Leeman v. Troutman Builds, Inc. , 260 Va. 202 ( 2000 )

Present: All the Justices
HERMAN E. LEEMAN, ET AL.
v. Record No. 992258 OPINION BY JUSTICE DONALD W. LEMONS
June 9, 2000
TROUTMAN BUILDS, INC.
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Benjamin N.A. Kendrick, Judge
In this appeal we consider whether summary judgment was
properly granted in a dispute over a restrictive covenant.
I
Garfield Manor Corporation (“Garfield Manor”) subdivided
certain land in Arlington County into seven lots and recorded
the plat of the subdivision under the name “Oakcrest.” In
1927, Garfield Manor conveyed Lot 6B with a deed containing a
restrictive covenant that stated: “Not more than one dwelling
shall be erected on said lot except with written approval of
the vendor.” On June 3, 1958, the State Corporation
Commission terminated the corporate existence of Garfield
Manor.
On May 27, 1998, Troutman Builds, Inc. (“Troutman”) sent
a letter to each of the other ten landowners in the Oakcrest
subdivision stating that Troutman had a contract to purchase
Lot 6B from Joyce Faherty, James Holland, Jr., and Jon
Holland, and informing the landowners that the County had
preliminarily approved Troutman’s plans to subdivide Lot 6B
into two lots. The stated plan was for the Troutman family to
live in the existing house on the first resubdivided lot and
for Troutman to build a new house on the second resubdivided
lot. All homeowners were asked to waive the restrictive
covenant. In its letter, Troutman stated that the homeowners
in the subdivision were the successors to Garfield Manor and
that one owner’s refusal to waive the restriction could void
the project. After Troutman failed to get all the homeowners
to agree to waive the restrictive covenant, Joyce Faherty,
James Holland, Jr., and Jon Holland instituted a declaratory
judgment action against Garfield Manor in the Circuit Court of
Arlington County, Law No. 98-918 (“Faherty”). No notice was
given to the ten homeowners who had received Troutman’s letter
and no homeowners were named as parties.
On December 16, 1998, the trial court entered a default
judgment against Garfield Manor in the Faherty case, holding
that although the property at issue was burdened with the
restrictive covenant, the covenant was void because it was
impossible to perform “as no vendor [exists] to give
permission for the construction of a second dwelling on the
lot.”
On May 13, 1999, Herman E. and Mary E. Leeman and
their neighbors Raymund A. and Berta S. Plunkett filed a
bill of complaint for declaratory judgment against
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Troutman seeking a declaration that (1) the final order
in Faherty was not enforceable against them and, (2) the
restrictive covenant barring the construction of an
additional residence on the lot was enforceable against
Troutman. 1 Among the allegations in the bill are the
assertions that both the Leemans and the Plunketts own
property in the same subdivision and “are subject to and
protected by the same restrictive covenant derived from a
common grantor along with the Defendants.” After
referring to the subdivision plan and the specific
covenant against building more than one dwelling per lot,
they further alleged that the grant from Garfield Manor
“was intended to benefit all land and land owners from
the common grant so designated.”
Troutman filed its Answer and Grounds of Defense and
moved for summary judgment. The trial court granted
summary judgment in favor of Troutman, stating that “the
covenant at issue cannot be performed under any
circumstances because the vendor, Garfield Manor
Corporation, no longer exists and therefore can neither
grant nor deny permission to construct further dwellings
1
At some time after the conclusion of the Faherty
litigation, Joyce Faherty, James Holland, Jr., and Jon Holland
transferred their interest in the subject property to
Troutman.
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on the Property.” The order further stated: “by the
final order in [Faherty], . . . this court determined
that the covenant at issue is void as unenforceable as a
matter of law” and “more than 21 days has elapsed since
the entry of the final order in [Faherty]” and that
“there are no material facts at issue.” This appeal
followed.
The Leemans and Plunketts argue that the covenant in
question is not impossible to perform and that the prior
adjudication in Faherty is not binding upon them because they
were not parties to, and had no notice of, the proceedings.
Additionally, the Leemans and Plunketts maintain that the
pleadings sufficiently allege material questions of fact
concerning the interpretation of the covenant, thereby making
summary judgment inappropriate.
Troutman asserts that the “covenant at issue is based on
the continued existence of Garfield Manor Corporation to give
or deny permission to construct additional dwellings on the
Property. However, because Garfield Manor Corporation was
terminated, it can no longer give or deny that permission,
making the covenant impossible to perform.” Additionally,
Troutman maintains that the final unappealed order in Faherty
determining that the covenant was impossible to perform is
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binding upon the Leemans and the Plunketts and is dispositive
of the issues in this case.
II
The Leemans and the Plunketts allege in their first
assignment of error that “[t]he trial court erred in ruling
that an ex parte final order in a case involving the subject
matter restrictive covenant is binding on necessary parties
not named in the action in which the final order was issued.”
We have stated that:
One of the fundamental prerequisites to
the application of the doctrine of res judicata
is that there must be an identity of parties
between the present suit and the prior
litigation asserted as a bar. A party to the
present suit, to be barred by the doctrine,
must have been a party to the prior litigation,
or represented by another so identified in
interest with him that he represents the same
legal right.
Dotson v. Harman, 232 Va. 402, 404-05, 350 S.E.2d 642, 644
(1986).
The Leemans and the Plunketts were not parties to the
prior litigation in Faherty and were not “represented by
another so identified in interest with [them] that he
represents the same legal right.” We hold that the judgment
in Faherty does not preclude the Leemans and Plunketts from
maintaining the current action.
III
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Summary judgment is appropriate only when there are no
material facts genuinely in dispute on a dispositive issue.
Rule 2:21. See generally, Stone v. Alley, 240 Va. 162, 392
S.E.2d 486 (1990). Construction of a controlling document may
be an appropriate basis for summary judgment in Virginia, see
Vicars v. First Virginia Bank-Mountain Empire, 250 Va. 103,
458 S.E.2d 293 (1995)(construction of letter and other
instruments), but only where it is shown that the moving party
is entitled to judgment as a matter of law. See Rule 2:21;
Ciejek v. Laird, 238 Va. 109, 113, 380 S.E.2d 639, 641-42
(1989) (inappropriate to grant summary judgment based on
controlling document when the instrument is ambiguous, or
raises interpretation issues, requires parol evidence, or
turns on other proof of its meaning or the intentions of the
parties to the instrument).
Here, the trial court concluded that the termination
of Garfield Manor’s corporate existence made performance
of the covenant impossible. This conclusion was
erroneous. It is not impossible to perform the covenant.
The covenant literally requires that “not more than one
dwelling shall be erected on said lot.” Compliance with
the terms of the covenant is simple: no further
construction of dwellings may be made on the lot. See,
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e.g., Woodward v. Morgan, 252 Va. 135, 138, 475 S.E.2d
808, 810 (1996).
Additionally, issues of material fact which were not
susceptible of summary adjudication on the state of this
record include: (1) whether the covenant in the 1927 deed
was a personal right reserved to Garfield Manor or was a
covenant running with the land and, (2) whether the
grantor’s intent was to benefit common grantees with
similar restrictions, and create a common scheme of
development allowing neighboring landowners to enforce
equitable servitudes upon the subject property. “We have
recognized two separate and distinct types of restrictive
covenants: the common law doctrine of covenants running
with the land and restrictive covenants in equity known
as equitable easements and equitable servitudes.” Sloan
v. Johnson, 254 Va. 271, 274-75, 491 S.E.2d 725, 727
(1997). See also Mid-State Equip. Co., Inc. v. Bell, 217
Va. 133, 141, 225 S.E.2d 877, 884 (1976). A more
complete evidentiary record is necessary in the present
case to resolve these issues.
Troutman maintains that the covenant involved in
Allison v. Greear, 188 Va. 64, 49 S.E.2d 279 (1948), “is
almost identical to the covenant at issue”. Although
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some similarities exist, we declined to decide in Allison
one of the important issues raised in this case.
In Allison, the deed in question recited:
The parties of the second part, by accepting
this deed, covenant for themselves, their heirs
and assigns, that the real estate hereby
conveyed will not be used by the parties of the
second part, their heirs or assigns, for the
purpose of conducting thereon a mercantile
business, without the written consent of the
parties of the first part, or their children,
or grandchildren.
Id. at 65, 49 S.E.2d at 279. The grantors, who owned and
operated a mercantile establishment on neighboring
property, sought to prevent the grantees from operating a
mercantile establishment on their property. Id. at 65-
66, 49 S.E.2d at 279. The trial court issued an
injunction in enforcement of the covenant. Id. at 65, 49
S.E.2d at 279.
In reversing and vacating the injunction, we placed
great emphasis on the testimony of the grantors that the
purpose of the restriction was “the protection of our own
business interests and for the protection of our own
children.” Id. at 66, 49 S.E.2d at 280. The grantors
sold their lot, including the building in which they had
conducted a mercantile business, prior to the controversy
in question. Id. at 66, 49 S.E.2d at 279. We concluded:
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'From the language in the restriction itself
read in the light of its purpose as testified
to by the Greears, the conclusion is
inescapable that, if valid, it is not a
covenant running with the land. At most,
. . ., it is only a personal restriction which
can be released at the will of the grantors, or
their children, or their grandchildren, at any
time. It being a personal restriction for the
sole purpose of restraining competition in
their mercantile business, and they having sold
their business in 1945, they have no mercantile
business to protect. There is no evidence that
they intend, in the future, to reestablish such
a business, or that their children or their
grandchildren (the latter being infants) will
ever desire to open or conduct a mercantile
business in this neighborhood. Under these
circumstances, if the restriction were
originally valid, its duration, so far as the
grantors are concerned, continued only during
the time they were actually engaged in the
mercantile business, which terminated in 1945.
'In 14 Am. Jur., Covenants, at the end of
paragraph 205, it is clearly stated that, “A
covenant personal to one is terminated by his
death or by his ceasing to have an interest in
the property, his use of which is benefited by
the restriction.”
Id. at 67, 49 S.E.2d at 280.
In this case, the intent of the developer, Garfield
Manor, is relevant to determine whether the covenant in
question runs with the land or is personal in nature.
The language of the deed, which here recites that the
restrictions are to run with the land, is evidence of
intent but may not be dispositive of the question.
Significantly, in Allison, we reserved judgment
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concerning the rights of neighboring property owners,
stating:
Our decision is limited to the proposition that
the grantors are not entitled to equitable relief
under the facts. The questions that might arise
in the future as to the rights of the lot owners,
as between themselves, or as between themselves
and the grantors in the restriction are not
decided.
Id. at 67, 49 S.E.2d at 280.
IV
The trial court erred in deciding that the covenant
in question is unenforceable because of impossibility of
performance. Because material questions of fact are
placed into issue by the present state of the record in
this litigation, further determinations on the
enforceability and application of the covenant must await
factual submissions, and summary judgment was improper.
Rule 2:21.
Accordingly, we will reverse the judgment of the
trial court and remand for further proceedings consistent
with this opinion.
Reversed and remanded.
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