Rocky Ridge Ranch Property Owners Ass'n v. Areaco Investment Co.

993 S.W.2d 553, 1999 Mo. App. LEXIS 633
CourtMissouri Court of Appeals
DecidedMay 11, 1999
DocketNos. 71978, 72022
StatusPublished
Cited by6 cases

This text of 993 S.W.2d 553 (Rocky Ridge Ranch Property Owners Ass'n v. Areaco Investment Co.) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rocky Ridge Ranch Property Owners Ass'n v. Areaco Investment Co., 993 S.W.2d 553, 1999 Mo. App. LEXIS 633 (Mo. Ct. App. 1999).

Opinion

LAWRENCE E. MOONEY, Judge.

Areaco Investment Company, Inc., (“Ar-eaco”) appeals the trial court’s judgment and issuance of a permanent injunction expunging Areaco’s amendment to a restrictive covenant regarding the Rocky Ridge Ranch subdivision. On appeal, Ar-eaco argues that: (1) the trial court erred in applying the reasonableness/scheme of development test in determining that the second amendment to the restrictive covenant was unreasonable and would destroy the development scheme of Rocky Ridge Ranch; (2) allowing parol evidence to conclude that paragraph twenty-one of the first amended restrictive covenant was ambiguous; and (3) finding that equity and the intent of the parties barred Areaco from voting its lots in order to adopt the Second Amendment to the restrictive covenant.

Rocky Ridge Property Owners [sic ] Association (“the Owners’ Association”) cross-appeals, alleging that the trial court erred in finding that: (1) Areaco was entitled to permit access to Rocky Ridge Ranch by “use members” and members of recreation associations; and (2) Areaco was entitled to full possession and control of the subdivision’s entrance gate. We affirm in part and reverse and remand in part.

Facts

Appellant Areaco is the developer of a 2500 acre residential development named Rocky Ridge Ranch, which was created in Ste. Genevieve County in 1966. The development was designed as “a rural residence area of a pioneer type development for permanent and occasional residents, and with provisions for many recreational privileges and facilities ...” Between 1966 and 1976, Areaco sold approximately 1000 lots at Rocky Ridge Ranch to individual purchasers, who are members of the Respondent Owners’ Association.

Rocky Ridge Ranch is governed by a restrictive covenant entitled Original Restriction Agreement (“Original Agreement”), which was created and recorded by Areaco in 1966. Paragraph twenty-one of the Original Agreement provides that the restrictive covenant can be amended as follows:

The Restriction Agreement may be modified and amended at any time by a suitable instrument executed by the Corporation and two-thirds (%) of the then owners of land in Rocky Ridge Ranch and duly recorded in the office of the Recorder of Deeds for Ste. Genevieve County, Missouri.
In determining the term “then owners,” for the purpose of arriving at the total number of owners of land therein, each lot shall be considered as having one owner.

In 1976, the United States Department of Housing and Urban Development (“HUD”) prohibited Areaco from selling any additional lots at Rocky Ridge Ranch. After the suspension of lot sales, Areaco began selling to non-lot owners use memberships, which entitle the purchaser to use the Rocky Ridge Ranch facilities for a yearly fee. Areaco also contracted with nationwide organizations, including Coast to Coast and Independent Travel Club Connections, to provide their members access to Rocky Ridge Ranch facilities. The [555]*555sale of use memberships allowed Areaco to continue raising revenue despite its inability to sell subdivision lots.

Between 1976 and early 1994, Areaco owned only one-half of the Rocky Ridge lots, far short of the two-thirds required to amend the Original Agreement. However, Areaco platted an additional 1150 lots in 1994, giving the corporation ownership of more than two-thirds of the lots. This additional platting allowed Areaco to unilaterally execute and record a Second Amendment to the Restriction Agreement (“Second Amendment”), supposedly in compliance with paragraph twenty-one of the Original Agreement. The Second Amendment was adopted without notice to or votes from any other Rocky Ridge Ranch property owner.

The Second Amendment makes substantial changes to the Original Agreement that may negatively impact property owners, including the following: (1) allows trailers, tents and other portable housing on lots designated by Areaco; (2) switches responsibility for sewer maintenance from Areaco to lot owners; (3) allows “guests and invitees” who purchased “use memberships” to use Rocky Ridge Ranch common areas; (4) prohibits hunting; (5) eliminates the requirement that fees collected from lot owners be held as part of a maintenance trust, and instead gives Areaco the power to expend those funds in its corporate capacity; (6) provides Areaco the sole power to amend the Original Agreement; (7) gives Areaco the sole right to enforce restrictions, and (8) allows Areaco the right to collect all attorney’s and litigation fees necessary to enforce the Second Amendment.

In response to Areaco’s unilateral adoption of the Second Amendment, the Owners’ Association filed suit on May 31, 1996. On June 7, 1996, the court issued its first temporary restraining order, enjoining enforcement of the Second Amendment and requiring Areaco to allow the Owners’ Association to act as the subdivision’s trustee. Areaco violated the first court order and was held in contempt on August 5, 1996. The court issued a second temporary restraining order and subsequent preliminary injunction on August 6, 1996, prohibiting Areaco’s promotion of Rocky Ridge Ranch as a “drive-thru” park or theme park.

On December 31, 1996, the trial court entered its judgment holding the Second Amendment invalid and expunged, and issued preliminary and permanent injunctions prohibiting Areaco from enforcing the Second Amendment. According to the trial court, “the Second Amendment fails to meet this test of reasonableness and scheme of development.” Further, the trial court determined that the parties did not intend that paragraph twenty-one of the Original Agreement be used by Areaco to unilaterally adopt the Second Amendment by platting additional lots.

The trial court also entered a preliminary and permanent injunction against the Owners’ Association, prohibiting it from denying Areaco and its guests entrance to or use of Rocky Ridge Ranch facilities, and determining that Areaco was entitled to full possession and control of the subdivision gate. Both Areaco and the Owners’ Association appeal this decision.

Analysis

In a court-tried case, the appellate court will sustain the decree or judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is “against the weight of the evidence” with caution, and with a firm belief that the decree or judgment is wrong. Id. We accord deference to the trial court for judgments involving construction or enforcement of restrictive covenants. Forst v. Bohlman, 870 S.W.2d 442, 445 (Mo.App. E.D.1994).

[556]*556On appeal, Areaco asks this court to decide whether the reasonableness/scheme of development test should be adopted and applied to determine the validity of the Second Amendment. However, we need not reach this issue, and instead affirm the trial court’s decision on the grounds that the parties did not intend for paragraph twenty-one to empower Areaco to unilaterally create the Second Amendment.

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993 S.W.2d 553, 1999 Mo. App. LEXIS 633, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rocky-ridge-ranch-property-owners-assn-v-areaco-investment-co-moctapp-1999.