RENDERED: AUGUST 21, 2026; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeal
NO. 2025-CA-0192-MR
CHAD A. STEELE AND LINDY D. STEELE APPELLANTS
APPEAL FROM MARSHALL CIRCUIT COURT v. HONORABLE ANDREA LEE MOORE, JUDGE ACTION NO. 23-CI-00304
SRH, LLC APPELLEE AND NO. 2025-CA-1011-MR
SRH, LLC APPELLANT
APPEAL FROM MARSHALL CIRCUIT COURT v. HONORABLE ANDREA LEE MOORE, JUDGE ACTION NO. 23-CI-00304
CHAD A. STEELE AND LINDY D. STEELE APPELLEES
OPINION
AFFIRMING
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BEFORE: COMBS, MOYNAHAN, AND TAYLOR, JUDGES. TAYLOR, JUDGE: Chad A. Steele and Lindy D. Steele (collectively referred to as the Steeles) bring Appeal No. 2025-CA-0192-MR from a January 22, 2025, order of the Marshall Circuit Court granting a motion for summary judgment dismissing their claim that a restrictive covenant burdened real property owned by SRH, LLC (SRH). SRH, LLC, brings Appeal No. 2025-CA-1011-MR from an August 11, 2025, order of the Marshall Circuit Court dismissing its counterclaim for abuse of process against the Steeles. We affirm Appeal Nos. 2025-CA-0192- MR and 2025-CA-1011-MR.1 Background
The Steeles and SRH own lots of real property in Kentucky Lake Subdivision. It appears that the subdivision contains a total of 174 lots. The Steeles purchased their lot (17) on July 5, 2016, and their deed contained a restrictive covenant that prohibited use of the lot for commercial purposes. SRH purchased their lots (18 and 20) on April 1, 2022, and neither the deed nor any deed in its chain of title contained a similar restrictive covenant prohibiting
1 Because these related appeals arise from the same action below, for judicial economy, they have been consolidated for review on the merits by this Court.
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commercial uses. Subsequently, SRH advertised that its property was available for short-term rentals on VRBO.
On September 8, 2023, the Steeles filed a complaint against SRH in the Marshall Circuit Court. Therein, the Steeles alleged:
3. The subdivision/developer of Kentucky Lake Subdivision, Kentucky Lake Subdivision, a partnership, adopted and imposed upon the lots a declaration of restrictions and covenants which included the following:
“No lot or lots in sub-division shall be used for commercial, manufacturing or business purposes. . . .”
The deeds imposing these restrictions stated that they “shall be covenants running with the land.”
4. Said restrictions, including the above-quoted restriction, were adopted to impose a general scheme of development upon the subdivision to induce purchase of the lots for residences, to maintain the subdivision as a desirable residential area and to protect the lots from improper use by future owners.
5. Filing of said restrictions and covenants, which run with the land, burdened the owners of all lots in the subdivision, including lots 18 and 20 (lots owned by Defendant, SRH, LLC) with restrictions in which all owners of lots in the subdivision have an interest and between whom there exists mutuality of consideration and consent; the said restrictions and covenants run with the land and may be enforced by Plaintiffs or any other owner of a lot in the subdivision.
6. Notwithstanding the said restrictions and covenants, and in direct violation of same and of the
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rights of Plaintiffs by reason of the said restrictions and covenants, Defendant is using its lots for business commercial short term rentals.
7. Such use is in violation of the subdivision restrictions and violates the general scheme for which the restrictions were imposed.
8. Defendant has constructive and actual knowledge of the said restrictions and covenants which burden its land.
9. Defendant’s actions violate Plaintiffs’ rights and are causing injury to the Plaintiffs. Defendant should be permanently enjoined from using its lots for business and commercial use.
Complaint at 2-3. The Steeles sought an injunction to prevent SRH from renting the lots for short-term rentals.
SRH filed an answer and counterclaim. In the answer, SRH maintained that no restrictive covenant prohibiting commercial uses was set forth in its deed or in its chain of title. And in the counterclaim, SRH claimed that the Steeles filed the action for the wrongful purpose of coercing it to stop renting the property even though the Steeles knew that no such restrictive covenant was included in its deed or chain of title:
Plaintiffs’ Complaint was filed for an ulterior motive of forcing Defendants to surrender their property rights without justification, not for the purpose of enforcing a restrictive covenant that Plaintiff had constructive and actual notice was not in the Defendant’s chain of title.
Answer at 6. SRH sought compensatory and punitive damages.
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Thereafter, SRH filed a motion for partial summary judgment. SRH argued that no restrictive covenant was included in its deed or in its chain of title as was included in the Steeles’ deed. SRH maintained:
After taking title to the parent tract from the TVA, the McKee developers recorded a subdivision plat for Kentucky Lake Subdivision. The recorded subdivision plat of Kentucky Lake Subdivision also does not contain any restriction on the business use of lots therein. The only restrictions against business use of any lots in Kentucky Lake Subdivision came about after it was subdivided. Those restrictions were placed on some lots, but not all, through warranty deeds from the developers James P. McKee, et al., to some, but not all, of the buyers of lots of the Kentucky Lake Subdivision. These restrictions are included in the chain of title for the Steeles’ lot, but are not included in the chain of title for SRH’s Lots 18 and 20.
....
Plaintiffs’ Complaint attempts to convey the idea that the developer of Kentucky Lake Subdivision filed a deed of restrictions or similar document applicable to all lots in the subdivision. That is simply not the case.
Instead, the restriction cited by the Plaintiff appears only in the developer’s separate conveyance deeds for some, but not all of the lots in the subdivision. The alleged restrictive covenant is not included in any separate declaration of restrictions, it is not included in the plat, and it is not generally applicable to all lots in the subdivision. Most importantly, and dispositive of this case, the supposed restrictive covenant is not included anywhere in the chain of title for Lots 18 and 20.
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Motion for Partial Summary Judgment at 3-5 (citations omitted). As the restrictive covenant was not included in its deed or chain of title, SRH argued that its lots were not burdened by same, and it was entitled to summary judgment.
The Steeles also filed a motion for summary judgment. The Steeles initially cited to the subdivision plat for Kentucky Lake Subdivision. The Steeles pointed out that according to the plat, the subdivision contained 174 lots, and on one lot, the word “commercial” was written thereupon. The Steeles further maintained that of the remaining 173 lots, the deeds to 168 lots contained the restrictive covenant prohibiting commercial uses. The Steeles stated that the restrictive covenant was plainly intended to run with the land and to bind every lot in the subdivision, including the lots owned by SRH. The Steeles also argued that as the subdivision plat only included one lot for commercial uses, it was reasonable to infer that commercial uses were prohibited upon the remaining lots.
By order entered January 22, 2025, the circuit court granted SRH’s motion for partial summary judgment and denied the Steeles’ motion for summary judgment. The court concluded that as the restrictive covenant was not in SRH’s deed, chain of title, or set forth on the subdivision plat, the restrictive covenant was unenforceable against SRH:
1. Under current and clear Kentucky law, a restrictive covenant must appear in the chain of title of the burdened parcel in order to be enforceable. See Oliver v. Schultz, 885 S.W.2d 699, 701 (Ky. 1994).
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Thus, a restrictive covenant cannot bind or burden land when it does not appear directly in the chain of title for that land such that an ordinary and prudent attorney performing a title search would be on notice of the restrictive covenant. Id. Because Defendant did not have record notice of the alleged restrictions, Defendant is not bound, and its land is not burdened, by the alleged restrictions. There is no way around this conclusion in the face of the Supreme Court’s clear language in Oliver.
January 22, 2025, Order at 1. The order included complete Kentucky Rules of Civil Procedure (CR) 54.02 language.
The Steeles then filed a motion for summary judgment seeking dismissal of the counterclaim alleging abuse of process. The Steeles asserted that they harbored no ulterior purpose for filing the action as they merely sought to enforce the restrictive covenant upon lots purchased by SRH. The Steeles maintained that they believed the restrictive covenant was applicable to all lots in the subdivision. The Steeles argued that filing an action that ultimately proved to lack a legal basis did not constitute an ulterior purpose, and they were entitled to summary judgment dismissing the abuse of process claim.
In response, SRH maintained that the Steeles knew that the restrictive covenant was not included in its deed or in its chain of title; nonetheless, the Steeles pursued legal proceedings to coerce SRH into complying with their demands to stop using its property for short-term rentals. Additionally, SRH pointed out that legal counsel for the Steeles sent a letter, wherein the Steeles
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demanded compliance with the restrictive covenant or ligation would be initiated. According to SRH, “[t]hreatening a lawsuit that has no basis in fact and then continuing the baseless lawsuit all the way to its expensive conclusion is not a proper use of the legal system and raises a genuine issue of material fact as to improper motive.” Response at 4.
Subsequently, by order entered August 11, 2025, the circuit court entered summary judgment dismissing SRH’s claim of abuse of process. The court determined that “[t]he purpose of movants’ lawsuit was to enforce a restrictive covenant against Defendant/Counterclaimant. This was the stated purpose of the lawsuit, not an ulterior purpose.” August 11, 2025, order at 1.
The Steeles filed a notice of appeal (Appeal No. 2025-CA-0192-MR)
from the January 22, 2025, order, and SRH filed a notice of appeal (Appeal No. 2025-CA-1011-MR) from the August 11, 2025, order. We shall address each appeal seriatim.
STANDARD OF REVIEW
Summary judgment is proper where there exists no genuine issue of material fact and movant is entitled to judgment as a matter of law. CR 56.03; Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). All facts and inferences therefrom are viewed in a light most favorable to the
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nonmoving party. Our review thereon is de novo. Ashland Hosp. Corp. v. Darwin Select Ins. Co., 664 S.W.3d 509, 515-16 (Ky. 2022).
APPEAL NO. 2025-CA-0192-MR The Steeles contend that the circuit court improperly rendered summary judgment concluding that SRH’s lots were not burdened by the restrictive covenant. The Steeles point out that of the 174 lots in the subdivision, the deeds to 168 lots contain the restrictive covenant. The Steeles argue that the restrictive covenant upon the 168 lots runs with the land and bound subsequent purchasers. The Steeles maintain that the SRH’s lots were originally sold by the developer to third parties, but the deeds were never recorded, and no copy exists. The Steeles believe that the original deeds “likely” contained the restrictive covenant. Steeles’ Brief at 4. The Steeles also cite to the subdivision plat upon which one lot was designated for commercial use, and no other lots were so designated. The Steeles assert that “[t]he owners of the 168 lots, all of whom had the restrictions in their chain or title, should be able to rely on the restrictions to protect them from commercial activity in their residential neighborhood.” Steeles’ Brief at 5. For the reasons hereinafter set forth, we conclude that the circuit court properly determined that the lots owned by SRH were not burdened by the restrictive covenant.
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In this case, it is undisputed that the restrictive covenant prohibiting commercial uses of lots was not in the deed conveying the lots to SRH and does not appear in its chain of title. A subdivision plat was filed of record, and on the plat, there were 174 lots, roads, and a common parking lot drawn thereupon. On one lot, the word “commercial’ was directly written on top of the lot, but no restrictions as to the lots or subdivision were specifically included on the plat. Additionally, there appears to be no deed of restrictions filed prior to the conveyance of any lots by the developer concerning the subdivision. Rather, the restrictive covenant prohibiting commercial uses of the lots are found in the individual deeds and chains of title to 168 of the 174 lots.
The Steeles essentially seek to impose the restrictive covenant upon the lots purchased by SRH because such restrictive covenant exists in collateral deeds to other lots in the subdivision, and according to the Steeles, the grantor/developer intended the restrictive covenant to be applicable to all lots in the subdivision. The Steeles believe that SRH had actual and constructive notice of the restrictive covenant and are bound thereby. In effect, the Steeles seek to impose a reciprocal negative easement or covenant upon the lots owned by SRH.
A reciprocal negative easement “is a covenant which equity raises and fastens upon the title of a lot or lots carved out of a tract that will prevent their use in a manner detrimental to the enjoyment and value of neighboring lots sold with
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express restrictions in their conveyance.” McCurdy v. Standard Realty Corp., 175 S.W.2d 28, 29 (Ky. 1943). Historically, a reciprocal negative easement was recognized where:
[T]here . . . [was] a common owner of the related parcels of land, and in his various grants of the lots he must have included some restriction, either affirmative or negative, for the benefit of the land retained, evidencing a scheme or intent that the entire tract should be similarly treated, so that once the plan is effectively put into operation, the burden he has placed upon the land conveyed is by operation of law reciprocally placed upon the land retained.
Bellemeade Co. v. Priddle, 503 S.W.2d 734, 736 (Ky 1973) (quoting First Security Bank & Trust Co. of Lexington v. Peter, 456 S.W.2d 46, 50 (Ky. 1970)); see Black v. Birner, 179 S.W.3d 873, 878 (Ky. App. 2005).
Examining the requirements of a reciprocal negative easement, in Bishop v. Rueff, 619 S.W.2d 718, 720 (Ky. 1981),2 the Court of Appeals held that “the grantee is charged with notice of an encumbrance upon property created by an instrument which is of record, notwithstanding the fact that it may exist only collaterally in the chain of title.” The Bishop Court imposed a restrictive covenant upon property even though the restriction was not contained in the property’s deed, chain of title, subdivision plat, or deed of restrictions:
2 As hereinafter explained, Bishop v. Rueff, 619 S.W.2d 718 (Ky. 1981), was overruled in part by Oliver v. Schultz, 885 S.W.2d 699 (Ky. 1994).
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While the Bishops’ deed was not in appellees’ chain of title, we are aware of no rule that a restrictive covenant of this nature must meet such requirement. We believe that appellees were on constructive notice as to the restriction limiting fences, and there is some evidence of actual notice. The “chain of title” argument seems to have been disposed of by Harp v. Parker, [128 S.W.2d 211 (Ky.
1939)].
We believe the governing principle involved is stated in McLean v. Thurman, Ky., 273 S.W.2d 825, 829 (1954). Where the owners of two or more lots situated near one another convey one of the lots with express restrictions applying thereto in favor of the land retained by the grantor, the servitude becomes mutual, and during the period of restraint the owner of the lots retained may do nothing that is forbidden to the owner of the lot sold.
The restriction is enforceable against the grantor, or subsequent purchaser, with notice, actual or constructive.
Bishop, 619 S.W.2d at 720 (citation omitted).
However, in Oliver v. Schultz, 885 S.W.2d 699, 701 (Ky. 1994), the Kentucky Supreme Court specifically sought to clarify “the law in this area.” Therein, the Supreme Court overruled Bishop in part and held that a restrictive covenant was only enforceable if contained in a recorded instrument in the grantee’s chain of title or in a recorded instrument that would put a reasonably prudent attorney on notice of the restrictive covenant when performing a title search:
[W]e hold that Bishop is only applicable under two circumstances: first, where the remainder of the grantor’s property is restricted in a deed of conveyance in such a manner that the restriction runs with the land; and
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second, that a subdivision plat, a deed of restrictions, or some other instrument of record is filed that would place an ordinary and reasonably prudent attorney performing a title search on notice of the restrictions in question. To the extent that Bishop allows a restriction placed in a collateral chain of title to bind a subsequent grantee in the absence of a recorded subdivision plat or deed of restrictions, it is overruled. In the future, restrictive covenants will be enforced under Kentucky law only when the restriction is placed in a recorded instrument, actual notice of a purported restriction notwithstanding.
Oliver, 885 S.W.2d at 701. Thus, the Oliver Court substantially narrowed the application of reciprocal negative easements.
Thereafter, in Black v. Birner, 179 S.W.3d 873, 878 (Ky. App. 2005), the Court of Appeals explained that there are generally three types of reciprocal covenants:
(1) those created by a developer at the time the land in question is being subdivided; (2) those imposed by a grantor when selling a portion of his or her land; and (3)
those agreed upon by owners of adjoining lands for their mutual benefit.
Relevant herein is the first type of covenant discussed in Black.
Under the first type, the restrictive covenant is created to carry out a general scheme to divide property for developmental purposes, such as a subdivision, and a uniform restrictive covenant is included in every individual deed to lots therein or is included in a recorded deed of restrictions or plat:
The first class consists of those “which are entered into with the design to carry out a general scheme for the
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improvement or development of real property.” In this class, “an owner of a large plot or tract of land divides it into building lots, to be sold to different purchasers for separate occupancy, by deeds which contain uniform covenants restricting the use which the several grantees may make of their premises.”
More recently, developers have adopted the practice of setting out the covenants in a single declaration that is recorded against the lots in the development before any conveyances are made. The declaration is then incorporated by reference in subsequent deeds to various lots.
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“In such cases the covenant is enforceable by any grantee as against any other, upon the theory that there is a mutuality of covenant and consideration, which binds each and gives to each the appropriate remedy.” This type of covenant is enforceable by and against subsequent purchasers.
Id. at 878-79 (citations and footnotes omitted) (quoting Korn v. Campbell, 85 N.E. 687, 689 (1908)).
Viewing the facts most favorable to the Steeles, the restrictive covenant prohibiting commercial use was not included in SRH’s deed or chain of title and was not found in a recorded deed of restrictions or subdivision plat. In fact, the restrictive covenant was not included in the deeds and chains of title to five lots in the subdivision. The subdivision plat did include a lot with the word “commercial” written on it; however, there was no specific restriction placed upon any lot by the subdivision plat, includes those owned by SRH. A reasonable
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attorney would not have been put on notice that any lot within the subdivision was restricted in use by reviewing the subdivision plat. See Oliver, 885 S.W.2d at 701. In order to establish a reciprocal negative easement, a recorded instrument evidencing the restrictive covenant must be placed in the grantee’s chain of title. See id. at 701. Here, no such recorded instrument exists. Therefore, we conclude that the lots owned by SRH were not burdened by the restrictive covenant prohibiting commercial uses and that SRH was entitled to summary judgment.
APPEAL NO. 2025-CA-1011-MR SRH asserts that the circuit court improperly rendered summary judgment dismissing its claim of abuse of process. SRH claims that the Steeles sent SRH a letter dated May 23, 2023. In the letter, SRH recounted that the Steeles demanded that SRH cease the short-terms rentals as it violated the restrictive covenant or legal proceedings would be instituted. SRH argues that the Steeles sent the demand letter even though they knew the restrictive covenant was not in the deed or chain of title to SRH’s lots. Citing to Sprint Communications Co., L.P. v. Leggett, 307 S.W.3d 109, 114 (Ky. 2010), SRH maintains:
The Steeles’ May 23, 2023 letter mirrors the coercive tactic condemned in Sprint. Like Sprint, the Steeles invoked the authority of the courts as a lever to achieve a result the law would not support: forcing SRH to relinquish a lawful property use based on non-existent restrictions. The threat was not a bona fide effort to resolve a dispute and seek an outcome allowed by law, but a calculated attempt to compel compliance with an
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extra-legal demand through fear of litigation expense and reputational harm. The May 23, 2023, letter used the specter of judicial process to secure a private, extralegal objective.
SRH’s Brief at 8-9.
The tort of abuse of process is generally defined as the wrongful or the irregular use of legal proceedings, and it has two elements – “1) an ulterior purpose, and 2) a willful act in the use of the process not proper in the regular conduct of the proceeding.” Leggett, 307 S.W.3d at 114. Kentucky courts recognize that in committing the tort of abuse of process, one must intend to use legal proceedings as a means to secure a collateral advantage:
[T]he gist of the tort [abuse of process] is not commencing an action or causing process to issue without justification, but misusing or misapplying process justified in itself for an end other than that which it was designed to accomplish. The purpose for which the process is used, once it is issued, is the only thing of importance. . . . The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance or any formal use of the process itself, which constitutes the tort.
Leggett, 307 S.W.3d at 113 (quoting Flynn v. Songer, 399 S.W.2d 491, 494 (Ky. 1966)). Thus, to sustain a claim for abuse of process, “there must be use of the process for an immediate purpose other than that for which it was designed and
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intended.” RESTATEMENT (SECOND) OF TORTS § 682 cmt. b (1977); see also Garcia v. Whitaker, 400 S.W.3d 270, 277 (Ky. 2013).
Viewing the facts most favorable to SRH, the May 23, 2023, letter merely set forth the Steeles’ legal position that SRH’s lots were burdened by the restrictive covenant prohibiting commercial uses and that SRH was violating the restrictive covenant by its short-term rentals. In the letter, the Steeles threatened legal action if SRH did not comply and persisted in violating the restrictive covenant. As SRH continued the short-term rentals, the Steeles filed the action seeking injunctive relief to prohibit SRH from violating the restrictive covenant. SRH’s claim for abuse of process fails because it did not demonstrate that the Steeles acted with an ulterior purpose.
The record reflects that the Steeles initiated the civil action for the purpose of enforcing the restrictive covenant against SRH and to enjoin SRH from engaging in short-term rentals in violation thereof. The action may have ultimately lacked merit, but the action was not initiated by the Steeles to obtain a collateral advantage; rather, it was initiated to enforce an alleged restrictive covenant, which is a legitimate underlying purpose for the legal action. Thus, we conclude that SRH’s claim of abuse of process was properly dismissed by summary judgment.
For the foregoing reasons, Appeal No. 2025-CA-0192-MR and Appeal No. 2025-CA-1011-MR are affirmed.
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ALL CONCUR.
BRIEFS FOR BRIEFS FOR APPELLANTS/APPELLEES CHAD APPELLEE/APPELLANT SHR, A. STEELE AND LINDY D. LLC: STEELE:
Adam Futrell
Robert L. Prince Paducah, Kentucky Benton, Kentucky