Defendant Dalton intended to erect a housing development named the Saratoga subdivision on the northern part of Lot 4 within a platted subdivision known as Equestrian Heights. The plans for the “Saratoga subdivision” included six row houses, two parking spaces, a water treatment facility (bioswale), and a retaining wall. Plaintiff Kramer, who owned a different part on Lot 4, filed an action to enjoin the Saratoga subdivision on the grounds that it was prohibited by the Equestrian Heights Protective Covenant.
The trial court granted summary judgment to Plaintiff as to the row houses, holding the “one single family dwelling” restriction in the covenant prohibited defendant from constructing a second house on the shared lot. The trial court also enjoined the construction of the bioswale, retaining wall and parking space, because the statement “no lot shall be used except for residential purposes” in the covenant, interpreted in conjunction with other provisions of the covenant, required that any use of the lot be related to the existing residence on Lot 4. Defendant appealed this judgment, arguing the trial court’s reading of “residential purposes” placed a restriction that does not appear in the text of the covenants and therefore cannot be asserted by the court.
The Court of Appeals of Oregon applied an analysis similar to one used in another case in an Oregon court to determine the correct meaning of the covenant language by examining the text of the disputed provision in the context of the document as a whole. The Court held that the text, when read in isolation, did not immediately resolve the dispute because the ordinary meaning of “residential” is “used, servicing or designed as a residence or for occupation by residents,” or “relating to or connected with residence or residences,” and thus the covenant could plausibly refer to a use that serves or is connected to any residence or residences, or it could mean a use related to, connected to, or serving particular residences.
However, when applied to the context of the restriction at issue in this case, the court found only one plausible interpretation, which was that each lot must be used exclusively for purposes related to the single family dwelling on that lot- the only residence permitted or even countenanced by the covenants.
The term “residential purposes” taken in the context of the title of the article, “Land Use and Building Type”, in conjunction with further language of the article that provides exceptions to building limitations, demonstrated that “residential purpose” in the context of the covenant refers exclusively to single family dwellings. The court further reasoned that if the phrase “residential purpose” was to refer to a purpose that serves any residence, the language would have been in the section dealing with “Business and Commercial uses.” But, since the “residential purposes” requirement was within the section that tied the use of the property to certain residences, the text was not isolated and the “use” of any of the lots within Equestrian Heights must be connected to the single-family dwelling on that lot.
The Court of Appeals affirmed the judgment of the trial court holding that the parking spaces, bioswale, and retaining wall violated the terms of the Equestrian Heights Protective Covenant because they were beneficial to the Saratoga subdivision only and not to the existing single family residence on Lot 4.
Kramer v. Dalton Co., 2010 WL 2292494 (Or.App., 6/9/2010).
The decision can be accessed here.
