Hensley v. Keith A. Gadd & JHT Props., LLC
560 S.W.3d 516
Mo. Ct. App.2018Background
- Hensley recorded Deed of Restrictions for Woodlawn Estates Sec. II: Lots 2–15 limited to single‑family residential use; Lot 1 expressly permitted single‑family, multi‑family, or commercial uses (commercial defined to include hotels).
- Gadd (owner of Lot 3; JHT owned Lot 2) advertised and rented the lots as short‑term "vacation rentals" (nightly/weekly), registered the operation with state as a hotel, and collected/transmitted applicable taxes.
- Neighbors complained about noise, parking, septic odors, and possible property damage from transient renters; trial court did not find the activities to meet the covenant's "nuisance" finding but noted the complaints.
- Hensley sued for violation of the Deed of Restrictions; Gadd counterclaimed for harassment. Parties agreed to a bench trial on depositions; trial court entered judgment for Hensley enjoining short‑term rentals and dismissed the harassment claim.
- Court of Appeals reversed the injunction, finding the restrictions ambiguous and construing them against the grantor; this Court granted discretionary review and reversed the Court of Appeals as to the injunction, affirming the dismissal of the harassment claim.
Issues
| Issue | Plaintiff's Argument (Hensley) | Defendant's Argument (Gadd) | Held |
|---|---|---|---|
| Whether short‑term/transient rentals violate the deed restrictions | Short‑term rentals advertised to the public are the functional equivalent of a hotel and thus a prohibited commercial use on Lots 2–15 | Restrictions allow rentals and contain no stated time limit; transient occupancy is still "residential" use | Short‑term/transient rentals here constitute hotel/commercial use prohibited on Lots 2–15; injunction warranted (restriction unambiguous) |
| Whether the deed restrictions are ambiguous or must be construed against grantor | Restrictions clearly limit commercial uses (including hotels) to Lot 1 and restrict Lots 2–15 to single‑family residential | Ambiguity exists because "rental" is permitted without a time limit; other owners conduct in‑home businesses, showing inconsistency | Restrictions are unambiguous given Lot‑1 carve‑out and definition of commercial; construed according to plain language, not against grantor |
| Waiver/changed‑neighborhood defense (failure to enforce against others) | No waiver: alleged other businesses were in‑home uses that did not change neighborhood character | Hensley permitted other business uses and rentals, so enforcement against Gadd is waived/arbitrary | No waiver; other alleged uses did not materially change neighborhood character and did not excuse short‑term hotel‑style rentals |
| Specificity of injunction & harassment counterclaim | Injunction must be specific; Hensley seeks enforcement of restrictions; dismissal of harassment proper because enforcement communications had legitimate purpose | Gadd contended injunction was too vague and harassment claim should survive | Court remanded for a more specific injunction consistent with CR 65.02; dismissal of harassment claim affirmed (trial court found no intent to harass and legitimate purpose) |
Key Cases Cited
- Triple Crown Subdivision Homeowners Ass'n, Inc. v. Oberst, 279 S.W.3d 138 (Ky. 2008) (restrictive‑covenant interpretation is a question of law; consider plain language and scheme)
- Robertson v. Western Baptist Hosp., 267 S.W.2d 395 (Ky. 1954) (each restriction case depends on instrument terms and facts)
- McFarland v. Hanley, 258 S.W.2d 3 (Ky. 1953) (instrument construed so every part has meaning; intent governs)
- Macy v. Wormald, 329 S.W.2d 212 (Ky. 1959) (interpretation of "residence" and single‑dwelling restriction)
- Clemons v. Meadows, 94 S.W. 13 (Ky. 1906) (hotel defined as place of lodging for the public; public character of hotels)
- Logan v. Logan, 409 S.W.2d 531 (Ky. 1966) (waiver/changed‑character defense requires fundamental change in neighborhood)