Appeal from Superior Court, King County. 93-2-04355-4. Honorable Marsha J. Pechman, Judge. Judgment Date: 1/31/94.
Authored by Barbara A. Madsen. Concurring: James M. Dolliver, Charles Z. Smith, Charles W. Johnson, Gerry L. Alexander. Dissenting: Richard B. Sanders, Richard P. Guy, Barbara Durham.
The opinion of the court was delivered by: Madsen
MADSEN, J. -- Members of the Mercia Heights homeowners association rejected Plaintiffs' building plans under a consent to construction clause in the subdivision's restrictive covenants. The trial court held that the association's rejection of the plans was unreasonable and arbitrary. The trial court further held the members jointly and severally liable for delay damages and attorney fees. The Court of Appeals affirmed and the homeowners sought review. We likewise affirm, but remand for determination of which individual association members shall be jointly and severally liable.
In 1992, Plaintiffs William and Carolyn Riss purchased lot 6 in Mercia Heights, a residential subdivision in Clyde Hill. The subdivision is subject to restrictive covenants recorded by the developer, which provide that new construction and remodeling must be approved by the Mercia Corporation, originally a nonprofit corporation consisting of the homeowners in the development. The corporation was administratively dissolved in 1985, and the subdivision is now governed by the homeowners as an unincorporated homeowners association which acts through an elected board of directors. The Mercia development includes many homes built in the 1950s which are one level or split-level ramblers. Many of the lots, which vary in shape, size, and slope, have distant views of Lake Washington, the Seattle skyline, and the Olympic Mountains.
The covenants, in existence since the 1950's, contain express restrictions on minimum square footage of residences, minimum setback requirements, and maximum roof heights, providing for homes with a minimum of 1,400 square feet and roof lines no higher than 20 feet above the highest point of finished grade on the lot. Paragraph 6 of the covenants provides that As to improvements, construction and alterations in Mercia Heights addition, the . . . Mercia Corporation shall have the right to refuse to approve the design, finishing or painting of any construction or alteration which is not suitable or desirable in said addition for any reason, aesthetic or otherwise . . . [considering]
harmony with other dwellings . . . the effect on outlook of adjoining or neighboring property and any and all other factors which in their opinion shall affect the desirability or suitability of such proposed structure, improvement or alterations. Clerk's Papers (CP) at 503. The covenants give the board of directors enforcement power and the authority to approve or disapprove construction or remodeling. The covenants provide that any lot owner may sue to enforce the covenants and the prevailing party is entitled to reasonable attorney fees and costs. In 1990, the covenants were amended to provide that a property owner aggrieved by a Board decision may appeal to the Mercia homeowners, who will meet and decide by majority vote, with proxies allowed, whether to overturn the Board's decision. Another amendment proposed in 1990 would have limited the height of new construction to the height of the existing dwelling on the lot unless written approval of a higher roof line was granted by the association. This amendment failed.
Plaintiffs wanted to remove the existing dwelling on lot 6 and construct a one-story home with a daylight basement. Plaintiffs submitted their plans to the homeowners' designee for covenant compliance and review. They were told that except in minor respects their plan satisfied the covenants. Plaintiffs knew the covenants required approval of the Board and the homeowners.
Following November meetings where the Board and homeowners discussed Plaintiffs' proposed plans, an open Board meeting was held December 9, 1992, to consider Plaintiffs' plans. Prior to this meeting, the president of the homeowners association and his wife took photographs holding poles in front of various Mercia residences to show how high 23 feet was as referenced against existing dwellings. A montage of these photographs was presented at the meeting. The trial court found this photographic study lacked precision, failed to take into account either the height restriction of the covenants or the City of Clyde Hill's height restrictions (measured from the original topography), and were inaccurate and misleading as to the effect of Plaintiffs' proposed residence. Plaintiffs' plans called for a roof height within the maximum restrictive covenant height of 20 feet above the highest point of finished grade on a lot; the proposed residence would have a roof height 11" feet above the highest point of finished grade, some five feet higher than the existing structure. Also prior to the meeting, another Board member sent a letter to all other lot owners expressing concerns with Plaintiffs' plans and, the trial court found, inaccurately representing the height and square footage of the proposed residence. See Exhibit 38.
Following the meeting, Plaintiffs were notified that the Board had rejected their plans. The Board's rejection was based upon the height of the structure, its bulk (width and depth), the design exterior finish, and proximity to neighboring houses. The letter notifying Plaintiffs of the rejection also explained that the Board was "not comfortable with giving specific guidelines at this time," and that "an arbitrary disapproval without any guidance would not be constructive." Exhibit 16. The Board said it would hire an architect to assist in describing guidelines that would allow Plaintiffs to design and construct a home on their property.
The architect the Board then consulted calculated the mass of the proposed home by adding square footage of the exterior surface walls when viewed in a plane, excluding the courtyard. This method was not communicated to Plaintiffs, and no comparison of their proposed home to other homes was made using this method. The architect recommended that a volume comparison be done, but none was made. On December 30, 1992, the Board president wrote to Plaintiffs, advising them of specific guidelines to aid in redesigning the house. The first required the roof line to remain at the same level as the existing structure to preserve views. The Board had never performed any view study or analysis, and Plaintiffs' evidence showed the proposed residence would not appreciably block views. The second guideline called for a 20 percent reduction in width and depth. Plaintiffs say this would result in a residence smaller than the existing residence. The sixth guideline concerned the width of the proposed residence; however, the proposed residence was 5 feet narrower than the existing residence. The remaining guidelines are not the subject of disagreement.
Testimony at trial also established that members of the homeowners association were concerned that lot 6 was special, or more visible to those entering the community.
Plaintiffs appealed the Board's decision to the homeowners. On January 2, 1993, the Board president wrote to the other Board members, urging them to assure a large turnout for the vote on Plaintiffs' appeal, or to vote by proxy, so that Plaintiffs would not be able to sway a small turnout. See Exhibit 40. *fn1 On January 8, 1993, the Board president wrote a letter to the owners advocating a vote against approval of Plaintiffs' plans at the January 18, 1993, meeting set to consider Plaintiffs' appeal. The homeowners voted against approval of Plaintiffs' plans. Defendants state that 24 of the 34 lot owners cast votes themselves or by proxy, and that the vote was 21-3 to reject Plaintiffs' proposal.
Plaintiffs brought this action against the homeowners individually, contending that the covenants were not enforceable, and, alternatively, that their plans complied with the covenants and the Board and association acted unreasonably in rejecting their plans. Five of the lot owners signed stipulations indicating they would not oppose Plaintiffs' proposed residence and they agreed to be bound by the court's decision. The remaining lot owners were defendants at trial.
The court ruled the covenants are binding, but it found the association acted unreasonably in rejecting Plaintiffs' plans. The court concluded that the covenants as written are reasonable, but do not permit the homeowners to impose restrictions more burdensome than those expressed in the covenants. Specifically, the court said that the homeowners could not restrict size, height, and proximity to neighbors beyond the minimum square footage and the maximum height restrictions, and the setback requirements set out in the covenants. The court concluded that paragraph 6's discretionary authority to reject proposals on the basis of design cannot be read as including authority to limit "bulk," i.e., size or scale. CP at 1633. The court concluded the association does have wide discretion to control design aesthetics, which the court reasoned included authority to reject, for example, a geodome, A-frame, or Tudor castle. The court also rejected the homeowners' concerns that lot 6 is special, saying that if special restrictions on a specific lot were desired, the covenants must clearly say so.
The court also concluded that the association acted unreasonably because it rejected Plaintiffs' plans without comparing the width and depth of other homes in the neighborhood to Plaintiffs' proposed residence, failed to thoroughly investigate, and relied upon inaccurate information.
The court ruled in favor of the association, however, on its rejection of the proposed exterior, Dryvit.
The court entered judgment declaring that Plaintiffs could build their proposed home, provided that they change the exterior finish to one reasonably specified by the association. Following trial on damages, which had been bifurcated from the liability issues, the court awarded Plaintiffs delay damages of $103,989.85, and attorney fees and costs of $102,250.31. The judgment was entered against the individual defendant homeowners jointly and severally.
The homeowners appealed. However, many of them subsequently moved to be dismissed from the appeal, and the Court of Appeals granted the motion. The remaining homeowners, the Appellants, are listed in the margin. *fn2 The Court of Appeals affirmed. Riss v. Angel, 80 Wash. App. 553, 912 P.2d 1028 (1996). Appellants then petitioned for review, which this court granted. Construction of Restrictive Covenants in General The court's primary objective in interpreting restrictive covenants is to determine the intent of the parties. Metzner v. Wojdyla, 125 Wash. 2d 445, 450, 886 P.2d 154 (1994); Mains Farm Homeowners Ass'n v. Worthington, 121 Wash. 2d 810, 815, 854 P.2d 1072 (1993); Lakes at Mercer Island Homeowners Ass'n v. Witrak, 61 Wash. App. 177, 179, 810 P.2d 27, review denied, 117 Wash. 2d 1013, 816 P.2d 1224 (1991). In determining intent, language is given its ordinary and common meaning. Metzner, 125 Wash. 2d at 450; Mains Farm, 121 Wash. 2d at 815; Krein v. Smith, 60 Wash. App. 809, 811, 807 P.2d 906, review denied, 117 Wash. 2d 1002, 815 P.2d 266 (1991). The document is construed in its entirety. Mountain Park Homeowners Ass'n, Inc. v. Tydings, 125 Wash. 2d 337, 344, 883 P.2d 1383 (1994); Burton v. Douglas County, 65 Wash. 2d 619, 622, 399 P.2d 68 (1965). The relevant intent, or purposes, is that of those establishing the covenants. Robert G. Natelson, Law of Property Owners Associations 2.5, at 61 (1989).
Historically, Washington courts have also held that restrictive covenants, being in derogation of the common law right to use land for all lawful purposes, will not be extended to any use not clearly expressed, and doubts must be resolved in favor of the free use of land. E.g., Burton, 65 Wash. 2d at 622 (citing Granger v. Boulls, 21 Wash. 2d 597, 152 P.2d 325, 155 A.L.R. 523 (1944)); Bersos v. Cape George Colony Club, 10 Wash. App. 969, 971, 521 P.2d 1217 (1974) (same); Fairwood Greens Homeowners Ass'n, Inc. v. Young, 26 Wash. App. 758, 761-62, 614 P.2d 219 (1980) (same). The Court of Appeals in this case applied the rule of strict construction against the drafter, reasoning that the homeowners are the drafters because they amended the covenants in 1990.
Washington courts have begun to question whether rules of strict construction should be applied where the meaning of a subdivision's protective covenants are at ...