Opinion
NO. 2018-CA-000547-MR NO. 2018-CA-000556-MR
04-03-2020
PAR GOLF, LLC APPELLANT v. GLENMARY HOMEOWNER'S ASSOCIATION, INC.; AND BRYAN, LLC APPELLEES AND LOUISVILLE METRO PLANNING COMMISSION APPELLANT v. GLENMARY HOMEOWNER'S ASSOCIATION, INC.; AND BRYAN, LLC APPELLEES
BRIEFS FOR APPELLANTS, PAR GOLF, LLC, AND LOUISVILLE METRO PLANNING COMMISSION: Clifford H. Ashburner J. Tanner Watkins Young-Eun Park Louisville, Kentucky Douglas E. Miller Radcliff, Kentucky Paul B. Whitty John G. Carroll Assistant Jefferson County Attorneys Louisville, Kentucky BRIEF FOR APPELLEE, GLENMARY HOMEOWNER'S ASSOCIATION, INC.: Donald L. Cox William H. Mooney Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE BARRY WILLETT, JUDGE
ACTION NOS. 14-CI-000844 AND 14-CI-002143 OPINION
AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, CHIEF JUDGE; JONES AND LAMBERT, JUDGES. LAMBERT, JUDGE: PAR Golf, LLC, and the Louisville Metro Planning Commission (the Planning Commission) have appealed from the March 1, 2018, order of the Jefferson Circuit Court reversing the Planning Commission's decision to approve plat amendment applications filed by PAR Golf related to the use of the Glenmary Golf Course. PAR Golf sought to subdivide and convert portions of the former golf course for non-recreational use so that it could sell the separate pieces of real estate. We affirm.
For a detailed recitation of the procedural and factual history of this case, we shall rely upon the circuit court's March 1, 2018, order:
PROCEDURAL BACKGROUND
These proceedings commenced on February 17, 2014, when the Plaintiff filed a Complaint seeking a declaration of rights against each of the named Defendants [pursuant to Kentucky Revised Statutes (KRS) 418.040 [14-CI-000884] [footnote omitted]. In its Complaint, the Plaintiff, Glenmary Homeowners' Association, Inc., (hereafter "Glenmary HOA") alleged that the Defendant, Par Golf, LLC, had purchased Recreation Areas A-D in the Glenmary subdivision on April 15, 2005. Plaintiff alleged that the areas purchased were subject to specific restrictions, which were also applicable through various plat notations and declarations, which were incorporated into the sales
contract. In spite of this, Glenmary HOA alleged that the Louisville Metro Planning Commission (hereafter "the Planning Commission") was in the process of considering an application by Par Golf, LLC (hereafter "Par Golf").
In its complaint, the Glenmary HOA sought the following specific relief:
1. A judgment against the Defendant, Planning Commission, declaring that [the] Land Development Code for Jefferson County is inapplicable to Glenmary Subdivision because Glenmary Subdivision predates the effective date of the Land Development Code;
2. A judgment against the Defendant, Planning Commission, declaring that any action by the Planning Commission which would authorize the Defendant, Par Golf, to construct homes or otherwise alter the dedicated Recreation Common Areas within Glenmary Subdivision would constitute an unauthorized exercise of authority and breach of the contract between the property owners in Glenmary Subdivision and in violation of the Kentucky Constitution.
3. A judgment against Defendant, Par Golf, declaring that any attempt to develop or utilize the dedicated Recreation/Common Areas constitutes a violation of the applicable Declarations.
The HOA also specifically sought appropriate injunctive relief.
The Planning Commission was served with the Complaint on February 19, 2014 by delivery to its
Chairman, Donnie Blake. The Planning Commission filed its Answer on March 7, 2014. In its Answer, the Planning Commission affirmatively stated in paragraph 5 that "the Planning Commission may go forward in acting on the application with or without those Declarations and/or the required vote." As an Affirmative Defense, the Planning Commission averred, "The Complaint fails to state a claim against the Commission upon which relief may be granted since the Commission has yet to take final action on any of the applications stated in the Complaint."
Par Golf filed its Answer on March 10, 2014.
On March 17, 2014, Glenmary HOA filed a Notice of Lis Pendens. On April 23, 2014, Glenmary HOA filed a motion for temporary injunction. On December 18, 2014, Par Golf filed a motion to quash the Lis Pendens filed by Glenmary HOA. That motion was denied by Order dated March 9, 2015. On June 10, 2014, the Court entered an Order restraining Par Golf or anyone acting on its behalf "from taking any actions to sell, develop, and/or otherwise use the real property identified in Exhibit A attached to this Order and located within the Glenmary Subdivision here in Jefferson County, Kentucky for any purpose or use other than as a Recreational/Common Area until such time as the Court can rule upon the Motion for Temporary Injunction filed by Glenmary HOA on April 23, 2014."
Glenmary HOA then filed its Notice of Appeal on April 16, 2014 [14-CI-002143] [footnote omitted]. The statutory authority for the appeal is KRS 100.347 . . . . According to the Notice of Appeal, Par Golf had filed applications with the Planning Commission to amend plats for certain portions of the property it had purchased in the Recreation/Common Areas. Those applications first came before the Planning Commission for approval on February 20, 2014. After hearing from Glenmary HOA and Par Golf, the Commission decided to pass any
decision on the applications until a later date. According to the Notice of Appeal and a copy of the minutes included as an exhibit, five of the ten members of the Planning Commission [footnote omitted] voted to approve Cases 19173, 19174 on March 20, 2014. According to those minutes, the five members present also voted to pass Case 13 SUBDIV1000 [Conservation Subdivision and Amendment to a Record Plat] "to a date set by the Planning Commission or will be re-noticed for an uncertain date." On the very next day, March 21, 2014, Par Golf entered into a sale of one of the lots created by reason of the March 20, 2014 plat amendments, according to the Notice of Appeal and a copy of the Special Warranty Deed appended to the Notice.
HISTORY RELEVANT TO AFFECTED
PROPERTY
Glenmary HOA outlines the general history of the Glenmary Subdivision in paragraphs 5 - 22 of its statement of appeal, along with supporting exhibits. The Planning Commission admits the allegations in paragraph 5 - 16 and 21 - 24 to the extent they are supported by the documents themselves. In similar manner, the Planning Commission admits the allegations in paragraphs 17 - 19 to the extent they are supported by the Articles of Incorporation. The Planning Commission denies the allegations in paragraph 20, taking the position that it is a legal conclusion and requires no response.
Par Golf admits the allegations in paragraph 5 - 7. Claiming insufficient knowledge to admit or deny the allegations in paragraphs 8 - 22, Par Golf acknowledges that public records speak for themselves.
Having reviewed the record and the parties' positions, the Court finds the following facts relevant to the history and development of the properties in question,
Jefferson County approved the general plan for Glenmary Subdivision in 1988, noting it was an innovative subdivision. The original developer of Glenmary Subdivision was HFH, Inc. (hereafter "HFH").
On July 12, 1989, HFH caused a Declaration of Covenants, Conditions and Restrictions (hereafter "Declarations") to be filed with the Office of Jefferson County Clerk. Those Declarations include the following terms:
WHEREAS, Developer is the owner of certain real property in Jefferson County, Kentucky, which is to be developed as a residential subdivision.
NOW, THEREFORE, Developer hereby declares that all of the property described in this instrument, and such additional property as may be hereafter made subject to this Declaration, shall be held, sold and conveyed subject to the following easements, restrictions, covenants and conditions, which are for the purpose of protecting the value and desirability of the real property. The easements, restrictions, covenants and conditions shall run with the real property and be binding on all parties having any right, title or interest in it, their
heirs, successors and assigns, and shall inure to the benefit of each owner.
. . .
Additions to Existing Property. Additional lands may become subject to this Declaration in the following manners:
(a) Additions in Accordance with a General Plan of Development.
Developer intends to make this section containing 231 lots a part of a larger community being developed in accordance with current plans and known as Glenmary Subdivision.
. . . The common area initially covered by this Declaration shall inure to the benefit of the owners of any new lots within Glenmary which may become subjected to this Declaration or a similar set of deed restrictions and common area allocable to the owners of all such lots within Glenmary shall inure to the benefit of the owners of lots recorded earlier, each to enjoy the common areas of the other and to have and to hold the same as if each new lot had been developed and subjected to this Declaration simultaneously.
All additions shall be made by filing with the Office
of the Clerk of Jefferson County, Kentucky, a Supplementary Declaration of Covenants, Conditions and Restrictions with respect of the additional property which shall extend the scheme of the covenants and restrictions of this Declaration to such property. The Supplementary Declarations may contain additions and modifications of the covenants and restrictions contained in this Declaration may be necessary to reflect this different character, if any, of the added properties and as [such] are not inconsistent with the scheme of this Declaration.
(b) Other Additions.
Additional residential property and common area which are not presently a part of the general plan of development of Glenmary may be annexed to Glenmary by Developer.
. . .
(20) Restrictions Run With Land.
Unless cancelled, altered or amended under the provisions of this paragraph, these covenants and restrictions are to run with the land and shall be binding on all parties claiming under them for a period of thirty (30) years from the date this document is recorded, after which time they shall be extended automatically for successive periods of ten (10) years. These restrictions may be cancelled, altered or amended at any time by the affirmative actions of 75% of those persons entitled to vote pursuant to the Articles of Incorporation of the Glenmary Homeowners Association, Inc. Failure of any owner to demand or insist upon observance of any of these restrictions, or to proceed for restraint of violations, shall not be deemed a waiver of the violation, or the right to seek enforcement of these restrictions.
(21) Enforcement.
Enforcement of these restrictions, excepting paragraph 19, shall be by proceeding at law or in equity, brought by any owner of real property in Glenmary Subdivision, by a property owner's association to be formed under paragraph (23), or by Developer itself, against any party violating or attempting to violate any covenant or restriction, either to restrain violation, to direct restoration or to recover damages.
. . .
(24) Homeowners Association.
Developer has incorporated the Glenmary Homeowners Association, Inc., a nonprofit Kentucky corporation, and has filed and recorded Articles of Incorporation and By-Laws which establish a Board of Directors and officers for the Association, and the duties for which they are responsible.
. . .
(27) The Glenmary Golf and Recreation Club, Inc. will manage the golf course, building, swimming pools, tennis courts and other recreational amenities. Initial purchasers of homesites, or houses within Glenmary Subdivision will be given an opportunity to become members in the Club. Initial purchasers of houses have sixty (60) days after taking title to property to contact the Club and apply for membership. Purchasers of lots may apply for membership in the Club upon taking title to the lot up to the time 60 days after occupancy of a house constructed on the lot by or for the lot owner. After the 60-day time period expires, application and membership to the Club will be pursuant to the By-Laws of the Club. Membership in the Club may include members from other neighborhoods, subdivisions or communities.
(28) Membership in the Glenmary Golf and Recreation Club, Inc. will be obtained after the payment of fees in accordance with the By-Laws of the Club. Various levels of
membership will be available, including full memberships or social memberships.
(29) Owners of lots , homes or any residents understand that Glenmary Golf and Recreation Clubs , Inc. will be an integral part of the subdivision community. Operation of the Club will be for the benefit of the membership and guests. Homeowners adjacent to the golf course on land operated by the Club understand that recreation activities will be conducted as permitted by the By-Laws of the Club .
(Italics and other emphasis added)
The real property at the center of this litigation is located within Sections I and II of the Glenmary Subdivision. The Supplemental Declaration of Covenants, Conditions and Restriction for Section II, executed on March 4, 1990, was filed in the Office of the Jefferson County Clerk. A review of this document reveals that it [is] essentially identical to the original Declarations filed in 1989, with the following additional provisions relevant to this matter:
(32) Maintenance of Open Space and Signature Walls.
The Homeowners Association will maintain the open space and signature walls which are an integral part of the subdivision community and development.
(33) Maintenance of Recreation Areas.
HFH , Inc. will retain ownership of the recreation space and will be responsible for maintaining the recreation space which
is an integral part of the subdivision community and development.
(italics and other emphasis added)
This real property was identified in three plats filed by HFH, Inc. in the Office of the Jefferson County Clerk, Plat Book 37, pp. 99, 100 and 101 [footnote omitted.] Each of the three plats include areas specifically designated as "Recreation Areas," (A, B and C) whose contours generally align with those of a golf course. Each of the three plats include the following notes,
1) There shall be no further subdivision or resubdivision of the land into a greater number of lots than originally approved.
. . .
3) All islands, common areas and/or recreation areas shall be maintained by HFH, Inc. or by Neighborhood Association. (Emphasis added)
In 1996, HFH, Inc., which had continued to be responsible for the maintenance and operation of the recreation areas, filed for Chapter 11 bankruptcy protection. As part of that bankruptcy action, HFH sold the recreation areas, which included the Clubhouse and Golf Course, to TGM, Golf Properties, Inc. TGM later sold the property to EJB Golf Properties, LLC, which in turn sold it to Par Golf, LLC in 2005. Shortly after purchasing the property, Par Golf began experiencing financial difficulties which have continued to the present, for a variety of reasons.
According to a May 14, 2015 affidavit by the joint owners of Par Golf, they approached Glenmary HOA in 2012 and 2013 with hopes of obtaining approval of 75% or more of the membership to convert portions of the affected property around the clubhouse to create a small conservation subdivision and to create 3 lots on another section of the property. In September 2013, Glenmary HOA conducted a certified vote for such approval. A majority of the members voted to approve of the purchase. However, although efforts were made, Glenmary HOA was unable to obtain financing satisfactory to complete the purchase. When the Board of Directors declined to enter into the sales contract, Par Golf filed Action No. 14-CI-2143 against Glenmary HOA to enforce the voidable sales contract in Division Three of the Jefferson Circuit Court. In an April 14, 2017 Opinion and Order, the Jefferson Circuit Court granted summary judgment in favor of Glenmary HOA. On December 11, 2017, the Court of Appeals granted a motion by Glenmary HOA to dismiss the appeal of that Opinion and Order.
THE PLANNING COMMISSION'S
PROCEEDINGS
According to the May 14, 2015 affidavit by the joint owners of Par Golf, they met with Chris Collins of Metro Planning prior to their 2005 purchase of the property at issue. According to the affidavit, [Mr.] Collins advised them that the property at 10200 Glenmary Farm Drive "was only restricted by binding elements, plat notes, or the Land Development Code.["] According to the affidavit, Mr. Collins advised them ". . . that the [']Recreation Area['] stamp on the plat allowed us to conduct a recreational business property zoned residential, but it was in no way a deed restriction." Based upon these statements by a representative of the Planning Commission, the affiants averred that they borrowed the money and moved forward with their purchase of the property in question.
In 2007, Par Golf requested a minor plat amendment to create 3 new lots from the same residual tract designated as Recreational Areas. After two hearings, Par Golf withdrew its request.
At its August 24, 2011 meeting, the Planning Commission considered a "record plat amendment" application filed by Par Golf. The Summary of Staff Presentation includes the following information,
The applicant requests a minor plat amendment. The minor subdivision plat proposes to create a new buildable lot 11,480 square feet in size. The residual tract of 27.81 acres is part of the Glenmary Golf Club, owned and operated by Par Golf, LLC, and was designated as Recreation Area on the recorded subdivision plats.
Staff has had email communication with Ron Huff and Bob Beard requesting information as to whether the recreation restriction was being removed. It was explained that the request was only to create a new buildable lot and there was no request to remove the recreation area designation from the residual tract containing the golf course. Staff had phone conversations with three property owners in regards to their opposition to the proposal . . . . They are concerned the abutting golf course 'green' would need to be moved to accommodate the new house causing draining problems,
the new house would not have to adhere to setback and building material requirements, and that they would like the Recreation Area to remain as open green space.
Bill Bardenwerper, counsel for Par Golf succinctly described Par Golf's overall plan to the Planning Commission,
. . . The proposal is about what it was about the last time, trying to find a way to eliminate some of the debt load, which is considerable on this golf course. It's a challenge to operate with the debt load that it has on it. These private golf courses are no big secret as they are having trouble all over the country and many are closing down. We've been pursuing various options: overall strategy [is] to redevelop all of the open space in the golf course areas which could have realistically developed from the get go that are not needed for the golf play. We haven't gone forward with that because the market is such that coming forward with some big plan for condos or something doesn't make sense. We've also been pursuing the possibility of sale, but candidly, the data on the property makes it difficult to sell. The bank that carries the note has asked us to start executing a plan for eliminating some of the debt and one way to do it is to take a piece of the open space that isn't needed for golf course playing and create a lot to see so another house can be built. (Emphasis added)
Hal Thomas, counsel for Glenmary HOA, responded,
One concern we had is the residual tract be designated as recreational area on the plat and I see that has now been written in and as long as that's on the recorded plat, we only have one other comment. I do not believe, at this time, that Glenmary Section 2 restrictions apply to this new lot. The way the Glenmary restrictions were recorded, they list specific lots they applied to, which at that time were all of the building lots. The golf course was not included. Our second interest would be that the new building lot has a restriction on that plat to the effect that the CCR's for Glenmary Section 2 would apply to that lot. If that's agreeable to you and if it can be inserted, then the Glenmary Homeowners Association has no objection.
However, certain home owners did express concerns. During the discussion, Commissioner Tomes also expressed concerns,
["]I've built on at least 4 golf course lots and I know that quite often what the developer sold was the view. I look at this plat and say all these people that bought the end lots had the long view of the golf course and paid for that. They had a plat they relied on that said it was open space , sort of like living next to a park. If I were an owner of one of those lots , I would be thinking how the value just depreciated by allowing another lot. It's why I asked the question just how much money is going to be realized out of this lot because it seems to me that it might pay the interest on the loan for a month or two, but I don't think it makes a
big dent (from what I'm hearing) in the principal. So this is the first of a dozen or 20 lots like this that are going to come through us , and if it's the case we don't have any power to say no." (Emphasis added)
Mr. Baker responded,
I think it's pertinent to ask that question and I'm sure many others are mulling that over in their heads as well. I'm advising you according to the laws and regulations of Louisville Metro and what this board is empowered to do. By no means am I saying there's not another equitable remedy out there but that's going to have to be pursued through a private lawsuit. (Emphasis added)
By a vote of 4-1, the Planning Commission approved the following action on the application,
. . . the request is in compliance with all zoning and subdivision regulations, reasonable notice has been given and there has been opportunity to express objections regarding drainage, which will be resolved (by MSD) if there was a construction project; the other concern being the view, which cannot be resolved by this committee; also, the conditions of approval will be imposed as stated previously - there will be a note on the plat stating that the lot being created on this minor plat will be under the CCR regime; not on the minor plat indicating the deed book and number page;
based on the staff report and the information heard today.
The plat that was approved shows that the new buildable lot is located on Glenmary Farm Drive, across from the entrance to Glen Falls Court. The plat notes that the lot was part of Tract B, Recreation Area of the Glenmary Golf Course. The plat includes the following note,
Lot #1 is subject to Supplementary Declaration of Covenants, Conditions and Restrictions recorded in DB 5943, Pg 269, as amended in DB 5946, Pg 876, as amended in DB 6853, Pg 53, as amended in DB 7324, Pg 568 all in the offices of the Clerk of Jefferson County, Kentucky
On April 22, 2013, Par Golf filed Minor Plat Applications 19173, 19174 and 19219, the subjects of this appeal, with the Planning Commission. Each of the applications noted that the purpose of the requested Minor Plat amendments was to create one new lot out of other lots. Applications 19173 and 19219 state that the purpose of the Minor Plat amendment is to "Create two lots from one lot.["] Application 19174 reports that the purpose of the Minor Plat amendment is to "Create three tracts from two tracts." All three applications report that the existing use of each lot is "residential," and the proposed use of each lot continues to be "residential."
In reality, each of these three applications, like the 2011 application, sought to create new building lot(s) out of the recreation areas owned and operated by Par Golf. Each of the plats note[s] that the property originated as Recreation Area in Tracts A, B or C.
Each of the Minor Plats submitted and approved include[s] the Notes, "This site is subject to the conditions of approval and waivers of Docket 10-34-88 on file in the office of the Louisville Metro Planning
Commission" and "Lot 2 is subject to deed of restriction in Deed Book 5943, Page 269." Application 19173 also references Deed Book 6206, Page 632.
Par Golf also filed application 13SUBD1000, which sought approval of the creation of a "conservation subdivision" for an additional 44 homes. The assigned Case Manager for the applications was Maria Scheitz.
At its June 5, 2013 meeting, the Planning Commission voted to provide notice of the three applications to Glenmary HOA along with "the same tier property owners within 500 feet."
The Staff Report dated July 3, 2013 advised the Development Review Committee of the Planning Commission that review of the applications was governed by Section 7.1.91 of the Land Development Code (hereafter "LDC"), which grants the Commission [authority] "to amend any recorded plat at the request of any lot owner in the subdivision."
At its July 3, 2013 meeting, Ms. Scheitz, the Case Manager, advised the Commission,
You did previously hear a case on this and it was determined that the lots could be created but there might be deed restrictions outstanding that would not permit them to build on these lots. The minutes from the previous case noted that the homeowners would need to address that through private means.
At that same meeting, Mr. John Carroll, legal counsel, remarked,
This is a decision that you (DRC) have the power to make. There is a note on each of these plats that says, ["]There shall be no
further subdivision or re-subdivision of the land into a greater number of lots than originally approved.["] But there is the later section in the code, which Steve read, that states, "The Planning Commission shall have the power to amend any recorded plat at the request of any lot owner in the subdivision.["] The deed restrictions are not effective on you. You could amend the plat in face of those deed restrictions. . . . He stated the Committee would have to deal first with the note of the record plats and also with approving building lots in the recreational areas before deciding on the minor plats.
While one Commissioner expressed concern about the notes and the declarations, another commented, ". . . the DRC does not have to adhere to the deed restrictions."
At its February 6, 2014 meeting, the Planning Commission received a Staff Report, which included the following conclusions by staff,
Each request is in compliance with all zoning and subdivision regulations. The record plat amendments will allow a new buildable lot to be created. Record plat amendments do not have a standard of review, unless the applicant also requests approval of a discretionary item such as a waiver or variance. The power to approve a subdivision plat is a ministerial action reserved for the Planning Commission or its designee.
. . .
The Planning Commission must determine whether all persons who may be affected by
the record plat amendment were given reasonable notice and whether they were given an opportunity to express their objections or concerns. If both conditions have been satisfied, then the request to amend the recorded plats shall be approved as each applicable plat is in compliance with the applicable regulations. (Italics added)
At the Commission's February 20, 2014 meeting, counsel for Glenmary HOA reminded the Commissioners of the comment in the June 3, 2013 meeting that indicated that homeowners would have to enforce deed restrictions ". . . through private means." Counsel advised the Commission that Glenmary HOA was seeking a judicial determination regarding the deed restrictions and asked the Commission to withhold action until the Court had spoken. The Commission's legal counsel confirmed that the civil action was pending but would not speak to its merits because it was in litigation. The Commission Chair determined to move forward. Accordingly, the Commission heard testimony that day.
When asked whether Par Golf would turn additional acreage into a conservation subdivision in the future, the Commission's case manager responded, ". . . that is correct, and that the owner of the golf course could develop it as either a standard or a conservation subdivision if their percentage of open space meets the minimum requirements." The following exchange also took place,
An unidentified citizen asked Mr. Bardenwerper if the conservation areas would be deeded to the new owner, as part
of the purchase of these properties by the developer. Mr. Bardenwerper said the open spaces would be maintained by the purchaser of the conservation subdivision, and then ultimately by the owners of the lots within that subdivision. The citizen then asked if any future development on the conservation areas would be at the discretion of the individual owners. Mr. Bardenwerper said yes, but there are regulations about how much open space there has to be. (Italics added)
As the meeting continued and focused upon the subdivision request, that case manager advised the Planning Commission, ". . . the Commissioners at DRC had asked whether deed restrictions affect their decision. They were informed by legal counsel at that time that deed restrictions are not binding in these cases." (Italics added) The case manager then addressed the applicable note in the Declarations,
He addressed the notices on each record plat which states that, "There shall be no further subdivision or re-subdivision of the land into a greater number of lots than originally approved." He said that this notice has appears [sic] on almost every record plat. The same language for amending a record plat was in the 1988 regulations. The process amending a record plat was briefly outlined.
In response to a question from Commissioner Profitt, Mr. Doyle explained
that the purposes of a record plat for each of the three lots is to change the land use from "recreational" to "buildable." . . . .
The following exchange also took place at this meeting,
Al Birch asked Mr. Doyle [the case manager] if these lots would become "buildable." Mr. Doyle said that was correct. Mr. Birch said that doesn't necessarily mean they will be built on. Mr. Doyle said this was correct, that no permits had been pulled for any type of construction at this time. He asked if one lot could be used for an entrance, if the rest of the golf course would be developed. Mr. Doyle said that, as long as it meets the R-4 zoning district regulations, it could. (Italics added)
Finally, during this meeting, Mr. Bardenwerper stated that, if additional homes were built upon the existing areas designated as "recreation areas, . . . the new homeowners would have their own HOA."
Following the testimony, six of the Commissioners expressed concerns about the applications. Commissioner Proffitt suggested continuing the case until the litigation regarding the deed restrictions is resolved. Commissioner Brown expressed concerns about the conservation subdivision plan, noting that the owners intended to demolish a historic structure to get more space for development and the views from existing roadways are not being protected. Commissioner Jarboe agreed and expressed concern that the applicant did not do enough for historic preservation. Commissioner White expressed concerns about the historic preservation issue and the promises that had been made to the original homeowners. He took the position that the Commission is supposed to address the impacts to communities that are not addressed by the technical issues. Commissioner
White also expressed concerns about the promises that had been made and the concerns that go beyond the technical guidelines of the LDC. Commissioner Kirchdorfer expressed concerns whether the conservation subdivision guidelines are being met. Commissioner Tomes spoke at length about deed restrictions, the right to subdivide property, and the law and rights according to KRS; he was in favor of continuing this case to better examine the LDC and KRS regulations. It appears that at least four of the Commissioners were in favor of moving forward on the minor plat amendments, but continuing the subdivision applications. The Commission voted to continue its consideration until the March 20, 2014 meeting "to allow the Commissioners time to review and consider the conservation subdivision regulations in the LDC and the testimony given.["]
At its March 20, 2014 meeting, the Planning Commission voted to approve the amendments to record plats for Cases 19173, 19174 and 19219. [Footnote omitted.] Case 13SUBD1000 was passed to the May 15, 2015 meeting.
These actions were taken by the Planning Commission after it had been served with and had responded to the Complaint for a Declaration of Rights on these matters. [Footnote 4 in original]
The Declaration was executed on July 12, 1989, the day it was filed. [Footnote 5 in original]
The original lots addressed in these Declarations were Lots 15-245, inclusive. However the Declarations expressly provided for additions to the existing property by means specified in the Declarations. [Footnote 6 in original]
In this section, the Declarations set out conditions and restrictions for these additional lots covering the following 22 specific requirements for each new lot - Primary Use Restrictions; Approval of Construction Plans; Building Materials; Setbacks; Minimum Floor Areas; Garages, Carports; Nuisances; Use of Other Structures and Vehicles; Animals; Landscaping; Tree Requirements; Mail and Paper Boxes, Hedges and Fences, Swimming Pools, Antennas; Clothes Lines; Duty to Maintain Property; Business, Occupations; Signs; Drainage; Underground Utility Service; Disposal of Trash; Drains; and Obligations to Construct or Reconvey; Fees for Subdivision Fund, Lien. [Footnote 7 in original]
It is noteworthy that the Section I plats filed in time with the original Declarations also included areas clearly identified as "Recreation Areas," (A, B, C and D), with similar Notes. One of these plats also included two areas identified as "Open Space," (F and G). [Footnote 9 in original]
Each of the four new lots created by Par Golf and the Planning Commission are in separate locations in the Recreation Areas in Section II of the Glenmary Subdivision. While the applications suggest that the minor plat amendment is simply to divide an existing lot(s) into one additional lot, the reality is that each of the four lots created are new and distinct buildable lots carved from the Recreation Areas. [Footnote 10 in original]
Mr. Bardenwerper represented Par Golf before the Planning Commission in regards to each of the "minor plat amendment" applications addressed in this proceeding. [Footnote 11 in original]
The Court believes Mr. Baker was counsel for the Planning Commission. [Footnote 12 in original]
At the time of this meeting, the only action pending before the Court was 14-CI-0844, the action for declaration of rights. The Planning Commission had argued in that action that it was premature because the Commission had not yet acted upon the applications. [Footnote 13 in original]
This comment was the single reference the Court could find of the regulations in place at the time of approval for this subdivision. There is no indication that staff provided the 1988 regulations to the Commission for their review and use. Rather, all other references were to LDC 7.1.91, despite the plain language of 7.1.90. [Footnote 14 in original]
During the course of the circuit court appeals, the court considered motions filed in 2015 by Glenmary HOA for a judgment on the pleadings seeking a declaratory judgment in its favor and by PAR Golf for summary judgment seeking a declaration that it was not subject to any residential or recreational use restrictions in the declarations or plats of record. These motions were denied on June 2, 2016, with the court ruling that it needed to review all of the subdivision deed restrictions to determine whether they applied to the property at issue, whether they could be amended, and by whom the restrictions could be amended. The same day, the court entered a temporary injunction maintaining the status quo until it could determine the parties' legal rights. The court stated that the developer and purchasers of the recreation areas had acted consistently with the premise that the areas identified in the deeds and on the plats were to be used as a golf and recreation club. Finally, it permitted Glenmary HOA to file an amended complaint naming Bryan LLC as a defendant, as PAR Golf had sold one of the lots created by the amended plats to that entity.
In March 2017, PAR Golf renewed its motion for summary judgment, arguing that the deed restrictions for the subdivision did not apply to the property at issue and that it was not restricted by any implied reciprocal covenant. It was restricted by zoning and subdivision approvals, which the Planning Commission could modify. PAR Golf argued that the note on the record plat for Section 1 of the Glenmary Subdivision, which stated, "There shall be no further subdivision or resubdivision of the land into a greater number of lots than originally approved," did not mean that the restriction could not be changed without the approval of the other land owners, but rather that the Planning Commission retained the sole ability to modify or deny a proposed modification of the plat. PAR Golf also argued that Glenmary HOA had waived its right to make this argument based upon statements of its prior attorney at an earlier Planning Commission meeting. Therefore, PAR Golf argued that Glenmary HOA was not entitled to relief.
The following month, Glenmary HOA responded to PAR Golf's motion and filed a countermotion for summary judgment. It framed the legal question as "whether, as a matter of law and undisputed fact, the Property owned by Par Golf is subject to the Declaration of Restrictions." It was not whether the property had to be used to operate a golf course. It stated:
[T]he record title in this case establishes: 1) the Plats specifically limit any further subdivision or resubdivision of the Property beyond those lots initially approved; 2) the Plats specifically incorporate the Declaration of Restrictions; 3) the language of the Declaration of Restrictions identify the Recreation Areas as "integral" parts of the subdivision; 4) homeowners purchased their property in reliance upon the Declaration of Restrictions which limited the further development of the Property; and 5) the Affidavit in Aid of Title filed by Par Golf acknowledges that the Declaration of Restrictions apply to the Recreation Areas contained within the Property. [footnote omitted]Glenmary HOA relied upon Parrish v. Newbury, 279 S.W.2d 229 (Ky. 1955), in support of its argument. The former Court of Appeals upheld the restrictions placed upon the plat in this case based upon the intention of the parties. Glenmary HOA concluded,
Therefore, as a matter of law, the designations on the applicable Glenmary Plats that preclude further subdivision of the land identified on the Plats and subjects all property identified on the Plat to the Deed of Restrictions relating to sections land 1 and 2 of Glenmary Subdivision apply to the Property and limit further development of the Property. These documents recognize that the Property was part of a general scheme
or plan of [development] and are part of the chain of title to the Property and constitute constructive public notice to all subsequent purchasers, including Par Golf.
On March 1, 2018, the circuit court entered an opinion in favor of Glenmary HOA. Like Glenmary HOA, the circuit court relied upon Parrish v. Newbury, supra. It observed the notes on the original plats providing for no further subdivision, the language in the Declarations about the golf course land and recreation activities, and that the three owners of the property at issue followed the restrictions in these documents: It noted that "each of the previous three owners [of the recreation areas owned by PAR Golf] fully respected the restrictions included in the plats, the declarations and the deeds" and that "[w]hen Par Golf, LLC, chose to purchase this property, they must be assumed to have exercised due diligence prior to the purchase. This would have included a review of the recorded instruments and a review of the financial success/challenges of each of the prior owners." The court went on to address whether the Commission's decision to approve the creation of three new residential lots in the recreation areas was authorized by law. The circuit court ultimately reversed the Commission's actions pursuant to KRS 13B.150(2)(a), (c), (d), and (g).
First, the court held that PAR Golf's applications should not have been governed by Land Development Code (LDC) 7.1.90, which addresses previously approved subdivisions, because the Glenmary Subdivision application had been approved prior to March 1, 2003. Rather, the regulations in effect at the time the subdivision application was filed should control. Second, even if the LDC were to apply, the circuit court determined that PAR Golf was not legally eligible to apply for a plat amendment under LDC 7.1.91 because it was not a lot owner, and the provision explicitly refers to a lot owner in its language. PAR Golf owned the recreation areas, a separate and distinct entity from a lot. And the court observed that in the previously approved plats for the subdivision, lots were identified by numbers while the recreation areas were identified by letters. Third, the court went on to address the interpretation of the LDC by the Planning Commission and its staff, which it described as flawed. It held they collectively interpreted the LDC improperly to give the Planning Commission no discretion under LDC 7.1.91(B), and that it only had a ministerial role to approve any application that the staff had found met the LDC's requirements. Finally, the court stated the Planning Commission's decision to consider the applications while the declaration of rights action was pending was also arbitrary.
The circuit court ultimately set aside the Planning Commission's approval of PAR Golf's applications and ordered it to take the necessary actions to void the previously amended plats within 60 days. After the court made this order final and appealable, both PAR Golf and the Planning Commission filed notices of appeal from the final order. Pursuant to the prehearing conference order, PAR Golf and the Planning Commission were designated as appellants, and Glenmary HOA and Bryan, LLC, were designated as appellees. The two appeals were consolidated for all purposes.
Our standard of review in an appeal from an administrative action "is limited to determining whether the decision was erroneous as a matter of law." McNutt Construction/First General Services v. Scott, 40 S.W.3d 854, 860 (Ky. 2001). Courts of this Commonwealth have long held that "judicial review of administrative action is concerned with the question of arbitrariness." American Beauty Homes Corp. v. Louisville and Jefferson County Planning and Zoning Commission, 379 S.W.2d 450, 456 (Ky. 1964) (emphasis in original).
There is an inherent right of appeal from orders of administrative agencies where constitutional rights are involved, and section (2) of the Constitution prohibits the exercise of arbitrary power.
Obviously within the scope of a proper review the court may determine whether the agency acted in exercise of its statutory powers. Henry v. Parrish, 307 Ky. 559, 211 S.W.2d 418 [1948]. Such action would be arbitrary within the prohibition of section (2) of the Kentucky Constitution. See 2 Am.Jur.2d, Administrative Law, section 617 (page 460).
In the interest of fairness, a party to be affected by an administrative order is entitled to procedural due process. Kentucky Alcoholic Beverage Control Board v. Jacobs, Ky., 269 S.W.2d 189 [1954]. Administrative proceedings affecting a party's rights which did not afford an opportunity to be heard could likewise be classified as arbitrary.
Unless action taken by an administrative agency is supported by substantial evidence it is arbitrary. Thurman v. Meridian Mut. Ins. Co., Ky., 345 S.W.2d 635 [1961].Id. (footnotes omitted).
The above three grounds of judicial review, (1) action in excess of granted powers, (2) lack of procedural due process, and (3) lack of substantial evidentiary support, effectually delineate its necessary and permissible scope.
Substantial evidence is defined as "that which, when taken alone or in light of all the evidence, has sufficient probative value to induce conviction in the mind of a reasonable person." Bowling v. Natural Resources and Environmental Protection Cabinet, 891 S.W.2d 406, 409 (Ky. App. 1994). See also Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298 (Ky. 1972). In weighing the evidence, "the trier of facts is afforded great latitude in its evaluation of the evidence heard and the credibility of witnesses appearing before it." Bowling, 891 S.W.2d at 409-10. See also McManus v. Kentucky Retirement Systems, 124 S.W.3d 454 (Ky. App. 2003). A reviewing court may not substitute its own judgment on a factual issue "unless the agency's decision is arbitrary and capricious." McManus, 124 S.W.3d at 458. Once a reviewing court has determined that the agency's decision is supported by substantial evidence, the court must then determine if the agency applied the correct rule of law to those factual findings in making its determination. If so, the final order of the agency has to be upheld. Bowling, 891 S.W.2d at 410.
Before we reach the merits of PAR Golf's appeal, we shall address Glenmary HOA's argument that PAR Golf failed to preserve the issues as to whether the Planning Commission acted arbitrarily and whether the Planning Commission had exercised ministerial acts because these issues had not been briefed below, nor had a post-judgment motion addressing these issues been filed. While it is true that this Court "is without authority to review issues not raised in or decided by the trial court[,]" Regional Jail Authority v. Tackett, 770 S.W.2d 225, 228 (Ky. 1989), in this case, the circuit court actually decided these issues in the order on appeal. Therefore, PAR Golf is permitted to raise these in its appeal to this Court.
The first issue we shall address is whether KRS 13B.150 applies to this case, as the circuit court held. That statute provides for judicial review of administrative orders:
(1) Review of a final order shall be conducted by the court without a jury and shall be confined to the record, unless there is fraud or misconduct involving a party engaged in administration of this chapter. The court, upon request, may hear oral argument and receive written briefs.
(2) The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the final order or it may
reverse the final order, in whole or in part, and remand the case for further proceedings if it finds the agency's final order is:
However, there are exceptions to the application of this statute contained in KRS 13B.020(2): "The provisions of this chapter shall not apply to: . . . (f) Administrative hearings conducted by any city, county, urban-county, charter county, or special district contained in KRS Chapters 65 to 109, or any other unit of local government operating strictly in a local jurisdictional capacity[.]" This action arose out of KRS Chapter 100 - specifically from KRS 100.347(2), which addresses appeals from a planning commission - and therefore KRS Chapter 13B does not apply to it. Therefore, the circuit court erred as a matter of law in holding that the Planning Commission had violated KRS 13B.150(2)(a), (c), (d), and (g). However, this error is harmless because the Planning Commission is still required to issue a decision that is not arbitrary as set forth in American Beauty Homes, supra.(a) In violation of constitutional or statutory provisions;
(b) In excess of the statutory authority of the agency;
(c) Without support of substantial evidence on the whole record;
(d) Arbitrary, capricious, or characterized by abuse of discretion;
(e) Based on an ex parte communication which substantially prejudiced the rights of any party and likely affected the outcome of the hearing;
(f) Prejudiced by a failure of the person conducting a proceeding to be disqualified pursuant to KRS 13B.040(2); or
(g) Deficient as otherwise provided by law.
Next, we shall consider whether the actions of the Planning Commission were arbitrary and capricious. As the circuit court recognized, the Planning Commission proceedings were based on the premises that 1) the LDC governed PAR Golf's minor plat amendment applications, and 2) the Planning Commission's actions were ministerial related to the approval process.
Related to the application of the LDC to the minor plat amendment applications, we agree with the circuit court that the LDC did not apply. First, LDC 7.1.90 addresses previously approved subdivisions and provides in relevant part as follows:
The provisions of the Land Development Code shall apply to all major and minor subdivision applications filed on or after March 1, 2003 (LDC effective date). Subdivision plans (major and minor) filed with a complete application prior to March 1, 2003 shall be reviewed for compliance with the Subdivision regulations in effect at the time of the filing.It is undisputed that the application for the Glenmary Subdivision was approved in 1988, well before March 1, 2003, and therefore the regulations in effect at that time should have controlled. However, the Planning Commission used the LDC, which was a violation of LDC 7.1.90.
And even if the LDC were to apply in this situation, LDC 7.1.91, which addresses major and minor amendments to recorded plats, provides:
The Planning Commission shall have the power to amend any recorded plat at the request of any lot owner in the subdivision.
A. If all owners whose property is subject to the recorded plat have acknowledged their consent to the amendment, Division staff may approve the amendment provided it is in compliance with all other applicable requirements. Parties shall acknowledge their consent, in writing, on forms provided by the Division.
B. If all such owners have not acknowledged consent, no amendment shall be permitted until there has been reasonable notice given to all persons who may be affected by the record plat amendment and giving such persons a reasonable opportunity to express their objections or concerns.
The Land Development and Transportation Committee shall determine:
1. who may be affected;
2. who should be given notice;
3. the nature of the notice; and
4. the manner by which the opportunity to express objections or concerns will be accommodated.
The applicant shall be responsible for providing the Planning Committee with the names and addresses of those persons the Land Development and Transportation Committee determines shall be notified.(Emphasis added.) The LDC includes separate definitions for "Lot" and "Recreation Area (Conservation Subdivisions)." A "Lot" is defined as "[t]he smallest subdivision of land having fixed and described boundaries for purposes of conveyance of title, and (when part of a subdivision) having an assigned number or other designation through which it is identified." A "Recreation Area (Conservation Subdivisions)" is defined as "[a]reas dedicated to passive and active recreation activities. Examples of active recreation facilities include golf courses, tennis courts, swimming pools, softball, baseball, and soccer fields. Examples of passive recreation include bird watching, walking, hiking, picnicking, horseback riding, or photography." Because PAR Golf was not a lot owner, but rather owned recreation areas, the Planning Commission could not have properly considered its request under the terms of the LDC.
Therefore, we hold that the Planning Commission acted arbitrarily in misapplying the LDC in this case and that the circuit court did not commit any error in invalidating the Planning Commission's actions in approving PAR Golf's applications.
Second, we agree with the circuit court and Glenmary HOA that the Planning Commission did not provide meaningful due process when it considered - albeit incorrectly - the applications for plat amendments. As set forth above, LDC 7.1.91 provides two methods by which the Planning Commission may consider an application to amend a recorded plat:
A. If all owners whose property is subject to the recorded plat have acknowledged their consent to the amendment, Division staff may approve the amendment provided it is in compliance with all other applicable requirements. Parties shall acknowledge their consent, in writing, on forms provided by the Division.The circuit court held, and we agree, that the Planning Commission conflated these two sections in its approach to plat amendments. By making this process a ministerial one, the circuit court stated the Planning Commission ignored the purpose of the notice and hearing requirements in (B), which were meant to ensure that the Planning Commission heard and considered any opposing views before deciding to approve or not approve an application. We recognize that while (A) permits staff approval, (B) does not, and it requires the Planning Commission to reach the decision through its discretionary powers once the due process requirements have been completed, including notice to affected persons and the opportunity to express any objections they might have. The applications in this case fell under (B), and a ministerial approval by the Planning Commission based upon a staff recommendation is certainly improper and arbitrary.
B. If all such owners have not acknowledged consent, no amendment shall be permitted until there has been reasonable notice given to all persons who may be affected by the record plat amendment and giving such persons a reasonable opportunity to express their objections or concerns.
Based upon our holdings, we need not reach the question of whether the Restrictions are applicable to PAR Golf's property. We also find no merit in PAR Golf's argument that it is being unfairly penalized in this instance. We take note of the circuit court's final paragraph, which we shall include because it aptly reflects the statutory, rather than equitable, nature of this case:
This is an unfortunate case. Each of these parties has won and lost certain battles throughout this process. Unfortunately, the end result may be that they both lose the war. In the end, Par Golf may lose the property at a significant financial loss and face other consequences. At the same time, Glenmary HOA may find itself with an untended swath of nature running through the property, rather than the recreation areas envisioned by HFH, Inc. and the initial purchasers. The Court has tried more than once to help the parties reach a resolution that may not be optimum but that is realistic and the best possible solution for both parties. At various times, Par Golf has suggested a process whereby the bulk of the Recreation Areas may be maintained by identifying non-essential areas that could be sold to help weather the financial storm. At others, Par Golf has announced a plan to essentially create a new subdivision inside Glenmary Subdivision by placing and . . . selling lots throughout the Recreation Areas, establishing a separate and distinct homeowners association. At times, Glenmary HOA has indicated a willingness to find a reasonable solution, but essentially asks Par Golf to maintain the Recreation Areas as a golf club, swimming pool, tennis courts, and clubhouse, in spite of the financial reversal. The Court has been asked to create an equitable solution. However, this is a statutory appeal and not an action in equity. If
there is a reasonable solution that benefits both parties, they must find and implement that solution.
For the foregoing reasons, the order of the Jefferson Circuit Court is affirmed.
ALL CONCUR. BRIEFS FOR APPELLANTS, PAR
GOLF, LLC, AND LOUISVILLE
METRO PLANNING
COMMISSION: Clifford H. Ashburner
J. Tanner Watkins
Young-Eun Park
Louisville, Kentucky Douglas E. Miller
Radcliff, Kentucky Paul B. Whitty
John G. Carroll
Assistant Jefferson County Attorneys
Louisville, Kentucky BRIEF FOR APPELLEE,
GLENMARY HOMEOWNER'S
ASSOCIATION, INC.: Donald L. Cox
William H. Mooney
Louisville, Kentucky