Dawson v. Holiday Pocono Civic Ass'n

36 Pa. D. & C.5th 449
CourtPennsylvania Court of Common Pleas, Carbon County
DecidedJanuary 21, 2014
DocketNo. 12-1809
StatusPublished

This text of 36 Pa. D. & C.5th 449 (Dawson v. Holiday Pocono Civic Ass'n) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Carbon County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dawson v. Holiday Pocono Civic Ass'n, 36 Pa. D. & C.5th 449 (Pa. Super. Ct. 2014).

Opinion

NANOVIC, P.J.,

— Whether property owners in a private residential community hold the basic right to lease their property or whether this right is subject to regulation under the restrictive covenants applicable to the community — to the point of prohibiting any lease for a term of less than one year — is the primary issue at stake in these proceedings. In resolving this issue, the meaning, significance, and enforceability of various deed covenants, bylaws, and rules and regulations in effect for the community, as well as their relationship to the governing municipality’s zoning ordinance and state statutes, are critical.

FACTUAL AND PROCEDURAL BACKGROUND

[451]*451The plaintiffs, Richard Dawson, John Montagno and John Nelson, own property in Holiday Pocono (“development”), a private residential subdivision in Kidder Township, Carbon County, Pennsylvania.1 The development consists of approximately fifteen hundred lots on which four hundred thirty-nine homes have been built. (George Dep., pp. 69-71, 5/17/13).2 Each lot in the development is subject to a common set of restrictive covenants. Covenants 1,12, and 13 are directly at issue in these proceedings. They provide as follows:

1. The premises hereby conveyed, shall be used for residential purposes only. No building shall be erected, altered, placed or permitted to remain on the premises hereby conveyed other than one (1) detached single-family dwelling, not to exceed two (2) and one-half stories in height, and a private garage for not more than two (2) cars.
12. An association of all property owners is to be formed by the grantor and designated by such name as may be deemed appropriate, and when formed, the buyer covenants and agrees that he, his executors, heirs or assigns, shall be bound by the bylaws, rules and regulations as may be duly formulated and adopted by [452]*452such association and that they shall be subject to the payment of annual dues and assessments of the same.
13. The buyer agrees not to sell, rent, lease or permit the premises hereby conveyed, excepting to persons first approved for membership in the aforementioned association, nor shall signs for advertising purposes be erected or maintained on the premises.

Located on each of plaintiffs’ properties is a single-family residential dwelling which plaintiffs do not use as their primary residence. In the past, plaintiffs have rented their properties to third parties as vacation homes, or otherwise for short periods of time (i.e., monthly, weekly or weekends), and desire to do so in the future. The parties do not dispute that plaintiffs purchased their properties with the intent of renting to others and in which they would reside for only brief periods of time each year.

By letter dated January 15, 2011, Holiday Pocono Civic Association, Inc. (“association”), the property owners’ association for the development,3 notified two of the plaintiffs, Richard Dawson and John Montagno, that the renting of their properties on a transient or short-term basis was prohibited by the development’s restrictive covenants, the association’s bylaws, and the township’s zoning ordinance. This notice did not cite to any specific provisions of the deed covenants, bylaws, or Kidder Township Zoning Ordinance that plaintiffs were allegedly [453]*453violating. The letter, bearing the caption “warning notice,” further stated that “ [i] f y ou continue with this type of rental, you will be subject to fines and/or further legal action for the day the violation occurs. Please be advised that the penalty for a second violation of this nature will result in a $300.00 a day fine and a third violation will result in a $400.00 a day fine. All similar subsequent violations will result in a $500.00 a day fine.” Plaintiff, John Montagno, was later advised by letter dated March 21, 2011, that the association would allow him to honor his existing rental agreements through December 31,2011, without incurring any transient rental fines. In consequence, plaintiffs claim they have been prevented from renting their properties on a short-term basis since January 1, 2012.

After several attempts to resolve their differences proved unsuccessful, plaintiffs commenced the present action against the association and Hank George4 by complaint filed on August 17, 2012. Therein, plaintiffs request a declaratory judgment against the association confirming plaintiffs’ right to lease their properties as they have in the past (Count I), an injunction enjoining defendants from preventing the short-term rental of plaintiffs’ properties (Count II), compensatory and punitive damages on behalf of the plaintiffs, Richard Dawson and John Montagno, for alleged fraudulent misrepresentation in directing these plaintiffs to terminate the short-term leasing of their properties (Count III) and, in the alternative to Count III, compensatory and punitive damages for negligent [454]*454misrepresentation (Count IV). Both parties have taken discovery and both have filed motions for summary judgment.5

DISCUSSION

Covenant 1 — Residential Use

The parties do not dispute that Covenant 1 restricts the use of plaintiffs’ properties to that for residential purposes. Plaintiffs contend that this, in fact, is what the properties have been used for: that both they and their tenants use the properties as a dwelling within which to reside, albeit on a temporary or short-term basis. The association argues that the rental of the properties for short periods transforms what would otherwise be a residential use to a commercial use for generating income, and that the rental of these properties on a short-term basis is incompatible with the residential character of the development sought to be protected by the deed covenants.

Accordingly, the validity and enforceability of Covenant 1 is not in issue, but rather its interpretation. As [455]*455to the interpretation of Covenant 1, deed covenants are a form of contract and are to be interpreted as such.

The interpretation of any contract is a question of law for the court. Currid v. Meeting House Restaurant, Inc., 869 A.2d 516, 519 (Pa. Super. 2005). As a general rule of contract interpretation, the intention of the parties at the time the contract is entered into governs. Baumgardner v. Stuckey, 735 A.2d 1272, 1274 (Pa. Super. 1999). The same is true in interpreting restrictive covenants. Id. However, there is an important difference in the rule of interpretation as applied to restrictive covenants on the use of land. Id. Restrictive covenants are limitations on a person’s “free and unconstrained use of property.” Richman v. Mosites, 704 A.2d 655, 657 (Pa. Super. 1997). They are not favored by the law, yet they are legally enforceable. Logston v. Penndale, Inc., 394 Pa. Super. 393, 576 A.2d 59, 62 (1990). As such, they are to be strictly construed against persons seeking to enforce them and in favor of the free and unrestricted use of property. Baumgardner, 735 A.2d at 1274.

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Bluebook (online)
36 Pa. D. & C.5th 449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dawson-v-holiday-pocono-civic-assn-pactcomplcarbon-2014.