Daily Development for

Wednesday, December 3, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

SERVITUDES; RESTRICTIVE COVENANTS; "RESIDENTIAL ONLY:" A covenant prohibiting "business or trade" activity in a subdivision does not prohibit swimming lessons conducted by a homeowner's children for profit during the summer months.

Gabriel v. Cazier, 938 P.2d 1209 (Idaho 1997).

Plaintiff and defendant live across the street from each other in a subdivision burdened by a declaration of protective restrictions and covenants. The declaration prohibited any "business or trade or offensive or noxious activity from being carried on any lot in the subdivision." Defendant's children taught swimming lessons in their backyard pool during the summer months. Plaintiff sued defendant alleging that defendant violated the declaration by conducting business -- swimming lessons -- within the subdivision and by creating a nuisance.

The facts indicated that there was considerable increase in traffic volume on the street when the swimming lessons were being conducted. The facts also indicated that plaintiffs themselves had conducted a real estate business and a mail order business from their own home from time to time and had sold animals raised in their backyard.

The Idaho Supreme Court found the restrictive covenant ambiguous in that the types of business activities subject to prohibition are subject to several, conflicting interpretations. It indicated that the provision could be found to prohibit businesses that required the construction of separate commercial structures - such as shops, restaurants or office buildings - or could be construed to apply to all types of commercial enterprise, even those conducted solely in the home.

The court then examined the intent of the parties at the time the restrictive covenant was drafted and found that restriction did not reach the swimming lessons conducted by defendant's children, rather it included activities such as opening automobile repair shops and animal kennels. The court further concluded that defendant's activity did not constitute a nuisance because the swim lessons did not create an undue amount of noise and were conducted solely in defendant's backyard during reasonable hours of the day, the parking was confined to defendant's frontage, and the increased traffic was within the capacity of the subdivision's streets.

A concurrence would have decided the case on the more narrow grounds used by the trial court - that any objection to the defendant's activity had long since been waived as the "swim school" had been operating for eight summers and similar activities had occurred in three other homes within the subdivision. The concurring judge noted that in his opinion the activity in question clearly fell within the "business" prohibition and would have been enjoined had it been challenged immediately upon commencement when the subdivision had first opened.

Comment 1: The majority judges probably wanted to avoid finding a waiver here in order to uphold the enforceability of covenants in other situations. Further, their cataloged of the facts relevant to the nuisance aspect of the case indicates that the swimming classes were, in their view, completely inoffensive and should not have been barred. Thus, they adopted the approach of finding the covenant language "ambiguous" and construing it in favor of the activity in question. But such approaches carry a price. All language, of course, is inherently ambiguous. "Ambiguity" as a legal standard must be something more. It must mean that the language is reasonably susceptible of several differing interpretations in context and as applied. To find that language that does not meet this standard is nevertheless "ambiguous" is to invite subsequent trial courts to set aside clearly bargained for agreements because the trial court feels that some other rule ought to apply. This is bad real estate law. Some might argue, however, that it is still good residential covenant law. (See below).

Comment 2: The court is correct that one could argue that, in context, it was necessary to determine whether the subdivision rules prohibited only businesses requiring separate permanent structures. The language was ambiguous to that extent. Note, however, that the court, at least implicitly, concluded that the rules did go beyond prohibition of businesses requiring separate structures. The court's interpretation of the rules is foggy, apparently deliberately so. The court says at least that the rules were intended to apply to auto repair shops or animal kennels. Both such activities could be carried out either in the open or in existing garage structures. Separate buildings would not be required. Why the court views swimming lessons as different from auto repair shops or kennels remains unstated.

If the court is stating that only noxious activities are prohibited, then it is not giving proper weight to the fact that the covenant separately classifies and prohibits activities that are noxious, whether or not they involve a trade or business. Clearly the prohibition of trade or business activities was intended to apply even to activities that were not "noxious" in and of themselves.

Comment 3: It may be that the court is taking the view that it occupies a special role in interpreting residential covenants - a role that takes into account the fact that these covenants do not result from a careful negotiation process, but rather from the imposition of restrictions upon homeowners who may not have read them prior to buying their property and the enforcement of the restrictions somewhat haphazardly by volunteer neighborhood boards and a cozy and somewhat undemocratic association political process.

The editor concurs that these special facts may demand a special response from the law. But should the response be from the courts? And should the response be to "read out" of neighborhood restrictions those prohibitions that the judges would deem to be overreaching in their own neighborhoods? The fact that the swimming lessons didn't bother any of the other neighbors - or wouldn't bother the judges - perhaps is beside the point. The neighbors across the street had a property right they were entitled to have enforced.

Comment 4: One response to the problem might be to establish special legislative standards - as is done in the Uniform Common Interest Ownership Act - requiring that specific information about the neighborhood restrictions be delivered to buyers before they contract to buy. At least then it can be argued that the restrictions formed a part of the bargain. Then there is less justification for courts to decide independently whether to enforce.

Comment 5: Another response might be to adopt a different standard for injunctive relief in residential subdivisions. Perhaps where a given activity is prohibited specifically but strikes the court as inoffensive, and where an injunction would impair significantly the use and enjoyment of the defendant's residential property, the plaintiff should be left with a damages remedy, and the injunction should be denied. The Editor hesitates to recommend this approach, however, because in general he feels that courts ought to recognize that property interests involve unique values that injunctions ought to protect in most cases. In short, the Editor sees problems but no final solutions. Editor needs more swimming lessons too!!

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