931 N.W.2d 698
N.D.2019Background
- Wachter Development recorded a Declaration of Restrictions and Obligations (DRO) for the Promontory Point V subdivision on April 8, 2013; the DRO prohibited fences.
- Wachter had contracted to sell 30 lots to K&L Homes in April 2012; K&L contracted to sell a lot to the Martins in July 2012.
- K&L received fee title from Wachter on August 1, 2013; K&L conveyed the lot to the Martins in March 2014.
- The Martins installed a fenced “dog run” in July 2016; Wachter demanded removal and sued in February 2017 to enforce the DRO.
- The district court granted summary judgment that the DRO applied to the Martins and that the dog run violated it; after trial the court rejected the Martins’ defenses of waiver/selective enforcement and unconscionability and ordered removal of the fence.
Issues
| Issue | Wachter’s Argument (Plaintiff) | Martins’ Argument (Defendant) | Held |
|---|---|---|---|
| Whether the DRO binds the Martins’ lot (equitable conversion) | DRO applies; K&L could not convey greater title than it had; DRO recorded before K&L obtained title | Martins were equitable owners when contracting with K&L so DRO shouldn’t bind them | DRO binds the Martins: equitable conversion did not apply before K&L obtained legal title after the DRO was recorded |
| Whether the dog run is a prohibited fence | Dog run falls within the DRO’s “No fences” restriction | Dog run is a permitted improvement or not covered | Dog run is a fence prohibited by the DRO |
| Whether Wachter waived or acquiesced in enforcing the no-fence restriction | No waiver; DRO contains a clear "no waiver" clause and evidence of enforcement exists | Wachter selectively enforced restriction against others, so it waived enforcement here | No waiver: evidence did not show effective waiver and the DRO’s no-waiver provision bars the defense |
| Whether the DRO (or its enforcement) is unconscionable | DRO and enforcement are not unconscionable; developer discretion is common and must be shown abused | DRO is one-sided and can be amended unilaterally, so it is unconscionable | Not unconscionable on these facts; procedural issues existed but no substantive unfairness or bad-faith exercise shown |
Key Cases Cited
- Frontier Fiscal Servs., LLC v. Pinky’s Aggregates, Inc., 928 N.W.2d 449 (N.D. 2019) (summary judgment standard and review)
- KLE Constr., LLC v. Twalker Dev., LLC, 887 N.W.2d 536 (N.D. 2016) (bench-trial factual-credibility and legal-conclusion review)
- Wheeler v. Southport Seven Planned Unit Dev., 821 N.W.2d 746 (N.D. 2012) (restrictive covenants in planned developments are favored if properly established)
- Hill v. Lindner, 769 N.W.2d 427 (N.D. 2009) (restrictive-covenant interpretation follows contract rules; plain meaning and whole-document approach)
- United Bank of Bismarck v. Trout, 480 N.W.2d 742 (N.D. 1992) (doctrine of equitable conversion requires a contract subject to specific enforcement)
- Green v. Gustafson, 482 N.W.2d 842 (N.D. 1992) (a grantor cannot convey a greater interest than the grantor possesses)