Welsch v. Goswick , 181 Cal. Rptr. 703 ( 1982 )

Opinion

WORK, J.

Petitioners Betty and Joseph Goswick seek a writ of prohibition or certiorari related to their appeal (4 Civ. No. 24797) from a trial court order which finds them in violation, but not in contempt, of a stipulated injunctive judgment, orders them to cease and desist operating a residential care facility for six elderly persons, and awards $4,000 in attorney fees to counsel for real party/respondent Susan Fleet Welsch. They contend extraordinary relief is necessary because the trial court exceeded its jurisdiction in making the order, and the order may be wholly or partly not appealable, being either tantamount to a finding of contempt or partly a consent judgment. The Goswicks have, however, also noticed an appeal from the judgment. We stayed the trial court order pending our review. We treat the matter as a direct appeal and discharge the writ as unnecessary.

The Goswicks essentially contend the court erred as a matter of law in finding their licensed facility operation to be a nonresidential use prohibited by a title covenant mutually agreed to by their predecessors in interest and all others purchasing lots within the Quiet Hills Subdivision. In the alternative, they urge enforcement of the restrictive covenant to prohibit their providing residential care and shelter to six unrelated elderly persons unconstitutionally infringes upon their right of privacy. Because we sustain the Goswicks’ first contention, we do not determine the broader issue of whether the constitutional right of privacy will always void private title covenants purporting to restrict a family residence from being used to operate any business in the absence of a showing such use negatively affects the residential character of the neighborhood, either visually or otherwise. (See People v. Williams (1976) 16 Cal.3d 663, 667 [128 Cal.Rptr. 888, 547 P.2d 1000]; People v. Gilbert (1969) 1 Cal.3d 475, 481, 484-485 [82 Cal.Rptr. 724, 462 P.2d 580]; Palermo v. Stockton Theatres, Inc. (1948) 32 Cal.2d 53, 65-66 [195 P.2d 1].)

Factual and Procedural Background

From 1971 through 1975, the Goswicks’ principal business activity was the operation of a nursing home in the City of Escondido. Records reveal they characterized their business as a sole proprietorship providing a service on which they generally reported a small to moderate profit. In 1976, the Goswicks purchased and occupied a 5,500 square-foot home in the Quiet Hills Subdivision of Escondido. Susan Fleet Welsch, also a subdivision homeowner, heads the subdivision’s architectural control committee. In 1955, the Quiet Hills declaration of restrictions was recorded against the Goswicks’ property and includes as its first restriction: “The property shall be used for single family residential purposes only.” The declaration of restrictions does not otherwise define “single family residential purpose” nor does it refer to community.care facilities as such.

Upon taking possession, the Goswicks prepared to operate the home as a residential care facility. Shortly thereafter, Welsch sued to enjoin the Goswicks from using their property in such a manner, arguing the proposed use violated the single-family residential purpose restriction. In 1977, the parties entered into a stipulated judgment, reciting (1) the Goswicks are subject to a private restrictive covenant limiting the use of the property to single family residential purposes, and (2) the operation of a “residential rest home or care facility” is not a single family residential purpose. The judgment contained a permanent injunction restraining the Goswicks from operating a residential rest home or care facility on the property.¹

On January 7, 1980, the Goswicks filed a declaratory relief action (Super. Ct. No. N 14098) seeking to have the stipulated injunctive judgment declared invalid due to changed circumstances in form of recently passed legislation. (See Health & Saf. Code, § 1566 et seq. infra.)² In July, the trial court (Super. Ct. No. N 7347) issued an “Order to Show Cause Re Contempt” based on a declaration by Welsch that the Goswicks were currently operating a residential care facility for six elderly ladies, violating the injunction and the restrictive covenant. On September 5, 1980, the trial court in the declaratory relief action sustained Welsch’s demurrer to the complaint without leave to amend because the relief requested should properly have been directly solicited in the injunction action itself.³ Although the demurrer was sustained, the full record in the declaratory relief action (N 14098) became part of the record in the contempt action (N 7347) by virtue of Welsch’s specific request for judicial notice pursuant to Evidence Code section 452, subdivision (d). Those materials were later referred to in various moving papers of the parties.

A hearing on the order to show cause came before the court in May 1981. The record, consisting entirely of declarations and exhibits, established the Goswicks were licensed by the county department of public welfare to provide room, board, and nonmedical care to not more than six elderly coresidents of their home. Signed contracts (entitled Admission Agreement (Boarding Home)) submitted to the trial court showed the Goswicks charged for these services at rates varying from $375 per month to $700 per month (a monthly total of $3,100).⁴ The home itself is a large residence with six full bedrooms, four baths, two living rooms and many amenities. The six elderly women currently in residence do not own or operate any automobiles. They require some assistance with housekeeping, shopping and, in some cases, bathing. The Goswicks do not advertise their facility and they employ no one to help operate their home or care for the residents.

By order dated May 14, 1981, the trial court determined the Gos-wicks’ activities violated the injunction previously issued pursuant to the stipulated judgment, and concluded the recently passed legislation had no effect on the injunction. It declined to issue a contempt finding, relying on the Goswicks’ good faith reliance on the new statutes and pointing to confusing advice which the Goswicks received from their attorney, but nonetheless assessed them for Welsch’s attorney fees ($4,000) based on the fact the injunction was violated. It also issued a cease- and-desist order requiring the Goswicks to evict the six elderly ladies within ninety days.

This Matter Is Properly Reviewed by Direct Appeal

The Goswicks’ declaratory relief action, challenging the propriety of the underlying injunction due to changed circumstances, in substance is a motion to dissolve or modify the injunction for changed circumstances. The Welsch contempt action sought enforcement of the injunction. Although the trial court, perhaps improperly, sustained the demurrer to the former action, it in essence consolidated it within the latter action by its judicial notice of the former and its express determination the new legislation had no effect upon the injunction. Consequently, the decision to enforce the injunction by issuing the cease and desist order is predicated upon an implied denial of the motion to dissolve, and is expressly appealable under Code of Civil Procedure section 904.1, subdivision (f). Accordingly, we discharge the writ as unnecessary and treat the matter as a direct appeal.

The Trial Court Abused Its Discretion in Failing to Modify the Injunction to Allow the Goswicks’ Use of Their Property as a Residential Care Facility Serving Six or Fewer Residents

It is settled that where there has been a change in the controlling facts upon which a permanent injunction was granted, or the law has been changed, modified or extended, or where the ends of justice would be served by modification or dissolution, the court has the inherent power to vacate or modify an injunction where the circumstances and situation of the parties have so changed as to render such action just and equitable. (Sontag Chain Stores Co. v. Superior Court (1941) 18 Cal.2d 92, 94-95 [113 P.2d 689]; Union Interchange, Inc. v. Savage (1959) 52 Cal.2d 601, 604 [342 P.2d 249]; Palo Alto-Meno Park Yellow Cab Co. v. Santa Clara County Transit Dist. (1976) 65 Cal.App. 3d 121, 130 [135 Cal.Rptr. 192]; Brunzell Constr. Co. v. Harrah’s Club (1966) 253 Cal.App.2d 764, 772 [49 Cal.Rptr. 667].) This principle governs even though the judgment providing the injunctive relief is predicated upon stipulation of the parties. (Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara County Transit Dist., supra, 65 Cal.App. 3d 121, 130.) The trial court’s decision to either continue, modify or dissolve a permanent injunction will not be set aside on appeal absent the establishment of an abuse of discretion. However, sound judicial discretion calls for modification of a stipulated injunctive decree when circumstances of law existing at the time of issuance have changed, making the original decree inequitable. (System Federation v. Wright (1961) 364 U.S. 642, 647 [5 L.Ed.2d 349, 353, 81 S.Ct. 348].)

The covenant which the injunction purports to enforce, limiting the use of the property to single family residential purposes, is one of several restrictions defined as “mutual equitable servitudes” included within the Quiet Hills declaration of restrictions. These servitudes were to be mutually imposed upon a tract of realty consisting of 24 lots “for the benefit of each and every lot and the owner or owners thereof, and with the right of enforcement of said conditions, and each of them, vested in the owner or owners of any one or more of said lots.” Such a set of restrictive covenants imposed against owners in a subdivision attempts to mutually restrict the actions of all owners for their mutual benefit. (See Sain v. Silvestre (1978) 78 Cal.App.3d 461, 465-466 [144 Cal.Rptr. 478], disapproved on other grounds in Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129 [158 Cal.Rptr. 1, 599 P.2d 83]; Werner v. Graham (1919) 181 Cal. 174, 183 [183 P. 945].) As mutual equitable servitudes, they individually become unenforceable absent mutuality of obligation. In other words, the declaration of restrictions operates much like a minizoning ordinance and accomplishes little if it does not apply equally to all lots in the subdivision. (See generally Comment, Validity Rules Concerning Public Zoning and Private Covenants: A Comparison and Critique (1966) 39 So.Cal.L.Rev. 409.) Thus, if we conclude a restrictive covenant, reasonably interpreted, does not now prohibit a given use of property by all other lot owners in the subdivision, it would be inequitable to continue to enforce that same prohibition against one lot owner merely because he is subject to a continuing injunction originally issued at a time when the covenant may reasonably have been interpreted to prohibit the use. Indeed, the courts exercise a general control over restrictions on use of land, and should refuse equitable enforcement by injunctive relief where the restriction is unreasonable or where enforcement is no longer equitable. (3 Witkin, Summary of Cal. Law (8th ed. 1973) Real Property, § 402, p. 2094.) Underlying this principle is the simple realization that time, circumstances and public policy may change the reasonable interpretation of a restrictive covenant. Accordingly, for the purposes of the instant case, we must determine whether social, economic and legal conditions have changed such that the covenant, limiting use of subdivision lots to single-family residential purposes, would currently be interpreted to prohibit operation of a residential care facility serving six or fewer persons.

We commence our task, cognizant of the established rule that “[restrictive covenants will be construed strictly against persons seeking to enforce them, and in favor of the unencumbered use of the property.” (Biagini v. Hyde (1970) 3 Cal.App.3d 877, 880 [83 Cal.Rptr. 875]; Ezer v. Fuchsloch (1979) 99 Cal.App.3d 849, 861 [160 Cal.Rptr. 486]; Sain v. Silvestre, supra, 78 Cal.App.3d 461, 474; Terry v. James (1977) 72 Cal.App.3d 438, 443 [140 Cal.Rptr. 201]; Lincoln Sav. & Loan Assn. v. Riviera Estates Assn. (1970) 7 Cal.App.3d 449, 463 [87 Cal.Rptr. 150].)

In 1978, the Legislature enacted article 7 of the Community Care Facilities Act (§ 1566 et seq.) which is entitled “Local Regulation.” The bulk of the article regulates local zoning ordinance interference with residential facilities⁵ serving six or fewer persons.⁶ (See in particular § 1566.3.) Section 1566 declares the public policy of this state “that each county and city shall permit and encourage the development of sufficient numbers and types of residential care facilities as are commensurate with local need.” However, section 1566.5 makes an explicit attempt to reach nongovernmental action: “For the purposes of any contract, deed, or covenant for the transfer of real property executed on or after January 1, 1979, a residential facility which serves six or fewer persons shall be considered a residential use of property and a use of property by a single family, notwithstanding any disclaimers to the contrary.”

The net effect of article 7’s enactment is that operation of a residential care facility serving six or fewer persons constitutes a single family residential use for the purposes of all governmental action and for the purposes of private covenants entered into after January 1, 1979. We recognize that the statutes do not attempt to reach covenants entered into before 1979. Nevertheless, article 7 constitutes a strong statement of public policy in favor of a broad interpretation of single family residential use in this area. (See Carr v. Kingsbury (1931) 111 Cal.App. 165, 168 [295 P. 586].)

Several recent cases from other jurisdictions⁷ dealing with similar fact situations support a conclusion the operation of a residential care facility is no longer inconsistent with single-family residential purposes. Of particular interest is the recent decision of the Montana Supreme Court in State, etc. v. District Court, etc., (1980) — Mont. — [609 P.2d 245], which involved circumstances substantially similar to this case. The Montana Legislature passed legislation designed to encourage community care facilities for developmentally disabled individuals.⁸ As part of the legislative package, a statute prohibited local governments from zoning to exclude community care facilities from single-family residential neighborhoods. (Cf. § 1566.3.) Although the legislation did not purport to affect private restrictive covenants, the Montana Supreme Court considered the statutes to be persuasive authority supporting an interpretation of “single-family residential” covenant as not excluding community care facilities. (State, etc. v. District Court, etc., supra, 609 P.2d 245, 247-248.) By comparison, here the California Legislature went one step further by directly regulating private covenants entered into after the passage of article 7. Surely this additional act aimed at furthering the purposes of the Community Care Facilities Act should not be viewed by the courts as a limitation upon the public policy articulated.

The result reached by the Montana Supreme Court is in accord with numerous recent decisions of courts in varying jurisdictions concluding the operation of small residential care facilities for persons with various disabilities is not inconsistent with single-family residential use restrictions. (See, e.g., J. T. Hobby & Son, Inc. v. Family Homes, etc. (1981) 302 N.C. 64 [274 S.E.2d 174]; Costley v. Caromin House, Inc. (Minn. 1981) 313 N.W.2d 21; Crowley v. Knapp (1980) 94 Wis.2d 421 [288 N.W.2d 815]; Malcolm v. Shamie (1980) 95 Mich.App. 132 [290 N.W.2d 101]; Bellarmine Hills Ass’n v. Residential Systems Co. (1978) 84 Mich.App. 554 [269 N.W.2d 673].) These decisions fortify a conclusion that the Quiet Hills declaration of restrictions should no longer be interpreted to preclude the Goswicks’ operation of a limited residential care facility.

Finally, recent changes in the social fabric convince us that operation of a residential care facility for six or fewer residents is not inconsistent with a single-family residential purpose restriction. Today, the family unit is rapidly losing its cohesiveness; urbanization, technological progress and social change have all contributed to its decline, causing law enforcement, educational institutions and social services to attempt, with mixed results, to fill the void. Nowhere has this effect been more pronounced than in the case of those members of our society unable to totally care for themselves. Where in times past the family unit provided support and care for the handicapped, the retarded, and most especially the elderly, family disintegration has left many of these individuals with few alternatives. (See generally, Nelson, The Burdens of Old Age on the Family, L.A. Times (Jan. 19, 1979).)

Recognizing that institutional care can seldom provide the kind of individualized support which can make the difference between productive self-actualization and unproductive stagnation, the Legislature has advocated the development of small community care facilities as a preferable alternative to hospitals, rest homes, and the like. (See § 1501.) These residences provide an alternative family structure offering the aid, encouragement and companionship necessary to help disabled persons realize their full potential. Given that purpose, we believe such facilities coincide with the traditional objectives and values associated with single-family residential neighborhoods.

In light of the foregoing, we conclude the covenant may no longer be read to prohibit the operation of a residential care facility serving six or fewer persons. Because the Goswicks may no longer equitably be enjoined from engaging in activities which every other lot owner in the Quiet Hills Subdivision is'free to pursue, the trial court abused its discretion in continuing to interpret the injunction as precluding this limited use and, thus, in failing to modify the injunction to permit the operation of a residential care facility serving six or fewer persons. Accordingly, we reverse the order and modify the injunction consistent with the language of the covenant so as to merely prohibit the use of the property in any manner inconsistent with a single-family residential purpose.

Disposition:

The order awarding attorney fees and directing the cease and desist order is reversed. The trial court is instructed to modify the underlying injunction so as to prohibit only those uses of the property not consistent with a singlerfamily residential purpose.

Wiener, J., concurred.

1 The judgment provides in relevant part: “IT IS HEREBY STIPULATED . . . that judgment in the above-entitled case be entered as follows:

“I. For Declaratory Relief in Favor of Said plaintiff:

« 11 ' v" —' '' 1

“E. That Paragraph First of the ‘Quiet Hills Declaration of Restrictions’ (Exhibit ‘B’ hereto) to which Defendants’ title is subject, specifically provides:

“‘FIRST: The property shall be used for single family residential purposes only.’

“F. That the operation of a residential rest home or care facility is not a single family residential purpose only and operation of such would be a breach and a violation of the conditions subsequent to Defendants’ title.

“G. That the violation of the foregoing would give rise to Plaintiff’s right to enjoin Defendants’ wrongful use of said property for the aforesaid purpose and/or to re-enter and have title quieted in Plaintiff’s name.

“II. FOR A PERMANENT INJUNCTION AGAINST DEFENDANTS:

“Enjoining and restraining Defendants and each of them, and their agents, servants, employees, representatives, and all persons acting under, in concert with, or for them, from operating a residential rest home or care facility on the property described in Exhibit ‘C’ hereto, or otherwise occupying, using, or maintaining said property in any manner inconsistent with a single family residential purpose only, or in violation of any of the conditions and restrictions contained in their title as set forth in Exhibits ‘A’ and ‘B’ hereto.”

2 All statutory references are to the Health and Safety Code unless otherwise specified.

3 Interestingly, Welsch argued in support of the demurrer that the proper procedure for the Goswicks to have followed was to attack the stipulated judgment by a motion to dissolve the injunction addressed to the issuing court. Since both actions were filed in the same court, the better procedure would have been for the trial court to consolidate them initially and treat the declaratory relief action as a motion to dissolve the injunction.

4 The contracts variously call for fees to be paid privately, or through social security and/or medicare. Some of the residents are required to give 14 days notice before leaving the facility. Each contract outlines the basic care services the Goswicks agreed to provide for the fee charged as follows: “COST OF CARE: (No CHARGES WILL BE Made Other Than Stipulated Below)

“Base rate includes the following services: room, board (three nutritious meals daily), a thorough cleaning and linen change weekly, transportation to doctor within a reasonable radius, personal laundry, access to a program of social recreational activities suited to this resident, daily observation of resident’s health, and supervision of medication. Help with personal cleanliness and grooming as necessary. Food will be delivered for temporary illness.

“No increase in rate will be made without prior approval of Community Services Division or Department of Public Welfare where Resident receives Public Assistance.

“Payment will be made: [X] in advance [ ] end agreed period”

5 Section 1502, subdivision (a)(1), defines “residential facility” as “any family home, group care facility, or similar facility determined by the director, for 24-hour, nonmedical care of persons in need of personal services, supervision, or assistance essential for sustaining the activities of daily living or for the protection of the individual.”

6 Section 1566 states that “‘six or fewer persons’ does not include the licensee or members of the licensee’s family or persons employed as facility staff.”

7 We are aware of only one California case which has touched on this issue. In the 1972 case of Seaton v. Clifford (1974) 24 Cal.App.3d 46 [100 Cal.Rptr. 779], the court concluded a single-family residential purpose covenant was violated by the operation of a care facility for six mentally retarded adults. Since the issue we address here is one of changed circumstances in a rapidly developing area of social concern subject to continuing legislative scrutiny, a 10-year-old case is of limited persuasive value. Additionally, the court’s opinion in Seaton does not make clear the extent to which the factual peculiarities of that care facility were inconsistent with a single-family residential environment. In this case, there is no evidence the use is not consistent with the attributes normally associated with a family residential environment.

8 The relevant statute defined such a facility as one serving not more than eight developmentally disabled persons. (State, etc. v. District Court, etc., supra, 609 P.2d 245, 247.)