Court Opinion

ID: 4352793
Source: CourtListenerOpinion
Date Created: 2018-12-20 16:07:34.828116+00
Date Added: 2024-06-11T14:44:57.405730
License: Public Domain

FILED
                                                                        Dec 20 2018, 5:56 am

                                                                            CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
Edward W. Hearn                                           Michael H. Michmerhuizen
Johnson & Bell, P.C.                                      William A. Ramsey
Crown Point, Indiana                                      Patrick G. Murphy
                                                          Barrett McNagny LLP
                                                          Fort Wayne, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Kosciusko County Community                                December 20, 2018
Fair, Inc.,                                               Court of Appeals Case No.
Appellant-Defendant,                                      18A-PL-1319
                                                          Appeal from the Kosciusko Circuit
        v.                                                Court
                                                          The Honorable Michael W. Reed,
Mary Clemens, Merle Conner,                               Judge
Judith Conner, and Chris                                  Trial Court Cause No.
Cummins,                                                  43C01-1805-PL-50
Appellees-Plaintiffs.

Friedlander, Senior Judge.

Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018                           Page 1 of 14
[1]   In May of 2018, the trial court preliminarily enjoined Kosciusko County

      Community Fair, Inc. (“the Fair”) from conducting motorized races on its

      property. On appeal, the Fair contends that Mary Clemens, Merle Conner,

      Judith Conner, and Chris Cummins (collectively, “Homeowners”) lacked

      standing to seek the requested injunctive relief. The Fair alternatively contends

      that the trial court erred in granting said relief. We affirm.

[2]   On June 27, 1989, James A. Cummins, Robert L. Fuson, Michael G. Hall, R.

      John Handel, George M. Haymond, J. Joseph Shellabarger, Fredric T.

      Stephens, Kenneth O. Truman, and H. Rex Wildman (collectively, “Original
                                                                                        1
      Homeowners”) filed a complaint against the Fair’s predecessor after a dispute

      arose regarding the operation of an automobile racetrack located on the Fair’s

      property. As part of the settlement of Original Homeowners’ lawsuit, on July

      18, 1990, the Fair executed a restrictive covenant limiting use of the racetrack.

      The restrictive covenant provided that after August 11, 1990, the Fair shall not

      use its property for motorized racing, except that it “shall have the right to

      continue the use of its grandstand and racetrack facility … for recreational

      and/or fairground activities other than motorized racing[.]” Ex. 1. The

      permissible activities included truck and tractor pulling contests during fair

      week each calendar year, two automobile demolition derbies each calendar

      year, musical presentations, bicycle racing, and rodeos. Pursuant to its terms,

      1
       The Fair was previously called Kosciusko County Fair Association, Inc. At some point, the Fair’s name
      was changed to Kosciusko County Community Fair, Inc. Given that the change appears to be a change in
      name only, we will hereinafter refer to both entities interchangeably as “the Fair.”

      Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018                        Page 2 of 14
      the restrictive covenant was binding on the Fair and Original Homeowners and

      was enforceable by Original Homeowners and their successors and assigns.

[3]   On May 2, 2018, Homeowners filed a complaint requesting injunctive relief

      against the Fair. Specifically, Homeowners sought to enforce the restrictive

      covenant and to prevent the Fair from conducting motorized races on its

      property. On May 16, 2018, the trial court found that Chris Cummins had

      standing to seek to enforce the restrictive covenant and issued a preliminary

      injunction enforcing the restrictive covenant and enjoining the Fair from

      conducting motorized racing on its property.

                                                1. Standing
[4]   The Fair contends that in order for Homeowners to have standing to sue to

      enforce the restrictive covenant, at least one of them must be an Original

      Homeowner or a successor or assign of one of the Original Homeowners listed

      in the covenant, and, because that is not the case, Homeowners lack standing to

      enforce the restrictive covenant. “The doctrine of standing focuses on whether

      the complaining party is the proper person to invoke the Court’s power.” Hulse

      v. Ind. State Fair Bd., 94 N.E.3d 726, 730 (Ind. Ct. App. 2018) (internal

      quotation omitted). “The standing requirement restrains the judiciary to

      resolving only those cases and controversies in which the complaining party has

      a demonstrable injury.” Id. “Whether a party has standing is a pure question of

      law that we review de novo.” Id.

      Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018       Page 3 of 14
[5]   In arguing that Homeowners lack standing, the Fair alleges that the restrictive

      covenant at issue does not extend to them. “Restrictive covenants are a form of

      express contract between grantor and grantee.” Rasp v. Hidden Valley Lake, Inc.,

      519 N.E.2d 153, 157 (Ind. Ct. App. 1988). “Generally, the purpose behind a

      restrictive covenant is to maintain or enhance the value of land, often times by

      controlling the nature and use of surrounding lands.” Id. These covenants

      obligate a party “to do or not to do a particular act.” Keene v. Elkhart Cty. Park

      & Rec. Bd., 740 N.E.2d 893, 896 (Ind. Ct. App. 2000). Covenants, when

      written, “are generally construed in the same manner as other written contracts,

      and we apply them according to their ordinary meaning when possible.” Land

      Innovators Co., L.P. v. Bogan, 15 N.E.3d 23, 31 (Ind. Ct. App. 2014), trans. denied.

[6]   “Restrictive covenants run with the land if 1) the covenantors intended it to run,

      2) the covenant touches and concerns the land, and 3) there is privity of estate

      between subsequent grantees of the original covenantor and covenantee.”

      Oakes v. Hattabaugh, 631 N.E.2d 949, 952 (Ind. Ct. App. 1994), trans. denied.

      There are two types of privity, horizontal privity and vertical privity. Columbia

      Club, Inc. v. Am. Fletcher Realty Corp., 720 N.E.2d 411 (Ind. Ct. App. 1999), trans.

      denied. “Horizontal privity is generally established by evidence that the original

      parties to the covenant had some mutual or successive interest either in the land

      burdened by the covenant or the land benefitted by it.” Id. at 421. Vertical

      privity is established “where the party seeking to enforce the covenant and the

      party against whom it is to be enforced are successors in title to the property of

      the covenantee and covenantor respectively.” Id.

      Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018     Page 4 of 14
[7]   The restrictive covenant at issue in this case provides as follows:

              [A]fter August 11, 1990, [the Fair] shall not use the Real Estate
              for motorized racing, except [the Fair] shall have the right to
              continue the use of its grandstand and racetrack facility on the
              Real Estate for recreational and/or fairground activities other
              than motorized racing, including but not limited to truck and
              tractor pulling contests during fair week each calendar year, two
              (2) automobile demolition derbies each calendar year, musical
              presentations, bicycle racing, and rodeos. The foregoing shall
              constitute a covenant running with the Real Estate and shall be
              binding upon [the Fair] and [Original] Homeowners and all
              persons claiming under them. This covenant shall be enforceable
              by [Original] Homeowners and their successors and assigns.

      Ex. 1 (emphases added). The above-quoted language clearly indicates that the

      covenantor intended for the covenant to run with the land and it is undisputed

      that the covenant touches and concerns the land. As such, the only question

      remaining is whether there is privity of estate between Original Homeowners

      and Homeowners.

[8]   It is uncontested that James A. Cummins was one of the original covenantees.

      Chris Cummins testified that in 1998 he purchased the property that was owned

      by James when the restrictive covenant was executed. In light of this

      testimony, the trial court found that Chris Cummins is a successor in title to the

      real estate owned by James A. Cummins. The Fair’s challenge to this finding

      amounts to nothing more than a request that we reweigh the evidence, which

      we will not do. Great Lakes Anesthesia, P.C. v. O’Bryan, 99 N.E.3d 260 (Ind. Ct.

      App. 2018). Because we agree that Chris Cummins is a successor in interest to

      Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018    Page 5 of 14
       one of the Original Homeowners, we conclude that there is vertical privity of

       estate. As a result, the restrictive covenant runs with the land and Chris

       Cummins had standing to enforce the restrictive covenant.

                     2. Order Granting Preliminary Injunction
[9]    The Fair also contends that the trial court erred in granting the preliminary

       injunction. “The issuance of a preliminary injunction is within the sound

       discretion of the trial court, and the scope of appellate review is limited to

       deciding whether there has been a clear abuse of discretion.” Bowling v.

       Nicholson, 51 N.E.3d 439, 443 (Ind. Ct. App. 2016), trans. denied. The decision

       to grant a preliminary injunction is measured by several factors: (a) whether the

       movant’s remedies at law were inadequate, thus causing irreparable harm

       pending resolution of the substantive action; (b) whether the movant had at

       least a reasonable likelihood of success at trial by establishing a prima facie

       case; (c) whether the threatened injury to the movant outweighed the potential

       harm to the non-movant that would result from the granting of an injunction;

       and (d) the public interest would not be disserved by the granting of a

       preliminary injunction. Id. The movant bears the burden to prove by a

       preponderance of the evidence that injunctive relief is warranted. Crossmann

       Cmtys., Inc. v. Dean, 767 N.E.2d 1035 (Ind. Ct. App. 2002).

                               a. Adequacy of Remedies at Law
[10]   The Fair claims that Homeowners failed to prove that their remedies at law

       were inadequate, thus causing them to suffer irreparable harm.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018      Page 6 of 14
               Irreparable harm is that harm which cannot be compensated for
               through damages upon resolution of the underlying action. Mere
               economic injury is not enough to support injunctive relief. The
               trial court should only award injunctive relief where a legal
               remedy will be inadequate because it provides incomplete relief
               or relief that is inefficient to the ends of justice and its prompt
               administration.

       Coates v. Heat Wagons, Inc., 942 N.E.2d 905, 912 (Ind. Ct. App. 2011) (internal

       quotations and citation omitted).

[11]   Chris Cummins testified that the motorized racing would cause him irreparable

       harm because it “infringes on your time with your family to be able to go

       outdoors which is what most people do that live on a lake, [b]e it have family

       over, a cookout, to spend quality time with your family and friends and being

       able to talk and not have the noise and the dust and the loud speakers echoing

       across the lake and into your ear and then, more so, the investment that I

       worked hard in my life to buy that home on the lake.” Tr. Vol. 2, p. 18. He

       further compared the noise coming from the racing cars to the noise that a

       chainsaw makes, giving off “a high pitch screech” that carries across the lake.

       Id. at 12. In finding irreparable harm, the trial court stated:

               In this case, there is no legal remedy that will adequately
               compensate [Homeowners]. There is no legal remedy that will
               compensate [Homeowners] for the noise and disruption to their
               use of their property. [Homeowners’] use of their real estate—
               once precluded or compromised by [the Fair]—is gone forever.
               [Homeowners] have established irreparable harm.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018     Page 7 of 14
       Appellant’s App. Vol. II, p. 12. In challenging the trial court’s finding, the Fair

       argues that Homeowners did not establish the monetary value of the harm. The

       Fair also points to the testimony of an individual who claims that the motorized

       racing at issue did not disrupt her use and enjoyment of her property. The

       Fair’s arguments, however, amount to nothing more than a request for this

       court to reweigh the evidence, which, again, we will not do. See O’Bryan, 99
N.E.3d 260.

                                b. Likelihood of Success at Trial
[12]   In arguing that Homeowners did not have a reasonable likelihood of success at

       trial, the Fair makes four claims. First, it claims that the restrictive covenant

       could not be enforced because it lacked an essential term. In making this claim,

       the Fair argues that a legal description of the benefitting properties was an

       essential term of the restrictive covenant. The Fair, however, failed to cite to

       any authority indicating such. The restrictive covenant clearly identified the

       burdened party and included a legal description of the burdened real estate. It

       also clearly identified the beneficiaries, i.e., the Original Homeowners. The

       language used in the restrictive covenant left no question as to the burdened

       party or real estate or to the beneficiaries. It also clearly stated the restrictions

       that were being placed upon the burdened property and clarified what uses were

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018        Page 8 of 14
       prohibited and what uses were allowed. We therefore conclude that the Fair
                                                                                                         2
       has failed to prove that the restrictive covenant lacked an essential term.

[13]   The Fair next claims that Homeowners did not have a reasonable likelihood of

       success at trial because there was no horizontal privity. In order for a restrictive

       covenant to run with the land, there must be privity of the estate between

       subsequent grantees of the original covenantor and covenantee. Oakes, 631
N.E.2d 949. Again, there are two types of privity, horizontal privity and

       vertical privity. Columbia Club, 720 N.E.2d 411. Although a panel of this Court

       has previously concluded that both vertical and horizontal privity must be

       proved when neither of the original covenantors is a party to the suit, that panel

       acknowledged in that same opinion that the horizontal privity requirement had

       been undermined by the frequent resort to the doctrine of equitable servitudes

       and expressed doubt about whether the requirement for horizontal privity had

       much continuing validity in Indiana. Moseley v. Bishop, 470 N.E.2d 773 (Ind.

       Ct. App. 1984).

[14]   In order to receive a preliminary injunction, Homeowners only had to show a

       reasonable likelihood of success at trial. With respect to privity, Homeowners

       assert that they need not prove horizontal privity because Community Fair

       could easily be considered the same entity as the Kosciusko County Fair

       2
        The Fair also relies on the Statute of Frauds which requires that certain contracts be in writing. See Ind.
       Code § 32-21-1-1(b) (2002). Reliance on the Statute of Frauds is misplaced, however, because the restrictive
       covenant was in writing and was recorded with the Kosciusko County Recorder’s Office.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018                            Page 9 of 14
       Association. Alternatively, Homeowners assert that even if Community Fair

       and the Fair Association were not considered the same entity, Homeowners

       could easily establish that they were entitled to relief under the doctrine of

       equitable servitudes because the restrictive covenant was recorded, giving the
                                           3
       Fair notice of the covenant. We need not decide whether Community Fair and

       the Fair Association are the same entity because our review of relevant

       authority suggests that Homeowners would likely succeed at trial using the

       equitable servitudes doctrine.

[15]   The Fair also claims that Homeowners’ action was barred by the doctrine of

       laches. “Laches is comprised of 1) an inexcusable delay in asserting a right, 2)

       an implied waiver from a knowing acquiescence in existing conditions, and 3)

       prejudice to the adverse party.” Oakes, 631 N.E.2d at 953. “Laches implies

       something more than mere lapse of time; it requires some actual or presumable

       change of circumstances rendering relief inequitable.” Id.

[16]   In claiming that Homeowners’ action was barred by laches, the Fair relies on

       this Court’s opinion in Oakes. In that case, the movant did not voice any

       complaints for a period of two years after learning of the alleged violation of the

       restrictive covenants at issue. In denying the movant’s request for injunctive

       3
         Under the doctrine of equitable servitudes, “a landowner who has actual or constructive notice of a
       covenant concerning the land made by his predecessor in interest may be bound by the covenant even though
       the original covenantors were not in privity of estate.” Moseley, 470 N.E.2d at 778 n.1.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018                       Page 10 of 14
       relief, the court determined that the non-movants were prejudiced by the

       movant’s unexplained delay in seeking relief.

[17]   The evidence in this case, however, does not support the Fair’s assertion that

       Homeowners delayed in asserting their right to enforce the restrictive covenant.

       Chris Cummins testified that when the Fair began conducting motorized races,

       he and other affected homeowners expressed their opposition via letters sent to

       and in meetings with the Fair’s representatives. Randall Shepherd, a member

       of the Fair’s Board of Directors, testified that the Fair had conducted races
                                                    4
       including truck and tractor pulls for the last decade and “the sprint, the series

       600 races for the last three years.” Tr. Vol. 2, p. 51. Shepherd admitted that the

       Board had received at least one letter from a homeowner asking the Fair to stop

       the motorized racing. Shepherd also testified that the Fair “tried to contact

       Chris [Cummins] to sit down with him and talk to him. Previously, two years

       ago or three years ago before we started any of the racing, we contacted Chris and

       he came in and we sat down and talked to him.” Id. at 59 (emphasis added).

       When it became clear that their initial attempts to convince the Fair to comply

       with the restrictive covenant were unsuccessful, Homeowners filed suit. The

       evidence establishes that although Homeowners did not immediately file suit,

       they took other steps to voice their opposition to the Fair’s violation of the

       restrictive covenant. We cannot conclude that Homeowners’ action is barred

       4
        Again, the restrictive covenant expressly allowed for truck and tractor pulling contests during fair week.
       The record is silent as to whether these truck and tractor pulls violated the restrictive covenant or occurred
       during fair week.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018                              Page 11 of 14
       by the doctrine of laches merely because they first attempted to resolve the

       conflict without court intervention.

[18]   The Fair lastly claims that Homeowners did not have a reasonable likelihood of

       success at trial because the restrictive covenant violated the rule against

       perpetuities. “The rule against perpetuities has to do with future estates which,

       by possibility, may not become vested within the time prescribed by law; it

       applies only to future estates which are contingent, and has no application to

       vested estates.” Swain v. Bowers, 91 Ind. App. 307, 316, 158 N.E. 598, 601

       (1927). We agree with the conclusion of the Court of Appeals of Arkansas that

       a restrictive covenant limiting the use of a parcel of land does not violate the

       rule against perpetuities even if it is of indefinite duration. See Malone v. Guynes,

       250 S.W.3d 260 (Ark. Ct. App. 2007). The Fair’s reliance on the rule against

       perpetuities is therefore misplaced.

              c. Injury to Movant Outweighs Harm to Non-Movant
[19]   The Fair next challenges the trial court’s determination that the harm that

       would be suffered by Homeowners if injunctive relief was denied outweighed

       the harm the Fair would suffer if injunctive relief was granted. In making this

       determination, the trial court found:

               Indiana law recognizes that restrictive covenants are a form of
               contract. If [Homeowners] are denied injunctive relief, they will
               be denied a benefit that they considered when they purchased
               their real estate, denied the benefit of their bargain, and denied
               use of their property. The harm to [the Fair] is that it will not be
               able to breach the Restrictive Covenants which it agreed to and

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018      Page 12 of 14
               for which it received a valuable consideration (settlement of a
               lawsuit). The only “harm” suffered by [the Fair] of granting the
               injunction is being forced to abide by obligations to which it
               agreed. Thus, the balance of the harms clearly weighs in favor of
               [Homeowners].

       Appellant’s App. Vol. II, p. 12.

[20]   Given that it is undisputed that the Fair had notice of the restrictive covenant,

       we agree with the trial court’s finding that the only actual harm suffered by the

       Fair is that it would be forced to abide by its earlier bargain. The Fair argues on

       appeal that it would suffer approximately $115,000 in damages in 2018 and

       would be exposed to potential breach of contract claims brought by vendors if

       injunctive relief was granted. We note, however, that given its knowledge of

       the restrictive covenant, the Fair could not have reasonably relied on (1) any

       monies generated by motorized races or (2) conducting motorized races during

       its negotiations with potential vendors. The Fair’s argument again amounts to

       a request for this court to reweigh the evidence, which we will not do. See

       O’Bryan, 99 N.E.3d 260.

                                             d. Public Interest
[21]   The Fair last challenges the trial court’s determination that the public interest

       would not be disserved by the granting of a preliminary injunction. In making

       this determination, the trial court found:

               First, Indiana recognizes the freedom of parties to contract and
               granting the injunction will simply enforce the parties’
               agreement. Granting the injunction and upholding the parties’

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018      Page 13 of 14
               contract would further the public interest. Second, restrictive
               covenants are clothed with a presumption of validity because
               homeowners make decisions to purchase their real estate based
               upon the existence of restrictive covenants. Failing to enforce a
               restrictive covenant deprives home buyers of the benefit of their
               bargain and diminishes property values. Third, the Restrictive
               Covenants resulted from the settlement of litigation. Indiana
               “strongly favors settlement agreements” to resolve disputes. Not
               enforcing the terms of a restrictive covenant that was put in place
               to settle a dispute encourages parties to file lawsuits, litigate, and
               to decline to enter into voluntary agreements to resolve disputes.
               Finally, the public interest will not be disserved by enjoining the
               motorized races, reducing noise pollution and maintaining the
               tranquility of the area and the lake.

       Appellant’s App. Vol. II, pp. 12–13. Without providing supporting evidence,

       the Fair asserts that stopping motorized racing disserves the public interest

       because motorized racing benefits the community by attracting consumers,

       creating jobs, and raising revenue. The Fair’s assertion amounts to yet another

       request for this court to reweigh the evidence, which, again, we will not do. See

       O’Bryan, 99 N.E.3d 260.

[22]   Judgment affirmed.

       Riley, J., and Kirsch, J., concur.

       Court of Appeals of Indiana | Opinion 18A-PL-1319 | December 20, 2018       Page 14 of 14