen (18) inches
in total, with twelve (12) inches above ground and six (6) inches underground.127 As
Mr. Diaz did the grading, though, he determined the Structure was too high and took
off the top layer, leaving the Structure with six (6) inches below, and six (6) inches
above, the ground.128
When Mr. Blancke became aware of the construction, which was not depicted
on the approved plans, he contacted Mr. Beebe for a meeting.129 On November 15,
2021, Mr. Blancke sent Mr. Beebe an email identifying the issues that needed to be
resolved, namely the discrepancies between the approved plans and the ongoing
construction.130 Mr. Beebe emailed that he had previously submitted his landscaping
plan and attached what he called “an additional copy.”131 But it was not an
125
Tr. 331:19-332:13.
126
Tr. 332:10-18, 450:14-16.
127
Tr. 332:18-22.
128
Tr. 333:10-17.
129
Tr. 108:3-22. Mr. Beebe admitted that the Homeowners did not ask for approval before
the Structure was installed. Tr. 341:6-7. He did not, however, concede that approval was
required and, if it was, he testified the Homeowners were unaware of any requirement. Tr.
341:7-9. Per Mr. Beebe, “[a]s soon as they said, you need to get approval for this, [the
Homeowners] submitted what they requested.” Tr. 341:9-10.
130
JX 69.
131
JX 19, JX 69.
23
“additional copy”—it was a new draft which, for the first time, reflected the
Structure.132 Mr. Beebe testified that he printed the prior plan, drew the line
depicting the Structure, scanned it in, and emailed it.133 Mr. Blancke responded on
November 16, 2021, indicating those plans were insufficient and that there needed
to be an on-site meeting.134
When Mr. Beebe declined a meeting, Mr. Blancke directed the Association’s
property manager, Chris Redefer with Rehoboth Bay Services LLC, to get
involved.135 Mr. Redefer sent Mr. Beebe a letter on November 19, 2021, demanding
that Mr. Beebe follow the approved plans for the construction on the Property (the
“Redefer Letter”).136 Shortly thereafter, on November 22, 2021, counsel to the
Association sent a cease-and-desist letter to the Homeowners.137
The Homeowners responded to the Redefer Letter arguing that (1) the
modifications were approved by the county and previously submitted to the
Association, (2) the concerns were part of a pattern of harassment by certain
132
Tr. 395:19-396:5.
133
Tr. 401:6-11.
134
JX 68.
135
Tr. 110:1-111:1.
136
JX 14. The Redefer Letter further raised concerns about excavation of common area
adjacent to the Property and fill that appeared to be in wetlands area. Id.
137
JX 1, Ex. K. See also JX 76 (January 17, 2022 follow up email from counsel to the
Association); JX 71 (February 21, 2022 follow up letter from the Association’s counsel to
the Homeowners).
24
members of the ARC, and (3) certain members of the ARC also trespassed and
otherwise interfered with the construction.138 The Homeowners emailed their
response to Laura Grant, Joe Ashton, and Betsy Baumeister, three (3) members of
the Association’s board.139 They explained they “would be happy to meet with
anyone on the Board copied [t]herein[,]” expressly excluding the ARC members,
Mr. Blancke, Mr. Harvey, and Mr. Pfizenmayer.140 Mr. Beebe testified he was
excluding those persons because “they were treating [the Homeowners] in a manner
that [they] didn’t feel was right, and [they] wanted some neutral parties in the
meeting.”141
Thereafter, Mr. Beebe started a campaign to whip up support within the
Community. On November 30, 2021, Mr. Beebe reached out to Sally Hack, a new
member of the ARC, about her involvement with the ARC and the demand letter,
and reiterated his concerns about Mr. Blancke and Mr. Harvey.142 Then, in
December of 2021, Mr. Beebe “went around and knocked on pretty much
everybody’s door[,]” to discuss the dispute over the Structure and solicit his
138
JX 72.
139
JX 73.
140
JX 72.
141
Tr. 352:19-20.
142
JX 11.
25
neighbors’ approval.143 Altogether, he secured forty-two (42) signatures on his
petition.144
On December 31, 2021, Mrs. Beebe left a message for Mr. Blancke, seeking
to discuss the ongoing issues.145 Mr. Blancke responded by email, copying the ARC
and its legal counsel, and explained any further communications should occur
through the Parties’ attorneys.146
Despite this instruction, Mr. Beebe submitted new plans to Ms. Frederick on
January 26, 2022.147 Mr. Blancke informed Ms. Frederick that the Association was
pursuing legal action against the Homeowners and that she should not review the
latest submission.148
The Homeowners were still required, however, to submit an as-built. In an
email sent November 22, 2021, the Association’s counsel requested that the
Homeowners submit “an amended plan showing the as-built home[.]”149 In January
of 2022, the Homeowners submitted an as-built (the “As-Built”) to Ms. Frederick
143
Tr. 343:4-344:4.
144
Tr. 344:20; JX 26.
145
See JX 13.
146
Id.
147
JX 58. These new plans were the first document from the Homeowners that showed
anything like the Structure. Compare JX 20 with JX 53. See also Tr. 115:15-18.
148
JX 29.
149
JX 70.
26
with a check for $100.150 Mr. Beebe could not recall the name of who drafted the
As-Built, which is unsigned and notes two (2) potential drafters (Devon Engineering
or Architectural Drafting & Design, LLC).151 The same person who drew the
original plans for the Homeowners’ house prepared the As-Built without viewing
the finished build.152 The As-Built included the Structure at the rear of the
Property.153
Ms. Frederick emailed Mr. Beebe on January 28, 2022, expressing concerns
with the As-Built.154 Specifically she was concerned “that the site work did not
match an engineered drainage plan” which made it so she could not review the As-
Built effectively.155
On January 28, 2022, Mr. Beebe sent the As-Built to the Kercher Group for
review.156 John Murray, a project manager at the Kercher Group, sent Mr. Beebe a
letter stating that the Structure should not interfere with the Kercher Plan.157 Mr.
150
Tr. 354:17-355:3. See JX 20.
151
JX 20; Tr. 421:12-422:9.
152
Tr. 422:2-5, 20-24.
153
See JX 20.
154
JX 58.
155
Id.
156
JX 22.
157
Id. Mr. Beebe explained that he requested this letter because of Ms. Frederick’s inquiry,
and it was prepared without anyone from the Kercher Group visiting the Property. Tr.
425:20-24. But the Kercher Group asked for pictures and Mr. Beebe “did what the Kercher
Group asked.” Tr. 449:3-6.
27
Murray did not address whether the Kercher Plan was followed. Mr. Beebe testified
that he sent this letter to Ms. Frederick.158
iii. The Aftermath
There is no dispute that there continues to be ponding around the Property’s
right of way and neighboring properties.159 The issues come and go. Tucker M.
Kokjohn, the Homeowners’ neighbor, explained that the ponding at the front of his
property is about the same as it was before the construction on the Property.160 In
the nineteen (19) years he has lived there, he has always had ponding near his
mailbox, requiring him sometimes to “either not wear shoes or wear galoshes to get
the mail.”161 The construction did not worsen the situation.162 And in his backyard,
the ponding has improved since the Homeowners’ construction; he does not “get as
158
Tr. 358:6-10.
159
See Tr. 369:17-370:6.
160
Tr. 263:11-12.
161
Tr. 262:15-16.
162
Tr. 262:11-12. Elizabeth Vasilikos, who lives less than three-quarters of a mile from
the Property testified similarly. A frequent runner and walker, she has passed by the
Property numerous times both before and after construction. Tr. 272:12-22. She always
noticed ponding after it rained. Tr. 273:16-17. After the Homeowners’ construction, the
ponding, to her, looks “absolutely the same.” Tr. 273:21. Ms. Vasilikos does not support
the Association’s lawsuit and, rather, supports the Homeowners and the Structure. Tr.
274:22-275:9.
Mr. Beebe also testified that he has “been jogging this road for 20 years, but
sometimes you have to zigzag your way around[,]” due to ponding water. Tr. 432:24-434:1.
28
much water in the backyard as [he] got before [the Homeowners] did [their]
landscaping.”163
Mr. Schlitter testified that when he visited the Property on October 14, 2021
one (1) day after it rained, he “didn’t observe any issue with drainage at that time.”164
Mr. Schlitter could, however, see that “[t]here were no swales in the right-of-way.
[The Property] did have two swales on either side.”165 Mr. Schlitter explained that
the right-of-way as constructed was “compliant” with the permit but DelDOT “did
not make the determination of whether or not [the right-of-way swales] conveyed
positive drainage on site, [because of] the sod thickness and [they] needed more
survey information.”166
In July of 2022, the General Manager of the Country Club, Carpiu Chereches,
visited the Property.167 Mr. Chereches was able to view the Structure, and consider
163
Tr. 262:23-263:3. Mr. Kokjohn testified that he does not support the Association’s
lawsuit and signed a petition in support of the Structure. Tr. 263:21-264:11.
164
Tr. 188:17-23.
165
Tr. 188:24-189:7.
166
Tr. 190:19-191:3. Mr. Schlitter noted, however, that the river rock shown in pictures of
the Property was not compliant because “[t]here is no safety permit for that work.” Tr.
196:11-15. Per Mr. Schlitter, “river rock is not allowed to be placed in the right-of-way”
because it is not a reliable surface for a vehicle to transverse; it is bumpy and can give way
to sinkage. Tr. 196:18-197:7. But many homeowners within the Community also have river
rock, which was not approved. Tr. 365:23-366:4.
167
Tr. 280:19-21.
29
whether it harmed the golf course.168 He found there was no effect and was pleased
with the Structure.169 At the Homeowners’ request, Mr. Chereches then wrote a
letter in July 2022 explaining “[w]ith the new construction came a new low-profile
garden wall [(the Structure)] that we went out to see if it would impact our golf
course in any way, and the conclusion was that it doesn’t. If anything, it was looked
at as an ingenious construction.”170
Thereafter, the Association had McBride and Ziegler, Inc. (“McBride”)
perform a survey of the front of the Property to determine if it was graded according
to the Kercher Plan.171 McBride’s Chief of Surveys, Devon Gaunt, testified that on
October 18 and 19, 2022, he went to the Property to take elevations of the grading
168
See Tr. 282:14-19.
169
Tr. 282:14-16.
170
JX 15. See also Tr. 284:5-7.
Mr. Chereches also drives on East Side Drive frequently and has observed ponding
on the road and in the rights-of-way. Tr. 286:5-17. Ms. Vasilikos testified similarly,
explaining that when there is a nor-easter or hurricane, the ponding on East Side Drive is
“pretty significant.” Tr. 277:5-6. Similarly, Mr. Harvey noticed ponding in front of the
Property and neighboring properties after Hurricane Ian in 2022. Tr. 232:20-22. At the
height of the storm, “the ponding [was] out to the mid point, almost to the mid point of the
road.” Tr. 235:20-22. “[A]pproximately 30 hours after the last rain fell[,]” there was water
ponding at the end of the Property’s driveway and neighboring property 150 East Side
Drive and in the river rock. See JX 67. Mr. Beebe explained these conditions were after the
area received over three (3) inches of rain in a two-day period. Tr. 360:6-16.
171
JX 74. McBride and Mr. Gaunt have a longtime working relationship with Mr. Harvey
who is the president of the Association. See Tr. 31:7-23. Mr. Gaunt testified that his survey
was accurate and his findings unaffected by that relationship. Tr. 32:12-19. Mr. Ziegler
confirmed the same. Tr. 45:3-6.
30
in the front yard and the street.172 The Homeowners were not asked if the survey
could proceed, nor provided notice that it was occurring.173 Rather, Mr. Beebe
happened upon the surveyors and, finding their answers evasive and conduct
suspicious, called the State Police.174 Luckily, all involved treated each other
respectfully and the situation did not escalate.
Mr. Beebe made it clear, however, that Mr. Gaunt and his team did not have
permission to enter the Property.175 They complied and conducted the survey from
an adjacent property.176 Using a Leica TS12 robotic total station, Mr. Gaunt
measured the front of the Property.177 Mr. Gaunt took “shots” with his instrument
pointed at the Property and the instrument electronically recorded and calculated the
elevation of the portion of the Property in the shot.178 Mr. Gaunt then loaded that
172
Tr. 8:3-10.
173
Tr. 373:21-23.
174
Tr. 375:21-376:2.
175
Tr. 14:2-13.
176
On a sunny day, with no water on the ground, the McBride representatives did not
personally witness any ponding. Tr. 11-17. But their survey demonstrated that the grading
of the Property did not match the Kercher Plan. See JX 74.
177
Tr. 9:13-22. Mr. Gaunt explained that although he has surveyed property without entry
before, it is customary to enter the property. Tr. 22:10-16, 14-19. He testified credibly that
it would not have assisted him with this assignment if he had permission to enter the land.
Tr. 11-13. Mr. Ziegler confirmed the same, explaining he felt he “had adequate
information” without entry to the Property. Tr. 64:17-65:6.
178
Tr. 11:22-12:18. Mr. Beebe raised a concern about whether the “shots” were level
because he witnessed the McBride team using equipment atop a pile of stones. Tr. 380:5-
16.
31
electronic data into AutoCAD, a computer drafting program, which created a report
demonstrating the various shots and elevation reflected.179 Mr. Gaunt and his boss,
Mark Ziegler, then manually reviewed the computer-generated report for accuracy
and to prepare written findings.180
Mr. Ziegler, who was tendered as an expert in stormwater management
(without objection), drafted the written findings (the “Ziegler Report”).181 In the
Ziegler Report, Mr. Ziegler compared the computer-generated report, based on Mr.
Gaunt’s measurements, with the Kercher Plan.182 In the Kercher Plan, Mr. Ziegler
noticed “a one-foot elevation bust along the edge of [the] pavement,” which resulted
in a “range of elevations that weren’t correct.”183 But “from a design perspective,”
the mistake was not material and, rather, would have permitted water to drain more
easily, if the Kercher Plan had been followed.184 But it was not. The computer-
179
Tr. 12:1-9.
180
See JX 74.
181
See id. At trial, potential typographical errors in the Ziegler Report were identified. See
Tr. 18:13-21, 19:24-20:4. Mr. Gaunt’s testimony regarding the instrument and drafting
program alleviated any concerns that the report contained material errors. See Tr. 9-13. See
also Tr. 73:11-22. Mr. Ziegler testified that changes in elevation were a result of the slope
of the street. See id.
The Homeowners point out that the Ziegler report does not provide any vertical
datum. Vertical datum are reference points by which all other elevations are measured in
comparison. Tr. 26:6-12.
182
Tr. 46:9-15.
183
Tr. 4-9.
184
Tr. 47:22-48:23.
32
generated report and Mr. Ziegler’s personal observations from viewing the Property
a week after Mr. Gaunt’s survey confirmed the swales depicted on the Kercher Plan
were not present.185 Mr. Ziegler also found in the Ziegler Report that stormwater
runoff was not draining as designed and was instead remaining in the street, due in
part to the edge of the stone bed being higher than the street.186 Without the swales,
per Mr. Ziegler, water is being conveyed to the front of the Property, rather than the
rear, as it would under the Kercher Plan.187
Mr. Ziegler also reviewed the As-Built. He testified that when his firm works
on residential land development projects, they prepare topographic and boundary
surveys, design the property, and calculate the elevations and grading.188 After
construction, McBride then prepares the “as-builts.”189 Mr. Ziegler explained “in
most jurisdictions, we are required to do the as-builts to ensure that the plan that was
proposed was built in accordance with plans. In accordance to the plan that was
185
Tr. 49:17-23. Mr. Ziegler also reviewed “Google Earth, . . . street view and . . . the GIS
maps that are on the Sussex County web page[.]” Tr. 63:21-64:1. Mr. Beebe described Mr.
Ziegler’s visit as much less pleasant than Mr. Gaunt’s. See Tr. 382:20-383:3.
186
The report and cover letter were generated quickly, within five (5) days of the survey.
JX 74. Mr. Gaunt testified that he was instructed to produce his findings quickly, although
he was not aware of this litigation at the time he visited the Property. Tr. 29:3-23. Despite
the quick turnaround, Mr. Gaunt is confident in the accuracy of the report. Tr. 32:8-11.
187
Tr. 58:2-4.
188
Tr. 36:22-37:7.
189
Tr. 37:8-9.
33
approved.”190 Based on his experience, the As-Built was “[a]bsolutely 100 percent
not” what he would expect to see as an as-built.191 In his view the As-Built had a
number of issues: (1) it was unsigned; (2) it depicted two fences that did not exist;
(3) it failed to show elevations or the stone beds in the street; and (4) it had no
information to “tell which way the water drains.”192
D. Procedural Posture
After unsuccessful efforts to resolve their dispute, on May 18, 2022, the
Association filed this action seeking (1) injunctive relief requiring the Homeowners
“to remove the [Structure] and regrade the Property in conformity with the [Kercher]
Plan;” (2) a declaration that the ARC can, with notice, inspect the Property for
compliance; and (3) shifting of fees and costs.193 After the Association filed the
certification required under Court of Chancery Rule 174(c)(2), I found this action
eligible to proceed under 10 Del. C. § 348 and referred the Parties to mandatory
mediation.194 Mediation was held on July 15, 2022, but was unsuccessful.195
190
Tr. 37:8-14.
191
Tr. 40:1-14.
192
Tr. 40:16-41:18.
D.I. 1. See JX 14, 70, 71, 76. The Association’s board authorized the lawsuit by
193
unanimous written consent on May 9, 2022. JX 46.
194
See D.I. 2, 6, 8-9.
195
See D.I. 16.
34
On August 5, 2022, I approved the Parties’ proposed schedule and set this
matter for trial beginning on November 14, 2022.196 Trial commenced as scheduled
and was continued into November 15, 2022.197 Thereafter, the Parties agreed to a
schedule for post-trial briefing and completed that briefing on February 23, 2023.198
II. ANALYSIS
The restrictions at issue in this case are commonly referred to as architectural
review covenants, in that they require prior review and approval of plans for
improvements. These types of covenants are “neither new nor uncommon in
Delaware” but they “must be carefully evaluated because their arguably subjective
nature introduces the risk of arbitrary and capricious application.”199
The Association bears the burden of proving the Restrictions (1) are
enforceable, (2) were not arbitrarily or capriciously applied to the Homeowners, and
(3) were violated by the Homeowners.200 The Association also bears the burden of
proving entitlement to injunctive relief.201 The Homeowners bear the burden of
196
D.I. 19.
197
D.I. 53. The first day of trial was the Homeowners’ twenty-fourth wedding anniversary.
Tr. 299:18-22.
198
See D.I. 57-58, 63.
Lawhon v. Winding Ridge Homeowners Ass’n, Inc., 2008 WL 5459246, at *5 (Del. Ch.
199
Dec. 31, 2008).
200
Id.201
O’Marrow v. Roles, 2015 WL 5714847, at *11 (Del. Ch. Sept. 30, 2015).
35
proving their affirmative defenses of unclean hands and waiver.202 Whichever party
prevails on their claims is then entitled to statutory fee shifting, unless the non-
prevailing party can demonstrate an exception thereto.203
The burden of proof for these claims and defenses is by a preponderance of
the evidence. “Proof by a preponderance of the evidence means proof that
something is more likely than not. It means that certain evidence, when compared to
the evidence opposed to it, has the more convincing force and makes you believe
that something is more likely true than not.”204 “By implication, the preponderance
of the evidence standard means that if the evidence is in equipoise,” the party with
the burden of proof loses.205
Applying this burden, I first address whether the Restrictions are enforceable
on their face. Finding they are, I then turn to whether the Restrictions were
arbitrarily enforced against the Homeowners. They were not. Thus, I address
whether the Homeowners violated the Restrictions with their grading and the
Structure. They did. That brings me to the Homeowners’ affirmative defenses—
waiver and unclean hands. I find neither avenue precludes judgment in favor of the
202
See Niehenke v. Right O Way Transp., Inc., 1996 WL 74724, at *2 (Del. Ch. Feb. 13,
1996) (citations omitted).
203
10 Del. C. § 348(e).
204
Del. Exp. Shuttle, Inc. v. Older, 2002 WL 31458243, at *17 (Del. Ch. Oct. 23, 2002)
(citations and quotation marks omitted).
205
OptimisCorp v. Waite, 2015 WL 5147038, at *55 (Del. Ch. Aug. 26, 2015).
36
Association. Finally, I turn to the relief requested by the Association: (1) injunctive
relief and (2) fee shifting. I find this relief should be granted.
A. The Restrictions are enforceable.
For deed restrictions to be enforceable under Delaware law, they must serve
a legitimate purpose and provide homeowners with sufficient notice of what conduct
would be appropriate.206 “[F]undamental fairness requires that a property owner be
given notice, whether written or de facto, of the specific requirements to which
the[ir] building plans must conform for those plans to receive . . . approval.” 207 As
explained by Vice Chancellor Noble, “[a]dequate notice means communicating the
demands of compliance; whether that be a 10-foot-setback or a certain architectural
style. Restrictive covenants which are too vague to serve these functions of notice
and fairness are unenforceable.”208 That is because “if the language of a restrictive
covenant is so vague that it does not provide ‘clear, precise, and fixed standards of
application,’ there is a risk of arbitrary or capricious decision-making by the entity
reviewing the homeowner’s request. In such cases, the restriction will be deemed
unenforceable by the court.”209
206
Canal Corkran Homeowners Ass’n, Inc. v. Petrone, 2017 WL 1450168, at *4 (Del. Ch.
Apr. 21, 2017).
207
Seabreak Homeowners Ass'n, Inc. v. Gresser, 517 A.2d 263, 270 (Del. Ch. 1986), aff’d,
538 A.2d 1113 (Del. 1988) (citations omitted).
208
Lawhon, 2008 WL 5459246, at *5 (citations omitted).
209
Canal Corkran Homeowners Ass’n, Inc., 2017 WL 1450168, at *4 (citation omitted).
37
When reviewing the Restrictions for enforceability, I am guided by contract-
interpretation principles. “Interpreting deed restrictions is a matter of contract
interpretation and provisions are construed by determining original intent from the
plain and ordering meaning of the words.”210 In doing so, I must review the
Restrictions “as a whole[.]”211
The Homeowners argue that the Restrictions are unenforceable because they
“vest absolute, discretionary authority in the [Association] and/or ARC to approve a
property owners’ building plans, landscaping plans, and grading plans subject to the
ARC’s ‘opinion’ as to ‘aesthetic,’ ‘desirability,’ ‘suitability,’ ‘safety,’ ‘health,’ and
other standards.”212 This type of language has been questioned by this Court.213 But
the mere presence of these buzzwords in deed restrictions does not render them
unenforceable. For example, Vice Chancellor Noble in Lawhon v. Winding Ridge
Homeowners Association, Inc., explained that although “restrictions based on
abstract aesthetic desirability are impermissible[,] . . . our courts regularly enforce
architectural review provisions designed to ensure the overall harmony of
appearance within a community, when that community possesses a ‘sufficiently
210
Wild Quail Golf & Country Club Homeowners’ Ass’n, Inc. v. Babbitt, 2021 WL
2324660, at *3 (Del. Ch. June 3, 2021).
211
Id. (citations omitted).
212
D.I. 61.
213
See, e.g., Lawhon, 2008 WL 5459246, at *5; Dawejko v. Grunewald, 1988 WL 140225,
at *5 (Del. Ch. Dec. 27, 1988).
38
coherent visual style’ enabling fair and even-handed application.”214 Such
represents the type of “built-in, objective standards that would enable [otherwise
aesthetic restrictions] to be applied in an evenhanded manner or to be used as a
guideline by lot owners in designing their residences.”215
Here, the Restrictions have built-in, objective standards permitting
evenhanded application. Those standards are both procedural and substantive. On
the procedural side, the Restrictions provide, with specificity, what type of
construction requires prior approval and how to seek such approval: by submitting
“complete and comprehensive plans and specifications, prepared by a competent
residential draftsman, showing the nature, kind, shape, height, materials, floor,
elevation, foundation and footing plans, exterior color scheme, location and frontage
of the lot, approximate cost of such building, structure, or other erection, and the
grading and landscaping plan of the lot to be built upon or improved[.]”216
That procedure then informs the substantive side, where the ARC is charged
with determining whether the plans are “suitable or desirable, in its or their sole
opinion, for aesthetic, safety, health, police or other reasons,” taking into account
214
2008 WL 5459246, at *5 (Del. Ch. Dec. 31, 2008).
215
Seabreak Homeowners Ass’n, Inc., 517 A.2d at 270. See also Welshire Civic Ass’n v.
Stiles, 1993 WL 488244, at *3 (Del. Ch. Nov. 19, 1993) (finding similar prior approval
covenants “not so vague or arbitrary as to be wholly invalid as a matter of law”).
216
JX 1, Ex. D, Art. D.
39
“such factors which in its or their opinion would affect the desirability or suitability
of such proposed improvements, erection, alteration, or change.”217 The scope of
review, which includes aesthetics among other reasons, relates back to the types of
plans and specifications required. It also works in tandem with the Materially
Affects Provision, which provides “[t]he elevation of a lot will not be changed so as
to materially affect the surface elevation or natural drainage of surrounding lots.”218
All these provisions must be read together. Although doing so does not free the
Restrictions from all subjectivity, it provides enough objectivity that the Restrictions
are not unenforceable on their face.
B. The Association did not arbitrarily enforce the Restrictions against
the Homeowners.
Proving the Restrictions are enforceable is step one; the Association must also
prove that they enforced the Restrictions against the Homeowners in a reasonable,
and not arbitrary and capricious, manner. I find the Association met this burden.
Although architectural review powers are commonplace, they are particularly
susceptible to arbitrary, capricious, and unreasonable application.219 Accordingly,
217
Id.218
The Parties dispute whether the Materially Affects Provision continues to bind the
Community. D.I. 61, p. 34; D.I. 63, p. 12. I find it does. The March Restrictions provide
how the restrictions may be modified. JX 75, Art. F. The mere omission of the Materially
Affects Provision from the November Restrictions is not enough.
219
Seabreak Homeowners Ass’n, Inc., 517 A.2d at 268.
40
these powers must be applied in a reasonable manner and “any doubts as to its
reasonableness must be resolved in favor of the landowners.”220 The Association
“must show [it] applied the relevant standards on a reasoned and nonarbitrary basis
(not on subjective aesthetics)” to the Homeowners.221 They did so here.
The Homeowners argue that the ARC, on behalf of the Association, acted
arbitrarily and unreasonably in connection with the Homeowners’ application in
three (3) ways. First, the Homeowners argue that Mr. Harvey was biased against
Mr. Beebe and used his de facto control over the ARC to impose heightened
requirements on the Homeowners. Second, the Homeowners argue that the
Restrictions are ambiguous as to what is required for a grading and drainage plan.
And third, they argue that the turnover of the ARC calls into question their subjective
decisions. I take these arguments in turn.
I agree with the Homeowners that the relationship between Mr. Beebe and
Mr. Harvey was strained. There is no dispute that they struggled to work together
and were often at odds during the application process and after the application was
approved. But the Association has proven that Mr. Harvey’s feelings for Mr. Beebe
did not invade the ARC’s process in a material way. First, the evidence does not
support that Mr. Harvey exercised de facto control over the ARC. The record
220
Id.221
Wild Quail Golf & Country Club Homeowners’ Ass’n, Inc., 2021 WL 2324660, at *5.
41
demonstrates that Mr. Harvey was only one voice on the Association’s side
expressing concerns about the Homeowners’ plans. Second, despite any dislike, Mr.
Harvey was the first member of the ARC to approve the Homeowners’ plans. Even
if I agree with the Homeowners that Mr. Harvey imposed additional requirements
on them through his March 2021 communications, such requirements did not
materially alter the process, rendering the ARC’s entire review arbitrary and
capricious. The Homeowners were able to respond to those “requirements” within
thirty (30) minutes, and their application was approved shortly thereafter. On the
record before me, I find any bias from Mr. Harvey toward Mr. Beebe did not infect
the ARC’s enforcement such that it was overall arbitrary and capricious.222
Moving to the second argument, I disagree that the Restrictions are
ambiguous regarding what is required for a grading and drainage plan. The
Restrictions provide in no uncertain terms that the Homeowners needed to submit a
plan “prepared by a competent residential draftsman, showing the . . . grading and
222
See Lawhon, 2008 WL 5459246, at *9 (finding enforcement was not arbitrary or
capricious even though “the record suggests that [the president of the association] opposed
the [homeowners’] home from his first encounter with [the homeowners’ real estate
agent]”).
As highlighted by Vice Chancellor Glasscock, these homeowners’ association
disputes almost always involve a homeowner who “believes she has been singled out for
unfair and overbearing—even tyrannical—treatment by the associations. At times that
belief is vindicated; at other times, not.” Henlopen Landing Homeowners Ass’n, Inc. v.
Vester, 2019 WL 3484254, at *1 (Del. Ch. Aug. 1, 2019). This is one of the latter instances.
42
landscaping plan of the lot to be built upon or improved.”223 Mr. Harvey’s February
2021 text message to Mrs. Beebe asking for “a plan including all calculations by a
registered professional Delaware civil engineer showing the design of the storm
water management plan” is a reasonable interpretation and enforcement of this
requirement.224
Finally, the typical turnover in voluntary committee membership, like the
ARC, does not render the decisions of the ARC as constituted at the time the
Homeowners applied unreasonable or arbitrary. The Homeowners were provided
with clear instructions as to the documentation they needed to submit for review and
how and to whom those should be submitted. The instructions in the ARC Manual
and from the ARC members tracked the Restrictions in all material respects. The
ARC, as properly constituted, hewed closely to the procedural requirements in the
Restrictions and, once the Homeowners submitted all the required documentation,
the ARC promptly approved the Homeowners’ plan.225
223
JX 1, Ex. D, Art. D.
224
JX 27.
225
To the extent the Homeowners argue that the ARC was unreasonable in refusing to
consider the belated submission of plans that depicted the Structure, I disagree. The
Homeowners had adequate notice of the Restrictions and had been through the approval
process before. They were also warned as early as November 15, 2021 that the Structure
was not approved and invited to meet and discuss the Structure. JX 69. They chose not to
heed those warnings or meet with the ARC and did not submit a plan seeking approval
until January 26, 2022, after construction was complete. JX 58. It was not arbitrary or
43
C. The Homeowners violated the Restrictions.
Having found the Restrictions are enforceable and were reasonably applied to
the Homeowners, I turn to whether the Homeowners violated the Restrictions. They
did, in two ways. First, the Homeowners failed to submit a plan for approval before
constructing the Structure. Second, the Homeowners failed to follow the Kercher
Plan after receiving approval.
“Restrictive covenants implicate contractual rights, [and] . . . are construed in
accordance with their plain meaning in favor of” the homeowners.226 Here, the
Restrictions expressly require prior approval for the construction of any “building,
structure, fence, wall, dock, bulkhead, seawall, swimming pool or other
erection[.]”227 The Homeowners, despite being aware of these requirements, failed
to submit any plans before constructing the Structure. Such violated the
Restrictions.228
unreasonable for the Association to defer such belated requests to their legal counsel and
continue with these proceedings. JX 76.
226
Serv. Corp. of Westover Hills v. Guzzetta, 2009 WL 5214876, at *3 (Del. Ch. Dec. 22,
2009) (citations and quotation marks omitted).
227
JX 1, Ex. D, Art. D.
228
The Homeowners argue that the Structure, as constructed, does not violate any term
within the Restrictions. D.I. 61, p. 25. But it is not the material, color, or other attributes of
the Structure that are at issue—the issue is that the Homeowners had adequate notice that
construction of something like the Structure required prior approval and they failed to apply
for that approval before construction. That failure is a breach, even if I agree with the
Homeowners that the Structure could have been approved if an application was timely
made. When an architectural review covenant is otherwise enforceable, the path of asking
for forgiveness, rather than permission, leads homeowners to a dead end. See Plantation
44
Further, the only reasonable interpretation of the Restrictions is that
homeowners must follow their plans after approval by the ARC; the Homeowners
failed to follow the Kercher Plan and, as such, violated the Restrictions.229
Park Ass’n, Inc. v. George, 2007 WL 316391, at *3 (Del. Ch. Jan. 25, 2007) (explaining a
relevant line “of cases can be readily reconciled as different methods of applying the maxim
that equity will not reward inequitable conduct, such as the knowing violation of a covenant
in a deed. Thus, those courts requiring a ‘balancing’ analysis in cases seeking to enjoin
breach of a deed covenant tend to discount harm resulting for the knowing breach of the
covenant”). See also Quail Vill. Homeowners Ass’n, Inc. v. Rossell, 2018 WL 6534456, at
*4 (finding a homeowner’s “argument – that the Association’s witnesses, who serve on
ARC, failed to express specific objections to the [unapproved] structure based upon the
deed restrictions’ standards – [wa]s premature, since [the homeowner] ha[d] not requested
ARC’s review of the structure and ARC ha[d] not responded to such a request. Further,
any issues concerning the enforceability of the deed restrictions requiring ARC approval
and their application by ARC, would become ripe only after that review has occurred.”);
The Cove on Herring Creek Homeowners’ Ass’n, Inc. v. Riggs, 2003 WL 1903472, at *5,
n.34 (Del. Ch. Apr. 9, 2003) (declining to “speculate upon what the ARC might have
decided had the [homeowners] adhered to the approval process”).
In Point Farm Homeowner’s Association, Inc. v. Evans, Vice Chancellor Harnett
noted “a homeowner may begin construction before obtaining approval where the
approving authority unreasonably refuses to approve the homeowner’s pans.” 1993 WL
257404, at *4 (Del. Ch. June 28, 1993). I do not disagree. But the homeowner who moves
forward without approval does so at her own risk. See, e.g., Slaughter v. Rotan, 1994 WL
514873, at *3 (Del. Ch. Sept. 14, 1994). Here, the Homeowners knowingly took that risk
and, I find, it should not be condoned. The Homeowners also do not stand in the same
shoes as the homeowners in Point Farm, who submitted extensive plans that were
ultimately rejected for unenforceable reasons. Point Farm, 1993 WL 257404, at *4. Here,
the Homeowners’ plans were approved. But those plans did not include the Structure, for
which the Homeowners did not seek prior approval and then, tried to hide the lack of
approval through a misrepresentation to the ARC. See JX 19.
229
The Homeowners argue that this argument is an unpled claim for breach of contract and
should be denied. D.I. 61, p. 50. But “the legal force of the restrictive covenants that bind
the [Community] is contractual in nature.” Seabreak Homeowners Ass’n, Inc., 517 A.2d at
269. See also The Cove on Herring Creek Homeowners’ Ass’n, Inc., 2003 WL 1903472,
at *5, n.34 (finding that the homeowners’ deviation from their application was a separate
violation of the applicable restrictions). Further, the Association has been consistent in
45
Otherwise, the approval process would be for naught, as would the provision
permitting entry upon the premises to see if construction is proceeding according to
plan.230 Here, the Homeowners did not take any steps to ensure the Kercher Plan
was followed. They failed to provide the Kercher Plan to the person they hired to
grade the property, Mr. Diaz, and, instead, gave him vague instructions to work on
swales. Their disregard for their own plans, and their agreement to stick to those
plans through the ARC’s approval letter, is telling.
The Association has further proven that these insufficient instructions, as
might be expected, failed to produce swales consistent with the Kercher Plan.231
This discrepancy was demonstrated through (1) the testimony of Mr. Schlitter, who
confirmed that the swales depicted in the Kercher Plan were not present when he
was at the Property, and (2) the Ziegler Report, which concluded that the Property’s
front elevations were materially different than those contemplated by the Kercher
pursuing relief related to the Homeowners’ failure to follow the Kercher Plan. See, e.g.,
D.I. 1, D.I. 41.
230
That approval letter also expressly required “[a]ny changes to the approved plans
submitted will require ARC review & approval prior to any work beginning.” JX 24. Mr.
Beebe signed the approval, confirming that he would so comply. Id. But he did not.
231
The Association also argues that the failure to follow the Kercher Plan led to elevation
changes on the Property that “materially affect[ed] the surface elevation or natural drainage
of surrounding lots” in violation of the Materially Affects Provision. See D.I. 59. I agree
with the Homeowners that the Association failed to prove any such violation by a
preponderance of the evidence. But the Association did prove that the Homeowners, more
likely than not, failed to follow the Kercher Plan, resulting in materially different grading.
46
Plan. The Homeowners cannot rebut the neutral and credible observations of Mr.
Schlitter. And I find their arguments against the Ziegler Report unpersuasive.232
With their involvement with the ARC and protracted application process,
there is no reasonable basis for the Homeowners to believe that they could move
forward without following approved plans. Rather, the record reflects that the
Homeowners knowingly violated the Restrictions by failing to follow the Kercher
Plan and constructing the Structure without prior approval.
D. The Homeowners failed to prove their affirmative defenses of
unclean hands and waiver.
Seeking to avoid judgment against them, the Homeowners assert two
affirmative defenses, on which they bear the burden of proof: unclean hands and
232
The Homeowners argue that the Ziegler Report is unreliable because it: (1) has an
inaccurate elevation and street address, (2) fails to disclose which vertical datum, if any,
was utilized, (3) fails to list a reference benchmark, (4) relies on unreliable data collected
from an adjacent property and on an unlevel surface, and (5) was hastily done by a company
connected to Mr. Harvey. I disagree that any of these arguments alone, or together, render
the Ziegler Report unreliable. Any errors or inaccuracies were addressed by Mr. Ziegler’s
testimony and fail to undermine the ultimate conclusions reached. See, e.g., Tr. 27:21-24.
Further, the only hint regarding unreliable data was Mr. Beebe’s self-serving testimony
that the surveyors placed their tripod on rocks or stones; I find that testimony lacks
credibility and is insufficient to undermine the thorough report and testimony from two
qualified individuals. Tr. 70:23-71:17. And, finally, I see no indication that the quick
turnaround of the Ziegler Report renders the otherwise well-reasoned and supported
findings unreliable. Tr. 29:24-31:6. Cf. Tumlinson v. Advanced Micro Devices, Inc., 81
A.3d 1264, 1272 (Del. 2013) (upholding a finding of unreliability where the expert failed
to “adequately detail her methodology” in a scientifically sound manner).
47
waiver.233 I find these defenses should fail.
i. The Homeowners failed to prove that the Association comes to
this Court with unclean hands.
The Homeowners argue the Association engaged in nine (9) acts which
demonstrate unclean hands: (1) the unannounced inspection that led to the Ziegler
Report, (2) the filing of this litigation with the hope of a settlement, (3) Mr. Harvey’s
insults and threats to Mr. Beebe and failure to recuse himself from the ARC process,
(4) Mr. Harvey’s imposition of extra burdens on the Homeowners, (5) the
Association’s failure to consult with the Homeowners’ other neighbor before filing
this action, (6) Mr. Harvey and Mr. Blancke’s alleged abuse of authority in not
involving all of the ARC members in the various decisions and communications, (7)
the Association’s institution of this action without a fully signed consent or full
director or member meeting, (8) Mr. Harvey’s exercise of unilateral authority over
the Homeowners’ application, and (9) the Association’s unwillingness to meet with
the Homeowners in January 2022. I disagree that these support a finding of unclean
hands.
233
Although the Homeowners pled an affirmative defense of laches, they withdrew the
defense in post-trial briefing. D.I. 12; D.I. 61, p. 53, n.263.
48
“Unclean hands derives from the equitable maxim that [sh]e who comes into
equity must come with clean hands.”234 It is a rule of public policy applied “to
protect the public and the court against misuse by one who, because of [her] conduct,
has forfeited [her] right to have the court consider [her] claims, regardless of their
merit.”235 Although there is no strict formula, the primary question “raised by a plea
of unclean hands is whether the plaintiff’s conduct is so offensive to the integrity of
the court that [her] claims should be denied, regardless of their merit.”236 A
secondary question is whether the offensive conduct is connected to the claims at
issue. “[F]or the unclean hands doctrine to apply, ‘the inequitable conduct must
have an immediate and necessary relation to the claims under which relief is
sought.’”237
The Homeowners have failed to meet this heavy burden. There is no dispute
that tempers flared between Mr. Harvey and Mr. Beebe. Mr. Harvey also used harsh
language and tried to “teach” Mr. Beebe, in a way that could be interpreted as
condescending. Could, and should, Mr. Harvey have behaved better? Perhaps. But
234
Murray v. Rolquin, 2023 WL 2421687, at *13 (Del. Ch. Mar. 9, 2023) (citation and
quotation marks omitted).
235
Skoglund v. Ormand Indus., Inc., 372 A.2d 204, 213 (Del. Ch. 1976).
236
Gallagher v. Holcomb & Salter, 1991 WL 158969, at *4 (Del. Ch. Aug. 16, 1991) aff’d
sub nom. New Castle Ins., Ltd. v. Gallagher, 692 A.2d 414 (Del. 1997).
237
In re Rural/Metro Corp. S’holders Litig., 102 A.3d 205, 237–38 (Del. Ch. 2014)
(quoting Nakahara v. NS 1991 Am. Trust, 718 A.2d 518, 523 (Del. Ch. 1998)).
49
Mr. Harvey’s human errors do not leave the Association with unclean hands to
pursue this action. Nor was the Association’s decision to pursue its claims before
this Court improper. The ARC attempted to meet with the Homeowners and resolve
their disputes without the need for litigation. Rather than meet with the ARC, the
Homeowners started a campaign against the ARC, consulting with and soliciting
support from other members of the Association. The Association’s decision to move
forward with litigation is understandable. As is the Association’s ongoing hope that
this litigation could be resolved; this Court encourages settlement and there is
nothing improper about the Association filing this action, while remaining open to
reaching a mutually agreeable resolution. Finally, the unannounced inspection that
led to the Ziegler Report, which did not intrude on the Property and was conducted
from an adjacent parcel, is not alone nor coupled with the above conduct so offensive
to the integrity of the Court that the Association’s claims should be barred.238
ii. The Homeowners failed to prove that the Association waived its
ability to enforce the Restrictions against the Homeowners.
The Homeowners also argue that the Association has waived its ability to
enforce the Restrictions. The Parties, through post-trial briefing, quibble over the
238
None of the items on the Homeowners’ list of alleged bad acts support a finding of
unclean hands either alone or taken together. The Homeowners’ unclean hands argument
rings especially hollow considering their inequitable conduct of disregarding the Kercher
Plan after the ARC approved it and installing the Structure without seeking prior approval.
See Quail Vill. Homeowners Ass’n, Inc., 2018 WL 6534456, at *3.
50
appropriate standard for waiver versus the related, unpled defense of abandonment.
The terms abandonment and waiver are sometimes used
interchangeably and the conduct that leads to a finding of abandonment
may frequently support a claim of waiver. Abandonment, which is
difficult to establish, occurs when all beneficiaries have relinquished
their rights to enforce a particular covenant or a general plan of
covenants. 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. Thus, the principal difference between the two defenses is
that waiver usually involves failure to object to a particular violation of
a servitude under circumstances that lead to the conclusion that the
beneficiary is precluded from objecting to different but similar
violations. Moreover, extensive waiver can ultimately amount to
abandonment of the servitude.239
But “[o]ne modest partial exception” permitted by an association “is not sufficient
to show that a deed restriction has been so indolently or erratically enforced as to
render future enforcement arbitrary.”240
The Homeowners argue that there are numerous structures in the Community
like the Structure, one of which the Association has not demonstrated was approved
before construction. Because the Association has either approved or failed to
challenge unapproved structures like the Structure, the Homeowners argue the
Association has waived the ability to challenge the Structure here. I disagree.
239
Tusi v. Mruz, 2002 WL 31499312, at *3 (Del. Ch. Oct. 31, 2002) (cleaned up).
Dolan v. Vills. of Clearwater Homeowner’s Ass’n, Inc., 2005 WL 2810724, at *4 (Del.
240
Ch. Oct. 21, 2005).
51
To prove waiver, the Homeowners needed to present evidence making it more
likely than not that the Association has not required other homeowners to seek prior
approval of structures like the Structure.241 One instance where prior approval is
uncertain is not sufficient to meet this burden.242 It is particularly unpersuasive when
viewed next to an instance where the similar structure was submitted for review and
approval. Further, to the extent the Homeowners are arguing that the Association’s
(or the ARC’s) prior approval for one homeowner means it waives the ability to
require prior approval from other homeowners for like projects, that proposition is
rejected. Prior approval covenants do not lose their force and effect when approval
is granted; rather than represent waiver, such represents an enforced process. Here,
the Association, through the ARC, consistently enforced the prior approval process.
E. The Association is entitled to injunctive relief.
Having found the Association should prevail, and the Homeowners’ defenses
should fail, I turn to the appropriate relief. The Association seeks a permanent
injunction requiring the Homeowners to remove the Structure and regrade the
Property per the Kercher Plan. I find this relief should be granted.
241
The question is not whether the Structure, if submitted for approval, would or should be
approved. Because a plan for the Structure was not submitted for prior approval, that issue
is not before me and would be premature to address. Quail Vill. Homeowners Ass’n, Inc.,
2018 WL 6534456, at *4.
242
See Dolan, 2005 WL 2810724, at *4 (finding one instance insufficient to show arbitrary
enforcement, explaining “the solitary anecdote actually tends to reinforce the importance
of” the restrictions).
52
To receive injunctive relief, the Association must prove: “(1) actual success
on the merits of the claims; (2) that the [Association] will suffer irreparable harm if
injunctive relief is not granted; and (3) that the harm to the [Association] outweighs
the harm to the [Homeowners if] an injunction is granted.”243 Prong one (1) has
already been addressed; thus, I focus on irreparable harm and balancing of the harms.
The irreparable harm analysis is unique in the deed restriction context. As
explained by then-Vice Chancellor Steele:
The [homeowners within a community with deed restrictions]
knowingly enter into a social contract with the other lot owners when
purchasing their land. This contract includes adhering to the
Restrictions’ restrictive covenants. Relying on the covenant, many lot
owners have invested a large amount of time and money improving
their lots, including building residences for themselves. Once a
restriction is breached, the [homeowners association] can never again
regain the sanctity of the covenant.244
Although injunctive relief may be an extreme remedy at times, it is appropriate when
there would not be “substantial economic harm” to the noncompliant
homeowners.245 That is because “[e]quity will not reward a knowing breach of
restrictions.”246
243
O’Marrow, 2015 WL 5714847, at *11.
244
Slaughter, 1994 WL 514873, at *3.
245
The Cove on Herring Creek Homeowners’ Ass’n, Inc., 2003 WL 1903472, at *6.
246
Quail Vill. Homeowners Ass’n, Inc., 2018 WL 6534456, at *3; Plantation Park Ass’n,
Inc., 2007 WL 316391, at *5 (explaining this Court may “discount harm resulting for the
knowing breach of the covenant” in its balancing analysis).
53
I find Vice Chancellor Noble’s decision in The Cove on Herring Creek
Homeowners’ Association, Inc. v. Riggs on point.247 Therein, Vice Chancellor
Noble ordered injunctive relief, mandating the removal of unapproved sheds.248 The
homeowners had “placed their sheds despite the absence of approval from the ARC
and after th[e] action had been filed.”249 Thus, “they [we]re not innocent victims of
circumstance.”250 Because the homeowners also failed to make any showing of
“substantial economic harm if they are required to remove their sheds[,]” Vice
Chancellor Noble granted injunctive relief.251
I recommend the same here. The Homeowners violated the Restrictions when
they failed to follow the Kercher Plan and installed the Structure without prior
approval. These were not innocent or mistaken actions; they were knowing
violations. The harm to the Association is evident from the breached social contract.
The Homeowners, on the other hand, failed to show any substantial economic harm
from the injunctive relief requested and failed to quantify the cost of remediation.
Further, the cost is of the Homeowners’ own making. Despite their knowledge of
247
2003 WL 1903472, at *6.
248
Id.249
Id.250
Id. See also Slaughter, 1994 WL 514873, at *3 (balancing the harms against the
homeowners where they “voluntarily elected to run the risk of placing themselves in a
worse position by choosing to interpret the restriction to suit themselves”).
251
The Cove on Herring Creek Homeowners’ Ass’n, Inc., 2003 WL 1903472, at *6.
54
the Restrictions and extensive involvement in the application process with the ARC,
the Homeowners chose not to follow the Kercher Plan and to construct the Structure
without seeking approval. That conscious decision should have consequences.252
This Court should issue an injunction requiring the Homeowners to remove the
Structure and regrade the Property consistent with the Kercher Plan.253
F. Fees and costs should be shifted in the Association’s favor.
Under 10 Del. C. § 348(e), “[t]he nonprevailing party at a trial held pursuant
to the provisions of this section must pay the prevailing party’s attorney fees and
court costs, unless the court finds that enforcing this subsection would result in an
unfair, unreasonable, or harsh outcome.”
252
The Homeowners’ knowing conduct distinguishes this case from Quail Village
Homeowners Association, Inc. v. Rossell, where there was no evidence that the homeowner
“knowingly proceeded with construction at her own risk[,]” and Master Griffin, in reliance
thereon, approved injunctive relief short of removal (requiring the homeowner to submit a
plan for approval). 2018 WL 6534456, at *4. Cf. Tusi v. Mruz, 2002 WL 31499312, at *5
(acknowledging the “draconian nature of relief requiring demolition of [a] [g]arage” and,
nonetheless, ordering same); Christine Manor Civic Ass’n v. Gullo, 2007 WL 3301024, at
* 4 (Del. Ch. Nov. 2, 2007) (finding “[t]he only equitable and viable remedy available to
the Court” where the homeowner built a structure without approval and “at her risk” was
“removal of the structure”).
253
I note, like Vice Chancellor Noble did in The Cove on Herring Creek Homeowners’
Association, Inc. v. Riggs, that it is at least conceivable that the Structure could be approved
through the appropriate process. 2003 WL 1903472, at *6, n.37. But I, nonetheless,
recommend removal to ensure that the Homeowners can fully implement the Kercher Plan.
If there is a way to work the Structure into the Kercher Plan (which there appears to be per
the January 31, 2022 letter from the Kercher Group), that can be explored through an
application to the ARC. JX 22.
55
The Association is the prevailing party. Thus, fees and costs should be shifted
in the Association’s favor, unless the Homeowners can demonstrate that enforcing
statutory fee shifting would be unfair, unreasonable, or harsh. The Association
should be compelled to file an affidavit under Court of Chancery Rule 88 within
twenty (20) days of this report becoming a final order of the Court; the Homeowners
should then be permitted to respond within twenty (20) days of filing.
III. CONCLUSION
For the foregoing reasons, I find the Homeowners violated the Restrictions
and the Association is entitled to injunctive relief. The Homeowners should be
required to remove the Structure and to regrade the Property in compliance with the
Kercher Plan. The Association is also entitled to shifting of fees and costs under 10
Del. C. § 348(e).
This is my final report and exceptions may be filed under Court of Chancery
Rule 144.
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