Equestrian Ridge v. Equestrian Ridge Estates II

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
03/19/2021 12:09 AM CDT
- 128 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128Equestrian Ridge Homeowners Association,
appellee, v. Equestrian Ridge Estates II
Homeowners Association, appellant.
___ N.W.2d ___
Filed January 8, 2021. No. S-20-239.
1. Jurisdiction: Appeal and Error. An appellate court’s review of whether
the district court had subject matter jurisdiction is a question of law and,
when it does not involve a factual dispute, is reviewed de novo.
2. Judgments: Appeal and Error. In a bench trial of a law action, the trial
court’s factual findings have the effect of a jury verdict, and an appellate
court will not disturb those findings unless they are clearly erroneous.
3. ____: ____. In a bench trial of a law action, an appellate court
resolves a trial court’s determination of law independently of the lower
court’s conclusions.
4. Standing: Jurisdiction: Parties. Standing refers to whether a party had,
at the commencement of the litigation, a personal stake in the outcome
of the litigation that would warrant a court’s exercise of its subject mat-
ter jurisdiction and remedial powers on that party’s behalf.
5. Standing: Parties. To have standing, the plaintiff must have some
legal or equitable right, title, or interest in the subject matter of
the controversy.
6. ____: ____. A plaintiff does not generally have standing to bring a case
on behalf of a third party.
7. Contracts: Standing: Parties. Third-party-beneficiary theory is a
­common-law doctrine that allows a nonparty to a contract to enforce an
interest owed by a promisor under the contract.
8. ____: ____: ____. The fact that a third party would be better off if a
contract were enforced does not give him or her standing to enforce
the contract.
9. Contracts: Parties: Intent: Proof. To enforce a contract, a third party
bears the burden of proving that he or she was an intended, not inciden-
tal, beneficiary of rights under the contract.
- 129 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 12810. Contracts: Words and Phrases. An intended beneficiary is one whose
rights and interest were apparently contemplated by the contract’s lan-
guage itself.
11. Contracts: Parties: Stipulations: Intent. To be those of an intended
beneficiary, a third party’s rights must appear by express stipulation or
it must appear by reasonable intendment that the rights and interest of
such unnamed parties were contemplated and that provision was being
made for them.
12. Contracts: Proof. The person seeking enforcement of a contract has
the burden of establishing the existence of a valid, legally enforceable
agreement, consisting of an offer, acceptance, and some meeting of
the minds.
13. Contracts. To be binding, an agreement must be definite and certain as
to the terms and requirements upon its parties.
14. ____. An enforceable contract must identify the subject matter and detail
the parties’ essential commitments to each other.
15. Contracts: Real Estate: Property: Words and Phrases. The difference
between an analysis based in real covenant law and one based in con-
tract law is that contracts concern primarily personal rights and duties,
while real covenants concern rights that run with property.
16. Contracts: Real Estate. Whereas personal contract rights are not bind-
ing on successors in interest, real covenants can be.
17. Contracts: Real Estate: Intent. There are generally three requirements
for a covenant, whether affirmative or negative, to run with the land:
(1) The grantor and the grantee must have intended that the covenant
run with the land, as determined from the instruments of record; (2) the
covenant must touch and concern the land with which it runs; and (3)
the party claiming the benefit of the covenant and the party who bears
the burden of the covenant must be in privity of estate.
18. Contracts: Real Estate: Intent: Appeal and Error. An appellate court
determines whether the grantor and grantee of a covenant had the intent
to bind successors in interest by referring to the instruments of record.
19. Contracts: Intent. Interpretation of instruments of record should be
performed in a manner that will give effect to the true intention of the
parties as expressed in the writings.
20. Contracts: Real Estate. As with any other contract, canons of construc-
tion are used only insofar as they are necessary to resolve an ambiguity
in the text of a covenant itself.
21. ____: ____. To touch and concern the land, the object of the covenant
must be annexed to, inherent in, or connected with the land.
22. ____: ____. The touch and concern requirement of a real covenant is
met when the covenant affects the legal relations—the advantages and
- 130 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128the burdens—of the parties to the covenant, as owners of particular
parcels of land and not merely as members of the community in gen-
eral, such as taxpayers or owners of other land. The covenant must
impose, on the one hand, a burden upon an interest in land, which on
the other hand increases the value of a different interest in the same or
related land.
23. ____: ____. The test of whether a covenant touches and concerns the
land is whether it tends directly or necessarily to enhance its value or
render it more beneficial or convenient to those by whom it is owned or
occupied. Those covenants that are generally held to run with the land
and to insure to the benefit of the assignee are such as ordinarily affect
the land itself and confer a benefit on the grantor.
24. Actions: Parties. Privity requires, at a minimum, a substantial identity
between the issues in controversy and a showing that the parties in the
two actions are really and substantially in interest the same.
25. ____: ____. Privity depends upon the relation of the parties to the sub-
ject matter and not their activity in a suit relating to it after the event.
26. Property: Parties: Words and Phrases. Privity is a mutual or succes-
sive relationship to the same rights of property. In its broadest sense,
privity is defined as mutual or successive relationships to the same
right of property, or such an identification of interest of one person
with another as to represent the same legal right or derivative interest
between parties.
27. Contracts: Parties: Assignments. Whereas a party assigns rights under
a contract, a party delegates duties.
28. Parties: Assignments. Parties should generally be free to assign rights
and delegate duties as they see fit, subject to certain limitations.
29. Contracts: Public Policy. Contract duties are generally delegable
unless prohibited by statute, public policy, or the terms of the con-
tract. Contractual duties are also not delegable if they involve the
personal qualities or skills of the obligor, in the absence of consent by
the obligee.
30. Contracts. Delegation to a third party of the duty to perform under a
contract requires an agreement between the obligor under the first con-
tract and a delegate. That is, the delegate must agree to be delegated the
obligor’s duty.
31. ____. A delegation of duties is not itself sufficient to bind its delegate to
perform the duties delegated.
32. Contracts: Claims: Breach of Contract. The mere delegation of a
performance imposes no duty on the delegate to perform. If the del-
egate performs the duty, the duty is discharged. If the delegate does
not perform the duty, the duty is not discharged, but any claim of the
obligee for breach is against the delegating party and not against the
- 131 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128delegate. The delegate is under no duty to perform unless it has under-
taken to do so.
33. Contracts: Assignments. Even if a delegate does not promise in so
many words to perform the duty of the delegating party, a court may
infer such a promise from the delegate’s conduct. Thus, if a party trans-
fers the entire contract, assigning rights as well as delegating perform­
ance, an assumption of those duties by the transferee will be inferred
from the acceptance of the transfer, unless the language or the situation
indicates the contrary.
34. Equity: Estoppel: Unjust Enrichment: Contracts: Real Estate.
Implied reciprocal servitude, unjust enrichment, and equitable estop-
pel are theories of recovery based not on the terms of a contract, but,
instead, on circumstances that demand judicial action to remedy an
injustice or inequity. They are generally conceived as alternatives to
enforceable covenants or provisions in a contract.
35. Contracts: Real Estate. An implied reciprocal servitude is created by
implication when no express real covenant applies.
36. Equity: Estoppel: Unjust Enrichment: Contracts. Unjust enrichment
and equitable estoppel claims are contract substitutes that courts apply
to prevent injustice.
37. Equity: Contracts: Real Estate. Where a contract or real covenant
itself is enforceable, its terms will not be displaced in equity.
38. Actions: Claims: Equity: Contracts. Although a party is permitted to
allege both a claim based in contract and in equity, once the terms of the
contract are found to be enforceable, those terms will generally control
and supersede other equitable actions.
39. Contracts: Appeal and Error. When the terms of a contract are
clear, an appellate court interprets the contract according to its terms’
plain meaning.
40. Contracts. Terms of a contract that are clear are given their plain and
ordinary meaning as a reasonable person would understand them.
41. ____. A contract must receive a reasonable construction and must be
construed as a whole.
42. ____. If possible, effect must be given to every part of a contract.
43. ____. A court is not free to rewrite a contract or to speculate as to terms
of the contract which the parties have not seen fit to include.
44. Contracts: Intent. A court should avoid interpreting contract provisions
in a manner that leads to unreasonable or absurd results that are obvi-
ously inconsistent with the parties’ intent.
Appeal from the District Court for Sarpy County: George
A. Thompson, Judge. Affirmed.
- 132 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128David L. Welch and Lisa M. Meyer, of Pansing, Hogan,
Ernst & Bachman, L.L.P., for appellant.
Thomas M. Locher and Amy M. Locher, of Locher, Pavelka,
Dostal, Braddy & Hammes, L.L.C., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Heavican, C.J.
I. INTRODUCTION
This case concerns the cost of maintenance for a private
street that connects two subdivisions to public roads. In 2010,
the subdivisions’ developers agreed to adopt covenants requir-
ing the subdivisions to share maintenance costs for the pri-
vate street. Both developers adopted such covenants. But in
2016, one subdivision modified its covenants to repudiate any
responsibility to pay for the street’s maintenance costs.
The other subdivision sued, claiming, among other things,
$18,732.74 in damages. The district court found for the plain-
tiff subdivision. We affirm.
II. FACTUAL BACKGROUND
Equestrian Ridge L.L.C. (ER) was a limited liability com-
pany established in 1995 by Ted Grace, individually, and
Duane Dowd, individually and on behalf of his business,
Dowd Grain Company, Inc. (Dowd Grain). Grace and Dowd
owned adjoining 80-acre tracts of land near Gretna, Nebraska.
Together the men agreed to contribute their tracts to ER and
to cooperate in developing the tracts into residential sub­
divisions. Grace’s tract, known as Equestrian Ridge Estates
(ERE), would be developed first. ERE was a rectangular tract
and bisected by a 1-mile stretch of 232d Street, a privately
maintained street running north to south from Lincoln Road to
Angus Road.
On November 20, 2004, Grace and Dowd executed a sec-
ond agreement (2004 Agreement). In it, each acknowledged
- 133 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128that ER had already contracted to sell 5 of the 15 lots that
had been developed in ERE. Eventually all 15 lots would
be sold, each subject to the authority of an Equestrian Ridge
Estates Homeowners’ Association (ERE HOA). But the next
step, according to the 2004 Agreement, would be to develop
Dowd’s tract, known as Dowd Grain Subdivision (DGS).
DGS was a trapezoidal tract, located east of ERE along
Shiloh Drive, which ran 2,000 feet south from Lincoln Road
before turning west and ending in a dead end near the border
with ERE.
Because DGS lots were only accessible by Shiloh Road,
which terminated in a dead end, Grace and Dowd also deter-
mined that accessibility to DGS’ lots should be improved by
extending Shiloh Road past its dead end to the west, across
the border with ERE. Accordingly, the 2004 Agreement stated
that “in the platting and subdivision of [DGS,] there will be a
connecting street [from the Shiloh Road dead end across ERE
land] to 232nd Street.”
To fulfill this purpose, Grace and Dowd agreed, inter
alia, that:
2. Dowd Grain will, through Subdivision Agreements,
Covenants, and provisions applicable to homeowner[s’]
associations or any combination of the foregoing, subject
[DGS] to a sharing of one third of the costs and expenses
of [ER] and [ERE HOA] in the repair and maintenance
of 232nd Street within [ERE]. The obligation for such
sharing of costs will begin when all public improvements
consisting of necessary utilities and interior streets in
[DGS] have been completed. When and if Lincoln Road
is paved the cost sharing shall be reduced from one third
to one fourth. These costs and maintenance expenses will
include road maintenance and resurfacing, maintenance
and repair of the bridge at the south end of 232nd Street
near Angus Road, snow removal, mowing of right-of-
way and maintenance of entrances at Angus Road and
Lincoln Road. . . .
- 134 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128....
4. The parties agree to execute any and all documents
necessary or appropriate to carry into effect the forego-
ing agreements.
....
8. . . . Grace and his related entities agree not to object
to [DGS].
9. The [ERE HOA] and each lot owner in [ERE] shall
be a third-party beneficiary of this Agreement.
The 2004 Agreement was signed by Grace, individually and in
his capacity as manager of ER, and by Dowd, individually and
in his capacity as president of Dowd Grain.
Also in the 2004 Agreement, Grace and Dowd agreed that
their cooperation in developing the tracts was complete. They
liquidated ER’s assets by allocating to each man ownership
over several of the remaining ERE lots and granting all of DGS
to Dowd. ER then dissolved in 2005.
From 2005 to 2010, Dowd developed 23 residential lots
within DGS, and he renamed the subdivision Equestrian Ridge
Estates II (ERE II). Shiloh Road, also known as 231st Street,
was also extended west to connect with 232d Street.
On January 12, 2010, before any individual lots were sold
in ERE II, Dowd, in his capacity as president of Dowd Grain,
signed and recorded a “Declaration of Covenants, Conditions,
Restrictions and Easements of [ERE II]” (Declaration). The
Declaration purported to govern an “[ERE II] Homeowners’
Association” (ERE II HOA) that had been formed by articles
of incorporation filed in 2007, and it required that all future
owners of the 23 lots in ERE II automatically became members
of ERE II HOA upon purchase of an ERE II lot.
As relevant here, the Declaration also provided:
The powers and duties to be exercised by [Dowd
Grain], and subsequently by the Board of Directors of
[ERE II HOA], shall include, but shall not be limited to,
the following:
- 135 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128(a) The . . . assessment for and payment of any tax
liability attributable to the Common Areas and facilities,
and the enforcement of the rules and regulations relating
to the Common Facilities.
The costs and maintenance expenses for 232nd Street
shall relate only to that portion of 232nd Street located
within [ERE], including the entrances at Angus Road and
Lincoln Road, and shall be in the amount of one-fourth
of the costs and expenses expended by [Dowd Grain]
and/or [ERE HOA] related to such matters. The costs
and maintenance expenses will include road maintenance
and resurfacing, maintenance and repair of the bridge
at the south end of 232nd Street near Angus Road, snow
removal, mowing of right-of-way and maintenance of
entrances at Angus Road and Lincoln Road.
(b) The fixing, levying, collecting, abatement, and
enforcement of all charges, dues, or assessments made
pursuant to the terms of this Declaration or [ERE II
HOA].
From 2010 to 2015, Dowd sold many of the lots within
ERE II and gradually relinquished control over the subdivision.
Dowd was initially a board member and was the first president
of ERE II HOA, but on July 7, 2015, in his personal capacity,
Dowd signed a letter titled “RESIGNATION,” resigning as “an
Officer and Director” of ERE II HOA. On the same day, in his
capacity as president of Dowd Grain, Dowd signed a document
entitled “Declarant’s Release, Relinquishment and Assignment
of Powers and Duties Under the Declaration of [ERE II].” The
document purported to “hereby release, relinquish and assign
to [ERE II HOA] any and all powers and duties of [Dowd
Grain] as provided in the Declaration.” The board members of
ERE II HOA formally accepted Dowd’s relinquishment docu-
ment during the board’s annual meeting on July 7. From that
date forward, the ERE II HOA board managed the subdivi-
sion and, until May 24, 2016, contributed its share under the
2004 Agreement of one fourth of all maintenance costs for
232d Street.
- 136 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128Around 2014, however, a dispute formed between ERE
HOA and ERE II HOA. In late 2014 or early 2015, the
board of directors for ERE II HOA met to discuss major road-
work that was expected along 232d Street. ERE HOA had hired
an engineering firm to provide cost estimates for repair of the
street’s bridge. At the meeting, ERE II HOA board members
complained that when ERE HOA made repairs to 232d Street,
it did so without the input of ERE II HOA. Board members for
ERE II HOA objected that they only ever learned about 232d
Street maintenance projects upon receiving invoices from ERE
HOA, typically without any explanation about the maintenance
for which they were being asked to contribute. ERE II HOA
board members also expressed concern that ERE HOA did not
contribute anything to the maintenance and upkeep costs of
ERE II HOA’s own private road, which connected Shiloh Drive
to 232d Street.
Based on these complaints, in early 2015, ERE II HOA
decided to amend its Declaration (Amended Declaration) to
remove any requirement of ERE II lot owners to contribute
to maintenance costs of 232d Street. ERE II HOA drafted
the Amended Declaration, which 77 percent of lot owners in
ERE II signed. Since May 24, 2016, ERE II HOA has refused
to contribute to 232d Street maintenance costs. ERE HOA has
paid the entire amount.
ERE HOA initiated this action on July 21, 2017. ERE HOA
filed a complaint in the district court for Sarpy County seek-
ing to declare the Amended Declaration null and void and to
require ERE II HOA to pay one-fourth of maintenance costs
for 232d Street pursuant to the 2004 Agreement. Specifically,
ERE HOA alleged seven theories for recovery: breach of con-
tract, breach of express covenant, breach of implied restrictive
covenant, unjust enrichment, equitable estoppel, specific per-
formance, and declaratory judgment. The parties agreed to try
the case to the court and stipulated to certain facts.
On February 20, 2020, after a bench trial, the district court
entered judgment for ERE HOA. It found that ERE II HOA
was a successor in interest to Dowd and DGS and that as
- 137 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128such, ERE II HOA was bound by the 2004 Agreement. The dis-
trict court also found that the 2004 Agreement’s requirement
that Dowd and DGS contribute to the costs of maintain-
ing 232d Street was given effect by Dowd’s adoption of the
Declaration. The district court also found that members of
ERE II HOA had purchased their lots subject to the Declaration,
with constructive notice of its covenant requiring contribution
for maintenance costs of 232d Street. Thus, the district court
held that ERE HOA “prevail[ed] on most, if not all[,] of the
theories set forth in the Complaint.”
ERE HOA was awarded $18,732.74 in damages for its past
due share of 232d Street maintenance costs. Additionally, the
district court ordered ERE II HOA to continue contributing its
share of costs for 232d Street maintenance and to not again
repudiate its obligation to contribute.
ERE II HOA filed a timely notice of appeal. 1
III. ASSIGNMENTS OF ERROR
ERE II HOA assigns, consolidated and restated, that the
district court erred in (1) finding that the 2004 Agreement was
enforceable against ERE II HOA, a nonparty to that agreement;
(2) finding that ERE II HOA breached its duty under the 2004
Agreement to contribute to 232d Street maintenance costs; and
(3) awarding damages, specific performance, and declaratory
relief to ERE HOA.
IV. STANDARD OF REVIEW
[1] An appellate court’s review of whether the district court
had subject matter jurisdiction is a question of law and, when it
does not involve a factual dispute, is reviewed de novo. 2
[2,3] In a bench trial of a law action, the trial court’s fac-
tual findings have the effect of a jury verdict, and an appellate
court will not disturb those findings unless they are clearly
1
See Neb. Rev. Stat. § 25-1912 (Cum. Supp. 2018).
2
See State ex rel. Malone v. Baldonado-Bellamy, 307 Neb. 549, 950 N.W.2d
51 (2020).
- 138 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128erroneous. 3 In contrast, when reviewing determinations of law,
an appellate court resolves the questions independently of the
lower court’s conclusions. 4
V. ANALYSIS
At its heart, this is a contract dispute that also involves real
covenants. ERE HOA claims that ERE II HOA was bound
by, and breached, a provision in the 2004 Agreement requir-
ing it to contribute to 232d Street maintenance costs; ERE II
HOA disagrees.
1. Standing
As an initial matter, before considering the merits of
ERE II HOA’s assignments of error, we must determine
whether ERE HOA had standing to bring an action to enforce
the 2004 Agreement. 5
[4-6] Standing refers to whether a party had, at the com-
mencement of the litigation, a personal stake in the outcome
of the litigation that would warrant a court’s exercise of its
subject matter jurisdiction and remedial powers on that party’s
behalf. 6 To have standing, the plaintiff must have some legal
or equitable right, title, or interest in the subject matter of the
controversy. 7 A plaintiff does not generally have standing to
bring a case on behalf of a third party. 8
ERE HOA’s suit here is based on the 2004 Agreement,
a contract to which it was not a named party. Indeed, the
2004 Agreement was signed by only two persons: Grace,
3
See State ex rel. BH Media Group v. Frakes, 305 Neb. 780, 943 N.W.2d
231 (2020).
4
See Nolasco v. Malcom, 307 Neb. 309, 949 N.W.2d 201 (2020).
5
First State Bank Neb. v. MP Nexlevel, 307 Neb. 198, 948 N.W.2d
708 (2020).
6
Id.7
Id. See, also, Neb. Rev. Stat. § 25-301 (Reissue 2016).
8
First State Bank Neb., supra note 5.
- 139 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128individually and in his capacity as manager of ER, and Dowd,
individually and in his capacity as president of Dowd Grain.
Still, ERE HOA contends it has standing to bring this action as
a third-party beneficiary under the 2004 Agreement.
[7-9] Third-party-beneficiary theory is a common-law doc-
trine that allows a nonparty to a contract to enforce an interest
owed by a promisor under the contract. 9 We have strictly con-
strued who may enforce a contract as a third-party benefici­
ary. 10 The fact that a third party would be better off if a contract
were enforced does not give him or her standing to enforce the
contract. 11 Rather, to enforce a contract, the third party bears
the burden of proving that he or she was an intended, not inci-
dental, beneficiary of rights under the contract. 12
[10,11] An intended beneficiary is one whose rights and
interest were apparently contemplated by the contract’s lan-
guage itself. 13 This generally means that the third party’s rights
must appear by express stipulation or it must appear by reason-
able intendment that the rights and interest of such unnamed
parties were contemplated and that provision was being made
for them. 14
Here, it appears that ERE HOA’s third-party rights as an
intended beneficiary were expressly recognized within the text
of the 2004 Agreement. Despite its execution between Grace
and Dowd, the 2004 Agreement stipulated that ERE HOA
“shall be a third-party beneficiary of this Agreement.”
9
See, generally, E. Allan Farnsworth, Contracts §§ 10.1 to 10.6 (4th ed.
2004); 13 Richard A. Lord, A Treatise on the Law of Contracts by Samuel
Williston § 37:1 et seq. (4th ed. 2013).
10
Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d
260 (2010).
11
Marcuzzo v. Bank of the West, 290 Neb. 809, 862 N.W.2d 281 (2015).
12
Western Ethanol Co. v. Midwest Renewable Energy, 305 Neb. 1, 938
N.W.2d 329 (2020).
13
Id.14
Podraza, supra note 10.
- 140 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128We view this as an express stipulation of ERE HOA’s rights
as an intended third-party beneficiary. Accordingly, we find
that ERE HOA met its burden of showing standing to bring
this action.
2. Enforcement of 2004 Agreement
Next, we consider the merits of ERE II HOA’s first assign-
ment of error. ERE II HOA assigns that the district court erred
in finding that the 2004 Agreement could be enforced against
ERE II HOA, a nonparty to the agreement. Alternatively, even
if the 2004 Agreement could be enforced against it, ERE II
HOA assigns that the district court erred in finding that ERE II
HOA had breached that agreement.
[12-14] The rules for enforcement of any contract are famil-
iar: The person seeking enforcement of the contract has the
burden of establishing the existence of a valid, legally enforce-
able agreement, consisting of an offer, acceptance, and some
meeting of the minds. 15 To be binding, the agreement must be
definite and certain as to the terms and requirements upon its
parties. 16 It must identify the subject matter and detail the par-
ties’ essential commitments to each other. 17
The parties here do not dispute that under these familiar
rules of contract law, the 2004 Agreement was binding—at
least as between Grace and Dowd, the parties named in the
agreement. But ERE II HOA was not named as a party to the
2004 Agreement. Thus, ERE II HOA contends that the 2004
Agreement, including its requirement to contribute to 232d
Street maintenance costs, could not bind ERE II HOA. At ERE
HOA’s urging, however, the district court held that ERE II
HOA was bound to contribute to 232d Street maintenance costs
under the 2004 Agreement. We agree.
15
See Acklie v. Greater Omaha Packing Co., 306 Neb. 108, 944 N.W.2d
297 (2020).
16
See id.17
See id.- 141 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128(a) Successor in Interest
to Real Property
While the district court held that ERE HOA prevailed “on
most, if not all of the [seven] theories [of recovery] set forth in
the Complaint,” the district court’s analysis implicitly focused
on the real property law of real covenants. It emphasized that
ERE II HOA “[was] a successor in interest of [DGS] and,
as such, [was] bound by [the covenant at issue in the 2004
Agreement,] which runs with the land in perpetuity.” A “suc-
cessor in interest” is defined as one “who follows another in
ownership or control of property . . . retain[ing] the same rights
as the original owner, with no change in substance.” 18
[15,16] The difference between an analysis based in real
covenant law and one based in contract law is that contracts
concern primarily personal rights and duties, while real cove-
nants concern rights that run with property. 19 Whereas personal
contract rights are not binding on successors in interest, real
covenants can be. 20
The general rules governing the running of covenants with
land are rooted in English common law. 21 Therein, it was first
stated that for a covenant to run with the land, it must touch
and concern the land and expressly bind assignees. 22
[17] Under the modern rule, there are generally three
requirements for a covenant, whether affirmative or nega-
tive, to run with the land: (1) The grantor and the grantee
must have intended that the covenant run with the land, as
determined from the instruments of record; (2) the covenant
must touch and concern the land with which it runs; and (3)
the party claiming the benefit of the covenant and the party
18
Black’s Law Dictionary 1732 (11th ed. 2019). Accord 73 C.J.S. Property
§ 59 (2014).
19
Regency Homes Assn. v. Egermayer, 243 Neb. 286, 498 N.W.2d 783 (1993).
20
See id. See, also, 21 C.J.S. Covenants § 6 (2016).
21
Regency Homes Assn., supra note 19.
22
Id. (citing Spencer’s Case, 5 Co. Rep. 16 a, 77 Eng. Rep. 72 (1583)).
- 142 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128who bears the burden of the covenant must be in privity of
estate. 23 We review whether each requirement, in turn, has
been met here.
(i) Intent to Bind
[18-20] The first requirement for a real covenant to run
with the land is that its original grantor and grantee must have
intended for it to bind successors in interest. 24 We determine
whether the grantor and grantee had this intent by referring to
the instruments of record. 25 Interpretation of such documents
should be performed in a manner that will give effect to the
true intention of the parties as expressed in the writings. 26 As
with any other contract, canons of construction are used only
insofar as they are necessary to resolve an ambiguity in the
text itself. 27
Under the plain terms of the 2004 Agreement, we find it
apparent that Grace and Dowd intended to sell their subdivi-
sion lots soon, while still subjecting those lots to various cov-
enants, including the requirement to contribute to 232d Street
maintenance costs. It was contemplated that these covenants
would bind lot owners in the future. For example, the covenant
at issue was expressed in the future tense: “Dowd Grain will,
though Subdivision Agreements, Covenants, and provisions
applicable to homeowner[s’] associations or any combination
of the foregoing, subject [DGS] to a [232d Street cost] sharing”
requirement. At the time the document was executed, no cov-
enants, declarations, or homeowners’ associations had yet been
established on either ERE or ERE II, yet the above-quoted
provision plainly anticipated them.
In addition, the next three sentences in the 2004 Agreement
likewise showed that Grace and Dowd intended to bind
23
See Brick Development v. CNBT II, 301 Neb. 279, 918 N.W.2d 824 (2018).
24
See id.25
See id.26
Standard Meat Co. v. Feerhusen, 204 Neb. 325, 282 N.W.2d 34 (1979).
27
Id.- 143 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128persons owning subdivision lots in the future to the require-
ment to contribute to 232d Street maintenance costs. First, the
obligation of Dowd’s subdivision to pay “will begin” when
the subdivision’s public utilities and streets were completed;
second, if Lincoln Road was paved, “the cost sharing shall
be reduced from one third to one fourth”; and third, the costs
Dowd’s subdivision would be required to pay “will include”
road maintenance, resurfacing, maintenance and repair of a
bridge, snow removal, and mowing. Each of these events
plainly had not yet occurred when the 2004 Agreement was
executed, but was anticipated to begin or continue as the sub-
divisions’ lots were sold.
Reading the instruments of record in total, we view them
as stating plainly the intention of Grace and Dowd to subject
future homeowners’ associations and lot owners in their subdi-
visions to the covenants of the 2004 Agreement, including the
requirement to contribute to 232d Street maintenance costs.
Thus, we find that the first element for a covenant to run with
the land is met.
(ii) Touch and Concern
The second element for a covenant to run with the land is
that it touches and concerns the land. 28 As the law of real cov-
enants has developed, the standard for a covenant to touch and
concern the land has grown muddled. We have acknowledged,
as have other jurisdictions, that “‘“[i]t has been found impos-
sible to state any absolute tests to determine what covenants
touch and concern land and what do not. The question is one
for the court to determine in the exercise of its best judgment
upon the facts of each case.”’” 29
[21] However, we generally consider a series of com-
mon factors that guide our touch and concern analysis. For
28
Brick Development, supra note 23.
29
Regency Homes Assn., supra note 19, 243 Neb. at 299, 498 N.W.2d at 791(quoting Neponsit P. O. Ass’n v. Emigrant I. Sav. Bank, 278 N.Y. 248, 15
N.E.2d 793 (1938)).
- 144 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128example, “‘[t]o touch and concern the land the object of the
covenant must be annexed to, inherent in, or connected with,
the land.’” 30
[22] Perhaps our clearest enunciation of what it means for
a covenant to touch and concern the land was a rule that we
adopted from the New York Court of Appeals:
[T]he touch and concern requirement of a real covenant
is met when the covenant affects the legal relations—the
advantages and the burdens—of the parties to the cov-
enant, as owners of particular parcels of land and not
merely as members of the community in general, such
as taxpayers or owners of other land. The covenant must
impose, on the one hand, a burden upon an interest in
land, which on the other hand increases the value of a dif-
ferent interest in the same or related land. 31
We consider briefly the facts of that New York Court of
Appeals case insofar as they are analogous here. 32 In that case,
purchasers of individual lots in a residential community had
objected to being required by covenants between their prede-
cessors in interest and the homeowners’ association to con-
tribute to the costs of maintaining roads, streets, and beaches
within the development. The court rejected the lot owners’
argument, holding that since the obligation to pay was tied
directly to the lot owners’ right to enjoyment of those roads,
streets, and beaches, it touched and concerned the land. 33 As
successors in interest to parties under the covenant, the lot
owners were obligated to contribute. 34
30
Id., 243 Neb. at 298, 498 N.W.2d at 790 (quoting Homeowners Assoc. v.
Sellers and Homeowners Assoc. v. Simpson, 62 N.C. App. 205, 302 S.E.2d
848 (1983)).
31
Id. at 299, 498 N.W.2d at 791 (citing Neponsit P. O. Ass’n, supra note 29).
32
See Neponsit P. O. Ass’n, supra note 29.
33
Id.
34
Id.
- 145 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128[23] Likewise, the Maryland Court of Special Appeals held,
in a case 35 relied upon by this court, 36 that a covenant to pay
an annual road charge was one that touched and concerned the
land while a fee to pay dues to a recreational and social club
was not. The Maryland court stated that the test of whether a
covenant touches and concerns the land is
“‘whether it tends directly or necessarily to enhance its
value or render it more beneficial or convenient to those
by whom it is owned or occupied. Those covenants that
are generally held to run with the land and to insure to
the benefit of the assignee are such as ordinarily affect the
land itself and confer a benefit on the grantor.’” 37
The court then found that because the fee for the recre-
ational and social club benefited the community as a whole
and did not increase the value of any individual lots, it did
not touch and concern those lots. “Property owners do not
need to use ‘social facilities.’” 38 In contrast, the annual road
charge did touch and concern the land because “the lot owners
must utilize the roads as a means of ingress and egress from
their respective homes and thus should be required to pay for
their maintenance.” 39
As in the above cases, the covenant at issue here burdens the
ERE II lot owners in a manner that is plainly related to the lot
owners’ use of their land. The 2004 Agreement states specifi-
cally that Dowd’s agreement to subject his subdivision to the
requirement to contribute to 232d Street maintenance costs was
in exchange for his lot owners’ ability to use 232d Street for
paved access to public roads.
35
Chesapeake Ranch Club v. CRC Members, 60 Md. App. 609, 483 A.2d
1334 (1984).
36
Regency Homes Assn., supra note 19.
37
Chesapeake Ranch Club, supra note 35, 60 Md. App. at 616, 483 A.2d at
1337 (quoting 20 Am. Jur. 2d Covenants § 35 (1965 & Supp. 1983)).
38
Chesapeake Ranch Club, supra note 35, 60 Md. App. at 616, 483 A.2d at
1338.
39
Id.- 146 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128When the 2004 Agreement was executed, the lot owners in
ERE II were unable to leave their lots via paved public roads.
Their only egress was Lincoln Road, which was unpaved. Yet
Grace and Dowd acknowledged that paved access to public
roads would increase the value of ERE II lots. Thus, paved
road access was inherent in and connected to ERE II lot own-
ers’ use and enjoyment of their land. In exchange for the bur-
den of being required to contribute to 232d Street maintenance
costs, Dowd afforded ERE II and its future lot owners the ben-
efit of paved access across 232d Street to public roads.
We find that the covenant in the 2004 Agreement to contrib-
ute to 232d Street maintenance costs touched and concerned
the land. The second element for a real covenant is met.
(iii) Privity of Estate
[24,25] The third element for a real covenant to run with
the land is that the party claiming the covenant’s benefit and
the party bearing its burden must be in privity of estate. 40 In a
similar context, when analyzing privity for purposes of claim
preclusion, we defined privity as requiring, “at a minimum,
a substantial identity between the issues in controversy and
a showing that the parties in the two actions are really and
substantially in interest the same.” 41 That is, “[p]rivity depends
upon the relation of the parties to the subject matter and not
their activity in a suit relating to it after the event.” 42
[26] Although not the deciding issue in our opinion, we
have also defined privity of estate in the context of express
covenants. 43 We stated:
40
Brick Development, supra note 23.
41
Kiplinger v. Nebraska Dept. of Nat. Resources, 282 Neb. 237, 248, 803
N.W.2d 28, 39 (2011), disapproved on other grounds, Banks v. Heineman,
286 Neb. 390, 837 N.W.2d 70 (2013).
42
Baer v. Southroads Mall Ltd., 252 Neb. 518, 524, 566 N.W.2d 734,
738 (1997).
43
See Gottsch v. Bank of Stapleton, 235 Neb. 816, 458 N.W.2d 443 (1990).
- 147 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128Privity has also been defined as “[m]utual or successive
relationship to the same rights of property. In its broad-
est sense, ‘privity’ is defined as mutual or successive
relationships to the same right of property, or such an
identification of interest of one person with another as
to represent the same legal right [or] [d]erivative inter-
est . . . between parties . . . .” 44
Here, under these definitions, there is strong evidence that
Dowd and ERE II HOA are in privity of estate. At the time
Grace and Dowd executed the 2004 Agreement, they agreed to
grant all of ERE II to Dowd. As ERE II’s owner, Dowd agreed
that before he sold the ERE II lots, he would subject them to
covenants requiring the lot owners to contribute to 232d Street
maintenance costs. Dowd did this via the Declaration.
ERE II HOA was formed in 2007 and assumed control
of ERE II, subject to Dowd’s covenants in the Declaration.
ERE II HOA’s board members were ERE II’s lot owners, all
of them having purchased their lots either from Dowd or from
his grantees.
Under these facts, we find that ERE II HOA is in privity
of estate with Dowd. ERE II, the same property that Dowd
once owned, is now controlled by ERE II HOA and owned
by ERE II HOA and ERE II’s lot owners. Dowd and these lot
owners are successive owners of the same land pursuant to
their deeds of purchase for the lots. This satisfies the third ele-
ment for a real covenant to run with the land.
ERE II HOA responds to this analysis by pointing to lan-
guage in the covenant stating that Dowd agreed to subject
DGS to the cost-sharing agreement. According to ERE II HOA,
it cannot be a successor in interest to DGS under the 2004
Agreement because DGS was never a legal entity.
But ERE II HOA’s argument here misunderstands the nature
of a real covenant. A real covenant binds successive owners
44
Id. at 838, 458 N.W.2d at 457 (quoting Black’s Law Dictionary 1079 (5th
ed. 1979)).
- 148 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128of land. 45 As analyzed above, ERE II HOA is in privity of
estate with Dowd. ERE II HOA does not dispute that Dowd
was a legal entity or that he signed the 2004 Agreement on
behalf of two legal entities: himself and Dowd Grain. As
ERE II HOA’s predecessor in interest, Dowd subjected his
land, DGS, to the covenant at issue here.
In this scenario, it matters not whether DGS was ever a legal
entity. Instead, DGS is merely the description Grace and Dowd
used for the land that would be subject to their covenants.
ERE II HOA’s argument here is without merit.
On our de novo review, we find that the three elements for
a real covenant here were met. Dowd’s promise in the 2004
Agreement to subject his subdivision to a requirement to con-
tribute to 232d Street maintenance costs was a covenant that
ran with the land. As such, we affirm the district court’s rea-
soning that ERE II HOA, as the successor in interest to Dowd,
was bound to contribute to 232d Street maintenance costs.
(b) Delegate of Contractual Duty
As analyzed above, the district court’s judgment rested
chiefly on an analysis based in the law of real covenants. Yet
another theory of recovery alleged in the complaint was that
the 2004 Agreement was enforceable against ERE II HOA
as a matter of simple contract law. According to ERE HOA,
although ERE II HOA was not named in the 2004 Agreement,
it was delegated Dowd’s duties under that agreement. The
district court implicitly found for ERE HOA on this theory of
recovery. We agree.
[27] Although we note that, under the law of real cov-
enants, our analysis above is itself adequate to find in favor of
ERE HOA, we find it important to nevertheless address ERE
HOA’s contract theory as well because we wish to clarify the
district court’s opinion. At issue here is whether Dowd del-
egated to ERE II HOA his duty under the 2004 Agreement to
45
See Regency Homes Assn., supra note 19.
- 149 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128contribute to 232d Street maintenance costs. Whereas a party
assigns rights under a contract, a party delegates duties. 46
[28,29] We have long recognized that parties should gener-
ally be free to assign rights and delegate duties as they see fit,
subject to certain limitations. 47 At common law, “[c]ontract
duties are generally delegable, unless prohibited by statute,
public policy or the terms of the contract. Contractual duties
are also not delegable if they involve the personal quali-
ties or skills of the obligor, in the absence of consent by
the obligee.” 48
[30] Delegation to a third party of the duty to perform under
a contract requires an agreement between the obligor under the
first contract and a delegate. 49 That is, the delegate must agree
to be delegated the obligor’s duty. 50 For example, in a 1988
case, Ames v. George Victor Corp., 51 we found a provision in a
contract sufficient to delegate an obligor’s duties under a first
contract to a delegate. The provision read: “‘[The corporation]
agrees to assume all the obligations of [the landlord] in said
subleases and shall be entitled to all rentals under said sub-
leases due and payable on July 1, 1984 and thereafter.’” 52
Here, ERE HOA argues that Dowd delegated to ERE II
HOA his duty to pay for 232d Street maintenance costs when
he executed a document entitled “Release, Relinquishment
46
Burnison v. Johnston, 277 Neb. 622, 764 N.W.2d 96 (2009). See, also, 29
Richard A. Lord, A Treatise on the Law of Contract by Samuel Williston
§ 74:10 (4th ed. 2003); 3 E. Allan Farnsworth, Farnsworth on Contracts
§ 11.1 (3d ed. 2004).
47
See, e.g., Union P. R. Co. v. Douglas County Bank, 42 Neb. 469, 60 N.W.
886 (1894).
48
29 Lord, supra note 46, § 74:27 at 404. Accord Earth Science Labs. v.
Adkins & Wondra, P.C., 246 Neb. 798, 523 N.W.2d 254 (1994).
49
See 29 Lord, supra note 46, § 74:27.
50
See id.
51
Ames v. George Victor Corp., 228 Neb. 675, 424 N.W.2d 106 (1988).
52
Id. at 681-82, 424 N.W.2d at 111.
- 150 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128and Assignment of Powers and Duties Under the Declaration
of [ERE II].” Under the terms of that document, Dowd, on
behalf of Dowd Grain, stated that he “does hereby release,
relinquish and assign to [ERE II HOA] any and all powers
and duties of [Dowd Grain] as provided in the Declaration.”
As ERE HOA argues, this appears to state that it was Dowd’s
intention to delegate all duties under the Declaration to
ERE II HOA.
One of the duties named in the Declaration was the duty to
contribute to 232d Street maintenance costs. Specifically, in the
Declaration, Dowd stated:
The costs and maintenance expenses for 232nd Street
shall relate only to that portion of 232nd Street located
within [ERE], including the entrances at Angus Road and
Lincoln Road, and shall be in the amount of one-fourth of
the costs and expenses expended by [Dowd Grain] and/or
[ERE HOA] related to such matters.
To the extent that ERE II HOA argues that such delegation
was unclear or that it did not specifically mention Dowd’s
duties under the 2004 Agreement, the Declaration further pro-
vides that “[a]t such time as [Dowd Grain] no longer holds title
to any subdivision lot, any powers and duties not previously
released or relinquished shall be deemed to have been released
and relinquished.” This satisfied the requirement for an obligor
under one contract to delegate his or her duties to a delegate.
Thus, ERE HOA argued, and we agree, that Dowd lawfully
delegated to ERE II HOA the duty to contribute to 232d Street
maintenance costs.
[31,32] A delegation of duties is not itself sufficient to
bind its delegate to perform the duties delegated, however. To
the contrary:
The mere delegation of a performance imposes no duty
on the delegate to perform. If the delegate performs the
duty, the duty is discharged. If the delegate does not per-
form the duty, the duty is not discharged, but any claim
of the obligee for breach is against the delegating party
- 151 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128and not against the delegate. The delegate is under no
duty to perform unless it has undertaken to do so. 53
Similar to other areas of contract law, it is foundational that an
agreement to delegate duties is not formed until it is accepted
by the delegate. 54
Here, we find strong evidence that the delegate, ERE II
HOA, accepted Dowd’s delegation. After Dowd executed the
relinquishment letter quoted above, the board members of
ERE II HOA formally accepted it during the board’s annual
meeting on July 7, 2015. The minutes of the meeting state
as follows:
This annual meeting of the Members of [ERE II HOA]
was held pursuant to the notice attached to these minutes
on July 7, 2015 at 6:00 p.m. at 508 W. Angus Road,
Gretna, Nebraska.
The first order of business was the acceptance of
Declarant’s Release, Relinquishment and Assignment of
Powers and Duties under the Declaration of [ERE II].
Upon motion duly made, seconded and carried, this
Release, Relinquishment and Assignment was accepted.”
[33] Moreover, even if the minutes were not themselves
sufficient evidence of ERE II HOA’s undertaking Dowd’s
delegated duties, ERE II HOA’s conduct thereafter provides
further evidence of this undertaking. As one commentator
noted:
Even if a delegate does not promise in so many words
to perform the duty of the delegating party, a court may
infer such a promise from the delegate’s conduct. Thus,
if a party transfers the entire contract, assigning rights
as well as delegating performance, an assumption of
those duties by the transferee will be inferred from the
53
Farnsworth, supra note 9, § 11.11 at 723.
54
See Acklie, supra note 15.
- 152 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128acceptance of the transfer, unless the language or the sit­
uation indicates the contrary. 55
Here, ERE II HOA’s conduct provides persuasive evidence
that it accepted Dowd’s delegation of the duty to contribute
to 232d Street maintenance costs. After Dowd executed the
relinquishment letter, ERE II HOA took the action commanded
by the duty, writing at least three checks between March 4
and May 1, 2016, to ERE HOA for the costs of maintaining
232d Street. The checks were for the amounts of $5,500.82,
$3,385.12, and $423.14. Their subject lines stated “partial pay-
ment Road Repair,” “payment 2 to ERE I HOA,” and “Final
Road repair Payment.”
On our de novo review, we find that Dowd delegated to
ERE II HOA his duty under the 2004 Agreement to contribute
to 232d Street maintenance costs. And ERE II HOA accepted
that duty, both during its 2015 annual meeting and by its con-
duct thereafter. Thus, ERE II HOA, as delegate, owed Dowd’s
duty under the 2004 Agreement to contribute to 232d Street
maintenance costs. The district court’s judgment should be
affirmed as a matter of contract law.
(c) Enforcement in Equity
As an alternative to the above theories of breach based on
the 2004 Agreement itself, ERE HOA also alleged three other
theories of recovery based entirely in equity. Those theories
were implied reciprocal servitude, unjust enrichment, and equi-
table estoppel. Under these theories, ERE HOA argued that
even if the 2004 Agreement was not enforceable as a matter
of real covenant or contract law, its covenant to contribute to
232d Street maintenance costs should still be enforced as a
matter of equity.
55
Farnsworth, supra note 9, § 11.11 at 724-25. See, also, 1 Restatement
(Second) of Contracts, § 164 (1981); 3 Restatement (Second) of Contracts
§ 328 (1981).
- 153 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128The district court implicitly found for ERE HOA on each
of these theories, and ERE II HOA assigns this was in error.
We agree.
[34-36] Implied reciprocal servitude, unjust enrichment,
and equitable estoppel are theories of recovery based not on
the terms of a contract, but, instead, on circumstances that
demand judicial action to remedy an injustice or inequity. 56
They are generally conceived as alternatives to enforceable
covenants or provisions in a contract. 57 An implied recipro-
cal servitude is created by implication when no express real
covenant applies. 58 Likewise, unjust enrichment and equitable
estoppel claims are contract substitutes that courts apply to
prevent injustice. 59
[37,38] However, we have long held that where a contract
or real covenant itself is enforceable, its terms will not be dis-
placed in equity. 60 Although a party is permitted to allege both
a claim based in contract and in equity, once the terms of the
contract are found to be enforceable, those terms will generally
control and supersede other equitable actions. 61
As we have already held, the terms in the 2004 Agreement
at issue here are enforceable against ERE II HOA as a matter
of real covenant and contract law. Thus, there is no need for
a contract substitute theory to apply, rendering a judgment in
equity. Accordingly, we deem ERE HOA’s equitable claims
displaced and superseded. To the extent the district court
rested its judgment on these three equitable theories, it was
in error.
However, as analyzed above, the 2004 Agreement was
enforceable against ERE II HOA under both the law of real
56
See DH-1, LLC v. City of Falls City, 305 Neb. 23, 938 N.W.2d 319 (2020).
57
See id.58
Walters v. Colford, 297 Neb. 302, 900 N.W.2d 183 (2017).
59
See, DH-1, LLC, supra note 56; Brick Development, supra note 23.
60
See DH-1, LLC, supra note 56.
61
See id.- 154 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128covenants and the law of contracts. ERE II HOA’s first assign-
ment of error is without merit.
3. Breach of 2004 Agreement
ERE II HOA’s second assignment of error is that no breach
occurred. It argues that even if it was bound by the provision
in the 2004 Agreement requiring it to contribute to 232d Street
maintenance costs, ERE II HOA did not breach that provi-
sion when it modified the Declaration in 2016. Rather, ERE II
HOA contends, the 2004 Agreement required only that Dowd
“through Subdivision Agreements, Covenants, and provisions
applicable to homeowner[s’] associations or any combination
of the foregoing, subject [DGS] to a sharing of one third of the
costs and expenses of [ER] and [ERE HOA] in the repair and
maintenance of 232nd Street within [ERE].”
According to ERE II HOA, a plain reading of this provision
reveals that it imposed only a one-time duty on Dowd Grain to
take action in the future to “subject” ERE II to a requirement
to contribute to the maintenance costs of 232d Street. That one-
time duty was activated, ERE II HOA acknowledges, “when
all public improvements consisting of necessary utilities and
interior streets in [DGS] have been completed.”
But ERE II argues the 2004 Agreement’s language neither
specified for how long Dowd’s duty would last nor required
that it be more than a one-time duty. Thus, according to
ERE II HOA, it was within its rights to amend the Declaration
in accord­ance with its amendment procedure to repudiate
its obligation for 232d Street maintenance costs. After the
Declaration initially subjected ERE II to maintenance costs
and thus met Dowd Grain’s duty under the 2004 Agreement,
Dowd’s duty under the 2004 Agreement was discharged.
[39-42] When the terms of a contract are clear, we interpret
the contract according to its terms’ plain meaning. 62 Terms of a
contract that are clear are given their plain and ordinary
62
See Kaiser v. Allstate Indemnity Co., 307 Neb. 562, 949 N.W.2d 787 (2020).
- 155 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128meaning as a reasonable person would understand them. 63 A
contract must receive a reasonable construction and must be
construed as a whole. 64 And, if possible, effect must be given
to every part of a contract. 65
[43,44] A court is not free to rewrite a contract or to specu-
late as to terms of the contract which the parties have not seen
fit to include. 66 A court should avoid interpreting contract pro-
visions in a manner that leads to unreasonable or absurd results
that are obviously inconsistent with the parties’ intent. 67
By the plain meaning of the 2004 Agreement, we disagree
that the covenant at issue is susceptible to the interpretation
that ERE II HOA urges. Contrary to ERE II HOA’s stilted
interpretation of the 2004 Agreement, a natural reading of the
agreement’s plain language indicates that Dowd and his suc-
cessors in interest would be subject to a requirement to share
costs with ERE HOA for the maintenance of 232d Street. There
is nothing about the verb “to subject” that makes it necessarily
pertain to a one-time action, as ERE II HOA alleges. Rather,
“to subject” means “[t]o make subject or bring into subjec-
tion to the rule, government, power, or service of a superior”
or “[t]o make submissive or dependent; to bring into a state
of subordination.” 68
Just as ERE II HOA alleges that the 2004 Agreement did
not specify that Dowd’s subjecting his subdivision to the cost-
sharing requirement would not end, it also did not specify that
it would end. A reasonable interpretation of the provision is
that Dowd and his successors in interest would be, and would
remain, subject to the cost-sharing requirement. We do not
63
See id.64
Lassalle v. State, 307 Neb. 221, 948 N.W.2d 725 (2020).
65
Id.66
Id.67
Id.68
“Subject,” Oxford English Dictionary Online, http://www.oed.com/view/
Entry/192688 (last visited Dec. 31, 2020).
- 156 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128read into the provision a stipulation that Dowd and his succes-
sors will be subject to the requirement only until they unilater-
ally change it, as ERE II HOA now alleges. 69
Moreover, construing the provision at issue within the 2004
Agreement as a whole, there is strong evidence that it was
intended to operate on an ongoing basis. After the sentence
stating that Dowd will “subject” his subdivision to the cost-
sharing requirement, it makes provisions for how that cost
sharing will change as future events occur. For example, it
states that if Lincoln Road is paved, Dowd’s cost-sharing obli-
gation will reduce from one third to one fourth. And it implies
that cost sharing is expected to occur year after year, because
it stipulates that cost sharing includes a number of future,
anticipated needs annually: “road maintenance and resurfac-
ing, maintenance and repair of the bridge at the south end
of 232nd Street near Angus Road, snow removal, mowing of
right-of-way and maintenance of entrances at Angus Road and
Lincoln Road.”
This language indicates strongly that the parties’ intent was
that ERE II lot owners would continue to share the costs of
maintenance for 232d Street with lot owners in ERE. After
all, the 2004 Agreement suggests that in exchange for this
promise to contribute, Dowd received something significant: a
right to connect Shiloh Drive across ERE lots to 232d Street.
That right of connection did not terminate after one use, so
ERE II HOA’s obligation to contribute to 232d Street main-
tenance costs should also not be read to terminate after one
use. Instead, it was breached when ERE II HOA amended its
Declaration to eliminate the requirement to contribute to 232d
Street maintenance costs.
This case is distinguishable from Boyles v. Hausmann, 70
which ERE II HOA cites for support in its brief. In Boyles, the
issue before this court was solely whether certain restrictive
69
See Lassalle, supra note 64.
70
Boyles v. Hausmann, 246 Neb. 181, 517 N.W.2d 610 (1994).
- 157 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128covenants that a subdivision had modified by a majority vote
of lot owners in the subdivision were valid. A landowner had
challenged the covenants on the basis that they added new
requirements to his lot. 71 We generally agreed with the lot
owner, finding that the subdivision had not followed its own
procedure for amending covenants. 72
But that rule from Boyles is inapposite here. Whereas Boyles
dealt solely with the validity of certain covenants executed by
the homeowners’ association, this case deals with both Dowd’s
Declaration regarding the homeowners’ association ERE II
HOA and the 2004 Agreement executed between Grace and
Dowd. Even if we were to analyze this case under Boyles and
conclude that ERE II HOA had properly followed its pro-
cedures for amending the Declaration, that would not affect
ERE II HOA’s obligation to contribute to 232d Street mainte-
nance costs under the 2004 Agreement. ERE II HOA’s argu-
ment is without merit.
As a result, we hold that not only was ERE II HOA bound
by the 2004 Agreement, but that ERE II HOA breached that
agreement when it amended its Declaration and refused to con-
tribute to 232d Street maintenance costs. ERE II HOA’s second
assignment of error is without merit.
4. Remedy
Based on the above-discussed theories of legal and equitable
recovery, the district court granted ERE HOA three remedies,
to wit: The district court ordered $18,732.74 in damages, a
declaratory judgment that “any attempt to repudiate the obliga-
tion to contribute to the costs of upkeep and maintenance of
232nd Street without the specific notice and consent of those
who are benefitted by the Covenant in [ERE] subdivision is
prohibited,” and specific performance to “continue to contrib-
ute to the costs of upkeep and maintenance of 232nd Street as
provided for in the Covenant granted by the Declaration.”
71
See id.72
See id.- 158 -
Nebraska Supreme Court Advance Sheets
308 Nebraska Reports
EQUESTRIAN RIDGE v. EQUESTRIAN RIDGE ESTATES II
Cite as 308 Neb. 128On our de novo review, we find no error in the district
court’s award. First, damages were awarded for ERE II HOA’s
past breach of contract, and ERE II HOA does not dispute
that the amount awarded was reasonably certain and such as
might be expected to follow the breach. 73 Second, a declara-
tory judgment was awarded to declare ERE HOA’s rights under
the 2004 Agreement. 74 And third, specific performance was
awarded to require ERE II HOA to comply with its duty under
the 2004 Agreement. 75
ERE II HOA’s assignment of error here is the same as
before—that the 2004 Agreement was not enforceable against
it and that no breach of the 2004 Agreement occurred—but
we have found to the contrary. As analyzed above, the 2004
Agreement was enforceable against ERE II HOA, and ERE II
HOA breached that agreement when it repudiated its duty to
contribute to 232d Street maintenance costs.
Thus, we affirm the district court’s award of the three rem-
edies. ERE II HOA’s third assignment of error is without merit.
VI. CONCLUSION
The district court’s order granting judgment to ERE HOA
is affirmed.
Affirmed.
73
See TNT Cattle Co. v. Fife, 304 Neb. 890, 937 N.W.2d 811 (2020).
74
See State ex rel. Wagner v. Evnen, 307 Neb. 142, 948 N.W.2d 244 (2020).
See, also, Neb. Rev. Stat. § 25-21,150 (Reissue 2016).
75
See Johnson v. Nelson, 290 Neb. 703, 861 N.W.2d 705 (2015).