Scott SHADER, et ux. v. HAMPTON IMPROVEMENT ASSOCIATION, INC.
No. 75, Sept. Term, 2014.
Court of Appeals of Maryland.
May 27, 2015.
115 A.3d 185
BATTAGLIA, J.
Under the Majority Opinion, the UM insurer escapes its obligation to pay UM benefits entirely without any need to show that it suffered any disadvantage from the failure of its insured to obtain a timely consent to the settlement with the liability insurer. This is a windfall to the insurer and a trap for the insured. I would hold, consistent with
Michael W. Siri and Carolyn E. Mech (Bowie & Jensen, LLC, Towson, MD), on brief, for Respondent.
Argued before: BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, McDONALD, and WATTS, JJ.
BATTAGLIA, J.
The attempt to enforce restrictive covenants in a community of 635 single family homes in Hampton, a residential neighborhood in Baltimore County, is at issue before us.1 The restrictive covenants attempt to prohibit the development of more than one single family dwelling per lot.
In 2002, Anna and Scott Shader, Petitioners, purchased real property at 606 East Seminary Avenue in Hampton.2 The
The Hampton Improvement Association (hereinafter “HIA“), Respondent, thereafter, contacted the Shaders‘s real estate agents by letter and noted that Paragraph C, in the Schedule of Restrictive Covenants and Easements recorded by the Hampton Company in 1931, “specifically prohibited” property owners from the “[e]rection of more than one house per deeded lot, as shown on the original [1930] Plat Map at the time the property was recorded“. (emphasis in original). Paragraph C provides:
The land included in said tract except as hereinafter provided shall be used for private residence purposes only and no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses each dwelling being designed for occupation by a single family and private garages for the sole use of the respective owners or occupants of the plots upon which such garages are erected there shall not be erected or maintained on said tract of land an apartment house or house designed or altered for occupation by more than one family and no more than one dwelling may be erected on a lot.
3. Hampton was originally formed in 1930 via the recordation of a Plat by the Hampton Company, dated July 16, 1930, [(hereinafter “1930 Plat“)] which plat is recorded among the Land Records of Baltimore County in Plat Book 9 folio 109....
4. On April 6, 1931, The Hampton Company recorded a Schedule of Restrictive Covenants and Easements (“Covenants“) which Covenants were recorded among the Land Records of Baltimore County in Liber 866, folio 475-478....
5. Among the restrictions in the Covenants, was Paragraph C, found at Liber 866, folio 476. That covenant read as follows:
The land included in said tract except as hereinafter provided shall be used for private residence purposes only and no building of any kind whatsoever shall be erected or maintained therеon except private dwelling houses each dwelling being designed for occupation by a single family and private garages for the sole use of the respective owners or occupants of the plots upon which such garages are erected there shall not be erected or maintained on said tract of land an apartment house or house designed or altered for occupation by more than one family and no more than one dwelling may be erected on a lot.4
6. The word “Lot” was defined at Liber 866, folio 475 as “one unit of said tract as at present shown by the recorded map of said tract. (“Tract” or “Tract of Land” was defined on the same page as the Plat No. 1 of Hampton.)
7. On February 10, 1939, a Revised Plat of Lots 40, 42 and 44 to 54, inclusive was filed among the Land Records of Baltimore County in Plat Book 12, folio 38....
*
10. When the Shaders purchased the Property, it consisted of two parcels, to wit; Lot 59 and the easterly portion of Lot 75, as shown on Plat No. 1 of Hampton....
11. On September 10, 2004, the Shaders reconfigured the two parcels and recorded deeds to that effect....
12. The Shaders have a home on the lot known as 606 E. Seminary Avenue and wish to either build a house on Lot 606A East Seminary Avenue or sell 606A East Seminary Avenue as a buildable lot.
13. The HIA has communicated to the Shaders that the Covenants prevent them or their successors in title from building 606A East Seminary Avenue....
The Shaders alleged, specifically, that Paragraph C had been abandoned by the HIA due to numerous violations of Paragraph C that occurred in the other lots in Hampton:
14. Over the years, numerous homes have been built in Hampton which violate the Covenants in numerous ways. For example:
a) There are several instances where due to lot reconfigurations (similar to the Shader lot re-configuration)
All of the restrictions conditions covenants easements and agreements contained here in shall be in perpetuity provided however that at any time after December 31 1960 any of the provisions contained in Paragraphs CD and K hereof may bе cancelled or abrogated in whole or in part by the recording in the proper public Land Records of an appropriate instrument or instruments in writing executed by the then owners (not including mortgagees) of a majority in area of the land included in said tract exclusive of streets and other land then devoted to public use....
homes have been built such that there are more than one home on a given Lot as Lot was defined in the 1930 Plat.
b) There are numerous Lots on which buildings other than single family dwellings and private garages have been constructed and maintained.
The HIA timely filed an answer, not only denying the Shaders‘s allegations, but also affirmatively defending that the Shaders‘s claims were barred by laches and the statute of limitations.
The Shaders, thereafter, moved for summary judgment, arguing that they were entitled to judgment as a matter of law as a result of a prior judgment entered against the HIA in Cortezi, et al. v. Duval Four-A, LLC, No. C-07-002587 (Cir. Ct. Balt. Cnty. 2008) (“Duval“), in which, they alleged, Paragraph C was not enforced:
2. The issue in this case (whether the covenants found at Liber 866, fоlio 475-478 are still enforceable or whether they have been abandoned) has already been decided as a matter of fact by this Court in a prior case (Cortezi, et al. v. Duval-Four, LLC, Case No. C-07-002587).
3. Hampton Improvement Association, Inc. was a party plaintiff in Cortezi.
4. The findings of this Court in the Cortezi case were not appealed.
The HIA filed its own motion for summary judgment5 and opposed the Shaders‘s summary judgment motion, alleging that they could not avail themselves of the Duval judgment because offensive non-mutual collateral estoppel6 had not been recognized in Maryland, as well as that genuine
First, I do not feel that “collateral estoppel” is able to be applied here.... [This doctrine] require[s] the placing of one face plate over another to see if the issues are the same and if the parties are fundamentally the same so as to be bound by a prior decision. There is nothing in the Shader motion that would allow me to see the face plate of the actual controversy before [the Duval court] and the decision by [the Duval court] as to the structures or buildings to which it refers as a violation of what covenant or issue presented. Second, the Response ... makes an important distinction between the erection of houses as opposed to other sheds or buildings, the fact that there is argued not to have been an abandonment of covenants for Plat # 1, differences that may exist between the covenants, and application of the covenants as to different plats. That all means that a significant amount of additional facts needs to be gone through by the court before summary judgment or any judgment would be able to be entered.
A non-jury trial was held before Judge Kathleen G. Cox of the Circuit Court for Baltimore County, at which time the parties renewed their motions for summary judgment.7 In a memorandum opinion, Judge Cox also dеnied both motions for summary judgment and ultimately denied the Shaders‘s request for declaratory relief. The court, first, denied the HIA‘s motion for summary judgment:
The Court does not believe that the claim is barred by limitations simply because the Shaders received a letter that placed them on notice of [the] Covenants. The Shaders’ claim did not ripen until they intended or sought to take action that was arguably barred by the Covenants. The Covenants arguably constitute a continuing restriction on
(citation omitted).
Judge Cox then turned to the Shaders‘s collateral estoppel argument in their motion for summary judgment and recognized that it required an application of offensive non-mutual collateral estoppel, but determined that the Duval case dealt with different and distinct issues than the instant case:
The Shaders’ argument requires application of the doctrine of non-mutual offensive collateral estoppel to the Duval ruling. Non-mutual offensive collateral estoppel requires four determinations:
1. Was the issue decided in the prior adjudication identical with the one presented in the action in question?
2. Was there a final judgment on the merits?
3. Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?
4. Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?
Leeds Fed. Sav. & Loan Ass‘n v. Metcalf, 332 Md. 107, 117-18, 630 A.2d 245, 250 (1993).
In the present case, the issues decided in the prior Duval matter are not identical to the issue presented in this case. While the issues are clearly related, the Shaders’ property consists of one “original” lot and a portion of another lot that were joined in one parcel. The Shaders then sought to re-configure the lot line between these two parcels....
Although the Shaders were able to show numerous instances of violations based upon construction of separate structures on properties throughout the community, they were unable to demonstrate construction of a second residence on a single lot. Rather, the evidence demonstrates that the HIA has consistently taken action to enforce the restriction in the Covenants that requires ‘no more than one dwelling may be erected on a Lot.’
Judge Cox opined that “restrictive Covenants may be abandoned in part without resulting in a wholesale abandonment of all restrictive Covenants“, and although there were additional non-residential buildings constructed on single lots in violation of one clause in Paragraph C, such construction did not invalidate the restriction on the construction of separate dwellings on a single lot.
Judge Cox also addressed the Shaders‘s argument that they owned two separate lots and, therefore, would not be in violation of the restriction prohibiting the construction of a second dwelling on a single lot were they to construct a dwelling on 606A East Seminary. She rejected this argument, and concluded that the term “lot” in Paragraph C was intended by the grantors tо refer to the “Lots as displayed on the initial plat from 1930“:
The deed in the chain of title to Lot 75 states clearly that it is not a buildable lot. Lot 75, as indicated on the 1930 plat, already contains a residential dwelling. The proposal to build another residence on lots that have been reconfigured,
The Shaders noted an appeal.
In a reported opinion, the Court of Special Appeals affirmed. Shader v. Hampton Imp. Ass‘n, Inc., 217 Md. App. 581, 94 A.3d 224 (2014). Our intermediate appellate court determined that the Circuit Court correctly denied the Shaders‘s attempted use of offensive non-mutual collateral estoppel, because the issues in Duval were not identical to the issues in the instant case. The Court of Special Appeals noted that the issues were distinct, because “the Duval case involved a lot—Lot 4-A—that was created more than 50 years prior by the Hampton Company as shown on the 1949 Plat“, whereas the Shaders‘s lot consists of оne lot from the original 1930 Plat and a portion of another lot that was joined in a single parcel. Id. at 606, 94 A.3d at 238. With respect to the issue of waiver by abandonment, the Court of Special Appeals determined that the Circuit Court was not clearly erroneous in finding that the restriction prohibiting the construction of more than one dwelling on a single lot was not abandoned. The Court of Special Appeals also agreed with Judge Cox that “restrictions in a set of covenants may be severable” and thus, although the clause restricting the erection of additional non-residential buildings had been waived by the construction of additional buildings, such as pool houses, gazebos, guest houses and sheds, the balance of Paragraph C, including the restriction on the construction of more than one dwelling, was not abandoned by the HIA and was, therefore, enforceable. Id. at 624, 94 A.3d at 249.
We granted certiorari. 440 Md. 225, 101 A.3d 1063 (2014). Before us, the Shaders rely on substantially the same arguments as were presented before the Court of Special Appeals, as does the HIA.
We shall hold that the Circuit Court did not err in denying the Shaders‘s motion for summary judgment because we have not adopted the doctrine of offensive non-mutual collateral estoppel and decline to do so in the present case, because the
DISCUSSION
I. Collateral Estoppel
We initially address the Shaders‘s claim that the HIA is barred from relitigating the enforcement of Paragraph C because the issue was decided in the Duval ruling.
When the doctrine of collateral estoppel is applied, “factual issues resolved in the adjudication of one claim are binding for purposes of subsequent adjudication of another claim.”8 John A. Lynch, Jr. & Richard W. Bourne, Modern Maryland Civil Procedure 1242-43 (2d ed. 2004, 2014 Supp.). “The determination of ultimate fact underlying the judgment in a previous proceeding is the gravamen of the doctrine.” Standard Fire Ins. Co. v. Berrett, 395 Md. 439, 457, 910 A.2d 1072, 1083 (2006). The purpose of the doctrine, like res judicata, is “to avoid the expense and vexation of multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibilities of inconsistent decisions.” Rourke v. Amchem Products, Inc., 384 Md. 329, 359, 863 A.2d 926, 944 (2004), quoting Murray Int‘l Freight Corp. v. Graham, 315 Md. 543, 547, 555 A.2d 502, 504 (1989).
In its traditional form, collateral estoppel may be invoked when “in a second suit between the same parties, even
- Was the issue decided in the prior adjudication identical with the one presented in the action in question?
- Was there a final judgment on the merits?
- Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?
- Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?
Burruss v. Bd. of Cnty. Comm‘rs of Frederick Cnty., 427 Md. 231, 249-50, 46 A.3d 1182, 1193 (2012), quoting Wash. Suburban Sanitary Comm‘n v. TKU Assocs., 281 Md. 1, 18-19, 376 A.2d 505, 514 (1977). “[F]or the doctrine of collateral estoppel to apply, the probable fact-finding that undergirds the judgment used to estop must be scrutinized to determine if the issues raised in that proceeding were actually litigated, or facts necessary to resolve the pertinent issues were adjudicated in that action.” Colandrea v. Wilde Lake Cmty. Ass‘n, Inc., 361 Md. 371, 391-92, 761 A.2d 899, 910 (2000), citing Burkett v. State, 98 Md. App. 459, 466, 633 A.2d 902, 906 (1993).
The traditional principle of mutuality of parties as an element of collateral estoppel has not always been required “if one of the parties in the original case is involved in relitigating one of the issues determined against a different party in a successive suit.” Berrett, 395 Md. at 457, 910 A.2d at 1083. Considered “non-mutual” collateral estoppel, it has been used both defensively, as well as offensively. See Burruss, 427 Md. at 249-50, 46 A.3d at 1193; Berrett, 395 Md. at 458, 910 A.2d at 1083; Rourke, 384 Md. at 341, 863 A.2d at 933. Defensive non-mutual collateral estoppel has been invoked in Maryland, “when a defendant seeks to prevent a plaintiff from relitigating an issue the plaintiff has previously litigated unsuccessfully in another action against a different party.” Welsh v.
The doctrine of offensive non-mutual collateral estoppel has not been embraced and applied by this Court, but has been invoked by other courts “when a plaintiff seeks to foreclose a defendant from relitigating an issue the defendant has previously litigated unsuccessfully in another action against a different party“. Id. In Burruss v. Board of County Commissioners of Frederick County, 427 Md. 231, 46 A.3d 1182 (2012), we declined to adopt the doctrine of offensive non-mutual collateral estoppel in a situation in which the Board of County Commissioners of Frederick County appointed a nine-member charter board to draft and present a charter to Frederick voters рursuant to
commissioners, which shall publish it at least twice in one or more newspapers of general circulation in the county within thirty days after it is presented. The charter shall be submitted to the voters of the county at a special or regular election held not earlier than thirty days or later than ninety days after publication of the charter. If a majority of the votes cast for and against the adoption of the charter are in favor of its adoption, the charter shall become effective as the charter of the county on the thirtieth day after the election or such later date as shall be specified in the charter.
We granted certiorari and affirmed the decision of the Circuit Court Judge. We declined to apply the doctrine of offensive non-mutual collateral estoppel and noted that even “assuming that all the elements of non-mutual collateral estoppel are satisfied“, its application was not appropriate. Burruss, 427 Md. at 252, 46 A.3d at 1194. We surveyed the Supreme Court‘s analysis of offensive non-mutual collateral estoppel in Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), in which the Supreme Court discussed the dual policy concerns underlying the application of offensive non-mutual collateral estoppel, those being judicial economy and fairness:
First, offensive use of collateral estoppel does not promote judicial economy in the same manner as defensive use does. Defensive use of collateral estoppel precludes a plaintiff from relitigating identical issues by merely “switching adversaries.” Bernhard v. Bank of America Nat. Trust & Savings Assn., 19 Cal. 2d 807, at 813, 122 P.2d 892, at 895 (1942). Thus defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action if possible. Offensive use of collateral estoppel, on the other hand, creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a “wait and see” attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. E.g., Nevarov v. Caldwell, 161 Cal. App. 2d 762, 767-768, 327 P.2d 111, 115 (1958); Reardon v. Allen, 88 N.J. Super. 560, 571-572, 213 A.2d 26, 32 (Law Div. 1965). Thus offensive use of collateral estoppel will likely
increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.
A second argument against offensive use of collateral estoppel is that it may be unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable. The Evergreens v. Nunan, 141 F.2d 927, 929 (C.A.2 1944); cf. Berner v. British Commonwealth Pac. Airlines, 346 F.2d 532 (C.A.2 1965) (application of offensive collateral estoppel denied where defendant did not appeal an adverse judgment awarding damages of $35,000 and defendant was later sued for over $7 million). Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant. Still another situation where it might be unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.
Considering the dual policy concerns and our review and subsequent vacation of the Anne Arundel County Circuit Court‘s ruling in Libertarian Party, 426 Md. at 522, 44 A.3d at 1022, we determined the application of offensive non-mutual collateral estoppel was not appropriate. We concluded its application would be inappropriate because the circuit court ruling in the Libertarian Party case was an incorrect interpretation of the law, and our holding in Libertarian Party, which vacated the circuit court ruling, “reaffirmed that the petition signature requirements in
The Shaders urge us to adopt and apply in their favor the
In Duval, the HIA had filed a declaratory and injunctive relief action against Duval Four-A, LLC, a Maryland limited liability company (“Duval“), that owned Lot 4A in Hampton. The Hampton Company, the original developer of the lots, had revised the original 1930 Plat in 1949 and reconfigured Lot 4 to create two additional lots: Lot 4A and Lot 4B. The HIA filed suit against Duval to prevent the construction of a dwelling on Lot 4A, and sought relief “based on the theory that the prohibition against the construction of more than one dwelling on a ‘lot’ refers to the ‘lots’ depicted in the 1930 Plat.” After hearing testimоny and argument of the parties, Judge Robert E. Cahill, Jr. of the Circuit Court for Baltimore County, denied relief to the HIA based on the 1949 revision of the 1930 Plat:
2. In 1949, a Revised Plat was filed by the Hampton Company which reconfigured the lot lines for several lots, and in fact, created Lot 4A, the lot owned by [Duval], and Lot 4B. Thereafter, on a least three of the lots depicted in the original 1930 Plat (Lots 18, 24 and 25) more than one dwelling was built per lot as those lots were originally configured on the 1930 Plat. Indeed, the evidence was undisputed that the dwelling which straddles what were depicted on the 1930 Plat as Lots 22 and 24 was built as recently as 2005....
3. There is no evidence that any of the lot owners in Hampton ever objected to the construction of more than one house per lot as the lots were depicted on the 1930 Plat in
these three other cases (Lots 18, 24 and 25). There is no evidence that the Hampton Improvement Association, Inc. ever objected. Neither the Plaintiffs, nor any of the other property owners in the subdivision sued or otherwise sought to enforce this interpretation of the covenant in these three situations, each of which involved lots oriented just adjacent to Lot 4A.
4. In addition, the testimony was undisputed that in some 30 instances in the subdivision, the Plaintiffs and their predecessors have permitted lot owners in Hampton to erect and maintain buildings other than single family dwellings and garages on their lots in violation of the very same covenant which they seek to enforce in this action.
(footnotes omitted). Judge Cahill concluded, “[b]ased on the fact that the Plat presently in effect portrays [Duval‘s] property as a separate lot, designated as Lot 4A, the construction of [Duval‘s] dwelling, as planned, will not frustrate the original intent or purpose of the covenants” and that the HIA “ha[s] waived the right to seek to enforce the provisions of Paragraph C of the Covenants by abandonment.” In footnote four to his opinion, Judge Cahill attempted to limit the breadth of his decision:
The decision in this matter is limited to the facts of this case. This Court specifically does not conсlude that the covenants are “void“. This Court specifically does not conclude that the waiver defense would apply in any other action to enforce the covenants in the future.12
Although we may disagree with the ability of a trial court to specifically limit the application of non-mutual collateral estoppel, we decline to embrace the doctrine of offensive non-mutual collateral estoppel, under the circumstances in this case, because the issues in Duval differ from the issues in the Shaders‘s case. In the instant case, the Shaders‘s rely upon Judge Cahill‘s determination that the HIA “ha[s] waived the
In the present case, the issues decided in the prior Duval matter are nоt identical to the issue presented in this case. While the issues are clearly related, the Shaders’ property consists of one “original” lot and a portion of another lot that were joined in one parcel. The Shaders then sought to reconfigure the lot line between these two parcels....
We agree with the trial court.
We have not embraced the doctrine of offensive non-mutual collateral estoppel, but even were we, the doctrine could not be applied in the present case because the issues addressed in Duval are different from those queued up here. As the trial court found, Duval dealt specifically with “a revision in the subdivision plat that was filed in 1949 that reconfigured some of the original lot lines and created at least two new lots“, whereas here, the Shaders‘s property consists of one lot from the original 1930 Plat and a portion of another lot that was joined in a single parcel.13 The issues, thus, are dissimilar.
II. Waiver
We next address the Shaders‘s argument that the HIA waived by abandonment the restrictions within Para-
The land included in said tract except as hereinafter provided shall be used for private residence purposes only and no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses each dwelling being designed for occupation by a single family and private garages for the sole use of the respective owners or occupants of the plots upon which such garages are erected there shall not be erected or maintained on said tract of land an apartment house or house designed or altered for occupation by more than one family and no more than one dwelling may be erected on a lot.
Judge Cox, after having heard testimony and reviewed the exhibits, some of which were photos depicting the structures, determined that the restriction prohibiting the construction of “no more than one dwelling” on a single lot was not waived by abandonment:
With the exception of the caveat pertaining to garages, Covenant C clearly states that “no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses.” Although the Shaders were able to show numerous instances of violations based upon construction of separate structures on properties throughout the community, they were unable to demonstrate construction of a second residence on a single lot. Rather, the evidence demonstrates that the HIA has consistently taken action to enforce the restriction in the Covenants that requires ‘no more than one dwelling may be erected on a Lot.’
Maryland law holds that restrictive Covenants may be abandoned in part without resulting in a wholesale abandonment of all restrictive Covenants. See King v. Waigand, 208 Md. 308, 313, 117 A.2d 918 (1955) (holding, where a restrictive covenant prohibited the sale of “malt and spirituous liquors,” the abandonment of the restriction on the sale of malt liquors, i.e. beer and winе, did not effect the
The evidence at trial clearly demonstrated that the HIA has continuously enforced the restriction on building more than one residential dwelling per lot. This enforcement has allowed Hampton to remain a neighborhood of large, single family properties, with a low population density.... Here, the Covenant is still serving its purpose in ensuring the residential character of the neighborhood. The Shaders had constructive notice of the Covenants at the time they purchased their property. For these reasons, this Court does not find that the HIA has abandoned enforcement of the Covenant.
The Court of Special Appeals agreed, holding that “the circuit court did nоt err in concluding that the HIA did not waive the restriction prohibiting more than one house per lot, consistent with the original Plat filed in 1930.” Shader, 217 Md. App. at 626, 94 A.3d at 250.
We have long recognized the equitable defense of waiver in restrictive covenant cases. See City of Bowie v. MIE Properties, Inc., 398 Md. 657, 697, 922 A.2d 509, 533 (2007) (citing numerous cases). In the context of restrictive covenants, “waiver deems unenforceable a covenant because some word or act of the [individual benefitting from the covenant] communicated to the [individual burdened by the covenant] that the covenant would not be enforced.” Id. Waiver by abandonment occurs when an individual benefiting from a restrictive covenant relinquishes his or her right to enforce the covenant, because he or she has previously allowed a violation of the covenant by other individuals burdened by the covenant. See id. “[W]here conduct [related to the use of benefitted land] indicates the actor‘s intent to relinquish the benefit of the covenant, the doctrine [of abandonment] prevents that person from gaining any benefit from the further
The Shaders urge that the trial court erred, because, they allege, the evidence adduced at trial demonstrates that the HIA, in fact, waived the restriction that “no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses” and the restriction prohibiting more than one residential dwelling per single lot, by permitting other prohibited buildings to be erected. They argue that they produced numerous exhibits with pictures of “out buildings” on other lots in Hampton, including photographs of pool houses, gazebos, guest houses and sheds and that, “[i]f the one house per lot restriction was designed to maintain a certain appearance within Hampton, it is beyond legitimate argument that allowing dozens and dozens of additional buildings, including guest houses, pool houses, apartments over garages, and the like, has completely altered the concept spelled out in the Covenants.”
The HIA conversely alleges that the existence of other non-residential buildings on lots does not result in an abandonment of the restriction prohibiting the construction of multiple residences on a single lot because the other buildings are not single family dwellings, and it only enforced the restriction when a property owner sought to increase the residential density of Hampton by constructing an additional residence on a single lot.14
The Shaders argue, though, alternatively, that the HIA, by allowing the erection of pool houses, gazebos, guest houses and sheds in violation of the clause restricting the erection of “building[s] of any kind ... except private dwelling houses” triggers a waiver of the entirety of Paragraph C.
Judge Cox found, with respect to the alleged waiver of the entirety of Paragraph C, “that restrictive Covenants may be abandoned in part without resulting in a wholesale abandonment of all restrictive Covenants.” She noted that, “[h]ere, violations of the portion of the covenant prohibiting the construction of buildings other than residential dwellings does not necessarily mean that the restriction on building more than one residence per lot has been abandoned“. She concluded that the purpose of Paragraph C was to ensure the residential character of the neighborhood and that the HIA‘s enforcement of the provision restricting the building of more than one residential dwelling per lot “has allowed Hampton to remain a neighborhood of large, single family properties, with a low population density“. As a result, she determined that the
relevant circumstances” in the surrounding neighborhood, which they conflate with the standard for waiver by abandonment. When a covenant is challenged based on changed relevant circumstances, “[t]he proper legal standard for this inquiry is to examine whether, after the passage of a reasonable period of time, the continuing validity of the covenant cannot further the purpose for which it was formed in light of changed relevant circumstances.” City of Bowie v. MIE Properties, Inc., 398 Md. 657, 685, 922 A.2d 509, 526 (2007). In contrast, waiver by abandonment focuses on violations of the covenant in areas of land subject to covenant aside from the property at issue in the suit. Id. at 698 n. 27, 922 A.2d at 534 n. 27. As a result, we do not need to address any issues related to a change in relevant circumstances.
The Court of Special Appeals agreed with Judge Cox “that restrictions in a set of covenants may be severable.” Shader, 217 Md. App. at 622, 94 A.3d at 248. Our intermediate appellate court opined:
The second clause, which defines the acceptable appurtenances for each single family dwelling, is the clause that the circuit court found was violated due to evidence of additional buildings, such as sheds, gazebos and pool houses on various lots in Hampton. Permitting the HIA to expand the concept of garage or building does not destroy the purpose of Paragraph C, so long as these buildings are appurtenant to and for the use of one single family dwelling. For this Court to hold that the abandonment of one restriction in Paragraph C results in the abandonment of all restrictions would be inequitable. Hampton could lose its aesthetic character and low residential density, аs homeowners would be able to subdivide their lots and construct multiple dwellings and units to the limits of applicable zoning regulations. This would defy the clear intent of Paragraph C of the Covenants: to restrict the use of each lot in Hampton to residential, single-family purposes. As the Court of Appeals has instructed, we “are under a duty to effectuate rather than defeat an intention which is clear from the context, the objective sought to be accomplished by the restriction and from the result that would arise from a different construction.” MIE Props., Inc., supra, 398 Md. at 680, 922 A.2d 509 (quoting Belleview Construction Co. [v. Rugby Hall Community Ass‘n, Inc.], supra, 321 Md. [152] at 157-58, 582 A.2d 493 [ (1990)]). Therefore, we hold that the circuit court did not err in concluding that the HIA did not waive the restriction prohibiting more than one house per lot, consistent with the original Plat filed in 1930.
Id. at 624-26, 94 A.3d at 249-50 (internal footnote omitted).
We agree that the HIA waived the clause in Paragraph C restricting the erection of “building[s] of any kind ... except
Paragraph C can be divided into four separate and independent clauses:
[1.] The land included in said tract except as hereinafter provided shall be used for private residence purposes only and
[2.] no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses each dwelling being designed for occupation by a single family and private garages for the sole use of the respective owners or occupants of the plots upon which such garages are erected
[3.] there shall not be erected or maintained on said tract of land an apartment house or house designed or altered for occupation by more than one family and
no more than one dwelling may be erected on a lot.
Severing of the second clause restricting the construction of any building aside from a private dwelling house or private garage would not frustrate the purpose of the covenants, which the Circuit Court found was to “ensur[e] the residential
We hold, therefore, that the Circuit Court did not err in determining that the HIA did not waive the clause in Paragraph C restricting the erection of more than one dwelling house on a single lot by allowing the erection of sheds, pool houses, gazebos and guest houses in violation of the clause restricting the erection of “building[s] of any kind except private dwelling houses“, because that clause is severable from the other covenants in Paragraph C.
JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS IN THIS COURT AND THE COURT OF SPECIAL APPEALS TO BE PAID BY PETITIONERS.
BATTAGLIA, J.