Shipyard Property Owners' Ass'n v. Mangiaracina

In this declaratory judgment action, Shipyard Property Owners’ Association (Shipyard) seeks a judicial declaration granting it authority to alter the assessment provisions in the covenants and restrictions for certain property owners in Shipyard Plantation, a planned unit development (PUD). The master concluded Shipyard could not alter the assessment provisions and Shipyard appeals. We affirm.

*305There is no dispute as to the basic facts of this case. Shipyard Plantation is a PUD on Hilton Head Island consisting of single-family residential, multi-family residential, recreational, and commercial areas. The PUD was developed over a thirteen year period from 1970 to 1983.

The original developer, The Hilton Head Company, Inc., established certain covenants and restrictions applicable to all the property. Rather than file a single declaration of covenants covering all residential areas, it prepared and filed separate documents for each residential area at or near the time the area was developed.

All together, thirty-two (32) sets of covenants and restrictions were filed. The covenants and restrictions expressly run with the land and appear to be uniform, except for provisions relating to the assessments to be paid for community services and the maintenance of common areas. Five of the covenants provide for fixed assessments, while the remaining twenty-seven provide for variable assessments.

Of the two hundred seventy-nine (279) single family dwelling units, seventy-nine (79) pay a fixed annual assessment of $50.00 per year. Of the eleven hundred ninety-nine (1,199) multi-family dwelling units, one hundred (100) units pay a fixed assessment of $50.00 per year and fifty-one (51) units pay a fixed assessment of $100.00 per year. Thus, of the fourteen hundred seventy-eight (1,478) dwelling units in the PUD, two hundred thirty (230) pay fixed annual assessments of either $50.00 or $100.00. The remaining twelve hundred forty-eight (1,248) dwelling units pay a variable annual assessment. The present variable assessment for most units is $385.00 per year. The variable assessments are subject to annual increases.

The fixed assessment covenants and restrictions were executed between December 1970 and February 1977. During that period of time, a total of six variable assessment covenants were also executed.1 There is no explanation in the covenants nor is there a readily discernible reason why some *306covenants provided for fixed assessments and others provided for variable assessments. As noted by the master, a dramatic example of the disparity created by having both fixed and variable annual assessments may be found by examining the Townhouse Tennis Horizontal Property Regime. Covenants and restrictions covering the thirty-six (36) units in that area were recorded in 1977. Twelve (12) of the units pay fixed assessments of $50.00 per year while the remaining twenty-four (24) units, which are immediately adjacent to the twelve (12), pay annual assessments of $385.00.2

After a bankruptcy proceeding and change of ownership, Shipyard acquired ownership of the common properties in 1988. By virtue of this acquisition, Shipyard assumed responsibility for providing certain community services and maintenance of common properties in the PUD. The master found that, unlike the original developer, Shipyard is a non-profit corporation composed entirely of the residential and commercial owners in the PUD. He also found that with the minor exception of vehicle permit fees, Shipyard’s only source of income is the collection of assessments.3 He further found increases in the cost for providing services are presently borne by property owners with variable annual assessments.4

In 1989, Shipyard brought this action seeking authority to modify the assessment provisions in the covenants of the respondents so as to eliminate the fixed annual assessments and equalize the assessment burden on all property owners in the PUD. Shipyard bases its right to modify the assessments on (1) changed conditions occurring subsequent to the filing of the covenants and (2) the doctrine of reciprocal negative easements which would impose the variable assessment covenants uniformly throughout the PUD. The owners answered and counterclaimed demanding the court uphold the fixed assessments based on the defenses, inter alia, of the statute of frauds, the statute of limitations, lack of jurisdiction, laches, and lack of standing.

*307The master concluded the covenants and restrictions do not permit Shipyard to modify the fixed assessments based on the theories of changed conditions or reciprocal negative easements. He also found he was without jurisdiction in this declaratory judgment action to invalidate express provisions of the covenants and modify the assessments.

The issues raised on appeal are whether: (1) the trial court erred in finding neither the doctrines of changed conditions nor reciprocal negative easements permits modification of the fixed assessments; (2) the trial court committed reversible error in finding Shipyard sought a court ordered modification of the fixed assessments and the attendant ruling that it had no jurisdiction to order modification; and (3) the trial court should have granted the defendants relief based on the defenses raised in their answers and counterclaims.

CHANGED CONDITIONS

The owners first argue the master should not have made a factual determination of whether there were sufficient changed conditions to warrant modification of the covenants. They base their argument on the fact that no testimony or factual stipulations were entered into the record regarding changed conditions. The parties submitted the case to the master on trial briefs only. Thus, the owners assert the master was required to determine the rights of the parties based only on a legal interpretation of the covenants and restrictions.5 At oral argument before this court, Shipyard’s attorney conceded it did not request cancellation or reformation of the covenants and restrictions in its pleadings.6 Additionally, he acknowledged Shipyard makes no contention the covenants and restrictions are unenforceable or illegal. Finally, we note the master found the covenants to be “clear and unambiguous, and not subject to interpretation or construction.” No exception was taken to that finding.

*308Where an action presents a question as to the construction of a written contract and the language of the contract is clear and unambiguous, the question is not one of fact but one of law. J.T.M. Co., Inc. v. Vane, 283 S.C. 512, 323 S.E. (2d) 794 (Ct. App. 1984). Moreover, where the language imposing restrictions upon the use of property is unambiguous, the restrictions will be enforced according to their obvious meaning. Donald E. Blatz, Inc. v. R. V. Chandler & Co., Inc., 248 S.C. 484, 151 S.E. (2d) 441 (1966). With this backdrop of concessions and the master’s unappealed lack of ambiguity finding, we hold the master’s factual findings regarding changed conditions were inappropriate and constitute error.

Although the master went too far in making findings of fact regarding changed conditions, he nevertheless correctly determined there were insufficient grounds for finding a change of circumstances warranting a modification of the covenants. In the first instance, it is not clear to us how the doctrine of changed conditions is applicable to the case sub judice. This doctrine is usually applied to situations restricting the use of land. Assuming the doctrine is applicable, it is clear all purchasers of property in Shipyard Plantation burdened with variable assessments had constructive notice of the prior sale of lots subject to fixed assessments.7

We do not know the reason why certain assessments are fixed while others are variable. As noted by the master: “Here, perhaps the purchasers of fixed rate assessment units paid more, or perhaps because they were early purchasers, to the extent this is true, a fixed rate was an incentive to them not available to later purchasers.”

To defeat enforcement of covenants restricting the use of land, changed conditions must be so radical as to practically destroy the essential objects and purposes of the covenants. Pitts v. Brown, 215 S.C. 122, 54 S.E. (2d) 538 (1949). Aside from the fact there may have been a rational basis for the disparity in assessments, Shipyard has not convinced us the inequity in assessments occurring subsequent to imposition of the covenants is so radical as to destroy the essential purpose of the restrictions and covenants. Indeed, *309Shipyard argues the restrictions and covenants are enforceable. We therefore hold Shipyard has not shown sufficient changed conditions to warrant a court declaration that the fixed assessments are unenforceable or should be modified.

RECIPROCAL NEGATIVE EASEMENTS

The essential elements for proof of a reciprocal negative easement are (1) a common grantor, (2) a designation of land subject to restrictions, (3) a general plan or scheme of restrictions, and (4) covenants running with the land in accordance with such plan or scheme. Bomar v. Echols, 270 S.C. 676, 244 S.E. (2d) 308 (1978); McDonald v. Welborn, 220 S.C. 10, 66 S.E. (2d) 327 (1951). In order for reciprocal negative easements to be created by implication, the implication must be plain and unmistakable. Edwards v. Surratt, 228 S.C. 512, 90 S.E. (2d) 906 (1956). Shipyard argues all of these elements are present in this case. For purposes of this opinion, we acknowledge the record reflects three of the four elements are satisfied. The one element the master found lacking was a general plan or scheme of restrictions.

Generally, the developer must establish the general scheme of development before any lots are sold. Heffner v. Litchfield Golf Co., 258 S.C. 447, 189 S.E. (2d) 3 (1972). To establish a general scheme, it is not necessary for every lot to be restricted in exactly the same manner, but extensive omissions or variations tend to show no scheme existed and the restrictions are only personal contracts. Reyner v. Stephens, 289 S.C. 575, 347 S.E. (2d) 878 (1986) (citing Pitts v. Brown, 215 S.C. 122, 54 S.E. (2d) 538 (1949)).

Here, we think it important to examine the record for evidence whether at the time the last fixed assessment covenant was recorded there was in place a general scheme of covenants burdening the properties in the PUD with variable assessments. This is important because reciprocal negative easements are never retroactive. Sanborn v. McLean, 233 Mich. 227, 206 N.W. 496 (1925). As noted above, during the development period of December 1970 through February 1977, five of the restrictions and covenants provided for fixed assessments and six provided for variable assessments. In fact, the first three restrictions and covenants provided for fixed assessments. Such covenants indicate no plain *310and unmistakable implication that during such period the developer intended to burden the land with variable assessments or intended to reserve the right to modify the fixed assessments. Reyner, 289 S.C. 575, 347 S.E. (2d) 878. We hold Shipyard has not shown a right to imposition of reciprocal negative easements which would provide for variable assessments throughout the PUD.

Shipyard next asserts the master erred in holding he did not have jurisdiction in this declaratory judgment action to modify the covenants. Because of our resolution of the above issues we need not address this question. Similarly, we need not address the appeal of the owners and the additional sustaining grounds.

Affirmed.