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Eager v. Peasley

Court of Appeals of Michigan

November 30, 2017

DONALD EAGER and CAROL EAGER, Plaintiffs-Appellants,
v.
CECILIA PEASLEY, Individually and as Trustee of the CECILIA L. KAURICH TRUST, Defendant-Appellee, and JEFFREY CAVANAUGH and SANDRA CAVANAUGH, Defendants.

         Alcona Circuit Court LC No. 2014-002282-CH

          Before: O'Connell, P.J., and Murphy and K. F. Kelly, JJ.

          K. F. Kelly, J.

         Plaintiffs appeal by right an order denying their request for injunctive relief. Plaintiffs sought to preclude defendant from renting out a lake house for transient short-term use, arguing that such use violated certain restrictive covenants.[1] The trial court found that the restrictive covenant was ambiguous and that, as a result, the law required free use of the property including transient short-term rentals. Finding no such ambiguity, we reverse.[2]

         I. BASIC FACTS

          Plaintiffs filed an amended complaint for breach of the restrictive covenants and nuisance against defendant, their neighboring property owner, who rented out a lake house for transient short-term use. Plaintiffs alleged that the rentals violated the restrictive deed covenants limiting defendant's use of the premises to "private occupancy" and prohibiting "commercial use" of the premises. Plaintiffs sought injunctive relief in the form of an order enjoining any further rental activity and abating the purported nuisance. No trial was conducted, nor does it appear that any hearing took place. Instead, the parties submitted the following stipulated facts to the trial court for resolution:

6. Plaintiff are owners of real property located in Caledonia Township, Alcona County, Michigan described as follows:
"Lot 4 of Doctor's Point, a subdivision recorded in Liber 1 of Plats, Page 47, Alcona County Records, commonly known as 6351 Oak Street, Hubbard Lake, Michigan 49747 . . ."
7. Defendant, as Trustee of the Cecilia L. Kaurich Trust, is the owner of real property located in Caledonia Township, Alcona County, Michigan as follows::
"Lot 1 and part of Lot 2 of Doctor's Point, a subdivision recorded in Liber 1 of Plats, Page 47, Alcona County Records, commonly known as 653 Oak Street, Hubbard Lake, Michigan 49747 . . ."
8. The subject cottage is a two-story structure with 150 feet of frontage on Hubbard Lake. It is approximately 2000 square feet in size and contains four bedrooms.
9. Defendant Peasley has owned the cottage since 2009 and Defendant has been renting it during the summer season each year since then.
10. Defendant advertises its rental availability on-line through a national website, www.homeaway.com, which also serves as the medium for payment.
11. All rental agreements are between Defendant Peasley and a single responsible signatory.
12. The renter must be at least 26 years old, and the rental is limited to 10 guests with no pets allowed.
13. The year 2016, which is typical of the rental history, shows 64 days booked over the four-month period of May through August. No dates have yet been booked in September.
14. Defendants have rented and continue to rent the Peasley Property on a short-term basis, for a minimum of two (2) nights to seven (7) nights for each rental, with prices ranging from $150.00 - $225.00 per night to $850.00 - $1, 700.00 per week depending upon the season, Spring May 19 - May 21, 2016; Summer May 22nd - September 2016.
15. The Defendant's calendar for 2016 reflects rentals for 10 different families and one business group (Leadership Retreat). The rentals average six (6) days in length.
16. There is no rental or business office maintained on site, no bed and breakfast service, and no other services provided while renters [are] on site[, ] such as housekeeping or linen.
17. Title to the Eager Property and Peasley Property originated from a common Grantor who burdened Lots 1-9 of Doctor's Point Subdivision with the same restrictive covenants which are the subject of this proceeding.
18. Among the covenants and restrictions placed under the chain of title of each of these parties' by warranty deed dated February 26, 1946, recorded March 18, 1946 at Liber 78, Page 432, Alcona County Records are the following:
" . . . the premises shall be used for private occupancy only; . . .that no commodity shall be sold or offered for the sale upon the premises and no commercial use made thereof, . . ."

         In pertinent part, the restrictive covenant provided:

[T]hat the premises shall be used for private occupancy only; that no building to be erected on said lands shall be used for purposes otherwise than as a private dwelling and such buildings as garage, ice-house, or other structures usually appurtenant to summer resort dwellings are to be at the rear of said dwellings; that such dwellings shall face the lake unless otherwise specified; that no commodity shall be sold or offered for sale upon said premises and no commercial use made thereof . . . .

         The court recited the stipulated facts and acknowledged the parties' arguments but then inexplicably denied plaintiffs' request for injunctive relief.

         II. ANALYSIS

         "The interpretation of restrictive covenants is a question of law that this Court reviews de novo." Johnson Family Ltd Partnership v White Pine Wireless, LLC, 281 Mich.App. 364, 389; 761 N.W.2d 353 (2008), citing Terrien v Zwit, 467 Mich. 56, 60-61, 648 N.W.2d 602 (2002).

         Our Supreme Court has confirmed that restrictive covenants are contracts with a particular value:

Because of this Court's regard for parties' freedom to contract, we have consistently supported the right of property owners to create and enforce covenants affecting their own property. Such deed restrictions generally constitute a property right of distinct worth. Deed restrictions preserve not only monetary value, but aesthetic characteristics considered to be essential constituents of a family environment. If a deed restriction is unambiguous, we will enforce that deed restriction as written unless the restriction contravenes law or public policy, or has been waived by acquiescence to prior violations, because enforcement of such restrictions grants the people of Michigan the freedom freely to arrange their affairs by the formation of contracts to determine the use of land. Such contracts allow the parties to preserve desired aesthetic or other characteristics in a neighborhood, which the parties may consider valuable for raising a family, conserving monetary value, or other reasons particular to the parties. [Bloomfield Estates Improvement Ass'n, Inc v City of Birmingham, 479 Mich. 206, 214; 737 N.W.2d 670 (2007) (citations and quotation marks omitted).]

         In terms of restrictive covenants, our Supreme Court has recognized "two essential principles, which at times can appear inconsistent. The first is that owners of land have broad freedom to make legal use of their property. The second is that courts must normally enforce unwaived restrictions on which the owners of other similarly burdened property have relied." O'Connor v Resort Custom Builders, Inc, 459 Mich. 335, 343; 591 N.W.2d 216 (1999). These types of cases are, therefore, decided on a case-by-case basis. Id.

         "In construing restrictive covenants, the overriding goal is to ascertain the intent of the parties. Where the restrictions are unambiguous, they must be enforced as written." Johnson, 281 Mich.App. at 389 (citations omitted). "[T]he language employed in stating the restriction is to be taken in its ordinary and generally understood or popular sense, and is not to be subjected to technical refinement, nor the words torn from their association and their separate meanings sought in a lexicon." Borowski v Welch, 117 Mich.App. 712, 716-717; 324 N.W.2d 144 (1982). Our Supreme Court has cautioned against judicial over-stepping when interpreting restrictive covenants:

The dissent justifies its amending from the bench by asserting that "[t]he absence of a definition in the restrictive covenants" of the terms "commercial, industrial, or business enterprises" leaves these terms ambiguous, and thus "opens the terms to judicial interpretation." We find this to be a remarkable proposition of law, namely, that the lack of an explicit internal definition of a term somehow equates to ambiguity-an ambiguity that apparently, in this case, allows a court free rein to conclude that a contract means whatever the court wants it to mean. Under the dissent's approach, any word that is not specifically defined within a contract becomes magically ambiguous. If that were the test for determining whether a term is ambiguous, then virtually all contracts would be rife with ambiguity and, therefore, subject to what the dissent in "words mean whatever I say they mean" fashion describes as "judicial interpretation." However, fortunately for the ability of millions of Michigan citizens to structure their own personal and business affairs, this is not the test. As this Court has repeatedly stated, the fact that a contract does not define a relevant term does not render the contract ambiguous. Rather, if a term is not defined in a contract, we will interpret such term in accordance with its "commonly used meaning." [Terrien, 467 Mich. at 75-76 (citations and footnotes omitted).]

          The terms "private occupancy only" and "a private dwelling, " coupled with the prohibition against "commercial use" in the restrictive covenant are clear and unambiguous and defendant is prohibited from renting ...


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