Christine Manor Civic Asso. v. Gullo

Full title: Christine Manor Civic Association v. Gullo

Court: Court of Chancery of Delaware

Date published: Nov 2, 2007

C.A. No. 712-VCN (Del. Ch. Nov. 2, 2007)

Opinion

C.A. No. 712-VCN.

November 2, 2007.

Donald L. Gouge, Jr., Esquire, Heiman, Gouge Kaufman, LLP, Wilmington, DE.

Thomas C. Marconi, Esquire, Losco Marconi, P.A., Wilmington, DE.

JOHN W. NOBLE, Vice Chancellor

Dear Counsel:

Christine Manor East is a residential subdivision in Newark, Delaware. It is subject to a declaration of restrictions (the "Declaration"), dated January 14, 1953, that limits structures to a dwelling and one private garage on each lot.¹ Plaintiff Christine Manor Civic Association ("CMCA") administers and enforces the Declaration.²

1 PX 1. The Declaration is not a separate document; it is contained within a deed. Other portions of Christine Manor are not subject to the Declaration.

2 Authority to enforce the Declaration was conferred upon the CMCA by an agreement, dated February 5, 1982, also appearing as part of PX 1. CMCA has designated its Building Plans Committee to handle matters arising under the Declaration.

Before anyone may construct a building or other structure in Christine Manor East, plans and specifications must be submitted to the CMCA for review.³ The CMCA may reject plans for aesthetic or other reasons — not "suitable or desirable" is the phraseology. It may consider the materials, the site location, the overlook from neighboring property, and harmony with the surroundings. The Declaration lacks the sophistication now seen in current subdivision restrictions, but the terms — even though sometimes they may frustratingly lack desired specificity — are generally enforceable. Application of the Declaration, however, may be somewhat subjective because it authorizes considerations of factors such as shape, height and materials.

3 The Declaration provides in pertinent part:

No building, fence, wall or other structure shall be commenced, erected or maintained, nor shall any addition to or change or alteration therein be made, until the plans and specifications, showing the nature, kind, shape, height, materials, floor plans, color scheme, location and approximate cost of such structure and the grading plan of the lot to be built upon shall have been submitted to and approved by the party of the second part. The party of the second part shall have the right to refuse to approve any such plans of [sic] specifications or grading plan, which are not suitable or desirable, in its opinion, for aesthetic or other reasons; and in so passing upon such plans, specifications and grading plan, it shall have the right to take into consideration the suitability of the proposed building or other structure and of the materials of which it is to be built, to the site upon which it is proposed to erect the same, the harmony thereof with the surroundings and the effect of the building or other structure, as planned, on the outlook from the adjacent or neighboring property.

* * *

In May, 2001, Defendant Anne M. Gullo purchased a residential parcel with a dwelling (the "Property") known as 2 Georgian Circle in Christine Manor East. Mrs. Gullo took title to the Property subject to the Declaration.⁴ Before purchasing the Property, she and her husband, Marc Gullo, had devoted roughly six months to finding the right property. The principal criteria were the preferred school district and the ability to construct a large outbuilding. Mr. Gullo contacted Fred Arbogast, then-president of the CMCA and a member of the Building Plans Committee, in advance of the transaction, to review their interest in erecting a large garage. As will be seen, Mr. Gullo and Arbogast have substantially differing memories of their conversations.

4 JX 2. She had received the Declaration by March 22, 2001, almost two months before acquiring her house. PX 12.

Mrs. Gullo initially proposed to build a garage 40' x 40' x 13'. Her application, submitted to CMCA, was rejected.⁵ She proposed to relocate the garage — that application, too, was rejected.⁶ She then reduced the size to 40' x 30' x 13'.⁷ That application was not formally rejected by the CMCA's Building Plans Committee. Instead, the CMCA, at a membership meeting, voted to pursue litigation to preclude the construction of such a structure by Mrs. Gullo, thus evidencing the CMCA's rejection of the application.⁸ The reasoning, flowing through all of the rejections, was that the proposed garage was too big, too "barnlike," and too commercial or agricultural in appearance for a residential area and aesthetically inconsistent with the rest of the neighborhood.

5 PX 5 (April 7, 2003).

6 PX 6 (May 16, 2003); PX 7 (Sept. 4, 2003).

7 See DX D.

8 PX 13 (minutes of CMCA's June 3, 2004 "Special Emergency Meeting").

Mrs. Gullo started and completed construction of the 40' x 30' garage without CMCA approval — an approval that has yet to be given.⁹ CMCA timely brought this action to enforce the Declaration and seeks an order requiring removal of the structure.

9 A plot showing the location of the as-constructed garage appears as DX B. Construction started in 2004 and was completed in 2006. DX C. The building "kit" had been ordered in the spring of 2004.

* * *

Questions involving enforcement of restrictive covenants can be vexing. The concern is that vague or subjective restrictions can be applied arbitrarily. Doubts are resolved in favor of the land owner because restrictions, while adding value through preservation of the nature and character of the neighborhood, interfere with or limit private property rights.¹⁰

10 See, e.g., Seabreak Homeowners Ass'n v. Gresser, 517 A.2d 263, 268 (Del.Ch. 1986), aff'd, 538 A.2d 1113 (Del. 1988) (TABLE).

The Declaration, as a general matter, is reasonable and enforceable. The erection of a 40' by 30' — 1,200 square feet — garage is out of keeping with the neighborhood. It is inconsistent with the values the Declaration seeks to preserve. It is not a reasonable structure for a residential neighborhood.¹¹

11 Many restrictive covenants cases involve prospective projects. In those cases, the final appearance requires a degree of speculation. In this instance, however, Mr. Gullo built the offending garage. Its appearance and its deviation from all other ancillary structures in the subdivision are not in doubt. See JX 4 14; DX E, F G.

* * *

Mrs. Gullo makes three arguments that require particular focus. First, Gullo contends that the CMCA acted arbitrarily and capriciously primarily because the Declaration does not allow rejection of an owner's plans on the basis of the size of the proposed improvements. Second, she argues that CMCA is estopped from enforcing the restrictions against her in this instance because her garage was, in essence, "preapproved" by Arbogast. Third, she asserts that over the years the restrictions have been broadly violated and thus are now unenforceable — the latter argument draws on elements ranging from abandonment to acquiescence to waiver.¹²

* * *

Mrs. Gullo contends that the CMCA has no basis for precluding her from erecting and maintaining the garage. She accuses the CMCA of arbitrary and capricious conduct. She asserts that the Declaration does not allow the CMCA to reject a proposed structure because of its size. The Declaration identifies a number of specific criteria — nature, kind, shape, height, materials, color scheme, and cost — but conspicuously absent from the list is size. In short, she argues that the Declaration lacks the necessary objective criteria and therefore is vague and unenforceable.

In rejecting the proposed 40' x 40' building, the CMCA and its Building Plans Committee identified four primary factors: (1) "Too big to be in harmony with surroundings." (2) "Too commercial or agricultural for a residential area." (3) "`Barn-like' as opposed to "garage-like" for home vehicles." (4) "Aesthetically dissimilar to [Gullo's] house structure."¹³ The reasons for not approving the subsequent 40' x 30' proposed structure were not as carefully memorialized contemporaneously with the decision because the decision was reached by a meeting of the members of the CMCA. Nonetheless, it is clear from the testimony of CMCA representative that the rejection was motivated by the same reasons.

13 PX 6. The Building Plans Committee suggested steps that Mr. Gullo could take to obtain approval. These included roofing the garage with the same shingles as the house, using siding similar to the siding on the dwelling, and reducing the size of the garage.

The Declaration is almost sixty years old. It does not have the detail or the precision of restrictive covenants typically imposed today. That, however, does not necessarily make it unenforceable.¹⁴ Because of the risk that the architectural review function can be carried out in an arbitrary, capricious or unreasonable manner and, therefore, impair significant private property rights, the question is whether the Declaration, as the CMCA seeks to apply it, can be enforced in a fair, objective, reasoned, and nonarbitrary manner.¹⁵ The Declaration does not list size as an explicit criterion (although it refers to height and shape), but it is not as limited as Mrs. Gullo would suggest. It authorizes consideration of "the harmony [of this proposed structure] with the surroundings." If that sets forth a standard that can be both objectively applied and fairly reviewed, then it will suffice. For example, in Dolan v. Villages of Clearwater Homeowners Association, Inc., "visual harmony," a standard strikingly similar to "harmony . . . with the surroundings" has been found to be sufficient. The properties in Dolan were of a unique design and, thus, an unacceptable deviation from a uniform standard in the field was readily discernable. In this instance, there may be many different structures because of the age of the Declaration and the evolution of the neighborhood that would be beyond the reach of the Declaration. Mrs. Gullo's garage, however, dwarfs any other existing outbuilding subject to the Declaration.¹⁶ It deviates so much from any other outbuildings that the conclusion that it is not harmonious with the balance of the community is not only a fair and objective conclusion, but it is also one that the Court can fairly and readily adopt. The other considerations identified by CMCA, such as "barn-like," all reinforce the conclusion that Gullo's garage is so different from the balance of the neighborhood that the CMCA's opposition to it is reasonable and should be enforced. This is not simply a matter of the exercise of someone's subjective judgment as to aesthetics. The CMCA identified with fair specificity its objections. In short, the Declaration is not vague; the Declaration is enforceable; the CMCA has set forth reasonable grounds for rejecting the Gullos' structure; it is reasonable to enforce the Declaration in this context.

14 See, e.g., Welshire Civic Ass'n, Inc. v. Stiles, 1993 WL 488244, at *3 (Del.Ch. Nov. 19, 1993).

15 See, e.g., Dolan v. Villages of Clearwater Homeowners Ass'n, Inc., 2005 WL 2810724, at *3-*4 (Del.Ch. Oct. 21, 2005).

16 The garage has approximately one-half of the floor area of dwelling.

* * *

Mrs. Gullo next argues that the CMCA is estopped from enforcing the Declaration against her because of the conversations that her husband had with Arbogast before the purchase of the property.

The doctrine of equitable estoppel applies when a party intentionally, or unintentionally, induces another to detrimentally rely upon the party's conduct. For an estoppel claim to prevail, it must be shown that the party claiming estoppel lacked knowledge or the means of obtaining knowledge of the truth of the facts in question, relied on the party against whom estoppel is claimed, and suffered a prejudicial change in position as a result of that reliance.¹⁷

17 Burge v. Fidelity Bond Mortg. Co., 648 A.2d 414, 420 (Del. 1994) (internal citations omitted); see also von Feldt v. Stifel Fin. Corp., 714 A.2d 79, 87 (Del. 1998).

Mrs. Gullo and her husband were interested in building a large garage before she bought the property. Indeed, their six-month search gave high priority to the ability to build a garage of sufficient size. To assure their ability to build a large garage, they sought out Arbogast, who served both as president of CMCA and as a member of the Building Plans Committee.

Following Mr. Gullo's initial inquiry about relocating to Christine Manor East, Arbogast faxed the Declaration to him. Mr. Gullo thereafter met with Arbogast. He showed him a brochure or pamphlet which depicted several steel structures supplied by the manufacturer which he intended to use. Most of them were "residential"-looking garages, but Mr. Gullo did not identify the structure which he intended to erect.¹⁸ For example, Arbogast was not informed that Gullo was planning to develop a structure with a large overhead door (as contrasted with a typical residential garage door). Arbogast was not aware that its appearance would be materially different from other outbuildings in the development and materially different from Gullo's dwelling. Arbogast talked generally with Mr. Gullo and advised him that the Buildings Plans Committee would be flexible and that he thought that they would be able to work something out that would be mutually satisfactory. Mr. Gullo, however, presented no specific plans or specifications for Arbogast or the Building Plans Committee to review. Arbogast did work with a layout sketch¹⁹ which, if scaled, depicted an outbuilding larger than the 40' x 30' building which Mr. Gullo would later erect. Mr. Gullo testified that he informed Arbogast that he wanted a building 40' x 60'. Mr. Gullo, unfortunately and without sufficient cause, came away from his meetings with Arbogast believing that he would be able to build the large outbuilding. Although it is fair to charge Arbogast with knowledge that Mr. Gullo hoped to build a large garage, Arbogast did nothing more than indicate that he (and the Building Plans Committee) would be willing to work with Mr. Gullo in seeking to balance Mr. Gullo's objectives with the requirements of the Declaration.²⁰

18 PX 21.

19 Id.

20 With the benefit of hindsight, it is easy to suggest that Arbogast might have been more explicit in informing Mr. Gullo that plans and specifications were necessary before approval could be granted and that no approval had been granted for any particular project. That, of course, would have been ideal, but ideal is not the standard against which Arbogast's conduct must be measured.

Mrs. Gullo's estoppel claim fails because the Court concludes, based primarily on the Court's assessment of Mr. Gullo's testimony and Arbogast's testimony,²¹ that Arbogast never made any commitment (or any sufficiently concrete communication) to authorize construction of a garage of the nature sought by Mrs. Gullo.²² Unfortunately for Mrs. Gullo, Arbogast (for himself and the CMCA) did nothing more than to agree to work with her husband.²³ An agreement to work with someone cannot be warped into an approval of plans that did not exist at the time.²⁴ That is especially true if there is a committee which makes the decision. Mr. Gullo knew of the committee and he knew that it had not approved the plans.²⁵ Under these circumstances, Mrs. Gullo went forward with the purchase of the property at her risk that the plans might not be approved.²⁶ Moreover, Mrs. Gullo constructed the garage knowing full well that it had not been approved and that the CMCA opposed its construction. Thus, she clearly absorbed and accepted the risk that she might be called upon to remove the garage.²⁷ In sum, Mrs. Gullo has not demonstrated that she is entitled to keep her garage based upon application of the doctrine of equitable estoppel.

21 Mrs. Gullo challenges Arbogast's credibility by suggesting that he recognized his mistake in leading Mr. Gullo to believe that the garage would be approved and, then to avoid embarrassment after recognizing his mistake, revised history. Perhaps that is fair argument; it is, however, without merit and without factual support. Similarly, Mrs. Gullo contends that, because the Property was an eyesore that the CMCA wanted rehabilitated, Arbogast and the CMCA did whatever was needed to persuade her to purchase the Property. The Property was an eyesore. The CMCA hoped that someone would fix up the Property. The Court, however, based on its assessment of Arbogast's testimony, finds that his hope that the Property would be improved neither caused him to mislead (intentionally or unintentionally) Mr. Gullo or to testify less than truthfully at trial.

22 Put to the side is the question of whether Arbogast had the power to bind the CMCA. He was only one member of a two (it should have been three) person committee to which the architectural review function had been assigned. See Warwick Park Owners Ass'n, Inc. v. Sahutsky, 2005 WL 2335485, at *3 (Del.Ch. Sept. 20, 2005).

23 The Court, moreover, expressly finds that Arbogast never approved a 60' x 40' (or any other sized) outbuilding.

24 Mrs. Gullo points to a CMCA summary of contacts with owners, or prospective owners, regarding possible approvals of various projects. JX A at A7. One entry, dated May 23, 2001, reflects Mr. Gullo's "inquiry prior to purchase" about "planned property fix-up and garage addition." The entry under the heading of "Action" reads, "Committee must approve." Mrs. Gullo would have the Court read this as evidence that approval had been granted and that the CMCA had no choice but to authorize Mrs. Gullo's project. The entry, while perhaps ambiguous, is better understood as Arbogast testified, as noting that Committee approval was still required, i.e., as a reminder that approval remained a necessary prerequisite to project implementation.

25 Arbogast discussed Mr. Gullo's project with the other members of the Building Plans Committee and the CMCA's board, but there is no basis to conclude that the Committee or the CMCA ever approved it (or could reasonably have been understood to have approved it).

26 Reliance must also be reasonable. The great question here is why Mr. Gullo would think that such a large garage — 2400 square feet — so out of keeping with the rest of the neighborhood — would ever be approved. Indeed, it deviates so far from any other outbuildings in the development that it strains credulity that anyone would reasonably expect approval or in this instance, more importantly, rely on any such expectations in making a major decision to buy a home.

27 Mrs. Gullo testified that she had been told by her husband that Arbogast had told him that the CMCA did not uphold deed restrictions. Mrs. Gullo may have testified truthfully — that may be what her husband told her — but, if it is what her husband told her, it is fanciful. Arbogast, as he emphatically testified, said no such thing.

* * *

As to her abandonment, acquiescence, or waiver argument, Gullo's proof fails. As taught in cases such as Henderson v. Chantry ²⁸ and Tusi v. Mruz,²⁹ there may be minor excursions from strict compliance with the scheme envisioned by the restrictive covenants without invalidating the protections afforded the neighborhood. None of the violations of the Declaration in Christine Manor East and none of the improvements authorized by the Building Plans Committee in Christine Manor East approach the scope of Mrs. Gullo's project.³⁰

28 2003 WL 139765 (Del.Ch. Jan. 10, 2003).

29 2002 WL 31499312 (Del.Ch. Oct. 31, 2002).

30 There may be one exception — not enough to excuse compliance with the Declaration. A pole structure with a roof and tarps for sides remained in Christine Manor East for several years — even though it was probably intended as a temporary structure. DX F. It has been removed.

* * *

Finally, as an overall matter, enforcement of the restrictions is reasonable. Mrs. Gullo seeks to have a building that cannot be reconciled with the balance of the neighborhood. The CMCA acted responsibly in its decision to deny the application.

* * *

Mrs. Gullo knew that when she started construction (or acquired the materials) that she had not received CMCA approval; she knew that it would not be forthcoming; thus, she built the garage at her risk. CMCA acted prudently and timely in its efforts to enforce the Declaration. The only equitable and viable remedy available to the Court in this instance is removal of the structure.

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Counsel are requested to confer and to submit a form of order to implement this letter opinion.