• Doctrine of Comparative Hardship Enables Homeowner Who Violated Covenants to Avoid Injunction
  • August 4, 2015 | Author: Edward J. Levin
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Injunctions are equitable remedies. Therefore, they are subject to equitable defenses, such as laches and the doctrine of comparative hardship. It also means that “the grant or denial of a request for injunctive relief rests within the sound discretion of the circuit court and therefore, appellate courts review these decisions under an ‘abuse of discretion’ standard.” These points were highlighted in Harper v. Smith, Court of Special Appeals, May 13, 2015, unreported. This decision was the second time the Court of Special Appeals considered this case.

    Mr. and Mrs. Michael Harper owned a 9.133 acre tract in Cockeysville, Baltimore County and they resided in part of it at 857 West Padonia Road. They subdivided the property into three lots in 2004, and in 2005 they recorded a Declaration of Covenants, Conditions, Restriction and Easements (the “Covenants”) among the land records of Baltimore County. The Covenants provided in part that no structure, broadly defined, could be constructed on any of the lots unless plans and specifications were approved by the Harpers.

    Kathleen Smith and her husband purchased one of the lots in 2011. At the closing of the house purchase, Ms. Smith received a title insurance policy and a copy of the Covenants. She asked the title agent about the Covenants, and the title agent said that Ms. Smith did not need to be concerned about them.

    In early 2012, Ms. Smith signed contracts totaling more than $250,000 for the construction of a pool and deck, a sport court and fence, a hot tub, a perimeter fence, and a grill and outdoor kitchen equipment. She did not submit any plans to the Harpers or request their permission to build any of these items. Construction occurred rapidly - pool work began on February 7, 2012, and the entire project was finished by April 16, 2012. Mr. Harper noticed construction work in February or March, but he thought that it all related to a pool, and since he had approved the concept of a pool when an interim owner of the property presented it to him he was not concerned about it at first.

    On May 2, 2012, Mr. Harper sent Ms. Smith a letter advising her that the property was subject to the Covenants, that she should have obtained prior permission before commencing any construction, and that she should remove the fences because they were not approved. Although the parties met and resolved some issues, they did not agree on all matters, and the Harpers filed a complaint for injunctive relief in the Circuit Court for Baltimore County asking that the court order construction to be undone.

    After a trial the circuit court found that the Covenants were valid, that Ms. Smith had no knowledge of them, and that the Harpers’ claim was barred by laches.

    On appeal to the Court of Special Appeals, the first time, the court held that laches did not apply, finding that the Harpers did not take too long to take action. The Court of Special Appeals remanded the case to the circuit court for further action.

    The circuit court held a hearing on May 9, 2014 and then denied the Harpers’ request for injunctive relief. The circuit court held that the doctrine of comparative hardship applied and that an injunction would result in great disproportionate harm to Ms. Smith. The Harpers again appealed to the Court of Special Appeals.

    In the decision that was issued on May 13, 2015, the Court of Special Appeals noted that the doctrine of comparative hardship is possible as an equitable remedy, but the court stated that it is only available to a person who committed the violation innocently or mistakenly. The circuit court had concluded that Ms. Smith had constructive notice of the Covenants when she started the construction, but that she had no actual awareness that they applied to her or her property.

    The circuit court had found that Ms. Smith would suffer a greater hardship than the Harpers by the injunction, considering the benefit that the Harpers would get by having a view of the pond on the property that was obscured by Ms. Smith’s construction compared to the amount of money that Ms. Smith would have to pay to remove the improvements.

    The Court of Special Appeals reviewed how “good faith” was defined in prior cases, and then it concurred with the determination of the circuit court in the subject case that Ms. Smith acted in “good faith.”

    The Court of Special Appeals reviewed the case from “an abuse of discretion standard.” Because the Court of Special Appeals found no error in the circuit court’s decision, it affirmed the Circuit Court’s order denying the Harpers’ request for an injunction.

    1. The Harpers had drafted the Covenants for a number of reasons, among them to assure a view of the pond on the property. Although the Harper case denied the equitable remedy of an injunction to the Harpers, perhaps the Harpers could be successful in an action for monetary damages against the Smiths.

    2. The first time that the Court of Special Appeals considered this case, the court pointed out that the Smiths’ title agent actually discovered the Covenants and pointed them out to Ms. Smith. The court said, “The law does not permit property owners to avoid enforcement of restrictive covenants in their chain of title by simply failing to become fully aware of the content and legal effect of such documents.” One purpose of the recording system is to put the world on notice of documents that affect title to real property. Why didn’t the circuit court, and later the Court of Special Appeals when it considered the case for a second time, follow this concept and rule that the Smiths were bound by the terms of the Covenant?

    3. The Court of Special Appeals’ discussion of comparative hardship provides for a balancing of the interests of the person who records restrictive covenants in the land records, on the one hand, with those of the person who ignores the limitation in that person’s chain of title, on the other. Shouldn’t there be substantial extra weight given to the declarant (the Harpers in this case) who follows the rules and takes the appropriate steps to protect the declarant’s property interests? And how does one balance the aesthetic loss suffered by the Harpers if the injunction is denied, against the economic loss that the Smiths would incur if the injunction were granted? In other words, how much is a view of a pond worth?