Liberty Country Club v. Landowners
2011 Ind. App. LEXIS 1061
| Ind. Ct. App. | 2011Background
- Liberty Country Club developed Country Club Estates with protective covenants recorded in 1972, including Covenant 15 granting lot owners use of the club water as long as available and a promise to dedicate water lines to a public utility when practical.
- Covenant language states the Club assumes no responsibility for availability or purity of the water, while the club intends to dedicate lines to a public utility as soon as practical.
- Liberty advertised free water service to buyers; Homeowners purchased believing water would be potable and free of charge for long-term use.
- In 2003, Liberty's water failed testing for bacteria; service was interrupted for repairs costing over $6,000, and purification steps followed, with Liberty paying for treatment.
- IDEM ordered Liberty in 2004 to install a purification system; Liberty incurred over $4,000 to install it and continued treating water at significant cost thereafter.
- In 2008, Liberty sued for declaratory judgment arguing it had no obligation to provide purified water; the Homeowners cross-moved for summary judgment, which the trial court granted.
- The trial court found Covenant 15 created an affirmative duty to deliver potable water as long as water is available and noted reliance by Homeowners on Liberty's representations and free water offering.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Covenant 15 impose a duty to provide potable water? | Liberty argues covenant only allows use of water without guaranteeing purity, not a duty to purify. | Homeowners contends covenant and conduct require Liberty to provide potable water at no cost. | Yes; covenant imposes duty to deliver potable water while available. |
| How does the 'as long as same is available' language interact with purity responsibility? | Liberty reads the clause as absence of purity obligation, with no duty to purify. | Homeowners argues the overall covenant, especially contemporaneous conduct, implies potable water responsibility. | Potable water duty is inferred; the purity language is not abandoned by the availability clause. |
| Does Liberty estoppel by its course of conduct defeat its covenant-based defense? | Liberty contends estoppel not applicable or waived; Homeowners cites reliance on free water promises. | Homeowners asserts Liberty's past representations estop it from relying on restrictive covenant language. | Estoppel based on conduct is recognized; cannot now rely on restrictive covenant construction. |
| Did the trial court properly rely on covenant language and conduct to conclude a duty to provide potable water? | Liberty argues no duty to provide potable water given explicit language and absence of purification obligation. | Homeowners argues covenants and conduct show intent to provide potable water at no cost. | Yes; trial court correctly found a continuing duty to provide potable water. |
Key Cases Cited
- Howell v. Hawk, 750 N.E.2d 452 (Ind.Ct.App.2001) (covenant intent determined from language and parties' situation)
- Mayer v. BMR Properties, LLC, 830 N.E.2d 971 (Ind.Ct. App.2005) (covenant intent and surrounding circumstances determine meaning)
- Campbell v. Spade, 617 N.E.2d 580 (Ind.Ct.App.1993) (interpretation of covenants based on specific language and context)
- Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 997 (Ind.2009) (summary judgment standard of review)
- Stateman Ins. Co. v. Reibly, 371 N.E.2d 414 (Ind.App.1978) (estoppel based on insurer's prior course of conduct)