Estates at Prairie Ridge Homeowners Assn. v. Korth
298 Neb. 266
Neb.2017Background
- Developer recorded restrictive covenants for The Estates at Prairie Ridge in 2003; covenants restrict certain "external improvements," storage of things "obnoxious to the eye," and "nuisance or annoyance" activities.
- In 2004 the Korths purchased a lot, submitted construction plans, and originally painted their house an earth tone after Developer disapproved a proposed blue color.
- Ten years later the Korths repainted the house blue without seeking Developer/HOA approval. Developer had assigned its covenant enforcement rights to the HOA in 2015.
- The HOA sued seeking declaratory and injunctive relief: a finding of willful violation, an order to submit an earth-tone substitute color, and an order to repaint.
- The district court found the repainting was an "external improvement," the blue was "a nuisance, annoyance, and obnoxious to the eye," and ordered repainting to an earth tone; the Korths appealed.
Issues
| Issue | Plaintiff's Argument (HOA) | Defendant's Argument (Korths) | Held |
|---|---|---|---|
| Whether covenants give HOA/Developer control over exterior paint color | Painting is an "external improvement" subject to prior approval | Covenants do not mention paint color; repainting is not a new improvement | Repainting is not governed by §1, art. I, §2—plain language does not cover paint color |
| Whether terms "external improvement," "nuisance or annoyance," and "obnoxious to the eye" are ambiguous | Terms should be read broadly to include paint color and its effect on neighborhood | Terms are unambiguous and limited by their wording (e.g., "storage" qualifier) | Terms are not ambiguous and do not encompass repainting or paint color |
| Whether repainting can be characterized as a "nuisance or annoyance" or "obnoxious to the eye" under covenants | Community testimony that blue color "clashed" supports nuisance/obnoxious finding | Covenant language limits nuisance/activity to things "carried on upon any Lot" and storage; paint color is not an ‘‘activity’’ or ‘‘storage’’ | Covenant language does not reach exterior paint color; resident opinions cannot expand plain text |
| Whether extrinsic evidence of Developer intent or past practice can control interpretation | Developer and residents' testimony show intent to control color; prior approvals of color support HOA | Restrictive covenants must be interpreted from the document; extrinsic evidence not allowed when language is unambiguous | Court rejected extrinsic evidence where covenants are unambiguous; intent must be read from the covenants themselves |
Key Cases Cited
- Kalkowski v. Nebraska Nat. Trails Museum Found., 290 Neb. 798, 862 N.W.2d 294 (2015) (defining "improvements" in context of farm lease and distinguishing improvements from ordinary repairs)
- Tyler v. Tyler, 253 Neb. 209, 570 N.W.2d 317 (1997) (held exterior painting could be treated as an "improvement" in marital property valuation context)
- Southwind Homeowners Assn. v. Burden, 283 Neb. 522, 810 N.W.2d 714 (2012) (restrictive covenants must be construed to effect parties' intent and are not favored; ambiguities construed to maximize property use)
- Mutual of Omaha Bank v. Watson, 297 Neb. 479, 900 N.W.2d 545 (2017) (appellate standard in equity actions: de novo review of facts and law)