Opinion ID: 1264387
Heading Depth: 3
Heading Rank: 2

Heading: Pelosi II

Text: On July 14, 1995, the circuit court heard Pelosi's motion for entry of mandatory injunction. On August 24, 1995, the circuit court entered Findings On Issues Submitted By The Intermediate Court of Appeals. The court entered the following relevant findings of fact: Question No. 1. Whether defendants deliberately and intentionally violated MM III Covenants? No. Question No. 2. Whether defendant[s] intentionally assumed the risk of such violation? No. Question No. 3 In balancing the equities should the court grant injunctive relief by ordering removal of the roadway and/or tennis court? No. Question No. 4. What, if any, damages should be assessed [against] the defendants? Further hearing is necessary. The pertinent facts of this case are as follows: .... 3) Without Lot 29 as access to [Wailea Ranch], no approval could have been given by the County. 4) No other access is available and by necessity, Lot 29 was included as part of [Wailea Ranch]. 5) Defendants purchased the property with subdivision and development as their purpose and would have had no reason to do so if no subdivision or development were possible or permissible. .... 7) The County of Maui had no objection to and indeed permitted the construction of a tennis court and road on Lot 29. 8) Roads and tennis courts exist in the Maui Meadows subdivisions. Although the restrictive covenants are not County or state laws and are to be considered separately and individually, considering the milieu of governmental regulations, real estate practice, construction and comparable uses, defendants' decision to proceed with a tennis court and road on Lot 29 cannot be found to have been deliberate and intentional violations of the MM III covenants. 9) Indeed, it would appear that the defendants' expertise in law, construction, real estate development, and architecture gave credence to their conclusions as to the proper interpretation of the restrictive covenants and not necessarily that they should have known better. 10) The finding by a jury of their peers that the defendants were not using Lot 29 for residential purposes would seem to have confirmed the defendants' and their experts' opinions in interpreting the use of Lot 29. 11) [Pelosi] is ... an experienced and practicing real estate person, and was living adjacent to the defendants['] development with a clear observation as to the progress of the construction. He had the opportunity to determine from the instigation of the defendants['] plans in 1986 whether to involve himself but expressed no objections until the spring of 1988. Even if [Pelosi's] version were accepted, construction on Lot 29 was substantially completed by July 1987[,] way before [Pelosi] alleges he met with defendants in late 1987 and warned defendants. 12) Since 1986, development has not been enjoined or delayed and additional party defendants have been added who have purchased lots and/or built upon them. The Wailea Ranch Estates may no longer exist as the original entity it once was. 13) Subjecting the defendants as well as subsequent innocent purchase[r]s to the injunctive relief sought by [Pelosi] would create substantial hardship on their part by effectively terminating access to the subdivision and thereby creating an illegal subdivision. The trial court also entered the following conclusions of law: 1) Since defendants did not deliberately or intentionally violate [the] MM III Covenants, injunctive relief is not appropriate. 2) Since defendants did not assume the risk of violating the MM III Covenants, injunctive relief is not appropriate. 3) Since in balancing the equities, the injunctive relief of removal of the road and/or tennis court would not serve justice, injunctive relief is not appropriate. 4) A hearing on damages resulting from defendants' breach of [the] MM III Covenants in addition to the $20,000 already awarded for nuisance is warranted. On October 27, 1995, Pelosi filed a motion for leave to present additional testimony on whether or not access other than Lot 29 is available to Defendant[ ]s['] subdivision. In support of his motion, Pelosi attached the affidavit and report of a civil engineer who stated that an existing fire break road could be upgraded to a residential access roadway for Wailea Ranch. The circuit court denied Pelosi's motion on November 24, 1995. On April 18, 1996, the circuit court held a one-day proof hearing to determine whether Pelosi was entitled to damages for the diminution in value to his property. On June 25, 1996, the circuit court entered findings of fact and conclusions of law regarding Pelosi's entitlement to damages. The circuit court first ruled that, inasmuch as it had previously concluded that the defendants' breach of the MM III covenant was not willful or intentional, Pelosi's alleged past and future emotional and physical damages are not relevant to the proper measure of damages in this breach of restrictive covenant case. The circuit court further concluded that Pelosi did not establish by any credible evidence that the uses complained of ... after the time of the breach of the MM III covenant were of such a material nature as to have caused [Pelosi] damages. [8] Accordingly, the circuit court awarded Pelosi $2.00 in nominal damages. On September 27, 1996, the circuit court entered an amended judgment, granting nominal damages to Pelosi and denying Pelosi's request for a mandatory injunction. [9] Pelosi filed a notice of appeal on December 19, 1996. On May 1, 1998, the ICA filed a memorandum opinion that concluded that the trial court should have issued a mandatory injunction, requiring the removal of the roadway and tennis court on Lot 29. The defendants filed timely applications for certiorari. This court held that two of the defendants, the Sohns, had not received proper service of documents on appeal, and remanded the appeal to the ICA for reconsideration in light of the Sohns' answering brief and Pelosi's reply. Following remand, the ICA's majority opinion affirmed the circuit court's denial of mandatory injunctive relief to Pelosi regarding the removal of the roadway of Lot 29, but concluded that Pelosi was entitled to a mandatory injunction ordering the removal of the tennis court from Lot 29. Pelosi II at 534, 985 P.2d at 1101. The ICA majority based its decision on the determination, drawn from the supreme court's analysis in Sandstrom v. Larsen, 59 Haw. 491, 583 P.2d 971 (1978), that mandatory injunctive relief must be granted as the remedy for a violation of a restrictive covenant if two requirements are met: (1) the defendant had actual or constructive knowledge of the restrictive covenant; and (2) despite such knowledge, the defendant deliberately and intentionally proceeded with construction violative of the covenant or intentionally assumed the risk of violating the covenant without first obtaining a resolution of the covenant. Pelosi II at 528, 985 P.2d at 1095. The ICA majority observed that the record overwhelmingly indicates that the WRE Defendants satisfied both parts of the two-prong test. Id. at 528, 985 P.2d at 1095 (emphasis added). The ICA majority expressed concern, however, that [a]lthough the Individual Defendants presumably had at least constructive notice of the restrictive covenant at issue, [10] there is no evidence that they participated in any way in the construction of the roadway or tennis court that were in violation of the restrictive covenant. Id. at 530, 985 P.2d at 1097. The ICA majority characterized the individual defendants as innocent purchasers and weighed the relative hardships to the parties to determine whether injunctive relief should issue. Id. at 532, 985 P.2d at 1099. Applying the relative hardship analysis, the ICA majority determined that, [s]ince Pelosi waited until May 1988 to formally request that the WRE Defendants remove the roadway and until August 1988 to file the instant action, we cannot conclude that the circuit court erred when it considered Pelosi's delay, balanced the equities, determined that closing up the roadway would deprive the Individual Defendants of access to the WRE Subdivision and create too much of a hardship on them, and consequently, declined to award Pelosi mandatory injunctive relief. Id. at 533, 985 P.2d at 1100. On the other hand, the ICA majority observed that, given the clear evidence[,] ... we cannot conclude that Pelosi's failure to file the underlying lawsuit until August 19[8]8 constituted laches that would deprive Pelosi of any entitlement to mandatory injunctive relief as to the tennis court. Id. at 534, 985 P.2d at 1101. Finally, the ICA majority concluded that, inasmuch as Pelosi had moved for a mandatory injunction `based on the trial transcript and the exhibits admitted in evidence at the trial[,]' ... we cannot conclude that the circuit court abused its discretion when it refused to allow Pelosi a second chance to prove his entitlement to a mandatory injunction. Id. at 533-534, 985 P.2d at 1100-1101.