Fort Pierce Industrial Park Phases II, III, & IV Owners Ass'n v. Shakespeare
379 P.3d 1218
Utah2016Background
- Fort Pierce Industrial Park Owners Association (Association) enforces CC&Rs that require Board approval before constructing structures and authorize the Board to consider suitability, harmony with surroundings, and effect on neighboring outlook; CC&Rs also reference St. George ordinances and include a two-business-per-lot limit unless the Board grants written consent.
- In 2009 the Shakespeares (property owners and lessee Atlas Tower) applied to build a cell tower on a small River Road lot that already had two businesses; St. George city granted required approvals, but the Association’s Board denied the application citing aesthetics, the two-business limit, and a policy to minimize tower proliferation and encourage collocation.
- Despite the Board’s denial, the Shakespeares built the tower; the Association sued for breach of the CC&Rs; Shakespeares counterclaimed seeking relief and fees.
- The district court found breach but concluded the Board lacked authority to limit the number of towers, applied a strict-construction rule for restrictive covenants, held the Board’s denial unreasonable (so tower could remain), found the denial timely, and awarded the Shakespeares 50% of attorney fees.
- Utah Supreme Court rejected strict construction of restrictive covenants (interpreting them like contracts), held the CC&Rs gave the Board authority to deny based on collocation/need, aesthetics, and the two-business rule, affirmed denial was timely, reversed the district court’s holding that the denial was improper, struck the fee award, and remanded fee determination consistent with its decision.
Issues
| Issue | Plaintiff's Argument (Association) | Defendant's Argument (Shakespeares) | Held |
|---|---|---|---|
| Proper standard for interpreting restrictive covenants | Restrictive covenants should be interpreted like contracts (neutral principles) | District court treated covenants as disfavored and strictly construed | Court: interpret restrictive covenants under contract rules; reject strict construction |
| Whether CC&Rs authorize Board to limit number of cell towers / consider collocation and city policy | Board has discretion to consider suitability, harmony, city wireless ordinances, and limit proliferation/call for collocation | CC&Rs do not expressly permit limiting number of towers; Board cannot override city approval | Court: CC&Rs, read as a whole, grant Board authority to deny based on need, collocation, aesthetics, and two-business limit |
| Whether Board reasonably applied its authority (business judgment) | Board acted within its discretion, in good faith, and applied relevant factors | Board acted unreasonably/arbitrarily; factors were pretext for preferring another site | Court: district court erred; Board acted within its discretion and good faith; business judgment challenge fails |
| Timeliness of Board’s denial under 60-day rule | Sixty-day clock restarts when applicant supplements materials (Oct 15 submission); denial Dec 10 was timely | Clock began at earlier submission (Oct 7); denial untimely | Court: application was finally submitted Oct 15; denial was within 60 days; summary judgment affirmed |
Key Cases Cited
- Swenson v. Erickson, 998 P.2d 807 (Utah 2000) (restrictive covenants interpreted under contract rules)
- View Condo. Owners Ass’n v. MSICO, L.L.C., 127 P.3d 697 (Utah 2005) (Declarations construed like contracts; unambiguous covenants enforceable as written)
- St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d 194 (Utah 1991) (disfavored-strict-construction language discussed as dicta)
- Utah Farm Bureau Ins. Co. v. Crook, 980 P.2d 685 (Utah 1999) (contract terms interpreted in light of the whole agreement)
- State v. Rasabout, 356 P.3d 1258 (Utah 2015) (ambiguity requires analysis of the whole text rather than isolated terms)