KL & JL Investments, Inc. v. Lynch
472 S.W.3d 540
Ky. Ct. App.2015Background
- The Montgomerys originally owned a Parent Tract, subdivided into 12 lots in the mid-1970s; eight deeds contained near-identical restrictive covenants limiting each lot to one single-family residence and prescribing construction standards.
- A subdivision plat showing twelve lots was prepared by William Montgomery but was never recorded; some purchasers were shown the plat.
- KL & JL Investments purchased one of the restricted five-acre lots in 2010, obtained local approval to subdivide it into five one-acre lots for sale, and secured a purported release of the restrictions from Eunice Montgomery (the surviving original grantor).
- Neighboring lot owners (the Property Owners) sued in Hardin Circuit Court seeking declaratory relief and an injunction, alleging the restrictive covenants run with the land and bind KL & JL Investments.
- The circuit court found the covenants ran with the land, enjoined KL & JL Investments from placing more than one residence on its lot, and held Eunice Montgomery’s release ineffective because subsequent grantees relied on the restrictions.
- On appeal, the video bench-trial record was missing; the court noted CR 75.18 remedies were available but not used and therefore presumed the missing record supported the trial court’s decision.
Issues
| Issue | Property Owners' Argument | KL & JL Investments' Argument | Held |
|---|---|---|---|
| Do the deed restrictions run with the land (mutually enforceable restrictive covenant)? | Restrictions were intended as part of a general plan; deed declares covenants "shall run with the land"; privity and "touch and concern" exist. | Restrictions inconsistent/ambiguous because omitted from 4 of 12 lots; not intended to bind subsequent grantees beyond grantor. | Affirmed: restrictions run with the land; substantial evidence supports general plan, privity, and that covenants touch and concern the land. |
| Was Eunice Montgomery’s later release effective to remove the restrictions? | Release is ineffective because subsequent purchasers relied on the restrictions and covenants benefit grantees. | Grantor can release restrictive covenants she formerly imposed. | Affirmed: release ineffective; original grantor cannot unilaterally change scheme after sale to grantees. |
| Should a changed neighborhood void the covenants? | N/A (Property Owners argued restrictions remain in effect). | Neighborhood change and surrounding development materially altered character, so covenants should be invalidated. | Rejected: insufficient change within the subdivision itself; changes beyond the subdivision do not void covenants here. |
| Does the missing video trial record require reversal? | N/A (Property Owners benefited). | Missing record prevents appellant from citing testimony, warrants reversal or remand. | Rejected: appellant failed to use CR 75.18 to prepare a settled narrative; appellate court presumes omitted record supports trial court. |
Key Cases Cited
- Bagby v. Stewart’s Ex’r, 265 S.W.2d 75 (Ky. 1954) (change-in-neighborhood and enforcement of subdivision restrictions)
- Colliver v. Stonewall Equestrian Estates Ass’n, Inc., 139 S.W.3d 521 (Ky. Ct. App. 2003) (restrictive-covenant interpretation is reviewed de novo)
- Oliver v. Schultz, 885 S.W.2d 699 (Ky. 1994) (requirements for covenants running with the land and limits of collateral-chain notice)
- Parrish v. Newbury, 279 S.W.2d 229 (Ky. 1955) (original developers cannot alter general scheme after lot sales without lot owners’ acquiescence)
- Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409 (Ky. 1998) (standard for substantial evidence review of factual findings)
- Humana, Inc. v. Metts, 571 S.W.2d 622 (Ky. Ct. App. 1978) (subsequent grantees may enforce covenants that run with the land)