Opinion ID: 1122560
Heading Depth: 2
Heading Rank: 2

Heading: Cross-Appeal By WMH

Text: Because we have concluded that the trial court improperly entered summary judgment in favor of WMH, we must now direct our attention to WMH's cross-appeal against MNS. Initially, we address a jurisdictional issue raised by MNS. MNS argues that WMH lacks standing to challenge the trial court's April 25, 1990 order granting summary judgment in favor of MNS. Generally, the requirements of standing are: (1) the person must first have been a party to the action; (2) the person seeking modification of the order or judgment must have had standing to oppose it in the trial court; and (3) such person must be aggrieved by the ruling. Chierighino v. Bowers, 2 Haw.App. 291, 293, 631 P.2d 183, 185 (1981). MNS cites the third requirement in claiming that WMH lacks standing because it is not aggrieved by the trial court's order. This court has liberally applied HRS § 641-1(a), which states that [a]ppeals shall be allowed in civil matters from all final judgments, orders, or decrees of the circuit ... court ... to the supreme court, and its policy is to permit litigants, where possible, to appeal and hear the case on the merits. Montalvo v. Chang, 64 Haw. 345, 350, 641 P.2d 1321, 1326 (1982) (citation omitted). We have defined an aggrieved party as one who is affected or prejudiced by the appealable order. Id. at 351, 641 P.2d at 1326. We believe WMH has standing to appeal on the ground that it was aggrieved by the April 25, 1990 summary judgment order because its interest in obtaining injunctive relief against MNS increased if WMH did not prevail against Kinkai. Hence, WMH would have a valid right to challenge on appeal the summary judgment order in favor of MNS. [7] In its cross-appeal, WMH has asserted a very limited and defined position, stating that [i]f (and only if) the trial court's holding that the height restriction is enforceable against Kinkai was erroneous, then the trial court also erred in granting a summary judgment dismissing WMH's claims against MNS. Within this context, WMH asserts that the language of the restrictive covenant unambiguously states that it is binding upon the Grantee [MNS], its successors and assigns. WMH further argues that it would be clearly erroneous to determine that the original covenanting parties intended for MNS to escape liability merely by selling Lot 48 to a party not bound by the agreement. On the other hand, MNS contends that a covenant that is deemed to run with the land is not binding upon an original promisor to the covenant after the promisor has divested himself or herself of his or her interest in the subject property, unless the parties intended that the original promisor would continue to be bound. The rule in Hawaii is that [i]n determin[ing] ... the meaning of language used in restrictive covenants, the controlling factor is expressed intent, and unexpressed intent is generally `unavailing.' Collins v. Goetsch, 59 Haw. at 487, 583 P.2d at 358 (citation omitted). The restrictive covenant provides, in relevant part: This covenant shall run with the land for a period of twenty-five years from the date hereof and shall be binding upon the property, the Grantee [(MNS)], its successors and assigns, and all other persons who shall have an interest in the property, including without limitation, all owners, lessees, licensees, grantees, assigns, and transferees thereof. The language of the covenant expressly provides that it run with the land and that it shall be binding upon ... the Grantee [MNS] ... and all other persons who shall have an interest in the property. Conspicuously absent from the covenant is an express provision that supports WMH's contention that the covenantor, MNS, has a continuing obligation to be bound by the covenant after MNS divested itself of any interest in the property. We believe the language of the restrictive covenant is unambiguous with respect to the original promisor's continuing obligation. MNS was bound by the covenant as long as it had an interest in Lot 48. Upon divesting itself of any interest in the property by the sale to Kinkai, MNS's liability for any breach of the covenant ceased. Absent an express provision making clear an original promisor's continuing obligation, the law is clear that the promisor's obligation ends with the transfer of property. See Restatement (First) of Property § 538. The rationale for holding covenants unenforceable at law against the covenantor upon the transfer of the covenantor's interest in the land is explained as follows: But when it comes to enforcing this contract duty [the original covenant] against the covenantor of a covenant found in a conveyance in fee, the courts have been inclined to de-emphasize the privity of contract relationship and to look only at the privity of estate liability. As a result, in a number of recent cases it has been held that the liability of the covenantor upon the covenant ceases when he has assigned his entire estate in the burdened land. The courts reach this conclusion by construing the covenant as manifesting an intention that the contract duty, resting upon the covenantor, is to cease when he assigns the land and that liability thereafter shall rest only upon privity of estate. This raising of an implied release is especially applicable to covenants restricting the use of the land, and even to affirmative covenants to perform a physical act upon the land, since the covenantor has no control over the land after his assignment to see that the covenants are performed. Thus it is doubtful if the parties contemplated the continuing liability of the original covenantor under privity of contract after his assignment. 2 Am. Law of Prop. § 9.18 (1952) (footnotes omitted) (emphasis added). In accordance with the foregoing, we hold that MNS, after divesting itself of title and interest in Lot 48, is not liable to any prior owner for any breach of the restrictive covenant by a subsequent owner of Lot 48. [8] Additionally, WMH maintains that it would be inequitable to excuse MNS from liability merely because it sold Lot 48 to Kinkai. We have already concluded that a covenant appurtenant was created and that it runs with the land. We have also concluded that WMH, having no interest in any land benefitted from the covenant, does not have the right to enforce the covenant against Kinkai. For these same reasons, we hold that WMH is unable to enforce the covenant against MNS; and therefore, the trial court's order granting summary judgment in favor of MNS must be affirmed.